Lonestar Resources US Inc. (Form: 10-12B, Received: 12/31/2015 13:55:00)

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As filed with the Securities and Exchange Commission on December 31, 2015

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10

GENERAL FORM FOR REGISTRATION OF SECURITIES

Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

Lonestar Resources US Inc.

(Exact name of registrant as specified in its charter)

Delaware		81-0874035
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

600 Bailey Avenue, Suite 200, Fort Worth, TX		76107
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (817) 921-1889

Securities to be registered pursuant to Section 12(b) of the Act:

Title of each class to be so registered		Name of each exchange on which each class is to be registered

Class A Voting Common Stock, par value $0.001 per share		The Nasdaq Global Market

Securities to be registered pursuant to Section 12(g) of the Act: None

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 o (Do not check if a smaller reporting company)		Smaller reporting company x

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		Page #

Item 1.	Business	8

Item 1A.	Risk Factors	30

Item 2.	Financial Information	52

Item 3.	Properties	73

Item 4.	Security Ownership of Certain Beneficial Owners and Management	78

Item 5.	Directors and Executive Officers	80

Item 6.	Executive Compensation	85

Item 7.	Certain Relationships and Related Transactions and Director Independence	90

Item 8.	Legal Proceedings	91

Item 9.	Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters	91

Item 10.	Recent Sales of Unregistered Securities	92

Item 11.	Description of Registrant’s Securities to be Registered	93

Item 12.	Indemnification of Directors and Officers	94

Item 13.	Financial Statements and Supplementary Data	95

Item 14.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	95

Item 15.	Financial Statements and Exhibits	96

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Presentation of Information

Lonestar Resources US Inc. is filing this registration statement on Form 10 to register its Class A Voting Common Stock, par value $0.001 per share, voluntarily pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Lonestar Resources US Inc. was incorporated in the State of Delaware in December 2015 for the purpose of reorganizing the operations of Lonestar Resources Limited, an Australian corporation, into a structure whereby the ultimate parent company of the Lonestar group of companies will be a Delaware corporation. See Item 1 (“Business—Corporate History”)

Prior to the effectiveness of this registration statement, Lonestar Resources US Inc. will acquire all of the issued and outstanding ordinary shares of Lonestar Resources Limited, the current parent company of the Lonestar group of companies, pursuant to a Scheme of Arrangement under Australian law that must be approved by the Federal Court of Australia and by Lonestar Resources Limited’s shareholders at a meeting of shareholders anticipated to be completed in March 2016.

As soon as practicable following completion of the Scheme of Arrangement, we intend to:

· list our Class A Voting Common Stock (referred to in this registration statement as our “common stock”) on The Nasdaq Global Market; and

· liquidate Lonestar Resources Limited, which is a holding company and itself has no operations (and all its subsidiaries will be subsidiaries of Lonestar Resources US Inc.).

We refer to these transactions as the “Reorganization.” Pursuant to the Reorganization we will issue to the shareholders of Lonestar Resources Limited one share of our common stock for every two ordinary shares of Lonestar Resources Limited that are issued and outstanding. Additionally, we will cancel each of the outstanding options to acquire ordinary shares of Lonestar Resources Limited and issue replacement options representing the right to acquire shares of our common stock on the same one-for-two basis. Prior to the closing of the Reorganization, we will have had no business or operations and following the closing of the Reorganization, the business and operations of Lonestar Resources US Inc. will consist solely of the business and operations of the subsidiaries of Lonestar Resources Limited.

All references in this registration statement regarding acreage as of September 30, 2015 include all leases that were in effect as of such date and exclude leases which were closed after such date or had terms agreed to with a reasonable expectation to close but had not closed by September 30, 2015. Definitions of certain oil and gas terms used in this registration statement are set forth in the “Glossary of selected oil and natural gas terms” beginning on page 3.

The financial and operational information presented in this registration statement is comprised of the financial and operational information of Lonestar Resources America, Inc. (“LRAI”) and its subsidiaries. LRAI is a subsidiary of Lonestar Resources Limited and has been its U.S. operating company for the Lonestar group of companies since February 2013. LRAI will continue in the role of U.S. operating company for Lonestar Resources US Inc. upon completion of the Reorganization.

Except as otherwise indicated or unless the context otherwise requires, the information included in this registration statement, including our consolidated financial statements, assumes and gives effect to the completion of the Reorganization. Unless the context otherwise requires, references in this registration statement to “Lonestar,” “we,” “us” and “our” refer to Lonestar Resources US Inc. and its subsidiaries upon completion of the Reorganization.

Currencies

Unless indicated otherwise in this registration statement, all references to $ or dollars refer to U.S. dollars. References to A$ mean the lawful currency of the Commonwealth of Australia.

Cautionary note regarding forward-looking statements

This registration statement contains forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than statements of historical fact included in this registration statement, regarding our strategy, future operations, financial position, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this registration statement, the words “could,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “may,” “continue,” “predict,” “potential,” “project” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words.

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Forward-looking statements may include statements about our:

· discovery and development of crude oil, NGLs and natural gas reserves;

· cash flows and liquidity;

· business and financial strategy, budget, projections and operating results;

· crude oil, NGLs and natural gas realized prices;

· timing and amount of future production of crude oil, NGLs and natural gas;

· availability of drilling and production equipment;

· availability of personnel;

· amount, nature and timing of capital expenditures, including future development costs;

· availability and terms of capital;

· drilling and completion of wells;

· competition;

· marketing of crude oil, NGLs and natural gas;

· timing, location and size of property acquisitions and divestitures;

· costs of exploiting and developing our properties and conducting other operations;

· general economic and business conditions;

· effectiveness of our risk management activities;

· environmental and other liabilities;

· counterparty credit risk;

· governmental regulation and taxation of the crude oil and natural gas industry; and

· our plans, objectives, expectations and intentions.

All forward-looking statements speak only as of the date of this registration statement. You should not place undue reliance on these forward-looking statements. Although we believe that our plans, objectives, expectations and intentions reflected in or suggested by the forward-looking statements we make in this registration statement are reasonable, we can give no assurance that these plans, objectives, expectations or intentions will be achieved. We disclose important factors that could cause our actual results to differ materially from our expectations under Item 1A (Risk Factors) and Item 2 (Financial Information) and elsewhere in this registration statement.

These factors include risks related to:

· variations in the market demand for, and prices of, crude oil, NGLs and natural gas;

· lack of proved reserves;

· estimates of crude oil, NGLs and natural gas data;

· the adequacy of our capital resources and liquidity including, but not limited to, access to additional borrowing;

· borrowing capacity under our credit facilities;

· general economic and business conditions;

· failure to realize expected value creation from property acquisitions;

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· uncertainties about our ability to replace reserves and economically develop our reserves;

· risks related to the concentration of our operations;

· drilling results;

· potential financial losses or earnings reductions from our commodity price risk management programs;

· potential adoption of new governmental regulations; and

· our ability to satisfy future cash obligations and environmental costs.

The forward-looking statements relate only to events or information as of the date on which the statements are made in this registration statement. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events.

Implications of being an Emerging Growth Company

As a company with less than $1.0 billion in revenue during our last fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may avail itself of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. For example, we intend to rely on an exemption from the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act of 2002 (the “Sarbanes Oxley Act”) relating to internal control over financial reporting, and we will not provide such an attestation from our auditors. In addition, we may also take advantage of certain other exemptions available under the JOBS Act, including an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies, an exemption from compliance with any new requirements adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotation or a supplement to the auditors’ report in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation not previously approved.

We will remain an emerging growth company until the earliest of the following:

· the end of the first fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of such fiscal year;

· the end of the first fiscal year in which we have total annual gross revenues of at least $1 billion; or

· the date on which we have issued more than $1 billion in non convertible debt securities in any rolling three year period.

Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided for by the JOBS Act.

Glossary of selected oil and natural gas terms

We are in the business of exploring for and producing oil and natural gas. Oil and natural gas exploration is a specialized industry. Many of the terms used to describe our business are unique to the oil and natural gas industry. The following is a description of the meanings of some of the oil and natural gas industry terms used in this document.

3-D seismic data. Geophysical data that depicts the subsurface strata in three dimensions.

Analogous reservoir. Analogous reservoirs, as used in resource 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, analogous reservoir refers to a reservoir that shares all of the following characteristics with the reservoir of interest: (i) the same geological formation (but not necessarily in pressure communication with the reservoir of interest); (ii) the same environment of deposition; (iii) similar geologic structure; and (iv) the same drive mechanism.

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Basin. A large natural depression on the earth’s surface in which sediments accumulate.

Bbl. One stock tank barrel, or 42 U.S. gallons liquid volume, of oil or other liquid hydrocarbons.

Boe. Barrels of oil equivalent, with 6,000 cubic feet of natural gas being equivalent to one barrel of oil.

Boe/d. Barrels of oil equivalent per day.

Btu or British thermal unit . The quantity of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

Completion. The installation of permanent equipment for the production of oil or natural gas.

Deterministic method. The method of estimating reserves or resources is called deterministic when a single value for each parameter (from the geoscience, engineering or economic data) in the reserves calculation is used in the reserves estimation procedure.

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 oil and natural gas.

Development well. A well drilled within the proved boundaries of an oil or natural gas reservoir with the intention of completing the stratigraphic horizon known to be productive.

Dry well. A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceeds production expenses and taxes.

Economically producible or viable . The term economically producible or economically viable, as it relates to a resource, means a resource that generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation. The value of the products that generate revenue shall be determined at the terminal point of oil and natural gas producing activities.

Estimated ultimate recovery . Estimated ultimate recovery is the sum of reserves remaining as of a given date and cumulative production as of that date.

Exploitation. Optimizing oil and natural gas production from producing properties or establishing additional reserves in producing areas through additional drilling or the application of new technology.

Exploratory well. A well drilled to find and produce oil or natural gas reserves not classified as proved, to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir or to extend a known reservoir.

Field. An area consisting of either a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.

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. 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 gas.

Horizontal well. A well in which a portion of the well has been drilled horizontally within a productive or potentially productive formation. This operation usually results in the ability of the well to produce higher volumes than a vertical well drilled in the same formation.

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Hydraulic fracturing or fracking . The technique of improving a well’s production or injection rates by pumping a mixture of fluids into the formation and rupturing the rock, creating an artificial channel. As part of this technique, sand or other material may also be injected into the formation to keep the channel open, so that fluids or natural gases may more easily flow through the formation.

Injection. A well which is used to place liquids or natural gases into the producing zone during secondary/tertiary recovery operations to assist in maintaining reservoir pressure and enhancing recoveries from the field.

MBoe. Thousand barrels of oil equivalent with 6,000 cubic feet of natural gas being equivalent to one barrel of oil.

MMBoe. Million barrels of oil equivalent with 6,000 cubic feet of natural gas being equivalent to one barrel of oil.

Mcf. Thousand cubic feet of natural gas.

MMBtu. Million British Thermal Units.

Natural gas liquids or NGL. Hydrocarbons found in natural gas which may be extracted as liquefied petroleum gas and natural gasoline.

Net acres or net wells. The sum of the fractional working interests owned in gross acres or wells, as the case may be. An owner who has 50% interest in 100 acres owns 50 net acres.

NYMEX. New York Mercantile Exchange.

Possible Reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed proved plus probable plus possible reserves estimates.

Probable Reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.

Probabilistic method. The method of estimation of reserves or resources is called probabilistic when the full range of values that could reasonably occur for each unknown parameter (from the geoscience and engineering data) is used to generate a full range of possible outcomes and their associated probabilities of occurrence.

Productive well. A well that is producing or is capable of production, including natural gas wells awaiting pipeline connections to commence deliveries and oil wells awaiting connection to production facilities.

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 oil and natural gas reserves or Proved reserves . Proved oil and natural gas 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 from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulation prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of

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whether deterministic or probabilistic methods are used for estimation. The project to extract the hydrocarbons must have commenced, or the operator must be reasonably certain that it will commence the project, within a reasonable time.

The area of the reservoir considered as proved includes all of the following: (i) the area identified by drilling and limited by fluid contacts, if any; and (ii) adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil and natural gas on the basis of available geoscience and engineering data.

In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons as seen in a well penetration unless geoscience, engineering or performance data and reliable technology establish a lower contact with reasonable certainty. Where direct observation from well penetrations has defined a highest known oil elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering or performance data and reliable technology establish the higher contact with reasonable certainty.

Reserves that can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (i) successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (ii) the project has been approved for development by all necessary parties and entities, including governmental entities.

Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the 12-month first day of the month historical average price during the twelve- month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of- the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

Proved undeveloped reserves or PUD . 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.

Reasonable certainty. If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical and geochemical), engineering and economic data are made to estimated ultimate recovery with time, reasonably certain estimated ultimate recovery is much more likely to increase or remain constant than to decrease.

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.

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Reserves. Reserves are 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.

Reservoir. A porous and permeable underground formation containing a natural accumulation of producible oil and natural gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

Resource play. These plays develop over long periods of time, well- by-well, in large-scale operations. They typically have lower than average long-term decline rates and lower geological and commercial development risk than conventional plays. Unlike most conventional exploration and development, resource plays are relatively predictable in timing, costs, production rates and reserve additions which can provide steady long-term reserves and production growth.

Resources. Resources are 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 unrecoverable. Resources include both discovered and undiscovered accumulations.

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.

Stratigraphic horizon. A sealed geologic interval capable of retaining hydrocarbons that was formed by changes in rock type or pinch-outs, unconformities, or sedimentary features such as reefs.

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 or natural gas regardless of whether or not such acreage contains proved reserves.

Undeveloped oil and natural gas reserves or Undeveloped reserves . Undeveloped oil and natural gas reserves are reserves of any category 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 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.

Working interest. The operating interest that gives the owner the right to drill, produce and conduct operating activities on the property and receive a share of production.

Workover. The repair or stimulation of an existing production well for the purpose of restoring, prolonging or enhancing the production of hydrocarbons.

WTI. West Texas Intermediate crude oil, which is a light, sweet crude oil, characterized by an API gravity between 39 and 41 and a sulfur content of approximately 0.4 weight percent that is used as a benchmark for other crude oils.

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Item 1. Business.

Overview

We are an independent oil and natural gas company, focused on the acquisition, development and production of unconventional oil, NGLs and natural gas properties in the Eagle Ford Shale in Texas, where we have accumulated approximately 37,004 gross (32,564 net) acres in what we believe to be the formation’s crude oil and condensate windows. We also hold a portfolio of conventional, long lived, crude oil weighted onshore assets in Texas and are inviting farm-in partners to undertake exploratory drilling on approximately 44,084 gross (28,655 net) acres in the Poplar West area of the Bakken Three Forks formation in Roosevelt County, Montana.

We plan to invest substantially all of our 2016 capital budget in the horizontal development of our Eagle Ford properties, with approximately $57.6 million allocated to Eagle Ford Shale drilling and completion activities. We believe our management team’s extensive experience in acquiring and operating oil and natural gas properties will assist us in the development, completion and growth of these properties.

Our Business Strategies

Our primary business objective is to increase reserves, production and cash flows at what we consider to be attractive rates of return on invested capital. We are focused on exploiting long-lived, unconventional oil, NGLs and natural gas reserves from the crude oil window of the Eagle Ford Shale. Key elements of our business strategy include:

Develop our Eagle Ford Shale leasehold positions. We intend to drill and develop our acreage position to maximize the value of our resource potential while maintaining financial flexibility. Through the conversion of our resource base to developed reserves, we will seek to increase our reserves, production and cash flow. As of September 30, 2015, we were producing from 61 gross (56 net) Eagle Ford wells and have 154 gross (144 net) engineered locations for potential future horizontal drilling in our Eagle Ford Shale acreage that will be our primary targets in the near term.

Leverage our extensive operational expertise and concentration of our operating areas to reduce costs and enhance returns. We are focused on continuously improving our operating measures. We intend to leverage the magnitude and concentration of our acreage within the Eagle Ford Shale, as well as our experience within our areas of operation to capture economies of scale, including by employing multiple-well pad drilling, and utilizing centralized production and fluid handling facilities. Our team has significant operating experience, and it regularly evaluates our operating measures against those of other operators in our area in order to improve our performance and identify additional opportunities to optimize our drilling and completion techniques and make informed decisions about our capital expenditure program and drilling activity.

Execute organic leasing and strategic acquisitions in the Eagle Ford Shale. Over the past one year and nine months, we have more than tripled our Eagle Ford Shale holdings from 9,923 net acres as of December 31, 2013 to 32,564 net acres as of September 30, 2015. We have successfully increased our production, reserves and drilling locations through organic leasing, selective acquisitions and farm-ins, and we intend to continue to evaluate acquisition and leasing opportunities that meet our strategic and financial objectives. We focus our acquisition activity where we believe our operational expertise provides the opportunity for meaningful incremental value creation, where our operational methods are relevant and where we would serve as operator following the acquisition. Further, we continue to seek new leasing and farm-in opportunities to expand our acreage position and complement our existing drilling inventory, as we believe that targeted organic leasing around our existing acreage provides the ability for greater returns due to cost and operating synergies in neighboring areas of operation.

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Maintain operational control over our drilling and completion operations. We operate 100% of the Eagle Ford Shale wells in which we have a working interest and intend to maintain a high degree of operational control over substantially all of our producing locations. Moreover, we hold an average working interest of 92% in our Eagle Ford Shale leasehold. We believe this strategy allows us to manage the timing and levels of our development spending, while controlling the techniques used to drill and complete wells, as well as overall well costs and operating costs. We expect to operate the drilling and completion phase on approximately 100% of our identified drilling locations. Approximately 63% of our existing Eagle Ford net acreage is held by production, and we anticipate that we will further increase the percentage of our Eagle Ford acreage that is held by production through our drilling program. Accordingly, we do not have to expend significant capital in 2016 to hold acreage in our portfolio. We believe that continuing to exercise a high degree of control over our acreage position will provide us with flexibility to manage our drilling program and optimize our returns and profitability.

Maintain financial liquidity and flexibility. As of September 30, 2015, we had approximately $5.0 million in cash and $101.0 million under our revolving credit facility available for future borrowings. We intend to use this liquidity position, combined with our cash flow from operations, to continue executing a capital expenditure program that we believe will result in steady growth of production, cash flow and proved reserves. Furthermore, we intend to continue executing hedging transactions for up to 85% of our expected production from currently producing wells, to achieve more predictable cash flow and to reduce our exposure to adverse fluctuations in oil, NGLs and natural gas prices. As of September 30, 2015, we had in place hedges covering approximately 2,551 Boe/d for the remainder of 2015 at an average price of approximately $82.23 per barrel and hedges covering approximately 2,276 Boe/d for calendar year 2016 at an average price of approximately $77.15 per barrel. We believe that these hedges insulate us from oil price volatility on approximately 54% of our expected crude oil production in 2016. We have also entered into three-way collars covering 1,000 Boe/d for calendar year 2017, which provide an effective floor of $55.25 per barrel with WTI prices between $40.00 per barrel and $60.00 per barrel, but also gives upside to $80.25 per barrel.

Optimize our current position and maximize cost-saving opportunities in response to oil price declines. We have moderated our drilling activity plans for 2015 and 2016 in response to oil price declines that began in late 2014 and our revised plan is to complete 14 gross (12 net) wells in 2015 and 10 (gross and net) wells in 2016. We believe that we are in a good position to be flexible due to our robust financial position, a $100 million joint development agreement entered into with IOG Capital L.P. in July 2015, the absence of material drilling obligations and strong operational capabilities. We estimate production will increase from 4,480 Boe/d in 2014 to between 6,100 to 6,300 Boe/d in 2015.

Competitive Strengths

We possess a number of competitive strengths that we believe will allow us to successfully execute our business strategy:

Strategic geographic focus in one of North America’s leading unconventional oil plays. We have assembled a leasehold position of approximately 32,564 net acres in the Eagle Ford Shale as of September 30, 2015. We believe this unconventional oil and natural gas formation has one of the highest rates of return among such formations in North America. In addition to leveraging our technical expertise in our project areas, our geographically-concentrated acreage position allows us to establish economies of scale with respect to drilling, production, operating and administrative costs. Based on our drilling and production results and well-established offset operator activity in and

Experienced management team and a proven track record. Our top eight executives average 30 years of industry experience. We have assembled what we believe to be a strong technical staff of geoscientists, field operations managers and engineers with significant experience drilling horizontal wells and with fracture stimulation of unconventional formations, which has resulted in a successful track record of reserve and production growth. In addition, our management team has extensive expertise and operational experience in the oil and natural gas industry with a proven track record of successfully negotiating, executing and integrating acquisitions. Members of our management team have previously held positions with major and large independent oil and natural gas companies, including Encore Acquisition Company, Denbury Resources, Petrohawk Energy, Burlington Resources, ExxonMobil, Pioneer Natural Resources and Kerr-McGee.

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Demonstrated ability to increase acreage position and drive growth of oil production and reserves. In recent years, we have increased our Eagle Ford Shale net acres by over eight times from 3,710 net acres to 32,564 net acres as of September 30, 2015. We placed 14 gross (12 net) Eagle Ford Shale wells onstream during the first nine months of 2015 and had a total of 61 gross (56 net) producing wells in the Eagle Ford, as of September 30, 2015. The resulting production rates achieved by this program increased Eagle Ford sales volumes for the first nine months of 2015 by approximately 48% over the first nine months of 2014. Our average total production for the first nine months of 2015 was 5,992 Boe/d, of which 89% was from the Eagle Ford Shale. Moreover, between December 31, 2013 and December 31, 2014, our total proved reserves increased by approximately 17% from 25.8 MMBoe to 31.0 MMBoe, and our proved developed reserves increased by approximately 25% from 9.3 MMBoe to 12.4 MMBoe. Our three-year average reserve replacement ratio is over 600%, which we believe demonstrates our ability to grow reserves year over year. We believe the location and concentration of our project areas within the Eagle Ford provide us an opportunity to continue to increase production, lower costs and further delineate our proved reserves.

Multi-year drilling inventory in existing and emerging resource plays. We have 154 gross (144 net) engineered horizontal drilling locations on 26,743 of our 32,564 net acres in the Eagle Ford Shale. As of September 30, 2015, these engineered drilling locations included 58 gross (56 net) locations to which we have assigned proved undeveloped reserves. We have identified 10 gross (10 net) engineered locations in the Eagle Ford Shale that we expect to drill in 2016, the completion of which would represent approximately 6% of our gross engineered drilling locations in the Eagle Ford Shale at September 30, 2015. We have 10,482 additional net acres in the Eagle Ford Shale with surrounding industry activity to which we have not assigned locations. We believe our acreage is prospective for additional locations and plan to continue evaluating this acreage and monitoring industry activity in order to maximize our efficiency in developing this acreage. Furthermore, we expect to identify and develop additional locations across our portfolio as we evaluate downspacing in the Eagle Ford Shale and accessing other stratigraphic horizons that lie above and below the Eagle Ford Shale, such as the Austin Chalk, Buda, Georgetown, Woodbine and Wilcox formations. Additionally, we and our partners are currently processing 3-D seismic data on our assets in the West Poplar area of the Bakken-Three Forks trend of the Williston Basin and will subsequently interpret it to determine future exploration and development opportunities on this acreage. We believe our multi-year, engineered drilling inventory and exploration portfolio will provide near-term growth in our production and reserves and highlight the long-term resource potential across our asset base.

Oil-weighted reserves and production. Our net proved reserves at December 31, 2014 were comprised of approximately 80% oil, and our net average daily production for the year ended December 31, 2014 and the nine months ended September 30, 2015 was comprised of 73% oil and 72% oil, respectively. Given the current commodity price environment and resulting disparity between oil and natural gas prices on a Boe basis, we believe our high percentage of oil reserves, compared to our overall reserve base, is a key strength.

Low field operating expenses. Even in light of recent declines in oil prices, we expect to generate substantial cash margins on our Eagle Ford Shale business due to our low cash operating costs. For the nine months ended September 30, 2015, our total field operating expenses (including lease operating expenses and production taxes) totalled $10.03 per barrel of oil equivalent. around our project areas, we believe there are relatively low geologic risks and ample repeatable drilling opportunities across our core operating areas in the Eagle Ford Shale where we have devoted almost all of our 2015 drilling capital budget.

Hedging position. As of September 30, 2015, we had in place hedges covering approximately 2,551 Boe/d for the remainder of 2015 at an average price of approximately $82.23 per barrel and hedges covering approximately 2,276 Boe/d for calendar year 2016 at an average price of approximately $77.15 per barrel. We believe that these hedges insulate us from oil price volatility on approximately 54% of our expected crude oil production in 2016. We have also entered into three-way collars covering 1,000 Boe/d for calendar year 2017, which provide an effective floor of $55.25 per barrel with WTI prices between $40.00 per barrel and $60.00 per barrel, but also gives upside to $80.25 per barrel.

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Corporate History

Lonestar Resources US Inc. was incorporated in the State of Delaware in December 2015 for purposes of effecting the Reorganization.

The former parent company of our group of companies, Lonestar Resources Limited (formerly Amadeus Energy Limited) was incorporated under the laws of Australia in January 1993 and its ordinary shares were listed on the Australian Securities Exchange (“ASX”) in 1997. In connection with the Reorganization, the ordinary shares of Lonestar Resources Limited will be delisted from the ASX.

In January 2013, Amadeus Energy Limited acquired Ecofin Energy Resources Plc (the previous holding company for Lonestar Resources, Inc.) from its controlling shareholder, Ecofin Water & Power Opportunities PLC, and minority shareholders in a reverse merger effected by way of an Australian Scheme of Arrangement. Amadeus Energy Limited was deemed the “legal acquirer” and Ecofin Energy Resources Plc was deemed the “accounting acquirer.” In connection with the acquisition, the name of Amadeus Energy Limited was changed to Lonestar Resources Limited. In connection with the acquisition, Ecofin Water & Power Opportunities PLC and the minority shareholders were issued ordinary shares that represented 68.5% of the issued and outstanding equity interests of Lonestar Resources Limited immediately following the transaction. Ecofin Water & Power Opportunities PLC remains our majority shareholder. See Item 4 — (Security Ownership of Certain Beneficial Owners and Management).

During 2010 and 2011, Lonestar Resources, Inc. made investments in leaseholds prospective for the Barnett Shale and Eagle Ford Shale in Texas and the Bakken Three Forks formations in Montana, with Ecofin Water & Power Opportunities PLC (among other parties) providing equity capital for these investments. In 2012, we reorganized our management team and hired several industry professionals, including our current Chief Executive Officer (Frank D. Bracken, III), to staff more fully our executive management team. At the same time, the company’s primary focus was redirected toward the Eagle Ford Shale.

During 2013 we accelerated the growth of our portfolio of unconventional assets in the Eagle Ford Shale through acquisitions and organic leasing and disposed of non-strategic properties in the Barnett Shale in north Texas and conventional assets in Louisiana and Oklahoma in order to further sharpen our focus on our Eagle Ford Shale operations.

Our Operations

Estimated Proved Reserves

The following table presents estimated net proved oil, NGLs and natural gas reserves attributable to our properties and the Standardized Measure amounts associated with the estimated proved reserves attributable to our properties as of December 31, 2013 and 2014. The data below is based on our reserve report prepared by W.D. Von Gonten & Co. for our Eagle Ford Shale properties and on the reserve report prepared by LaRoche Petroleum Consultants, Ltd. for our conventional properties in the State of Texas. The Standardized Measure and PV-10 amounts shown in the table are

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not intended to represent the current market value of our estimated oil and natural gas reserves. We do not currently have proved reserves on our acreage in the West Poplar Area of the Bakken-Three Forks trend in Montana. Reserves reported below for our Eagle Ford shale assets are owned by our subsidiary Lonestar Resources, Inc., and reserves reported below for our conventional assets are owned by our subsidiary Amadeus Petroleum, Inc.

	As of December 31,
	2014		2013
Estimated Proved Reserves (1)
Eagle Ford Shale:
Oil (MBbls)	20,861		10,490
NGLs (MBbls)	3,044		1,841
Natural Gas (MMcf)	21,528		12,651
Total Eagle Ford Shale (MBoe)(2)	27,493		14,440
Conventional Assets:
Oil (MBbls)	2,749		2,994
NGLs (MBbls)	—		—
Natural Gas (MMcf)	4,441		4,722
Total Conventional Assets (MBoe)(2)	3,490		3,781
Total Estimated Proved Reserves (MBoe)(2)	30,983		18,220
Estimated Proved Developed Reserves
Eagle Ford Shale:
Oil (MBbls)	7,044		3,801
NGLs (MBbls)	1,212		639
Natural Gas (MMcf)	8,360		4,355
Total Eagle Ford Shale (MBoe)(2)	9,649		5,166
Conventional Assets:
Oil (MBbls)	2,140		2,394
NGLs (MBbls)	—		—
Natural Gas (MMcf)	3,631		3,933
Total Conventional Assets (MBoe)(2)	2,745		3,049
Total Estimated Proved Developed Reserves (MBoe)(2)	12,395		8,215
Estimated Proved Undeveloped Reserves
Eagle Ford Shale:
Oil (MBbls)	13,817		6,688
NGLs (MBbls)	1,833		1,203
Natural Gas (MMcf)	13,167		8,296
Total Eagle Ford Shale (MBoe)(2)	17,844		9,274
Conventional Assets:
Oil (MBbls)	609		600
NGLs (MBbls)	—		—
Natural Gas (MMcf)	810		789
Total Conventional Assets (MBoe)(2)	744		731
Total Estimated Proved Undeveloped Reserves (MBoe)(2)	18,588		10,005
PV-10 (millions)(3)	$	705.8	$	418.7
Standardized Measure (millions)(4)	$	549.0	$	302.8
Oil and Gas Prices Used (1) :
Oil — NYMEX-WTI per Bbl	$	94.99	$	96.94
Natural Gas — NYMEX-Henry Hub per MMBtu	$	4.35	$	3.67

(1) Our estimated net proved reserves and related Standardized Measure were determined using index prices for crude oil and natural gas, without giving effect to commodity derivative contracts, held constant throughout the life of our properties. The prices are based on the average prices during the 12-month period prior to the ending date of the period covered, determined as the unweighted arithmetic average of the prices in effect on the first day of the month for each month within such period, unless prices were defined by contractual arrangements, and are adjusted by lease for quality, transportation fees, geographical differentials, marketing bonuses or deductions and other factors affecting the price realized at the wellhead.

(2) One Boe is equal to six Mcf of natural gas or one Bbl of oil or NGLs based on an industry-standard approximate energy equivalency. This is a physical correlation and does not reflect a value or price relationship between the commodities.

(3) PV-10 is a non-GAAP financial measure and represents the present value of estimated future cash inflows from proved crude oil and natural gas reserves, less future development and production costs, discounted at 10% per annum to reflect timing of future cash inflows and using the unweighted arithmetic average of the first-day-of-the-month price for each of the preceding twelve months. PV-10 differs from the Standardized Measure because it does not include the effect of future income taxes. See below for a reconciliation of our Standardized Measure to PV-10.

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(4) Standardized Measure is calculated in accordance with Statement of Financial Accounting Standards No. 69, Disclosures About Oil and Gas Producing Activities , as codified in ASC Topic 932, Extractive Activities — Oil and Gas .

The data in the table above represent estimates only. Oil, NGLs and natural gas reserve engineering is inherently a subjective process of estimating underground accumulations of oil, natural gas and NGLs that cannot be measured exactly. The accuracy of any reserve estimate is a function of the quality of available data and engineering and geological interpretation and judgment. Accordingly, reserve estimates may vary from the quantities of oil, natural gas and NGLs that are ultimately recovered.

Future prices realized for production and costs may vary, perhaps significantly, from the prices and costs assumed for purposes of these estimates. The Standardized Measure amounts shown above should not be construed as the current market value of our estimated oil, NGLs and natural gas reserves. The 10% discount factor used to calculate Standardized Measure, which is required by Financial Accounting Standards Board pronouncements, is not necessarily the most appropriate discount rate. The present value, no matter what discount rate is used, is materially affected by assumptions as to timing of future production, which may prove to be inaccurate.

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PV-10

Certain of our oil and natural gas reserve disclosures included in this registration statement are presented on a PV-10 basis. PV-10 is the estimated present value of the future cash flows less future development and production costs from our proved reserves before income taxes discounted using a 10% discount rate. PV-10 is considered a non-GAAP financial measure because it does not include the effects of future income taxes, as is required in computing the standardized measure of discounted future net cash flows (the “Standardized Measure”). We believe that PV-10 is an important measure that can be used to evaluate the relative significance of our oil and natural gas properties and that PV-10 is widely used by securities analysts and investors when evaluating oil and gas companies. Because many factors that are unique to each individual company impact the amount of future income taxes to be paid, we believe that the use of a pre-tax measure provides greater comparability of assets when evaluating companies, and that most other companies in the oil and gas industry calculate PV-10 on the same basis. Investors should be cautioned that neither PV-10 nor Standardized Measure represents an estimate of the fair market value of our proved reserves.

The following table provides a reconciliation of PV-10 to the Standardized Measure(1):

	As of December 31,
($ in millions)	2014		2013
PV-10:
Eagle Ford	$	643.6	$	344.5
Conventional Assets	62.2		74.2
Total PV-10	$	705.8	$	418.7
Future Income Taxes:
Eagle Ford	143.1		94.8
Conventional Assets	13.7		21.1
Total Future Income Taxes	156.8		115.9
Standardized Measure of Discounted Future Net Cash Flows:
Eagle Ford	500.5		249.7
Conventional Assets	48.5		53.1
Total Standardized Measure of Discounted Future Net Cash Flows	$	549.0	$	302.8

Development of Proved Undeveloped Reserves

At December 31, 2014, our proved undeveloped reserves were approximately 18,588 MBoe, an increase of approximately 8,583 MBoe over our December 31, 2013 proved undeveloped reserves estimate of approximately 10,005 MBoe. The change primarily consisted of increases due to drilling and completion activities and acquisition of proved undeveloped reserves partially offset by decreases due to conversion of 4,315 MBoe proved undeveloped reserves to proved developed reserves as a result of drilling and completion activities during the year . During the year ended December 31, 2014, we incurred capital expenditures of approximately $108.5 million to convert proved undeveloped reserves to proved developed reserves.

None of our proved undeveloped reserves at December 31, 2014 are scheduled to be developed on a date more than five years from the date the reserves were initially booked as proved undeveloped. Historically, our drilling and development programs were substantially funded from cash flow from operations, borrowings under our bank credit facilities and the issuance of bonds. Based on our current expectations of our cash flows and drilling and development programs, which includes drilling

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of proved undeveloped locations, we believe we can fund the drilling of our current inventory of proved undeveloped locations and our expansions and extensions in the next five years from our cash on hand combined with cash flow from operations and borrowings under our credit facilities.

Qualifications of Responsible Technical Persons

Internal Company Person. Thomas H. Olle, our Senior Vice President- Operations, is the technical person primarily responsible for overseeing the preparation of our reserve estimates. Mr. Olle is also responsible for our interactions with and oversight of our independent third-party reserve engineers. Mr. Olle has more than 35 years of industry experience, with expertise in reservoir management and project development across a broad range of reservoir types. Mr. Olle previously held senior positions at Encore Acquisition Corp. and Burlington Resources. He holds a Bachelor of Science degree in Mechanical Engineering with Highest Honors from the University of Texas at Austin and is a member of the Society of Petroleum Engineers.

Independent Reserve Engineers. W.D. Von Gonten & Co. is an independent petroleum engineering and geological services firm. No director, officer or key employee of W.D. Von Gonten & Co. has any financial ownership in Lonestar. W.D. Von Gonten & Co.’s compensation for the required investigations and preparation of its report is not contingent upon the results obtained and reported, and W.D. Von Gonten & Co. has not performed other work for us or our affiliates that would affect its objectivity. The engineering information presented in W.D. Von Gonten & Co.’s reports was overseen by William D. Von Gonten, Jr., P.E. Mr. Von Gonten is an experienced reservoir engineer having been a practicing petroleum engineer since 1990. He has a Bachelor of Science degree in Petroleum Engineering from Texas A&M University and is a licensed Professional Engineer in the State of Texas.

LaRoche Petroleum Consultants, Ltd. is an independent petroleum engineering and consulting firm. No director, officer or key employee of LaRoche Petroleum Consultants, Ltd. has any financial ownership in Lonestar. LaRoche Petroleum Consultants, Ltd.’s compensation for the required investigations and preparation of its report is not contingent upon the results obtained and reported, and LaRoche Petroleum Consultants, Ltd. has not performed other work for us or our affiliates that would affect its objectivity. The engineering information presented in LaRoche Petroleum Consultants, Ltd.’s report was overseen by William M. Kazmann. Mr. Kazmann is an experienced reservoir engineer having been a practicing petroleum engineer since 1974. He has been with LaRoche Petroleum Consultants, Ltd. for more than 17 years, where he is President and Senior Partner. He has a Bachelor of Science and Master of Science degrees in Petroleum Engineering from the University of Texas at Austin and is a licensed Professional Engineer in the State of Texas.

Technology Used To Establish Proved Reserves

Our independent reserve engineers follow SEC rules and definitions in preparing their reserve estimates. Under SEC rules, proved reserves are those quantities of oil and natural gas that by analysis of geological, geochemical 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. The term “reasonable certainty” implies a high degree of confidence that the quantities of oil and natural gas actually recovered will equal or exceed the estimate. 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 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.

To establish reasonable certainty with respect to our estimated proved reserves, our independent reserve engineers employed technologies that have been demonstrated to yield results with consistency and repeatability. The technologies and economic data used in the estimation of our

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reserves include electrical logs, radioactivity logs, core analyses, geologic maps and available downhole and production data, seismic data and well-test data. Reserves attributable to producing wells with sufficient production history were estimated using appropriate decline curves or other performance relationships. Reserves attributable to producing wells with limited production history and for undeveloped locations were estimated using performance from analogous wells in the surrounding area and geologic data to assess the reservoir continuity. These wells were considered to be analogous based on production performance from the same formation and completion using similar techniques.

Internal Controls Over Reserves Estimation Process

Our estimated reserves at December 31, 2014 and 2013 for the Eagle Ford Shale properties were prepared by W.D. Von Gonten & Co., independent reserve engineers. Our estimated reserves at December 31, 2014 and 2013 for our conventional long-lived, crude oil-weighted onshore assets were prepared by LaRoche Petroleum Consultants, Ltd., independent reserve engineers. We expect to continue to have our reserve estimates prepared annually by our independent reserve engineers. Our internal professional staff works closely with W.D. Von Gonten & Co. and with LaRoche Petroleum Consultants, Ltd. to ensure the integrity, accuracy and timeliness of data that is furnished to them for their reserve estimation processes. All of the production, expense and well-ownership information, maintained in our secure reserve engineering database, is provided to our independent engineers. In addition, we provide such engineers other pertinent data, such as seismic information, geologic maps, well logs, production tests, material balance calculations, well performance data, operating procedures, pricing differentials and relevant economic criteria, including lease operating statements. We make all requested information, as well as our pertinent personnel, available to our independent engineers in connection with their evaluation of our reserves. Year-end reserve estimates are reviewed by our Senior Vice President-Operations, our Chief Executive Officer and other senior management, and revisions are communicated to our board of directors.

Production, Revenues and Price History

The following table sets forth information regarding gross wells brought online during the period, combined net production of oil, NGLs and natural gas and certain price and cost information attributable to our properties, for the nine months ended September 30, 2015 and 2014 and the years ended December 31, 2014 and 2013.

	Nine months ended September 30,				Year ended December 31,
	2015		2014		2014		2013
Gross Wells Drilled by Area: (1)
Western Eagle Ford	11		5		8		10
Central Eagle Ford	3		6		9		2
Eastern Eagle Ford	—		2		5		—
Total Eagle Ford	14		13		22		12
Conventional	—		—		—		—
Production
Oil (Bbls/day):
Western Eagle Ford	2,359		1,779		1,817		1,477
Central Eagle Ford	973		515		623		—
Eastern Eagle Ford	572		179		393		—
Total Eagle Ford	3,904		2,473		2,833		1,477
Conventional Assets	381		453		434		547
Total Oil	4,285		2,926		3,267		2,024
Natural gas liquids (Bbls/day):
Western Eagle Ford	594		384		399		265
Central Eagle Ford	32		—		—		—
Eastern Eagle Ford	37		11		24		—
Total Eagle Ford	663		395		423		265
Conventional Assets	13		8		13		3
Total NGLs	676		403		436		268
Natural Gas (Mcf/day):
Western Eagle Ford	4,097		2,998		3,149		1,897
Central Eagle Ford	146		1		2		—
Eastern Eagle Ford	200		77		126		—
Total Eagle Ford	4,443		3,076		3,277		1,897
Conventional Assets	1,743		1,222		1,387		1,248
Barnett Shale	—		—		—		1,224
Total Natural Gas	6,186		4,298		4,664		4,369
Average Daily Production (Boe/d)	5,992		4,045		4,480		3,020
Average Daily Sales Price:
Oil ($/Bbl)	$	48.22	$	96.07	$	87.41	$	96.95
NGLs ($/Bbl)	13.26		32.47		29.26		29.78
Natural Gas ($/Mcf)	2.63		4.77		4.50		4.15
Average Unit Cost ($/Boe):
Lease operating expenses(2)	$	8.27	$	10.68	$	10.72	$	12.54
Production taxes	2.57		4.86		4.36		4.65
Depreciation, depletion and amortization	23.94		24.32		24.90		25.66

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(1) Includes wells placed online during the period shown.

(2) Includes $0.6 million in 2013 associated with P&A expense related to actions mandated by regulatory agencies.

Drilling Activities

The following table sets forth information with respect to wells drilled and completed during the periods indicated. The information should not be considered indicative of future performance, nor should a correlation be assumed between the number of productive wells drilled, quantities of reserves found or economic value.

	Nine months ended		Year ended December 31,
	September 30, 2015		2014		2013
	Gross	Net	Gross	Net	Gross	Net
Development Wells:
Productive	14	12	22	19	12	10
Dry	—	—	—	—	—	—
Exploratory Wells:
Productive	—	—	—	—	—	—
Dry	—	—	—	—	—	—
Total Wells:
Productive	14	12	22	19	12	10
Dry	—	—	—	—	—	—

The following table sets forth information relating to the productive wells in which we owned a working interest as of September 30, 2015. Productive wells consist of producing wells and wells capable of production, including natural gas wells awaiting pipeline connections to commence deliveries and oil wells awaiting connection to production facilities. Gross wells are the total number of productive wells in which we own an interest, and net wells are the sum of our fractional working interests owned in gross wells.

	Productive Wells (Oil)		Productive Wells (Gas)		Total Wells
	Gross	Net	Gross	Net	Gross	Net
Eagle Ford:
Operated by us	55.0	50.2	2.0	2.0	57.0	52.2
Non-operated	—	—	—	—	—	—
Total Eagle Ford	55.0	50.2	2.0	2.0	57.0	52.2
Conventional:
Operated by us	241.0	187.0	23.0	19.8	264.0	206.8
Non-operated	15.0	3.8	—	—	15.0	3.8
Total Conventional	256.0	190.8	54.0	19.8	279.0	210.6

Subsequent to September 30, 2015 we drilled and completed two wells in the Western Region, which were brought into flowback in early December 2015. Three additional wells are planned to be spud in the Western Region in late December 2015.

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Developed and Undeveloped Acreage

The following table sets forth information relating to our leasehold acreage in the Eagle Ford and the Bakken-Three Forks Trend (West Poplar). As of September 30, 2015, approximately 87% of our net Eagle Ford acreage was held by production.

	As of September 30, 2015
	Developed Acreage		Undeveloped Acreage		Total Acreage
	Gross	Net	Gross	Net	Gross	Net
Western Eagle Ford	3,233	3,077	11,208	10,136	14,440	13,213
Central Eagle Ford	2,306	1,821	8,180	8,180	10,486	10,001
Eastern Eagle Ford	1,052	940	11,026	8,410	12,078	9,350
Total Eagle Ford	6,591	5,838	30,414	26,726	37,004	32,564
West Poplar	—	—	44,084	28,655	44,084	28,655
Total	6,591	5,838	74,498	55,381	81,088	61,219

As of September 30, 2015, we had leases across the Eagle Ford Shale representing 3,011 net acres expiring in 2016, 4,519 net acres expiring in 2017 and 563 net acres expiring in 2018 and beyond. We anticipate that our current and future drilling plans together with selected lease extensions will address a significant portion of our leases expiring in the Eagle Ford Shale in 2016. Our 28,655 net acres in the West Poplar project are subject to leases expiring in 2016, and we have an option to renew those leases for another three to five years at prices ranging from $125 to $300 per acre. With respect to West Poplar, we recently received approval of the Stone Turtle Indian Exploratory unit by the Bureau of Land Management and Bureau of Indian Affairs that establishes a 5-year primary term on all leasehold in the unit, in exchange for drilling activity. This approval opens the door for development of the block either by Lonestar or a farm-in partner. To date, we have only drilled one vertical exploratory well in our West Poplar leasehold.

Operations

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 well drilled on the leased premises. The lessor royalties and other leasehold burdens on our properties range from 19.0% to 25.0% resulting in a net revenue interest to us ranging from 75.0% to 81.0%.

Marketing and Major Customers

For the year ended December 31, 2014, purchases by our largest three customers accounted for 36%, 23% and 16%, respectively, of our total sales revenues.

Since the oil and natural gas that we sell are commodities for which there are a large number of potential buyers and because of the adequacy of the infrastructure to transport oil and natural gas in the areas in which we operate, if we were to lose one or more customers, we believe that we could readily procure substitute or additional customers such that our production volumes would not be materially affected for any significant period of time.

Title to Properties

Prior to completing an acquisition of producing oil and natural gas properties, we perform title reviews on significant leases, and depending on the materiality of properties, we may obtain an additional title opinion or conduct a review to ensure all title is current relative to previously obtained title opinions. As a result, title examinations have been obtained on a significant portion of our properties. After an acquisition, we review the assignments from the seller for scrivener’s and other errors and execute and record corrective assignments as necessary.

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We typically conduct title review of all acquired properties, regardless of whether they have proved reserves. Prior to the commencement of drilling operations on any property, we update our title examination and perform curative work with respect to significant defects or customary assignments, if any. 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 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.

Seasonal Nature of Business

Generally, but not always, the demand for natural gas decreases during the summer months and increases during the winter months, resulting in seasonal fluctuations in the price we receive for our natural gas production. Seasonal anomalies such as mild winters or hot summers sometimes lessen this fluctuation.

Competition

We operate in a highly competitive environment for leasing and acquiring properties and in securing trained personnel. Our competitors include major and independent oil and natural gas companies that operate in our project areas. These competitors include, but are not limited to, Anadarko Petroleum Corporation, Chesapeake Energy Corporation, EP Energy Corporation, Carrizo Oil & Gas, Inc., Halcón Resources Corporation, Hunt Oil Company, Marathon Oil Corporation, Newfield Exploration Company and Stonegate Production Company. Many of our competitors have substantially greater financial, technical and personnel resources than we do, which can be particularly important in the areas in which we operate. As a result, our competitors may be able to pay more for productive crude oil and natural gas properties and exploratory prospects, as well as evaluate, bid for and purchase a greater number of properties and prospects than our financial or personnel resources permit. Our ability to acquire additional properties and to find and develop reserves will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, there is substantial competition for capital available for investment in the oil and natural gas industry.

We are also affected by the competition for and the availability of equipment, including drilling rigs and completion equipment. We are unable to predict when, or if, shortages of such equipment may occur or how they would affect our development and exploitation programs.

Regulation of the Oil and Natural Gas Industry

Our operations are substantially affected by federal, state and local laws and regulations. In particular, crude oil and 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 properties for crude oil and natural gas production have statutory provisions regulating the exploration for and production of crude 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

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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 regulation of the size of drilling and spacing units or proration units, the number of wells that may be drilled in an area, and the unitization or pooling of crude oil and natural gas wells, as well as regulations that generally prohibit the venting or flaring of natural gas and that impose certain requirements regarding the rateability or fair apportionment of production from fields and individual wells.

The regulatory burden on the industry increases the cost of doing business and affects profitability. Failure to comply with applicable laws and regulations can result in substantial penalties. Furthermore, such laws and regulations are frequently amended or reinterpreted, and new proposals that affect the crude oil and natural gas industry are regularly considered by Congress, the states, the Federal Energy Regulatory Commission (“FERC”) and the courts. We believe that we are in substantial compliance with all applicable laws and regulations and that our continued substantial compliance with existing requirements will not have a material adverse effect on our financial position, cash flows or results of operations. Nor are we currently aware of any specific pending legislation or regulation that is reasonably likely to be enacted, or for which we cannot predict the likelihood of enactment, and that is reasonably likely to have a material effect on our financial position, cash flows or results of operations.

Regulation of Transportation of Crude Oil

Our sales of oil are affected by the availability, terms and cost of transportation. Interstate transportation of oil by pipeline is regulated by FERC pursuant to the Interstate Commerce Act of 1887 (“ICA”), the Energy Policy Act of 1992 (“EPAct”), and the rules and regulations promulgated under those laws. The ICA and its implementing regulations require that tariff rates for interstate service on oil pipelines, including interstate pipelines that transport oil and refined products (collectively referred to as “petroleum pipelines”), be just and reasonable and non-discriminatory and that such rates and terms and conditions of service be filed with FERC. EPAct deemed certain interstate petroleum pipeline rates then in effect to be just and reasonable under the ICA, which are commonly referred to as “grandfathered rates.” Pursuant to EPAct, FERC also adopted a generally applicable rate-making methodology, which, as currently in effect, allows petroleum pipelines to change their rates provided they do not exceed prescribed ceiling levels that are tied to changes in the Producer Price Index for Finished Goods (“PPI”), plus 1.3%. For the five-year period beginning July 1, 2011, the index will be PPI plus 2.65%.

FERC has also established cost-of-service rate-making, market- based rates and settlement rates as alternatives to the indexing approach. A pipeline may file rates based on its cost of service if there is a substantial divergence between its actual costs of providing service and the rate resulting from application of the index. A pipeline may charge market-based rates if it establishes that it lacks significant market power in the affected markets. Further, a pipeline may establish rates through settlement with all current non-affiliated shippers.

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 vary from state to state. Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any way that is of material difference from those of our competitors that are similarly situated.

Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers must offer service to all similarly situated shippers requesting service on the same terms and under the same rates. When oil pipelines operate at full capacity, access is governed by prorationing provisions set forth in the

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pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our similarly situated competitors.

Regulation of Transportation and Sales of Natural Gas

Historically, the transportation and sale for resale of natural gas in interstate commerce has been regulated by FERC under the Natural Gas Act of 1938 (“NGA”), the Natural Gas Policy Act of 1978 (“NGPA”) and regulations issued under those statutes. 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 market prices, Congress could re-enact price controls in the future. Deregulation of wellhead natural gas sales began with the enactment of the NGPA and culminated in the adoption of the Natural Gas Wellhead Decontrol Act, which removed all price controls affecting wellhead sales of natural gas effective January 1, 1993.

FERC regulates interstate natural gas, transportation rates and terms and conditions of service, which affect the marketing of natural gas that we produce as well as the revenues we receive for sales of our natural gas. Since 1985, FERC has endeavored to make natural gas transportation more accessible to natural gas buyers and sellers on an open and non-discriminatory basis. FERC has stated that open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services. Beginning in 1992, FERC issued a series of orders, beginning with Order No. 636, to implement its open access policies. As a result, the interstate pipelines’ traditional role of providing the sale and transportation of natural gas as a single service has been eliminated and replaced by a structure under which pipelines provide transportation and storage service on an open access basis to others that buy and sell natural gas. Although FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry.

In 2000, FERC issued Order No. 637 and subsequent orders, which imposed a number of additional reforms designed to enhance competition in natural gas markets. Among other things, Order No. 637 revised FERC’s pricing policy by waiving price ceilings for short-term released capacity for a two-year experimental period and effected changes in FERC regulations relating to scheduling procedures, capacity segmentation, penalties, rights of first refusal and information reporting.

Gathering services, which occur upstream of jurisdictional transmission services, are regulated by the states onshore and in state waters. 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 is done on a case-by-case basis. To the extent that FERC issues an order that reclassifies transmission facilities as gathering facilities and, depending on the scope of that decision, our costs of getting gas to point of sale locations may increase. State regulation of natural gas gathering facilities generally includes various safety, environmental and, in some circumstances, non-discriminatory take requirements. Although such regulation has not generally been affirmatively applied by state agencies, natural gas gathering may receive greater regulatory scrutiny in the future.

Intrastate natural gas transportation and facilities are also subject to regulation by state regulatory agencies, and certain transportation services provided by intrastate pipelines are also regulated by FERC. 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 vary 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

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transportation rates affects the marketing of natural gas that we produce, as well as the revenues we receive for sales of our natural gas.

Regulation of Production

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. All of the states in which we own and operate properties have regulations governing 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, 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 reductions in well spacing. Moreover, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas and NGLs within its jurisdiction. 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.

Environmental, Health and Safety Regulation

Our exploration, development, production and processing operations are subject to various federal, state and local laws and regulations relating to health and safety, the discharge of materials and environmental protection. These laws and regulations may, among other things: require the acquisition of permits to conduct exploration, drilling and production operations; govern the amounts and types of substances that may be released into the environment in connection with oil and natural gas drilling and production; restrict the way we handle or dispose of our wastes; limit or prohibit construction or drilling activities in sensitive areas, such as wetlands, wilderness areas, or areas inhabited by endangered or threatened species; require investigatory and remedial actions to mitigate pollution conditions caused by our operations or attributable to former operations; and impose obligations to reclaim and abandon well sites and pits. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, the imposition of remedial obligations and the issuance of orders enjoining some or all of our operations in affected areas.

These laws and regulations may also restrict the rate of crude oil and natural gas production below the rate that would otherwise be possible. The regulatory burden on the crude oil and gas industry increases the cost of doing business in the industry and consequently affects profitability. In addition, Congress and federal and state agencies frequently revise environmental, health and safety laws and regulations, and any changes that result in more stringent and costly emissions control, waste handling, disposal, clean-up and remediation requirements for the crude oil and gas industry could have a significant impact on our operating costs.

The clear trend in environmental regulation is to place more restrictions and limitations on activities that may affect the environment, and thus, any changes in environmental laws and regulations or re-interpretations of enforcement policies that result in more stringent and costly waste handling, storage, transport, disposal, or remediation requirements could have a material adverse effect on our operations and financial position in the future. We may be unable to pass on such increased compliance costs to our customers. Moreover, accidental releases or spills may occur in the course of our operations, and we cannot assure you that we will not incur significant costs and liabilities as a result of such releases or spills, including any third party claims for damage to property, natural resources or persons. We maintain insurance against costs of clean-up operations, but we are not fully insured against all such risks. While we believe that we are in substantial compliance with existing environmental laws and regulations and that current requirements would not have a material

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adverse effect on our financial condition or results of operations, there is no assurance that this will continue in the future.

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

Hazardous Substances and Waste

The Comprehensive Environmental Response, Compensation, and Liability Act (“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 who are considered to be responsible for the release of a “hazardous substance” into the environment. CERCLA exempts “petroleum, including oil or any fraction thereof” from the definition of “hazardous substance” unless specifically listed or designated under CERCLA. While the EPA interprets CERCLA to exclude oil and fractions of oil, hazardous substances that are added to petroleum or that increase in concentration as a result of contamination of the petroleum during use are not considered part of the petroleum and are regulated under CERCLA as a hazardous substance.

Responsible persons under CERCLA include current and prior owners or operators of the site where the release occurred and entities that disposed or arranged for the disposal of the hazardous substances found at the site. Under CERCLA, these “responsible persons” may be subject to strict, joint and several liability for the costs of cleaning up the hazardous substances that have been released into the environment, for damages to natural resources, and for the costs of certain health studies. CERCLA also authorizes the EPA and, in some instances, third parties to act in response to threats to the public health or the environment and to seek to recover from the responsible classes of persons the costs they incur. It is not uncommon for neighboring landowners and other third parties to file claims for personal injury and property damage allegedly caused by the release of hazardous substances or other pollutants into the environment. We generate materials in the course of our operations that may be regulated as hazardous substances.

We also generate solid and hazardous wastes that are subject to the requirements of the Resource Conservation and Recovery Act, as amended (“RCRA”), and comparable state statutes. The RCRA imposes requirements on the generation, storage, treatment, transportation and disposal of hazardous wastes. In the course of our operations we generate petroleum hydrocarbon wastes and ordinary industrial wastes that may be regulated as hazardous wastes. The RCRA regulations specifically exclude from the definition of hazardous waste “drilling fluids, produced waters and other wastes associated with the exploration, development or production of oil, natural gas or geothermal energy.” However, legislation has been proposed in Congress from time to time that would reclassify certain natural gas and oil exploration and production wastes as “hazardous wastes,” which would make the reclassified wastes subject to much more stringent handling, disposal and clean-up requirements. No such effort has been successful to date.

We currently own or lease, and have in the past owned or leased, properties that have been used for numerous years to explore and produce crude oil and natural gas. Although we have utilized operating and disposal practices that were standard in the industry at the time, hydrocarbons and wastes may have been disposed of or released on or under the properties owned or leased by us or on or under the other locations where these hydrocarbons and wastes have been taken for treatment or disposal. In addition, certain of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons and wastes was not under our control. These properties and wastes disposed thereon may be subject to CERCLA, RCRA and analogous state laws. Under these laws, we could be required to remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators), to clean up contaminated property (including groundwater contaminated by prior owners or operators) and to perform remedial operations to prevent future contamination.

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Pipeline Safety and Maintenance

Pipelines, gathering systems and terminal operations are subject to increasingly strict safety laws and regulations. Both the transportation and storage of refined products and oil involve a risk that hazardous liquids may be released into the environment, potentially causing harm to the public or the environment. In turn, such incidents may result in substantial expenditures for response actions, significant government penalties, liability to government agencies for natural resources damages and significant business interruption. The U.S. Department of Transportation (“DOT”) has adopted safety regulations with respect to the design, construction, operation, maintenance, inspection and management of our pipeline and storage facilities. These regulations contain requirements for the development and implementation of pipeline integrity management programs, which include the inspection and testing of pipelines and the correction of anomalies. These regulations also require that pipeline operation and maintenance personnel meet certain qualifications and that pipeline operators develop comprehensive spill response plans.

There have been recent initiatives to strengthen and expand pipeline safety regulations and to increase penalties for violations. In 2012, the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011 was signed into law. This Act provides additional requirements related to spill and accident reporting, as well as more stringent oversight of pipelines and increased penalties for violations of safety rules. Since enactment, DOT has initiated a series of rulemakings to implement the new law. DOT has also recently promulgated new regulations extending safety rules to certain low-pressure, small-diameter pipelines in rural areas. Improving pipeline safety, which has the effect of reducing methane leaks, has been proposed as part of the Obama Administration’s methane strategy.

Air Emissions

The Clean Air Act, as amended (“CAA”), and comparable state laws and regulations restrict the emission of air pollutants from many sources, including oil and natural gas operations, and impose various monitoring and reporting requirements. These laws and regulations may require us to obtain preapproval for the construction or modification of certain projects or facilities expected to produce or significantly increase air emissions, obtain and comply with stringent air permit requirements, or utilize specific equipment or technologies to control emissions. Obtaining permits has the potential to delay the development of oil and natural gas projects.

In August 2010, the EPA published new regulations under the CAA to control emissions of hazardous air pollutants from existing stationary reciprocating internal combustion engines (“RICE NESHAP”). The rule may require us to undertake certain expenditures and activities, likely including purchasing and installing emissions control equipment, such as oxidation catalysts or non-selective catalytic reduction equipment, on a portion of our engines located at major sources of hazardous air pollutants and all our engines over a certain size regardless of location, following prescribed maintenance practices for engines (which are consistent with our existing practices), and implementing additional emissions testing and monitoring. On January 14, 2013, the EPA signed final revisions to the 2010 RICE NESHAP to reflect new technical information submitted by stakeholders and in response to lawsuits and administrative petitions. On January 30, 2013 the final RICE NESHAP rule was published in the Federal Register with an effective date of April 1, 2013. Several petitions requesting administrative reconsideration of the 2013 RICE NESHAP were received by the EPA. On August 15, 2014, EPA published its final decision on reconsideration and determined that it would not propose any changes to the regulation based on the petitions.

In June 2010, the EPA formally proposed modifications to existing regulations under the CAA that established new source performance standards for manufacturers, owners and operators of new, modified and reconstructed stationary internal combustion engines. The EPA finalized the modifications on June 28, 2011 with an effective date of August 2011. The rule modifications may require us to undertake significant expenditures, including expenditures for purchasing, installing, monitoring and maintaining emissions control equipment on a potentially significant percentage of our natural gas compressors.

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The EPA also issued new CAA regulations relevant to hydraulic fracturing in 2012, including a new source performance standard for volatile organic chemicals (“VOCs”) and sulfur dioxide (“SO 2 ”) emissions with expanded applicability to natural gas operations, as well as a new air toxics standard. These rules create significant new technology requirements for controlling wellhead emissions from our operations. The EPA has made several changes to these rules in response to industry and environmental group legal challenges and administrative petitions, including, most recently, a decision to include a specific performance standard for methane in the rules (discussed further below). In general, there is increasing interest in and focus on regulation of methane emissions from oil and natural gas operations, and hydraulic fracturing operations in particular, under the CAA. We cannot predict future regulatory requirements in this area or the cost to comply with such requirements. The adoption and implementation of any regulations imposing reporting obligations on, or limiting emissions of greenhouse gases from, our equipment and operations could require us to incur costs to reduce emissions of greenhouse gases associated with our operations or could adversely affect demand for the oil and natural gas we produce. We further note that states are authorized to regulate methane emissions within their boundaries provided their requirements are not weaker than federal rules.

Climate Change

The United States is a party to the United Nations Framework Convention on Climate Change (“UNFCCC”), an international treaty focused on stabilizing greenhouse gases (“GHGs”) concentrations in the atmosphere at a level that would prevent serious damage to the climate system. The UNFCCC did not establish any substantive obligations for parties to reduce GHGs. The subsequent treaty, the Kyoto Protocol, did establish binding GHG targets for developed countries, but the United States did not ratify it. The Conference of Parties 21 (“COP21”) organised by the United Nations under the Framework Convention on Climate Change and held in Paris during December 2015 resulted in 195 countries, including the United States, committing to work towards limiting global warming and agreeing to a monitoring and review process of GHG emissions. As part of this agreement, the United States, along with other signatories, submitted an Intended Nationally Determined Contribution (“INDC”). The United States’ INDC pledges a 26-28% reduction in its GHGs by 2025 against a 2005 baseline, consistent with the 32% cut by 2030 in the legally binding measures being enforced under the Clean Air Act. Progress towards the INDCs will be reviewed in 2018 and new INDCs are to be submitted in five yearly intervals starting in 2020. The COP 21 agreement is not a treaty and the INDCs are non-binding and submitted voluntary, so that this does not require ratification from the United States. Nevertheless, this will heighten political pressure on the United States to ensure continued compliance with enforcement measures resulting from the Clean Air Act and to bring forward further actions to reduce GHGs in the period post 2030. In the absence of comprehensive climate change legislation, significant regulatory action to regulate GHGs under the federal Clean Air Act has occurred over the past several years. In particular, the Clean Power Plan regulation under the Clean Air Act, which regulates carbon pollution from existing fossil fuel-fired power plants represents a significant portion of the United States’ reductions proposed under the Paris agreement. Any future federal laws, agreements or implementing regulations that may be adopted to address GHG emissions could require us to incur increased operating costs and could adversely affect demand for the oil and natural gas we produce.

In addition, as stated previously, the EPA has begun to regulate GHG emissions from stationary and mobile sources. The EPA is requiring a reduction in emissions of GHGs from new motor vehicles beginning with the 2012 model year. Furthermore, the EPA published a final rule on June 3, 2010 to address the permitting of GHG emissions from stationary sources under the Prevention of Significant Deterioration (“PSD”) and Title V permitting programs. This rule “tailors” these permitting programs to apply to certain stationary sources of GHG emissions, such as power plants and oil refineries. This rule was subject to legal challenge that went to the Supreme Court. On June 23, 2014, the Supreme Court issued its decision in Utility Air Regulatory Group v. EPA (No. 12-1146). The Court held that EPA may not require a major source to obtain a PSD or title V permit on the basis of greenhouse gas emissions alone. The Court further held that PSD permits that are otherwise required (based on

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emissions of other pollutants) may continue to require limitations on greenhouse gases emissions based on the application of Best Available Control Technology (“BACT”). The EPA is currently evaluating the implications of the decision and awaiting further action by the U.S. Courts in terms of whether additional rulemaking is necessary.

In addition, the EPA requires the reporting of GHGs from specified large GHG emission sources, including GHGs from petroleum and natural gas systems that emit more than 25,000 tons of GHGs per year. Reporting is required from onshore and offshore petroleum and natural gas production, natural gas processing, transmission and distribution, underground natural gas storage and liquefied natural gas import, export and storage. Pursuant to a settlement agreement, the EPA has also committed to regulate GHGs from new petroleum refineries, though no draft rule has yet been released.

On August 3, 2015, the EPA finalized its NSPS rule regulating greenhouse emissions from new, modified and restructured fossil fuel-fired power plants. In the proposed NSPS, the EPA establishes emission standards for coal plants and for natural gas-fired stationary combustion turbines. The EPA determined that partial carbon capture and sequestration constituted the “best system of emission reduction” (“BSER”) for coal plants. For natural gas plants, the EPA determined that modern, efficient natural gas combined cycle technology constituted the BSER. The NSPS applies to new fossil-fuel fired electric utility generating units over 25 MW and that generate electricity for sale. The NSPS for new sources triggers the need to set standards for existing fossil fuel-fired power plants. On August 3, 2015, the EPA released the final Clean Power Plan, which is regulation designed to reduce carbon pollution from existing fossil fuel-fired power plants. In the Clean Power Plan, the EPA sets forth state-specific emission targets and gives states significant flexibility in determining how they would meet the standards. Limits set by the state to meet the state-specific goals can either apply directly to the power plant or be met through reductions in power plant emissions through implementation of energy efficiency or renewable energy measures in the state. Each state can choose to include measures that EPA determines constitute BSER or may choose additional measures, as long as such measures achieve the emission reduction necessary to meet that state’s goal set by EPA. Throughout the Clean Power Plan, the EPA emphasizes the flexibility of the states to decide how to reduce emissions to meet the state goals, including the use of cap-and-trade programs. While these rules will more negatively impact coal-fired power plants, natural gas-fired power plants may also face liability under the rules and increased costs of operation.

On August 18, 2015, the EPA issued a suite of proposed regulations that would reduce methane emissions from the oil and gas industry, including proposed updates to the NSPS for new and modified sources in the oil and gas industry, a clarification of the source determination rule and a proposed Federal Implementation Plan for new oil and gas sources in Indian Country. The rules were prompted by the Obama Administration’s commitment to reduce methane emissions from the oil and gas sector by 40-45% from 2012 levels by 2025. The NSPS update would require methane and VOC reductions from hydraulically fractured oil wells, which would complement the 2012 NSPS described above. The new proposals would also extend emission reduction requirements “downstream,” covering equipment in the natural gas transmission segment that was not regulated by the 2012 NSPS. The regulations address leaks of methane and propose draft guidelines for the states to reduce VOC emissions from existing oil and gas sources in areas with smog issues. These regulations could affect us indirectly by affecting our customer base or by directly regulating our operations. In either case, increased costs of operation and exposure to liability could result.

Several of the EPA’s GHG rules are being challenged in court proceedings and depending on the outcome of such proceedings, such rules may be modified or rescinded or the EPA could develop new rules. The adoption and implementation of any 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 or could adversely affect demand for the oil and natural gas we produce.

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While new legislation requiring GHG controls is not expected at the national level in the near term, almost one-half of the states have taken actions to monitor and/or reduce emissions of GHGs, including obligations on utilities to purchase renewable energy and GHG cap and trade programs. Although most of the state level initiatives have to date focused on large sources of GHG emissions, such as coal-fired electric plants, it is possible that smaller sources of emissions could become subject to GHG emission limitations or allowance purchase requirements in the future.

Any one of these climate change regulatory and legislative initiatives could have a material adverse effect on our business, financial condition and results of operations. Legislation or regulations that may be adopted to address climate change could also affect the markets for our products by making our products more or less desirable than competing sources of energy. To the extent that our products are competing with higher GHG emitting energy sources, such as coal, our products would become more desirable in the market with more stringent limitations on GHG emissions. To the extent that our products are competing with lower GHG emitting energy sources, such as solar and wind, our products would become less desirable in the market with more stringent limitations on GHG emissions. We cannot predict with any certainty at this time how these possibilities may affect our operations.

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, droughts, floods and other climatic events. If any such effects were to occur, they could adversely affect or delay demand for the oil or natural gas we produce or otherwise cause us to incur significant costs in preparing for or responding to those effects.

Water Discharges

The Federal Water Pollution Control Act, as amended, or the Clean Water Act (“CWA”), and analogous state laws impose restrictions and controls regarding the discharge of pollutants into waters of the United States. Pursuant to the CWA and analogous state laws, permits must be obtained to discharge pollutants into state waters or waters of the United States. Any such discharge of pollutants into regulated waters must be performed in accordance with the terms of the permits issued by the EPA or analogous state agencies. The CWA and regulations implemented thereunder also prohibit the discharge of dredge and fill material into regulated waters, including jurisdictional wetlands, unless authorized by an appropriately issued permit. Spill prevention, control and countermeasure requirements under federal law require appropriate containment berms and similar structures to help prevent the contamination of navigable waters in the event of a petroleum hydrocarbon tank spill, rupture or leak. In addition, the CWA and analogous state laws require individual permits or coverage under general permits for discharges of stormwater runoff from certain types of facilities. Currently, storm water discharges from crude oil and natural gas exploration, production, processing or treatment operations, or transmission facilities are exempt from regulation under the CWA. Federal and state regulatory agencies can impose administrative, civil and criminal penalties, as well as other enforcement mechanisms for noncompliance with discharge permits or other requirements of the CWA and analogous state laws and regulations.

Endangered Species Act

The federal Endangered Species Act, as amended (“ESA”), restricts activities that may affect endangered and threatened species or their habitats. While some of our facilities may be located in areas that are designated as habitats for endangered or threatened species, we believe that we are in substantial compliance with the ESA. However, the designation of previously unidentified endangered or threatened species could cause us to incur additional costs or become subject to operating restrictions or bans in the affected areas.

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Employee Health and Safety

We are subject to a number of federal and state laws and regulations, including the federal Occupational Safety and Health Act, as amended (the “OSH Act”), and comparable state statutes, whose purpose is to protect the health and safety of workers. In addition, the OSH Act’s hazard communication standard, the EPA community right-to-know regulations under Title III of the federal Superfund Amendment and Reauthorization Act, and comparable state statutes require that information be maintained concerning hazardous materials used, produced or released in our operations and that this information be provided to employees, state and local government authorities and citizens. In 2012, the Occupational Safety and Health Administration (“OSHA”) issued a hazard alert related to worker exposure to respirable dust from silica sand, a common additive to hydraulic fracturing fluids. The alert stated that workers at drill sites can be exposed to excessive levels of respirable silica sand, which can cause lung disease and cancer. Increasing concerns about worker safety at drill sites may lead to increased regulation and enforcement or related tort claims by our employees. We believe that we are in substantial compliance with all applicable laws and regulations relating to worker health and safety.

Hydraulic Fracturing

The federal Safe Drinking Water Act (“SDWA”) and comparable state statutes may restrict the disposal, treatment or release of water produced or used during crude oil and natural gas development. Subsurface emplacement of fluids (including disposal wells) is governed by federal or state regulatory authorities that, in some cases, include the state oil and gas regulatory authority or the state’s environmental authority. We utilize hydraulic fracturing in our operations as a means of maximizing the productivity of our wells and operate saltwater disposal wells to dispose of produced water. The federal Energy Policy Act of 2005 amended the Underground Injection Control (“UIC”) provisions of the SDWA to expressly exclude hydraulic fracturing without diesel additives from the definition of “underground injection.” However, the U.S. Senate and House of Representatives have considered several bills in recent years to end this exemption, as well as other exemptions for crude oil and gas activities under U.S. environmental laws. The Fracturing Responsibility and Awareness of Chemicals Act (“FRAC Act”), first introduced in 2011, would amend the SDWA to repeal the exemption from regulation under the UIC program for hydraulic fracturing. This bill has been reintroduced in each congressional session since it was initially proposed but has not yet garnered enough support to be put to a vote. If enacted, the FRAC Act would amend the definition of “underground injection” in the SDWA to encompass hydraulic fracturing activities. Such a provision could require hydraulic fracturing operations to meet permitting and financial assurance requirements, to adhere to certain construction specifications, to fulfill monitoring, reporting and recordkeeping obligations, and to meet plugging and abandonment requirements. The FRAC Act also proposes to require the reporting and public disclosure of chemicals used in the fracturing process. Note that each of the above components of the FRAC Act have become increasingly common in state laws since the FRAC Act was first introduced. Other recent bills in the U.S. House of Representatives would end certain exemptions for oil and natural gas operations related to permitting requirements for multiple commonly owned and adjacent sources of hazardous air pollutants under the CAA and permitting requirements for stormwater discharges under the CWA. If the exemptions for hydraulic fracturing are removed from U.S. environmental laws, or if the FRAC Act or other legislation is enacted at the federal, state or local level, any restrictions on the use of hydraulic fracturing contained in any such legislation could have a significant impact on our financial condition and results of operations.

Federal agencies have also begun to directly regulate hydraulic fracturing. The EPA has recently asserted federal regulatory authority over, and issued permitting guidance for, hydraulic fracturing involving diesel additives under the SDWA’s UIC Program. As a result, service providers or companies that use diesel products in the hydraulic fracturing process are expected to be subject to additional permitting requirements or enforcement actions under the SDWA. The EPA has also issued new CAA regulations relevant to hydraulic fracturing in 2012, including the NSPS for VOC and SO 2 emissions with expanded applicability to natural gas operations and new national emission standards

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for hazardous air pollutants standards for air toxics, which are discussed in more detail above. These regulatory developments are indicative of increasing federal regulatory activity related to hydraulic fracturing, which has the potential to create additional permitting, technology, recordkeeping and site study requirements, among others, for our business. The EPA is also collecting information as part of a multi-year study into the effects of hydraulic fracturing on drinking water. The results of this study could result in additional regulations, which could lead to operational burdens similar to those described above. The U.S. Department of the Interior has likewise developed comprehensive regulations for hydraulic fracturing on federal land, which remain under review by the White House’s Office of Management and Budget.

Several state governments in the areas where we operate have adopted or are considering adopting additional requirements relating to hydraulic fracturing that could restrict its use in certain circumstances or make it more costly to utilize. Such measures may address any risk to drinking water, the potential for hydrocarbon migration and disclosure of the chemicals used in fracturing. For example, several states, such as Colorado, have implemented rules requiring hydraulic fracturing operators to sample ground- and surface waters near proposed well sites before operations can begin, and to sample the same sites again after fracturing operations are complete. A majority of states around the country, including Colorado and Texas, have also adopted some form of fracturing fluid disclosure law to compel disclosure of fracturing fluid ingredients and additives that are not subject to trade secret protection. Other states, such as Ohio and Texas, have begun to study potential seismic risks related to underground injection of fracturing fluids. Any enforcement actions or requirements of additional studies or investigations by governmental authorities where we operate could increase our operating costs and cause delays or interruptions of our operations.

At this time, it is not possible to estimate the potential impact on our business of these state and local actions or the enactment of additional federal or state legislation or regulations affecting hydraulic fracturing.

Other Laws

The Oil Pollution Act of 1990, as amended (“OPA”), establishes strict liability for owners and operators of facilities that are the site of a release of oil into waters of the United States. The OPA and its associated regulations impose a variety of requirements on responsible parties related to the prevention of oil spills and liability for damages resulting from such spills. A “responsible party” under the OPA includes owners and operators of certain onshore facilities from which a release may affect waters of the United States. The OPA assigns liability to each responsible party for oil clean-up costs and a variety of public and private damages. While liability limits apply in some circumstances, a party cannot take advantage of liability limits if the spill was caused by gross negligence or willful misconduct or resulted from violation of a federal safety, construction or operating regulation. If the party fails to report a spill or to cooperate fully in the clean-up, liability limits likewise do not apply. Few defenses exist to the liability imposed by the OPA. The OPA imposes ongoing requirements on a responsible party, including the preparation of oil spill response plans and proof of financial responsibility to cover environmental clean-up and restoration costs that could be incurred in connection with an oil spill.

The National Environmental Policy Act of 1969, as amended (“NEPA”), requires federal agencies to evaluate major agency actions having the potential to significantly impact the environment before their commencement. Generally, federal agencies must prepare either an environmental assessment or an environmental impact statement, depending on whether the specific circumstances surrounding the proposed federal action will have a significant impact on the environment. The NEPA process involves significant public input through comments on alternatives to the proposed project or resource-specific mitigation options for the project. NEPA decisions can be and often are appealed through the administrative and federal court systems by process participants. Environmental groups in the United States have increasingly focused on the required public consultation process under NEPA as a forum for voicing concerns over continued development of fossil fuel energy sources in the

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United States and for seeking expansive environmental reviews of projects that relate to the production, transportation, or combustion of these fuels, including evaluating the impacts of projects on climate change. Although we believe that our actions do not typically trigger NEPA analysis, should we ever be subject to NEPA, the process could result in delaying the permitting and development of projects, increase the costs of permitting and developing some facilities and result in certain instances in litigation and/or the cancellation of certain leases.

Industry Segment and Geographic Information

We operate in one industry segment, which is the exploration, development and production of oil, NGLs and natural gas. Our current operational activities and consolidated revenues are generated from markets exclusively in the U.S., and we have no long lived assets located outside the U.S.

Employees

As of September 30, 2015, we had approximately 53 employees, including seven engineers and geoscientists, five land professionals and eighteen field operating personnel. None of these employees are represented by labor unions or covered by any collective bargaining agreement. We believe that our relations with our employees are satisfactory.

We also contract for the services of independent consultants involved in land, engineering, regulatory, accounting, financial and other disciplines as needed.

Facilities

We lease approximately 16,000 square feet of office space at Suite 200, 600 Bailey Avenue, Fort Worth, Texas, where our principal offices are located. We maintain field offices in Atascosa County, Texas and Albany, Texas.

Item 1A. Risk Factors.

An investment in our common stock involves significant risks. You should carefully consider the risks described below and the other information in this document before you decide to invest in our common stock. If any of the following risks actually occurs, our business, prospects, financial condition and results of operations could be materially affected, the trading price of our common stock could decline and you could lose all or part of your investment.

Risks Related to the Oil and Natural Gas Industry and Our Business

Oil, natural gas and NGL prices are volatile. A substantial or extended decline in the price of these commodities may adversely affect our business, financial condition or results of operations and our ability to meet our capital expenditure obligations and financial commitments.

Our revenues, profitability, liquidity, ability to access capital and future growth prospects are highly dependent on the prices we receive for our oil, natural gas and NGLs. The prices of these commodities are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil, natural gas and NGLs have been volatile, and this volatility may continue in the future. The prices we receive for our production and the levels of our production depend on numerous factors beyond our control. These factors include:

· general worldwide and regional economic and political conditions;

· the domestic and global supply of, and demand for, oil, natural gas and NGLs;

· the cost of exploring for, developing, producing and marketing oil, natural gas and NGLs;

· the proximity, capacity, cost and availability of oil, natural gas and NGL pipelines and other transportation facilities;

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· the price and quantity of imports of foreign oil, natural gas and NGLs;

· the level of global oil, natural gas and NGL exploration and production;

· the level of global oil, natural gas and NGL inventories;

· weather conditions and natural disasters;

· domestic and foreign governmental laws, regulations and taxes;

· volatile trading patterns in commodities futures markets;

· price and availability of competitors’ supplies of oil, natural gas and NGLs;

· the actions of the Organization of Petroleum Exporting Countries (“OPEC”) and the ability of OPEC and other producing nations to agree to and maintain production levels;

· technological advances affecting energy consumption; and

· the price and availability of alternative fuels.

Further, oil, natural gas and NGL prices do not necessarily fluctuate in direct relationship to each other. Because approximately 76% of our estimated proved reserves as of December 31, 2014 was attributed to oil, our financial results are more sensitive to movements in oil prices.

As of September 30, 2015, we had commodity price hedging agreements on approximately 54% of our expected production for 2016 or 2,276 Boe/d. To the extent we are unhedged, we have significant exposure to adverse changes in the prices of oil and natural gas that could materially and adversely affect our business and results of operations.

The decline in the SEC mandated oil price for use in PV-10 calculations from $94.99 per barrel to $50.13 per barrel is expected to have a material reduction in the PV-10 valuation of our proved reserves. We believe that PV-10 is an important measure that can be used to evaluate the relative significance of our oil and natural gas properties and that PV-10 is widely used by securities analysts and investors when evaluating oil and gas companies.

WTI oil prices have declined from over $100 per barrel in September 2014 to under $40 per barrel currently. Such a decline in oil price, if sustained, will have a material impact on our annual revenues and has caused us to take actions to reduce the costs of drilling and our operations. For example, we have moderated our 2016 drilling plan by reducing the number of wells planned from 16 wells in 2015 to 10 wells planned for 2016, with a capital budget of $57.2 million, in order to ensure our drilling budget is broadly matched by our operating cash flows.

Prolonged further sustained declines in oil, natural gas or NGL prices may act to reduce our cash flows further and adversely affect our financial condition. Our liquidity would be reduced, our access to equity or long-term debt might be restricted, and our ability to meet our capital expenditure obligations and financial commitments might be adversely affected. We may choose to defer drilling activity and/or production from existing wells for a number of reasons, including the following:

· drilling activity is sanctioned on the expectation of matching the drilling budget with operating cash flows and securing reasonable rates of returns based on the then prevailing oil, natural gas and NGL prices; if those prices decline and operating cash flows are reduced, there is a risk that drilling may be curtailed or postponed; and

· operating costs on our Eagle Ford properties are so low that production from these properties would likely continue to contribute to cash flows, but we may choose to defer production in the event that we consider there may be greater value in producing later.

Furthermore, prolonged sustained further declines in oil, natural gas or NGL prices may reduce the amount of our estimated oil, natural gas and NGL reserves, the carrying value of our oil, natural

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gas and NGL reserves, the PV-10 valuations of our oil, natural gas and NGL reserves, and the standardized measure relating to oil, natural gas and NGL reserves.

Our future revenues are dependent on our ability to successfully replace our proved producing reserves.

Our business strategy is to generate profit through the acquisition, exploration, development and production of crude oil and natural gas reserves. Future success therefore depends on our ability to find, develop or acquire additional crude oil and natural gas reserves that are economically recoverable. Further to this, our proved reserves generally decline when produced, unless we conduct successful exploration or development activities or acquire properties containing proved reserves or both. We may not be able to find, develop or acquire additional reserves on an economically viable basis. Furthermore, if crude oil and natural gas prices increase, the cost of finding, developing or acquiring additional reserves could also increase.

Exploration and development activities involve numerous risks, including the risk that no commercially productive oil or natural gas reservoirs will be discovered. In addition, the future cost and timing of drilling, completing and operating wells is often uncertain. Furthermore, drilling operations may be curtailed, delayed or cancelled as a result of a variety of factors, including:

· lack of prospective acreage available on acceptable terms;

· unexpected or adverse drilling conditions;

· elevated pressure or irregularities in geologic formations;

· equipment failures or accidents;

· adverse weather conditions;

· title problems;

· limited availability of financing upon acceptable terms;

· reductions in oil, NGLs and natural gas prices;

· compliance with governmental requirements; and

· shortages or delays in the availability of drilling rigs, equipment and personnel.

Even if our drilling efforts are successful, our wells, once completed, may not produce reserves of crude oil, NGLs or natural gas that are economically viable or that meet our prior estimates of economically recoverable reserves. Unsuccessful drilling activities could result in a significant decline in our production and revenues and materially harm our operations and financial position by reducing our available cash and liquidity. In addition, the potential for production decline rates for our wells could be greater than we expect. Because of the risks and uncertainties inherent to our businesses, our future drilling results may not be comparable to our historical results.

Our exploration, development and exploitation projects require substantial capital expenditures. We may be unable to obtain needed capital or financing on satisfactory terms, which could lead to a decline in our oil and natural gas reserves with resulting adverse effects on our cash flow and liquidity.

The oil and natural gas industry is capital intensive. We currently make, and expect to continue to make, substantial capital expenditures for the acquisition, development and exploration of oil, natural gas and NGL reserves. We expect total capital expenditures under our 2016 capital program to be approximately $57.6 million and be allocated to the drilling and completion of 10 wells across our properties in the Eagle Ford Shale and construction and installation of associated infrastructure. We expect to fund our 2016 capital expenditures with cash generated by operations.

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The actual amount and timing of our future capital expenditures may differ materially from our estimates as a result of, among other things, crude oil and natural gas 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:

· our proved reserves;

· the amount of crude oil, natural gas and NGLs we are able to produce from existing wells;

· the prices at which our crude oil, natural gas and NGLs are sold;

· the costs at which our crude oil, natural gas and NGLs are extracted;

· global credit and securities markets;

· the ability and willingness of lenders and investors to provide capital and the cost of the capital; and

· our ability to acquire, locate and produce new reserves.

If our revenues or the borrowing base under our revolving credit facility decreases as a result of lower crude oil and natural gas 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 and growth 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. If cash flow generated by our operations or available borrowings under our revolving 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 would adversely affect our business, financial condition and results of operations.

Operating hazards, natural disasters or other interruptions of our operations could result in potential liabilities, which may not be fully covered by our insurance.

The oil and natural gas business involves operating hazards such as:

· well blowouts;

· mechanical failures;

· explosions;

· pipe or cement failures and casing collapses, which could release natural gas, oil, drilling fluids or hydraulic fracturing fluids;

· uncontrollable flows of oil, natural gas or well fluids;

· fires;

· geologic formations with abnormal pressures;

· handling and disposal of materials, including drilling fluids and hydraulic fracturing fluids;

· pipeline ruptures or spills;

· releases of toxic gases; and

· other environmental hazards and risks.

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Any of these hazards and risks can result in the loss of hydrocarbons, environmental pollution, personal injury claims and other damage to our properties and the property of others.

We maintain insurance against losses and liabilities in accordance with customary industry practices and in amounts that our management believes to be prudent. However, insurance against all operational risks is not available to us. We do not carry business interruption insurance. We may elect not to carry insurance if our management believes that the cost of available insurance is excessive relative to the risks presented.

In addition, losses could occur for uninsured risks or in amounts in excess of existing insurance coverage. We cannot insure fully against pollution and environmental risks. We cannot assure investors that we will be able to maintain adequate insurance in the future at rates we consider reasonable or that any particular types of coverage will be available. The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial position and results of operations.

Our planned exploratory drilling involves drilling in existing or emerging shale plays using the latest available horizontal drilling and completion techniques, which are subject to risks. As a result, drilling results may not meet our expectations for reserves or production.

Our operations involve utilizing the latest drilling and completion techniques as developed by us and our service providers in order to maximize cumulative recoveries and therefore generate the highest possible returns. Risks that we face while drilling include, but are not limited to:

· landing our well bore in the desired formation;

· staying in the desired formation while drilling horizontally through the formation;

· running our casing the entire length of the well bore; and

· being able to run tools and other equipment consistently through the well bore.

Risks that we face while completing our wells include, but are not limited to:

· being able to fracture stimulate the planned number of stages;

· being able to run tools the entire length of the well bore during completion operations; and

· successfully cleaning out the well bore after completion of the final fracture stimulation stage.

The results of our 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. Newer or emerging formations and areas have limited or no production history and, consequently, we are less able to predict future drilling results in these areas.

Ultimately, the success of these drilling and completion techniques can only be evaluated as more wells are drilled and production profiles are established over a sufficiently long time period. If our drilling results are less than anticipated or we are unable to execute our drilling program because of capital constraints, lease expirations, access to gathering systems and limited takeaway capacity or otherwise and/or crude oil and natural gas prices decline, the return on our investment in these areas may not be as attractive as we anticipate. Further, as a result of any of these developments we could incur material write-downs of our oil and natural gas properties and the value of our undeveloped acreage could decline in the future.

SEC rules could limit our ability to book additional PUDs in the future .

SEC rules require that, subject to limited exceptions, our PUDs may only be booked if they relate to wells scheduled to be drilled within five years after the date of booking. This requirement

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limits our ability to book additional PUDs as we pursue our drilling program. Moreover, we may be required to write down our PUDs if we do not drill those wells within the required five-year time frame.

Our identified drilling locations are scheduled to be developed over several 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 final determination of whether to drill any scheduled or budgeted wells will be dependent on a number of factors, including:

· the ongoing review and analysis of geologic and engineering data;

· the availability of sufficient capital resources to us and the other participants for drilling and completing of the prospects;

· the approval of the prospects by other participants once additional data has been compiled;

· economic and industry conditions at the time of drilling, including prevailing and anticipated prices for crude oil and natural gas and the availability and prices of drilling rigs and personnel;

· the ability to maintain, extend or renew leases and permits on reasonable terms for the prospects; and

· the opportunity to divert our drilling budget to preferred prospects on acquired acreage or to secure other acreage by farming in.

Although we have identified or budgeted for numerous drilling prospects, we may not be able to lease or drill those prospects within our expected time frame or at all. Wells that are currently part of our capital plan may be based on results of drilling activities in other areas that we believe are geologically similar to a prospect rather than on analysis of seismic or other data in the prospect area, in which case actual drilling and results are likely to vary, possibly materially, from results in other areas. In addition, our drilling schedule may vary from our expectations because of future uncertainties. In addition, our ability to produce oil and natural gas may be significantly affected by the availability and prices of hydraulic fracturing equipment and personnel.

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 locations represent a significant part of our growth strategy. Our ability to drill and develop these locations depends on a number of uncertainties, including crude 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 potential well 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 potential locations. In addition, unless production is established within the spacing units covering the undeveloped acres on which some of the potential locations are obtained, the leases for such acreage will expire. Therefore, our actual drilling activities may materially differ from those presently identified.

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. Any drilling activities we are able to conduct on these potential 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.

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A large proportion of our total estimated proved reserves at December 31, 2014 was undeveloped. The development of our estimated proved undeveloped reserves may take longer and may require higher levels of capital expenditures than we currently anticipate. Therefore, our estimated proved undeveloped reserves may not be ultimately developed or produced.

At December 31, 2014, approximately 60% of our total estimated reserves were classified as proved undeveloped. Recovery of undeveloped reserves requires successful drilling and incurrence of significant capital expenditures. Our approximately 18.6 MMBoe of estimated proved undeveloped reserves will require an estimated $315 million of development capital over the next five years. Development of these 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 PV-10 value of our estimated proved undeveloped reserves 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 proved undeveloped reserves as unproved reserves.

Further, our reserves data assume that we can and will make these expenditures and that these operations will be conducted successfully. These assumptions, however, may not prove correct. If we choose not to spend the capital to develop these reserves, or if we are not otherwise able to successfully develop these reserves, we will be required to write them off. Any such write-offs of our reserves could reduce our ability to borrow and adversely affect our liquidity.

Our producing properties are located primarily in the Eagle Ford Shale of South Texas, making us vulnerable to risks associated with operating in one geographic area.

Approximately 90% of our production during the nine months ended September 30, 2015 was derived from our properties in the Eagle Ford Shale region of South Texas. As a result of this geographic concentration, we may be disproportionately exposed to the effect of regional supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation capacity constraints, market limitations, weather events or interruption of the processing or transportation of crude oil or natural gas. Additionally, we may be exposed to additional risks, such as changes in field-wide rules and regulations that could cause us to permanently or temporarily shut-in many or all of our wells within the Eagle Ford Shale.

Approximately 82% of our net Eagle Ford Shale leasehold acreage is undeveloped, and that acreage may not ultimately be developed or become commercially productive, which could cause us to lose rights under our leases as well as have a material adverse effect on our crude oil, natural gas and NGLs reserves and future production and, therefore, our future cash flow and income.

Approximately 82% of our net Eagle Ford Shale leasehold acreage is undeveloped, or acreage on which wells have not been drilled or completed to a point that would permit the production of commercial quantities of crude oil, natural gas and NGLs regardless of whether such acreage contains proved reserves. Unless production is established on the undeveloped acreage covered by our leases, such leases will expire. Our future crude oil, natural gas and NGLs reserves and production and, therefore, our future cash flow and income are highly dependent on successfully developing our undeveloped leasehold acreage.

Our estimated proved reserves are based on many assumptions that may turn out to be inaccurate and any significant inaccuracies in these reserve estimates or underlying assumptions could materially affect the quantities and present value of our reserves.

There are uncertainties inherent in estimating crude oil and natural gas reserves and their estimated value, including many factors beyond our control. The reserve data in this registration statement represent only estimates. Reservoir engineering is a subjective and inexact process of estimating underground accumulations of crude oil and natural gas that cannot be measured in an exact manner and is based on assumptions that may vary considerably from actual results. Reservoir

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engineering also requires economic assumptions about matters such as crude oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. Accordingly, actual production, crude oil and natural gas prices, revenue, taxes, operating expenses, expenditures and quantities of recoverable crude oil and natural gas reserves will likely vary, possibly materially, from estimates. Any significant variance in our estimates or the accuracy of our assumptions could materially affect the estimated quantities and present value of reserves shown in this registration statement.

Certain of our oil producing properties are located on the Fort Peck Reservation, making us vulnerable to risks associated with tribal sovereignty laws and regulations pertaining to the operation of oil and gas properties on Native American tribal lands.

Certain of our oil and natural gas properties are located on the Fort Peck Reservation in Montana, or the “Reservation.” Operation of oil and natural gas interests on Native American tribal lands presents unique considerations and complexities that arise from the fact that Native American tribes are “dependent” sovereign nations located within states but are subject only to tribal laws and treaties with, and the laws and Constitution of, the United States. This creates an overlay of three jurisdictional regimes — Native American, federal and state. These considerations and complexities could arise around various aspects of our operations, including real property considerations, permitting, employment practices, environmental matters and taxes.

Furthermore, because tribal property is considered to be held in trust by the federal government, before we can take actions such as drilling, pipeline installation or similar actions, we are required to obtain approvals from various federal agencies, including the Bureau of Indian Affairs and the Bureau of Land Management. We are also required to obtain approvals from the Tribe for surface use access on certain of our properties. Gaining these approvals could result in delays in implementation of, or otherwise prevent us from implementing, our development program.

We have limited control over activities in properties we do not operate, which could reduce our production and revenues and could increase our costs.

We utilize joint operating agreements on certain of our conventional oil, natural gas and NGL properties where we have less than 100% working interest. These non-operated activities in aggregate are expected to account for approximately 3% of our group production in 2015. Other companies may be operators under these joint operating agreements and, as a non-operating working interest owner, we will be dependent to a degree on the efficient and effective management of the operators. The objectives and strategy of those operators may not always be consistent with our objectives and strategy. As a result, we have limited ability to exercise influence over, and control the risks associated with, operations of these properties. The failure of an operator of our wells to adequately perform operations, an operator’s breach of the applicable agreements or an operator’s failure to act in ways that are in our best interests could reduce our production and revenues from our conventional assets or could create liability for the operator’s failure to properly maintain the well and facilities and to adhere to applicable safety and environmental standards.

Such events could significantly and adversely affect our anticipated exploration and development activities of our non-operated properties. Under our joint operating agreements, we will be required to pay our percentage interest share of all costs and liabilities incurred by the operator on behalf of the working interest owners in connection with joint venture activities. In common with other working interest owners, if we fail to pay our share of any costs and liabilities, we may be deemed to have elected non-participation with respect to operations affected and may be subject to loss of interest through foreclosure of operator liens invoked by participating working interest owners and subject us to non-consent penalties.

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

The loss of one or more of these purchasers could limit our access to suitable markets for the crude oil, natural gas and NGLs we produce. The availability of a ready market for any crude oil, natural gas and/or NGLs we produce depends on numerous factors beyond the control of our management, including but not limited to the extent of domestic production and imports of crude oil, the proximity and capacity of pipelines, the availability of skilled labor, materials and equipment, the effect of state and federal regulation of crude oil and natural gas production and federal regulation of crude oil, natural gas and NGLs sold in interstate commerce. We cannot assure you that we will continue to have ready access to suitable markets for our future crude oil, natural gas and NGL production.

The present value of future net revenues from our proved reserves will not necessarily be the same as the current market value of our estimated oil and natural gas reserves.

The discounted future net cash flows in this registration statement are not necessarily the same as the current market value of our estimated crude oil and natural gas reserves. As required by the current requirements for crude oil and natural gas reserve estimation and disclosures, the estimated discounted future net cash flows from proved reserves are based on the average of the sales price on the first day of each month in the applicable year, with costs determined as of the date of the estimate. Actual future net cash flows also will be affected by various factors, including:

· the actual prices we receive for crude oil and natural gas;

· our actual operating costs in producing crude oil and natural gas;

· the amount and timing of actual production;

· supply and demand for crude oil and natural gas;

· increases or decreases in consumption of crude oil and natural gas; and

· changes in governmental regulations or taxation.

In addition, the 10% discount factor we use when calculating discounted future net cash flows for reporting requirements may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and gas industry in general.

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

Because crude oil and natural gas prices are subject to volatility, we may periodically enter into price-risk-management transactions such as fixed-rate swaps, costless collars, puts, calls and basis differential swaps to reduce our exposure to price declines associated with a portion of our oil and natural gas production and thereby achieve a more predictable cash flow. The use of these arrangements limits our ability to benefit from increases in the prices of crude oil and natural gas. Our derivative arrangements may apply to only a portion of our production, thereby providing only partial protection against declines in crude oil and natural gas prices.

These arrangements may expose us to the risk of financial loss in certain circumstances, including instances in which production is less than expected, our customers fail to purchase contracted quantities of crude oil and natural gas or a sudden, unexpected event materially impacts crude oil or natural gas prices. In addition, the counterparties under our derivatives contracts may fail to fulfill their contractual obligations to us.

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If crude oil and natural gas prices decrease, we may be required to write-down the carrying values of our crude oil and natural gas properties.

We review our proved crude 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. Based on 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 crude oil and natural gas properties, which may result in a decrease in the amount we can borrow under our credit facilities. A write-down constitutes a non-cash charge to earnings. We may incur impairment charges in the future, which could have a material adverse effect on our ability to borrow under our credit facilities and adversely impact our results of operations for the periods in which such charges are taken.

Our inability to market our crude oil and natural gas could adversely affect our business.

Market conditions or the unavailability of satisfactory crude oil and natural gas transportation arrangements may hinder our access to crude oil and natural gas markets or delay production. The availability of a ready market for our crude oil and natural gas production depends on a number of factors, including the demand for and supply of crude oil and natural gas and the proximity of reserves to pipelines and gathering facilities. Our ability to market our production depends in substantial part on the availability and capacity of gathering systems, pipelines and processing facilities owned and operated by third parties. Our failure to obtain such services on favorable terms could adversely impact our business and results of operations.

Our productive properties may be located in areas with limited or no access to pipelines, thereby requiring compression facilities or delivery by other means, such as trucking and train. Such restrictions on our ability to sell our crude oil or natural gas may have several adverse effects, including higher transportation costs, fewer potential purchasers (thereby potentially resulting in a lower selling price) or, in the event we were unable to market and sustain production from a particular lease for an extended period of time, possibly causing us to lose a lease due to the lack of commercially established production.

We generally deliver our crude oil and natural gas production through gathering systems and pipelines that we do not own under interruptible or short-term transportation agreements. Under the interruptible transportation agreements, the transportation of our crude oil and natural gas production may be interrupted due to capacity constraints on the applicable system, for maintenance or repair of the system or for other reasons as dictated by the particular agreements. We may also enter into firm transportation arrangements for additional production in the future. Because we are obligated to pay fees on minimum volumes to our service providers under these agreements regardless of actual volume throughput, these firm transportation agreements may be significantly more costly than interruptible or short-term transportation agreements, which could adversely affect our business and results of operations.

A portion of our crude oil and natural gas production in any region may be interrupted, or shut in, from time to time for numerous reasons, including as a result of weather conditions, accidents, loss of pipeline or gathering system access, or field personnel issues or strikes. We may also voluntarily curtail production in response to market conditions. If a substantial amount of our production is interrupted or curtailed, it could adversely affect our business and results of operations.

The terms of our revolving credit facility and the indenture that governs our 8.75% Senior Notes due 2019 may restrict our operations, particularly our ability to respond to changes or to take certain actions.

The indenture that governs our 8.750% Senior Notes due 2019 and our revolving credit facility contain a number of restrictive covenants that impose significant operating and financial restrictions

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on us and may limit our ability to engage in acts that may be in our long-term best interest, including restrictions on our ability, subject to satisfaction of certain conditions, to:

· incur additional indebtedness and guarantee indebtedness;

· pay dividends or make other distributions or repurchase or redeem capital stock;

· prepay, redeem or repurchase certain debt;

· issue certain preferred stock or similar equity securities;

· make loans and investments;

· sell assets;

· incur liens;

· enter into transactions with affiliates;

· alter the businesses we conduct;

· enter into agreements restricting our subsidiaries’ ability to pay dividends; and

· consolidate, amalgamate, merge or sell all or substantially all of our assets.

In addition, the restrictive covenants in our revolving credit facility require us to maintain specified financial ratios and satisfy other financial condition tests. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and we may be unable to meet them.

A breach of the covenants or restrictions under the indenture that governs the notes or under our revolving credit facility could result in an event of default under the applicable indebtedness. Such a default may allow the creditors to accelerate the related debt and may result in the acceleration of any other debt to which a cross-acceleration or cross-default provision applies. In the event our lenders or holders of the notes accelerate the repayment of our borrowings, we and our subsidiaries may not have sufficient assets to repay that indebtedness.

As a result of these restrictions, we may be:

· limited in how we conduct our business;

· unable to raise additional debt or equity financing to operate during general economic or business downturns; or

· unable to compete effectively or to take advantage of new business opportunities.

These restrictions may affect our ability to grow in accordance with our strategy. In addition, our financial results, our substantial indebtedness and our credit ratings could adversely affect the availability and terms of our financing.

Our level of indebtedness may increase, reducing our financial flexibility.

We intend to fund our capital expenditures in 2016 through cash flow from operations and beyond 2016, if necessary, from borrowings under our credit facilities as well as debt or equity financings. Our ability to make the necessary capital investment to maintain or expand our asset base and develop oil and natural gas reserves will be impaired if cash flow from operations is reduced and external sources of capital become limited or unavailable. If we incur additional debt for these or other purposes, the related risks that we now face could intensify. Our level of debt could adversely affect our business and results of operations in several important ways, including the following:

· a portion of our cash flow from operations would be used to pay interest on borrowings;

· the covenants contained in our credit facilities limit our ability to borrow additional funds, pay dividends, dispose of assets or issue shares of preferred stock and otherwise may affect

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our flexibility in planning for, and reacting to, changes in general business and economic conditions;

· a high level of debt may impair our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate or other purposes;

· a leveraged financial position would make us more vulnerable to economic downturns and decreases in commodity prices and could limit our ability to withstand competitive pressures; and

· a debt that we incur under our credit facilities will be at variable rates, which could make us vulnerable to an increase in interest rates.

Increased costs of capital could adversely affect our business.

Our business and operating results can be adversely affected by factors such as the availability, terms and cost of capital and increases in interest rates. Changes in any one or more of these factors could cause our cost of doing business to increase, limit our access to capital, limit our ability to pursue acquisition opportunities, reduce our cash flows available for drilling and place us at a competitive disadvantage. Disruptions in the global financial markets may lead to an increase in interest rates or a contraction in credit availability, which would impact our ability to finance our operations. We will require continued access to capital for the foreseeable future. A significant reduction in the availability of credit could materially and adversely affect our business, results of operations and financial condition.

Competition in the crude oil and natural gas industry is intense and many of our competitors have resources that are greater than ours.

The oil and natural gas industry is highly competitive. Public integrated and independent oil and gas companies, private equity backed and private operators are all active bidders for desirable crude oil and natural gas properties as well as the equipment and personnel required to operate those properties. Many of these companies have substantially greater financial resources, staff and facilities than we do. There is a risk that increased industry competition will adversely impact our ability to purchase assets or secure services at prices that will allow us to generate sufficient returns on investment in the future.

The loss of any of our key personnel could adversely affect our business, financial condition, the results of operations and future growth.

We are reliant on a number of key members of our executive management team. Loss of such personnel may have an adverse effect on our performance. Certain areas in which we operate are highly competitive regions and competition for qualified personnel is intense. We may be unable to hire suitable field personnel for our technical team or there may be periods of time where a particular position remains vacant while a suitable replacement is identified and appointed. Our ability to manage our growth will require us to continue to train, motivate and manage our employees and to attract, motivate and retain additional qualified personnel. We may not be successful in attracting and retaining the personnel required to grow and operate our business profitably.

Our ability to manage growth will have an impact on our business, financial condition and results of operations.

Our growth historically has been achieved through the acquisition of leaseholds and the expansion of our drilling programs. Future growth may place strains on our financial, technical, operational and administrative resources and cause us to rely more on project partners and independent contractors, potentially adversely affecting our financial position and results of operations. Our ability to grow will depend on a number of factors, including:

· our ability to obtain leases or options on properties;

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· our ability to identify and acquire new exploratory prospects;

· our ability to develop existing prospects;

· our ability to continue to retain and attract skilled personnel;

· our ability to maintain or enter into new relationships with project partners and independent contractors;

· the results of our drilling programs;

· commodity prices; and

· our access to capital.

We may not be successful in upgrading our technical, operational and administrative resources or increasing our internal resources sufficiently to provide certain of the services currently provided by third parties, and we may not be able to maintain or enter into new relationships with project partners and independent contractors on financially attractive terms, if at all. Our inability to achieve or manage growth may materially and adversely affect our business, results of operations and financial condition.

We may incur losses as a result of title deficiencies.

We may lose title to, or interests in, our leases and other properties if the conditions to which those interests are subject are not satisfied or if insufficient funds are available to meet the commitments.

The existence of title differences with respect to our crude oil and natural gas properties could reduce their value or render such properties worthless, which would have a material adverse effect on our business and financial results. We do not obtain title insurance and have not necessarily obtained drilling title opinions on all of our crude oil and natural gas properties. As is customary in the industry in which we operate, we generally rely upon the judgment of crude oil and natural gas lease brokers or independent landmen who perform the field work in examining records in the appropriate governmental offices and abstract facilities before attempting to acquire or place under lease a specific mineral interest and before drilling a well on a leased tract, and we generally make title investigations and receive title opinions of local counsel before we commence drilling operations. In some cases, we perform curative work to correct deficiencies in the marketability or adequacy of the title assigned to us. In cases involving more serious title problems, the amount paid for affected crude oil and natural gas leases can be lost, and the target area can become undrillable. While we undertake to cure all title deficiencies prior to drilling, the failure of title may not be discovered until after a well is drilled, in which case we may lose the lease, our investment in the well and the right to produce all or a portion of the minerals under the property. A significant portion of our acreage is undeveloped leasehold, which has a greater risk of title defects than developed acreage.

Our operations are subject to health, safety and environmental laws and regulations that may expose us to significant costs and liabilities.

The conduct of exploration for, and production of, hydrocarbons may expose our staff to potentially dangerous working environments. Occupational health and safety legislation and regulations differ in each jurisdiction. If any of our employees suffer injury or death, compensation payments or fines may have to be paid, and such circumstances could result in the loss of a license or permit required to carry on the business, or other legislative sanction, all of which have the potential to materially and adversely affect our business, results of operations and financial condition.

There is an inherent risk of incurring significant environmental costs and liabilities in the performance of our operations, some of which may be material, due to our handling of petroleum hydrocarbons and wastes, our emissions to air and water, the underground injection or other disposal of our wastes and historical industry operations and waste disposal practices. Under certain

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environmental laws and regulations, we may be liable, regardless of whether we were at fault, for the full cost of removing or remediating contamination, even when multiple parties contributed to the release and the contaminants were released in compliance with all applicable laws. In addition, accidental spills or releases on our properties may expose us to significant liabilities that could have a material adverse effect on our financial condition and results of operations. Aside from government agencies, the owners of properties where our wells are located, the operators of facilities where our petroleum hydrocarbons or wastes are taken for reclamation or disposal and other private parties may be able to sue us to enforce compliance with environmental laws and regulations, as well as collect penalties for violations or obtain damages for any related personal injury or property damage. Some sites we operate are located near current or former third-party oil and natural gas operations or facilities, and there is a risk that contamination has migrated from those sites to ours. Changes in environmental laws and regulations occur frequently, and any changes that result in more stringent or costly material handling, emission, waste management or clean-up requirements could require us to make significant expenditures to attain and maintain compliance or may otherwise materially and adversely affect our business, results of operations and financial condition. We may not be able to recover some or any of these costs from insurance.

In addition, our operations and financial performance may be adversely affected by governmental action, including delay, inaction, policy change or the introduction of new, or amendment of or changes in interpretation of existing legislation or regulations, particularly in relation to access to infrastructure, environmental regulation (including in respect of carbon emissions and management), royalties and production and exploration licensing. Federal and state regulators are increasingly targeting greenhouse gas emissions from oil and gas operations. While these regulatory efforts are evolving, they may require the installation of emission controls or mandate other action that may result in increased costs of operation, delay, uncertainty or exposure to liability.

Hydraulic fracturing, which is the process used for releasing hydrocarbons from shale rock, has recently come under increased scrutiny and could be the subject of further regulation that could impact the timing and cost of development.

Hydraulic fracturing is an important and commonly used process in the completion of unconventional crude oil and natural gas wells. Hydraulic fracturing involves the injection of water, sand and chemicals under pressure into deep rock formations to stimulate crude oil or natural gas production. Currently, hydraulic fracturing is primarily regulated in the United States at the state level, which generally focuses on regulation of well design, pressure testing and other operating practices. However, some states and local jurisdictions across the United States, including states in which we operate, have begun adopting more restrictive regulation, including measures such as:

· required disclosure of chemicals used during the hydraulic fracturing process;

· restrictions on wastewater disposal activities;

· required baseline and post-drilling sampling of water supplies in close proximity to hydraulic fracturing operations;

· new municipal or state land use regulations, such as changes in setback requirements, which may restrict drilling locations or related activities;

· financial assurance requirements, such as the posting of bonds, to secure site restoration obligations; and

· local moratoria or even bans on crude oil and natural gas development utilizing hydraulic fracturing in some communities.

At the U.S. federal level, hydraulic fracturing that does not involve the use of diesel fuels is exempt from regulation under the Safe Drinking Water Act (“SDWA”). However, the United States Congress (“Congress”) has considered and likely will continue to consider eliminating this regulatory exemption, which could subject hydraulic fracturing activities to regulation and permitting by the

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Environmental Protection Agency (“EPA”) under the SDWA. Congressional action will be informed by a study commenced in 2011 by the EPA on the impacts of hydraulic fracturing on drinking water resources, with final results anticipated in 2016. Despite the existing exemption, the EPA has begun utilizing other legal authorities in various ways to regulate portions of the hydraulic fracturing process, exemplified by its issuance of regulations under the Clean Air Act limiting emission of pollutants during the hydraulic fracturing process, as well as its recent initiation of a proposed rulemaking under the Toxic Substances Control Act to obtain data on chemical substances and mixtures used in hydraulic fracturing. In addition, the United States Department of the Interior has proposed comprehensive regulations governing the use of hydraulic fracturing on federally managed lands.

These efforts by Congress, federal regulators, states and local governments could result in additional costs, delay and operational uncertainty that could limit, preclude or add costs to use of hydraulic fracturing in our drilling operations.

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

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

Our ability to produce crude oil and natural gas economically and in commercial quantities could be impaired if we are unable to acquire adequate supplies of water for our drilling operations or are unable to dispose of or recycle the water we use economically and in an environmentally safe manner.

Drilling activities require the use of water. For example, the hydraulic fracturing process that we employ to produce commercial quantities of oil and natural gas from many reservoirs, including the Eagle Ford, requires the use and disposal of significant quantities of water. In certain areas, there may be insufficient local aquifer capacity to provide a source of water for drilling activities. Water must be obtained from other sources and transported to the drilling site. The effects of climate change may further exacerbate water scarcity in certain regions.

Our inability to secure sufficient amounts of water, or to dispose of or recycle the water used in our operations, could adversely impact our operations in certain areas. Moreover, the imposition of new environmental initiatives and regulations could include restrictions on our ability to conduct certain operations such as hydraulic fracturing or disposal of waste, including, but not limited to, produced water, drilling fluids and other materials associated with the exploration, development or production of crude oil and natural gas. In particular, regulatory focus on disposal of produced water and drilling waste through underground injection has increased because of alleged links between such injection and regional seismic impacts in disposal areas.

Compliance with environmental regulations and permit requirements governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing of wells may increase our operating costs and cause delays, interruptions or termination of our operations, the extent of which cannot be predicted, all of which could materially and adversely affect our business, results of operations and financial condition.

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

The EPA finalized its New Source Performance Standard (“NSPS”) rule regulating carbon dioxide from new, modified and reconstructed fossil fuel-fired power plants and the Clean Power Plan

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for existing fossil fuel-fired power plants. While these rules will more negatively impact coal-fired power plants, natural gas-fired power plants may also face liability under the rules and increased costs of operation.

In August 2015, the EPA released proposed regulation intended to reduce methane emissions from the oil and gas industry, including throughout the natural gas supply chain. The methane regulations, once finalized could affect us indirectly by affecting our customer base or by directly regulating our operations. In either case, increased costs of operation and exposure to liability could result.

In addition, Congress has considered legislation to restrict or regulate emissions of greenhouse gases, such as carbon dioxide and methane that are understood to contribute to global warming. While comprehensive climate legislation will likely not be passed by either house of Congress in the near future, energy legislation and other initiatives continue to be proposed that may be relevant to greenhouse gas emissions issues. In addition, almost half of the states, either individually or through multi-state regional initiatives, have begun to address greenhouse gas emissions, primarily through the planned development of emission inventories or regional greenhouse gas cap and trade programs. Although most of the state-level initiatives have to date been focused on large sources of greenhouse gas emissions such as electric power plants, smaller sources could become subject to greenhouse gas-related regulation. Depending on the particular program, we could be required to control emissions or to purchase and surrender allowances for greenhouse gas emissions resulting from our operations. Any future federal laws or implementing regulations that may be adopted to address greenhouse gas emissions could require us to incur increased operating costs and could adversely affect demand for the oil and natural gas we produce.

Finally, increasing concentrations of greenhouse gases in the Earth’s atmosphere may produce climate changes that have significant physical effects, such as increased frequency and severity of storms, floods, droughts and other climatic events. If any such effects were to occur, they could have an adverse effect on our exploration and production operations. Significant physical effects of climate change could also have an indirect effect on our financing and operations by disrupting the transportation or process-related services provided by midstream companies, service companies or suppliers with whom we have a business relationship. We may not be able to recover through insurance some or any of the damages, losses, or costs that may result from potential physical effects of climate change.

Acts of terrorism (including eco-terrorism and cyber attacks) could have a material adverse effect on our financial condition, results of operations and cash flows.

Our assets and operations, and the assets and operations of our providers of gas gathering, processing, transportation and fractionation services, may be targets of terrorist activities (including eco-terrorist and cyber-terrorist activities) that could disrupt our business or cause significant harm to our operations, such as full or partial disruption to our ability to produce, process, transport, market or distribute natural gas, NGLs and oil. Acts of terrorism, as well as events occurring in response to or in connection with acts of terrorism, could cause environmental and other repercussions that could result in a significant decrease in revenues or significant reconstruction or remediation costs, which could have a material adverse effect on our financial condition, results of operations and cash flows. In addition, acts of terrorism, and the threat of such acts, could result in volatility in the prices for natural gas, NGLs and oil and could affect the markets for such commodities.

Certain federal income tax deductions currently available with respect to crude oil and natural gas exploration and development may be eliminated as a result of future legislation.

We are also subject to changing and extensive tax laws, the effects of which cannot be predicted. Certain legislation introduced in the Congress, if enacted into law, would make significant changes to U.S. tax laws, including, but not limited to, the elimination of certain key federal income tax incentives currently available to crude oil and natural gas exploration and production companies.

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These or any other similar changes in federal tax laws could defer or eliminate certain tax deductions that are currently available with respect to crude oil and natural gas exploration and development, and any such change could materially and adversely affect our business, results of operations and financial condition.

General economic conditions could adversely affect our business and future growth.

Instability in the global financial markets may have a material impact on our liquidity and financial condition, and we may ultimately face major challenges if conditions in the financial markets were to materially change or worsen. Our ability to access the capital markets or to borrow money may be restricted or may be more expensive at a time when we would need to raise capital, which could have an adverse effect on our flexibility to react to changing economic and business conditions and on our ability to fund our operations and capital expenditures in the future. Such economic conditions could have an impact on our customers, causing them to fail to meet their obligations to us. In addition, it could have an impact on the liquidity of our operating partners, resulting in delays in operations or their failure to make required payments.

Also, market conditions could have an impact on our crude oil and natural gas derivative instruments if our counterparties are unable to perform their obligations or seek bankruptcy protection, which could lead to reductions in the demand for crude oil and natural gas, or reductions in the prices of oil and natural gas or both, which could have an adverse impact on our financial position, results of operations and cash flows. While the ultimate outcome and impact of changing economic conditions cannot be predicted, they may materially and adversely affect our business, results of operations and financial condition.

Changes in the differential between benchmark prices of crude oil and natural gas and the reference or regional index price used to price our actual crude oil and natural gas sales could have a material adverse effect on our results of operations and financial condition.

The reference or regional index prices that we will use to price our crude oil and natural gas sales sometimes will reflect a discount to the relevant benchmark prices. The difference between the benchmark price and the price we reference in our sales contracts is called a differential. We cannot accurately predict crude oil and natural gas differentials. Changes in differentials between the benchmark price for crude oil and natural gas and the reference or regional index price we reference in our sales contracts could materially and adversely affect our business, results of operations and financial condition.

Recent federal legislation could have an adverse impact on our ability to use derivative instruments to reduce the effects of commodity prices, interest rates and other risks associated with our business.

Historically, we have entered into a number of commodity derivative contracts in order to hedge a portion of our crude oil and natural gas production. Under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Commodity Futures Trading Commission (“CFTC”) issued regulations setting position limits for certain futures and option contracts in the major energy markets and for swaps that are their economic equivalents. Certain bona fide hedging transactions are exempt from these limits. The position limits regulation was vacated by the United States District Court for the District of Columbia in September 2012. The CFTC has appealed the District Court’s decision and its Chairman has stated that the agency is working on developing a new proposed rulemaking to address position limits. The CFTC has finalized other regulations, including critical rulemakings on the “swap” and “swap dealer” definitions, swap dealer registration, swap data reporting and mandatory clearing, among others. The Dodd-Frank Act and CFTC rules also will require us in connection with certain derivatives activities to comply with clearing and trade-execution requirements (or take steps to qualify for an exemption to such requirements). In addition, new regulations may require us to comply with margin requirements although these regulations are not finalized and their application to us is uncertain at this time. The legislation may also require the counterparties to our derivative contracts to spin off some of their

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derivatives activities to a separate entity, which may not be as creditworthy as the current counterparty.

The new legislation and any new regulations could:

· significantly increase the cost of some derivative contracts (including through requirements to post collateral that could adversely affect our available liquidity);

· materially alter the terms of some derivative contracts;

· reduce the availability of some derivatives to protect against risks we encounter;

· reduce our ability to monetize or restructure our existing derivative contracts; and

· potentially increase our exposure to less creditworthy counterparties.

If we reduce our use of derivatives as a result of the new legislation and regulations, 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. Increased volatility may make us less attractive to certain types of investors. Finally, the Dodd-Frank Act was intended, in part, to reduce the volatility of crude oil and natural gas prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to crude oil and natural gas. If the new legislation and regulations result in lower commodity prices, our revenues could be adversely affected. Any of these consequences could adversely affect our financial condition and results of operations.

We may be subject to risks in connection with acquisitions, and the integration of significant acquisitions may be difficult.

In accordance with our business strategies, we periodically evaluate acquisitions of reserves, properties, prospects and leaseholds and other strategic transactions that appear to fit within our overall business strategy. The successful acquisition of producing properties requires an assessment of several factors, including:

· recoverable reserves;

· future crude oil and natural gas prices and their appropriate differentials;

· development and 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 potential recoverable reserves. Inspections may not always be performed on every well, and environmental problems 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.

Significant acquisitions and other strategic transactions may involve other risks, including:

· diversion of our management’s attention to evaluating, negotiating and integrating significant acquisitions and strategic transactions;

· the challenge and cost of integrating acquired operations, information management and other technology systems and business cultures with those of our operations while carrying on our ongoing business;

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· difficulty associated with coordinating geographically separate organizations; and

· the challenge of attracting and retaining personnel associated with acquired operations.

The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business. Our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our business. If our senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer.

In addition, even if we successfully integrate an acquisition, it may not be possible to realize the full benefits we may expect, including with respect to estimated proved reserves, production volume or cost savings from operating synergies, within our expected time frame. Anticipated benefits of an acquisition may also be offset by operating losses relating to changes in commodity prices in crude oil and natural gas industry conditions, risks and uncertainties relating to the exploratory prospects of the combined assets or operations, or an increase in operating or other costs or other difficulties. Failure to realize the benefits we anticipate from an acquisition may materially and adversely affect our business, results of operations and financial condition.

Our major shareholder could have conflicts of interest with us.

Ecofin Water & Power Opportunities PLC and affiliated entities own a majority of our outstanding shares of common stock, and Ecofin Water & Power Opportunities PLC designees hold two of the seats on our board of directors. As such, it has an influence over our decisions to enter into corporate transactions and could have the ability to prevent transactions that require the approval of our shareholders.

Risks Related to our Common Stock

An active trading market for our common stock may not develop on Nasdaq and the trading price for our common stock may fluctuate significantly.

While we have applied for the listing of our common stock on Nasdaq, a liquid public market may not develop or be sustained. If an active public market on Nasdaq for our common stock does not develop, the market price and liquidity of our shares may be materially adversely affected. In the past, following periods of volatility in the market price of a company’s securities, shareholders often instituted securities class action litigation against that company. If we were involved in a class action suit, it could divert the attention of senior management and, if adversely determined, could have a material adverse effect on our results of operations and financial condition.

The market price and trading volume of our common stock may be volatile and may be affected by economic conditions beyond our control.

The market price of our common stock may be highly volatile and could be subject to wide fluctuations. The market prices of securities of oil and gas exploration and production companies have often experienced fluctuations that have been unrelated or disproportionate to the operating results of these companies. In addition, the trading volume of our common stock may fluctuate and cause significant price variations to occur. If the market price of our common stock declines significantly, you may be unable to resell your shares at or above the purchase price, if at all. We cannot assure you that the market price of our shares will not fluctuate or significantly decline in the future.

Some specific factors that could negatively affect the price of our common stock or result in fluctuations in their price and trading volume include:

· actual or expected fluctuations in our operating results;

· actual or expected changes in our growth rates or our competitors’ growth rates;

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· changes in commodity prices for hydrocarbons we produce;

· changes in market valuations of similar companies;

· changes in our key personnel;

· potential acquisitions and divestitures;

· changes in financial estimates or recommendations by securities analysts;

· changes or proposed changes in laws and regulations affecting the oil and natural gas industry;

· changes in trading volume of our common stock on Nasdaq;

· sales of our common stock by us, our executive officers or our shareholders in the future;

· conditions in the crude oil and natural gas industry in general; and

· conditions in the financial markets or changes in general economic conditions.

We are an emerging growth company and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies may make the common stock less attractive to investors and, as a result, adversely affect the price of the common stock and result in a less active trading market for the common stock.

We are an emerging growth company as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. For example, we have elected to rely on an exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act relating to internal control over financial reporting, and we will not provide such an attestation from our auditors. We may also take advantage of an exemption from the adoption of new or revised financial accounting standards until they would apply to private companies, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding advisory “say-on-pay” votes on executive compensation and shareholder advisory votes on golden parachute compensation not previously approved.

We may avail ourselves of these disclosure exemptions until we are no longer an emerging growth company. We cannot predict whether investors will find the common stock less attractive because of our reliance on some or all of these exemptions. If investors find the common stock less attractive, it may adversely impact the price of the common stock and there may be a less active trading market for the common stock.

We will cease to be able to take advantage of the disclosure exemptions as an emerging growth company upon the earliest of:

· the end of the fiscal year in which the fifth anniversary of completion of an initial public offering occurs;

· the end of the first fiscal year in which the market value of our common stock held by non-affiliates exceeds $700 million as of the end of the second quarter of such fiscal year;

· the end of the fiscal year in which we have total annual gross revenues of at least $1 billion; and

· the date on which we have issued more than $1 billion in non-convertible debt securities in any rolling three-year period.

If we fail to establish and maintain proper internal controls, our ability to produce accurate financial statements or comply with applicable regulations could be impaired.

Section 404(a) of the Sarbanes-Oxley Act requires that, beginning with our annual report for the year ending December 31, 2017, our management assess and report annually on the effectiveness of our internal controls over financial reporting and identify any material weaknesses in our internal controls over financial reporting. Once we are no longer a smaller reporting company, Section 404(b) of the Sarbanes-Oxley Act will require our independent registered public accounting firm to issue an

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annual report that addresses the effectiveness of our internal controls over financial reporting. We expect, however, to rely on the exemptions provided in the JOBS Act, and consequently will not be required to comply with SEC rules that implement Section 404(b) of the Sarbanes-Oxley Act until such time as we are no longer an emerging growth company.

Our first Section 404(a) assessment will take place beginning with our annual report for the year ending December 31, 2017. In connection with the review of our unaudited condensed consolidated financial statements for the nine months ended September 30, 2015, management has identified a material weakness in the financial close process relating to the failure to record certain balance sheet entries and balance sheet reclassification adjustments during the interim quarter end closing process. Though management expects to remediate this deficiency going forward, the presence of further material weaknesses could result in financial statement errors which, in turn, could lead to errors in our financial reports and/or delays in our financial reporting, which could require us to restate our operating results or our auditors may be required to issue a qualified audit report. We might not identify one or more material weaknesses in our internal controls in connection with evaluating our compliance with Section 404(a) of the Sarbanes-Oxley Act. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal controls over financial reporting, we will need to expend significant resources and provide significant management oversight. Implementing any appropriate changes to our internal controls may require specific compliance training of our directors and employees, entail substantial costs in order to modify our existing accounting systems, take a significant period of time to complete and divert management’s attention from other business concerns. These changes may not, however, be effective in maintaining the adequacy of our internal control.

If either we are unable to conclude that we have effective internal controls over financial reporting or, at the appropriate time, our independent auditors are unwilling or unable to provide us with an unqualified report on the effectiveness of our internal controls over financial reporting as required by Section 404(b) of the Sarbanes-Oxley Act, investors may lose confidence in our operating results, the price of our common stock could decline and we may be subject to litigation or regulatory enforcement actions. In addition, if we are unable to meet the requirements of Section 404 of the Sarbanes-Oxley Act, we may not be able to remain listed on Nasdaq.

We will continue to be controlled by our existing owners, whose interests may differ from those of our public stockholders.

Ecofin Water & Power Opportunities PLC and its affiliates controls approximately 58.8% of the combined voting power of our common stock. As a result, Ecofin Water & Power Opportunities PLC will the ability to elect all of the members of our board of directors and to control our management and affairs. In addition, it may be able to determine the outcome of all matters requiring stockholder approval, including mergers and other material transactions, and are able to cause or prevent a change in the composition of our board of directors or a change in control of our company that could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.

We are a “controlled company” within the meaning of Nasdaq listing standards and, as a result, qualify for, and rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

We are a “controlled company” within the meaning of Nasdaq listing standards. Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “controlled company” and may elect not to comply with certain corporate governance requirements of Nasdaq, including (i) the requirement that a majority of the board of directors consist of independent directors, (ii) the requirement that we have a nominating and corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities and (iii) the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. We intend to rely on some or all of these exemptions. For example, we will not have a majority of independent directors and our compensation and nominating and corporate governance committees will not consist entirely of independent directors.

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Accordingly, you will not have the same protections afforded to stockholders of companies subject to all of the corporate governance requirements of Nasdaq.

We do not anticipate paying dividends in the foreseeable future.

For the foreseeable future, we currently intend to retain all available funds and any future earnings to support our operations and to finance the growth and development of our business. Any future determination to declare cash dividends will be made at the discretion of our board of directors, subject to compliance with applicable laws and covenants under current or future credit facilities, which may restrict or limit our ability to pay dividends, and will depend on our financial condition, operating results, capital requirements, general business conditions and other factors that our board of directors may deem relevant. We do not anticipate paying any cash dividends on our common stock in the foreseeable future. As a result, a return on your investment will only occur if our common stock share price appreciates.

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Item 2. Financial Information.

	Nine months ended September 30,						Year ended December 31,
($ in thousands except shares and per share amounts)	2015			2014			2014			2013
	(unaudited)			(unaudited)
Statement of Operations Data:
Revenues
Oil sales	$	56,408		$	76,440		$	104,233		$	71,602
Natural gas sales	4,404			5,535			7,590			6,277
Natural gas liquid sales	1,225			2,977			3,804			2,992
Total revenue	62,037			84,952			115,627			80,871
Operating expenses
Lease operating and gas gathering	12,676			12,224			16,632			13,493
Production, ad valorem and severance taxes	4,202			5,349			7,123			5,028
Depletion, depreciation and amortization	39,861			26,612			40,522			28,110
Accretion of asset retirement obligations	160			143			201			169
Impairment of oil and gas properties	—			—			5,478			2,762
Bargain purchase gain on acquisition	—			—			—			(27,817		)
Loss on sale of oil and gas properties	—			—			—			17,139
Stock-based compensation	1,746			1,961			1,939			2,245
General and administrative	6,470			5,477			7,672			9,873
Total operating expenses	65,115			51,766			79,567			51,002
Income (loss) from operations	(3,078		)	33,186			36,060			29,869
Other income (expense)
Interest expense	(18,485		)	(14,241		)	(19,949		)	(5,230		)
Gains (losses) on commodity derivatives	18,956			1,361			43,972			(2,831		)
Other income (expense)	(678		)	419			55			—
Total other income (expense)	(207		)	(12,461		)	24,078			(8,061		)
Income (loss) before taxes	(3,285		)	20,725			60,138			21,808
Income tax benefit (expense)	856			(2,550		)	(22,619		)	2,942
Net income (loss)	$	(2,429	)	$	18,175		$	37,519		$	24,750
Pro forma weighted average number of common shares outstanding
Basic(1)	7,522,025			7,268,108			7,330,602			7,108,777
Diluted(1)	7,522,025			7,268,108			7,330,602			7,108,777
Pro forma net earnings per common share
Basic(1)	$	(0.32	)	$	2.50		$	5.12		$	3.48
Diluted(1)	$	(0.32	)	$	2.50		$	5.12		$	3.48
Balance Sheet Data:
Cash and cash equivalents	$	5,020		$	13,684		$	9,810		$	6,491
Oil and gas properties	526,051			443,084			481,079			293,574
Total assets	584,939			484,504			559,842			312,718
Stockholders’ equity	207,905			189,567			208,800			169,979

(1) Gives effect to the Reorganization and the 50:1 share consolidation that Lonestar Resources Limited effected in May 2015 as if they had occurred for the period indicated. As the employee stock options are not “in the money” at each of these periods, the employee stock options did not cause any dilution.

Overview

We are an independent oil and natural gas company, focused on the development, production and acquisition of unconventional oil, NGLs and natural gas properties in the Eagle Ford Shale in Texas, where we have accumulated approximately 37,004 gross (32,564 net) acres in what we believe to be the formation’s crude oil window. We also hold a portfolio of conventional, long-lived, crude oil-weighted onshore assets in Texas and are conducting resource evaluation on approximately 44,084 gross (28,655 net) acres in the West Poplar area of the Bakken-Three Forks trend in Roosevelt County, Montana.

As we have increased our focus on the Eagle Ford Shale over the past three years, our properties have changed. In particular:

· in 2013, we sold our conventional properties in Louisiana and Oklahoma;

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· also in 2013, we sold our Barnett Shale assets (with all production being natural gas) for a cash price of $10.0 million;

· in March 2014, we acquired certain oil and natural gas interests, comprising 15,232 gross (13,156 net) acres, in the Eagle Ford Shale for $70.8 million in cash; and

· in May 2015, we acquired leasehold associated with approximately 6,122 gross (4,047 net) acres in the Eagle Ford Shale, including 1,720 gross (1,225 net) acres for $2.1 million and 4,402 gross (2,822 net) acres through a farm-in agreement.

How We Conduct Our Business and Evaluate Our Operations

We employ our capital resources for exploration, acquisitions and development in what we believe to be the most attractive opportunities available to us as market conditions evolve. We have historically acquired properties that we believe have significant appreciation potential through exploration, development, production optimization or cost reduction. We intend to continue to focus our efforts on the acquisition of operated properties to the extent we believe they meet our return objectives.

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

· production volumes;

· realized prices on the sale of oil and natural gas, including the effect of our commodity derivative contracts;

· lease operating and production expenses;

· general and administrative expenses; and

· EBITDAX (as defined below).

Production Volumes

Production volumes directly impact our results of operations. Based on the expected timing of our drilling schedule and decline curves, we determine our oil and natural gas production budgets and forecasts. We assess our actual production performance by comparing oil and natural gas production at a prospect level to budgets, forecasts and prior periods. In addition, we compare our initial production rates to our peers in each of our operated prospects.

Realized Prices on the Sale of Oil and Natural Gas

Factors Affecting the Sales Price of Oil and Natural Gas. We expect to market our oil and natural gas production to a variety of purchasers based on regional pricing. The relative prices of oil and natural gas are determined by the factors impacting global and regional supply and demand dynamics, such as geopolitical events, economic conditions, production levels, weather cycles and other events. In addition, relative prices are heavily influenced by product quality and location relative to consuming and refining markets.

Oil. The New York Mercantile Exchange — West Texas Intermediate (“NYMEX-WTI”) futures price is a widely used benchmark in the pricing of domestic crude oil in the United States. The actual prices realized from the sale of oil differ from the quoted NYMEX-WTI price as a result of quality and location differentials. Quality differentials to NYMEX-WTI prices result from the fact that oil differs in its molecular makeup, which plays an important part in refining and subsequent sale as petroleum products. Among other things, there are two characteristics that commonly drive quality differentials: (i) the American Petroleum Institute (“API”) gravity of the oil; and (ii) the percentage of sulfur content by weight of the oil. In general, lighter oil (with higher API gravity) produces a larger number of lighter products, such as gasoline, which have higher resale value and, therefore,

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depending on supply and demand fundamentals, normally sell at a higher price than heavier oil. Oil with low sulfur content (“sweet” oil) is less expensive to refine and, as a result, normally sells at a higher price than high sulfur content oil (“sour” oil).

Location differentials to NYMEX-WTI prices result from variances in transportation costs based on the proximity to the major consuming and refining markets. Oil that is produced close to major consuming and refining markets is in higher demand as compared to oil that is produced farther from such markets. Consequently, oil that is produced close to major consuming and refining markets normally realizes a higher price (i.e., a lower location differential to NYMEX-WTI).

Oil prices have historically been extremely volatile, and we expect this volatility to continue. For example, the NYMEX-WTI oil price ranged from a high of $ 110.53 per Bbl to a low of $86.68 per Bbl during 2013, from a high of $107.62 per Bbl to a low of $53.27 per Bbl during 2014 and from a high of $61.43 per Bbl to a low of $38.09 per Bbl during the nine months ended September 30, 2015. Our realized price per Bbl varies by basin and is based upon transportation costs, mainly trucking costs and pipeline tariffs, and regional basis differentials.

Natural Gas. The NYMEX-Henry Hub price of natural gas is a widely used benchmark for the pricing of natural gas in the United States. Similar to oil, the actual prices realized from the sale of natural gas differ from the quoted NYMEX-Henry Hub price as a result of quality and location differentials. Quality differentials to NYMEX-Henry Hub prices result from: (i) the Btu content of natural gas, which measures its heating value; and (ii) the percentage of sulfur, CO2 and other inert content by volume. Wet natural gas with a high Btu content sells at a premium to low Btu content dry natural gas because it yields a greater quantity of NGLs. Natural gas with low sulfur and CO2 content sells at a premium to natural gas with high sulfur and CO2 content because of the added cost to separate the sulfur and CO2 from the natural gas to render it marketable. Wet natural gas is processed in third-party natural gas plants, and residue natural gas as well as NGLs are recovered and sold. Dry natural gas residue from our properties is generally sold based on index prices in the region from which it is produced.

Location differentials to NYMEX-Henry Hub prices result from variances in transportation costs based on the proximity to the major consuming markets. The processing fee deduction retained by the natural gas processing plant generally in the form of percentage of proceeds also affects the differential. Generally, these index prices have historically been at a discount to NYMEX-Henry Hub natural gas prices.

Natural gas prices have historically been extremely volatile, and we expect this volatility to continue. For example, the NYMEX-Henry Hub natural gas price ranged from a high of $ 4.52 per MMBtu to a low of $3.08 per MMBtu during 2013, from a high of $7.92 per MMBtu to a low of $2.75 per MMBtu during 2014 and from a high of $3.29 per MMBtu to a low of $2.47 per MMBtu during the nine months ended September 30, 2015. Our realized gas price per MMBtu varies by basin based upon transportation costs, mainly pipeline tariffs, as well as liquids premiums and regional basis differentials.

Commodity Derivative Contracts. We have adopted a commodity derivative policy designed to minimize volatility in our cash flows from changes in commodity prices. Our current policy is to hedge up to 85% of forecasted proved developed producing production. Should we reduce our estimates of future production to amounts that are lower than our commodity derivative volumes, we will reduce our positions as soon as practical. Our credit facility prohibits us from entering into hedging arrangements for more than 90% of our projected production of crude oil and natural gas.

Lease Operating Expenses

We strive to increase our production levels to maximize our revenue. We evaluate operating costs to determine reserves, rates of return, and current and long-term profitability of our wells. We expect expenses for utilities, direct labor, water injection and disposal, and materials and supplies to

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comprise the most significant portion of our oil and natural gas production expenses. Oil and natural gas production expenses do not include general and administrative costs or production and other taxes. 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 may result in increased oil and natural gas production expenses during periods the repairs are performed.

A majority of our operating cost components are variable and may increase or decrease as the level of produced hydrocarbons and water increases or decreases. For example, we incur power costs in connection with various production-related activities, such as pumping to recover oil and natural gas and separation and treatment of water produced in connection with our oil and natural gas production. Over the life of hydrocarbon fields, the amount of water produced may increase and, as pressure declines in natural gas wells that also produce water, more power will be needed for artificial lift systems that help to remove water produced from the wells. Thus, production of a given volume of hydrocarbons may become more expensive each year as the cumulative oil and natural gas produced from a field increases until additional production becomes uneconomic. Our lease operating and production expense are both included in lease operating expenses.

Severance and Ad Valorem Taxes

The State of Texas regulates the development, production, gathering and sale of oil and natural gas, including imposing production taxes. The state currently imposes a production tax equal to 4.6% of the market value of oil sold, and a regulatory fee and tax of 0.8125% per barrel of oil sold. The State of Texas also imposes a production tax equal to 7.5% of the market value of the natural gas sold, and a regulatory fee of 0.0667% per Mcf of gas sold.

Generally, production taxes include taxes calculated on production volumes and sales values. Severance taxes are calculated on asset values at the beginning of each calendar year.

General and Administrative Expenses

General and administrative expenses are comprised of employee benefits expense (including salaries and wages) and administrative expenses. Employee benefits expense includes salaries, wages and related benefits for our corporate personnel. Stock compensation, including stock options, are expensed in the statement of operations over their vesting period. The total amount expensed over the vesting period is determined by reference to the fair value of the options and restricted share units at the grant date. Administrative expenses include overhead costs, such as maintaining our headquarters, costs of managing our production and development operations, audit and other fees for professional services, and legal compliance.

EBITDAX

EBITDAX is a supplemental, non-GAAP measure and is defined as our earnings before interest expense, income taxes, depreciation, depletion and amortization, property impairments, gain (loss) on sale of non-current assets, exploration expense, share-based compensation and income and gains and losses on commodity hedging net of settlements of commodity hedging. We use this non-GAAP measure primarily to compare our results with other companies in the industry that make a similar disclosure. We note, however, because EBITDAX is not a GAAP measure, it may not necessarily be comparable to similarly titled measures employed by other companies.

Outlook

We believe that oil and natural gas prices will remain volatile for the foreseeable future. In response, we have moderated our drilling activity in 2015 and expect to continue such moderation in response to oil price declines that began in late 2014. We plan to invest substantially all of our 2016 capital budget in the horizontal development of our Eagle Ford properties, of which we plan to allocate approximately $57.6 million to Eagle Ford Shale drilling and completion activities. Despite

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the decline in oil prices, we expect to continue to generate cash margins on our Eagle Ford Shale business due to our low field operating expenses, which totalled $10.72 per Boe in 2014 and $8.27 per Boe during the nine months ended September 30, 2015. We believe our management team’s extensive experience in acquiring and operating oil and natural gas properties will assist us in the development, completion and growth of these properties.

Operating Results

The following discussion relates to our consolidated results of operations, financial condition and capital resources. You should read this discussion in conjunction with our consolidated financial statements and the notes thereto. Comparative results of operations for the period indicated are discussed below.

Results of operations for the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014

Net Production

	For the nine months ended September 30,
	2015	2014	% Change
Crude Oil (Bbls/d):
Eagle Ford Shale	3,904	2,472	58	%
Conventional	381	453	-16	%
Total Crude Oil	4,285	2,925	46	%
Natural Gas Liquids (Bblsd):
Eagle Ford Shale	663	395	68	%
Conventional	14	8	75	%
Total NGLs	677	403	68	%
Natural Gas (Mcfd):
Eagle Ford Shale	4,442	3,076	44	%
Conventional	1,743	1,222	43	%
Total Natural Gas	6,185	4,298	44	%
Oil Equivalent (Boe/d):
Eagle Ford Shale	5,307	3,380	57	%
Conventional	685	665	3	%
Total Oil Equivalent	5,992	4,045	48	%

Our production increased 48% from an average of 4,045 Boe/d during the nine months ended September 30, 2014 to an average of 5,992 Boe/d during the nine months ended September 30, 2015. The increase in our average daily production is the result of an effective drilling program. For the nine months ended September 30, 2015, approximately 72% of our production was crude oil, 11% was NGLs and 17% was natural gas.

· Net production from our Eagle Ford Shale assets averaged approximately 5,307 Boe/d in the nine months ended September 30, 2015, a 57% increase over the approximate 3,380 Boe/d in in the nine months ended September 30, 2014. Approximately 86% of our Eagle Ford production in the nine months ended September 30, 2015 was liquid hydrocarbons.

· Net production from our conventional properties increased 3% from 665 Boe/d in the nine months ended September 30, 2014 to 685 Boe/d in the nine months ended September 30, 2015. Approximately 58% of our production from our Conventional properties during the nine months ended September 30, 2015 was liquid hydrocarbons.

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Average Sales Price

	For the nine months ended September 30,
	2015		2014		% Change
Crude Oil ($/Bbls):
Eagle Ford Shale	$	48.26	$	96.67	-50	%
Conventional	47.74		92.78		-49	%
Total Crude Oil	$	48.22	$	96.07	-50	%
Natural Gas Liquids ($/Bbls):
Eagle Ford Shale	$	13.13	$	32.31	-59	%
Conventional	19.55		39.92		-51	%
Total NGLs	$	13.26	$	32.47	-59	%
Natural Gas ($/Mcf):
Eagle Ford Shale	$	2.57	$	4.21	-39	%
Conventional	2.80		6.16		-55	%
Total Natural Gas	$	2.63	$	4.77	-45	%
Oil Equivalent ($/Boe):
Eagle Ford Shale	$	39.29	$	78.32	-50	%
Conventional	34.05		75.01		-55	%
Total Oil Equivalent, excluding the effect from hedging	$	38.69	$	77.78	-50	%
Total Oil Equivalent, including the effect from hedging	$	55.18	$	74.80	-26	%

The average wellhead price for our production in the nine months ended September 30, 2015 was $ 38.69 per Boe, which was 50% lower than the average price in the comparable period in 2014. Reported wellhead realizations were driven lower by significant declines (30 - 50%) in both the crude oil and natural gas benchmarks between the periods. While benchmark prices fell sharply, our revenues were bolstered by crude oil hedge positions, which added $23.05 per barrel to crude oil price realization.

· The average wellhead price for our Eagle Ford Shale production in the nine months ended September 30, 2015 was $39.29 per Boe, which was 50% lower than the average price in the comparable period in 2014 due to the significant decline in the crude oil and natural gas benchmarks.

· The average wellhead price for our Conventional properties in the nine months ended September 30, 2015 was $34.05 per Boe, which was 55% lower than the average price in the comparable period in 2014 due to the significant decline in WTI pricing.

Revenues

	For the nine months ended September 30,
($ in millions)	2015		2014		% Change
Oil Revenues:
Eagle Ford Shale	$	51.4	$	65.0	-21	%
Conventional	5.0		11.4		-56	%
Total Oil Revenues	$	56.4	$	76.4	-26	%
NGLs Revenues:
Eagle Ford Shale	$	1.9	$	3.3	-40	%
Conventional	0.1		0.1		—
Total NGLs Revenues	$	2.0	$	3.4	-40	%
Natural Gas Revenues:
Eagle Ford Shale	$	2.5	$	3.3	-23	%
Conventional	1.1		1.9		-44	%
Total Natural Gas Revenues	$	3.6	5.2		-30	%
Total Wellhead Revenues:
Eagle Ford Shale	$	55.8	$	71.6	-22	%
Conventional	6.2		13.4		-54	%
Total Wellhead Revenues	$	62.0	$	85.0	-27	%

While wellhead revenue declined $23.0 million (27%) in the nine months ended September 30, 2015 compared to the comparable period in 2014 due to the significant decrease in benchmark prices, we realized a favorable crude oil hedge, which added $27.0 million in gains on commodity derivatives for the nine months ended September 30, 2015.

· Wellhead revenues for our Eagle Ford Shale assets decreased $15.8 million (22%) in the nine months ended September 30, 2015 from the comparable period in 2014 as a result of

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a 50% decrease in wellhead price realizations but partially offset by a 57% increase in production in the nine months ended September 30, 2015.

· Wellhead revenues for our Conventional properties decreased $7.2 million (54%) in the nine months ended September 30, 2015 from the comparable period in 2014 as a result of a 55% decrease in wellhead price realizations but partially offset by a 3% increase in production during the nine months ended September 30, 2015.

Operating Costs and Expenses

The table below presents a detail of expenses for the periods indicated.

	Nine months ended September 30,				%
	2015		2014		Change
Lease Operating Expense ($/Boe):
Western Eagle Ford Shale	$	7.71	$	8.58	-10	%
Central Eagle Ford Shale	7.03		10.77		-35	%
Eastern Eagle Ford Shale	6.80		8.53		-20	%
Conventional	14.46		19.68		-27	%
Total lease operating expenses ($/Boe)	$	8.27	$	10.68	-23	%
Production Taxes ($/Boe):
Western Eagle Ford Shale	$	2.27	$	4.43	-49	%
Central Eagle Ford Shale	3.40		5.55		-39	%
Eastern Eagle Ford Shale	2.88		6.14		-53	%
Conventional	2.61		5.67		-54	%
Total production taxes ($/Boe)	$	2.57	$	4.86	-47	%

Lease Operating Expenses

Lease operating expenses are the costs incurred in the operation of producing properties and workover costs. Expenses for direct labor, water injection and disposal, utilities, materials and supplies comprise the most significant portion of our lease operating expenses. Lease operating expenses do not include general and administrative expenses or production or ad valorem taxes.

Our total lease operating expenses increased slightly in the nine months ended September 30, 2015 from the comparable period in 2014 as we controlled costs. Costs were controlled by developing experienced field staff, by upgrading our preventative maintenance activities and by more effective use and centralized purchasing of chemicals, among other activities. On a units-of-production basis, our lease operating expenses declined 23% from $10.68 per Boe in the nine months ended September 30, 201 4 to $8.27 per Boe in the nine months ended September 30, 2015. While lease operating expenses remained virtually unchanged in absolute dollar terms, given the increase in production, lease operating expenses on a units-of-production basis dropped significantly.

Severance and Ad Valorem Taxes

Severance and ad valorem taxes are paid on produced crude oil and natural gas based upon a percentage of gross revenues or at fixed rates established by state or local taxing authorities. In general, the production taxes we pay correlate to the changes in oil and natural gas 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.

Our total production and ad valorem taxes declined $1.1 million (21%) in the nine months ended September 30, 2015 from the comparable period in 2014 principally due to the 26% decline in wellhead revenues.

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Depreciation, Depletion and Amortization (DD&A)

Capitalized costs attributed to our proved properties are subject to depreciation and depletion. Depreciation and depletion of the cost of oil and natural gas properties is calculated using the units-of-production method aggregating properties on a field basis. For leasehold acquisition costs and the cost to acquire proved properties, the reserve base used to calculate depreciation and depletion is the sum of proved developed reserves and proved undeveloped reserves. For development costs, the reserve base used to calculate depletion and depreciation is proved developed reserves only. Other property and equipment are carried at cost, and depreciation is calculated using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 5 years.

DD&A increased $12.4 million (47%) in the nine months ended September 30, 2015 from the comparable period in 2014 primarily due to the 48% increase in total oil equivalent produced in the nine months ended September 30, 2015.

General and Administrative (G&A) Expenses

G&A increased $1.0 million (18%) in the nine months ended September 30, 2015 from the comparable period in 2014 primarily due to the general and administrative expenses necessary to support higher production. As we scale the business, we achieved a 21% decrease in G&A per Boe to $3.95 per Boe in the nine months ended September 30, 2015 from $4.95 per Boe in the nine months ended September 30, 2014.

Interest Expense

Our interest expense increased $4.2 million (29%) in the nine months ended September 30, 2015 from the comparable period in 2014 primarily due to (i) interest on our 8.750% Senior Notes due 2019, which were issued in April 2014, accruing the entire nine months ended September 30, 2015 but only partially during the nine months ended September 30, 2014 and (ii) a non-cash write-off of approximately $0.7 million of deferred financing costs associated with the extinguishment of our previous credit facility that was replaced by a Citibank-led facility in July 2015.

Net borrowings under our credit facilities averaged $ 74.2 million in the nine months ended September 30, 2015 and the weighted average interest rate on outstanding borrowings was 2.6% during the period. Net borrowings under our credit facilities averaged $49 million in the nine months ended September 30, 2014 and the weighted average interest rate on outstanding borrowings was 2.61% during the period.

Commodity Derivative Transactions

We apply mark-to-market accounting to our derivative contracts. In the nine months ended September 30, 2015, we recognized a non-cash $ 8 million loss on our commodity derivative contracts related to the change in fair value of our derivative contracts and a $27 million realized gain on settlement of our commodity derivative contracts. Settlement of the crude oil hedge positions added $23.05 per barrel to crude oil price realization.

In the nine months ended September 2014, we recognized a non-cash $4.6 million gain on our commodity derivative contracts related to the change in fair value of our derivative contracts and a $3.3 million realized loss on settlement our commodity derivative contracts.

Income Taxes

As a result of the net loss before income tax of $3.3 million in 2015 and net income before tax of $20.7 million in 2014, we recorded income tax benefit of $0.9 million in 2015 and an income tax expense of $2.6 million in 2014.

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Net Income (Loss) Before Taxes

As a result of the above factors, and particularly the $22.9 million (27%) decrease in revenue resulting from the decline in crude oil and natural gas benchmark prices, we recorded a net loss before income tax of $2.1 million in the nine months ended September 30, 2015 compared to net income of $20.7 million in the nine months ended September 30, 2014.

Results of operations for the year ended December 31, 201 4 compared to the year ended December 31, 201 3

Net Production

	Year ended December 31,
	2014	2013	% Change
Crude Oil (Bbls/d):
Eagle Ford Shale	2,833	1,477	92	%
Barnett Shale	—	—	—
Conventional	434	547	-21	%
Total Crude Oil	3,267	2,024	61	%
Natural Gas Liquids (Bbls/d):
Eagle Ford Shale	423	265	60	%
Barnett Shale	—	—	—
Conventional	13	3	303	%
Total NGLs	436	268	63	%
Natural Gas (Mcf/d):
Eagle Ford Shale	3,277	1,897	73	%
Barnett Shale	—	1,224	-100	%
Conventional	1,387	1,248	11	%
Total Natural Gas	4,664	4,369	7	%
Oil Equivalent (Boe/d):
Eagle Ford Shale	3,801	2,057	85	%
Barnett Shale	—	204	-100	%
Conventional	679	759	-11	%
Total Oil Equivalent	4,480	3,020	48	%

Our production increased 48% from an average of 3,020 Boe/d during 2013 to an average of 4,480 Boe/d during 2014. The increase in our average daily production is the result of drilling 23 gross wells and completing 21 gross (19.5 net) Eagle Ford Shale wells. Net production during 2014 was comprised of an average of 3,267 Bbls/d of oil, 436 Bbls/d of NGLs and 4,664 Mcf/d of natural gas. In 2014, approximately 73% of our production was crude oil, approximately 10% was NGLs and approximately 17% was natural gas.

· Net production from the Western Eagle Ford Shale assets averaged approximately 2,741 Boe/d in 2014, a 33% increase over the approximate 2,057 Boe/d in 2013. The increase was primarily the result of drilling 11 gross wells and completing 8 gross (8 net) wells.

· Net production from the Central Eagle Ford Shale assets averaged approximately 624 Boe/d in 2014. These assets were purchased and developed in 2014.

· Net production from the Eastern Eagle Ford Shale assets averaged approximately 436 Boe/d in 2014. These assets were purchased and developed in 2014.

· Net production from our Conventional properties averaged approximately 679 Boe/d in 2014. In 2014 our production from conventional properties was comprised of approximately 434 Bbls/d of oil, approximately 13 Bbls/d of NGLs and approximately 1,387 Mcf/d of natural gas. Approximately 66% of our production from conventional properties during 2014 was liquid hydrocarbons.

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Average Sales Price

	Year ended December 31,
	2014		2013		% Change
Crude Oil ($/Bbls):
Eagle Ford Shale	$	87.34	$	98.82	-12	%
Barnett Shale	—		—		—
Conventional	87.89		91.91		-4	%
Total Crude Oil	$	87.41	$	96.95	-10	%
Natural Gas Liquids ($/Bbls):
Eagle Ford Shale	$	29.08	$	29.34	-1	%
Barnett Shale	—		—		—
Conventional	35.06		66.65		-47	%
Total NGLs	$	29.26	$	29.78	-2	%
Natural Gas ($/Mcf):
Eagle Ford Shale	$	4.04	$	3.40	19	%
Barnett Shale	—		3.37		-100	%
Conventional	5.59		6.06		-8	%
Total Natural Gas	$	4.50	$	4.15	8	%
Oil Equivalent ($/Boe):
Eagle Ford Shale	$	71.78	$	77.82	-8	%
Barnett Shale	—		20.24		-100	%
Conventional	68.37		76.57		-11	%
Total Oil Equivalent	$	71.27	$	73.62	-3	%

The average wellhead price for our production in 2014 was $71.27 per Boe, which was 3% lower than the $ 73.62 per Boe average price in 2013. Much of this variance was due to the WTI benchmark pricing being approximately 5% lower in 2014 compared to 2013. Our average wellhead crude oil price decreased from $96.95 per barrel in 2013 to $87.41 per barrel in 2014. Our average NGLs price decreased from $29.78 per barrel in 2013 to $29.26 per barrel in 2014. Our average natural gas price increased 8% from $4.15 per Mcf in 2013 to $4.50 per Mcf in 2014.

· For the production from the Western Eagle Ford Shale assets during 2014, the average price was $68.38 per Boe, a 12% increase compared to our average price during 2013. The average wellhead price for the Western Eagle Ford Shale crude oil production decreased 9% during 2014 as compared to our average prices during 2013 to $89.64 per Bbl. The average price for our Eagle Ford Shale NGLs production during 2014 remained virtually flat at $29.32 per Bbl, while our natural gas price during 2014 increased to $4.09 per Mcf, or 20% as compared to our average realized price for 2013.

· For the production from the Central Eagle Ford Shale assets during 2014, the average price was $85.39 per Boe. These assets were purchased and developed in 2014.

· For the production from the Eastern Eagle Ford Shale assets during 2014, the average price was $73.70 per Boe. These assets were purchased and developed in 2014.

· On our Conventional properties, our average wellhead price was $68.37 per Boe in 2014, representing an 11% decrease compared to the average price during 2013.

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Revenues

	Year ended December 31,
($ in millions)	2014		2013		% Change
Oil Revenues:
Eagle Ford Shale	$	90.3	$	53.2	70	%
Barnett Shale	—		—		—
Conventional	13.9		18.4		-24	%
Total Oil Revenues	$	104.2	$	71.6	46	%
NGLs Revenues:
Eagle Ford Shale	$	4.2	$	2.8	48	%
Barnett Shale	—		—		—
Conventional	0.2		0.1		100	%
Total NGLs Revenues	$	4.4	$	2.9	50	%
Natural Gas Revenues:
Eagle Ford Shale	$	4.4	$	2.2	100	%
Barnett Shale	—		1.5		-100	%
Conventional	2.6		2.7		-4	%
Total Natural Gas Revenues	$	7.0	$	6.4	10	%
Total Wellhead Revenues:
Eagle Ford Shale	$	98.9	$	58.2	70	%
Barnett Shale	—		1.5		-100	%
Conventional	16.7		21.2		-21	%
Total Wellhead Revenues	115.6		80.9		43	%

Our oil, NGLs and natural gas revenues totalled $115.6 million in 201 4 as compared to $80.9 million in 2013. Revenue growth was a function of a 48% increase in production, partially offset by a 3% decrease in average realized wellhead prices. Crude oil sales revenue in 2014 increased $32.6 million (46%) to $104.2 million. This increase in crude oil sales revenue consisted of $39.7 million resulting from increased production as compared to 2013 that was partially offset by $7.0 million resulting from lower sales prices as compared to 2013. NGLs sales revenue in 2014 increased $1.5 million (50%) to $4.4 million, with $1.8 million attributable to the increase in production that was partially offset by $0.1 million attributable to lower sales prices as compared to 2013. Natural gas sales revenue in 2014 increased $0.6 million (10%) to $7.0 million attributable to the increase in production and higher sales prices compared to 2013.

· Net oil, NGLs and natural gas revenues from the Western Eagle Ford Shale assets totalled $68.4 million in 2014, representing a 17% increase as compared to $58.5 million in revenues in 2013. This increase is primarily the result of the addition of 8 gross (8 net) wells that were placed on stream during 2014. Crude oil contributed 87% of revenues, while NGLs contributed 6% of revenues and natural gas contributed 7% of revenues.

· Net oil, NGLs and natural gas revenues from the Central Eagle Ford Shale assets totalled $19.4 million in 2014. These assets were purchased and developed in 2014. Crude oil contributed virtually all of the revenue.

· Net oil, NGLs and natural gas revenues from the Eastern Eagle Ford Shale assets totalled $11.4 million in 2014. These assets were purchased and developed in 2014. Crude oil contributed 97% of revenues, while NGLs contributed 2% of revenues and natural gas contributed 1% of revenues.

· Net oil, NGLs and natural gas revenues from our Conventional properties totalled $16.9 million in 2014 compared to $21.3 million in 2013. Crude oil sales contributed 82% of revenues, while NGLs sales contributed 1% of revenues and natural gas sales contributed 17% of revenues.

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Operating Costs and Expenses

The table below presents a detail of expenses for the periods indicated.

	Year ended December 31,				%
($ in thousands)	2014		2013		Change
Lease Operating Expense ($/Boe):
Western Eagle Ford Shale	$	8.57	$	6.88	25	%
Central Eagle Ford Shale	11.42		—		—
Eastern Eagle Ford Shale	6.73		—		—
Barnett Shale	—		11.21		—
Conventional	21.32		28.24		(25	)%
Total lease operating expenses ($/Boe)	$	10.72	$	12.54	(15	)%
Production Taxes ($/Boe):
Western Eagle Ford Shale	$	4.07	$	4.30	(5	)%
Central Eagle Ford Shale	4.47		—		—
Eastern Eagle Ford Shale	4.36		—		—
Barnett Shale	—		1.24		—
Conventional	5.41		6.52		(17	)%
Total production taxes ($/Boe)	$	4.36	$	4.65	(6	)%

Lease Operating Expenses

Our lease operating expenses were $16.6 million in 201 4, an increase of $3.1 million. On a units-of-production basis, our lease operating expenses decreased 15% to $10.72 per Boe in 2014 as compared to $12.54 per Boe in 2013.

· Lease operating expenses for our Eagle Ford Shale assets totalled $11.5 million in 2014, a 137% increase from 2013 and largely driven by an increase in the number of net producing wells during 2014. On a units-of-production basis, lease operating expenses in 2014 increased 25% to $8.57 per Boe. The increase in our lease operating costs in the Eagle Ford is largely a function of the number of wells resulting from the 2014 drilling program and the acquisition of the producing wells purchased in March 2014.

· Lease operating expenses for our Conventional properties totalled $5.1 million in 2014, or $21.32 per Boe, compared to $7.8 million in 2013, or $28.24 per Boe. Since the reverse merger in January 2013, we have continued efforts to lower operating expense for the Conventional properties to maximize cash flow on this low-decline asset.

Severance and Ad Valorem Taxes

Our production and ad valorem taxes totalled $7.1 million and $ 5.0 million in 2014 and 2013, respectively. The increase in production and ad valorem taxes over the period was due to both the increase in production volumes as well as an increase in revenues.

Depreciation, Depletion and Amortization (DD&A)

DD&A expense was $ 40.5 million and $28.1 million in 2014 and 2013, respectively. The $12.4 million (44%) increase in DD&A expense was primarily driven by a combination of an increase in crude oil and natural gas production that resulted from the wells drilled in 2014 and the acquisition in March 2014 of additional Eagle Ford Shale properties.

General and Administrative (G&A) Expenses

G&A decreased $2.2 million (22%) from $9.9 million in 2013 to $7.7 million in 2014 primarily due to decreases in stock-based compensation expense, payments made for corporate overhead expenses, and other expenses incurred in the closing of the Denver, Colorado office during 2013.

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Interest Expense

Interest expense more than doubled from $5.2 million in 2013 to $19.9 million in 2014 primarily due to the placement of $220 million aggregate principal amount of 8.750% Senior Notes in April 2014.

Net borrowings under our credit facilities averaged $42.6 million in 2014 with the weighted average interest rate on outstanding borrowings of approximately 2.95% during the year. Net borrowings under our credit facilities averaged $84.6 million in 2013 with the weighted average interest rate on outstanding borrowings of approximately 3.5% during the year.

Commodity Derivative Transactions

We apply mark-to-market accounting to our derivative contracts. In 201 4, we recognized a non-cash $42.8 million gain on our commodity derivative contracts related to the change in fair value of our derivative contracts and a $1.2 million realized gain on our commodity derivative contracts. In 2013, we recognized a non-cash $1.0 million loss on our commodity derivative contracts related to the change in fair value of our derivative contracts and a $1.8 million realized loss on our commodity derivative contracts.

Impairment on Oil & Gas Properties

For the year ended December 31, 201 4, we recorded an impairment on oil and natural gas properties of $5.5 million, reflecting a development write-off at our Morgan’s Bluff Hackberry Unit in Orange County, Texas. For the year ended December 31, 2013, we recorded an impairment on oil and natural gas properties of $2.8 million, reflecting a development write-off expense at our Morgan’s Bluff Hackberry Unit in Orange County, Texas.

Bargain Purchase Gain on Acquisition

In 2013, we recorded a bargain purchase gain associated with the reverse merger transaction with Amadeus Energy Limited of $27.8 million, which represented the difference in net assets acquired of $84.3 million less total consideration transferred of $56.5 million. The consideration transferred was computed by reference to Amadeus Energy Limited’s closing stock price on the date of the reverse merger. The allocation of the purchase price was based on our assessment of the fair value of the acquired assets and liabilities. The primary asset acquired was oil and gas properties which are valued on the basis of discounted future cash flows expected to be obtained from existing oil and gas reserves as determined by third party petroleum engineers.

Loss on Sale of Oil and Gas Properties

In 2013, we recorded a loss on the sale of our Barnett Shale properties of $17.1 million.

Net Income (Loss) Before Taxes

As a result of the above factors, and particularly the $34.8 million (43%) increase in revenue, we recorded net income before income tax of $60.1 million and $21.8 million in 2014 and 2013 respectively.

Income Taxes

As a result of the net income before income tax of $60.1 million and $21.8 million in 2014 and 2013 respectively, we recorded income tax expense of $22.6 million in 2014 and an income tax benefit of $2.9 million in 2013. The tax benefit recorded in 2013 is due to the reverse merger with Amadeus Energy Limited being treated as a stock purchase, and therefore the fair value gain is a permanent difference, creating a significant difference between the statutory and effective tax rates for the year.

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Sources of Liquidity and Capital Resources

We expect that our primary sources of liquidity and capital resources will be cash flows generated by operating activities and borrowings under our revolving credit facility.

We have historically financed our acquisition and development activity through cash flows generated by operating activities, borrowings under our revolving credit facility, and the issuance of bonds.

Historical Cash Flows

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

	For the nine months ended September 30,						For the year ended December 31,
($ in millions)	2015			2014			2014			2013
	(unaudited)			(unaudited)
Statement of Cash Flows Data:
Net cash provided by (used in):
Operating activities	$	42.3		$	56.0		$	82.5		$	40.4
Investing activities	(77.1		)	(176.3		)	(233.7		)	(132.2		)
Financing activities	30.0			127.5			154.5			89.0
Increase (decrease) in cash and cash equivalents	$	(4.8	)	$	7.2		$	3.3		$	(2.8	)

Net Cash Provided By Operating Activities

Net cash provided by operating activities decreased $13.7 million from $56.0 million in the nine months ended September 30, 2014 to $42.3 million in the nine months ended September 30, 2015. This decrease is primarily due to a $19.8 million decline in net income and a $17.3 million decrease in net operating liabilities, offset by a $12.4 million increase in DD&A. We also experienced a $12.7 million increase in unrealized gain on derivative financial instruments.

Net cash provided by operating activities increased $42.1 million from $40.4 million in 2013 to $ 82.5 million in 2014. This increase in net cash flow from operations is attributable to higher net income of $12.8 million, higher DD&A of $12.4 million, an increase in net operating liabilities of $25.3 million and an increase in deferred taxes of approximately $25.4 million, and partially offset by an increase in non-cash gains on derivative financial instruments of $44.0 million. The $40.4 million of operating cash flow in 2013 was negatively impacted by approximately $10.7 million related to the net of the $27.8 million bargain purchase gain on acquisition less the loss on sale of the Barnett Shale property.

Net Cash Used In Investing Activities

Net cash used in investing activities decreased $99.2 million from $176.3 million in the nine months ended September 30, 2014 to $77.1 million in the nine months ended September 30, 2015. This decrease is primarily due to (i) a $64.0 million decrease in the acquisition of oil and gas properties and (ii) a $37.5 million decrease in the development of oil and gas properties, partially offset by a decrease of $3.2 million in proceeds from the sale of oil and gas properties.

Net cash used in investing activities increased $101.5 million from $132.2 million in 2013 to $233.7 million in 2014. This increase is primarily due to (i) a $7.0 million increase in the acquisition of oil and gas properties; (ii) a $78.7 million increase in the development of oil and gas properties and (iii) a decrease of $8.5 million in proceeds from the sale of oil and gas properties. In 2013, Lonestar received cash of $5.3 million acquired in the reverse merger with Amadeus Energy Limited.

Net Cash Provided By Financing Activities

Net cash provided by financing activities decreased $97.5 million from $127.5 million in the nine months ended September 30, 2014 to $30.0 million in the nine months ended September 30,

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2015. The decrease was principally due to the receipt of $214.5 million from the sale of 8.750% Senior Notes due 2019 in 2014, partially offset by a net change in bank borrowings of $117.0 million.

Net cash provided by financing activities increased $65.5 million from $89.0 million in 2013 to $ 154.5 million in 2014. The increase was principally due to the receipt of $214.5 million from the sale of 8.750% Senior Notes due 2019 in 2014, partially offset by a net change in bank borrowing of $149.0 million.

Debt

As of September 30, 2015, we had an aggregate of $295.4 million of indebtedness, including $79.0 million drawn on our revolving credit facility and $220.0 million (less an unamortized discount of $3.9 million) under our 8.750% Senior Notes due 2019.

Revolving Credit Facility

LRAI and its subsidiaries have entered into a revolving credit facility with Citibank, N.A. as Administrative Agent, and certain other lenders. The revolving credit facility matures on October 16, 2018.

As of September 30, 2015, we had outstanding borrowings of approximately $79.0 million under the revolving credit facility, which was subject to an average interest rate of approximately 2.6% during the nine months ended September 30, 2015. Additionally, the revolving credit facility may be used for loans and, subject to a $2,500,000 sub-limit, letters of credit. We have drawn $250,000 of advances on the letter of credit as of September 30, 2015. Availability under our revolving credit facility, which at all times is subject to customary conditions and the then-applicable borrowing base, is currently $101.0 million. The borrowing base was $180.0 million as of September 30, 2015 and is subject to periodic redetermination. The borrowing base under our revolving credit facility can be redetermined up or down by the lenders based on, among other things, their evaluation of our oil and natural gas reserves. Redeterminations are scheduled to occur semi-annually on April 1 and October 1 of each year.

Obligations under the revolving credit facility are secured by a first priority lien on substantially all assets of the existing and future subsidiaries of LRAI, including a first priority lien on all ownership interests in its existing and future subsidiaries. Obligations under the revolving credit facility are guaranteed by all its existing and future subsidiaries.

At the election of LRAI, borrowings under the revolving credit facility may be made on an alternate base rate or an adjusted eurodollar rate basis, plus an applicable margin. The applicable margin varies from 0.75% to 1.75% for alternate base rate borrowings and from 1.75% to 2.75% for eurodollar borrowings, depending on the utilization of the borrowing base. LRAI is also required to pay a commitment fee on the unused committed amount at a rate equal to 0.375% to 0.50% per annum.

The revolving credit facility contains various affirmative and negative covenants and events of default that limit an ability to incur indebtedness, make restricted payments, grant liens, consolidate or merge, dispose of certain assets, make certain investments, engage in transactions with affiliates and hedge transactions and make certain acquisitions. The revolving credit facility also contains financial covenants that require the satisfaction of certain specified financial ratios, including (i) current assets to current liabilities of at least 1.0 to 1.0 and (ii) total debt to consolidated EBITDAX of not greater than 4.0 to 1.0.

8.750% Senior Notes due 2019

LRAI issued $220 million aggregate principal amount of 8.750% Senior Notes due 2019 (the “Notes”) in April 2014 under an indenture among LRAI, its subsidiary guarantors and Wells Fargo

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Bank, National Association, as trustee (the “Trustee”). Lonestar Resources Limited is not a party to the indenture.

The Notes mature on April 15, 2019 and accrue interest at a rate of 8.750% per annum, payable semi-annually in arrears on April 15 and October 15 of each year until the maturity date. The Notes are fully and unconditionally guaranteed on a senior unsecured basis by each subsidiary of LRAI.

LRAI may redeem up to 35% of the Notes prior to April 15, 2016 with an amount of cash not greater than the net proceeds of certain equity offerings at a price of 108.75% of the amount redeemed plus any accrued and unpaid interest. In addition, prior to April 15, 2016, it may redeem the Notes, in whole or in part, at a redemption price of 100% of the principal amount of the Notes redeemed, plus any accrued and unpaid interest to the redemption date, plus a “make-whole” premium. On or after April 15, 2016, it may redeem the Notes, in whole or in part, at certain redemption prices, plus any accrued and unpaid interest to the redemption date.

If LRAI sells certain assets and does not use the net proceeds for certain purposes specified in the indenture or if it experiences a change of control (as defined in the indenture), then it may be required to offer to purchase Notes from holders at a price equal to 101% of the principal amount, plus accrued and unpaid interest.

The Indenture contains certain covenants that restrict the ability of LRAI and its subsidiary guarantors to:

· borrow money;

· pay dividends on or repurchase capital stock;

· make certain investments;

· use assets as security in other transactions; and

· sell certain assets or enter into mergers or consolidations.

These limitations are subject to a number of exceptions and qualifications.

Contractual Obligations

A summary of our contractual obligations as of December 31, 2014 is provided in the following table.

	Payments due by period
($ in millions)	Total		Less than 1 year		1 - 2 years		3 - 5 years		More than 5 years
Revolving credit facility(1)	$	49.0	$	—	$	—	$	49.0	$	—
8.750% Senior Notes due 2019	220.0		—		—		220.0		—
Interest on 8.750% Senior Notes due 2019	81.8		19.2		38.5		24.1		—
Drilling rig commitment	9.1		9.1		—		—		—
Office lease	3.0		0.5		0.9		0.8		0.8
Total commitments	$	362.9	$	28.8	$	39.4	$	293.9	$	0.8

(1) These amounts do not include any estimated interest on these borrowings, because our revolving borrowings have short-term interest periods, and we are unable to determine what our borrowing costs may be in future periods.

Capital Expenditures

Historical capital expenditures

The table below summarizes our capital expenditures incurred in the nine months ended September 30, 2015 and in the years ended December 31, 2014 and 2013.

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	Nine months ended September 30,		Year ended December 31,
($ in millions)	2015		2014		2013
	(unaudited)
Acquisition of oil and gas properties	7.0		71.0		64.0
Development of oil and gas properties	69.7		164.2		85.5
Purchases of other property and equipment	0.2		1.0		(0.3		)
Total capital expenditures	$	76.9	$	236.2	$	149.2

2016 capital expenditure budget

Our capital budget for 2016 is $57.6 million, including an investment of approximately $20.5 million to drill and $35.0 million to complete 10 Eagle Ford Shale wells and a contingency capital budget of approximately $2.1 million. We consider future commodity prices when determining our development plan but many other factors are also considered. Although the magnitude of change in these collective factors within a sustained low commodity price environment is difficult to estimate, we currently expect to execute our development plan based on current conditions. To the extent there is a significant increase or decrease in commodity prices in the future, we will assess the impact on our development plan at that time, and we may respond to such changes by altering our capital budget or our development plan. We expect to fund our 2016 capital budget with cash flow from operations.

	2016 Capital Expenditure Budget
	Gross Wells	Net Wells	Expenditures ($ million)(1)
Western Eagle Ford	8	8	$	44.5
Central Eagle Ford	—	—	—
Eastern Eagle Ford	2	2	13.1
Total Eagle Ford	10	10	57.6
Conventional Assets	—	—	—
West Poplar	—	—	—
Total	10	10	$	57.6

(1) Includes approximately $2.1 million of capital expenditure contingency allocated across the Eagle Ford expenditure.

The amount, timing and allocation of capital expenditures are largely discretionary and within management’s control. If crude oil, NGLs and natural gas prices decline below what we consider acceptable levels, or costs increase to levels we consider unacceptable, we may choose to defer a portion of our budgeted capital expenditures until later periods in order to achieve the desired balance between sources and uses of liquidity and prioritize capital projects that we believe have the highest expected returns and potential to generate near-term cash flow. We may also increase our capital expenditures significantly to take advantage of opportunities we consider to be attractive. We consistently monitor and adjust our projected capital expenditures in response to success or lack of success in drilling activities, changes in prices, availability of financing, drilling and acquisition costs, industry conditions, the timing of regulatory approvals, the availability of rigs, contractual obligations, internally generated cash flows and other factors both within and outside our control.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

Critical Accounting Estimates

The preparation of our financial statements requires us to make estimates and judgments that can affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent assets and liabilities at the date of our financial statements. We analyze our estimates and judgments, including those related to oil, NGLs and natural gas revenues, oil and natural gas properties, fair value of derivative instruments, contingencies and litigation, and we base our estimates and judgments on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Actual results may vary from our estimates. We have outlined below policies of particular importance to the portrayal of our financial position and results of operations and that require the application of significant judgment or estimates by our management.

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In addition, we note that our significant accounting policies are detailed in Note 2 to our consolidated financial statements for the year ended December 31, 2014.

Estimates of Reserve Quantities

Reserve estimates are inexact and may change as additional information becomes available. Furthermore, estimates of oil and gas reserves are projections based on engineering data. There are uncertainties inherent in the interpretation of such data, as well as the projection of future rates of production and timing of development expenditures. Reservoir engineering is a subjective process of estimating underground accumulations of oil and gas that cannot be measured in an exact way. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation, and judgment. Accordingly, there can be no assurance that ultimately, the reserves will be produced, nor can there be assurance that the proved undeveloped reserves will be developed within the period anticipated.

Oil and Natural Gas Properties

We use the successful efforts method of accounting to account for its oil and gas properties. Under this method, costs of acquiring properties, costs of drilling successful exploration wells, and development costs are capitalized. The costs of exploratory wells are initially capitalized pending a determination of whether proved reserves have been found. At the completion of drilling activities, the costs of exploratory wells remain capitalized if a determination is made that proved reserves have been found. If no proved reserves have been found, the costs of each of the related exploratory wells are charged to expense. In some cases, a determination of proved reserves cannot be made at the completion of drilling, requiring additional testing and evaluation of the wells. Our policy is to expense the costs of such exploratory wells if a determination of proved reserves has not been made within a 12-month period after drilling is complete. All costs related to development wells, including related production equipment and lease acquisition costs, are capitalized when incurred, whether productive or nonproductive.

Capitalized costs attributed to the proved properties are subject to depreciation and depletion. Depreciation and depletion of the cost of oil and gas properties is calculated using the units-of-production method aggregating properties on a field basis. For leasehold acquisition costs and the cost to acquire proved properties, the reserve base used to calculate depreciation and depletion is the sum of proved developed reserves and proved undeveloped reserves. For development costs, the reserve base used to calculate depletion and depreciation is proved developed reserves only.

Unproved properties consist of costs incurred to acquire unproved leases. Unproved lease acquisition costs are capitalized until the leases expire or when the Company specifically identifies leases that will revert to the lessor, at which time the Company expenses the associated unproved lease acquisition costs. The expensing of the unproved lease acquisition costs is recorded as an impairment of oil and gas properties in the consolidated statement of operations, as applicable. Unproved oil and gas property costs are transferred to proven oil and gas properties if the properties are subsequently determined to be productive or are assigned proved reserves. Unproved oil and gas properties are assessed periodically for impairment based on remaining lease terms, drilling results, reservoir performance, future plans to develop acreage, and other relevant factors.

On the sale or retirement of a complete or partial unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and any gain or loss is recognized.

Impairment of Long-Lived Assets

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recover its carrying amount, an impairment loss must be recorded to reduce the carrying amount to its estimated fair value. Judgments and assumptions are inherent in management’s estimate of undiscounted future cash flows and an asset’s fair value. These judgments and assumptions include such matters as the estimation of oil and gas reserve quantities, risks associated with the different categories of oil and gas reserves, the timing of development and production, expected future commodity prices, capital expenditures, production costs, and appropriate discount rates.

Derivative Financial Instruments

We use derivative financial instruments to hedge our exposure to changes in commodity prices arising in the normal course of business. The principal derivatives that may be used are commodity price swap, option and costless collar contracts. The use of these instruments is subject to policies and procedures as approved by our board directors. We do not trade in derivative financial instruments for speculative purposes. None of our derivative contracts have been designated as cash flow hedges for accounting purposes. Derivative financial instruments are initially recognized at cost, if any, which approximates fair value. Subsequent to initial recognition, derivative financial instruments are recognized at fair value. The derivatives are valued on a mark-to-market valuation, and the gain or loss on re-measurement to fair value is recognized through the statement of operations. The estimated fair value of our derivative instruments requires substantial judgment. These values are based upon, among other things, option pricing models, futures prices, volatility, time to maturity and credit risk. The values we report in our financial statements change as these estimates are revised to reflect actual results, changes in market conditions or other factors, many of which are beyond our control.

Asset Retirement Obligations

We account for asset retirement obligations under ASC 410, Asset Retirement and Environmental Obligations . ASC 410 requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Oil and gas producing companies incur such a liability upon acquiring or drilling a well. Under ASC 410, an asset retirement obligation is recorded as a liability at its estimated present value at the asset’s inception, with an offsetting increase to producing properties in the accompanying consolidated balance sheet, which is allocated to expense over the useful life of the asset. Periodic accretion of the discount on asset retirement obligations is recorded as an expense in the accompanying consolidated statement of operations.

Income taxes

We follow the asset and liability method in accounting for income taxes in accordance with ASC 740, Income Taxes . Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which these temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. In addition, a valuation allowance is established to reduce any deferred tax asset for which it is determined that it is more likely than not that some portion of the deferred tax asset will not be realized.

We evaluate uncertain tax positions, which requires significant judgments and estimates regarding the recoverability of deferred tax assets, the likelihood of the outcome of examinations of tax positions that may or may not be currently under review, and potential scenarios involving settlements of such matters. Changes in these estimates could materially impact the consolidated financial statements.

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Quantitative and Qualitative Disclosures About Risk

We are exposed to a variety of financial market risks including interest rate, commodity prices, foreign exchange and liquidity risk. Our risk management focuses on the volatility of commodity markets and protecting cash flow in the event of declines in commodity pricing. We utilize derivative financial instruments to hedge certain risk exposures. Our financial instruments consist mainly of deposits with banks, short-term investments, accounts receivable, derivative financial instruments, finance facility and payables. The main purpose of non-derivative financial instruments is to raise finance for our operations.

Financial risk management is carried out by our management. Our board of directors sets financial risk management policies and procedures to which our management is required to adhere. Our management identifies and evaluates financial risks and enters into financial risk instruments to mitigate these risk exposures in accordance with the policies and procedures outlined by our board of directors.

Interest Rate Sensitivity Analysis

As of September 30, 2015, we had $79.0 million outstanding under our revolving credit facility, which is subject to floating market rates of interest. Borrowings under our revolving credit facility bear interest at a fluctuating rate that is tied to an adjusted base rate or LIBOR, at our option. Any increase in this interest rate can have an adverse impact on our results of operations and cash flow. Based on borrowings outstanding at September 30, 2015, a 100 basis point change in interest rates would change our annualized interest expense by approximately $0.8 million.

Commodity Price Risk Exposure and Management

As a result of our operations, we are exposed to commodity price risk arising from fluctuations in the prices of crude oil, NGLs and natural gas. The demand for, and prices of, crude oil, NGLs and natural gas, are dependent on a variety of factors, including supply and demand, weather conditions, the price and availability of alternative fuels, actions taken by governments and international cartels and global economic and political developments.

Our board of directors actively reviews oil and natural gas hedging on a monthly basis. Reports providing detailed analysis of our hedging activity are continually monitored against our policy. We sell our oil and natural gas on market using NYMEX market spot rates reduced for basis differentials in the basins from which we produce. We use forward contracts to manage our commodity price risk exposure. Our current policy is to hedge up to 85% of forecasted proved developed producing production.

Our primary commodity risk management objective is to reduce volatility in our cash flows. Management makes recommendations on hedging that are approved by the board of directors before implementation. We enter into hedges for oil using NYMEX futures or over-the-counter derivative financial instruments with only certain well-capitalized counterparties which have been approved by our board of directors. Historically we have not sought to hedge the price of our natural gas or NGL production.

Presently, all of our hedging arrangements are concentrated with two counterparties, both of which are lenders under our revolving credit facility. If these counterparties fail to perform their obligations, we may suffer financial loss or be prevented from realizing the benefits of favorable price changes in the physical market.

The result of oil market prices exceeding our swap prices or collar ceilings requires us to make payment for the settlement of our hedge derivatives, if owed by us, generally up to three business days before we receive market price cash payments from our customers. This could have a material adverse effect on our cash flows for the period between hedge settlement and payment for revenues earned.

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The following table provides a summary of our derivative contracts as of September 30, 2015:

Settlement Period	Derivative Instrument	Total Volume	Fixed Price
October - December 2015	Oil — WTI Fixed Price Swap	58,000 Bbl	$	87.00
October - December 2015	Oil — WTI Fixed Price Swap	64,400 Bbl	81.25
October - December 2015	Oil — WTI Fixed Price Swap	29,992 Bbl	87.80
October - December 2015	Oil — WTI Fixed Price Swap	45,500 Bbl	92.25
October - December 2015	Oil — WTI Fixed Price Swap	36,800 Bbl	59.52
January - December 2016	Oil — WTI Fixed Price Swap	205,000 Bbl	84.45
January - December 2016	Oil — WTI Fixed Price Swap	309,000 Bbl	90.45
January - December 2016	Oil — WTI Fixed Price Swap	135,600 Bbl	63.20
January - December 2016	Oil — WTI Fixed Price Swap	183,400 Bbl	56.90
January - December 2017	Oil — WTI Three-way collar	365,100 Bbl	—

The three-way collars provide an effective floor of $55.25 per barrel with WTI prices between $40.00 - $60.00 per barrel but also give upside to $80.25 per barrel.

Oil Prices Risk Sensitivity Analysis

The effect on profit as a result of changes in oil prices with all variables remaining constant for the year ended December 31, 2014 would be as follows (in $ million):

Change in profit/(loss)
— improvement in oil price of $10 per Bbl	$	7.3
— decline in oil price of $10 per Bbl	(7.3		)

Counterparty and Customer Credit Risk

In connection with our hedging activity, we have exposure to financial institutions in the form of derivative transactions. The counterparties on our derivative instruments currently in place have investment-grade credit ratings. We expect that any future derivative transactions we enter into will be with these counterparties or our lenders under our credit facilities that will carry an investment-grade credit rating.

We are also subject to credit risk due to concentration of our oil and natural gas receivables with certain 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. We review the credit rating, payment history and financial resources of our customers, but we do not require our customers to post collateral.

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Item 3. Properties.

Overview

Eagle Ford Shale Trend

Our primary operational focus is on our Eagle Ford Shale position, which as of September 30, 2015 is comprised of 37,004 gross (32,564 net) acres in seven Texas counties. The Eagle Ford Shale is an oil and natural gas producing stratigraphic horizon of sedimentary rock that extends across portions of south Texas from the Mexican border into east Texas forming a band roughly 50 to 100 miles wide and 400 miles long. The Eagle Ford Shale is organically rich and calcareous, in places transitioning to an organic, argillaceous lime-mudstone. The formation lies between the deeper Buda limestone and the shallower Austin Chalk formation. Its thickness generally ranges between 100 and 200 feet in the productive parts of the play, is found at depths ranging from as shallow as 4,000 feet to as deep as 13,000 feet, and in much of the deeper portions of the horizon is overpressured.

Along the entire length of the Eagle Ford Shale the structural dip of the formation is consistently down to the south with relatively few, modestly-sized structural perturbations. As a result, depth of the horizon increases consistently southwards along with the thermal maturity of the formation. Where the formation is shallow, it is less thermally mature and therefore more oil prone, and as it gets deeper and becomes more thermally mature, the Eagle Ford Shale is more natural gas. The transition between being more oil prone and more natural gas prone includes an interval that typically produces wet gas and NGLs.

The first horizontal wells drilled specifically for the Eagle Ford Shale were drilled in 2008, leading to a discovery in La Salle County. Since then, the play has expanded significantly across a large portion of south Texas and then into east Texas.

We view our properties in the Eagle Ford Shale as being divided into three distinct regions within this play: Western Eagle Ford (comprised of Dimmit, La Salle and Frio Counties), Central Eagle Ford (comprised of Gonzales and Wilson Counties) and Eastern Eagle Ford (comprised of Brazos and Robertson Counties). As of September 30, 2015, 32,564 net acres were operated by us and 20,662 net acres were held by production, or HBP. Our Eagle Ford Shale net production for the nine months ended September 30, 2015 was 5,307 Boe/d, comprised of 3,904 Bbls/d of oil, 663 Bbls/d of NGLs and 4,442 Mcf/d of natural gas, from 61 gross (56 net) producing wells.

As of December 31, 2014, our Eagle Ford Shale properties had proved reserves of 27.5 MMBoe, of which 87% is crude oil and NGLs and 35% is proved developed producing, or PDP. The PV-10 of our Eagle Ford proved reserves as of December 31, 2014 was $643.6 million, and 46% of such PV-10 is PDP. See Item 1 (“Business — Our Operations — PV-10”).

We had a total of 154 gross (144 net) engineered horizontal Eagle Ford drilling locations on 24,650 of our 32,564 net Eagle Ford Shale acres as of September 30, 2015. Approximately 100% of these locations are on leases operated by us, and 58 gross (56 net) locations are currently categorized as proved undeveloped, or PUD. As of September 30, 2015, we had 7,914 additional net acres in the Eagle Ford Shale trend with surrounding industry activity to which we have not assigned locations. In furtherance of our ongoing development activities, in July 2015 we entered into a joint development agreement (“JDA”) with IOG Capital, L.P. (“IOG”). Pursuant to the JDA, IOG will fund up to $100 million to be used in drilling incremental Eagle Ford Shale wells. IOG will fund up to 90% of the initial capital for the wells drilled in the program, and we will contribute the remainder of the incremental costs. IOG will have the right participate in the drilled wells as a non-operated working

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interest owner. As of September 30, 2015 IOG had elected to participate in the drilling and completion of two horizontal wells in La Salle County, Texas, which were spud in October 2015.

In addition, w e have identified 10 gross (10 net) engineered locations in the Eagle Ford Shale that we expect to drill in 2016. Based on our total of 154 gross engineered drilling locations as of September 30, 2015, this would provide for approximately 15 years of drilling inventory. We plan to continue evaluating this acreage and monitoring industry activity and believe the acreage may be prospective for additional locations.

Western Eagle Ford

As of September 30, 2015, our Western Eagle Ford region was comprised of 14,440 gross (13,213 net) acres in Dimmit, La Salle and Frio Counties and includes our Asherton, Beall Ranch, Burns Ranch, and Horned Frog projects. All of this net acreage was HBP. Production in the nine months ended September 30, 2015 was 3,636 Boe/d, which was comprised of 2,359 Bbls/d of oil, 594 Bbls/d of NGLs and 4,097 Mcf/d of gas from 36 gross (35 net) producing wells. Prominent offset operators in this region include Chesapeake Energy, EP Energy, Anadarko Petroleum, Stonegate Production and Carrizo Oil & Gas, Inc..

As of December 31, 2014, our Western region had proved reserves of 17.1 MMBoe, of which 82% is crude oil and NGLs and 39% is PDP. The PV-10 of our Western region proved reserves as of December 31, 2014 was $389.1 million and 45% of such PV-10 is PDP. See Item 1 (“Business — Our Operations — PV-10”).

According to our 2014 reserve report, single well estimated ultimate recoveries (EUR) on our undeveloped locations range from 396 MBoe to 633 MBoe across our Western region wells, projected well costs range from $3.9 million to $6.2 million for wells with lateral lengths of 3,900 feet to 8,000 feet.

We believe we have been at the forefront of drilling, completion and production techniques in the Western Eagle Ford since we began drilling in the region in 2011. We believe our Beall Ranch #1H, #2H and #3H wells were the first horizontal wells drilled in the oil window on 500 foot well spacing. Further, all of our wells in the Western Eagle Ford have been pad drilled and, wherever possible, zipper-fracked. During the four years we have been active as an operator in the Western Eagle Ford, we have made a number of improvements to our methods for drilling, completing and producing our Eagle Ford laterals. We have significantly enhanced the amount of proppant deployed in fracture stimulation procedures, increasing proppant per foot from 964 lbs/ft in our first generation of wells to 1,500 lbs/ft in the wells we drilled in 2014. We believe we have made additional improvements to our well results by virtue of modifications we have made to post-frac shut-in times, as well as choke management, which involves flowing the wells back on smaller chokes. The most compelling evidence of the collective effect of our improved practices are the increases in EURs assigned by our independent reserve engineers, W.D. Von Gonten & Co. We have designed our perforation programs to minimize perforating larger faults so as to maximize fracturing efficacy and avoid communicating with the underlying Buda formation.

As of September 30, 2015, our Western Eagle Ford acreage had a total of 36 gross (35 net) Eagle Ford producing wells with 61 gross (54 net) engineered Eagle Ford drilling locations. 100% of these gross drilling locations are on leases that we operate. Of these locations, 29 gross (28 net) locations are categorized as PUD. We plan to drill 8 gross (8 net) Eagle Ford wells in this region during the fourth quarter of 2015 and fiscal 2016.

Central Eagle Ford

Our Central Eagle Ford region as of September 30, 2015 was comprised of 10,486 gross (10,001 net) acres in Wilson and Gonzales Counties, and includes our Pirate and Modern Gonzo projects. As of September 30, 2015, 100% of this acreage was operated by us. Approximately 56% of this net acreage was HBP. Production in the nine months ended September 30, 2015 was 1,029 Boe/d,

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which was comprised of 973 Bbls/d of oil, 32 Bbls/d of NGLs and 146 Mcf/d of natural gas from 17 gross (14 net) producing wells. Prominent offset operators in this region include Hunt Oil, Marathon Oil, McMoRan Oil & Gas and EOG Resources, Inc.

As of December 31, 2014, our acreage in the Central region had proved reserves of 5.4 MMBoe, of which 96% is crude oil and NGLs and 30% is PDP. The PV-10 of our Central region proved reserves as of December 31, 2014 was $126.0 million and 51% of such PV-10 is PDP. See Item 1 (“Business — Our Operations — PV-10”).

According to our 2014 reserve report, single well EURs range from 209 MBoe to 353 MBoe across our Central region wells. Projected well costs range from $5.5 million to $6.6 million for wells with lateral lengths of 5,000 feet to 8,000 feet.

The Eagle Ford Shale occurs at a total vertical depth of 6,700 feet to 7,900 feet across our leasehold in the Central region. The total thickness of the Eagle Ford Shale in this region ranges from 90 feet to 100 feet, with the Lower Eagle Ford exhibiting thicknesses ranging from 50 feet to 60 feet.

Based on our drilling experience and that of offset operators, we believe that success in the Central Eagle Ford area is related to a different set of factors than in other parts of the Eagle Ford Shale. The Eagle Ford Shale horizon in this area is thinner yet exhibits higher porosities, and is more prone to significant faulting than in our other leasehold positions. We emphasize utilization of 3-D seismic imaging to maximize the lateral’s interface with the Eagle Ford and avoid the Buda formation, which produces high rates of water locally. We also take care to design well paths so as to minimize intersecting large faults that may take the lateral well bore out of our target Eagle Ford zone. Additionally, we believe that perforation placement is more important than proppant volumes in successful fracture stimulations in this area. Due to the relatively high porosities in the Central region compared to our other operating regions, fracture stimulation typically requires 250,000 pounds of proppant per stage, and stages are placed at an average of 250 foot intervals. We have designed our perforation programs to minimize perforating larger faults so as to maximize fracturing efficacy and avoid communicating with the underlying Buda formation.

Our Central Eagle Ford region had a total of 17 gross (14 net) Eagle Ford producers and had a total of 61 gross (61 net) engineered Eagle Ford drilling locations as of September 30, 2015. All of these drilling locations are on leases that we operate. Of these locations, 17 gross (17 net) are currently categorized as PUD. Our current plan does not include drilling any wells in the Central region during the fourth quarter of 2015 and fiscal 2016.

Eastern Eagle Ford

Our Eastern Eagle Ford region as of September 30, 2015, was comprised of 12,078 gross (9,350 net) acres in Brazos and Robertson Counties. Approximately 38% of this net acreage is HBP. Our Eastern region includes 5,475 gross (4,979) net acres, which are located within the productive limits of the Aguila Vado Eagle Ford Shale Field, and an additional 6,608 gross (4,371) net acres that are under appraisal. Production in the nine months ended September 30, 2015 was 643 Boe/d, which was comprised of 572 Bbls/d of oil, 37 Bbls/d of NGLs and 200 Mcf/d of natural gas from 8 gross (7.6 net) producing wells.

As of December 31, 2014, our Eastern region had proved reserves of 4.9 MMBoe, of which 96% is crude oil and NGLs and 29% is PDP. The PV-10 of our Eastern region proved reserves as of December 31, 2014 was $129.0 million and 43% of such PV-10 is PDP. See Item 1 (“Business — Our Operations — PV-10”).

According to our 2014 reserve report, single well EURs range from 374 MBoe to 474 MBoe across our Eastern Eagle Ford region wells, and projected well costs range between $6.1 million and $6.9 million for wells with lateral lengths ranging from 5,000 feet to 7,000 feet.

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The Eagle Ford Shale occurs at a total vertical depth of 7,800 feet to 8,500 feet across our leasehold in the Eastern Eagle Ford. The total thickness of the Eagle Ford zone ranges from 400 feet to 500 feet in this region, with the lower Eagle Ford exhibiting thicknesses of approximately 200 feet.

Our Eastern Eagle Ford region had a total of 8 gross (8 net) producing wells, and had a total of 32 gross (29 net) engineered drilling locations as of September 30, 2015. All of these drilling locations are on leases that are operated by us. Of these locations, 12 gross (11 net) locations are currently categorized as PUD. Our current plan is to drill 12 gross (11 net) wells in the Eastern Eagle Ford region during the fourth quarter of 2015 and fiscal 2016.

Conventional Assets

In addition to our Eagle Ford Shale acreage, we have conventional oil and natural gas properties located in 14 counties in Texas, including long-lived reserves in the Canyon, Delaware Sand, Hackberry, Caddo, Cockfield and Jackson formations. Our average working interest in our conventional assets is approximately 74%. As of December 31, 2014, these properties contained approximately 3.5 MMBoe of estimated proved reserves, of which 79% is crude oil. Production for the nine months ended September 30, 2015 from our conventional assets was 685 Boe/d, approximately 56% of which was crude oil, which represented 11% of our total net production for that period. We do not plan to drill any new wells on these properties in 2016.

We are in the process of updating the evaluation of proved reserves and, once complete, we may appoint a sales agent to help explore the monetization of our conventional reserves during the first half of 2016.

West Poplar Area of Bakken-Three Forks

In a series of transactions in 2011 and 2012, we acquired approximately 50,191 gross (32,624 net) undeveloped acres in the West Poplar area of the Bakken-Three Forks trend in Roosevelt County, Montana, with an average working interest of approximately 65%. We and our partners drilled one exploratory vertical well on this acreage in July 2012, which logged oil pay in three prospective unconventional zones in the Bakken, Three Forks and Lower Lodgepole formations that comprise a horizontal drilling target at depths ranging from 120 feet to 150 feet. Upon testing, each of these zones produced light gravity crude oil ranging from 41.2 to 45.8 API gravity. These tests were achieved with simple acidization and the oil volumes were produced water-free. During 2013, we completed archeological studies across our leasehold and acquired a 3-D seismic study across our leasehold, which is currently being processed, to enhance the value of these assets. With approval from the Bureau of Land Management and Bureau of Indian Affairs, we have formed with our partners a federal unit that allows for the suspension of lease expirations pending completion of an economic well, which we are considering drilling in 2016. Furthermore, we have the option to renew or extend leased acreage designated as the West Poplar Unit.

Summary of Primary Project Areas

The following table presents summary data for each of our primary project areas as of September 30, 2015 and our capital expenditure budget for 2016:

		Average		Engineered Drilling Locations(1)		2016 Capital Expenditure Budget
	Net Acreage	Working Interest		Gross	Net	Gross Wells	Net Wells	Expenditures ($MM)(2)
Western Eagle Ford	13,213	92	%	61	54	8	8	$	44.5
Central Eagle Ford	10,001	95	%	61	61	—	—	—
Eastern Eagle Ford	9,350	77	%	32	29	2	2	13.1
Total Eagle Ford	32,564	88	%	154	144	10	10	57.6
Conventional Assets	N/A	74	% (3)	—	—	—	—	—
West Poplar	28,655	65	%	—	—	—	—	—
Total	61,219	77	% (4)	—	—	10	10	$	57.6

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(1) We consider these locations to be “engineered” based on reserves assigned to such locations as proved undeveloped, probable or possible in our internal engineering assessment. Assumed well spacing is 500 feet in our Western Eagle Ford region and approximately 750 feet in our Central and Eastern Eagle Ford regions.

(2) Includes approximately $2.1 million of capital expenditure contingency allocated across the Eagle Ford expenditures.

(3) Due to the maturity of our conventional reserves, we consider the most appropriate measure of our working interest on the conventional assets is the average working interest across our reserves, which is shown here.

(4) Across our Eagle Ford and West Poplar acreage.

We are continuously evaluating opportunities to grow both our acreage and our producing assets through acquisitions. Our successful acquisition of such assets will depend on both the opportunities and the financing alternatives available to us at the time we consider such opportunities.

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Item 4. Security Ownership of Certain Beneficial Owners and Management.

The table below sets forth certain information regarding the beneficial ownership of our common stock as of November 30, 2015 by (i) each of our named executive officers; (ii) each person who, to our knowledge, beneficially owns more than 5% of outstanding shares; and (iii) all of our directors and executive officers as a group, after giving effect to the Reorganization.

Beneficial ownership is determined according to the rules of the SEC and generally includes any shares over which a person exercises sole or shared voting or investment power. All shares of common stock owned by such person, including shares of common stock underlying stock options that are currently exercisable or exercisable within 60 days after November 30, 2015 are deemed to be outstanding and beneficially owned by that person for the purpose of computing the ownership percentage of that person, but are not considered outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise indicated, to our knowledge, each person listed in the table below has sole voting and investment power with respect to the shares shown to be beneficially owned by such person, except to the extent that applicable law gives spouses shared authority. The address of each of our executive officers and directors listed below is c/o Lonestar Resources US Inc., 600 Bailey Avenue, Suite 200, Ft.Worth, Texas 76107.

Name	Number of Shares Beneficially Owned		Percentage of Outstanding Shares(1)
Ecofin Water & Power Opportunities PLC	4,425,452	(2)	58.8	%
Springfield Lode, Colchester Road, Chelmsford, Essex, CM2 5PW, U.K.
Named Executive Officers
Frank D. Bracken, III	280,400	(3)	1.0	%
Barry Schneider	96,525	(4)		*
Thomas H. Olle	150,996	(5)		*
Directors (other than Mr. Bracken)
Bernard Lambilliotte	4,425,452	(6)	58.8	%
Christopher Rowland, Ph.D.	62,438	(7)		*
Daniel Lockwood	8,982			*
Mitchell Wells	22,560	(8)		*
John Pinkerton	115,000	(9)		*
Robert Scott	35,600			*
Executive Officers and Directors as a group (11 persons)	5,263,343	(10)	62.4	%

* Represents beneficial ownership of less than 1% of the outstanding shares of Lonestar.

(1) Based on 7,522,025 shares of common stock issued and outstanding as of November 30, 2015, after giving effect to the Reorganization.

(2) Certain shares owned by Ecofin Water & Power Opportunities PLC are held by affiliated entities with which Ecofin Water & Power Opportunities may be deemed to share beneficial ownership.

(3) Includes 74,371 shares and 206,029 shares that Mr. Bracken has the right to acquire pursuant to currently exercisable options.

(4) Includes 46,500 shares and 50,025 shares that Mr. Schneider has the right to acquire pursuant to currently exercisable options.

(5) Includes 32,876 shares and 118,120 shares that Mr. Olle has the right to acquire pursuant to currently exercisable options.

(6) 148,958 of these shares are pledged to a third party as security for loan, and such pledge could result in a change in beneficial ownership of the shares in certain circumstances. Mr. Lambilliotte holds his shares through an account with an entity affiliated with Ecofin Water & Power Opportunities PLC, and the shares shown as being owned by him are included in the shares shown in the table as being owned by that entity. Mr. Lambilliotte is Chief Investment Officer of Ecofin Limited, a fund manager that has investment

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authority over the shares owned by Ecofin Water & Power Opportunities PLC, and he and his family members are beneficiaries of a trust that is the controlling shareholder of Ecofin Limited.

(7) Dr. Rowland is Director of Special Situations of Ecofin Limited.

(8) Includes 2,560 shares and 20,000 shares that Mr. Wells has the right to acquire pursuant to currently exercisable options.

(9) Includes 115,000 shares that Mr. Pinkerton has the right to acquire pursuant to currently exercisable options (subject to exercise conditions).

(10) Includes an aggregate of 688,813 shares that the members of the group have the right to acquire pursuant to currently exercisable options.

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Item 5. Directors and Executive Officers.

The following table sets forth the name, position and age of each of our directors and executive officers.

Name	Position	Age
Frank D. Bracken, III	Chief Executive Officer	52
Barry D. Schneider	Chief Operating Officer	53
Douglas W. Banister	Chief Financial Officer	53
Thomas H. Olle	Senior Vice President - Operations	61
Jana Payne	Vice President - Geosciences	53
Bernard Lambilliotte	Chairman	57
Daniel R. Lockwood	Director	57
Dr. Christopher Rowland	Director	60
Robert Scott	Director	67
John Pinkerton	Director	61
Mitchell Wells	Director	40

Frank D. Bracken, III is our Chief Executive Officer. Mr. Bracken has served in this positions since January 2013 and has served as a director and Chief Executive Officer of Lonestar Resources, Inc., our wholly-owned subsidiary, since January 2012. Mr. Bracken was previously employed by Sunrise Securities from September 2008 to December 2011 and employed by Jefferies LLC from November 1999 to August 2008. During that time, Mr. Bracken led oil and natural gas transactions, spanning from public and private equity and debt offerings to joint ventures in the Haynesville Shale to one of the first purchases of a publicly-traded oil & gas company by a private equity firm. As Chief Financial Officer and a member of the board of directors at Gerrity Oil & Gas Corp, an NYSE-listed exploration and production company, Mr. Bracken was responsible for corporate budgeting and development, equity and debt financing in public and private offerings, and acquisitions and divestitures. Mr. Bracken holds a Bachelors of Arts degree from Yale University.

Barry D. Schneider is our Chief Operating Officer. Mr Schneider has served in this position since May 2014. Prior to joining us, Mr. Schneider held the position of Vice President - Northern Region for Denbury Resources, Inc. Mr. Schneider was at Denbury for 15 years and held positions of increasing responsibility. After holding the positions of Vice President, Production & Operations, Mr. Schneider was promoted to Vice President-East Region in 2009. Since 2012, he was responsible for its Northern Region business unit. Prior to Denbury, Mr. Schneider was employed by Wiser Oil and Conoco-Philips. Mr. Schneider received his B.S. in Natural Gas Engineering from Texas A&M - Kingsville in 1985.

Douglas W. Banister is our Chief Financial Officer. He became Chief Accounting Officer of Lonestar Resources, Inc., our wholly-owned subsidiary in August 2010. Mr. Banister is a Certified Public Accountant with 29 years of experience in finance, planning, negotiating and business developments. Mr. Banister began his career in public accounting with Ernst & Young and later worked for D.R. Horton and Richmond American Homes. Mr. Banister holds a B.B.A. from Texas Wesleyan University with an emphasis in accounting.

Thomas H. Olle is our Senior Vice President-Operations. Mr. Olle has served in this position since August 2010. Mr. Olle has over 35 years of oil and gas industry experience in multiple facets of the business, such as reservoir management and management of unconventional resource development projects including horizontal well field development and tertiary recovery projects. Mr. Olle also has significant experience with reserve evaluation and reporting, production engineering and operations, and business development functions including acquisitions, divestitures and new ventures. During his tenure at Encore Acquisition Company, Mr. Olle served as Vice President-Strategic Solutions and also held executive positions responsible for asset management and engineering. He also served as Senior Engineering Advisor for Burlington Resources and District Reservoir Engineer for Southland Royalty Company. Mr. Olle holds a Bachelors of Science in Mechanical Engineering with Highest Honors from the University of Texas in Austin.

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Jana Payne was appointed our Vice-President of Geosciences in November 2015, bringing over 25 years of experience in the oil and gas industry. Prior to joining us, Ms. Payne held the position of Senior Exploitation Manager and Geologist at Halcon Resources, Inc. Ms. Payne spent eight years at Petrohawk Energy Inc. (and subsequently BHP Billiton following its acquisition of Petrohawk), where her initial mapping of the Eagle Ford shale led to the discovery of the first commercial Eagle Ford Shale well and acquisition of over 300,000 acres by the company. Ms. Payne’s early career was as a geologist at Marathon Oil Co. and Petroleum Geo-Services, Inc. Ms. Payne has published works in learned journals and holds an MSc and BSc in geology from the University of Texas at Arlington.

Bernard Lambilliotte has served as a Director since January 2013 and Chairman of the Board since May 2014. Mr. Lambilliotte has served as Chief Investment Officer of Ecofin Limited, a specialist fund manager in equity, utilities and infrastructure, since 1992. Mr. Lambilliotte served as an investment manager with Pictet & Cie., private bankers, in Geneva and London, where he was responsible for the development of sector funds, having previously been an investment banker with Swiss Bank Corporation in London and Paris, and with Drexel Burnham Lambert in London. He sits on the board of directors of each of Hamon er Cie S.A., an international power engineering group based in Belgium, and Oro Negro, an oil services company based in Mexico. He graduated from the Université Libre de Bruxelles with a degree in engineering, and from INSEAD, Fontainebleau, France where he received an M.B.A. degree. Mr. Lambilliotte is also a trustee of the Ecofin Research Foundation, a UK-based registered charity, which aims to promote the development of sustainable, low carbon solutions.

Daniel R. Lockwood has served as a Director since May 2014. He also serves as Vice-President of New Tech Global and is responsible for overseeing and managing NTG engineering and project management services. Mr. Lockwood is a graduate of the Colorado School of Mines with a degree in Petroleum Engineering. Dan joined New Tech Engineering in 2000, and brings with him more than 35 years of engineering and management experience and is considered one of the industry’s leading experts in Shale Operations.

Dr. Christopher Rowland has been a Director of Lonestar since January 2013. He is also Director of Special Situations for Ecofin Limited where he is responsible for initiating and monitoring unlisted investments. Prior to joining Ecofin Limited in 2006, Dr. Rowland formed and led equity research teams over a 20-year period at several investment banks, including Merrill Lynch and Dresdner Klienwort Benson. Apart from his career as a research analyst, Dr. Rowland spent time setting up an alternative generator to buy coal-fired power stations in 1993. He has a Ph.D. for his research into the economics of UK oil taxation and holds a MSc (Econ) from the University of London and a BSc in Economics from the University of Bath.

Robert Scott has served as a Director since 1996. He has over 35 years experience as an advisor on corporate services and taxation, specializing in the mining and resources sector. Mr. Scott holds a Fellowship of the Australian Institute of Chartered Accountants and the Taxation Institute of Australia. Mr. Scott is currently Non-Executive Director of Homeloans Limited, Sandfire Resources Limited and RTG Mining Inc., and Non-Executive Chairman of Manas Resources Limited. Mr. Scott was formerly Chairman of bioMD Limited and Australian Renewable Fuels Limited and a Non-executive Director of New Guinea Energy Limited, Neptune Marine Services Limited and CGA Mining Limited.

John Pinkerton has served as a Director since August 2014. He has been a director of Range Resources Corporation (NYSE: RRC) since 1988 and was Chairman of its Board of Directors from 2008 until January 2015. He joined Range as President in 1990 and served as Chief Executive Officer from 1992 until 2012. Prior to joining Range, Mr. Pinkerton served in various capacities at Snyder Oil Corporation for twelve years, including the position of Senior Vice President. Mr. Pinkerton received his Bachelor of Arts degree in Business Administration from Texas Christian University, where he now serves on the board of trustees, and a Master’s degree from the University of Texas at Arlington. During his 27-year tenure Range Resources grew from its small cap origins to be a $13 billion dollar

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enterprise with a pre-eminent position in the Marcellus Shale. As CEO of Range Resources, Mr. Pinkerton established the technical expertise to enable a drilling-led strategy complemented by bolt-on acquisitions where synergies would enhance growth. This resulted in a rapid and impressive increase in the scale of the business, and seven consecutive years of double-digit growth in both production and reserves (adjusted for debt). Mr. Pinkerton has widespread skill in the management, acquisition and divestiture of oil and gas properties — including related corporate financing activities — hedging, risk analysis and the evaluation of drilling programs. He has represented the industry in policy matters, serving on the executive committee of America’s Natural Gas Alliance.

Mitchell Wells has served as a director since December 2014. Mr. Wells is a qualified lawyer with legal experience in Australia, the United States and the United Kingdom. He has worked in the oil and gas sector for the past 8 years both as a Chief Operating Officer and as a Company Secretary. Mr Wells also previously served as Lonestar Resources Limited’s company Secretary.

Codes of Business Conduct and Ethics

In connection with the Reorganization, our board of directors will adopt a code of business conduct and ethics that will apply to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other executive officers.

Controlled Company

Ecofin Water & Power Opportunities PLC and its affiliates control a majority of the voting power of our outstanding common stock. As a result, we are a “controlled company” under Nasdaq corporate governance standards. As a controlled company, exemptions under Nasdaq standards will exempt us from certain Nasdaq corporate governance requirements, including the requirements:

· that a majority of our board of directors consists of “independent directors,” as defined under Nasdaq rules;

· that the compensation of our executive officers be determined, or recommended to the board of directors for determination, by majority vote of the independent directors or by a compensation committee comprised solely of independent directors; and

· that director nominees be selected, or recommended to the board of directors for selection, by majority vote of the independent directors or by a nomination committee comprised solely of independent directors.

Accordingly, you may not have the same protections afforded to stockholders of companies that are subject to all of Nasdaq’s corporate governance requirements. In the event that we cease to be a controlled company, we will be required to comply with these provisions within the transition periods specified in Nasdaq rules.

These exemptions do not modify the independence requirements for our audit committee, and we expect to satisfy the member independence requirement for the audit committee prior to the end of the transition period provided under Nasdaq rules and SEC rules.

Board Structure

Composition

Upon completion of the Reorganization, our board of directors is expected to consist of eight members: Frank D. Bracken, III, Bernard Lambilliotte, Daniel R. Lockwood, Dr. Christopher Rowland, John Pinkerton, Mitchell Wells, Robert Scott and one new director who we intend to appoint prior to completion of the Reorganization. Each director is to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. Vacancies and newly created directorships on the board of directors may be filled at any time by the remaining directors.

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Director Independence

Our board of directors has determined that Robert Scott is an “independent director” as such term is defined by the applicable Nasdaq rules. We intend to appoint a new director prior to the completion of the Reorganization whom we believe will be an independent director under the applicable Nasdaq rules.

Committees of the Board

Our board of directors will have an Audit and Risk Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. Under the rules of Nasdaq, the membership of the Audit and Risk Committee is required to consist entirely of independent directors, subject to applicable phase-in periods. As a controlled company, we are not required to have fully independent Compensation and Nominating and Corporate Governance Committees. The following is a brief description of our committees.

Audit and Risk Committee. Our Audit and Risk Committee will assist the board in monitoring the audit of our financial statements, our independent auditors’ qualifications and independence, the performance of our audit function and independent auditors and our compliance with legal and regulatory requirements. The Audit and Risk Committee has direct responsibility for the appointment, compensation, retention (including termination) and oversight of our independent auditors, and our independent auditors report directly to the Audit and Risk Committee. The Audit and Risk Committee will also review and approve related party transactions as required by the rules of Nasdaq.

Our Audit and Risk Committee will comprise Mitchell Wells, Robert Scott and the planned new director. The board of directors has determined that Mr. Scott qualifies as an “audit committee financial expert.” The board has also determined that Mr. Scott is “independent” for purposes of Rule 10A-3 of the Exchange Act and Nasdaq rules, and that Mr. Wells is “independent” for purposes of Rule 10A-3 of the Exchange Act. We intend that the planned new director will be independent under Rule 10A-3 of the Exchange Act and applicable Nasdaq listing rules.

The board of directors has determined that Mr. Wells is not “independent” under Nasdaq listing rules as a result of his service as Company Secretary of Lonestar Resources Limited prior to the Reorganization. Accordingly, we are relying on the phase-in provisions of the Nasdaq listing rules applicable to new public companies, and we plan to have an Audit and Risk Committee comprised solely of independent directors that are independent for purposes of serving on an Audit and Risk Committee within one year of our listing. We may also rely on additional exemptions provided under Nasdaq listing rules, including the exemption afforded by Rule 5605(c)(2)(B) to the extent the board determines that reliance on such exemption would be in the best interests of the company and its shareholders.

Compensation Committee. Our Compensation Committee will review and recommend policies relating to compensation and benefits of our directors and employees and will be responsible for approving the compensation of our Chief Executive Officer and other executive officers.

Our Compensation Committee will comprise Daniel R. Lockwood, John Pinkerton, and Dr. Christopher Rowland. Our board has determined that Messrs. Lockwood, Pinkerton and Rowland are not independent under Nasdaq rules. Because we are a “controlled company” under the rules of Nasdaq, our Compensation Committee is not required to be fully independent, although if such rules change in the future or we no longer meet the definition of a controlled company under the current rules, we will adjust the composition of the Compensation Committee accordingly in order to comply with such rules.

Nominating and Corporate Governance . Our Nominating and Corporate Governance Committee will select or recommend that the board of directors select candidates for election to our board of directors, develops and recommends to the board of directors corporate governance guidelines that are applicable to us and oversees board of director and management evaluations.

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Our Nominating and Corporate Governance Committee will comprise Robert Scott, John Pinkerton, and Dr. Christopher Rowland. Our board has determined that Messrs. Pinkerton and Rowland are not independent under Nasdaq rules. Because we are a “controlled company” under the rules of Nasdaq, our Nominating and Corporate Governance Committee is not required to be fully independent, although if such rules change in the future or we no longer meet the definition of a controlled company under the current rules, we will adjust the composition of the Nominating and Corporate Governance Committee accordingly in order to comply with such rules.

Compensation Committee Interlocks and Insider Participation

None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving on our board of directors or compensation committee.

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

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Item 6. Executive Compensation

Introduction

We are currently considered a “smaller reporting company” for purposes of the SEC’s executive compensation disclosure rules. In accordance with such rules, we are required to provide a Summary Compensation Table and an Outstanding Equity Awards at Fiscal Year End Table as well as limited narrative disclosures. Further, our reporting obligations extend only to the individuals serving as our chief executive officer and our two other most highly compensated executive officers. For 2014, our named executive officers were:

· Frank D. Bracken, III, Chief Executive Officer;

· Barry D. Schneider, Chief Operating Officer (appointed May 2014); and

· Thomas H. Olle, Senior Vice President - Engineering.

Principles used to determine the nature and amount of compensation

Governance and the role of the Remuneration & Nomination Committee

Our board strives to align Lonestar’s compensation strategy with company performance and shareholder interests, and ensure that it is equitable for participants. To assist with this, prior to the Reorganization the board had in place a Remuneration & Nomination Committee, which consisted of non-executive Directors only. Lonestar’s CEO has historically attended meetings of the Remuneration & Nomination Committee but did not attend discussions regarding his compensation.

The Remuneration & Nomination Committee’s objective was to support and advise the board in fulfilling its oversight responsibility by focusing on Lonestar’s approach to executive compensation as well as the use of equity across the company.

In connection with our proposed listing on Nasdaq, we will form a Compensation Committee and adopt a charter for it in compliance with Nasdaq listing rules applicable to controlled companies. See Item 5 (“Directors and Executive Officers — Board Structure — Committees of the Board — Compensation Committee ”)

Summary of principles and the components of compensation

The structure of our executive compensation and the non-executive director compensation programs are separate and distinct. The following table is an overview of the compensation framework elements as we intend to apply to our named executive officers and our non-executive directors:

	Element	Executives	Non-Executive Directors

Fixed compensation	Base salary	ü	´

	Fees / Consultancy	´	ü

	401(k)/Australian superannuation	ü	ü

	Other benefits	ü	´

Variable compensation	Short term incentive	ü	´

	Long term incentives	ü	´

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Executive compensation policy

The objective of the executive compensation framework is to competitively and appropriately reward performance and results delivered. To this end, our compensation policy is intended to embody the following principles in its compensation framework:

· compensation should facilitate the delivery of long term results for the business and its shareholders;

· compensation should support the attraction, retention, motivation and alignment of the talent needed to achieve the organisation’s goals;

· compensation should reinforce leadership, accountability, teamwork and innovation; and

· compensation should be aligned to the contribution and performance of the business, teams and individuals.

Approach to executive compensation

Prior to the Reorganization, our Remuneration & Nomination Committee considered the appropriate level of compensation, as well as the mix and structure of fixed and variable compensation, for our executive officers. This determination will be made by our Compensation Committee following the Reorganization.

We will broadly seek to position fixed compensation in line with similar oil and gas companies. Individual positioning of compensation depends on this positioning aspiration plus consideration of experience, individual performance and Lonestar’s circumstances. When setting compensation, we seek to establish an appropriate mix between fixed and variable compensation. For fiscal 2014, most of the executives had a target package split with approximately 67% based on fixed compensation and 33% based on variable compensation.

Fixed compensation : Base salary is designed to compensate for the value the individual provides to Lonestar, including the following:

· skills and competencies needed to generate results;

· sustained contribution to the team and Lonestar; and

· the value of the role and contribution of the individual in the context of the external market.

For U.S.-based executives, retirement benefits are paid in accordance with 401(k) requirements. In line with prevalent market practice in the United States, U.S.-based executives receive health plan benefits.

Short-term incentives (“STI”): The STI plan allows for executives to receive an annual cash bonus equal to up to 50% of their base salary. The payments determined by the board take into account both Lonestar’s and the individual’s performance. Metrics used for determining the award of STI include: production and reserves growth, EBITDAX growth and achievement of EBITDAX guidance (normalized). STI awards are weighted approximately 75% for Lonestar performance and 25% individual performance. No part of the bonus is payable in future years.

Long-term incentives (“LTI”): We had two LTI plans in place during 2014 being the Lonestar Resources Limited 2012 Employee Share Option Plan (the “2012 Plan”) and the Amadeus Employee Share Option Plan. Following the Reorganization, these plans will be replaced by our Lonestar Resources US Inc. 2016 Incentive Plan (the “2016 Plan”), and options issued under the 2012 Plan will be cancelled and replaced with awards issued pursuant to the 2016 Plan.

The options that will be issued under the 2016 Plan will fall into two categories, being (i) Class A incentive options and (ii) Class B incentive options. Class A options vest equally over three years unless there is a change in control event (as defined in the 2016 Plan) or cessation of employment by

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redundancy or termination. In the event of an executive’s redundancy or a change in control, all Class A options that have not vested will vest on the date of that change in control, termination or redundancy event. Class B options granted under the 2016 Plan will only vest in the event of a change in control, redundancy or termination.

Service and Employment Agreements

Non-executive directors : On appointment to the board, all non-executive Directors enter into a service agreement with Lonestar in the form of a letter of appointment. The letter outlines the board’s relevant policies and terms, including compensation. The non-executive directors receive a fixed fee, which has included Australian statutory superannuation but will cease upon completion of the Reorganization.

Executive officers: Compensation for each executive officer is formalized in an employment agreement, which are summarized below.

Frank D. Bracken, III, Chief Executive Officer

Term of agreement is to December 31, 2016

Base salary of $600,000 to be reviewed annually

Eligible for annual cash bonus of up to 50% of base salary

Entitled to benefits, including health care, car allowance and medical

Termination benefits to be paid on termination without cause or resignation for good reason

Eligible to participate in any employee share option plan

Barry D. Schneider, Chief Operating Officer (appointed in May 2014)

Term of agreement is to May 12, 2017

Base salary of $420,000 to be reviewed annually

Eligible for annual cash bonus of up to 50% of base salary

Entitled to benefits, including health care, car allowance and medical

Termination benefits to be paid on termination without cause or resignation for good reason

Eligible to participate in any employee share option plan

Douglas W. Banister, Chief Financial Officer

Term of agreement is to December 31, 2016

Initial base salary of $300,000 to be reviewed annually

Eligible for annual cash bonus of up to 50% of base salary

Entitled to benefits, including health care and medical

Termination benefits to be paid on termination without cause or resignation for good reason

Eligible to participate in any employee share option plan

Thomas H. Olle, Senior Vice President - Engineering

Term of agreement is to December 31, 2016

Base salary of $350,000 to be reviewed annually

Eligible for annual cash bonus of up to 50% of base salary

Entitled to benefits, including health care, car allowance and medical

Termination benefits to be paid on termination without cause or resignation for good reason

Eligible to participate in any employee share option plan

Jana Payne, Vice President - Geosciences

Term of agreement is to December 31, 2016

Base salary of $250,000 to be reviewed annually

Eligible for annual cash bonus of up to 50% of base salary

Entitled to benefits, including health care and medical

Termination benefits to be paid on termination without cause or resignation for good reason

Eligible to participate in any employee share option plan

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Summary Compensation Table

The following table sets forth the compensation of our principal executive officer and the two most highly compensated executive officers other than our principal executive officer for 2014 and 2013.

Name and Principal Position	Year	Salary		Bonus(1)		Option Awards(2)		All Other Compensation			Total

Frank D. Bracken, III	2014	$	575,000	$	300,000	$	495,770	$	49,043	(3)	$	1,419,813
Chief Executive Officer	2013	$	500,000	$	250,000	$	549,411	$	26,000		$	1,325,411

Thomas H. Olle	2014	$	337,500	$	175,000	$	284,234	$	47,959	(4)	$	844,693
Senior Vice President - Engineering	2013	$	300,000	$	150,000	$	314,987	$	40,500		$	805,487

Barry D. Schneider(5)	2014	$	68,937	$	134,468	$	225,592	$	24,861	(6)	$	453,858
Chief Operating Officer	2013	$	¾	$	¾	$	¾	$	¾		$	¾

(1) Pursuant to their respective employment agreements, each of our named executive officers is eligible for an annual cash bonus for each calendar year during his employment based upon the achievement of certain performance goals established by our board or the Remuneration & Nomination Committee, as the case may be, in its sole discretion.

(2) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718.

(3) Includes $30,753 paid or reimbursed to Mr. Bracken for insurance premiums incurred by him, $4,290 for executive medical coverage and $14,000 representing Mr. Bracken’s auto allowance.

(4) Includes $27,959 paid of reimbursed to Mr. Olle for insurance premiums incurred by him, $9,600 representing Mr. Olle’s auto allowance and $10,400 representing company matched 401(k) contributions.

(5) Mr. Schneider’s employment with Lonestar commenced in May 2014.

(6) Includes $16,192 paid or reimbursed to Mr. Schneider for insurance premiums incurred by him, $1,019 for executive medical coverage and $7,650 representing Mr. Schneider’s auto allowance.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth all outstanding equity awards held by each of our named executive officers at December 31, 2014 without giving effect to the Reorganization. As described above, in connection with the Reorganization, the options issued under the 2012 Plan will be cancelled and will be reissued pursuant to our 2016 Plan on a one for two basis.

Name	Number of Securities Underlying Unexercised Options (#) Exercisable	Option Exercise Price (A$)		Option Expiry Date

Frank D. Bracken, III	412,058	A$	15.00	Dec. 31, 2016
Chief Executive Officer

Thomas H. Olle	236,240	A$	15.00	Dec. 31, 2016
Senior Vice President - Engineering

Barry D. Schneider	150,000	A$	20.00	Dec. 31, 2017
Chief Operating Officer

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Non-executive Directors’ compensation policy

Fees and payments made to non-executive Directors for their service as Directors reflect the demands that are made on, and the responsibilities of, the Directors. Fees for non-executive Directors fees are reviewed and Lonestar seeks to position fees in line with other oil and gas companies of a similar market capitalization. Director fees are inclusive of committee fees. No termination or retirement benefits are provided to non-executive Directors. Directors may have separate consulting agreements.

Director compensation

The following table sets forth the compensation received by each non-employee Directors during our fiscal year ended December 31, 2014.

	Fees Earned or Paid in Cash ($)(1)		Option Awards ($)	All Other Compensation ($)(2)		Total ($)
Bernard Lambilliotte	$	69,041	¾	¾		$	69,041
Daniel R. Lockwood	37,500		¾	¾		37,500
Dr. Christopher Rowland	50,000		¾	$	50,000	100,000
Robert Scott	54,142		¾	¾		54,142

(1) Represents the cash portion of the annual board fees and chair fees.

(2) Other compensation for Dr. Christopher Rowland consisted of consulting fees.

Tax matters

Section 162(m) of the Internal Revenue Code of 1986 (as amended) places a limit of $1,000,000 on the amount of compensation that certain publicly held corporations may deduct for U.S. federal tax purposes in any one year with respect to certain named executives. This limitation did not apply to us for fiscal 2014 because, as of December 31, 2014, none of our shares were required to be registered under the Exchange Act.

It is expected that Section 162(m) will apply to us following the Reorganization and that our compensation committee will adopt a general practice of considering the adverse effect of Section 162(m) on the deductibility of compensation when designing annual and long-term compensation programs and approving payouts under these programs. While the tax treatment of compensation is important, the primary factor influencing program design is the support of business objectives. Consequently, it is expected that our compensation committee will reserve the right to design and administer the programs in a manner that does not satisfy the requirements of Section 162(m) and to approve the payment of non-deductible compensation if the compensation committee believes doing so may achieve a result determined to be in Lonestar’s best interest. Due to transition rules that apply to Lonestar under Section 162(m), we believe that all of the compensation that will result when our named executives exercise their currently outstanding stock options should be fully deductible.

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Item 7. Certain Relationships and Related Transactions and Director Independence.

Certain Relationships and Related Party Transactions

Other than as disclosed below, since January 1, 2013 we have not entered into any transactions or loans with any: (i) enterprises that directly or indirectly, through one or more intermediaries, control, are controlled by or are under common control with us; (ii) associates; (iii) individuals owning, directly or indirectly, an interest in our voting power that gives them significant influence over us, and close members of any such individual’s family; (iv) key management personnel and close members of such individuals’ families; or (v) enterprises in which a substantial interest in our voting power is owned, directly or indirectly, by any person described in (iii) or (iv) or over which such person is able to exercise significant influence.

We loaned $539,000 in total to Frank D. Bracken, III and Thomas H. Olle to assist with their tax obligations as a result of stock compensation awarded to them in 2013. The loans were on arms-length commercial terms and will be settled in full in January 2016.

Butterfly Flaps, Ltd, a company in which Dr. Christopher Rowland (a director of Lonestar) owns an interest, has performed consultancy work for Lonestar since 2013 covering various strategic, tax structuring and investor matters at a cost of approximately $25,000 per quarter.

New Tech Global Ventures, LLC, a company in which Daniel R. Lockwood (a director of Lonestar) owns a limited partnership interest, has provided field engineering staff and consultancy services for Lonestar since 2013. The total cost for such services was approximately $800,000, $2,100,000 and $500,000 in 2015, 2014 and 2013, respectively.

Mitchell Wells, who has been a Director of Lonestar Resources Limited since December 2014, has provided consultancy services as its Company Secretary since January 2013. These services have been provided through BlueSkye Pty Ltd, for which Mr. Wells is the sole Director and shareholder. BlueSkye Pty Ltd was paid $142,500 in 2015, $181,458 in 2014 and $166,080 in 2013. He has not received any additional compensation for his service as a Director.

We review all relationships and transactions in which we and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. Our Chief Executive Officer and Chief Financial Officer are primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related party transactions. Our Audit and Risk Committee reviews and approves or ratifies any related party transaction pursuant to the authority given under the charter of the Audit and Risk Committee.

Director Independence

Because we are a “controlled company” under Nasdaq rules, we are not required to have a majority of our board of directors consist of “independent directors,” as defined under Nasdaq rules. If such rules change in the future or we no longer meet the definition of a controlled company under the current rules, we will adjust the composition of the boards and its committees accordingly in order to comply with such rules. See Item 5 (“Directors and Executive Officers — Controlled Company”).

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Item 8. Legal Proceedings.

From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of business. Like other crude oil and gas producers and marketers, our operations are subject to extensive and rapidly changing federal and state environmental, health and safety, and other laws and regulations governing air emissions, wastewater discharges, and solid and hazardous waste management activities. We are not aware of any material pending or overtly threatened legal action against Lonestar.

Item 9. Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters.

Market Information

Lonestar Resources Limited’s ordinary shares have traded on the ASX under the trading symbol “LNR.” The shares will be delisted and will cease trading upon the completion of the Reorganization. We have applied to have our common stock listed on the Nasdaq Global Market under the symbol “LONE” upon completion of the Reorganization. There can be no assurance that the listing application will be approved or that an active U.S. trading market for our common stock will develop.

The following table sets forth, for the periods indicated, the high and low closing prices of Lonestar Resources Limited’s ordinary shares on the ASX.

	High	Low
	A$	A$
*Fiscal year ending December 31, 2015*
Fourth Quarter (through December 21, 2015)	8.70	5.75
Third Quarter	8.90	5.30
Second Quarter(1)	9.80	7.70
First Quarter(1)	13.30	8.20
*Fiscal year ended December 31, 2014*
Fourth Quarter(1)	22.00	8.00
Third Quarter(1)	29.50	17.50
Second Quarter(1)	22.50	13.00
First Quarter(1)	14.50	10.50
*Fiscal year ended December 31, 2013*
Fourth Quarter(1)	14.50	11.00
Third Quarter(1)	14.00	7.00
Second Quarter(1)	9.50	7.00
First Quarter(1)	10.50	8.00

(1) Takes into account a 50:1 share consolidation (reverse stock split) effected in May 2015 but does not give effect to the Reorganization.

As of November 30, 2015 and giving effect to the Reorganization, we had 7,522,025 shares of common stock issued and outstanding, and there were approximately 2,100 holders of record of our common stock. Upon completion of the Reorganization, which is being conducted in reliance upon the exemption from registration provided under Section 3(a)(10) of the Securities Act, our shareholders will receive one share of Lonestar Resources US Inc. common stock for every two shares of Lonestar Resources Limited shares held prior to the Reorganization.

As of the date of this registration statement and giving effect to the Reorganization, 1,139,112 shares of our common stock were subject to outstanding stock options. In connection with the Reorganization, the options issued under the 2012 Plan will be cancelled and will be reissued pursuant to our 2016 Plan on a one for two basis. We plan to file a registration statement on Form S-8 to cover the issuance of the shares of our common stock that will be issuable upon exercise of these options or options that may be issued in the future under our employee benefit plans.

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Dividends

We currently intend to retain any earnings to fund the operation and expansion of our business and do not anticipate paying any cash dividends for the foreseeable future. The declaration and payment of any dividends in the future by us will be subject to the sole discretion of our board of directors and will depend upon many factors, including our financial condition, earnings, capital requirements of our operating subsidiaries, covenants associated with certain of our debt obligations, legal requirements, regulatory constraints and other factors deemed relevant by our board of directors. Moreover, if we determine to pay any dividend in the future, there can be no assurance that we will continue to pay such dividends . In addition, under our bank financing agreements, we are not permitted to pay cash dividends without the prior written consent of the lender.

Repurchases of Securities

Under the Delaware General Corporation Law, we are generally permitted to purchase or redeem our outstanding shares out of funds legally available for that purpose without obtaining stockholder approval, provided that (i) our capital is not impaired; (ii) such purchase or redemption would not cause our capital to become impaired; (iii) the purchase price does not exceed the price at which the shares are redeemable at our option and (iv) immediately following any such redemption, we shall have outstanding one or more shares of one or more classes or series of stock, which shares shall have full voting powers. Our certificate of incorporation does not create any further limitation on our purchase or redemption of our shares.

Item 10. Recent Sales of Unregistered Securities.

Issuances by Lonestar Resources US Inc.:

Since incorporation of Lonestar Resources US Inc. in December 2015, we have issued and sold the following securities that were not registered under the Securities Act:

In connection with the Reorganization, we will issue shares of common stock and options to purchase shares of common stock in exchange for all outstanding ordinary shares and options of Lonestar Resources Limited upon implementation of the Scheme of Arrangement. These issuances will be exempt pursuant to Section 3(a)(10) of the Securities Act.

Issuances by Lonestar Resources Limited:

Since January 1, 2012, Lonestar Resources Limited has issued and sold to third parties the securities listed below without registering the securities under the Securities Act. None of these transactions involved any public offering. All the securities were sold through private placement either (i) outside the United States or (ii) in the United States to a limited number of investors in transactions not involving any public offering. As discussed below, we believe that each issuance of these securities was exempt from, or not subject to, registration under the Securities Act. The numbers and prices of securities listed below do not take into account the 50:1 share consolidation with respect to our ordinary shares that occurred in May 2015.

1. On January 2, 2013, we issued 500,000 ordinary shares to Craig Coleman, our then Chairman, in lieu of A$50,000 of his fees as a Director. This issuance was exempt from registration under the Securities Act in reliance on Regulation S.

2. On January 2, 2013, we issued 460,000,000 ordinary shares to Ecofin Water & Power Opportunities PLC, as majority capital-holder, and minority capital-holders in Ecofin Energy Resources Plc (the previous holding company for Lonestar Resources, Inc.) in consideration for all their capital in such company. This issuance was exempt from registration under the Securities Act in reliance on Regulation S and Section 4(a)(2).

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3. On May 7, 2014, we issued 55,000,000 ordinary shares to Ecofin Water & Power Opportunities PLC, as majority capital-holder, and minority capital-holders in Ecofin Energy Resources Plc (the previous holding company for Lonestar Resources, Inc.) as deferred consideration for their capital in such company. This issuance was exempt from registration under the Securities Act in reliance on Regulation S and Section 4(a)(2).

Since January 1, 2013, Lonestar Resources Limited granted options to employees, directors and consultants under incentive compensation programs. We believe that the issuance of these securities were exempt from registration under the Securities Act in reliance upon Regulation S or Rule 701 of the Securities Act as transactions pursuant to written compensatory plans or pursuant to a written contract relating to compensation. No underwriters were employed in connection with the foregoing option grants.

Item 11. Description of Registrant’s Securities to be Registered.

The following description of our capital stock is a summary only and is qualified in its entirety by reference to our Certificate of Incorporation and Bylaws, which are included as Exhibits 3.1 and 3.2 of this registration statement.

We are authorized to issue up to 15,000,000 shares of Class A Voting Common Stock, $0.001 par value per share, and 5,000 shares of Class B Non-Voting Common Stock, $0.001 par value per share.

Holders of our Class A Voting Common Stock are entitled to one vote for each share on all matters voted on by stockholders, including the election of directors. Except as required by law, the holders of our Class B Non-Voting Common Stock will not be entitled to vote on matters voted on by stockholders.

Holders of our Class A and Class B common stock are entitled to receive dividends when and as declared by our board of directors out of funds legally available for dividends ; provided, however, that any dividend upon the common stock that is payable in common stock shall be paid only in Class A Voting Common Stock to the holders of Class A Voting Common Stock and only in Class B Non-Voting Common Stock to the holders of Class B Non-Voting Common Stock.

Holders of our common stock do not have any conversion, redemption or pre-emptive rights. In the event of any voluntary or involuntary liquidation, dissolution or winding up of the company, the holders of shares of our common stock will be entitled to receive all of the remaining assets of the company available for distribution to its stockholders, ratably in proportion to the number of shares of common stock held by them, regardless of whether such shares are Class A Voting Common Stock or Class B Non-Voting Common Stock.

Any outstanding shares of our common stock are fully paid and non-assessable.

Anti-Takeover Effects of Certain Provisions of Delaware Law and Our Certificate of Incorporation and Bylaws

Certain provisions of our Certificate of Incorporation and Bylaws may be considered as having an anti-takeover effect, such as the following provisions:

· requiring advance notice of stockholder intention to put forth director nominees or bring up other business at a stockholders’ meeting;

· requiring the affirmative vote of 66 2 / 3 % of the voting power of all then outstanding shares entitled to vote in order for stockholders to adopt, amend or repeal any provision of our Bylaws or Certificate of Incorporation; and

· providing that the number of directors shall be fixed from time to time by our board of directors pursuant to a resolution adopted by a majority of the total number of authorized

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directors (whether or not there exist any vacancies in previously authorized directorships) or by the stockholders. Newly created directorships resulting from any increase in our authorized number of directors will be filled only by a majority vote of our board of directors then in office, whether or not such directors number less than a quorum, and directors so chosen will serve for a term expiring at the annual meeting of stockholders at which the term of office to which they have been elected expires or until such director’s successor shall have been duly elected and qualified.

We are also subject to Section 203 of the Delaware General Corporation Law (the “DGCL”), which in general prohibits a Delaware corporation 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:

· prior to that date, our board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

· 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, excluding for purposes of determining the number of shares outstanding (but not the outstanding voting stock owned by the interested stockholder) those shares owned by (i) persons who are directors and also officers and (ii) employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

· on or subsequent to that date, the business combination is approved by our board of directors and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least 66 2 / 3 % of the outstanding voting stock that is not owned by the interested stockholder.

In general, Section 203 defines an interested stockholder as an entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by any of these entities or persons.

The above-summarized provisions of the DGCL and our Certificate of Incorporation and Bylaws could make it more difficult to acquire us by means of a tender offer, a proxy contest or otherwise, or to remove incumbent officers and directors. These provisions are expected to discourage certain types of coercive takeover practices and takeover bids that our board of directors may consider inadequate and to encourage persons seeking to acquire control of us to first negotiate with our board of directors. We believe that the benefits of increased protection of our ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure us outweigh the disadvantages of discouraging takeover or acquisition proposals because, among other things, negotiation of these proposals could result in an improvement of their terms.

Listing

We have applied to list our common stock on The Nasdaq Global Market under the symbol of “LONE.”

Transfer Agent and Registrar

The transfer agent and registrar for our common stock is Computershare.

Item 12. Indemnification of Directors and Officers.

Our Certificate of Incorporation provides that, our directors shall not be personally liable to us or our stockholders for monetary damages for breach of fiduciary duty as a director, except to the

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extent such exemption from liability or limitation is not permitted under the DGCL. Our Bylaws provide that, to the fullest extent permitted by Delaware law, we will indemnify and advance expenses (including attorneys’ fees, judgments, fines or penalties and amounts paid in settlement) to, a director or officer in an action brought by reason of the fact that the director or officer is or was our director or officer, or is or was serving at our request as a director or officer of any other entity, against all expenses, liability and loss incurred or suffered by such person in connection therewith. We may also, to the extent authorized by the board of directors, grant rights to indemnification and to the advancement of expenses to any employee or agent of Lonestar to the fullest extent permitted by the DGCL. We may maintain insurance to protect a director, officer, employee or agent against any expense, liability or loss, whether or not we would have the power to indemnify such person against such expense, liability or loss under Delaware law.

The limitation of liability and indemnification provisions in our Certificate of Incorporation and Bylaws may discourage stockholders from bringing a lawsuit against directors for breach of their fiduciary duty. These provisions may also have the effect of reducing the likelihood of derivative litigation against our directors and officers, even though such an action, if successful, might otherwise benefit us and our stockholders. However, these provisions do not limit or eliminate our rights, or those of any stockholder, to seek non-monetary relief such as injunction or rescission in the event of a breach of a director’s duty of care. The provisions will not alter the liability of directors under the federal securities laws. In addition, your investment may be adversely affected to the extent that, in a class action or direct suit, we pay the costs of settlement and damage awards against directors and officers pursuant to these indemnification provisions. There is currently no pending litigation or proceeding against any of our directors, officers or employees for which indemnification is sought.

Item 13. Financial Statements and Supplementary Data.

Our consolidated financial statements appear on pages F-1 through F-39 of this registration statement.

Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

Lonestar has not had a change in its independent registered public accounting firm during its last two fiscal years or through the date of this filing. Lonestar notes that it has not had any disagreements with its current public accounting firm during the last two fiscal years or through the date of this filing on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of the public accounting firm, would have caused it to make reference to the subject matter of the disagreement in connection with its report on Lonestar’s financial statements.

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Item 15. Financial Statements and Exhibits.

(a) Financial Statements

Our consolidated financial statements appear on pages F-1 through F-39 of this registration statement.

(b) Exhibits

Exhibit Number		Description

2.1		Scheme Implementation Agreement, by and between Lonestar Resources US Inc. and Lonestar Resources Limited, executed on December 28, 2015

3.1		Certificate of Incorporation of Lonestar Resources US Inc.

3.2		Bylaws of Lonestar Resources US Inc.

4.1		Indenture, dated April 4, 2014 among Lonestar Resources America Inc., its subsidiary guarantors and Wells Fargo Bank, National Association, as trustee

10.1		Form of Indemnification Agreement for Directors and executive officers

10.2		Form of Executive Employment Agreement for executive officers

10.3		Credit Agreement, dated July 28, 2015, among Lonestar Resources America Inc., Citibank, N.A., as Administrative Agent, and the guarantors and lenders party thereto.

10.4		Joint Development Agreement, dated July 27, 2015, between Lonestar Resources America Inc. and IOG South Texas I, LLC*

10.5		Lonestar Resources US Inc. 2016 Incentive Plan*

21.1		List of significant subsidiaries of Lonestar Resources US Inc.

23.1		Consent of BDO USA, LLP

23.2		Consent of W.D. Von Gonten & Co.

23.3		Consent of LaRoche Petroleum Consultants, Ltd.

99.1		Report of W.D. Von Gonten & Co. regarding the registrant’s estimated proved reserves as of December 31, 2013, dated March 22, 2014

99.2		Report of W.D. Von Gonten & Co. regarding the registrant’s estimated proved reserves as of December 31, 2014, dated January 29, 2015

99.3		Report of LaRoche Petroleum Consultants, Ltd. regarding the registrant’s estimated proved reserves as of December 31, 2013, dated January 28, 2014

99.4		Report of LaRoche Petroleum Consultants, Ltd. regarding the registrant’s estimated proved reserves as of December 31, 2014, dated January 30, 2015

* To be filed by amendment

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SIGNATURES

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.

		Lonestar Resources US Inc.


Date:	December 31, 2015	By:	/s/ Frank D. Bracken, III
			Frank D. Bracken, III Chief Executive Officer

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page

Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014	F-2
Unaudited Consolidated Statements of Operations for the nine months ended September 30, 2015 and 2014	F-4
Unaudited Consolidated Statements of Changes in Stockholder’s Equity for the nine months ended September 30, 2015	F-5
Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	F-6
Notes to Unaudited Consolidated Financial Statements	F-7

Report of Independent Registered Public Accounting Firm	F-16
Consolidated Balance Sheets as of December 31, 2014 and 2013	F-17
Consolidated Statements of Operations for the years ended December 31, 2014 and 2013	F-19
Consolidated Statements of Changes in Stockholder’s Equity for the years ended December 31, 2014 and 2013	F-20
Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013	F-21
Notes to Consolidated Financial Statements	F-22

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Lonestar Resources America, Inc.

Condensed Consolidated Balance Sheets

	September 30, 2015 (unaudited)		December 31, 2014

Assets

Current assets
Cash and cash equivalents	$	5,020,468	$	9,809,854
Accounts receivable:
Oil, natural gas liquids, and gas sales	7,446,319		8,987,525
Joint interest owners and other	2,794,008		9,488,326
Derivative financial instruments	29,738,225		31,045,260
Prepaid expenses and other	1,324,591		618,346

Total current assets	46,323,611		59,949,311

Oil and gas properties, at cost, using the successful efforts method of accounting	526,050,984		481,079,275
Other property and equipment (net of accumulated depreciation of $938,190 and $680,002; respectively)	2,215,257		2,366,013
Derivative financial instruments	6,478,873		12,713,295
Other noncurrent assets	3,742,574		3,608,331
Restricted certificates of deposit	127,706		125,980

Total assets	$	584,939,005	$	559,842,205

See accompanying notes to the unaudited condensed consolidated financial statements.

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Lonestar Resources America, Inc.

Condensed Consolidated Balance Sheets (continued)

	September 30, 2015 (unaudited)		December 31, 2014

Liabilities and Stockholder’s Equity

Current liabilities
Accounts payable	$	13,633,861	$	30,841,136
Oil, natural gas liquids, and gas sales payable	5,294,576		4,961,510
Accrued liabilities	23,975,248		11,581,088

Total current liabilities	42,903,685		47,383,734

Long-term debt	295,429,407		264,613,529
Deferred tax liability	30,353,073		31,210,576
Other non-current liabilities	1,000,000		1,000,000
Asset retirement obligations	7,347,991		6,834,615

Total liabilities	377,034,156		351,042,454

Commitments and contingencies

Stockholder’s equity
Common stock, $0.001 par value, 200,000 shares authorized, 184,072 shares issued and outstanding	—		—
Additional paid-in capital	154,337,490		152,802,589
Retained earnings	53,567,359		55,997,162

Total stockholder’s equity	207,904,849		208,799,751

Total liabilities and stockholder’s equity	$	584,939,005	$	559,842,205

See accompanying notes to the unaudited condensed consolidated financial statements.

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Lonestar Resources America, Inc.

Unaudited Condensed Consolidated Statements of Operations

	Nine Months Ended September 30,
	2015			2014

Revenues
Oil sales	$	56,407,882		$	76,439,778
Natural gas sales	4,404,120			5,535,085
Natural gas liquid sales	1,225,153			2,977,497

Total revenues	62,037,155			84,952,360

Operating expenses
Lease operating and gas gathering	12,676,043			12,224,165
Production, ad valorem, and severance taxes	4,202,603			5,349,103
Depletion, depreciation, and amortization	39,861,080			26,611,764
Accretion of asset retirement obligations	160,175			143,425
Stock-based compensation	1,745,751			1,961,596
General and administrative	6,469,937			5,476,711

Total operating expenses	65,115,589			51,766,764

Income (loss) from operations	(3,078,434		)	33,185,596

Other income (expense):
Interest expense	(18,485,143		)	(14,241,223		)
Gains on derivative financial instruments	18,955,923			1,361,157
Other income (expense)	(677,694		)	419,055

Total other income (expense)	(206,914		)	(12,461,011		)

Income (loss) before taxes	(3,285,348		)	20,724,585

Income tax (expense) benefit	855,545			(2,550,113		)

Net income (loss)	$	(2,429,803	)	$	18,174,472

Net income (loss) per common share-basic and diluted	$	(13.20	)	$	110.37

Weighted average common shares outstanding-basic and diluted		184,072			164,671

See accompanying notes to the unaudited condensed consolidated financial statements.

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Lonestar Resources America, Inc.

Unaudited Condensed Consolidated Statements of Changes of Stockholder’s Equity

Common Stock

Additional

Retained

Total
Stockholder’s

Shares

Amount

Paid-in Capital

Earnings

Equity

Balance at December 31, 2014

184,072

—

152,802,589

55,997,162

208,799,751

Stock-based compensation

—

1,745,751

—

1,745,751

Dividend to parent

—

(210,850

)

—

(210,850

)

Net loss

—

(2,429,803

)

(2,429,803

)

Balance at September 30, 2015

184,072

—

154,337,490

53,567,359

207,904,849

See accompanying notes to the unaudited condensed consolidated financial statements.

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Lonestar Resources America, Inc.

Unaudited Condensed Consolidated Statements of Cash Flows

	Nine months ended September 30,
	2015			2014

Operating activities
Net income (loss)	$	(2,429,803	) $	18,174,472
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Accretion of asset retirement obligations	160,175			143,425
Depreciation, depletion, and amortization	39,861,080			26,611,764
Stock-based compensation	1,745,751			1,961,596
Bond discount interest expense	825,000			550,000
Deferred taxes	(857,503		)	2,446,703
Unrealized (gain) loss on derivative financial instruments	7,541,457			(5,156,607		)
(Gain) loss on sale of oil and gas properties	629,253			(466,490		)
Changes in operating assets and liabilities:
Accounts receivable	8,235,524			(8,026,559		)
Prepaid expenses and other assets	(135,969		)	(2,047,291		)
Accounts payable and accrued expenses	(5,186,294		)	21,875,250

Net cash provided by operating activities	50,388,671			56,066,263

Investing activities
Acquisition of oil and gas properties	(7,032,113		)	(70,978,282		)
Development of oil and gas properties	(77,734,732		)	(107,135,081		)
Purchases of other property and equipment	(191,240		)	(882,098		)
Proceeds from sale of oil and gas properties	—			3,200,000
Dividend to parent	(210,850		)	(548,200		)

Net cash used in investing activities	(85,168,935		)	(176,343,661		)

Financing activities
Proceeds from bank borrowings	123,513,602			103,000,000
Payments on bank borrowings	(93,513,602		)	(190,000,000		)
Proceeds from bond offering	—			214,500,000
Other long term note payable	(9,122		)	(30,000		)

Net cash provided by financing activities	29,990,878			127,470,000

Increase (decrease) in cash and cash equivalents	(4,789,386		)	7,192,602
Cash and cash equivalents, beginning of the period	9,809,854			6,491,109

Cash and cash equivalents, end of the period	$	5,020,468		13,683,711

Supplemental information
Cash paid for income taxes	$	127,000		$	100,400
Cash paid for interest expense	$	11,020,209		$	2,051,320

See accompanying notes to the unaudited condensed consolidated financial statements.

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Lonestar Resources America, Inc.

Notes to the Unaudited Condensed Consolidated Financial Statements

1. Nature of Business and Presentation

Lonestar Resources America, Inc., (the “Company”) is a Delaware registered U.S. holding company formed January 31, 2013, which is engaged in the exploration, development, production, acquisition, and sale of oil and natural gas primarily in North and South Texas and Montana through its wholly owned subsidiaries. Its executive offices are located in Fort Worth, Texas. The Company is a wholly owned subsidiary of Lonestar Resources Limited (formerly Amadeus Energy Limited, the “Parent”), an Australian company traded on the Australian Stock Exchange (ASX).

Basis of Presentation

The accompanying interim condensed consolidated financial statements have not been audited by independent public accountants, but in the opinion of management, reflect all adjustments necessary for a fair presentation of the financial position and results of operations. Any and all adjustments are of a normal and recurring nature. Although management believes the unaudited interim related disclosures in these condensed consolidated financial statements are adequate to make the information presented not misleading, certain information and footnote disclosures normally included in annual audited consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to the rules of the Securities and Exchange Commission.. The results of operations and the cash flows for the nine months ended September 30, 2015 are not necessarily indicative of the results to be expected for the full year.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries: Lonestar Resources, Inc. (LRI), Barnett Gas, LLC (Barnett Gas), Eagleford Gas, LLC (Eagleford Gas), Poplar Energy, LLC (Poplar), Eagleford Gas 2, LLC (Eagleford Gas 2), Eagleford Gas 3, LLC (Eagleford Gas 3), Eagleford Gas 4, LLC (Eagleford Gas 4), Eagleford Gas 5, LLC (Eagleford Gas 5), Eagleford Gas 6, LLC (Eagleford Gas 6), Eagleford Gas 7, LLC (Eagleford Gas 7), Eagleford Gas 8, LLC (Eagleford Gas 8), Lonestar Operating, LLC, Amadeus Petroleum, Inc. (API), T-N-T Engineering, Inc. (TNT) and Albany Services, LLC (Albany). All significant intercompany balances and transactions have been eliminated in consolidation.

2. Recently Issued Accounting Pronouncements

In April 2015, the Financial Accounting Standards Board amended the existing accounting standards for imputation of interest. The amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by these amendments. The Company is required to adopt the guidance in the first quarter of fiscal 2017. Early adoption is permitted. The amendments should be applied retrospectively with the adjusted balance sheet of each individual period presented, in order to reflect the period-specific effects of applying the new guidance. The Company is currently evaluating the timing and the impact of these amendments on its consolidated financial statements.

3. Acquisitions & Divestitures

In March 2014 the Company acquired additional working interests in four wells and approximately 1,240 net acres in the Eagle Ford Shale trend. The acquired assets are located in La Salle County. The Company

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paid approximately $2,385,000 to acquire the acreage. $750,000 was allocated to proved properties, while $1,635,000 was allocated to unproved properties.

In March 2014 the Company acquired an additional 15,232 gross / 13,156 net acres in the Eagle Ford Shale trend. The acquired assets are located in La Salle, Frio, Wilson, Brazos and Robertson counties. The Company paid approximately $71,000,000 to acquire the acreage. $19,600,000 of the purchase price was allocated to proved properties, while $51,400,000 was allocated to unproved properties. Virtually all of the properties will be operated by Lonestar.

In June 2014, the Company sold its working interest in its non-operated Raccoon Bend property for approximately $3,200,000. The effective date of the sale was June 1, 2014. The gain on the sale approximated $466,000.

In September 2014 the Company acquired an additional 720 net acres in the Eagle Ford Shale trend. The acquired assets are located in La Salle County. The Company paid approximately $2,500,000 to acquire the acreage. All of the purchase price was allocated to unproved properties.

In January 2015 the Company exchanged its working interest in two non-operated wells and the underlying leasehold acreage for increased working interests in currently owned and operated property. The exchange resulted in a loss of $629,253. Additionally, the Company acquired 159 net acres in the Eagle Ford Shale trend in La Salle County for $500,000 as a further component of the exchange.

4. Restricted Certificates of Deposit

The Company is required to maintain certain certificates of deposit (CDs) by a municipality in which drilling operations are located and by the Railroad Commission of Texas (RRC). These CDs are pledged as collateral for letters of credit issued by the Company’s bank to the municipality and the RRC. These CDs have maturity dates ranging from November 8, 2015 to March 8, 2016, and bear interest rates ranging from 0.20% to 0.25%. As these CDs are expected to be renewed upon maturity and are not available for use in operations, they are classified as noncurrent assets.

5. Commodity Price Risk Activities

The Company has implemented a strategy to reduce the effects of volatility of oil and natural gas prices on the Company’s results of operations by securing fixed price contracts for a portion of its expected sales volumes.

Inherent in the Company’s fixed price contracts, are certain business risks, including market risk and credit risk. Market risk is the risk that the price of oil and natural gas will change, either favorably or unfavorably, in response to changing market conditions. Credit risk is the risk of loss from nonperformance by the Company’s counterparty to a contract. The Company does not currently require collateral from any of its counterparties nor, does its counterparties, require collateral from the Company. At September 30, 2015 the Company had no open physical delivery obligations.

The Company enters into certain commodity derivative instruments to mitigate commodity price risk associated with a portion of its future crude oil and natural gas production and related cash flows. The oil and natural gas revenues and cash flows are affected by changes in commodity product prices, which are volatile and cannot be accurately predicted. The objective for holding these commodity derivatives is to protect the operating revenues and cash flows related to a portion of the future crude oil and natural gas sales from the risk of significant declines in commodity prices, which helps ensure the Company’s ability to fund the capital budget. The Company has not designated any of the commodity derivatives as hedges under the applicable accounting standards. Consequently, all changes in fair value of these derivative (realized and unrealized) are included in the consolidated statement of operations.

As of September 30, 2015 the following derivative transactions were outstanding:

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Instrument	Total Volume	Settlement Period	Fixed Price

Oil — WTI Fixed Price Swap	58,000 BBL	October — December 2015	$	87.00
Oil — WTI Fixed Price Swap	36,800 BBL	October — December 2015	59.52
Oil — WTI Fixed Price Swap	64,400 BBL	October — December 2015	81.25
Oil — WTI Fixed Price Swap	45,500 BBL	October — December 2015	92.25
Oil — WTI Fixed Price Swap	29,992 BBL	October — December 2015	87.80
Oil — WTI Fixed Price Swap	205,000 BBL	January — December 2016	84.45
Oil — WTI Fixed Price Swap	183,400 BBL	January — December 2016	56.90
Oil — WTI Fixed Price Swap	309,000 BBL	January — December 2016	90.45
Oil — WTI Fixed Price Swap	135,600 BBL	January — December 2016	63.20

Instrument	Total Volume	Settlement Period	Puts		Calls

Oil — 3 Way Collar	365,100 BBL	January — December 2017	$	40.00 / 60.00	$	85.00

All derivative contracts are carried at their fair value on the balance sheet and all changes in value are recorded in the consolidated statement of operations in realized and unrealized loss on commodity derivatives.

6. Fair Value Measurements

In accordance with ASC 820, Fair Value Measurements and Disclosures , fair value measurements are based upon inputs that market participants use in pricing an asset or liability, which are classified into two categories: observable inputs and unobservable inputs. Observable inputs represent market data obtained from independent sources, whereas unobservable inputs reflect a company’s own market assumptions, which are used if observable inputs are not reasonably available without undue cost and effort. ASC 820 prioritizes the inputs used in measuring fair value into the following fair value hierarchy:

Level 1 — Quoted prices for identical assets or liabilities in active markets.

Level 2 — Quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and inputs derived principally from or corroborated by observable market data by correlation or other means. The fair value of derivative instruments is derived from counterparty statements.

Level 3 — Unobservable inputs for the asset or liability. The fair value input hierarchy level to which an asset or liability measurement falls in its entirety is determined based on the lowest level input that is significant to the measurement in its entirety.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of September 30, 2015 and December 31, 2014, for each fair value hierarchy level:

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	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
September 30, 2015
Assets:
Commodity derivatives	$	—	$	36,217,098	$	—	$	36,217,098
Liabilities:
Commodity derivatives	—		—		—		—

Total	$	—	$	36,217,098	$	—	$	36,217,098

December 31, 2014
Assets:
Commodity derivatives	$	—	$	43,758,555	$	—	$	43,758,555
Liabilities:
Commodity derivatives	—		—		—		—

Total	$	—	$	43,758,555	$	—	$	43,758,555

The book values of cash and cash equivalents, receivables for oil sales, natural gas sales, natural gas liquids sales, joint interest billings, notes and other receivables, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of debt approximates fair value since it is subject to a short-term floating interest rate that approximates the rate available to the Company.

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7. Properties and Equipment

A summary of properties and equipment follows:

	September 30, 2015 (unaudited)			December 31, 2014

Proved properties and equipment	$	577,218,141		$	495,954,566
Unproved properties	68,562,612			65,725,668
Less accumulated depreciation, depletion, and amortization	(119,729,769		)	(80,600,959		)

	$	526,050,984		$	481,079,275

8. Accrued Liabilities

Accrued liabilities consist of the following:

	September 30, 2015 (unaudited)		December 31, 2014

Bonus payable	$	1,021,311	$	1,848,612
Severance & vacation payable	—		283,540
Accrued interest	9,155,476		4,149,105
Accrued rent	435,303		489,191
Accrued expenses	13,363,158		4,592,152
Other	—		218,488

	$	23,975,248	$	11,581,088

9. Long-Term Debt

The Company’s debt consists of the following:

	September 30, 2015 (unaudited)			December 31, 2014

Revolving credit facility	$	79,000,000		$	49,000,000
8.75% senior notes	220,000,000			220,000,000
Less discount on 8.75% senior notes	(3,850,000		)	(4,675,000		)
Other	279,407			288,529

	$	295,429,407		$	264,613,529

Senior Secured Revolving Credit Facility

In March 2013, the Company entered into a $400,000,000 syndicated credit facility agreement (“revolving credit facility”) with Wells Fargo Bank (as Administrative Agent). The initial borrowing base was set at $105,000,000. The borrowing base shall be re-determined semi-annually based on the credit agreement, and such re-determined borrowing base shall become effective and applicable on April 1 and October 1 of each year commencing October 1, 2013. The revolving credit facility matures on March 14, 2018. As of September 30, 2015 and December 31, 2014, $79,000,000 and $49,000,000 was borrowed under the revolving credit facility, respectively. The borrowing base as of September 30, 2015 was $180,000,000.

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The revolving credit facility may be used for loans and, subject to a $2,500,000 sub-limit, letters of credit. The Company has drawn $250,000 of advances on the letter of credit as of September 30, 2015. The revolving credit facility provides for a commitment fee of 0.5% based on the unused portion of the borrowing base under the revolving credit facility.

Borrowings under the revolving credit facility, at the Company’s election, bear interest at either: (i) an alternate base rate (“ABR”) equal to the higher of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.5% per annum, and (c) the adjusted LIBO rate of a three-month interest period on such day plus 1.0%; or (ii) the adjusted LIBO rate, which is the rate stated on Reuters screen LIBOR01 page, for one, two, three, six or twelve months, as adjusted for statutory reserve requirements for Eurocurrency liabilities, plus, in each of the cases described in clauses (i) and (ii) above, an applicable margin ranging from 1.0% to 2.0% for ABR loans and from 2.0 to 3.0% for adjusted LIBO rate loans.

The revolving credit facility requires the Company to maintain certain financial ratios and limits the amount of indebtedness the Company can incur. Subject to certain permitted liens, the Company’s obligations under the revolving credit facility have been secured by the grant of a first priority lien on no less than 80% of the value of the proved oil and gas properties of the Company and its subsidiaries.

In connection with the revolving credit facility, the Company and certain of its subsidiaries also entered into certain customary ancillary agreements and arrangement, which, among other things, provide that the indebtedness, obligations, and liabilities of the Company arising under or in connection with the revolving credit facility are unconditionally guaranteed by such subsidiaries. As of September 30, 2015 and December 31, 2014, the Company was in compliance with all covenants including all financial ratios.

In June 2013, the Company entered into a $35,000,000 second lien term loan agreement (“2 nd lien facility”) with Wells Fargo Energy Capital, Inc. (as Administrative Agent). The 2 nd lien facility provides for a commitment fee of 0.75% based on the unused portion of the commitment amount under the 2 nd lien facility. The 2 nd lien facility matures on September 14, 2018. As of December 31, 2013, $10,000,000 was borrowed under the 2 nd lien facility. In February 2014, the 2 nd lien facility was amended increasing the commitment amount to $55,000,000. In April 2014, the 2 nd lien facility was fully paid and subsequently terminated.

On July 28, 2015, the Company closed a new $500,000,000 Senior Secured Credit Facility which replaced the $400,000,000 Wells Fargo led syndicated facility outlined above. The new facility was arranged by Citibank, N.A. and features an expanded borrowing base of $180,000,000, which is an increase over the $150,000,000 borrowing base available under the Wells Fargo led facility at December 31, 2014. The new facility provides additional liquidity for the Company and a lower interest rate. The new rate is a 25 basis point improvement over the LIBOR interest rate spread. The new facility provides for an extension in the maturity date to October 16, 2018, which represents a seven month extension over the Wells Fargo led facility. The financial covenants contained in this new facility are substantially the same as the previous facility. As of September 30, 2015 and December 31, 2014, the Company was in compliance with all covenants including all financial ratios.

8.75% Senior Notes

On April 4, 2014, the Company issued at par $220,000,000 of 8.75% Senior Unsecured Notes due April 15, 2019 (“Notes”) to U.S. based institutional investors. The net proceeds from the offering of approximately $212,000,000 (after deducting purchasers’ discounts and offering expenses) were used to repay the Company’s revolving credit facility and 2nd lien facility, and for general corporate purposes. Under the 2nd lien term loan agreement, the Company was required to pay a prepayment fee of $1,100,000 in connection with the early prepayment of the facility equal to 2.0% of the principal balance that was prepaid. This facility was terminated upon repayment.

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unpaid interest, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

Year	Percentage
2016	106.563	%
2017	104.375	%
2018 and thereafter	100.000	%

In addition, upon a change of control of the Company, holders of the Notes will have the right to require the the Company to repurchase all or any part of their Notes for cash at a price equal to 101% of the aggregate principal amount of the Notes repurchased, plus any accrued and unpaid interest. The Notes were issued under and governed by an Indenture dated April 4, 2014, between the Company, Wells Fargo Bank, National Association, as trustee and the Company’s subsidiaries named therein as guarantors (the “Indenture”). The Indenture contains covenants that, among other things, limit the ability of the Company and its subsidiaries to: incur indebtedness; pay dividends or make other distributions on stock; purchase or redeem stock or subordinated indebtedness; make investments; create liens; enter into transactions with affiliates; sell assets; refinance certain indebtedness; and merge with or into other companies or transfer substantially all of the Company’s assets.

In conjunction with the issuance of the Notes, the Company recorded a discount of approximately $4,100,000 to be amortized over the remaining life of the Notes using the effective interest method. The remaining unamortized discount was $3,850,000 and $4,675,000 at September 30, 2015 and December 31, 2014, respectively.

Debt Issuance Costs

The Company capitalizes certain direct costs associated with the issuance of long-term debt and amortizes such costs over the lives of the respective debt. During 2014, the Company capitalized approximately $3,500,000 in costs associated with the issuance of the Notes and costs incurred for amendments to the Company’s Senior Revolving Credit Facility. With the payoff and termination of the 2nd lien facility, the Company expensed approximately $700,000 of debt issuance costs. At September 30, 2015 and December 31, 2014, the Company had approximately $3,200,000 and $3,300,000, respectively, of debt issuance costs remaining that are being amortized over the lives of the respective debt.

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10. Stockholder’s Equity

At the annual meeting of stockholders held December 17, 2012, Parent’s stockholders approved the merger and associated stock options to be issued under the 2012 Employee Share Option scheme. All outstanding shares from the previous plan, issued in May 2012, fully vested upon completion of the merger.

Determining Fair Value of Stock Options

In determining the fair value of stock option grants, the Company utilized the following assumptions:

Valuation and Amortization Method. The Company estimates the fair value of stock option awards on the date of grant using the Black-Scholes-Merton valuation model. The fair value of all awards is expensed using the “graded-vesting method.”

Expected Life. The expected life of stock options granted represents the period of time that stock options are expected, on average, to be outstanding. The Company determined the expected life to be 3.5 years, for all stock options issued with three-year vesting periods and four-year grant expirations.

Expected Volatility. Using the Black-Scholes-Merton valuation model, the Company estimates the volatility of Parent’s common shares at the beginning of the quarter in which the stock option is granted. The volatility of 58.6% is based on weighted average historical movements of Parent’s common share price on the ASX over a period that approximates the expected life.

Risk-Free Interest Rate. The Company utilizes a risk-free interest rate equal to the rate of U.S. Treasury zero-coupon issues as of the date of grant with a term equivalent to the stock option’s expected life.

Expected Dividend Yield. Parent has not paid any cash dividends on its common shares and does not anticipate paying any cash dividends in the foreseeable future. Consequently, a dividend yield of zero is utilized in the Black-Scholes-Merton valuation model.

Expected Forfeitures . The Company has experienced limited forfeitures and therefore has not discounted expenses for forfeitures at the reporting date.

Stock Option Activity

For the nine months ended September 30, 2015, no stock options were exercised. Stock options issued, canceled, or forfeited during 2015 were as follows:

	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)

Options vested and exercisable at December 31, 2013	595,228		$	16	3
Granted	410,822		18		3
Exercised	—		—		—
Canceled/Expired	(24,667	)	18		1.5
Forfeited	(247,320	)	15		2
Outstanding at December 31, 2014	1,614,270		16		2
Options vested and exercisable at December 31, 2014	970,155		$	16	2
Granted	160,000		10		1.5
Exercised	—		—		—
Canceled/Expired	(14,765	)	15.5		1.3
Forfeited	(7,383	)	15.5		1.3
Outstanding at September 30, 2015	1,752,122		15.5		2
Options vested and exercisable at September 30, 2015	1,115,390		$	15.5	2

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	Shares		Weighted Average Fair Value per Share		Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Term (in years)

Outstanding non-vested options at December 31, 2013	882,456		$	10	$	25	3

Granted	410,822		10		15		3
Vested	(399,593	)	11.5		16		3
Forfeited	(249,570	)	10		31		3
Outstanding non-vested options at December 31, 2014	644,115		$	11.5	$	15	2

Granted	160,000		10		10		1.5
Vested	(160,000	)	10		10		1.5
Forfeited	(7,383	)	15.5		15.5		1.3
Outstanding non-vested options at December 31, 2015	636,732		$	15.5	$	15.5	2

Stock-Based Compensation Expense

For the nine month period ended September 30, 2015, the Company recorded stock-based compensation expense for stock options granted using the fair-value method of $1,745,751. All stock-based compensation costs were expensed and not tax affected, as the Company currently records no U.S. income tax expense.

11. Earnings Per Share

In accordance with the provisions of current authoritative guidance, basic earnings or loss per share shown on the Unaudited Condensed Consolidated Statements of Operations is computed on the basis of the weighted average number of common shares outstanding during the periods. Diluted earnings or loss per share is computed based upon the weighted average number of common shares outstanding plus the assumed issuance of common shares for all potentially dilutive securities.

Lonestar Resources America Inc. had outstanding ordinary common shares (prior to the reorganization) of 184,072 at September 30, 2015 and 2014. All shares were held by Lonestar Resources Limited (Parent), and there are no dilutive units outstanding. Each share entitles the holder to participate in dividends and the proceeds of winding up of the Company in proportion to the number of, and amounts paid on, the shares held. Each share is also entitled to one vote at a stockholder meeting either in person or by proxy.

In connection with a planned reorganization, a new corporate entity was formed, Lonestar Resources US Inc., which immediately prior to the reorganization will acquire the Parent via an Australian Scheme of Arrangement. As a result, certain accounting policies have been adopted in these financial statements as if the Company were a public company. The following table presents unaudited pro forma earnings per share of Lonestar Resources US Inc., assuming that the 1 for 2 reverse stock split upon reorganization had occurred at the beginning of nine month periods ended September 30, 2015 and 2014:

UNAUDITED PRO FORMA EARNINGS PER SHARE (AFTER REORGANIZATION)

	Nine Months Ended September 30
	2015			2014
Net income (loss) per common share:
Basic	$	(0.32	)	$	2.50
Diluted	$	(0.32	)	$	2.50

Weighted average common shares outstanding
Basic	7,522,025			7,268,108
Diluted	7,522,025			7,268,108

Since the Company experienced a net loss during the nine months ended September 30, 2015, the employee stock options did not cause any dilution. As the employee stock options are not “in the money” at September 30, 2014, the employee stock options did not cause any dilution.

The pro forma earnings per share may not be indicative of the results that actually would have occurred if the equity structure of the reorganized company had been in place during the periods shown below or the results that may occur in the future.

12. Related Party Activities

During the nine months ended September 30, 2015 and 2014 the Company paid dividends to its Parent of approximately $211,000 and $548,000, respectively.

In April 2014, the Company loaned $539,000 in total to Frank D. Bracken, III and Thomas H. Olle to assist with their tax obligations as a result of stock compensation awarded to them in 2013.

Mitchell Wells, who has been a Director of Lonestar Resources Limited since December 2014, has provided consultancy services as its Company Secretary since January 2013. These services have been provided through BlueSkye Pty Ltd, for which Mr. Wells is the sole Director and shareholder. BlueSkye Pty Ltd was paid $106,875 in 2015 and $138,750 in 2014. He has not received any additional compensation for his service as a Director.

13. Subsequent Events

In preparing the unaudited condensed consolidated financial statements, management has evaluated all subsequent events and transactions for potential recognition or disclosure through the date the accompanying unaudited consolidated financial statements were issued. We are unaware of any material additional disclosures that should be made to these financial statements.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Shareholders

Lonestar Resources America, Inc.

Fort Worth, Texas

We have audited the accompanying consolidated balance sheets of Lonestar Resources America, Inc. and Subsidiaries as of December 31, 2014 and 2013, and the related consolidated statements of operations, changes in stockholder’s equity, and cash flows for each of the two years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these 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. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Lonestar Resources America, Inc. and Subsidiaries at December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP
Dallas, Texas
December 31, 2015

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Lonestar Resources America, Inc.

Consolidated Balance Sheets

December 31,	2014		2013

Assets

Current assets
Cash and cash equivalents	$	9,809,854	$	6,491,109
Accounts receivable:
Oil, natural gas liquid and natural gas sales	8,987,525		7,268,674
Joint interest owners and other	9,488,326		909,549
Derivative financial instruments	31,045,260		157,309
Prepaid expenses and other	618,346		454,085

Total current assets	59,949,311		15,280,726

Oil and gas properties, net, using the successful efforts method of accounting	481,079,275		293,574,177
Other property and equipment (net of accumulated depreciation of $680,002 and $376,340, respectively)	2,366,013		1,352,161
Derivative financial instruments	12,713,295		489,518
Deferred tax asset	—		34,514
Other noncurrent assets	3,608,331		1,861,355
Restricted certificates of deposit	125,980		125,729

Total assets	$	559,842,205	$	312,718,180

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Lonestar Resources America, Inc.

Consolidated Balance Sheets (continued)

December 31,	2014		2013

Liabilities and Stockholder’s Equity

Current liabilities
Accounts payable	$	30,841,136	$	9,440,321
Oil, natural gas liquid and natural gas sales payable	4,961,510		3,130,398
Derivative financial instruments	—		1,876,832
Accrued liabilities	11,581,088		3,203,490

Total current liabilities	47,383,734		17,651,041

Long-term debt	264,613,529		109,000,000
Deferred tax liability	31,210,576		8,820,672
Derivative financial instruments	—		329,985
Other non-current liabilities	1,000,000		1,000,000
Asset retirement obligations	6,834,615		5,937,118

Total liabilities	351,042,454		142,738,816

Commitments and contingencies (Note 12)

Stockholder’s equity
Common stock, $0.001 par value, 200,000 shares authorized, 184,072 shares issued and outstanding	—		—
Additional paid-in capital	152,802,589		151,501,613
Retained earnings	55,997,162		18,477,751

Total stockholder’s equity	208,799,751		169,979,364

Total liabilities and stockholder’s equity	$	559,842,205	$	312,718,180

See accompanying Notes to Consolidated Financial Statements.

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Lonestar Resources America, Inc.

Consolidated Statements of Operations

Years ended December 31,	2014			2013

Revenues
Oil sales	$	104,233,379		$	71,601,841
Natural gas sales	7,589,599			6,277,007
Natural gas liquid sales	3,803,582			2,991,820

Total revenues	115,626,560			80,870,668

Operating expenses
Lease operating and gas gathering	16,631,611			13,492,922
Production, ad valorem, and severance taxes	7,123,332			5,027,534
Depletion, depreciation, and amortization	40,521,546			28,110,025
Accretion of asset retirement obligations	201,076			169,637
Impairment of oil and gas properties	5,478,264			2,762,235
Bargain purchase gain on acquisition	—			(27,817,572		)
Loss on sale of oil and gas properties	—			17,139,055
Stock-based compensation	1,938,400			2,244,967
General and administrative	7,672,018			9,872,813

Total operating expenses	79,566,247			51,001,616

Income from operations	36,060,313			29,869,052

Other income (expense)
Interest expense	(19,949,359		)	(5,229,781		)
Gains (losses) on derivative financial instruments	43,972,245			(2,831,301		)
Other income (expense)	55,187			—

Total other income (expense)	24,078,073			(8,061,082		)

Income before taxes	60,138,386			21,807,970

Income tax (expense) benefit	(22,618,975		)	2,942,226

Net income	$	37,519,411		$	24,750,196

Net income per common share-basic and diluted	$	221.27		$	255.10

Weighted average common shares outstanding-basic and diluted		169,561			97,021

See accompanying Notes to Consolidated Financial Statements.

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Lonestar Resources America, Inc.

Consolidated Statements of Changes in Stockholder’s Equity

	Common Stock			Additional Paid-			Accumulated			Total Stockholder’s
	Shares	Amount		in Capital			Earnings			Equity

Balance at December 31, 2012	7	$	—	$	91,266,115		$	(6,272,445	)	$	84,993,670

Issuance of common stock in connection with merger	184,065	—		57,990,531			—			57,990,531

Stock-based compensation	—	—		2,244,967			—			2,244,967

Net income	—	—		—			24,750,196			24,750,196

Balance at December 31, 2013	184,072	$	—	$	151,501,613		$	18,477,751		$	169,979,364

Dividend to parent	—	—		(637,424		)	—			(637,424		)

Stock-based compensation	—	—		1,938,400			—			1,938,400

Net income	—	—		—			37,519,411			37,519,411

Balance at December 31, 2014	184,072	$	—	$	152,802,589		$	55,997,162		$	208,799,751

See accompanying Notes to Consolidated Financial Statements.

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Lonestar Resources America, Inc.

Consolidated Statements of Cash Flows

Years ended December 31,	2014			2013

Operating activities
Net income	$	37,519,411		$	24,750,196
Adjustments to reconcile net income to net cash provided by operating activities:
Bargain purchase gain on acquisition	—			(27,817,572		)
(Gain) loss on sale of oil and gas properties	(466,490		)	17,139,055
Accretion of asset retirement obligations	201,076			169,637
Depreciation, depletion, and amortization	40,521,546			28,110,025
Stock-based compensation	1,938,400			2,244,967
Deferred taxes	22,424,418			(2,942,226		)
(Gain) loss on derivative financial instruments	(43,972,245		)	2,831,301
Settlements of matured derivative financial instruments	(1,503,609		)	(1,153,444		)
Impairment of oil and gas properties	5,478,264			2,762,235
Non-cash interest expense	825,000			83,847
Changes in operating assets and liabilities:
Accounts receivable	(10,297,628		)	(702,459		)
Prepaid expenses and other assets	(1,747,227		)	(479,130		)
Accounts payable and accrued expenses	31,610,184			(4,580,295		)

Net cash provided by operating activities	82,531,100			40,416,137

Investing activities
Cash acquired in merger	—			5,265,337
Acquisition of oil and gas properties	(70,978,282		)	(63,930,000		)
Development of oil and gas properties	(164,180,576		)	(85,456,485		)
Purchases of other property and equipment	(1,086,073		)	255,127
Dividend to parent	(637,424		)	—
Proceeds from sales of oil and gas properties	3,200,000			11,653,969

Net cash used in investing activities	(233,682,355		)	(132,212,052		)

Financing activities
Proceeds from bank borrowings	135,000,000			118,000,000
Payments on bank borrowings	(195,000,000		)	(29,000,000		)
Proceeds from bond offering	214,500,000			—
Payment on other note payable	(30,000		)	—
Proceeds from issuance of common stock	—			2,500
Payment of parent company loan	—			(26,148		)

Net cash provided by financing activities	154,470,000			88,976,352

Increase (decrease) in cash and cash equivalents	3,318,745			(2,819,563		)
Cash and cash equivalents, beginning of the year	6,491,109			9,310,672

Cash and cash equivalents, end of the year	$	9,809,854		$	6,491,109

Supplemental information
Cash paid for federal income taxes	$	90,000		$	—
Cash paid for interest expense	$	13,400,795		$	2,699,215

See accompanying Notes to Consolidated Financial Statements.

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Lonestar Resources America, Inc.
Notes to Consolidated Financial Statements

1. Nature of Business and Presentation

Lonestar Resources America, Inc., (the “Company”) is a Delaware registered U.S. holding company formed January 31, 2013, which is engaged in the exploration, development, production, acquisition, and sale of oil, natural gas liquid (“NGL”) and natural gas primarily the Eagle Ford Shale Play in South Texas, Conventional properties in North Texas and Bakken properties in Montana through its wholly owned subsidiaries. Its executive offices are located in Fort Worth, Texas. The Company is a wholly owned subsidiary of Lonestar Resources Limited (formerly Amadeus Energy Limited, the “Parent”), an Australian company traded on the Australian Stock Exchange (“ASX”).

The Company was formed as a U.S. holding company for Lonestar Resources, Inc. and Amadeus Petroleum, Inc., which are subsidiaries previously wholly-owned by the Parent. This formation was effected through an exchange of shares of the Company for those issued by the merged subsidiaries and has been treated as a reorganization of entities under common control. As discussed in Note 3, Parent previously acquired Lonestar Resources, Inc. on January 2, 2013 in a transaction accounted for as a reverse merger in which Lonestar Resources, Inc. survives as “accounting acquirer”. The results of operations of Amadeus Petroleum, Inc., the former wholly owned subsidiary of Parent and “accounting acquiree”, have been included in the consolidated results of the Company from the date of the reverse merger on January 2, 2013. For convenience purposes the accompanying consolidated financial statements present full year operating results of the merged entities though the reverse merger occurred on January 2, 2013.

2. Summary of Significant Accounting Policies

A summary of the Company’s significant accounting policies, consistently applied in the preparation of the accompanying consolidated financial statements, follows.

Basis of Accounting

The accounts are maintained and the consolidated financial statements have been prepared using the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Use of Estimates

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts in the consolidated financial statements and accompanying notes. Actual results could differ from these estimates and assumptions.

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries: Lonestar Resources, Inc. (“LRI”), Barnett Gas, LLC (“Barnett Gas”), Eagleford Gas, LLC (“Eagleford Gas”), Poplar Energy, LLC (“Poplar”), Eagleford Gas 2, LLC (“Eagleford Gas 2”), Eagleford Gas 3, LLC (“Eagleford Gas 3”), Eagleford Gas 4, LLC (“Eagleford Gas 4”), Eagleford Gas 5, LLC (“Eagleford Gas 5”), Eagleford Gas 6, LLC (“Eagleford Gas 6”), Eagleford Gas 7, LLC (“Eagleford Gas 7”), Eagleford Gas 8, LLC (“Eagleford Gas 8”), Lonestar Operating, LLC, Amadeus Petroleum, Inc. (“API”), T-N-T

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Engineering, Inc. (“TNT”) and Albany Services, LLC (“Albany”). All significant intercompany balances and transactions have been eliminated in consolidation.

Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less when purchased to be cash equivalents.

Concentrations and Credit Risk

The Company’s financial instruments exposed to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with reputable financial institutions. At times, the balances deposited may exceed amounts covered by insurance provided by the U.S. Federal Deposit Insurance Corporation (“FDIC”). The Company has not incurred any losses related to amounts in excess of FDIC limits.

Substantially all of the Company’s accounts receivable are due from either purchasers of oil, NGL and natural gas or working interest partners in oil and natural gas wells for which a subsidiary of the Company serves as the operator. Generally, operators of oil and natural gas properties have the right to offset future revenues against unpaid charges related to operated wells. The Company’s receivables are generally unsecured. The Company has experienced no credit losses since its inception and does not carry an allowance for uncollectible amounts at December 31, 2014.

Oil, NGL and natural gas revenues from Shell Trading (US) Company, Trafigura AG and BP Products North America LLC for the year ended December 31, 2014, represented 36%, 23% and 16%, respectively, of total revenues. Oil revenues from Shell Trading for the year ended December 31, 2013, represented 62% of total revenues. Accounts receivable relating to oil, NGL and natural gas sales from Shell Trading, Trafigura AG and BP Products North America LLC represented 19%, 27% and 32%, respectively, of total receivables at December 31, 2014. Accounts receivable relating to oil, natural gas and natural gas liquid sales from Shell Trading represented 57% of total receivables at December 31, 2013.

Prepaid Expenses

Prepaid expenses generally relate to prepaid drilling and completion costs that will be capitalized into oil and gas properties.

Oil and Natural Gas Properties

The Company uses the successful efforts method of accounting to account for its oil and gas properties. Under this method, costs of acquiring properties, costs of drilling successful exploration wells, and development costs are capitalized. The costs of exploratory wells are initially capitalized pending a determination of whether proved reserves have been found. At the completion of drilling activities, the costs of exploratory wells remain capitalized if a determination is made that proved reserves have been found. If no proved reserves have been found, the costs of each of the related exploratory wells are charged to expense. In some cases, a determination of proved reserves cannot be made at the completion of drilling, requiring additional testing and evaluation of the wells. The Company’s policy is to expense the costs of such exploratory wells if a determination of proved reserves has not been made within a 12-month period after drilling is complete. All costs related to development wells, including related production equipment and lease acquisition costs, are capitalized when incurred, whether productive or nonproductive.

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Other Property and Equipment

Other property and equipment, consisting primaraily of office, transportation and computer equipment, is carried at cost. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, ranging from 3 to 5 years. Major renewals and improvements are capitalized, while expenditures for maintenance and repairs are expensed as incurred. Upon sale or abandonment, the cost of the equipment and related accumulated depreciation are removed from the accounts, and any gain or loss is recognized.

Impairment of Long-Lived Assets

The carrying value of the oil and gas properties and other related property and equipment is periodically evaluated under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 360, Property, Plant, and Equipment . ASC 360 requires long-lived assets and certain identifiable intangibles to be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When it is determined that the estimated future net cash flows of an asset will not be sufficient to recover its carrying amount, an impairment loss must be recorded to reduce the carrying amount to its estimated fair value. Judgments and assumptions are inherent in management’s estimate of undiscounted future cash flows and an asset’s fair value. These judgments and assumptions include such matters as the estimation of oil and gas reserve quantities, risks associated with the different categories of oil and gas reserves, the timing of development and production, expected future commodity prices, capital expenditures, production costs, and appropriate discount rates.

Under ASC 360, the Company evaluates impairment of proved and unproved oil and gas properties on an area basis. On this basis, certain fields may be impaired because they are not expected to recover their entire carrying value from future net cash flows. As a result of this evaluation, the Company recorded impairment of oil and gas properties of $5,478,264 and $2,762,235 for the years ended December 31, 2014 and 2013, respectively.

Asset Retirement Obligations

The Company accounts for asset retirement obligations under ASC 410, Asset Retirement and Environmental Obligations . ASC 410 requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Oil and gas producing companies incur such a liability upon acquiring or drilling a well. Under ASC 410, an asset retirement obligation is recorded as a liability at its estimated present value at the asset’s inception, with an offsetting increase to producing properties in the accompanying consolidated balance sheet, which is allocated to expense over the useful life of the asset. Periodic accretion of the discount on asset retirement obligations is recorded as an expense in the accompanying consolidated statement of operations. See Note 8.

Revenue Recognition

Oil, NGL and natural gas revenues are recognized when title to the product transfers to the purchaser. The Company follows the sales method of accounting for its crude oil, NGL and natural gas revenue, whereby revenue is recorded based on the Company’s share of volume sold, regardless of whether the Company has

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taken its proportional share of volume produced. A receivable or liability is recognized only to the extent that the Company has an imbalance on a specific property greater than the expected remaining proved reserves. There were no imbalances at December 31, 2014 or 2013.

Fair Value of Financial Instruments

In accordance with the reporting requirements of ASC 825, Financial Instruments , the Company calculates the fair value of its assets and liabilities that qualify as financial instruments under this guidance and includes this additional information in the notes to consolidated financial statements when the fair value is different from the carrying value of those financial instruments. See Note 6.

Income Taxes

The Company follows the asset and liability method in accounting for income taxes in accordance with ASC 740, Income Taxes . Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, operating losses and tax credit carryforwards.

The Company evaluates uncertain tax positions, which requires significant judgments and estimates regarding the recoverability of deferred tax assets, the likelihood of the outcome of examinations of tax positions that may or may not be currently under review, and potential scenarios involving settlements of such matters. Changes in these estimates could materially impact the consolidated financial statements. Management is not aware of any material uncertain tax positions as of December 31, 2014.

Share-Based Payments

The Company accounts for equity-based awards in accordance with ASC 718, Compensation-Stock Compensation , which requires companies to recognize in the statement of operations all share-based payments granted to employees based on their fair value. Share-based compensation is recognized by the Company on a straight-line basis over the requisite service period, which approximates the option vesting period of three years.

Reclassifications

Certain reclassifications have been made to prior year balances to conform to current year presentation. These adjustments did not have any impact on the Company’s prior year results of operations.

3. Acquisitions and Divestitures

The Company completed an acquisition during March 2014 of approximately 13,156 net acres with an effective date of January 1, 2014. The acquisition consisted of working interests in approximately 50 producing oil and gas wells, with an additional total of 56 drilling locations in undeveloped acreage. Proved and probable reserves approximated 10.7 million barrels oil equivalent as of January 1, 2014, 93% of which was liquids.

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Details of the purchase consideration and assets acquired are as follows:

Net Assets Acquired
Proved oil and gas properties	$	58,490,000
Unproved oil and gas properties	12,247,000

Purchase consideration
Total cash consideration paid	$	70,737,000

The Company sold its working interest in non-operated oil and gas properties in the Raccoon Bend area during June 2014 for approximately $3,200,000. The gain on the sale approximated $466,000.

On October 22, 2012, Parent announced that it had entered into a binding agreement to acquire UK-based Ecofin Energy Resources Plc (“EER”), the holding company for Texas-based Lonestar Resources, Inc., from its controlling shareholder Ecofin Water & Power Opportunities PLC and EER’s other minority investors (the “Lonestar Transaction”). The Lonestar Transaction was satisfied by the issuance of 460,000,000 ordinary shares of Parent at an issue price of USD$0.22 each. The issue price of the shares was based on the market price of the shares at the date of acquisition. The transaction was completed and effective January 2, 2013.

The Lonestar Transaction has been accounted for in accordance with ASC 805, Business Combinations . Pursuant to business combination accounting rules, the Lonestar Transaction resulted in a reverse merger in which Parent was deemed the “legal acquirer” as Parent issued its common stock to EER; however, EER was deemed the “accounting acquirer”. EER’s majority holding of Parent shares of common stock post-merger, assuming a majority of Parent’s Board of Directors and surviving senior management, were the key factors determining EER as the “accounting acquirer”. As such, Parent’s assets were fair valued at the date of completion. The effects of the Lonestar Transaction are reflected in the Company’s financial statements as the sole operating subsidiary of Parent, Amadeus Petroleum Inc (“API”), was subsequently contributed to the Company in exchange for common stock.

The net assets acquired in the business combination are as follows:

	Amount

Cash and cash equivalents	$	5,265,337
Trade and other receivables	2,884,193
Other current assets	126,123
Oil and gas properties	96,160,161
Plant, property and equipment	947,578
Deferred tax asset	4,382,003
Trade and other payables	(3,027,235		)
Asset retirement obligations	(5,488,578		)
Derivative liability	(127,848		)
Tax liability	(1,000,000		)
Deferred tax liability	(15,838,847		)

Total net assets acquired	$	84,282,887

The total consideration transferred was approximately $ 56,500,000 resulting in a gain due to the value of the oil and gas properties owned by LNR. This gain of approximately $27,800,000 is included in the Company’s consolidated statement of operations. In accordance with ASC 805, the consideration transferred was computed by reference to Parent’s closing stock price on the date of reverse merger. The allocation of the purchase price was based on the Company’s assessment of the fair value of the acquired assets and liabilities using both Level 2 and 3 inputs. The primary asset acquired was oil and gas properties which are valued on the basis of discounted future cash flows expected to be obtained from existing oil and gas reserves as determined by third party petroleum engineers.

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During January thru March 2013, Eagleford Gas acquired an additional 46.7% working interest in the Beall Ranch property for approximately $58,400,000, obtained through bank borrowings. Eagleford Gas acquired an additional 2.0% working interest in its Beall Ranch property for $5,500,000 in June 2013. $34,400,000 of the combined purchase price was allocated to proved properties, while $29,500,000 was allocated to unproved properties.

In June 2013, Barnett Gas sold its working interest in its Woodland Estates property in the Barnett Shale for approximately $10,000,000. The effective date of the sale was May 1, 2013. The loss on the sale approximated $17,110,000.

Effective August 1, 2013, API sold its working interest in Louisiana and Oklahoma non-operated oil and gas properties for approximately $1,700,000. The loss on the sale approximated $29,000.

4. Restricted Certificates of Deposit

The Company is required to maintain certain certificates of deposit (“CDs”) by a municipality in which drilling operations are located and by the Railroad Commission of Texas (“RRC”). These CDs are pledged as collateral for letters of credit issued by the Company’s bank to the municipality and the RRC. These CDs have maturity dates ranging from March 6 to March 8, 2015, and bear interest rates ranging from 0.20% to 0.25%. As these CDs are expected to be renewed upon maturity and are not available for use in operations, they are classified as noncurrent assets.

5. Commodity Price Risk Activities

Inherent in the Company’s fixed price contracts, are certain business risks, including market risk and credit risk. Market risk is the risk that the price of oil and natural gas will change, either favorably or unfavorably, in response to changing market conditions. Credit risk is the risk of loss from nonperformance by the Company’s counterparty to a contract. The Company does not currently require collateral from any of its counterparties nor, does its counterparties, require collateral from the Company. At December 31, 2014, the Company had no open physical delivery obligations.

The Company enters into certain commodity derivative instruments to mitigate commodity price risk associated with a portion of its future oil, NGL and natural gas production and related cash flows. The oil, NGL and natural gas revenues and cash flows are affected by changes in commodity product prices, which are volatile and cannot be accurately predicted. The objective for holding these commodity derivatives is to protect the operating revenues and cash flows related to a portion of the future oil, NGL and natural gas sales from the risk of significant declines in commodity prices, which helps ensure the Company’s ability to fund the capital budget. The Company has not designated any of the commodity derivatives as hedges under the applicable accounting standards. Consequently, all changes in fair value of these derivative (realized and unrealized) are included in the consolidated statement of operations.

As of December 31, 2014, the following derivative transactions were outstanding:

Instrument	Total Volume	Settlement Period	Fixed Price

Oil — WTI Fixed Price Swap	244,200 BBL	January — December 2015	$	87.00
Oil — WTI Fixed Price Swap	255,500 BBL	January — December 2015	81.25
Oil — WTI Fixed Price Swap	35,460 BBL	January — March 2015	92.10
Oil — WTI Fixed Price Swap	63,400 BBL	January — March 2015	98.15
Oil — WTI Fixed Price Swap	35,800 BBL	January — March 2015	91.60
Oil — WTI Fixed Price Swap	32,942 BBL	April — June 2015	90.40
Oil — WTI Fixed Price Swap	55,300 BBL	April — June 2015	95.65
Oil — WTI Fixed Price Swap	31,400 BBL	April — June 2015	89.50

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Oil — WTI Fixed Price Swap	32,016 BBL	July — September 2015	88.87
Oil — WTI Fixed Price Swap	49,700 BBL	July — September 2015	93.65
Oil — WTI Fixed Price Swap	29,992 BBL	October — December 2015	87.80
Oil — WTI Fixed Price Swap	45,500 BBL	October — December 2015	92.25
Oil — WTI Fixed Price Swap	205,000 BBL	January — December 2016	84.45
Oil — WTI Fixed Price Swap	309,000 BBL	January — December 2016	90.45

The above derivative contracts aggregate to 911,210 barrels for 2015 or 2,496 barrels per day and 514,000 barrels for 2016 or 1,408 barrels per day. All derivative contracts are carried at their fair value on the balance sheet and all changes in value are recorded in the consolidated statement of operations in realized and unrealized gain or loss on derivative financial instruments.

As of December 31, 2014 and 2013, all of the Company’s economic derivative hedge positions were with large financial institutions, which are not known to the Company to be in default on their derivative positions. The Company is exposed to credit risk to the extent of non-performance by the counterparties in the derivative contracts discussed above; however, the Company does not anticipate non-performance by such counterparties. None of the Company’s derivative instruments contains credit-risk related contingent features.

6. Fair Value Measurements

Level 1 — Quoted prices for identical assets or liabilities in active markets.

The following tables present the Company’s assets and liabilities that are measured at fair value on a recurring basis as of December 31, 2014 and 2013, for each fair value hierarchy level:

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)			Significant Unobservable Inputs (Level 3)		Total
December 31, 2014
Assets:
Commodity derivatives	$	—	$	43,758,555		$	—	$	43,758,555
Liabilities:
Commodity derivatives	—		—			—		—

Total	$	—	$	43,758,555		$	—	$	43,758,555

December 31, 2013
Assets:
Commodity derivatives	$	—	$	646,827		$	—	$	646,827
Liabilities:
Commodity derivatives	—		(2,206,817		)	—		(2,206,817		)

Total	$	—	$	(1,559,990	)$	—		$	(1,559,990	)

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The book values of cash and cash equivalents, receivables for oil, NGL and natural gas sales, joint interest billings, notes and other receivables, accounts payable, and accrued liabilities approximate fair value due to the short-term nature of these instruments. The carrying value of debt approximates fair value since it is subject to a short-term floating interest rate that approximates the rate available to the Company.

7. Oil and Gas Properties

A summary of oil and gas properties as of December 31, follows:

	2014			2013
Proved properties and equipment	495,954,566			265,180,716
Unproved properties	65,725,668			64,500,661
Less accumulated depreciation, depletion, and amortization	(80,600,959		)	(36,107,200		)

	$	481,079,275		$	293,574,177

The Company recorded impairment of oil and gas properties of $5,478,264 and $2,762,235 for the years ended December 31, 2014 and 2013, respectively, which is included in accumulated depreciation, depletion, and amortization.

8. Asset Retirement Obligations

Pursuant to ASC 410 , Asset Retirement Obligations, the Company recognizes the fair value of its asset retirement obligations related to the plugging, abandonment, and remediation of oil and gas producing properties. The present value of the estimated asset retirement costs has been capitalized as part of the carrying amount of the related long-lived assets, which approximated $6,481,752 as of December 31, 2014.

The liability has been accreted to its present value as of December 31, 2014. The Company evaluated its wells and has determined a range of abandonment dates through December 2056.

The following represents a reconciliation of the asset retirement obligations:

	Amount
Asset retirement obligations at December 31, 2012	$	425,427
Wells drilled during the year	203,075
Wells acquired during the year	5,626,369
Wells sold during the year	(314,249		)
Accretion of discount	169,637
Wells plugged and abandoned during the year	(173,141		)

Asset retirement obligations at December 31, 2013	5,937,118

Wells drilled during the year	543,555
Wells acquired during the year	965,917
Wells sold during the year	(482,081		)
Accretion of discount	201,076
Wells plugged and abandoned during the year	(330,970		)

Asset retirement obligations at December 31, 2014	$	6,834,615

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9. Accrued Liabilities

The accrued liabilities consist of the following at December 31:

	2014		2013

Bonus payable	$	1,848,612	$	1,260,513
Severance & vacation payable	283,540		334,500
Accrued interest	4,149,105		472,046
Accrued rent	489,191		460,119
Accrued expenses	4,592,152		633,307
Other	218,488		43,005

	$	11,581,088	$	3,203,490

10. Income Taxes

The current and deferred components of income tax expense (benefit) are as follows:

Years Ended December 31,	2014		2013

Current tax expense (benefit)
Federal	$	112,621	$	73,900
State	81,936		—

Deferred tax expense (benefit)
Federal	21,779,679		(2,983,764		)
State	644,739		(32,362		)

Income tax expense (benefit)	$	22,618,975	$	(2,942,226	)

Total income tax (benefit)/expense differs from the amounts computed by applying the U.S. statutory federal income tax rate to income (loss) before income taxes as a result of state income taxes, certain permanent differences and valuation allowances. For tax purposes, the Lonestar Transaction was treated as a stock purchase and therefore the fair value gain is a permanent difference, creating a significant difference between the statutory and effective rates for the year ended December 31, 2013.

The following table provides a reconciliation of the Company’s effective tax rate from the U.S. 35% statutory rate for the periods indicated:

Years Ended December 31,	2014		2013

Expected income tax provision (benefit) at statutory rate	$	21,048,435	$	7,414,710
State tax, tax effected	675,733		5,230
Permanent difference related to fair value gain	—		(9,432,263		)
Other	585,907		385,833
Change in valuation allowance	—		(1,315,736		)
Rate difference	308,900		—
Actual income tax provision	$	22,618,975	$	(2,942,226	)

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The tax effects of the Company’s temporary differences that give rise to significant portions of the deferred tax assets and liabilities are presented below:

December 31,	2014			2013

Deferred tax assets:
Net operating loss carryforward	$	64,772,240		$	33,843,390
Severance costs	96,679			34,514
Organizational expenses	58,187			62,235
Stock based compensation	1,522,325			819,889
Intangibles	869,594			935,108
Unrealized hedging loss	—			447,735
Other	324,375			145,493

	67,643,400			36,288,364
Deferred tax liabilities:
Oil and gas properties and other property and equipment, principally due to intangible drilling costs	(84,371,190		)	(45,074,522		)
Unrealized hedging gain	(14,482,786		)	—

Net deferred tax liabilities	$	(31,210,576	)	$	(8,786,158	)

The tax net operating loss carryforward as of December 31, 2014, approximates $184,242,000 and begins to expire in 2030. In January 2013, the Company experienced an ownership change as defined in Section 382 of the Internal Revenue Code of 1986, as amended. The provisions of Section 382 apply an annual limit to the amount of the net operating loss carryforward that was incurred prior to the ownership change that can be used to offset future taxable income beginning with the 2013 taxable year. Management believes that the Company’s net operating losses will be fully utilized during the loss carryforward period. The Company has approximately $11,374,000 of percentage depletion carryover which has no expiration.

The Company files income tax returns in the United States federal jurisdiction and in various state jurisdictions. At December 31, 2014, there are no current examinations of federal or state jurisdictions in progress. The Company’s income tax returns related to fiscal years ended December 31, 2010, through 2014 remain open to possible examination by the tax authorities. The Company has not recorded any interest or penalties associated with uncertain tax positions.

11. Long-Term Debt

The Company’s debt consists of the following:

December 31,	2014			2013

Revolving credit facility	$	49,000,000		$	99,000,000
2 nd lien facility	—			10,000,000
8.75% senior notes	220,000,000			—
Less discount on 8.75% senior notes	(4,675,000		)	—
Other	288,529			—

	$	264,613,529		$	109,000,000

Senior Revolving Credit Facility

In March 2013, the Company entered into a $400,000,000 syndicated credit facility agreement (“revolving credit facility”) with Wells Fargo Bank (as Administrative Agent). The initial borrowing base was set at $105,000,000. The borrowing base shall be re-determined semi-annually based on the credit agreement, and such re-determined borrowing base shall become effective and applicable on April 1 and October 1 of each year commencing October 1, 2013. The revolving credit facility matures on March 14, 2018. As of December 31, 2014 and 2013, $49,000,000 and $99,000,000 was borrowed under the revolving credit facility, respectively. The borrowing base as of December 31, 2014 was $150,000,000.

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The revolving credit facility may be used for loans and, subject to a $2,500,000 sub-limit, letters of credit. The Company has not drawn any advances on the letter of credit as of December 31, 2014. The revolving credit facility provides for a commitment fee of 0.5% based on the unused portion of the borrowing base under the revolving credit facility.

In connection with the revolving credit facility, the Company and certain of its subsidiaries also entered into certain customary ancillary agreements and arrangement, which, among other things, provide that the indebtedness, obligations, and liabilities of the Company arising under or in connection with the revolving credit facility are unconditionally guaranteed by such subsidiaries. As of December 31, 2014 and 2013, the Company was in compliance with all covenants including all financial ratios.

8.75% Senior Notes

The Company received a $108,750,000 borrowing base commitment under the revolving credit facility, upon closing of the Notes offering.

On or after April 15, 2016, the Company may redeem the Notes in whole or in part at the redemption prices (expressed as percentages of the principal amount) set forth in the following table plus accrued and unpaid interest, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed during the twelve-month period beginning on April 15 of the years indicated below:

Year	Percentage
2016	106.563	%
2017	104.375	%
2018 and thereafter	100.000	%

In addition, upon a change of control of the Company, holders of the Notes will have the right to require the Company to repurchase all or any part of their Notes for cash at a price equal to 101% of the aggregate principal amount of the Notes repurchased, plus any accrued and unpaid interest. The Notes were issued under

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and governed by an Indenture dated April 4, 2014, between the Company, Wells Fargo Bank, National Association, as trustee and the Company’s subsidiaries named therein as guarantors (the “Indenture”). The Indenture contains covenants that, among other things, limit the ability of the Company and its subsidiaries to: incur indebtedness; pay dividends or make other distributions on stock; purchase or redeem stock or subordinated indebtedness; make investments; create liens; enter into transactions with affiliates; sell assets; refinance certain indebtedness; and merge with or into other companies or transfer substantially all of the Company’s assets.

Debt Issuance Costs

The Company capitalizes certain direct costs associated with the issuance of long-term debt and amortizes such costs over the lives of the respective debt. During 2014, the Company capitalized approximately $3.5 million in costs associated with the issuance of the Notes and costs incurred for amendments to the Company’s Senior Revolving Credit Facility. With the payoff and termination of the 2nd lien facility, the Company expensed approximately $700,000 of debt issuance costs. At December 31, 2014 and 2013, the Company had approximately $3,300,000 and $1,500,000, respectively, of debt issuance costs remaining that are being amortized over the lives of the respective debt.

12. Commitments and Contingencies

Employment Agreements

The Company has entered into various employment agreements with executives of the Company that provide for minimum levels of annual base salary plus an incentive compensation award based on individual and/or Company performance. Existing agreements were entered into as of January 1, 2013, and expire on December 31, 2015; such agreements supersede any previous contracts signed by the executives. Potential severance obligations under these employment agreements amounted to $2,480,000 and $3,348,000 at December 31, 2014 and 2013, respectively.

Litigation

The Company is subject to certain claims and litigation arising in the normal course of business. In the opinion of management, the outcome of such matters will not have a materially adverse effect on the consolidated results of operations or financial position of the Company.

Environmental Remediation

Various federal, state, and local laws and regulations covering the discharge of materials into the environment, or otherwise relating to the protection of the environment, may affect the Company’s operations and the costs of its oil and gas exploration, development, and production operations. The Company does not anticipate that it will be required in the near future to expend significant amounts in relation to the consolidated financial statements taken as a whole by reason of environmental laws and regulations, and appropriately no reserves have been recorded.

Lease Agreement

The Company entered into an operating lease agreement for its primary facility in October 2014. The lease will expire in October 2021. Future minimum annual lease payments are as follows:

	Amount
2015	$	458,195
2016	485,839
2017	427,836
2018	411,767
2019	422,301
Thereafter	800,848

Total	$	3,006,786

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Rent expense was $337,254 and $628,603 for the years ended December 31, 2014 and 2013, respectively. Included in rent expense for 2014 is $87,856 representing the acceleration of the office rent for our previous Fort Worth corporate office that was subleased in December 2014. Included in rent expense for 2013 is the acceleration of the office rent for the Denver office shut-down at the end of 2013 in the amount of $379,996.

13. Stockholder’s Equity

Determining Fair Value of Stock Options

In determining the fair value of stock option grants, the Company utilized the following assumptions:

Expected Forfeitures . The Company has experienced limited forfeitures and therefore has not discounted expenses for forfeitures at the reporting date.

The weighted average grant date fair value of stock options granted and the intrinsic value of stock options exercised are shown below for the periods indicated:

	For the year ended
	December 31, 2014

Weighted average grant date fair value per stock option granted	$	0.09
Intrinsic value of stock options exercised (1)	$	—
Grant date fair value of stock options vested	$	795,407

(1) No options were exercised during 2014 or 2013.

Stock Option Activity

The following tables summarize certain information related to outstanding stock options under the 2012 Plan as of and for the years ended December 31, 2014 and 2013:

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	Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)

Outstanding at December 31, 2012	10,200,000		$	0.50	4
Granted	66,184,219		0.30		4
Exercised	—		—		—
Canceled/Expired	(1,500,000	)	0.80		.5
Forfeited	(1,000,000	)	0.36		4
Outstanding at December 31, 2013	73,884,219		0.31		3
Options vested and exercisable at December 31, 2013	29,761,406		0.32		3

Granted	20,541,085		0.36		3
Exercised	—		—		—
Canceled/Expired	(1,233,333	)	0.36		1.5
Forfeited	(12,478,484	)	0.3		2
Outstanding at December 31, 2014	80,713,487		0.32		2
Options vested and exercisable at December 31, 2014	48,507,739		$	0.32	2

	Shares		Weighted Average Fair Value per Share		Weighted Average Exercise Price per share		Weighted Average Remaining Contractual Term (in years)

Outstanding non-vested options at December 31, 2012	10,200,000		$	0.20	$	0.50	3
Granted	66,184,219		0.20		0.30		4
Vested	(29,761,406	)	0.23		0.32		3
Forfeited	(2,500,000	)	0.20		0.62		2
Outstanding non-vested options at December 31, 2013	44,122,813		0.23		0.30		3

Granted	20,541,085		0.09		0.36		3
Vested	(19,979,666	)	0.09		0.32		3
Forfeited	(12,478,484	)	0.09		0.30		3
Outstanding non-vested options at December 31, 2014	32,205,748		$	0.09	$	0.32	2

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Stock-Based Compensation Expense

For the years ended December 31, 2014 and 2013, the Company recorded stock-based compensation expense of $1,938,400 and $2,244,967, respectively. All stock-based compensation costs were expensed and not tax affected, as the Company currently records no U.S. income tax expense.

As of December 31, 2014, the Company had approximately $2,100,000 of unrecognized compensation cost related to unvested stock options, which is expected to be amortized equally over 2015 and 2016.

14. Earnings Per Share

In accordance with the provisions of current authoritative guidance, basic earnings or loss per share shown on the Consolidated Statements of Operations is computed on the basis of the weighted average number of common shares outstanding during the periods. Diluted earnings or loss per share is computed based upon the weighted average number of common shares outstanding plus the assumed issuance of common shares for all potentially dilutive securities.

Lonestar Resources America Inc. had outstanding ordinary common shares (prior to the reorganization) of 184,072 and 100,000 at December 31, 2014 and 2013, respectively. All shares were held by Lonestar Resources Limited (Parent), and there are no dilutive units outstanding. Each share entitles the holder to participate in dividends and the proceeds of winding up of the Company in proportion to the number of, and amounts paid on, the shares held. Each share is also entitled to one vote at a stockholder meeting either in person or by proxy.

In connection with a planned reorganization, a new corporate entity was formed, Lonestar Resources US Inc., which, immediately prior to the reorganization, will acquire the Parent via an Australian Scheme of Arrangement. As a result, certain accounting policies have been adopted in these financial statements as if the Company were a public company. The following table presents unaudited pro forma earnings per share of Lonestar Resources US Inc., assuming that the 1 for 2 reverse stock split upon reorganization had occurred at the beginning of the years ended December 31, 2014 and 2013:

UNAUDITED PRO FORMA EARNINGS PER SHARE (AFTER REORGANIZATION)

	2014		2013
Net income per common share:
Basic	$	5.12	$	3.48
Diluted	$	5.12	$	3.48

Weighted average common shares outstanding
Basic	7,330,602		7,108,777
Diluted	7,330,602		7,108,777

As the employee stock options are not “in the money” at December 31, 2014 and 2013, the employee stock options did not cause any dilution.

15. Related Party Activities

During the year ended December 31, 2014, the Company paid dividends to its Parent of approximately $637,000.

During the year ended December 31, 2013, the Company recognized interest expense and management fee expense arising from transactions with its Parent of approximately $1,400,000 and $3,400,000, respectively.

In April 2014, the Company loaned $539,000 in total to Frank D. Bracken, III and Thomas H. Olle to assist with their tax obligations as a result of stock compensation awarded to them in 2013.

New Tech Global Ventures, LLC, a company in which Daniel R. Lockwood (a director of Lonestar) owns a limited partnership interest, has provided field engineering staff and consultancy services for Lonestar since 2013. The total cost for such services was approximately $2,100,000 and $500,000 in 2014 and 2013, respectively.

Mitchell Wells, who has been a Director of Lonestar Resources Limited since December 2014, has provided consultancy services as its Company Secretary since January 2013. These services have been provided through BlueSkye Pty Ltd, for which Mr. Wells is the sole Director and shareholder. BlueSkye Pty Ltd was paid $181,458 in 2014 and $166,080 in 2013. He has not received any additional compensation for his service as a Director.

16. Supplemental Information on Oil and Natural Gas Exploration and Production Activities (unaudited)

Capitalized Costs

The following table presents the Company’s aggregate capitalized costs relating to oil and gas activities at the end of the periods indicated:

December 31,	2014			2013

Oil and natural gas properties:
Proved properties and equipment	$	494,951,078		$	262,184,034
Unproved properties	65,725,668			64,500,661
Capitalized asset retirement cost	6,481,752			5,758,917

Less:
Accumulated depletion and amortization	(80,600,959		)	(36,107,200		)
Property impairment	(5,478,264		)	(2,762,235		)

Total	$	481,079,275		$	293,574,177

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Results of Operations

The following table sets for the results of operations from oil and gas producing activities for the years ended December 31, 2014 and 2013.

December 31,	2014			2013

Oil and gas producing activities:
Oil sales	$	104,233,379		$	71,601,841
Natural gas sales	7,589,599			6,277,007
Natural gas liquids sales	3,803,582			2,991,820
Lease operating and gas gathering	(16,631,611		)	(13,492,922		)
Production, ad valorem and severance taxes	(7,123,332		)	(5,027,534		)
Accretion of asset retirement obligations	(201,076		)	(169,637		)
Depreciation, depletion and amortization	(40,521,546		)	(28,110,025		)
Property impairment	(5,478,264		)	(2,762,235		)
Results of operations from oil and gas producing activities	$	45,670,731		31,308,315

Depletion rate per BOE	$	24.55		$	24.23

Crude Oil and Natural Gas Reserves

Net Proved Reserve Summary

The reserve information presented below is based upon estimates of net proved oil and gas reserves that were prepared by the independent petroleum engineering firms of W.D. Von Gonten & Co. for the evaluation of the Company’s Eagle Ford Shale properties and LaRoche Petroleum Consultants, Ltd. for the evaluation of the Company’s conventional assets. All of the Company’s reserves are located in the United States.

Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible in future years from known reservoirs under existing economic conditions, operating methods and governmental regulations (i.e. prices and costs as of the date the estimate is made). The project to extract the hydrocarbons must have commenced or the interest owner must be reasonably certain that it will commence within a reasonable period of time.

Reservoir engineering, which is the process of estimating quantities of crude oil and natural gas reserves, is complex, requiring significant decisions in the evaluation of all available geological, geophysical, engineering and economic data for each reservoir. These estimates are dependent upon many variables, and changes occur as knowledge of these variables evolves. Therefore, these estimate are inherently imprecise, and are subject to considerable upward or downward adjustments. Actual production, revenues and expenditures with respect to reserves will likely vary from estimates, and such variances could be material. In addition, reserve estimates for properties which have not yet been drilled, or properties with a limited production history may be less reliable than estimates for properties with longer production histories.

The following information table sets forth changes in estimated net proved developed crude oil and natural gas reserves for the years ended December 31, 2014 and 2013.

	Oil (BBL) (1)		Gas (mcf)		BOE (2)

Net proved reserves
Reserves at December 31, 2012	8,740,226		19,648,360		12,014,952
New discoveries & extensions	2,226,648		1,839,228		2,533,186
Purchase of reserves in place	4,536,123		4,758,497		5,329,206
Reserves sold	(40,248	)	(8,645,099	)	(1,481,097	)
Revisions of prior year estimates	723,679		1,415,909		959,663
Production	(861,489	)	(1,643,752	)	(1,135,447	)
Reserves at December 31, 2013	15,324,939		17,373,143		18,220,463
New discoveries & extensions	2,783,596		2,528,029		3,204,934
Purchase of reserves in place	10,132,594		3,655,020		10,741,764
Reserves sold	(252,200	)	(5,632	)	(253,139	)
Revisions of prior year estimates	18,557		4,106,884		703,038
Production	(1,352,494	)	(1,689,029	)	(1,633,999	)
Reserves at December 31, 2014	26,654,992		25,968,415		30,983,061

F- 37

Table of Contents

(1) Oil includes both oil and natural gas liquids

(2) BOE (barrels of oil equivalent) is calculated by converting 6 MCF of natural gas to 1 BBL of oil. A BBL (barrel) of oil is one stock tank barrel, or 42 U.S. gallons liquid volume, of crude oil or other liquid hydrocarbons.

Standardized Measure of Discounted Future Net Cash Flows

Certain information concerning the assumptions used in computing the valuation of proved reserves and their inherent limitations are discussed below. The Company believes that such information is essential for a proper understanding and assessment of the data presented.

For the years ended December 31, 2014 and 2013, calculations were made using average prices of $94.99 and $96.94 per barrel of crude oil, respectively, and $4.35 and $3.66 per MCF of natural gas, respectively. Prices and costs are held constant for the life of the wells; however, prices are adjusted by well in accordance with sales contracts, energy content quality, transportation, compression and gathering fees, and regional price differentials.

These assumptions used to compute the standardized measure are those prescribed by the FASB and the SEC, and do not necessarily reflect the Company’s expections of the actual net cash flow to be derived from those reserves, nor the present worth of the properties. Further, actual future net cash flows will be affected by factors such as the amount and timing of actual production, supply and demand for crude oil and natural gas, and changes in governmental regulations and tax rates. Sales prices of both crude oil and natural gas have fluctuated significantly in recent years.

Future development and production costs are computed by estimating the expenditures to be incurred in developing and producing the proved crude oil and natural 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 is used to reflect the timing of the future net cash flows relating to proved reserves.

The standardized measure of discounted future net cash flows as of December 31, 2014 and 2013 were as follows:

	Dec, 31 2014			Dec, 31 2013

Future Cash Flows	$	2,389,844,493		$	1,443,621,035
Future Costs
Production	(649,398,768		)	(451,512,835		)
Development	(320,222,400		)	(188,167,206		)

Future Inflows Before Income Tax	1,420,223,325			803,940,994
Future Income Taxes	(353,602,580		)	(233,249,630		)

Future Net Cash Flows	1,066,620,745			570,691,364
10% Annual Discount for Estimated Timing of Cash Flows	(517,581,023		)	(267,919,838		)

Standardized Measure of Discounted Future Net Cash Flows	$	549,039,722		$	302,771,526

Changes in the Standardized Measure of Discounted Future Net Cash flows Relating to Proved Crude Oil and Nature Gas Reserves were as follows for the years indicated:

F- 38

Table of Contents

December 31,	2014			2013

Standardized measure at beginning of period	$	302,771,526		$	236,193,400
Extensions and discoveries and improved recovery net of future production and development costs	88,919,601			44,638,787
Purchase of minerals in place	270,331,369			140,642,008
Accretion of discount	41,871,778			23,619,340
Net change in sales price, net of production costs	(38,540,796		)	(15,040,366		)
Changes in estimated future development costs	(9,274,717		)	(7,231,273		)
Changes of production rates (timing) and other	12,731,855			(30,472,670		)
Revisions of quantity estimates	18,066,206			31,004,067
Net change in income taxes	(40,835,170		)	(50,731,920		)
Sales net of production costs	(91,571,228		)	(63,380,343		)
Sales of minerals in place	(5,430,702		)	(6,469,503		)
Net increase (decrease)	246,268,196			66,578,126
Standardized measure at end of the year	$	549,039,722		$	302,771,526

16. Subsequent Events

In preparing the consolidated financial statements, management has evaluated all subsequent events and transactions for potential recognition or disclosure through the date the accompanying consolidated financial statements were issued.

17. Reorganization

In connection with a planned reorganization, a new corporate entity was formed, Lonestar Resources US Inc., which immediately prior to the reorganization will acquire the Parent via an Australian Scheme of Arrangement. As a result, certain accounting policies have been adopted in these financial statements as if the Company were a public company. These include earnings per share, segment reporting and supplemental oil and gas disclosures.

F- 39

Exhibit 2.1

Scheme Implementation Agreement


Lonestar Resources Limited

Lonestar Resources US Inc.

Baker & McKenzie

ABN 32 266 778 912

AMP Centre
Level 27
50 Bridge Street
Sydney NSW 2000
Australia

www.bakermckenzie.com

Table of contents

1	Definitions and interpretation	1

2	Agreement to propose Schemes	8

3	Conditions	8

4	Schemes of arrangement	12

5	Implementation	14

6	Warranties	17

7	Termination	18

8	Costs and stamp duty	19

9	Notices	19

10	General	21

Annexure 1		25
Timetable		25

Annexure 2		26
Share Scheme of Arrangement		26

Annexure 3		12
Lonestar Option Scheme of Arrangement		12

Annexure 4		11
Non-employee Option Scheme of Arrangement		11

Annexure 5		11
Deed Poll		11

Title		Scheme Implementation Agreement

Date		2015

Parties		Lonestar Resources Ltd (ABN 36 058 714 408) of Level G, 11 Ventnor Ave, West Perth WA 6005 ( Lonestar )

		Lonestar Resources US Inc. (a corporation formed in the State of Delaware, United States of America) of 600 Bailey Avenue, Suite 200, Fort Worth, Texas, United States of America ( Holdco )

Recitals

A Lonestar will effect a redomiciliation by schemes of arrangement under Part 5.1 of the Corporations Act which would change the jurisdiction of the holding company of the Lonestar Group from Australia to the State of Delaware, US.

B Lonestar and Holdco propose to implement the Share Scheme and Option Schemes for Holdco to acquire all of the fully paid ordinary shares and issued options of Lonestar on the terms and conditions of this Agreement.

C As a result of the Schemes, Lonestar will become a wholly-owned subsidiary of Holdco.

Operative provisions

1 Definitions and interpretation

Definitions

1.1 In this Agreement, unless the context otherwise requires:

Adviser means, in relation to an entity, its legal, financial and other expert advisers (not including the Independent Expert).

AIFRS means the International Financial Reporting Standards as adopted in Australia.

ASIC means the Australian Securities and Investments Commission.

ASIC Review Period means the period from the date on which a draft of the Scheme Booklet is provided to ASIC for its review pursuant to section 411(2) of the Corporations Act to the date on which ASIC confirms that it does not intend to make any submissions at the Court hearing on the First Court Date or otherwise object to the Scheme and Option Scheme.

Associate has the meaning given in Division 2 of Part 1.2 of the Corporations Act as if section 12(1) of that Act included a reference to this Agreement and Lonestar were the designated body.

ASX means ASX Limited (ACN 008 624 691) or, where the context requires, the securities market which it operates.

Business Day means a day that is not a Saturday, Sunday or a public holiday or bank holiday in Sydney.

Claim means a demand, claim, action or proceeding, however arising and whether present, unascertained, immediate, future or contingent, including any claim for specific performance.

Corporations Act means the Corporations Act 2001 (Cth).

Court means a court of competent jurisdiction under the Corporations Act.

Deed Poll means the deed poll to be executed by Holdco substantially in the form of Annexure 5 under which Holdco covenants in favour of Lonestar Shareholders and Optionholders to perform its obligations under this Agreement, the Share Scheme and Option Schemes.

Dispatch Date means the day that the Scheme Booklet is dispatched to Lonestar Shareholders and Optionholders.

Effective Date means the date on which an office copy of the Court orders made under section 411(4)(b) of the Corporations Act approving the Share Scheme and/or the Lonestar Option Scheme and/or the Non-employee Option Scheme are lodged with ASIC.

Effective means, when used in relation to the Share Scheme and Option Schemes, the coming into effect, under section 411(10) of the Corporations Act, of the Court orders made under section 411(4)(b) of the Corporations Act in relation to the relevant Scheme.

Excluded Shareholder means a person to be identified.

Excluded Shares means the Lonestar Shares held by the Excluded Shareholder on the Scheme Record Date.

First Court Date means the date of the hearing by the Court of the application to order the convening of the Scheme Meetings under section 411(1) of the Corporations Act.

Government Agency means a:

(a) government, whether foreign, federal, state, territorial or local;

(b) department, office or minister of a government (whether foreign, federal, state, territorial or local) acting in that capacity; or

(c) commission, delegate, instrumentality, agency, board, or other government, semi-government, judicial, administrative, monetary or fiscal authority, whether statutory or not and whether foreign, federal, state, territorial or local,

and includes ASX, ASIC, the Foreign Investment Review Board and the Takeovers Panel.

GST means goods and services tax as defined in A New Tax Systems (Goods and Services Tax) Act 1999 (Cth), or any like tax.

Holdco Employee Option means a Holdco Option granted under the Holdco Employee Stock Option Plan.

Holdco Employee Stock Option Plan means the Lonestar Resources US Inc. 2016 Incentive Plan, to be approved by Holdco prior to the Lonestar Option Scheme Meeting.

Holdco Indemnified Party means Holdco and its Representatives.

Holdco Option means an option to subscribe for a Holdco Share and includes Holdco Employee Options.

Holdco Scheme Information means information about Holdco which is provided to Lonestar by or on behalf of Holdco to enable the Scheme Booklet to be prepared in accordance with all applicable laws, applicable ASIC guidance and policies and the Listing Rules, or to the Independent Expert to enable it to prepare its report.

Holdco Share means a share of voting common stock in Holdco.

Holdco Warranties means the representations and warranties of Holdco set out in clause 6.2.

Implementation Date means the third Business Day after the Scheme Record Date.

Implementation means the implementation of the applicable Share Scheme and/or Option Schemes, on it becoming Effective under section 411(10) of the Corporations Act.

Independent Expert means an expert independent of the parties engaged by Lonestar to opine (and prepare a report for inclusion in the Scheme Booklet) on whether the Share Scheme and Option Schemes are in the best interests of Lonestar Shareholders and Optionholders, respectively.

Ineligible Foreign Shareholder means a Scheme Shareholder whose address, as shown in the Register (as at the Scheme Record Date), is in a place outside Australia and Australia’s external territories, Hong Kong, Jersey, New Zealand, Papua New Guinea, Singapore, United Kingdom or US, unless Holdco is satisfied, acting reasonably, that the laws of that place permit the allotment and issue of Holdco Shares to that Scheme Shareholder, either unconditionally or after compliance with conditions that Holdco in its sole discretion regards as acceptable and not unduly onerous or impracticable.

Listing Rules means the listing rules of ASX as amended from time to time.

Lonestar Board means the board of directors of Lonestar as constituted from time to time.

Lonestar Group means Lonestar and each of its Subsidiaries.

Lonestar Indemnified Party means each member of the Lonestar Group and their respective Representatives.

Lonestar Option means options to acquire by way of issue Lonestar Shares, that are the existing Class A and Class B Options held by current and former Lonestar Group employees.

Lonestar Option Scheme means the scheme of arrangement, substantially in the form set out in Annexure 3 under Part 5.1 of the Corporations Act between Lonestar and Lonestar Optionholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act.

Lonestar Option Scheme Meeting means the meeting of Lonestar Optionholders ordered by the Court to be convened under section 411(1) of the Corporations Act.

Lonestar Optionholder means a person who holds Lonestar Options.

Lonestar Optionholder Approval means a resolution by Lonestar Optionholders in favour of the Lonestar Option Scheme passed by the majorities required under section 411(4)(a)(i) of the Corporations Act.

Lonestar Scheme Information means all information included in the Scheme Booklet other than the Holdco Scheme Information and the Independent Expert’s report.

Lonestar Share means an issued fully paid ordinary share in Lonestar.

Lonestar Shareholder Approval means a resolution by Lonestar Shareholders in favour of the Share Scheme passed by the majorities required under section 411(4)(a)(ii) of the Corporations Act.

Lonestar Shareholder means each person who is registered in the Register as a holder of Lonestar Shares.

Lonestar Warranties means the representations and warranties of Lonestar set out in clause 6.1.

Nasdaq means the Nasdaq Global Market or such other Nasdaq market on which the Holdco Shares may be listed or quoted.

Non-employee Option means options to acquire by way of issue Lonestar Shares, other than the Lonestar Options.

Non-employee Option Scheme means the scheme of arrangement, substantially in the form set out in Annexure 4 under Part 5.1 of the Corporations Act between Lonestar and Non-employee Optionholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act.

Non-employee Option Scheme Meeting means the meeting of Non-employee Optionholders ordered by the Court to be convened under section 411(1) of the Corporations Act.

Non-employee Optionholder Approval means a resolution by Non-employee Optionholders in favour of the Non-employee Option Scheme passed by the majorities required under section 411(4)(a)(i) of the Corporations Act.

Non-employee Optionholders means a person who holds Non-employee Options.

Officer means, in relation to an entity, its directors, officers and employees.

Option means an option to subscribe for a Lonestar Share, being the Lonestar Options and Non-employee Options.

Option Scheme Consideration means the consideration to be provided to Scheme Optionholders under the terms of the Option Schemes for the cancellation of the Options as set out in clause 4.

Option Scheme Meetings means the Lonestar Option Scheme Meeting and the Non-employee Option Scheme Meeting.

Option Schemes means the Lonestar Option Scheme and Non-employee Option Scheme.

Optionholder means a holder of an Option.

Register means the register of shareholders or optionholders, as applicable, of Lonestar.

Regulatory Consents has the meaning given to that term in clause 3.1(f).

Related Body Corporate has the meaning given to that term in the Corporations Act.

Representative means, in relation to an entity:

(a) each of the entity’s Related Bodies Corporate; and

(b) each of the Officers and Advisers of the entity or any of its Related Bodies Corporate.

Scheme Booklet means the document including the information described in clause 5.1(a) to be approved by the Court and dispatched to Lonestar Shareholders and Optionholders.

Scheme Lonestar Optionholder means each person who holds Lonestar Options as at the Scheme Record Date.

Scheme Meetings means the Share Scheme Meeting and Option Scheme Meetings.

Scheme Non-employee Optionholder means each person who holds Non-employee Options as at the Scheme Record Date.

Scheme Optionholder means a Scheme Lonestar Optionholder and Scheme Non-employee Optionholder, or either one of them as relevant.

Scheme Record Date means 7.00 pm on the third Business Day after the Effective Date.

Scheme Share means a Lonestar Share as at the Scheme Record Date, other than Lonestar Shares held by the Excluded Shareholder.

Scheme Shareholder means each person who holds Scheme Shares.

Schemes means the Share Scheme and Option Schemes.

Second Court Date means the date of the hearing by the Court of the application to approve the Share Scheme and Option Schemes under section 411(4)(b) of the Corporations Act.

Share Scheme Consideration means the consideration to be provided to Scheme Shareholders under the terms of the Scheme for the transfer to Holdco of their Scheme Shares as described in clause 4.

Share Scheme means the scheme of arrangement, substantially in the form set out in Annexure 2 under Part 5.1 of the Corporations Act between Lonestar and Scheme Shareholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act.

Share Scheme Meeting means the meeting of Lonestar Shareholders (other than the Excluded Shareholder) ordered by the Court to be convened under section 411(1) of the Corporations Act.

Subsidiary has the meaning given to that term in the Corporations Act.

Sunset Date means 5.00 pm on 30 June 2016 or such other date and time agreed in writing between Lonestar and Holdco.

Timetable means the indicative timetable set out in Annexure 1.

Transaction Period means the period between the date of this Agreement and the earliest of:

(a) the Implementation Date;

(b) the date this Agreement is terminated in accordance with its terms; and

Treasurer means the Treasurer of the Commonwealth of Australia.

US means the United States of America.

US$ means US currency.

Voting Power has the meaning given to that term in Chapter 6 of the Corporations Act.

Interpretation

1.2 In this Agreement:

(a) unless the context requires another meaning, a reference:

(i) to the singular includes the plural and vice versa;

(ii) to a gender includes all genders;

(iii) to a document (including this Agreement) is a reference to that document (including any Schedules and Annexures) as amended, consolidated, supplemented, novated or replaced;

(iv) to an agreement includes any undertaking, representation, deed, agreement or legally enforceable arrangement or understanding whether written or not;

(v) to a party means a party to this Agreement;

(vi) to an item, Recital, clause, Schedule or Annexure is to an item, Recital, clause, Schedule or Annexure of or to this Agreement;

(vii) to a notice means a notice, approval, demand, request, nomination or other communication given by one party to another under or in connection with this Agreement;

(viii) to a person (including a party) includes:

(A) an individual, company, other body corporate, association, partnership, firm, joint venture, trust or Government Agency;

(B) the person’s successors, permitted assigns, substitutes, executors and administrators; and

(C) a reference to the representative member of the GST group to which the person belongs to the extent that the representative member has assumed rights, entitlements, benefits, obligations and liabilities which would remain with the person if the person were not a member of a GST group;

(ix) to a law includes any legislation, judgment, rule of common law or equity or rule of any applicable stock exchange, and is a reference to that law as

amended, consolidated, supplemented or replaced and includes a reference to any regulation, by-law or other subordinate legislation;

(x) to proceedings includes litigation, arbitration and investigation;

(xi) to a judgment includes an order, injunction, decree, determination or award of any court or tribunal;

(xii) to time is to prevailing Sydney time; and

(xiii) to $ means the lawful currency of Australia;

(b) the words “including” or “includes” means “including, but not limited to”, or “includes, without limitation” respectively;

(d) headings are for convenience only and do not affect interpretation of this Agreement;

(e) if a payment or other act must (but for this clause) be made or done on a day that is not a Business Day, then it must be made or done on the next Business Day; and

(f) if a period must be calculated from, after or before a day or the day of an act or event, it must be calculated excluding that day.

Construction

1.3 This Agreement may not be construed adversely to a party only because that party or its legal advisers were responsible for preparing it.

Payments

1.4 Unless otherwise expressly provided in this Agreement, where an amount is required to be paid to a party (the Receiving Party ) by another party under this Agreement, that amount must be paid:

(a) in immediately available and irrevocable funds by electronic transfer to a bank account or accounts notified by the Receiving Party in writing on or before the due date for payment, or in other such immediately payable funds as the parties agree; and

(b) without deduction, withholding or set-off.

In this clause 1.4, a Receiving Party does not include a Scheme Shareholder or Scheme Optionholder.

Best and reasonable endeavours

1.5 Any provision of this Agreement which requires a party to use best endeavours, or reasonable endeavours, or to take all steps reasonably necessary or desirable, (including to procure that something is performed or occurs) does not include an obligation:

(a) to pay any significant sum of money or to provide any significant financial compensation, valuable consideration or any other incentive to or for the benefit of any person, except for payment of any applicable fee for the lodgement or filing of

any relevant application with any Government Agency or fees to any professional advisers; or

(b) to commence any legal proceeding against any person,

except in accordance with the express terms of this Agreement.

2 Agreement to propose Schemes

2.1 Lonestar will propose and seek to implement the Schemes in accordance with this Agreement and the Corporations Act.

2.2 Holdco will comply with its obligations under the Schemes and the Deed Poll, and provide reasonable assistance to Lonestar in proposing and implementing the Schemes in accordance with this Agreement.

3 Conditions

Conditions to Share Scheme

3.1 Subject to this clause 3, the Share Scheme will not become Effective and the obligations of the parties in relation to the Share Scheme (including the obligations of Holdco to provide the Share Scheme Consideration to Scheme Shareholders under the Deed Poll) will not become binding until each of the following conditions is satisfied or waived in accordance with clauses 3.5 to 3.7:

(a) (Orders convening Share Scheme Meeting) The Court orders the convening of the Share Scheme Meeting under section 411(1) of the Corporations Act.

(b) (Lonestar Shareholder Approval) Lonestar Shareholder Approval is obtained at the Share Scheme Meeting.

(c) (Court approval of Share Scheme) The Court makes orders under section 411(4)(b) of the Corporations Act approving the Share Scheme on the Second Court Date.

(d) (Order lodged with ASIC) An office copy of the Court orders approving the Share Scheme is lodged with ASIC as contemplated by section 411(10) of the Corporations Act on or before the Sunset Date.

(e) (No prohibitive orders) Prior to 8.00 am on the Second Court Date, no Government Agency takes any action, or imposes any legal restraint or prohibition, to prevent the implementation of the Share Scheme (or any transaction contemplated by the Share Scheme), which remains in force at 8.00 am on the Second Court Date.

(f) (Regulatory Consents) All approvals or consents required from any Government Agency to implement the Share Scheme (other than the approval of the Court of the Share Scheme under section 411(4)(b) of the Corporations Act) are obtained (or deemed obtained) and not withdrawn by 8.00 am on the Second Court Date ( Regulatory Consents ), including ASIC and ASX providing all consents and approvals and do all other acts which are necessary or reasonably desirable to implement the Share Scheme.

(g) (Nasdaq approval for listing) Prior to 8.00 am on the Second Court Date, the Holdco Shares shall have been authorised for listing on Nasdaq, subject to official notice of issuance following the implementation of the Share Scheme.

(h) (Independent Expert’s report) The Independent Expert issues its report before the date on which the Scheme Booklet is provided to ASIC and the Independent Expert concludes that the Share Scheme is in the best interest of Lonestar Shareholders (and does not change that conclusion prior to 8.00 am on the Second Court Date).

Conditions to Lonestar Option Scheme

3.2 Subject to this clause 3, the Lonestar Option Scheme will not become Effective and the obligations of the parties in relation to the Lonestar Option Scheme (including the obligations of Holdco under the Deed Poll to provide the relevant Option Scheme Consideration to Scheme Lonestar Optionholders) will not become binding until each of the following conditions is satisfied.

(a) (Court approval of Share Scheme) The Court makes orders under section 411(4)(b) of the Corporations Act approving the Share Scheme on the Second Court Date.

(b) (Lonestar Optionholder Approval) Lonestar Optionholder Approval is obtained at the Lonestar Option Scheme Meeting;

(c) (Court approval of Lonestar Option Scheme) The Court makes orders under section 411(4)(b) of the Corporations Act approving the Lonestar Option Scheme on the Second Court Date.

(d) (Order lodged with ASIC) An office copy of the Court orders approving the Lonestar Option Scheme is lodged with ASIC as contemplated by section 411(10) of the Corporations Act on or before the Sunset Date.

(e) (No prohibitive orders) Prior to 8.00 am on the Second Court Date, no Government Agency takes any action, or imposes any legal restraint or prohibition, to prevent the implementation of the Lonestar Option Scheme (or any transaction contemplated by the Lonestar Option Scheme), which remains in force at 8.00 am on the Second Court Date.

(f) (Regulatory Consents) All approvals or consents required from any Government Agency to implement the Lonestar Option Scheme (other than the approval of the Court of the Lonestar Option Scheme under section 411(4)(b) of the Corporations Act) are obtained (or deemed obtained) and not withdrawn by 8.00 am on the Second Court Date, including ASIC and ASX providing all consents and approvals and do all other acts which are necessary or reasonably desirable to implement the Lonestar Option Scheme.

(g) (Independent Expert’s report) The Independent Expert issues its report before the date on which the Scheme Booklet is provided to ASIC and the Independent Expert concludes that the Lonestar Option Scheme is in the best interest of Lonestar Optionholders (and does not change that conclusion prior to 8.00 am on the Second Court Date).

Conditions to Non-employee Option Scheme

3.3 Subject to this clause 3, the Non-employee Option Scheme will not become Effective and the obligations of the parties in relation to the Non-employee Option Scheme (including the obligations of Holdco under the Deed Poll to provide the relevant Option Scheme Consideration to Scheme Non-employee Optionholders) will not become binding until each of the following conditions is satisfied.

(a) (Court approval of Share Scheme) The Court makes orders under section 411(4)(b) of the Corporations Act approving the Share Scheme on the Second Court Date.

(b) (Non-employee Optionholder Approval) Non-employee Optionholder Approval is obtained at the Non-employee Option Scheme Meeting;

(c) (Court approval of Non-employee Option Scheme) The Court makes orders under section 411(4)(b) of the Corporations Act approving the Non-employee Option Scheme on the Second Court Date.

(d) (Order lodged with ASIC) An office copy of the Court orders approving the Non-employee Option Scheme is lodged with ASIC as contemplated by section 411(10) of the Corporations Act on or before the Sunset Date.

(e) (No prohibitive orders) Prior to 8.00 am on the Second Court Date, no Government Agency takes any action, or imposes any legal restraint or prohibition, to prevent the implementation of the Non-employee Option Scheme (or any transaction contemplated by the Non-employee Option Scheme), which remains in force at 8.00 am on the Second Court Date.

(f) (Regulatory Consents) All approvals or consents required from any Government Agency to implement the Non-employee Option Scheme (other than the approval of the Court of the Non-employee Option Scheme under section 411(4)(b) of the Corporations Act) are obtained (or deemed obtained) and not withdrawn by 8.00 am on the Second Court Date, including ASIC and ASX providing all consents and approvals and do all other acts which are necessary or reasonably desirable to implement the Non-employee Option Scheme.

(g) (Independent Expert’s report) The Independent Expert issues its report before the date on which the Scheme Booklet is provided to ASIC and the Independent Expert concludes that the Non-employee Option Scheme is in the best interest of Non-employee Optionholders (and does not change that conclusion prior to 8.00 am on the Second Court Date).

Reasonable endeavours

3.4 Each of Lonestar and Holdco must use its reasonable endeavours to procure that:

(a) each of the conditions in clauses 3.1, 3.2 and 3.3 are satisfied as expeditiously as possible and in any event on or before the Sunset Date, including providing all reasonable assistance to the other party which is necessary to satisfy such conditions; and

(b) there is no occurrence within the control of Lonestar or Holdco (as the context requires) or their Subsidiaries that would prevent the conditions in clauses 3.1, 3.2 and 3.3 from being satisfied.

Waiver of conditions

3.5 The conditions in clauses 3.1, 3.2 and 3.3 are for the mutual benefit of Lonestar and Holdco and may only be waived jointly by them except the conditions in clauses:

(a) 3.1(a), (b), (c) and (d);

(b) 3.2(a), (b), (c) and (d); and

which cannot be waived.

3.6 To be effective any waiver of the breach or non-fulfilment of any condition in clauses 3.1, 3.2 or 3.3 (except conditions which cannot be waived) must be in writing and a copy of the waiver must be provided to the other party prior to 8.00 am on the Second Court Date to be effective.

3.7 A waiver of any condition in clauses 3.1, 3.2 or 3.3 precludes the party who has the benefit of the condition from suing the other party for any breach of this Agreement that resulted from any breach or non-fulfilment of the condition.

Failure of condition

3.8 If a condition in clauses 3.1, 3.2 or 3.3:

(a) is not satisfied or (where capable of waiver) waived by the date specified for its satisfaction; or

(b) becomes incapable of being satisfied by the date specified for its satisfaction and is not waived,

then Lonestar and Holdco must consult in good faith with a view to determining whether:

(d) to extend the relevant time or date for satisfaction of the Conditions;

(e) to change the date of the application to be made to the Court for orders under section 411(4)(b) of the Corporations Act approving the relevant Scheme or adjourning that application (as applicable) to another date agreed by Lonestar and Holdco; or

(f) to extend the Sunset Date.

3.9 If Lonestar and Holdco are unable to reach agreement under clause 3.8 within two Business Days of the date on which they both become aware that the condition is not satisfied or has become incapable of being satisfied (or, if earlier, by 8.00 am on the Second Court Date), or the parties are not required in the circumstances to consult under clause 3.8, then unless the relevant condition is waived, either Lonestar or Holdco in the case of a condition which is for the benefit of both of them, may terminate this Agreement at any time prior to 8.00 am on the Second Court Date with immediate effect by written notice to the other party.

3.10 Subject to the rights of the parties under clause 6.3 of this Agreement, following any termination under clause 3.9, no party will have any liability to the other parties in respect of this Agreement, other than in respect of a breach of this Agreement occurring prior to that termination.

Certificates

3.11 On the Second Court Date:

(a) Holdco and Lonestar will provide a joint certificate to the Court confirming whether or not the conditions set out in clauses:

(i) 3.1(e), (f) and (g);

(ii) 3.2(e) and (f); and

(iii) 3.3(e) and (f),

have been satisfied or waived in accordance with the terms of this Agreement; and

(b) Lonestar will provide a certificate to the Court confirming whether or not the conditions set out in clauses:

(i) 3.1(a), (b), and (h);

(ii) 3.2(a), (b) and (g); and

(iii) 3.3(a), (b) and (g),

have been satisfied accordance with the terms of this Agreement.

4 Schemes of arrangement

Share Scheme

4.1 Lonestar will propose a scheme of arrangement under which, subject to the Share Scheme becoming Effective, all the Scheme Shares are transferred to Holdco.

4.2 In conjunction with and conditional upon completion of the Share Scheme, Holdco must purchase the Excluded Shares from the Excluded Shareholder for a cash price per share based on the 30 day volume average weighted price of Lonestar Shares on ASX.

Share Scheme Consideration

4.3 In consideration of the Scheme Shareholders transferring their Scheme Shares to Holdco at completion of that Scheme, Holdco covenants in Lonestar’s favour (in its own right and separately as trustee or nominee for each Scheme Shareholder) that Holdco will, on the Implementation Date and immediately prior to the transfer of the Scheme Shares to Holdco, issue to each Scheme Shareholder (or in accordance with clause 4.5 to a nominee appointed by Holdco, on its behalf where such Scheme Shareholder is an Ineligible Foreign Shareholder) one Holdco Share for every two Lonestar Shares held by the Scheme Shareholder on the Scheme Record Date.

4.4 Fractional entitlements to Share Scheme Consideration will be rounded down.

Ineligible Foreign Shareholders

4.5 Where a Scheme Shareholder is an Ineligible Foreign Shareholder, the number of Holdco Shares to which that Ineligible Foreign Shareholder would otherwise have been entitled to under Share Scheme will be issued to a nominee appointed by Holdco.

4.6 Holdco will procure that, as soon as reasonably practicable and in any event not more than 15 Business Days after the Implementation Date, the nominee:

(a) sells on Nasdaq all of the Holdco Shares issued to the nominee in accordance with clause 4.5 in such manner, at such price and on such other terms as the nominee determines in good faith, and at the risk of the Ineligible Foreign Shareholders; and

(b) remits to Holdco, the proceeds of sale (after deducting any applicable brokerage, stamp duty and other selling costs, taxes and charges).

4.7 Promptly after the last remittance in accordance with clause 4.6(b), Holdco will pay to each Ineligible Foreign Shareholder the proportion of the net proceeds of sale received by Holdco pursuant to clause 4.6(b) to which that Ineligible Foreign Shareholder is entitled.

Option Schemes

4.8 Lonestar will propose a scheme of arrangement under which all the Lonestar Options are cancelled and the Scheme Lonestar Optionholders will be entitled to receive the relevant Option Scheme Consideration.

4.9 Lonestar will propose a scheme of arrangement under which all the Non-employee Options are cancelled and the Scheme Non-employee Optionholders will be entitled to receive the relevant Option Scheme Consideration.

Option Scheme Consideration

4.10 In consideration of the Scheme Lonestar Optionholders agreeing to cancel their Lonestar Options on the Implementation Date, Holdco covenants in Lonestar’s favour (in its own right and separately as trustee or nominee for each Scheme Lonestar Optionholder) that Holdco will, on the Implementation Date and immediately prior to the cancellation of the Lonestar Options, issue to each Scheme Lonestar Optionholder, one Holdco Employee Option for every two Lonestar Options held by the Lonestar Optionholder on the Scheme Record Date.

4.11 In consideration of the Scheme Non-employee Optionholders agreeing to cancel their Non-employee Options on the Implementation Date, Holdco covenants in Lonestar’s favour (in its own right and separately as trustee or nominee for each Scheme Non-employee Optionholder) that Holdco will, on the Implementation Date and immediately prior to the cancellation of the Non-employee Options, issue to each Scheme Non-employee Optionholder, one Holdco Option for every two Non-employee Options held by the Non-employee Optionholder on the Scheme Record Date.

4.12 Fractional entitlements to Option Scheme Consideration will be rounded down.

Terms of Holdco Options

4.13 Each Holdco Employee Option issued in accordance with clause 4.10 will:

(a) have a new exercise price per Holdco Share in US dollars as set out in the Lonestar Option Scheme;

(b) have an exercise period equal to the unexpired exercise period of the relevant Lonestar Options it replaces;

(c) be vested to the same extent and have the same terms as to vesting as the relevant Lonestar Options it replaces, ignoring any deemed vesting which arises by reason of the Share Scheme; and

(d) otherwise be issued on the terms of the Holdco Employee Stock Option Plan.

4.14 Each Holdco Option issued in accordance with clause 4.11 will:

(a) have an exercise price per Holdco Share equal to two times the exercise price per Lonestar Share of the relevant Non-employee Options it replaces, converted from Australian dollars to US dollars at the prevailing Australian/US dollar exchange rate on the Implementation Date as reasonably determined by Lonestar;

(b) have an exercise period equal to the unexpired exercise period of the relevant Non-employee Options it replaces;

(c) be vested to the same extent and have the same terms as to vesting as the relevant Non-employee Options it replaces; and

(d) otherwise be issued on the same terms as the existing Non-employee Options, with necessary changes due to Holdco being the issuer in place of Lonestar.

ASX Waiver

4.15 As soon as reasonably practicable after the date of this Agreement, Lonestar must use its reasonable endeavours to procure that ASX grants a waiver from rule 6.23 of the Listing Rules in respect of the Option Schemes.

4.16 If the waiver referred to in clause 4.15:

(a) is obtained before the end of the ASIC Review Period, but is subject to one or more conditions that are not reasonably satisfactory to Holdco; or

(b) is not obtained before the end of the ASIC Review Period,

Lonestar will seek any approvals that are required from the Lonestar Shareholders under rule 6.23 of the Listing Rules in relation to the Option Scheme on the same date on which the Share Scheme Meeting is held.

5 Implementation

Lonestar’s obligations

5.1 Lonestar must take all reasonably necessary steps to propose and implement the Schemes in accordance with all necessary laws and regulations as soon as is reasonably practicable and substantially in accordance with the Timetable, including doing anything required on behalf of Lonestar Shareholders and Optionholders which Lonestar is authorised to do. This includes:

(a) (Scheme Booklet) Preparing the Scheme Booklet and dispatching the Scheme Booklet to Lonestar Shareholders and Optionholders. The Scheme Booklet must comply with all applicable laws, including the Corporations Act, applicable ASIC guidance and policies and the Listing Rules.

(b) (Consultation) Providing Holdco with drafts of the Scheme Booklet, consulting with Holdco in relation to the content and presentation of the Scheme Booklet and giving Holdco and its representatives a reasonable opportunity to provide input about the content and presentation of the Scheme Booklet, and obtaining Holdco’s consent to include the Holdco Scheme Information in the form and context in which it appears.

(c) (Engage the Independent Expert) Engaging the Independent Expert to prepare and provide its report for inclusion in the Scheme Booklet, and providing all reasonable assistance and information to the Independent Expert to enable it to do so.

(d) (Section 411(17)(b) statement) Applying to ASIC for:

(i) a letter of intent stating that ASIC does not intend to appear before the Court on the First Court Date; and

(ii) a statement under section 411(17)(b) of the Corporations Act that ASIC has no objection to the Schemes.

(e) (Engage suitable counsel) Engaging suitable counsel to represent Lonestar in all Court proceedings related to the Schemes.

(f) (Court direction) Applying to the Court for orders under section 411(1) of the Corporations Act directing Lonestar to convene the Scheme Meetings.

(g) (Registration) Requesting ASIC to register the explanatory statement included in the Scheme Booklet in relation to the Schemes in accordance with section 412(6) of the Corporations Act.

(h) (Scheme Meetings) Taking all reasonable steps necessary to comply with the orders of the Court, including dispatching the Scheme Booklet to Lonestar Shareholders and Optionholders and convening and holding the Scheme Meetings.

(i) (Lonestar new information) Providing to Lonestar Shareholders and Optionholders any further or new information which arises after the Dispatch Date and prior to the Scheme Meetings which is necessary to ensure that the information contained in the Scheme Booklet is not false, misleading or deceptive in any material respect (whether by omission or otherwise).

(j) (Court approval) If Lonestar Shareholder Approval and/or Lonestar Optionholder Approval and/or Non-employee Optionholder Approval is obtained at the relevant Scheme Meetings and, if necessary, Holdco and Lonestar agree on the Business Day immediately following the Scheme Meetings that it can be reasonably expected that all of the conditions in clauses 3.1, 3.2 and/or 3.3 (as applicable) will be satisfied or waived on or prior to 8.00 am on the proposed Second Court Date, applying (and, to the extent necessary, re-applying) to the Court for orders approving the relevant Schemes.

(k) (Lodge copy of Court order) Lodging an office copy of the Court orders approving any of the Schemes (if made) with ASIC no later than 10.00 am on the next Business Day after the orders are made.

(l) (Registration) If the Share Scheme becomes Effective, executing proper instruments of transfer of, and effecting and entering in the Register the transfer of, the Scheme Shares to Holdco under the Share Scheme on the Implementation Date.

(m) (Register information) Providing Holdco and its share registry with all information necessary, or reasonably requested, in order to assist Holdco to issue the Scheme Consideration.

Holdco’s obligations

5.2 Holdco must take all reasonably necessary steps to implement the Schemes in accordance with all necessary laws and regulations as soon as is reasonably practicable and substantially in accordance with the Timetable. This includes:

(a) (Deed Poll) Executing the Deed Poll.

(b) (Holdco Scheme Information) Preparing and providing to Lonestar, in a form appropriate for inclusion in the Scheme Booklet, the Holdco Scheme Information.

(c) (Independent Expert’s report) Providing all reasonable assistance and information to the Independent Expert in connection with the preparation of its report for inclusion in the Scheme Booklet.

(d) (Accuracy of Holdco Scheme Information) Before the Dispatch Date, verifying to Lonestar the accuracy of the Holdco Scheme Information contained in the Scheme Booklet, and consenting to the inclusion of that information in the form and context in which it appears in the Scheme Booklet, in each case subject to Holdco being reasonably satisfied as to those matters.

(e) (Holdco new information) Providing to Lonestar any further or new information about Holdco which arises after the Dispatch Date and prior to the Scheme Meetings which is necessary or reasonably required by Lonestar to ensure that the Holdco Scheme Information disclosed to Lonestar Shareholders and Optionholders is not false, misleading or deceptive in any material respect (whether by omission or otherwise).

(f) (Scheme Consideration) If the:

(i) Share Scheme becomes Effective, providing the Share Scheme Consideration in accordance with clause 4.3;

(ii) Lonestar Option Scheme becomes Effective, providing the Lonestar Option Scheme Consideration in accordance with clause 4.10; and

(iii) Non-employee Option Scheme becomes Effective, providing the Non-employee Option Scheme Consideration in accordance with clause 4.11,

in each case, on the Implementation Date.

(g) ( Excluded Shares ) If the Share Scheme becomes Effective, purchase the Excluded Shares from the Excluded Shareholder in accordance with its obligations in clause 4.2.

(h) (Reasonable assistance) Without limiting any obligation of Holdco under any other provision of this Agreement, providing any assistance or information reasonably requested by Lonestar in relation to the Schemes.

Timetable

5.3 Each of Lonestar and Holdco must use its reasonable endeavours to perform its obligations (and procure its Representatives to assist in that performance) substantially in accordance with the Timetable.

Conduct of business

5.4 During the Transaction Period, Lonestar must, and must ensure that its Subsidiaries, conduct their businesses in the ordinary and proper course of business.

5.5 Any restriction on conduct which is imposed in clause 5.4 does not apply to the extent that:

(a) the conduct is required to be undertaken by Lonestar or its Subsidiary (as the case may be) in connection with the Schemes or this Agreement; or

(b) the conduct is approved by Holdco.

6 Warranties

Lonestar Warranties

6.1 Lonestar represents and warrants to Holdco at the date of this Agreement and on each subsequent day until and including 8:00 am on the Second Court Date (except that where any statement is expressed to be made only at a particular date it is given only at that date) that:

(a) it has taken all necessary corporate action to authorise entry into this Agreement and has taken or will take all necessary corporate action to authorise the performance of this Agreement and to carry out the transactions contemplated by this Agreement;

(b) it has full corporate power to execute, deliver and perform its obligations under this Agreement and to carry out the transactions contemplated by this Agreement; and

(c) this Agreement constitutes a legal, valid and binding obligation of it enforceable in accordance with its terms by appropriate legal remedy, subject to laws generally affecting creditors’ rights and the principles of equity.

Holdco Warranties

6.2 Holdco represents and warrants to Lonestar at the date of this Agreement and on each subsequent day until and including 8:00 am on the Second Court Date (except that where any statement is expressed to be made only at a particular date it is given only at that date) that:

(a) is a corporation validly existing under the laws of its place of incorporation;

(b) it has taken all necessary corporate action to authorise the entry into this Agreement and has taken or will take all necessary corporate action to authorise the performance of this Agreement and to carry out the transactions contemplated by this Agreement;

(c) it has full corporate power to execute, deliver and perform its obligations under this Agreement and to carry out the transactions contemplated by this Agreement; and

(d) this Agreement constitutes a legal, valid and binding obligation of it enforceable in accordance with its terms by appropriate legal remedy, subject to laws generally affecting creditors’ rights and the principles of equity.

Release

6.3 Each party:

(a) releases its rights against, and will not make any Claim against, any past or present Representative of any other party in relation to anything done or purported to be done in connection with the Scheme, any transaction contemplated by or warranty given in this Agreement, any information provided to it by another party or in relation to its execution or delivery this Agreement to the extent that the past or present Representative has acted in good faith and has not engaged in any wilful misconduct. Nothing in this clause 6.3(a) excludes any liability that may arise from wilful misconduct or bad faith on the part of any person; and

(b) holds the releases in clause 6.3(a) in respect of its past and present Representatives as trustee for those Representatives.

6.4 Each representation and warranty in clauses 6.1 and 6.2:

(a) is severable;

(b) will survive termination of this Agreement; and

(c) is given with the intent that liability under it is not confined to breaches which are discovered before the date of termination of this Agreement.

No other warranties or reliance

6.5 Each party acknowledges that no other party (nor any person acting on that other party’s behalf) has made any warranty, representation or other inducement to it to enter into this Agreement, except for the representations and warranties expressly set out in this Agreement.

6.6 Each party acknowledges and confirms that it does not enter into this Agreement in reliance on any warranty, representation or other inducement by or on behalf of any other party, except for any warranty or representation expressly set out in this Agreement.

7 Termination

Termination for breach

7.1 Without prejudice to any other rights of termination under this Agreement, either party may terminate this Agreement by giving the other party written notice at any time before 8.00 am on the Second Court Date if:

(a) the other party is in material breach of any term of this Agreement, or there has been a material breach of a representation or warranty given by the other party under clauses 6.1 or 6.2 (as applicable) on or before the Second Court Date; and

(b) the party wishing to terminate this Agreement has given the other party a written notice setting out details of the breach and stating its intention to terminate this Agreement; and

(c) the breach has not been remedied 10 Business Days (or any shorter period ending immediately before 8.00 am on the Second Court Date) from the date the notice under clause 7.1(b) is given.

Automatic termination

7.2 This Agreement will terminate automatically without the need for action by any party in the event that Lonestar Shareholder Approval is not obtained at the Share Scheme Meeting.

Mutual termination

7.3 This Agreement is terminable if agreed to in writing by Holdco and Lonestar.

Effect of termination

7.4 If either Lonestar or Holdco terminates this Agreement under clauses 3 or 7, this Agreement and the parties’ obligations under it cease, other than obligations under this clause and clauses 6.3, 8, 9 and 10 which will survive termination.

7.5 Termination of this Agreement under clauses 3 or 7 does not affect any accrued rights of a party in respect of a breach of this Agreement prior to termination.

8 Costs and stamp duty

Costs

8.1 Subject to clause 8.2, each party must bear its own costs and expenses (including professional fees and stamp duty) incurred by it in connection with the negotiation, preparation and execution of this Agreement and the implementation or attempted implementation of the Schemes.

Stamp duty

8.2 Holdco must pay all stamp duty and any related fines or penalties in respect of this Agreement, the Deed Poll and the acquisition of the Scheme Shares in accordance with the Share Scheme and indemnify Lonestar (on Lonestar ‘s own behalf and separately as trustee or nominee for the other Lonestar Indemnified Parties and Lonestar Shareholders) against any liability arising from failure to comply with this clause 8.2.

9 Notices

Requirements

9.1 All notices must be:

(a) in legible writing and in English;

(b) addressed to the recipient at the address, email address or fax number set out below or to any other address, email address or fax number that a party may notify to the other:

to Lonestar:

Address:		Ground Floor, 11 Ventnor Ave, West Perth WA 6005

Attention:		Mitchell Wells

Email:		mwells@lonestarresources.com

to Holdco:

Address:		600 Bailey Avenue, Suite 200, Fort Worth, Texas 76107

Attention:		Frank D. Bracken, III

Email:		fbracken@lonestarresources.com

Fax:		+1 817 806 5112

(d) sent to the recipient by hand, email, prepaid post (airmail if to or from a place outside Australia), email or facsimile; and

(e) if sent by email, in a form which:

(i) identifies the sender; and

(ii) clearly indicates the subject matter of the notice in the subject heading of the email,

provided that the recipient has not provided written notice to the other parties confirming that it does not wish to receive notices by email. The parties consent to the method of signature contained in clause 9.1(e) and agree that it satisfies the requirements of applicable law for signature on service of notice by email.

Receipt of notices

9.2 Without limiting any other means by which a party may be able to prove that a notice has been received by the other party, a notice will be considered to have been received:

(a) if sent by hand, when left at the address of the recipient;

(b) if sent by pre-paid post, three Business Days (if posted within Australia to an address in Australia) or 10 Business Days (if posted from one country to another) after the date of posting; or

(c) if sent by fax, on receipt by the sender of an acknowledgment or transmission report generated by the sender’s machine indicating that the whole fax was sent to the recipient’s fax number; and

(d) if sent by email, when the sender receives an automated message confirming delivery or four hours after the time the email is sent (as recorded on the device from which the sender sent the email) unless the sender receives an automated message that the email has not been delivered, whichever occurs first.

9.3 If a notice is served by hand, or is received by email or the recipient’s fax, on a day that is not a Business Day, or after 5.00 pm (recipient’s local time) on a Business Day, the notice will be

considered to have been received by the recipient at 9.00 am (recipient’s local time) on the next Business Day.

10 General

Entire agreement

10.1 To the extent permitted by law, in relation to the subject matter of this Agreement, this Agreement:

(a) embodies the entire understanding of the parties and constitutes the entire terms agreed on between the parties; and

(b) supersedes any prior agreement (whether or not in writing) between the parties.

Further assurances

10.2 Each party must, at its own expense, whenever requested by the other party, promptly do or, to the extent reasonably practicable, arrange for others to do everything, including executing any documents, reasonably necessary to give full effect to this Agreement and the transactions contemplated by this Agreement.

No merger

10.3 The rights and obligations of the parties do not merge on completion of any transaction contemplated under this Agreement. They survive the execution and delivery of any assignment or other document entered into to implement any transaction contemplated under this Agreement.

Assignment

10.4 A party cannot assign, novate or otherwise transfer or deal in any other way with any of its rights or obligations under this Agreement without the other party’s prior written consent.

Invalid or unenforceable provisions

10.5 If a provision of this Agreement is invalid or unenforceable in a jurisdiction:

(a) it is to be read down or severed in that jurisdiction to the extent of the invalidity or unenforceability; and

(b) that fact does not affect the validity or enforceability of that provision in another jurisdiction or the remaining provisions.

Waiver and exercise of rights

10.6 A waiver by a party of a provision of, or of a right under, this Agreement is only binding on the party granting the waiver if it is given in writing and is signed by the party or an authorised officer of the party granting the waiver.

10.7 A waiver is effective only in the specific instance and for the specific purpose for which it is given.

10.8 A single or partial exercise of a right by a party does not preclude another exercise of that right or the exercise of another right.

10.9 The failure to exercise, or the delay in exercising, a right does not operate as a waiver or prevent the party so failing or exercising its right from later doing so.

Amendment

10.10 Except as expressly provided to the contrary in this Agreement, this Agreement may only be amended by a document signed by or on behalf of each party.

Counterparts

10.11 This Agreement may be signed in counterparts and all counterparts taken together constitute one document.

Rights cumulative

10.12 Except as expressly provided to the contrary in this Agreement or as permitted by law, the rights, powers and remedies provided in this Agreement are cumulative and do not exclude any other rights, powers or remedies provided by law independently of this Agreement.

Consents or approvals

10.13 A party may give its approval or consent conditionally or unconditionally, or withhold its approval or consent, in its absolute discretion unless this Agreement expressly provides otherwise.

Severability

10.14 If a provision of this Agreement is invalid or unenforceable in a jurisdiction:

(a) it is to be read down or severed in that jurisdiction to the extent of the invalidity or unenforceability; and

(b) that fact does not affect the validity or enforceability of that provision in another jurisdiction, or the remaining provisions of this Agreement.

GST

10.15 Unless expressly included, the consideration for any supply under or in connection with this Agreement does not include GST.

10.16 To the extent that any supply made by a party to another party ( Recipient ) under or in connection with this Agreement is a taxable supply and a tax invoice has been provided to the Recipient, the Recipient must pay, in addition to the consideration to be provided under this Agreement for that supply (unless it expressly includes GST) an amount equal to the amount of that consideration (or its GST exclusive market value) multiplied by the rate at which GST is imposed in respect of the supply.

10.17 The amount of GST payable in accordance with clause 10.16 will be paid at the same time and in the same manner as the consideration otherwise payable for the supply is provided.

Governing law and jurisdiction

10.18 This Agreement is governed by the laws of New South Wales.

10.19 Each party irrevocably and unconditionally:

(a) submits to the exclusive jurisdiction of the courts of New South Wales; and

(b) waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum.

Execution

Executed as an agreement.

Signed by
Lonestar Resources Limited
by a director and secretary/director:

/s/ Christopher Rowland		/s/ Mitchell Wells
Signature of director		Signature of director/secretary

Christopher Rowland		Mitchell Wells
Name of director (please print)		Name of director/secretary (please print)

Signed by
Lonestar Resources US Inc.
by an authorised officer:

/s/ Frank D. Bracken, III
Signature of authorised officer

Name: Frank D. Bracken, III
Title: Chief Executive Officer

Annexure 1

Timetable

Event		Indicative date

Provide Scheme Booklet to ASIC for review and comment		by 23 December 2015

Enter into Scheme Implementation Agreement		by 31 December 2015

First Court Date		2 February 2016

Scheme Booklet registered by ASIC and lodged with ASX		3 February 2016

Dispatch Scheme Booklet to Lonestar Shareholders and Optionholders		9 February 2016

Latest date for return of completed proxy forms for Scheme Meetings		8 March 2016

Eligibility for voting at Scheme Meetings determined		8 March 2016

Scheme Meetings		10 March 2016

Second Court Date		22 March 2016

Notify ASX of Court approval of the Schemes		22 March 2016

Effective Date (lodge office copy of Court orders approving the Schemes with ASIC)		22 March 2016

Lonestar Shares suspended from trading on ASX		22 March 2016

Scheme Record Date		29 March 2016

Implementation Date		31 March 2016

Annexure 2

Share Scheme of Arrangement

Scheme of Arrangement

Lonestar Resources Limited

The holders of fully paid ordinary shares in
Lonestar Resources Limited as at the
Scheme Record Date

Scheme of Arrangement

pursuant to section 411 of the Corporations Act 2001 (Cth)

between		Lonestar Resources Limited (ABN 36 058 714 408) of Ground Floor, 11 Ventnor Ave, West Perth WA 6005 (Lonestar)

and		The holders of fully paid ordinary shares in Lonestar as at the Scheme Record Date

Operative provisions

1 Definitions and interpretation

Definitions

1.1 In this document, unless the context requires otherwise:

ASIC means the Australian Securities and Investments Commission.

ASPL means ASX Settlement Pty Ltd (ABN 49 008 504 532).

ASX means ASX Limited (ACN 008 624 691) or, where the context requires, the securities market which it operates.

ASX Settlement Rules means the ASX Settlement Operating Rules.

Business Day means a day that is not a Saturday, Sunday, public holiday or bank holiday in Sydney, New South Wales.

CHESS means the Clearing House Electronic Subregister System of share transfers operated by ASPL.

Corporations Act means the Corporations Act 2001 (Cth).

Court means the Federal Court of Australia or such other court of competent jurisdiction under the Corporations Act agreed in writing by Holdco and Lonestar.

Deed Poll means the deed poll in respect of the Share Scheme dated [ insert date ] 2016 executed by Holdco in favour of each Scheme Shareholder.

Effective means, when used in relation to the Share Scheme, the coming into effect, under section 411(10) of the Corporations Act , of the Share Scheme Order.

Effective Date means the date on which an office copy of the Share Scheme Order approving the Share Scheme is lodged with ASIC.

Excluded Shareholder means [ a person to be identified ].

Excluded Shares means the Lonestar Shares held by the Excluded Shareholder on the Scheme Record Date.

Holdco means Lonestar Resources US Inc. (a corporation formed in the State of Delaware, United States of America).

Holdco Share means a share of voting common stock in Holdco.

Implementation Date means the third Business Day after the Scheme Record Date, or such other day as Holdco and Lonestar agree in writing.

Lonestar Share means an issued fully paid ordinary share in Lonestar.

Lonestar Shareholder means each person who is registered in the Register as a holder of a Lonestar Share.

Lonestar Share Registry means Computershare Investor Services Pty Ltd (ACN 078 279 277).

Register means the register of shareholders of Lonestar.

Registered Address means the address of each Scheme Shareholder as recorded in the Register as at the Scheme Record Date.

Related Body Corporate has the meaning given in the Corporations Act.

Scheme Implementation Agreement means the scheme implementation agreement dated [31 December] 2015 between Lonestar and Holdco.

Scheme Record Date means 7.00 pm (Sydney time) on the third Business Day after the Effective Date.

Scheme Share means a Lonestar Share held by a Scheme Shareholder as at the Scheme Record Date.

Scheme Shareholder means each person who holds a Lonestar Share (other than the Excluded Shareholder) as at the Scheme Record Date.

Second Court Date means the first day on which the Court hears the application for the Share Scheme Order, or if the application is adjourned or subject to appeal for any reason, the first day on which the adjourned or appealed application is heard.

Share Scheme means this scheme of arrangement under Part 5.1 of the Corporations Act between Lonestar and Scheme Shareholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and approved in writing by Lonestar and Holdco.

Share Scheme Consideration means the consideration to be provided to Scheme Shareholders under the terms of this Share Scheme for the transfer to Holdco of their Scheme Shares, being one Holdco Share for every two Lonestar Shares held by a Scheme Shareholder.

Share Scheme Meeting means the meeting of Lonestar Shareholders (other than the Excluded Shareholder) ordered by the Court to be convened under section 411(1) of the Corporations Act in relation to the Share Scheme.

Share Scheme Order means the orders of the Court approving the Share Scheme, with or without modification, under section 411(4)(b) of the Corporations Act.

Sunset Date means:

(a) 5.00 pm (Sydney time) on 30 June 2016; or

(b) such other date and time as agreed in writing between Lonestar and Holdco.

Interpretation

1.2 In this document:

(a) unless the context requires otherwise, a reference:

(i) to the singular includes the plural and vice versa;

(ii) to a gender includes all genders;

(iii) to a document or instrument is a reference to that document or instrument as amended, consolidated, supplemented, novated or replaced;

(iv) to a clause, paragraph, Schedule or Annexure is to a clause, paragraph, Schedule or Annexure of or to this document;

(v) to a law includes any legislation, judgment, rule of common law or equity or rule of any applicable stock exchange, and is a reference to that law as amended, consolidated, supplemented or replaced and includes a reference to any regulation, by-law or other subordinate legislation;

(vi) to any time is to Sydney time;

(vii) to “$” is to the lawful currency of Australia;

(b) the words “including” or “includes” means “including, but not limited to”, or “includes, without limitation” respectively;

(d) headings are for convenience only and do not affect interpretation of this document;

(e) if a payment or other act must (but for this clause) be made or done on a day that is not a Business Day, then it must be made or done on the next Business Day; and

(f) if a period must be calculated from, after or before a day or the day of an act or event, it must be calculated excluding that day.

2 Preliminary

Lonestar

2.1 Lonestar is a public company limited by shares, incorporated in Australia and taken to be registered in Western Australia. Its registered office is at Ground Floor, 11 Ventnor Ave, West Perth WA 6005.

2.2 Lonestar is admitted to the official list of ASX and Lonestar Shares are quoted on ASX.

2.3 As at [ insert date ], 15,044,051 Lonestar Shares were on issue.

Holdco

2.4 Holdco is a corporation formed in the State of Delaware, United States of America. Its principal executive office is at 600 Bailey Avenue, Suite 200, Fort Worth, Texas, United States of America..

Effect of Share Scheme

2.5 If the Share Scheme becomes Effective:

(a) Lonestar will procure the issue of the Share Scheme Consideration to Scheme Shareholders in accordance with the terms of the Share Scheme; and

(b) subject to provision of the Share Scheme Consideration, all of the Scheme Shares, together with all rights and entitlements attaching to the Scheme Shares at the Implementation Date, will be transferred to Holdco and Lonestar will enter Holdco in the Register as the holder of the Scheme Shares.

Scheme Implementation Agreement

2.6 Lonestar and Holdco have entered into the Scheme Implementation Agreement which sets out the terms on which Lonestar and Holdco have agreed to implement the Share Scheme.

Deed Poll

2.7 The Share Scheme attributes actions to Holdco but does not itself impose an obligation on Holdco to perform those actions. Holdco has executed the Deed Poll in favour of each Scheme Shareholder under which it has covenanted, subject to the Share Scheme becoming Effective, to perform certain steps attributed to it under the Share Scheme and to do all things necessary or desirable to implement the Share Scheme, including to issue the Share Scheme Consideration.

3 Conditions precedent

Conditions precedent to Share Scheme

3.1 The Share Scheme is conditional on and will have no force or effect until, the satisfaction of each of the following conditions precedent:

(a) all of the conditions precedent set out in clause 3.1 of the Scheme Implementation Agreement, other than those in clauses 3.1(c) and (d), having been satisfied or

waived in accordance with the terms of the Scheme Implementation Agreement, before 8:00 am on the Second Court Date;

(b) as at 8.00 am on the Second Court Date, neither the Scheme Implementation Agreement nor the Deed Poll having been terminated in accordance with its terms;

(d) any other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to the Share Scheme, and which are acceptable to Lonestar and Holdco, having been satisfied; and

(e) the Share Scheme Order (and, if applicable, any orders under section 411(6) of the Corporations Act) approving the Share Scheme coming into effect, under section 411(10) of the Corporations Act, on or before the Sunset Date,

and the provisions of clauses 4, 6 and 7 will not come into effect unless and until each of these conditions precedent has been satisfied.

Certificate in relation to conditions precedent

3.2 Prior to or at the Court hearing on the Second Court Date, Lonestar and Holdco will each provide to the Court a certificate, or such other evidence as the Court requests, confirming (in respect of matters within their knowledge) whether or not all of the conditions precedent to the Share Scheme other than those in clauses 3.1(c) and 3.1(d), 3.1(e) have been satisfied or waived.

3.3 The giving of a certificate by each of Lonestar and Holdco under clause 3.2 will, in the absence of manifest error, be conclusive evidence of the satisfaction or waiver of the conditions precedent referred to in the relevant certificate.

Termination

3.4 Without limiting any rights under the Scheme Implementation Agreement, if the Share Scheme Implementation Agreement is terminated in accordance with its terms before the Share Scheme becomes Effective, each of Holdco and Lonestar are released from:

(a) any further obligation to take steps to implement the Share Scheme; and

(b) any liability with respect to the Share Scheme.

Sunset Date

3.5 The Share Scheme will lapse and have no further force or effect if the Effective Date has not occurred on or before the Sunset Date.

4 Implementation of Share Scheme

Lodgement of Share Scheme Order

4.1 Lonestar must lodge with ASIC in accordance with section 411(10) of the Corporations Act an office copy of the Share Scheme Order as soon as practicable on or before the first Business Day after the date on which the Court makes that Share Scheme Order.

Transfer of Scheme Shares

4.2 Subject to the Share Scheme becoming Effective and the provision of the Share Scheme Consideration in accordance with clause 5.1, on the Implementation Date the Scheme Shares, together with all rights and entitlements attaching to them as at the Implementation Date, will be transferred to Holdco without the need for any further act by any Scheme Shareholder by:

(a) Lonestar delivering to Holdco a duly completed share transfer form executed on behalf of the Scheme Shareholders (which may be a master share transfer form) to transfer all the Scheme Shares to Holdco;

(b) Holdco duly executing this transfer form and delivering this transfer form to Lonestar for registration; and

(c) to the extent applicable, Lonestar effecting a valid transfer of Scheme Shares under section 1074D of the Corporations Act.

4.3 As soon as practicable after receipt of the transfer form or completion of the transfer procedure, Lonestar must enter the name and address of Holdco in the Register as the holder of the Scheme Shares.

4.4 To the extent permitted by law, the Scheme Shares will be transferred to Holdco free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind.

5 Share Scheme Consideration

Provision of Share Scheme Consideration

5.1 Lonestar must use its best endeavours to procure that, in consideration for the transfer to Holdco of the Scheme Shares held by each Scheme Shareholder under the terms of this Share Scheme, Holdco issues to such Scheme Shareholders (or, in accordance with clause 5.4, to a nominee appointed by Holdco on its behalf where such Scheme Shareholder is an Ineligible Foreign Shareholder) one Holdco Share for every two Shares held by the Scheme Shareholder on the Scheme Record Date.

5.2 Subject to clauses 5.3 and 5.4, the transactions which form part of this Share Scheme will be implemented in the following sequence on the Implementation Date:

(a) each Scheme Shareholder will receive the Share Scheme Consideration for the Scheme Shares held by that Scheme Shareholder on the Scheme Record Date; and

(b) in exchange, all Scheme Shares will be transferred to Holdco.

5.3 Fractional entitlements to Share Scheme Consideration will be rounded down.

Ineligible Foreign Shareholders

5.4 Where a Scheme Shareholder is an Ineligible Foreign Shareholder, Holdco will be under no obligation to issue and Lonestar will procure that Holdco will not issue any Share Scheme Consideration to Ineligible Foreign Shareholder. Instead Lonestar will procure that Holdco will issue the Share Scheme Consideration that would otherwise have been issued to the Ineligible Foreign Shareholders to a nominee appointed by Holdco who will sell the Holdco Shares issued as Share Scheme Consideration as soon as reasonably practicable and in any

event no more than 15 Business Days after the Implementation Date in such manner, at such price and on such other terms as the nominee determines in good faith, and at the risk of the Ineligible Foreign Shareholders and pay the net proceeds received, after deducting any applicable brokerage and other taxes and charges, to that Ineligible Foreign Shareholder in full satisfaction of that Ineligible Foreign Shareholder’s rights to Share Scheme Consideration.

Obligations of Scheme Shareholders

5.5 Each Scheme Shareholder who will be issued Holdco Shares under the Share Scheme agrees:

(a) to become a stockholder of Holdco;

(b) to have their name and address entered into the register of stockholders maintained by Holdco; and

(c) to be bound by the certificate of incorporation and bylaws of Holdco in force from time to time in respect of the Holdco Shares.

Joint holders

5.6 In the case of Scheme Shares held in joint names, any Share Scheme Consideration will be issued to and registered in the names of the joint holders and holding statements or notices confirming the issue of the Share Scheme Consideration will be forwarded to the holder whose name appears first in the Register as at the Scheme Record Date.

6 Dealings in Lonestar Shares

Determination of Scheme Shareholders

6.1 Each Scheme Shareholder will be entitled to participate in the Share Scheme.

6.2 For the purpose of determining who is a Scheme Shareholder, dealings in Lonestar Shares will only be recognised if:

(a) in the case of dealings of the type to be effected by CHESS, the transferee is registered in the Register as the holder of the relevant Lonestar Shares by the Scheme Record Date; and

(b) in all other cases, share transfer forms in registrable form or transmission applications in respect of those dealings are received by the Lonestar Share Registry by the Scheme Record Date.

Lonestar’s obligation to register

6.3 Lonestar must register any registrable transfers or transmission applications of the kind referred to in clause 6.2(b) by the Scheme Record Date.

Transfers after the Scheme Record Date

6.4 If the Share Scheme becomes Effective, a Lonestar Shareholder (and any person claiming through that holder) must not dispose of, or purport or agree to dispose of, any Lonestar Shares or any interest in them after the Scheme Record Date (other than a transfer to Holdco in accordance with the Share Scheme and any subsequent transfers by Holdco or its successors in title).

6.5 Lonestar will not accept for registration, nor recognise for any purpose, any transfer or transmission application in respect of Lonestar Shares received after the Scheme Record Date (other than a transfer to Holdco in accordance with the Share Scheme and any subsequent transfers by Holdco or its successors in title).

Maintenance of Register

6.6 For the purpose of determining entitlements to the Share Scheme Consideration, Lonestar will, until the Share Scheme Consideration has been issued to Scheme Shareholders, maintain or procure the maintenance of the Register in accordance with this clause 6. The Register in this form will solely determine entitlements to the Share Scheme Consideration.

Effect of certificates and holding statements

6.7 From the Scheme Record Date, each certificate or holding statement for Scheme Shares will cease to have any effect as a document of title in respect of the Scheme Shares or otherwise (other than holding statements in favour of Holdco and its successors in title).

6.8 Each entry on the Register as at the Scheme Record Date (other than entries in respect of Holdco and its successors in title) will cease to have any effect other than as evidence of the entitlements of Scheme Shareholders to the Share Scheme Consideration in respect of the Scheme Shares relating to that entry.

Information to be made available to Holdco

6.9 As soon as reasonably practicable after the Scheme Record Date and in any event at least two Business Days before the Implementation Date, Lonestar will give to Holdco or as it directs or procure that Holdco be given or as it directs, details of the name, address and number of Scheme Shares held by each Scheme Shareholder as shown in the Register at the Scheme Record Date in the form Holdco reasonably requires.

7 Quotation of Lonestar Shares

7.1 Lonestar will apply to ASX for suspension of trading of Lonestar Shares on ASX with effect from the close of trading on the Effective Date.

7.2 If the Share Scheme has been fully implemented in accordance with its terms, on the date determined by Holdco, Lonestar will apply to ASX for the termination of the official quotation of Lonestar Shares on ASX and to have Lonestar removed from the official list of ASX.

8 General Share Scheme provisions

Appointment of Lonestar as agent and attorney

8.1 Each Scheme Shareholder, without the need for any further act, irrevocably appoints Lonestar and each of the directors and officers of Lonestar (jointly and severally) as its agent and attorney for the purpose of doing all things and executing all deeds, instruments, transfers and other documents that may be necessary or desirable to give full effect to the Share Scheme and the transactions contemplated by it, including but not limited to:

(a) enforcing the Deed Poll against Holdco;

(b) in the case of Scheme Shares in a CHESS holding:

(i) causing a message to be transmitted to ASPL in accordance with the ASX Settlement Rules to transfer the Scheme Shares held by the Scheme Shareholder from the CHESS subregister of Lonestar to the issuer sponsored subregister operated by Lonestar or the Lonestar Share Registry at any time after Holdco has paid or procured the payment of the Share Scheme Consideration which is due under this Share Scheme to Scheme Shareholders; and

(ii) completing and signing on behalf of Scheme Shareholders any required form of transfer of Scheme Shares;

(c) in the case of Scheme Shares registered in the issuer sponsored subregister operated by Lonestar or the Lonestar Share Registry, completing and signing on behalf of Scheme Shareholders any required form of transfer; and

(d) in all cases, executing any document or doing any other act necessary or desirable to give full effect to this Share Scheme and the transactions contemplated by it, including executing a proper instrument of transfer of Scheme Shares for the purposes of section 1071B of the Corporations Act (which may be a master transfer).

8.2 Lonestar may sub-delegate its functions, authorities or powers under clause 8.1 as agent and attorney of each Scheme Shareholder to any or all of its directors or officers.

Agreement by Scheme Shareholders

8.3 Each Scheme Shareholder agrees to:

(a) the transfer of its Scheme Shares together with all rights and entitlements attaching to those Scheme Shares to Holdco in accordance with the terms of the Share Scheme; and

(b) the variation, cancellation or modification (if any) of the rights attached to its Lonestar Shares constituted by or resulting from the Share Scheme.

Warranty by Scheme Shareholders

8.4 Each Scheme Shareholder is deemed to have warranted to Lonestar, and is deemed to have authorised Lonestar to warrant to Holdco as agent and attorney for the Scheme Shareholder, that:

(a) all of its Scheme Shares (including all rights and entitlements attaching to them) transferred to Holdco under the Share Scheme will, on the date of the transfer, be fully paid and free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind; and

(b) it has full power and capacity to sell and transfer its Scheme Shares (including all rights and entitlements attaching to them) to Holdco.

Title to Scheme Shares

8.5 On and from the Implementation Date, pending registration by Lonestar of Holdco in the Register as the holder of the Scheme Shares, Holdco will be beneficially entitled to the Scheme Shares.

Appointment of Holdco as sole proxy

8.6 On and from the Implementation Date and until registration by Lonestar of Holdco in the Register as the holder of the Scheme Shares, each Scheme Shareholder:

(a) without the need for any further act irrevocably appoints Holdco and each of its directors, officers and secretaries (jointly and each of them separately) as its agent and attorney to appoint an officer or agent nominated by Holdco as its sole proxy and where applicable, corporate representative to:

(i) attend shareholders’ meetings of Lonestar;

(ii) exercise the votes attached to the Scheme Shares registered in the name of the Scheme Shareholder; and

(iii) sign any shareholders’ resolution of Lonestar;

(b) undertakes not to attend or vote at any such meetings or sign any such resolutions, whether in person, by proxy or by corporate representative other than under clause 8.6;

(c) must take all other actions in the capacity of a registered holder of Scheme Shares as Holdco reasonably directs; and

(d) acknowledges and agrees that in exercising the powers referred to in this clause 8.6, Holdco and each of the directors, officers and secretaries of Holdco may act in the best interests of Holdco as the intended registered holder of the Scheme Shares.

8.7 Lonestar undertakes in favour of each Scheme Shareholder that it will appoint the officer or agent nominated by Holdco as that Scheme Shareholder’s proxy or, where applicable, corporate representative in accordance with clause 8.6(a).

Share Scheme alterations and conditions

8.8 If the Court proposes to approve the Share Scheme subject to any alterations or conditions under section 411(6) of the Corporations Act, Lonestar may, by its counsel or solicitors, and with the consent of Holdco, consent to those alterations or conditions on behalf of all persons concerned, including, for the avoidance of doubt, all Scheme Shareholders.

Effect of Share Scheme

8.9 The Share Scheme binds Lonestar and all Scheme Shareholders (including those who do not attend the Share Scheme Meeting, do not vote at the meeting or vote against the Share Scheme) and, to the extent of any inconsistency and to the extent permitted by law, overrides the constitution of Lonestar.

No liability when acting in good faith

8.10 Neither Lonestar nor Holdco, nor any of their respective officers or agents, will be liable to a Lonestar Shareholder for anything done or omitted to be done in the performance of the Share Scheme in good faith.

Notices

8.11 Where a notice, transfer, transmission application, direction or other communication referred to in the Share Scheme is sent by post to Lonestar, it will not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at Lonestar’s registered office or at the Lonestar Share Registry.

8.12 The accidental omission to give notice of the Share Scheme Meeting or the non-receipt of such a notice by any Lonestar Shareholder will not, unless so ordered by the Court, invalidate the Share Scheme Meeting or the proceedings of the Share Scheme Meeting.

Further assurances

8.13 Each party must, at its own expense, whenever requested by the other party, promptly do or, to the extent reasonably practicable, arrange for others to do everything, including executing any documents, reasonably necessary to give full effect to this Share Scheme and the transactions contemplated by this Share Scheme.

Costs and stamp duty

8.14 Holdco will pay all stamp duty (if any) and any related fines, penalties and interest payable on the transfer by Scheme Shareholders of the Scheme Shares to Holdco.

Governing law and jurisdiction

8.15 This Agreement is governed by the laws of New South Wales. Each party irrevocably and unconditionally:

(a) submits to the exclusive jurisdiction of the courts of New South Wales; and

(b) waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum.

Annexure 3

Lonestar Option Scheme of Arrangement

Scheme of Arrangement


Lonestar Resources Limited

The holders of options to subscribe for fully
paid ordinary shares in Lonestar Resources
Limited, known as Class A and Class B
Options

Scheme of Arrangement

pursuant to section 411 of the Corporations Act 2001 (Cth)


between		Lonestar Resources Limited (ABN 36 058 714 408) of Ground Floor, 11 Ventnor Ave, West Perth WA 6005 (Lonestar)

and		The holders of options to subscribe for fully paid ordinary shares in Lonestar, known as Class A and Class B Options, as at the Scheme Record Date

Operative provisions

1 Definitions and interpretation

Definitions

1.1 In this document, unless the context requires otherwise:

ASIC means the Australian Securities and Investments Commission.

Business Day means a day that is not a Saturday, Sunday, public holiday or bank holiday in Sydney, New South Wales.

Corporations Act means the Corporations Act 2001 (Cth).

Court means Federal Court of Australia or such other court of competent jurisdiction under the Corporations Act agreed in writing by Holdco and Lonestar.

Deed Poll means the deed poll in respect of the Lonestar Option Scheme dated [ insert date ] executed by Holdco in favour of each Scheme Lonestar Optionholder.

Effective means, when used in relation to the Lonestar Option Scheme, the coming into effect, under section 411(10) of the Corporations Act , of the Lonestar Option Scheme Order.

Effective Date means the date on which an office copy of the Lonestar Option Scheme Order approving the Lonestar Option Scheme is lodged with ASIC.

Holdco means Lonestar Resources US Inc. (a corporation formed in the State of Delaware, United States of America).

Implementation Date means the third Business Day after the Scheme Record Date, or such other day as Holdco and Lonestar agree in writing.

Lonestar Employee Option Plan means the Lonestar Resources Limited Employee Share Option Plan formerly known as Amadeus Energy Limited 2012 Employee Share Option Plan.

Lonestar Option means options to acquire by way of issue Lonestar Shares, that are the existing Class A and Class B Options held by current and former employees of Lonestar.

Lonestar Option Scheme means this scheme of arrangement under Part 5.1 of the Corporations Act between Lonestar and Scheme Lonestar Optionholders, subject to any

alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and approved in writing by Lonestar and Holdco.

Lonestar Option Scheme Consideration means the consideration to be provided to Scheme Lonestar Optionholders under the terms of this Lonestar Option Scheme for the cancellation of their Scheme Lonestar Options.

Lonestar Option Scheme Meeting means the meeting of Optionholders (other than Excluded Optionholders) ordered by the Court to be convened under section 411(1) of the Corporations Act in relation to the Option Scheme.

Lonestar Option Scheme Order means the orders of the Court approving the Option Scheme, with or without modification, under section 411(4)(b) of the Corporations Act .

Lonestar Optionholder means each person who is registered in the Register as a holder of a Lonestar Option.

Lonestar Share means an issued fully paid ordinary share in Lonestar.

Register means the register of shareholders or optionholders, as applicable, of Lonestar.

Registered Address means the address of each Scheme Lonestar Optionholder as recorded in the Register as at the Scheme Record Date.

Related Body Corporate has the meaning given to that term in the Corporations Act.

Scheme Implementation Agreement means the scheme implementation agreement dated [ insert date ] between Lonestar and Holdco.

Scheme Lonestar Option means a Lonestar Option held by a Scheme Lonestar Optionholder as at the Scheme Record Date.

Scheme Lonestar Optionholder means each person who holds a Lonestar Option at the Scheme Record Date.

Scheme Record Date means 7.00 pm (Sydney time) on the third Business Day after the Effective Date.

Second Court Date means the first day on which the Court hears the application for the Lonestar Option Scheme Order, or if the application is adjourned or subject to appeal for any reason, the first day on which the adjourned or appealed application is heard.

Sunset Date means:

(a) 5.00 pm on 30 June 2016; or

(b) such other date and time as agreed in writing between Lonestar and Holdco.

Interpretation

1.2 In this document:

(a) unless the context requires otherwise, a reference:

(i) to the singular includes the plural and vice versa;

(ii) to a gender includes all genders;

(iii) to a document or instrument is a reference to that document or instrument as amended, consolidated, supplemented, novated or replaced;

(iv) to a clause, paragraph, Schedule or Annexure is to a clause, paragraph, Schedule or Annexure of or to this document;

(vi) to any time is to Sydney, Western Australia time;

(vii) to “$” is to the lawful currency of Australia;

(b) the words “including” or “includes” means “including, but not limited to”, or “includes, without limitation” respectively;

(d) headings are for convenience only and do not affect interpretation of this document;

(e) if a payment or other act must (but for this clause) be made or done on a day that is not a Business Day, then it must be made or done on the next Business Day; and

(f) if a period must be calculated from, after or before a day or the day of an act or event, it must be calculated excluding that day.

2 Preliminary

Lonestar

2.2 Lonestar is admitted to the official list of ASX and Lonestar Shares are quoted on ASX. Lonestar Options are not quoted on ASX.

2.3 As at [ insert date ], 1,918,891 Lonestar Options were on issue.

Holdco

2.4 Holdco is a corporation formed in the State of Delaware, United States of America. Its principal executive office is at 600 Bailey Avenue, Suite 200, Fort Worth, Texas, United States of America.

Effect of Lonestar Option Scheme

2.5 If the Lonestar Option Scheme becomes Effective:

(a) all of the Scheme Lonestar Options, together with all rights and entitlements attaching to the Scheme Lonestar Options at the Implementation Date, will be cancelled; and

(b) in consideration of the cancellation of the Scheme Lonestar Options, Lonestar will procure the issue of the Lonestar Option Scheme Consideration to each Scheme Lonestar Optionholder in accordance with the terms of the Lonestar Option Scheme.

Scheme Implementation Agreement

2.6 Lonestar and Holdco have entered into the Scheme Implementation Agreement which sets out the terms on which Lonestar and Holdco have agreed to implement the Lonestar Option Scheme.

Deed Poll

2.7 The Lonestar Option Scheme attributes actions to Holdco but does not itself impose an obligation on Holdco to perform those actions. Holdco has executed the Deed Poll in favour of each Scheme Lonestar Optionholder under which it has covenanted, subject to the Lonestar Option Scheme becoming Effective, to perform certain steps attributed to it under the Lonestar Option Scheme and to do all things necessary or desirable to implement the Lonestar Option Scheme, including to issue the Lonestar Option Scheme Consideration.

3 Conditions precedent

Conditions precedent to Lonestar Option Scheme

3.1 The Lonestar Option Scheme is conditional on and will have no force or effect until, the satisfaction of each of the following conditions precedent:

(a) all of the conditions precedent set out in clause 3.2 of the Scheme Implementation Agreement, other than those in clauses 3.2(a), (c) and (d), having been satisfied or waived in accordance with the terms of the Scheme Implementation Agreement, before 8.00 am on the Second Court Date;

(b) as at 8.00 am on the Second Court Date, neither the Scheme Implementation Agreement nor the Deed Poll having been terminated in accordance with its terms;

(d) any other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to the Lonestar Option Scheme, and which are acceptable to Lonestar and Holdco, having been satisfied,

and the provisions of clauses 4, 6, 6 and 7 will not come into effect unless and until each of these conditions precedent has been satisfied.

Certificate in relation to conditions precedent

3.2 Prior to or at the Court hearing on the Second Court Date, Lonestar and Holdco will each provide to the Court a certificate, or such other evidence as the Court requests, confirming (in respect of matters within their knowledge) whether or not all of the conditions precedent to the Lonestar Option Scheme (other than those in relation to this Lonestar Option Scheme and the Share Scheme being approved by the Court pursuant to section 411(4)(b) of the Corporations Act) have been satisfied or waived.

Termination

3.4 Without limiting any rights under the Scheme Implementation Agreement, if the Scheme Implementation Agreement is terminated in accordance with its terms before the Lonestar Option Scheme becomes Effective, each of Holdco and Lonestar are released from:

(a) any further obligation to take steps to implement the Lonestar Option Scheme; and

(b) any liability with respect to the Lonestar Option Scheme.

Sunset Date

3.5 The Lonestar Option Scheme will lapse and have no further force or effect if the Effective Date has not occurred on or before the Sunset Date.

4 Implementation of Lonestar Option Scheme

Lodgement of Lonestar Option Scheme Order

4.1 Lonestar must lodge with ASIC in accordance with section 411(10) of the Corporations Act an office copy of the Lonestar Option Scheme Order as soon as practicable on or before the first Business Day after the date on which the Court makes that Lonestar Option Scheme Order.

Provision of Lonestar Option Scheme Consideration

4.2 On the Implementation Date, in consideration for the Scheme Lonestar Optionholders agreeing to the cancellation of the Scheme Lonestar Options, Holdco must issue the Lonestar Option Scheme Consideration to each Scheme Lonestar Optionholder in accordance with clause 5.

Cancellation of Scheme Lonestar Options

4.3 Subject to the Lonestar Option Scheme becoming Effective and the issue of the Lonestar Option Scheme Consideration in accordance with clause 4.2, on the Implementation Date in consideration for and immediately following the issue of the Lonestar Option Scheme Consideration:

(a) the Scheme Lonestar Options, together with all rights and entitlements attaching to them as at the Implementation Date, will be cancelled without the need for any further act by any Scheme Lonestar Optionholder; and

(b) Lonestar must update the Register to reflect the cancellation.

5 Provision of Lonestar Option Scheme Consideration

Provision of Lonestar Option Scheme Consideration

5.1 Lonestar must use its best endeavours to procure that, on the Implementation Date, in consideration for the cancellation of the Scheme Lonestar Options held by each Scheme

Lonestar Optionholder under the terms of this Lonestar Option Scheme, Holdco issues to such Scheme Lonestar Optionholders one Holdco Option for every two Scheme Lonestar Options held by them on the Scheme Record Date.

5.2 Fractional entitlements to Lonestar Option Scheme Consideration will be rounded down to the nearest whole number of Holdco Options.

Terms of new Holdco Options

5.3 Each Holdco Option will:

(a) have an exercise price per Holdco Share as set out in the table in Schedule 1 which corresponds with the exercise price per Lonestar Share of the relevant Lonestar Options which it replaces;

(b) have an exercise period equal to the unexpired exercise period of the relevant Lonestar Options it replaces;

(c) be vested to the same extent and have the same terms as to vesting as the relevant Lonestar Options it replaces, ignoring any deemed vesting which arises by reason of the Share Scheme; and

(d) otherwise be issued on the terms of the Holdco Employee Stock Option Plan.

Obligations of Scheme Lonestar Optionholders

5.4 Each Scheme Lonestar Optionholder who will be issued with Holdco Options under the Lonestar Option Scheme agrees:

(a) that this Lonestar Option Scheme constitutes his/her acceptance of an offer of the Holdco Options for the purposes of the Holdco Employee Stock Option Plan;

(b) to become an optionholder of Holdco;

(d) to be bound by the certificate of incorporation and bylaws of Holdco as in force from time to time in respect of the Holdco Options.

6 Dealings in Lonestar Options

Determination of Scheme Lonestar Optionholders

6.1 Each Scheme Lonestar Optionholder will be entitled to participate in the Lonestar Option Scheme.

Exercise of Lonestar Options

6.2 Lonestar must issue, and register the relevant Lonestar Optionholder as the holder of, Lonestar Shares resulting from the valid exercise of a Lonestar Option which is received on or before 12:00 pm on the Business Day immediately prior to the Scheme Record Date.

6.3 Lonestar will not accept for registration or recognise for any purpose any exercise of a Lonestar Option received after 12:00 pm on the Business Day immediately prior to the

Scheme Record Date and, after such time, the Lonestar Options will not be capable of exercise notwithstanding the terms on which the Lonestar Options were granted.

Maintenance of Register

6.4 For the purpose of determining entitlements to the Lonestar Option Scheme Consideration, Lonestar will, until the Lonestar Option Scheme Consideration has been paid to Scheme Lonestar Optionholders, maintain or procure the maintenance of the Register in accordance with this clause 6. The Register in this form will solely determine entitlements to the Lonestar Option Scheme Consideration.

Effect of Register

6.5 Each entry on the Register as at the Scheme Record Date will cease to have any effect other than as evidence of an entitlement of Scheme Lonestar Optionholders to the Lonestar Option Scheme Consideration.

Information to be made available to Holdco

6.6 As soon as reasonably practicable after the Scheme Record Date and in any event at least 2 Business Days before the Implementation Date, Lonestar will give to Holdco or as it directs, or procure that Holdco be given or as it directs, details of the name, address and number of Scheme Lonestar Options held by each Scheme Lonestar Optionholder as shown in the Register at the Scheme Record Date in the form Holdco reasonably requires.

7 General Option Scheme provisions

Appointment of Lonestar as agent and attorney

7.1 Each Scheme Lonestar Optionholder, without the need for any further act, irrevocably appoints Lonestar and each of the directors and officers of Lonestar (jointly and severally) as its agent and attorney for the purpose of doing all things and executing all deeds, instruments, transfers and other documents that may be necessary or desirable to give full effect to the Lonestar Option Scheme and the transactions contemplated by it, including but not limited to:

(a) enforcing the Deed Poll against Holdco; and

(b) executing any document or doing any other act necessary or desirable to give full effect to this Lonestar Option Scheme and the transactions contemplated by it.

Agreement by Scheme Lonestar Optionholders

7.2 Each Scheme Lonestar Optionholder agrees:

(a) to the cancellation of its Scheme Lonestar Options together with all rights and entitlements attaching to those Scheme Lonestar Options in accordance with the terms of the Lonestar Option Scheme; and

(b) the variation, cancellation or modification (if any) of the rights attached to its Lonestar Options constituted by or resulting from the Lonestar Option Scheme.

Warranty by Scheme Lonestar Optionholders

7.3 Each Scheme Lonestar Optionholder is deemed to have warranted to Lonestar, and is deemed to have authorised Lonestar to warrant to Holdco as agent and attorney for the Scheme Lonestar Optionholder, that:

(a) all of its Scheme Lonestar Options (including all rights and entitlements attaching to them) cancelled under the Lonestar Option Scheme will, on the date of cancellation, be free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind; and

(b) it has full power and capacity to deal with its Scheme Lonestar Options (including all rights and entitlements attaching to them).

Lonestar Option Scheme alterations and conditions

7.4 If the Court proposes to approve the Lonestar Option Scheme subject to any alterations or conditions under section 411(6) of the Corporations Act , Lonestar may, by its counsel or solicitors, and with the consent of Holdco, consent to those alterations or conditions on behalf of all persons concerned, including, for the avoidance of doubt, all Scheme Lonestar Optionholders.

Effect of Lonestar Option Scheme

7.5 The Lonestar Option Scheme binds Lonestar and all Scheme Lonestar Optionholders (including those who do not attend the Lonestar Option Scheme Meeting, do not vote at that meeting or vote against the Lonestar Option Scheme) and, to the extent of any inconsistency and to the extent permitted by law, overrides the constitution of Lonestar and the terms and conditions of the Scheme Lonestar Options.

No liability when acting in good faith

7.6 Neither Lonestar nor Holdco, nor any of their respective officers or agents, will be liable to Lonestar Optionholders for anything done or omitted to be done in the performance of the Lonestar Option Scheme in good faith.

Notices

7.7 Where a notice, transfer, transmission application, direction or other communication referred to in the Lonestar Option Scheme is sent by post to Lonestar, it will not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at Lonestar’s registered office.

7.8 The accidental omission to give notice of the Lonestar Option Scheme Meeting or the non-receipt of such a notice by any Lonestar Optionholder will not, unless so ordered by the Court, invalidate the Lonestar Option Scheme Meeting.

Further assurances

7.9 Each party must, at its own expense, whenever requested by the other party, promptly do or, to the extent reasonably practicable, arrange for others to do everything, including executing any documents, reasonably necessary to give full effect to this Lonestar Option Scheme and the transactions contemplated by this Lonestar Option Scheme.

Costs and stamp duty

7.10 Holdco will pay all stamp duty (if any) and any related fines, penalties and interest payable on the cancellation of the Scheme Lonestar Options.

Governing law and jurisdiction

7.11 The Lonestar Option Scheme is governed by the laws of New South Wales.

7.12 Each party irrevocably and unconditionally:

(a) submits to the exclusive jurisdiction of the courts of New South Wales; and

(b) waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum.

Schedule 1

Lonestar Option Scheme Consideration

Current type of Option	Expiry date of Lonestar Options	Exercise price of Lonestar Options		Number of Lonestar Options	Exercise price of new Holdco Options		Number of new Holdco Options
Class A	31 Dec 2016	A$	15.00	1,207,042	US$	15.00	603,521
Class B	31 Dec 2016	A$	15.00	270,849	US$	15.00	135,424
Class B 13/14	31 Dec 2016	A$	20.00	185,250	US$	20.00	92,625
Class A 13/14	31 Dec 2017	A$	20.00	255,750	US$	20.00	127,875

Numbers of Lonestar Options and new Holdco Options are presented on an aggregate basis to illustrate the exchange ratio. The actual number of new Holdco Options may change following implementation of the Lonestar Option Scheme as any fractional entitlements will be rounded down.

Annexure 4

Non-employee Option Scheme of Arrangement

Scheme of Arrangement

Lonestar Resources Limited

The holders of options to subscribe for fully
paid ordinary shares in Lonestar Resources
Limited, other than Class A and Class B
Options

Scheme of Arrangement

pursuant to section 411 of the Corporations Act 2001 (Cth)

between		Lonestar Resources Limited (ABN 36 058 714 408) of Ground Floor, 11 Ventnor Ave, West Perth WA 6005 (Lonestar)

and		The holders of options to subscribe for fully paid ordinary shares in Lonestar, other than Class A and Class B Options, as at the Scheme Record Date

Operative provisions

1 Definitions and interpretation

Definitions

1.1 In this document, unless the context requires otherwise:

ASIC means the Australian Securities and Investments Commission.

Business Day means a day that is not a Saturday, Sunday, public holiday or bank holiday in Sydney, New South Wales.

Corporations Act means the Corporations Act 2001 (Cth).

Court means Federal Court of Australia or such other court of competent jurisdiction under the Corporations Act agreed in writing by Holdco and Lonestar.

Deed Poll means the deed poll in respect of the Non-employee Option Scheme dated [ insert date ] executed by Holdco in favour of each Scheme Non-employee Optionholder.

Effective means, when used in relation to the Non-employee Option Scheme, the coming into effect, under section 411(10) of the Corporations Act , of the Non-employee Option Scheme Order.

Effective Date means the date on which an office copy of the Non-employee Option Scheme Order approving the Non-employee Option Scheme is lodged with ASIC.

Holdco means Lonestar Resources US Inc. (a corporation formed in the State of Delaware, United States of America).

Implementation Date means the third Business Day after the Scheme Record Date, or such other day as Holdco and Lonestar agree in writing.

Lonestar Option means options to acquire by way of issue Lonestar Shares, that are the existing Class A and Class B Options held by current and former employees of Lonestar.

Lonestar Share means an issued fully paid ordinary share in Lonestar.

Non-employee Option means options to acquire by way of issue Lonestar Shares, other than the Lonestar Options.

Non-employee Option Scheme means this scheme of arrangement under Part 5.1 of the Corporations Act between Lonestar and Scheme Non-employee Optionholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act and approved in writing by Lonestar and Holdco.

Non-employee Option Scheme Consideration means the consideration to be provided to Scheme Non-employee Optionholders under the terms of this Non-employee Option Scheme for the cancellation of their Scheme Non-employee Options.

Non-employee Option Scheme Meeting means the meeting of Optionholders (other than Excluded Optionholders) ordered by the Court to be convened under section 411(1) of the Corporations Act in relation to the Option Scheme.

Non-employee Option Scheme Order means the orders of the Court approving the Option Scheme, with or without modification, under section 411(4)(b) of the Corporations Act .

Non-employee Optionholder means each person who is registered in the Register as a holder of a Non-employee Option.

Register means the register of shareholders or optionholders, as applicable, of Lonestar.

Registered Address means the address of each Scheme Non-employee Optionholder as recorded in the Register as at the Scheme Record Date.

Related Body Corporate has the meaning given to that term in the Corporations Act.

Scheme Implementation Agreement means the scheme implementation agreement dated [ insert date ] between Lonestar and Holdco.

Scheme Non-employee Option means a Non-employee Option held by a Scheme Non-employee Optionholder as at the Scheme Record Date.

Scheme Non-employee Optionholder means each person who holds a Non-employee Option at the Scheme Record Date.

Scheme Record Date means 7.00 pm (Sydney time) on the third Business Day after the Effective Date.

Second Court Date means the first day on which the Court hears the application for the Non-employee Option Scheme Order, or if the application is adjourned or subject to appeal for any reason, the first day on which the adjourned or appealed application is heard.

Sunset Date means:

(a) 5.00 pm on 30 June 2016; or

(b) such other date and time as agreed in writing between Lonestar and Holdco.

Interpretation

1.2 In this document:

(a) unless the context requires otherwise, a reference:

(i) to the singular includes the plural and vice versa;

(ii) to a gender includes all genders;

(iii) to a document or instrument is a reference to that document or instrument as amended, consolidated, supplemented, novated or replaced;

(iv) to a clause, paragraph, Schedule or Annexure is to a clause, paragraph, Schedule or Annexure of or to this document;

(vi) to any time is to Sydney, New South Wales time;

(vii) to “$” is to the lawful currency of Australia;

(b) the words “including” or “includes” means “including, but not limited to”, or “includes, without limitation” respectively;

(d) headings are for convenience only and do not affect interpretation of this document;

(e) if a payment or other act must (but for this clause) be made or done on a day that is not a Business Day, then it must be made or done on the next Business Day; and

(f) if a period must be calculated from, after or before a day or the day of an act or event, it must be calculated excluding that day.

2 Preliminary

Lonestar

2.2 Lonestar is admitted to the official list of ASX and Lonestar Shares are quoted on ASX. Non-employee Options are not quoted on ASX.

2.3 As at [ insert date ], 309,334 Non-employee Options were on issue.

Holdco

2.4 Holdco is a corporation formed in the State of Delaware, United States of America. Its principal executive office is at 600 Bailey Avenue, Suite 200, Fort Worth, Texas, United States of America.

Effect of Non-employee Option Scheme

2.5 If the Non-employee Option Scheme becomes Effective:

(a) all of the Scheme Non-employee Options, together with all rights and entitlements attaching to the Scheme Non-employee Options at the Implementation Date, will be cancelled; and

(b) in consideration of the cancellation of the Scheme Non-employee Options, Lonestar will procure the issue of the Non-employee Option Scheme Consideration to each Scheme Non-employee Optionholder in accordance with the terms of the Non-employee Option Scheme.

Scheme Implementation Agreement

2.6 Lonestar and Holdco have entered into the Scheme Implementation Agreement which sets out the terms on which Lonestar and Holdco have agreed to implement the Non-employee Option Scheme.

Deed Poll

2.7 The Non-employee Option Scheme attributes actions to Holdco but does not itself impose an obligation on Holdco to perform those actions. Holdco has executed the Deed Poll in favour of each Scheme Non-employee Optionholder under which it has covenanted, subject to the Non-employee Option Scheme becoming Effective, to perform certain steps attributed to it under the Non-employee Option Scheme and to do all things necessary or desirable to implement the Non-employee Option Scheme, including to issue the Non-employee Option Scheme Consideration.

3 Conditions precedent

Conditions precedent to Non-employee Option Scheme

3.1 The Non-employee Option Scheme is conditional on and will have no force or effect until, the satisfaction of each of the following conditions precedent:

(a) all of the conditions precedent set out in clause 3.3 of the Scheme Implementation Agreement, other than those in clauses 3.3(a), (c) and (d), having been satisfied or waived in accordance with the terms of the Scheme Implementation Agreement, before 8.00 am on the Second Court Date;

(b) as at 8.00 am on the Second Court Date, neither the Scheme Implementation Agreement nor the Deed Poll having been terminated in accordance with its terms;

(d) any other conditions made or required by the Court under section 411(6) of the Corporations Act in relation to the Non-employee Option Scheme, and which are acceptable to Lonestar and Holdco, having been satisfied,

and the provisions of clauses 4, 5, 6 and 7 will not come into effect unless and until each of these conditions precedent has been satisfied.

Certificate in relation to conditions precedent

the Non-employee Option Scheme (other than those in relation to this Non-employee Option Scheme and the Share Scheme being approved by the Court pursuant to section 411(4)(b) of the Corporations Act) have been satisfied or waived.

Termination

3.4 Without limiting any rights under the Scheme Implementation Agreement, if the Scheme Implementation Agreement is terminated in accordance with its terms before the Non-employee Option Scheme becomes Effective, each of Holdco and Lonestar are released from:

(a) any further obligation to take steps to implement the Non-employee Option Scheme; and

(b) any liability with respect to the Non-employee Option Scheme.

Sunset Date

3.5 The Non-employee Option Scheme will lapse and have no further force or effect if the Effective Date has not occurred on or before the Sunset Date.

4 Implementation of Non-employee Option Scheme

Lodgement of Non-employee Option Scheme Order

4.1 Lonestar must lodge with ASIC in accordance with section 411(10) of the Corporations Act an office copy of the Non-employee Option Scheme Order as soon as practicable on or before the first Business Day after the date on which the Court makes that Non-employee Option Scheme Order.

Provision of Non-employee Option Scheme Consideration

4.2 On the Implementation Date, in consideration for the Scheme Non-employee Optionholders agreeing to the cancellation of the Scheme Non-employee Options, Holdco must issue the Non-employee Option Scheme Consideration to each Scheme Non-employee Optionholder in accordance with clause 5.

Cancellation of Scheme Non-employee Options

4.3 Subject to the Non-employee Option Scheme becoming Effective and the issue of the Non-employee Option Scheme Consideration in accordance with clauses 4.2, on the Implementation Date in consideration for and immediately following the issue of the Non-employee Option Scheme Consideration:

(a) the Scheme Non-employee Options, together with all rights and entitlements attaching to them as at the Implementation Date, will be cancelled without the need for any further act by any Scheme Non-employee Optionholder; and

(b) Lonestar must update the Register to reflect the cancellation.

5 Provision of Non-employee Option Scheme Consideration

Provision of Non-employee Option Scheme Consideration

5.1 Lonestar must use its best endeavours to procure that, on the Implementation Date, in consideration for the cancellation of the Scheme Non-employee Options held by each Scheme Non-employee Optionholder under the terms of this Non-employee Option Scheme, Holdco issues to such Scheme Non-employee Optionholders one Holdco Option for every two Scheme Non-employee Options held by them on the Scheme Record Date.

5.2 Fractional entitlements to Non-employee Option Scheme Consideration will be rounded down to the nearest whole number of Holdco Options.

Terms of new Non-employee Options

5.3 Each new Holdco Option will:

(b) have an exercise period equal to the unexpired exercise period of the relevant Non-employee Options it replaces;

(c) be vested to the same extent and have the same terms as to vesting as the relevant Non-employee Options it replaces, ignoring any deemed vesting which arises by reason of the Share Scheme; and

(d) otherwise be issued on the same terms as the existing Non-employee Options, with necessary changes due to Holdco being the issuer in place of Lonestar.

Obligations of Scheme Non-employee Optionholders

5.4 Each Scheme Non-employee Optionholder who will be issued with Holdco Options under the Non-employee Option Scheme agrees:

(a) to become an optionholder of Holdco;

(b) to have their name and address entered into the register of optionholders maintained by Holdco; and

(c) to be bound by the certificate of incorporation and bylaws of Holdco as in force from time to time in respect of the Holdco Options.

6 Dealings in Non-employee Options

Determination of Scheme Non-employee Optionholders

6.1 Each Scheme Non-employee Optionholder will be entitled to participate in the Non-employee Option Scheme.

Exercise of Non-employee Options

6.2 Lonestar must issue, and register the relevant Non-employee Optionholder as the holder of, Lonestar Shares resulting from the valid exercise of a Non-employee Option which is received on or before 12:00 pm on the Business Day immediately prior to the Scheme Record Date.

6.3 Lonestar will not accept for registration or recognise for any purpose any exercise of a Non-employee Option received after 12:00 pm on the Business Day immediately prior to the Scheme Record Date and, after such time, the Non-employee Options will not be capable of exercise notwithstanding the terms on which the Non-employee Options were granted.

Maintenance of Register

6.4 For the purpose of determining entitlements to the Non-employee Option Scheme Consideration, Lonestar will, until the Non-employee Option Scheme Consideration has been paid to Scheme Non-employee Optionholders, maintain or procure the maintenance of the Register in accordance with this clause 6. The Register in this form will solely determine entitlements to the Non-employee Option Scheme Consideration.

Effect of Register

6.5 Each entry on the Register as at the Scheme Record Date will cease to have any effect other than as evidence of an entitlement of Scheme Non-employee Optionholders to the Non-employee Option Scheme Consideration.

Information to be made available to Holdco

6.6 As soon as reasonably practicable after the Scheme Record Date and in any event at least 2 Business Days before the Implementation Date, Lonestar will give to Holdco or as it directs, or procure that Holdco be given or as it directs, details of the name, address and number of Scheme Non-employee Options held by each Scheme Non-employee Optionholder as shown in the Register at the Scheme Record Date in the form Holdco reasonably requires.

7 General Option Scheme provisions

Appointment of Lonestar as agent and attorney

7.1 Each Scheme Non-employee Optionholder, without the need for any further act, irrevocably appoints Lonestar and each of the directors and officers of Lonestar (jointly and severally) as its agent and attorney for the purpose of doing all things and executing all deeds, instruments, transfers and other documents that may be necessary or desirable to give full effect to the Non-employee Option Scheme and the transactions contemplated by it, including but not limited to:

(a) enforcing the Deed Poll against Holdco; and

(b) executing any document or doing any other act necessary or desirable to give full effect to this Non-employee Option Scheme and the transactions contemplated by it.

Agreement by Scheme Non-employee Optionholders

7.2 Each Scheme Non-employee Optionholder agrees:

(a) to the cancellation of its Scheme Non-employee Options together with all rights and entitlements attaching to those Scheme Non-employee Options in accordance with the terms of the Non-employee Option Scheme; and

(b) the variation, cancellation or modification (if any) of the rights attached to its Non-employee Options constituted by or resulting from the Non-employee Option Scheme.

Warranty by Scheme Non-employee Optionholders

7.3 Each Scheme Non-employee Optionholder is deemed to have warranted to Lonestar, and is deemed to have authorised Lonestar to warrant to Holdco as agent and attorney for the Scheme Non-employee Optionholder, that:

(a) all of its Scheme Non-employee Options (including all rights and entitlements attaching to them) cancelled under the Non-employee Option Scheme will, on the date of cancellation, be free from all mortgages, charges, liens, encumbrances, pledges, security interests and other interests of third parties of any kind; and

(b) it has full power and capacity to deal with its Scheme Non-employee Options (including all rights and entitlements attaching to them).

Non-employee Option Scheme alterations and conditions

7.4 If the Court proposes to approve the Non-employee Option Scheme subject to any alterations or conditions under section 411(6) of the Corporations Act , Lonestar may, by its counsel or solicitors, and with the consent of Holdco, consent to those alterations or conditions on behalf of all persons concerned, including, for the avoidance of doubt, all Scheme Non-employee Optionholders.

Effect of Non-employee Option Scheme

7.5 The Non-employee Option Scheme binds Lonestar and all Scheme Non-employee Optionholders (including those who do not attend the Non-employee Option Scheme Meeting, do not vote at that meeting or vote against the Non-employee Option Scheme) and, to the extent of any inconsistency and to the extent permitted by law, overrides the constitution of Lonestar and the terms and conditions of the Scheme Non-employee Options.

No liability when acting in good faith

7.6 Neither Lonestar nor Holdco, nor any of their respective officers or agents, will be liable to Non-employee Optionholders for anything done or omitted to be done in the performance of the Non-employee Option Scheme in good faith.

Notices

7.7 Where a notice, transfer, transmission application, direction or other communication referred to in the Non-employee Option Scheme is sent by post to Lonestar, it will not be deemed to be received in the ordinary course of post or on a date other than the date (if any) on which it is actually received at Lonestar’s registered office.

7.8 The accidental omission to give notice of the Non-employee Option Scheme Meeting or the non-receipt of such a notice by any Non-employee Optionholder will not, unless so ordered by the Court, invalidate the Non-employee Option Scheme Meeting.

Further assurances

7.9 Each party must, at its own expense, whenever requested by the other party, promptly do or, to the extent reasonably practicable, arrange for others to do everything, including executing any documents, reasonably necessary to give full effect to this Non-employee Option Scheme and the transactions contemplated by this Non-employee Option Scheme.

Costs and stamp duty

7.10 Holdco will pay all stamp duty (if any) and any related fines, penalties and interest payable on the cancellation of the Scheme Non-employee Options.

Governing law and jurisdiction

7.11 The Non-employee Option Scheme is governed by the laws of New South Wales.

7.12 Each party irrevocably and unconditionally:

(a) submits to the exclusive jurisdiction of the courts of New South Wales; and

(b) waives, without limitation, any claim or objection based on absence of jurisdiction or inconvenient forum.

Schedule 1

Non-employee Option Scheme Consideration

Current type
of Non-
employee
Option

Expiry date
of Non-
employee
Options

Exercise
price of Non-
employee
Options

Number of
Non-
employee
Options

Exercise
price of new
Holdco
Options

Number of
new Holdco
Options

Amadeus

17 May 2016

18.00

129,334

A$36.00 in US$*

64,667

JP-B

31 Dec 2016

10.00

50,000

A$20.00 in US$*

25,000

JP-C

31 Dec 2017

10.00

60,000

A$20.00 in US$*

30,000

JP-D

31 Dec 2018

10.00

70,000

A$20.00 in US$*

35,000

* A$ exercise prices are to be converted to US dollars at the prevailing Australian/US dollar exchange rate on the Implementation Date, as reasonably determined by Lonestar. Holdco Options will have an exercise price per Holdco Share in US$ equal to that amount.

Annexure 5

Deed Poll

By Lonestar Resources US Inc.

in favour of each Scheme Shareholder,
Scheme Lonestar Optionholder and Scheme
Non-employee Optionholder

Title		Deed Poll

Date		2016

By		Lonestar Resources US Inc. (a corporation formed in the State of Delaware, United States of America) of 600 Bailey Avenue, Suite 200, Fort Worth, Texas, United States of America ( Holdco )

in favour of		Each holder of issued fully paid ordinary shares in Lonestar Resources Limited (ABN 36 058 714 408) ( Lonestar ) as at the Scheme Record Date ( Scheme Shareholder );

		each holder of issued options to subscribe for fully paid ordinary shares in Lonestar, known as Class A and Class B Options as at the Scheme Record Date ( Scheme Lonestar Optioholder ); and

		each holder of issued options to subscribe for fully paid ordinary shares in Lonestar, other than Class A and Class B Options, as at the Scheme Record Date ( Scheme Non-employee Optionholder ),

		collectively, the Scheme Shareholders and Optionholders .

Recitals

D Lonestar and Holdco are parties to a Scheme Implementation Agreement dated [31 December] 2015 ( Scheme Implementation Agreement ).

E Holdco is entering into this Deed Poll for the purpose of covenanting in favour of Scheme Shareholders and Scheme Optionholders to perform certain of its obligations under the Scheme Implementation Agreement and certain steps attributed to it under the Schemes, including ensuring that the Share Scheme Consideration is issued to Scheme Shareholders and the Option Scheme Consideration is issued to Scheme Optionholders.

F The effect of the Share Scheme will be that the Scheme Shares, together with all rights and entitlements attaching to them, will be transferred to Holdco in exchange for the Share Scheme Consideration.

G The effect of the Option Schemes will be that the Scheme Options, together with all rights and entitlements attaching to them, will be cancelled in exchange for the Option Scheme Consideration.

Operative provisions

1 Definitions and interpretation

Definitions

Schemes means:

(a) the scheme of arrangement under Part 5.1 of the Corporations Act between Lonestar and Scheme Shareholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act;

(b) the scheme of arrangement under Part 5.1 of the Corporations Act between Lonestar and Lonestar Optionholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act; and

(c) the scheme of arrangement under Part 5.1 of the Corporations Act between Lonestar and Non-employee Optionholders, subject to any alterations or conditions made or required by the Court under section 411(6) of the Corporations Act.

Interpretation

1.2 Words and phrases defined in the Schemes have the same meanings in this Deed Poll unless the context requires otherwise.

1.3 Clause 1.2 of the Schemes apply to the interpretation of this Deed Poll except that references to “this document” in that clause are to be read as references to “this Deed Poll”.

2 Nature of Deed Poll

2.1 Holdco acknowledges that:

(a) this Deed Poll may be relied on and enforced by any Scheme Shareholder, Scheme Lonestar Optionholder or Scheme Non-employee Optionholder in accordance with its terms, even though the Scheme Shareholders, Scheme Lonestar Optionholders and Scheme Non-employee Optionholders are not a party to it; and

(b) under the Schemes, each Scheme Shareholder, Scheme Lonestar Optionholder and Scheme Non-employee Optionholder irrevocably appoints Lonestar and each of the directors and officers of Lonestar (jointly and severally) as its agent and attorney to enforce this Deed Poll against Holdco.

3 Conditions precedent and termination

Conditions precedent

3.1 Holdco’s obligations under clause 4 in relation to a Scheme are subject to that Scheme becoming Effective.

Termination

3.2 Holdco’s obligations under this Deed Poll will automatically terminate and the terms of this Deed Poll will have no further force or effect if:

(a) the Scheme Implementation Agreement is terminated in accordance with its terms prior to the occurrence of the Effective Date for the Schemes; or

(b) the Share Scheme does not become Effective on or before the Sunset Date,

unless Holdco and Lonestar otherwise agree in writing.

3.3 If the Share Scheme becomes Effective but the Option Schemes do not become Effective on or before the Sunset Date, Holdco’s obligations under this Deed Poll will not terminate and the

terms of this Deed Poll will continue to have force such that Holdco will be required to satisfy its obligations in respect of the Share Scheme.

Consequences of termination

3.4 If this Deed Poll is terminated under clause 3.2, then, in addition and without prejudice to any other rights, powers or remedies available:

(a) Holdco is released from its obligations to further perform this Deed Poll, except for any obligations which by their nature survive termination; and

(b) each Scheme Shareholder, Scheme Lonestar Optionholder and Scheme Non-employee Optionholder retains the rights it has against Holdco in respect of any breach of this Deed Poll which occurred before its termination.

4 Provision of Scheme Consideration

4.1 Subject to clause 3, Holdco undertakes to each:

(a) Scheme Shareholder:

(i) to issue to each Scheme Shareholder (or, in accordance with the terms of the Share Scheme, to a nominee appointed by Holdco, on its behalf where such Scheme Shareholder is an Ineligible Foreign Shareholder) the Share Scheme Consideration;

(ii) that the Holdco Shares to be issued to Scheme Shareholders in accordance with the terms of the Share Scheme rank equally in all respects with all other Holdco voting shares on issue as at the Implementation Date; and

(iii) to undertake all other actions attributed to it under, and otherwise comply with its obligations in, the Share Scheme as if it were a party to the Share Scheme,

subject to and in accordance with the provisions of the Share Scheme.

(b) Scheme Lonestar Optionholder:

(i) to issue to each Scheme Lonestar Shareholder the Lonestar Scheme Consideration; and

(ii) to undertake all other actions attributed to it under, and otherwise comply with its obligations in, the Lonestar Option Scheme as if it were a party to the Lonestar Option Scheme,

subject to and in accordance with the provisions of the Lonestar Option Scheme.

(i) to issue to each Scheme Non-employee Optionholder the Non-employee Option Scheme Consideration; and

(ii) to undertake all other actions attributed to it under, and otherwise comply with its obligations in, the Non-employee Option Scheme as if it were a party to the Non-employee Option Scheme,

subject to and in accordance with the provisions of the Non-employee Option Scheme.

5 Representations and warranties

5.1 Holdco represents and warrants that:

(a) it is a corporation validly existing under the laws of the place of its incorporation;

(b) it has the corporate power to enter into and perform its obligations under this Deed Poll and to carry out the transactions contemplated by this Deed Poll;

(c) it has taken all necessary corporate action to authorise the entry into this Deed Poll and has taken or will take all necessary corporate action to authorise the performance of this Deed Poll and to carry out the transactions contemplated by this Deed Poll; and

(d) this Deed Poll is valid and binding upon it and enforceable against it in accordance with its terms.

6 Continuing obligations

6.1 This Deed Poll is irrevocable and, subject to clause 3, remains in full force and effect until the earlier of:

(a) Holdco having fully performed its obligations under this Deed Poll; and

(b) the termination of this Deed Poll under clause 3.2.

7 Notices

7.1 Any notice or other communication given to Holdco under or in connection with this Deed Poll must be:

(a) in legible writing and in English;

(b) addressed to Holdco at the address or fax number set out below:

Attention:		Frank D. Bracken, III
Address:		600 Bailey Avenue, Suite 200, Fort Worth, Texas 76107
Fax:		+1 817 806 5112

(d) sent to Holdco by hand, prepaid post (airmail if to or from a place outside Australia) or fax.

7.2 Without limiting any other means by which a party may be able to prove that a notice has been received by Holdco, a notice will be considered to have been received:

(a) if sent by hand, when left at the address of Holdco;

(b) if sent by pre-paid post, three Business Days (if posted within Australia to an address in Australia) or 10 Business Days (if posted from one country to another) after the date of posting; or

(c) if sent by fax, on receipt by the sender of an acknowledgment or transmission report generated by the sender’s machine indicating that the whole fax was sent to Holdco’s fax number,

but if a notice is served by hand, or is received by Holdco’s fax, on a day that is not a Business Day, or after 5.00 pm (Holdco’s local time) on a Business Day, the notice will be considered to have been received by Holdco at 9.00 am (Holdco’s local time) on the next Business Day.

8 General

Stamp duty

8.1 Holdco:

(a) must pay all stamp duty (if any) and any related fines, penalties and interest in respect of the Schemes and this Deed Poll, the performance of this Deed Poll and each transaction effected by or made under this Deed Poll; and

(b) indemnifies each Scheme Shareholder, Scheme Lonestar Optionholder and Non-employee Optionholder on demand against any liability arising from failure to comply with clause 8.1(a).

Waiver

8.2 Failure to exercise or enforce or a delay in exercising or enforcing or the partial exercise or enforcement of any right, power or remedy provided by law or under this Deed Poll by any party will not in any way preclude, or operate as a waiver of, any exercise or enforcement, or further exercise or enforcement of that or any other right, power or remedy provided by law or under this Deed Poll.

8.3 No waiver of a breach of any term of this Deed Poll will operate as a waiver of another breach of that term or of a breach of any other term of this Deed Poll.

8.4 Nothing in this Deed Poll obliges a party to exercise a right to waive any conditional term of this agreement that may be in its power.

8.5 A provision of or right under this Deed Poll may not be waived except in writing signed by the person granting the waiver.

Variation

8.6 A provision of this Deed Poll may not be varied unless the variation is agreed to in writing by Holdco and Lonestar, and the Court indicates that the variation would not of itself preclude approval of the Schemes. A variation which complies with this clause is effective when Holdco enters into a further deed poll in favour of each Scheme Shareholder, Scheme Lonestar Optionholder and Non-employee Optionholder giving effect to the amendment.

Rights cumulative

8.7 The rights, powers and remedies of Holdco and of each Scheme Shareholder, Scheme Lonestar Optionholder and Scheme Non-employee Optionholder under this Deed Poll are cumulative and do not exclude any other rights, powers or remedies provided by law independently of this Deed Poll.

Assignment

8.8 The rights and obligations of Holdco and of each Scheme Shareholder, Scheme Lonestar Optionholder and Scheme Non-employee Optionholder under this Deed Poll are personal and must not be assigned, encumbered or otherwise dealt with at law or in equity.

Further assurances

8.9 Each party must, at its own expense, whenever requested by the other party, promptly do or, to the extent reasonably practicable, arrange for others to do everything, including executing any documents, reasonably necessary to give full effect to this Deed Poll and the transactions contemplated by this Deed Poll.

Governing law and jurisdiction

8.10 This Deed Poll is governed by the laws of New South Wales.

8.11 Holdco irrevocably and unconditionally submits to the exclusive jurisdiction of the courts of New South Wales.

Execution

Executed as a deed.

Signed by
Lonestar Resources US Inc.
by an authorised officer:



Signature of authorised officer

Name: Frank D. Bracken, III
Title: Chief Executive Officer

Exhibit 3.1

CERTIFICATE OF INCORPORATION

LONESTAR RESOURCES US INC.

ARTICLE 1

The name of the corporation is: Lonestar Resources US Inc. (the “ Corporation ”).

ARTICLE 2

The address of the Corporation’s registered office in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE 3

The purpose of the Corporation is to engage in any lawful act or activity in any part of the world for which corporations may be organized under the General Corporation Law of the State of Delaware.

ARTICLE 4

The aggregate number of shares of all classes of capital stock that the Corporation shall have the authority to issue is fifteen million five thousand (15,005,000) shares, consisting of (i) fifteen million (15,000,000) shares of Class A Voting Common Stock, $0.001 par value per share (the “ Class A Voting Common Stock ”), and (ii) five thousand (5,000) shares of Class B Non-Voting Common Stock, $0.001 par value per share (the “ Class B Non-Voting Common Stock ”). The designations and the powers, preferences, rights, qualifications, limitations and restrictions of the Class A Voting Common Stock and the Class B Non-Voting Common Stock (referred to herein collectively as “Common Stock”) are as follows:

Provisions Relating to the Common Stock.

(a) General . Shares of Common Stock shall have identical rights and privileges in every respect, except as set forth herein.

(b) Voting Rights .

(i) Class A Voting Common Stock . The holders of shares of Class A Voting Common Stock shall be entitled to vote upon matters submitted to a vote of the stockholders of the Corporation and shall be entitled to one vote for each share of Class A Voting Common Stock held.

(ii) Class B Non-Voting Common Stock . Except as required by law, the holders of shares of Class B Non-Voting Common Stock shall not be entitled to vote upon matters submitted to a vote of the stockholders of the Corporation.

(c) Dividends . The holders of shares of Common Stock shall be entitled to receive such dividends (payable in cash, stock or otherwise) as may be declared by the Board of

Directors at any time and from time to time out of any funds of the Corporation legally available therefor, regardless of whether such shares are Class A Voting Common Stock or Class B Non-Voting Common Stock; provided, however, that any dividend upon the Common Stock that is payable in Common Stock shall be paid only in Class A Voting Common Stock to the holders of Class A Voting Common Stock and only in Class B Non-Voting Common Stock to the holders of Class B Non-Voting Common Stock.

(d) Liquidation and Dissolution . In the event of any voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the holders of shares of Common Stock shall be entitled to receive all of the remaining assets of the Corporation available for distribution to its stockholders, ratably in proportion to the number of shares of Common Stock held by them, regardless of whether such shares are Class A Voting Common Stock or Class B Non-Voting Common Stock. A liquidation, dissolution or winding up of the Corporation, as such terms are used in this paragraph (d), shall not be deemed to be occasioned by or to include any consolidation or merger of the Corporation with or into any other corporation or corporations or other entity or entities or a sale, lease, exchange or conveyance of all or part of the assets of the Corporation.

ARTICLE 5

The name and mailing address of the sole incorporator are as follows:

Name	Mailing Address

Elizabeth Graffeo	Baker & McKenzie LLP
	815 Connecticut Avenue NW
	Washington, DC 20006

ARTICLE 6

The name and mailing address of each person who is to serve as a director of the Corporation until the first annual meeting of the stockholders or until their successors are elected and qualified are as follows:

Name	Mailing Address

Frank D. Bracken, III	Lonestar Resources, Inc.
	600 Bailey Avenue, Suite 200
	Fort Worth, TX 76107

Bernard Lambilliotte	Lonestar Resources, Inc.
	600 Bailey Avenue, Suite 200
	Fort Worth, TX 76107

Daniel R. Lockwood	Lonestar Resources, Inc.
	600 Bailey Avenue, Suite 200
	Fort Worth, TX 76107

John Pinkerton	Lonestar Resources, Inc.
	600 Bailey Avenue, Suite 200
	Fort Worth, TX 76107

Dr. Christopher Rowland	Lonestar Resources, Inc.
	600 Bailey Avenue, Suite 200
	Fort Worth, TX 76107

Robert Scott	Lonestar Resources, Inc.
	600 Bailey Avenue, Suite 200
	Fort Worth, TX 76107

Mitchell Wells	Lonestar Resources, Inc.
	600 Bailey Avenue, Suite 200
	Fort Worth, TX 76107

Each director shall have one vote provided, however, if no majority can be obtained within the board of directors on a particular issue or resolution, then the chairman of the board of directors shall have a second vote.

ARTICLE 7

Meetings of stockholders may be held within or outside the State of Delaware, as the Bylaws of the Corporation may provide. The books of the Corporation may be kept outside the State of Delaware at such place or places as may be designated from time to time by the Board of Directors or in the Bylaws of the Corporation. Elections of directors need not be by written ballot unless the Bylaws of the Corporation so provide.

ARTICLE 8

In furtherance and not in limitation of the powers conferred by statute, the Board of Directors shall have the power, both before and after receipt of any payment for any of the Corporation’s capital stock, to adopt, amend, repeal or otherwise alter the Bylaws of the Corporation; provided , however , that the grant of such power to the Board of Directors shall not divest the stockholders of or limit their power to adopt, amend, alter, change or repeal the Bylaws of the Corporation.

ARTICLE 9

No director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director, except to the extent such exemption from liability or limitation thereof is not permitted under the General Corporation Law of the State of Delaware as the same exists or may hereafter be amended. Any repeal or modification of the foregoing sentence shall not adversely affect any right or protection of a director of the Corporation with respect to any acts or omissions of such director occurring prior to such repeal or modification.

ARTICLE 10

To the fullest extent permitted by applicable law, the Corporation is authorized to indemnify (and advance expenses to) its directors, officers, employees and agents (and any other persons to which the General Corporation Law of the State of Delaware permits the Corporation to provide indemnification) through bylaw provisions, agreements with such persons, vote of stockholders or disinterested directors or otherwise.

ARTICLE 11

The Corporation reserves the right, subject to any express provisions or restrictions in this Certificate of Incorporation or the Bylaws of the Corporation, to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by applicable law, and all rights and powers conferred upon a director or stockholder of the Corporation by this Certificate of Incorporation or any amendment thereof are granted subject to this reservation.

* * *

IN WITNESS WHEREOF, the undersigned, has executed this Certificate of Incorporation this 16th day of December, 2015.

	/s/ ELIZABETH GRAFFEO
	Elizabeth Graffeo, Sole Incorporator

Exhibit 3.2

BYLAWS
OF
LONESTAR RESOURCES US INC.

(the “Corporation”)

Adopted as of December 24, 2015

TABLE OF CONTENTS

		Page

ARTICLE I MEETINGS OF STOCKHOLDERS		1
Section 1.	Annual Meeting	1
Section 2.	Special Meetings	4
Section 3.	Notice of Meetings	4
Section 4.	Quorum	5
Section 5.	Presiding Officers of the Meeting	5
Section 6.	Conduct of Business	5
Section 7.	Proxies and Voting	6
Section 8.	Stock List	6
ARTICLE II BOARD OF DIRECTORS		7
Section 1.	Number, Election and Term of Directors		7
Section 2.	Newly Created Directorships and Vacancies		7
Section 3.	Eligibility for Nomination as a Director		7
Section 4.	Regular Meetings		8
Section 5.	Special Meetings		8
Section 6.	Quorum		8
Section 7.	Participation in Meetings by Conference Telephone		8
Section 8.	Conduct of Business		8
Section 9.	Compensation of Directors		8
ARTICLE III COMMITTEES		9
Section 1.	Committees of the Board of Directors	9
Section 2.	Regular Meetings	9
Section 3.	Special Meetings	9
Section 4.	Quorum	9
Section 5.	Conduct of Business	9
ARTICLE IV OFFICERS		10
Section 1.	Generally	10
Section 2.	Chief Executive Officer	10
Section 3.	Chief Operating Officer	10
Section 4.	Vice President	10
Section 5.	Treasurer	11
Section 6.	Secretary	11
Section 7.	Delegation of Authority	11

TABLE OF CONTENTS

(continued)

		Page

Section 8.	Removal	11
Section 9.	Action with Respect to Securities of Other Corporations	11
ARTICLE V STOCK		11
Section 1.	Certificates of Stock; Uncertificated Shares	11
Section 2.	Transfers of Stock	12
Section 3.	Record Date	12
Section 4.	Lost, Stolen or Destroyed Certificates	12
Section 5.	Regulations	12
ARTICLE VI NOTICES		12
Section 1.	Notices	12
Section 2.	Waivers	13
ARTICLE VII MISCELLANEOUS		13
Section 1.	Facsimile Signatures	13
Section 2.	Corporate Seal	13
Section 3.	Reliance upon Books, Reports and Records	13
Section 4.	Fiscal Year	13
Section 5.	Time Periods	13
Section 6.	Dispute Resolution	13
ARTICLE VIII INDEMNIFICATION OF DIRECTORS AND OFFICERS		14
Section 1.	Right to Indemnification	14
Section 2.	Right to Advancement of Expenses	14
Section 3.	Right of Indemnitee to Bring Suit	15
Section 4.	Non-Exclusivity of Rights	15
Section 5.	Insurance	15
Section 6.	Indemnification of Employees and Agents of the Corporation	15
Section 7.	Nature of Rights	15
ARTICLE IX AMENDMENTS		16

ARTICLE I

MEETINGS OF STOCKHOLDERS

Section 1. Annual Meeting.

(a) An annual meeting of the stockholders, for the election of directors to succeed those whose terms expire and for the transaction of such other business as may properly come before the meeting, shall be held at such place within or without the State of Delaware or solely by means of remote communication pursuant to Section 211(a)(2) of the Delaware General Corporation Law, on such date, and at such time as may be designated by the Board of Directors.

(b) Nominations of persons for election to the Board of Directors and the proposal of business to be transacted by the stockholders may only be made at an annual meeting of stockholders (i) pursuant to the Corporation’s notice and proxy materials for such meeting, (ii) by or at the direction of the Board of Directors, or (iii) by any stockholder of record of the Corporation at the time of the giving of the notice required in Section 1(c) who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 1. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to make nominations or propose business (other than business required to be included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”)) at an annual meeting of stockholders.

(c) For nominations or business to be properly brought before an annual meeting by a stockholder of record pursuant to clause (iii) of Section 1(b), (i) the stockholder of record must have given timely notice thereof in writing to the Secretary of the Corporation, (ii) the stockholder of record must provide to the Secretary of the Corporation any updates or supplements to such notice at the times and in the forms specified in this Section 1, (iii) any such business must be a proper matter for stockholder action under Delaware law, and (iv) the stockholder of record and the beneficial owner or owners, if any, on whose behalf any such proposal or nomination is made, must have acted in accordance with the representations set forth in the Solicitation Statement (as defined in Section 1(d)(iii)(D)). To be timely, a notice by a stockholder of record must be received by the Secretary at the principal executive offices of the Corporation not less than 90 or more than 120 days prior to the one-year anniversary of the date of the preceding year’s annual meeting of stockholders; provided, however, that, subject to the last sentence of this Section 1(c), if the meeting is convened more than 30 days prior to or delayed by more than 60 days after the anniversary of the preceding year’s annual meeting, or if no annual meeting was held in the preceding year, notice by the stockholder of record to be timely must be so received not earlier than the close of business on the 120th day prior to the date of the annual meeting and not later than the close of business on the later of (i) the 90th day before such annual meeting or (ii) if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made. Notwithstanding anything in the preceding sentence to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there has been no public announcement naming all of the nominees for director or indicating the increase in the size of the Board of Directors made by the Corporation at least 10 days before the last day a stockholder of record may deliver a notice of nomination in accordance with the preceding sentence, a notice by a stockholder of record required by this Section 1 shall also be considered timely, but only with respect to nominees for any new positions created by such increase in the number of directors, if it shall be received by the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. In no event shall an adjournment, or postponement of an annual meeting for which notice has been given, commence a new time period for the giving of a notice by a stockholder of record.

(d) Such notice by a stockholder of record shall set forth:

(i) If such notice pertains to the nomination of directors, as to each person whom the stockholder of record proposes to nominate for election or reelection as a director: (A) all information relating to such person as would be required to be disclosed in solicitations of proxies for the election of such nominees as directors pursuant to Regulation 14A under the Exchange Act; (B) such person’s written consent to serve as a director if elected; (C) a description of all direct and indirect compensation or other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder of record and beneficial owner or owners, if any, or other person on whose behalf the nomination is made, and their respective affiliates and associates, or other persons acting in concert therewith, on the one hand, and each proposed nominee and his or her respective affiliates and associates or other persons acting in concert therewith, on the other hand, including without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder of record making the nomination and any beneficial owner or owners, if any, or other person on whose behalf the nomination is made, or any affiliate or associate thereof or other person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (D) a completed and signed questionnaire, representation or agreement as may be required by the Corporation pursuant to Section 3 of Article II of these Bylaws.

(ii) As to any business that the stockholder of record proposes to bring before the meeting: a brief description of such business, the reasons for conducting such business at the meeting, any material interest in such business of such stockholder of record and the beneficial owner or owners, if any, or other persons on whose behalf the proposal is made or acting in concert therewith and a description of all agreements, arrangements and understandings between such stockholder of record and beneficial owner or owners, if any, and any other such person or persons (including their names) in connection with the proposal of such business by such stockholder of record.

(iii) As to (1) the stockholder of record giving the notice and (2) the beneficial owner or owners, if any, or other persons on whose behalf the nomination or proposal is made or acting in concert therewith (each, a “party”):

(A) the name and address of each such party;

(B) (1) the class, series, and number of shares of the Corporation that are owned, directly or indirectly, beneficially and of record by each such party, (2) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or providing for a settlement payment or mechanism based on the price of any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise (a “Derivative Instrument”) directly or indirectly owned beneficially by each such party, and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (3) any proxy, contract, arrangement, understanding or relationship pursuant to which any party, either directly or acting in concert with another person or persons, has a right to vote, directly or indirectly, any shares of any security of the Corporation, (4) any short interest or other borrowing arrangement in any security of the Corporation held by each such party (for purposes of this Section 1(d), a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (5) any rights to dividends on the shares of the Corporation owned beneficially directly or indirectly by each such party that are separated or separable from the underlying shares of the Corporation, (6) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which any party is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (7) any performance-related fees (other than an asset-based fee) that each such party is directly or indirectly entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of each such party’s immediate family sharing the same household

(which information set forth in this paragraph shall be supplemented by such stockholder or such beneficial owner or other person, as the case may be, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date);

(C) any other information relating to each such party that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act (whether or not such party intends to deliver a proxy statement or conduct its own proxy solicitation); and

(D) a statement as to whether or not each such party will deliver a proxy statement and form of proxy to holders of, in the case of a proposal, at least the percentage of voting power of all of the shares of capital stock of the Corporation required under applicable law to approve the proposal or, in the case of a nomination or nominations for election as directors, at least the percentage of voting power of all of the shares of capital stock of the Corporation reasonably believed by the stockholder of record or beneficial owner or owners, as the case may be, to be sufficient to elect the persons proposed to be nominated by the stockholder of record (such statement, a “Solicitation Statement”).

(iv) A stockholder of record providing notice of a nomination of director or other business proposed to be brought before a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 1 shall be true and correct as of the record date for the meeting and as of the date that is 10 business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than five business days prior to the date for the meeting, if practicable (or, if not practicable, on the first practicable date prior to) any adjournment or postponement thereof (in the case of the update and supplement required to be made as of 10 business days prior to the meeting or any adjournment or postponement thereof).

(e) A person shall not be eligible for election or re-election as a director at an annual meeting unless (i) the person is nominated by a stockholder of record in accordance with Section 1(b)(iii); or (ii) the person is nominated by or at the direction of the Board of Directors or a duly authorized committee thereof. Only such business shall be conducted at an annual meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this section. The chair of the meeting shall have the power and the duty to determine whether a nomination or any business proposed to be brought before the meeting has been made in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, to declare that such proposed business or nomination shall not be presented for stockholder action at the meeting and shall be disregarded.

(f) For purposes of these Bylaws, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(g) Notwithstanding the foregoing provisions of this Section 1, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 1. Nothing in this Section 1 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

Section 2. Special Meetings.

(a) Special meetings of the stockholders, other than those required by statute, may only be called by the Board of Directors, the Chairman of the Board or the Chief Executive Officer of the Corporation or by stockholders holding 5% of the then outstanding shares of the Corporation’s Class A Voting Common Stock, at such time and for such purpose as the persons calling such meeting shall see fit. The Board of Directors and, in the absence thereof, the Chairman of the Board or the Chief Executive Officer, may postpone or reschedule any previously scheduled special meeting called by any of them, but not a previously scheduled special meeting called by stockholders holding a 5% of the then outstanding shares of the Corporation’s Class A Voting Common Stock. A special meeting of stockholders shall be held at such place within or without the State of Delaware or solely by means of remote communication pursuant to Section 211(a)(2) of the Delaware General Corporation Law, on such date, and at such time as designated in the notice of such special meeting.

(b) Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting by or at the direction of the Board of Directors or, in the absence thereof, the Chairman of the Board or the Chief Executive Officer. The notice of such special meeting shall include the purpose for which the meeting is called. If a special meeting of stockholders has been called for the purpose of the election of directors, nominations of persons for election to the Board of Directors may be made at such special meeting of stockholders (a) by or at the direction of the Board of Directors or (b) by any stockholder of record who, at the time of giving of notice provided for in this paragraph, shall be entitled to vote at the meeting and nominate persons for election to the Board of Directors pursuant to Section 1(b)(iii), who delivers a written notice to the Secretary setting forth the information set forth in Section 1(d)(i) and 1(d)(iii) of this Article I and who provides to the Secretary of the Corporation any updates as supplements to such notice at the times and in the forms specified in Section 1(d)(iv). Nominations by stockholders of persons for election to the Board of Directors may be made at such a special meeting of stockholders only if such stockholder of record’s notice required by the preceding sentence shall be received by the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. In no event shall an adjournment, or postponement of a special meeting for which notice has been given, commence a new time period for the giving of a stockholder of record’s notice. A person shall not be eligible for election or reelection as a director at a special meeting unless the person is nominated (i) by or at the direction of the Board of Directors or (ii) by a stockholder of record entitled to nominate persons for election or re-election in accordance with the procedures set forth in Section 1(b)(iii).

(c) Notwithstanding the foregoing provisions of this Section 2, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to matters set forth in this Section 2. Nothing in this Section 2 shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

Section 3. Notice of Meetings.

(a) Notice of the place, if any, date, and time of all meetings of the stockholders, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, shall be given, not less than 10 nor more than 60 days before the date on which the meeting is to be held, to each stockholder entitled to vote at such meeting, except as otherwise provided herein or required by law (meaning, here and hereinafter, as required from time to time by the Delaware General Corporation Law or the Certificate of Incorporation of the Corporation).

(b) When a meeting is adjourned to another time or place, notice need not be given of the adjourned meeting if the time and place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than 30 days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, notice of the place, if any, date, and time of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting, shall be given in conformity herewith. If after the adjournment a new record date for stockholders entitled to vote is fixed for the adjourned meeting, the Board of Directors shall fix a new record date for notice of such adjourned meeting, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors and, except as otherwise required by law, shall not be more than 60 nor less than 10 days before the date of such adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record entitled to vote at such adjourned meeting as of the record date fixed for notice of such adjourned meeting. At any adjourned meeting, any business may be transacted which might have been transacted at the original meeting.

Section 4. Quorum.

At any meeting of the stockholders, the holders of a majority of the voting power of all of the shares of the stock entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum for all purposes, unless or except to the extent that the presence of a larger number may be required by law or by the rules of any stock exchange upon which the Corporation’s securities are listed.

Where a separate vote by a class or classes or series is required, a majority of the voting power of the shares of such class or classes or series present in person or represented by proxy shall constitute a quorum entitled to take action with respect to that vote on that matter.

If a quorum shall fail to attend any meeting, the chair of the meeting may adjourn the meeting to another place, if any, date, or time.

Section 5. Presiding Officers of the Meeting.

The Chairman of the Board or, in his or her absence, the Chief Executive Officer of the Corporation or, in his or her absence, such person as may be chosen by the Board of Directors, or if there are not remaining directors serving, such person as may be chosen by the holders of a majority of the voting power of the shares entitled to vote who are present, in person or by proxy, at such meeting shall call to order any meeting of the stockholders and act as chair of the meeting. In the absence of the Secretary of the Corporation, the secretary of the meeting shall be such person as the chair of the meeting appoints.

Section 6. Conduct of Business.

The chair of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the matters to be voted upon by the stockholders, the manner of voting and the conduct of discussion as seem to him or her in order. The chair shall have the power to adjourn the meeting to another place, if any, date and time, if the meeting was called by the Board of Directors, the Chairman of the Board or the Chief Executive Officer of the Corporation, but not if the meeting was called by stockholders holding 5% of the then outstanding shares of the Corporation’s Class A Voting Common Stock. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. No ballots, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors or the chair of the meeting after the closing of the polls unless the Delaware Court of Chancery upon application by a stockholder shall determine otherwise.

Section 7. Proxies and Voting.

(a) At any meeting of the stockholders, every stockholder entitled to vote may vote in person or by proxy authorized by an instrument in writing or by an electronic transmission permitted by law and filed in accordance with the procedure established for the meeting. Any copy, facsimile telecommunication or other reliable reproduction of the writing or electronic transmission authorized pursuant to this paragraph may be substituted or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission.

(b) The Corporation may, and to the extent required by law, shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting may, and to the extent required by law, shall, appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. Every vote taken by ballots shall be counted by a duly appointed inspector or inspectors.

(c) When a quorum is present at any meeting, action on a matter shall be approved as follows: (i) For a proposal other than the election of directors, unless these Bylaws, the Certificate of Incorporation or a specific statutory provision or stock exchange listing standard requires a different vote with respect to such proposal, or the matter has been brought before the meeting by or at the direction of the Board of Directors and the Board by resolution requires a higher vote with respect to such matter, the proposal shall be approved if the votes cast in favor of the matter exceed the votes cast opposing the matter. (ii) In a contested director election in which the number of nominees exceeds the number of directors to be elected, each director shall be elected by the vote of a majority of the shares represented at the meeting and entitled to vote. (iii) In an uncontested director election, each nominee who receives a majority of the votes cast shall be deemed to be elected and if an incumbent director of the Corporation receives less than a majority of the votes cast, such director shall tender his or her resignation to the Board of Directors, whereupon the Board of Directors shall within 90 days after the receipt thereof either (a) accept the resignation of such director, determine a date on which such resignation will take effect within 90 days of the date of such decision and make the effective date of such resignation public by means of a current report on Form 8-K filed with the US Securities and Exchange Commission within four business days thereof, or (b) upon the unanimous vote of the Board of Directors, decline to accept such resignation and, not later than four business days thereof, make public, together with a discussion of the analysis used in reaching the conclusion, the specific reasons that the Board of Directors chose not to accept the resignation and the decision was in the best interest of the Corporation and its stockholders. The provisions of this Section 7(c) will govern with respect to all votes of stockholders except as otherwise provided for in these Bylaws or in the Certificate of Incorporation or by some specific statutory provision, regulation or rule superseding the provisions contained in these Bylaws or the Certificate of Incorporation.

Section 8. Stock List.

A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order for each class of stock and showing the address of each such stockholder and the number of shares registered in his or her name, shall be open to the examination of any such stockholder for a period of at least 10 days prior to the meeting in the manner provided by law. The stock list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law. This list shall presumptively determine the identity of the stockholders entitled to examine such stock list and to vote at the meeting and the number of shares held by each of them.

ARTICLE II

BOARD OF DIRECTORS

Section 1. Number, Election and Term of Directors.

The Board of Directors shall consist of one or more members, which number shall be fixed from time to time by action of the Board of Directors or the stockholders. Except as provided in Section 2 of this Article II, the directors shall be elected at the annual meeting of stockholders. Each director shall hold office until such director’s successor is duly elected and qualified or until such director’s earlier death, resignation or removal as hereinafter provided. Elections of directors need not be by written ballot unless the Board of Directors votes to require a written ballot. If the election is to be by written ballot, then, if the Board of Directors authorizes it, a ballot submitted by electronic transmission may satisfy the requirement of a written ballot. Any such electronic transmission must either set forth or be submitted with information from which the Corporation can determine that it was authorized by the stockholder or proxyholder. The directors shall be elected by a majority of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote in the election of directors.

Section 2. Newly Created Directorships and Vacancies.

Newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall, unless otherwise required by law or by resolution of the Board of Directors, be filled only by a majority vote of the directors then in office, whether or not such directors number less than a quorum (and not by stockholders), and directors so chosen shall serve for a term expiring at the next annual meeting of stockholders or until such director’s successor shall have been duly elected and qualified. No decrease in the number of authorized directors shall shorten the term of any incumbent director.

Section 3. Eligibility for Nomination as a Director.

To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Sections 1 and 2 of Article I of these Bylaws or such period as the Board of Directors may specify) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which form of questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed in writing to the Corporation or (2) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

Section 4. Regular Meetings.

Regular meetings of the Board of Directors shall be held without notice at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors. A notice of each regular meeting shall not be required.

Section 5. Special Meetings.

Special meetings of the Board of Directors may be called by the Chairman of the Board, the Chief Executive Officer, or, if requested in writing by two directors, by the Secretary and shall be held at such place, on such date, and at such time as they, or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director by whom it is not waived by mail or personal delivery or by telephone or by telegraphing or telexing or by facsimile or electronic transmission of the same not less than 24 hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

Section 6. Quorum.

At any meeting of the Board of Directors, a majority of the directors then in office present in person, by telephone or by other electronic communications shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

Section 7. Participation in Meetings By Conference Telephone.

Members of the Board of Directors, or of any committee thereof, may participate in a meeting of such Board of Directors or committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can speak and hear each other and such participation shall constitute presence in person at such meeting.

Section 8. Conduct of Business.

At any meeting of the Board of Directors, business shall be transacted in such order and manner as the Chairman of the Board, or in his or her absence, such chair of the meeting as the members of the Board of Directors present may elect, and such other business may thereafter be transacted in such order and manner as the Board of Directors may from time to time determine by vote of the majority of directors present, and all matters shall be determined by the vote of a majority of the directors present, except as otherwise provided herein or required by law. Each director shall have one vote provided, however, if no majority can be obtained within the board of directors on a particular issue or resolution, then the chairman of the board of directors shall have a second vote. Action may be taken by the Board of Directors without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 9. Compensation of Directors.

Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors or a duly authorized committee thereof shall have the authority to fix the compensation of the directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or paid a stated salary or paid other compensation as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed compensation for attending committee meetings.

ARTICLE III

COMMITTEES

Section 1. Committees of the Board of Directors.

The Board of Directors may from time to time designate committees of the Board of Directors, with such lawfully delegable powers and duties as it thereby confers, to serve at the pleasure of the Board of Directors and shall, for those committees and any others provided for herein, elect the director or directors to serve as the member or members of each such committee, designating the chair of each such committee and, if it desires, other directors as alternate members who may replace any absent or disqualified member at any meeting of each such committee. In the absence or disqualification of any member of any committee and any alternate member in his or her place, the member or members of the committee present at the meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may by unanimous vote appoint another member of the Board of Directors to act at the meeting in the place of the absent or disqualified member. The Board of Directors shall adopt a written charter for each standing committee designated, addressing its purpose, responsibilities, powers, authority and any other matter required by law.

Section 2. Regular Meetings.

Regular meetings of standing committees of the Board of Directors shall be held with or without notice at such place or places, on such date or dates, and at such time or times as shall have been established by the Board of Directors or such committee.

Section 3. Special Meetings.

Special meetings of committees of the Board of Directors may be called by the chair of such committee, the Board of Directors or, if requested in writing by two members of such committee, then by the Secretary, and shall be held at such place, on such date, and at such time as they or he or she shall fix. Notice of the place, date, and time of each such special meeting shall be given to each director by whom it is not waived by mail or personal delivery or by telephone or by telegraphing or telexing or by facsimile or electronic transmission of the same not less than 24 hours before the meeting. Unless otherwise indicated in the notice thereof, any and all business may be transacted at a special meeting.

Section 4. Quorum.

At any meeting of a committee of the Board of Directors, a majority of the members of such committee then in office present in person, by telephone or by other electronic communications shall constitute a quorum for all purposes. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date, or time, without further notice or waiver thereof.

Section 5. Conduct of Business.

At any meeting of a committee of the Board of Directors, business shall be transacted in such order and manner as the chair of such committee, or in his or her absence, such chair of the meeting as the members of such committee present may elect, and such other business may thereafter be transacted in such order and manner as such committee may from time to time determine by vote of the majority of members present, and all matters shall be determined by the vote of a majority of the members present, except as otherwise provided herein or required by law. Action may be taken by a committee of the Board of Directors without a meeting if all members thereof consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of such committee of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

ARTICLE IV

OFFICERS

Section 1. Generally.

The officers of the Corporation shall consist of a Chief Executive Officer, a Chief Operating Officer, a Chief Financial Officer, one or more Vice Presidents, a Secretary and a Treasurer and such other officers as may from time to time be appointed by the Board of Directors or by a duly authorized committee thereof. Officers shall be appointed by the Board of Directors, which shall consider that subject at its first meeting after every annual meeting of stockholders. Each officer shall hold office until his or her successor is appointed and qualified or until his or her earlier resignation or removal. Any number of offices may be held by the same person. The salaries of officers appointed by the Board of Directors or by a duly authorized committee thereof shall be fixed from time to time by the Board of Directors or by such officers as may be designated by resolution of the Board of Directors.

Section 2. Chief Executive Officer.

Subject to the provisions of these Bylaws and to the direction of the Board of Directors, the Chief Executive Officer shall have the responsibility for the general management and control of the business and affairs of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of chief executive or which are delegated to him or her by the Board of Directors. He or she shall have power to sign all stock certificates, contracts, bonds, mortgages and other instruments of the Corporation and shall have general supervision and direction of all of the other officers, employees and agents of the Corporation, subject in all cases to the orders and resolutions of the Board of Directors.

Section 3. Chief Operating Officer.

The Chief Operating Officer shall be the chief operating and administrative officer of the Corporation. He or she shall have general responsibility for the management and control of the operations and administration of the Corporation and shall perform all duties and have all powers which are commonly incident to the office of the Chief Operating Officer or which are delegated to him or her by the Board of Directors. Subject to the direction of the Board of Directors and the Chief Executive Officer, the Chief Operating Officer shall have power to sign all stock certificates, contracts, bonds, mortgages and other instruments of the Corporation and shall have general supervision and direction of all of the other officers (other than the Chief Executive Officer), employees and agents of the Corporation, subject in all cases to the orders and resolutions of the Board of Directors and to the direction of the Chief Executive Officer.

Section 4. Chief Financial Officer.

The Chief Financial Officer shall be the chief officer of the financial planning and record-keeping for the Corporation, including overseeing the implementation of controls to obtain information from the directors and executive officers with respect to information required by auditors. He or she shall have general responsibility for the management of the financial risks of the company and shall perform all duties and have all powers which are commonly incident to the office of the Chief Financial Officer or which are delegated to him or her by the Board of directors, the Chief Executive Officer or the Chief Operating Officer.

Section 5. Vice President.

Each Vice President shall have such powers and duties as may be delegated to him or her by the Board of Directors. One Vice President shall be designated by the Board of Directors to perform the duties and exercise the powers of the Chief Operating Officer in the event of the Chief Operating Officer’s absence or disability.

Section 6. Treasurer.

The Treasurer shall have the responsibility for maintaining the financial records of the Corporation subject to the direction of the Chief Financial Officer. He or she shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions and of the financial condition of the Corporation. The Treasurer shall also perform such other duties as the Board of Directors and the Chief Financial Officer may from time to time prescribe.

Section 7. Secretary.

The Secretary shall issue all authorized notices for, and shall keep minutes of all meetings of the stockholders and the Board of Directors. He or she shall have charge of the corporate books and shall perform such other duties as the Board of Directors, the Chief Executive Officer and the Chief Operating Officer may from time to time prescribe.

Section 8. Delegation of Authority.

The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

Section 9. Removal.

Any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.

Section 10. Action with Respect to Securities of Other Corporations.

Unless otherwise directed by the Board of Directors, the Chief Executive Officer, the Chief Operating Officer or any officer of the Corporation authorized by the Chief Operating Officer shall have power to vote and otherwise act on behalf of the Corporation, in person or by proxy, at any meeting of stockholders of or with respect to any action of stockholders of any other corporation in which this Corporation may hold securities and otherwise to exercise any and all rights and powers which this Corporation may possess by reason of its ownership of securities in such other corporation.

ARTICLE V

STOCK

Section 1. Certificates of Stock; Uncertificated Shares.

The shares of stock at the Corporation shall be represented by certificates, provided that the Board may provide, by resolution, that some or all classes or series of its stock may be uncertificated shares. Each holder of stock represented by certificates, shall be entitled to a certificate signed by, or in the name of the Corporation by, the President or any Vice President, and by the Secretary, an Assistant Secretary, the Treasurer or an Assistant Treasurer, certifying the number of shares owned by him or her. Any or all of the signatures on the certificate may be by facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, such certificate may nonetheless be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

Section 2. Transfers of Stock.

Transfers of stock shall be made only upon the transfer books of the Corporation kept at an office of the Corporation or by transfer agents designated to transfer shares of the stock of the Corporation. Except where a certificate is issued in accordance with Section 4 of Article V of these Bylaws, an outstanding certificate for the number of shares involved, if one has been issued, shall be surrendered for cancellation before a new certificate, if any, is issued therefor.

Section 3. Record Date.

(a) In order that the Corporation may determine the stockholders entitled to notice of and/or to vote at any meeting of stockholders, or to receive payment of any dividend or other distribution or allotment of any rights or to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may, except as otherwise required by law, fix a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which record date shall not be more than 60 nor less than 10 days before the date of any meeting of stockholders, nor more than 60 days prior to the time for such other action as hereinbefore described; provided, however, that if no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of and/or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held, and, for determining stockholders entitled to receive payment of any dividend or other distribution or allotment of rights or to exercise any rights of change, conversion or exchange of stock or for any other purpose, the record date shall be at the close of business on the day on which the Board of Directors adopts a resolution relating thereto.

(b) A determination of stockholders of record entitled to notice of and/or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

Section 4. Lost, Stolen or Destroyed Certificates.

In the event of the loss, theft or destruction of any certificate of stock, another may be issued in its place pursuant to such regulations as the Board of Directors may establish concerning proof of such loss, theft or destruction and concerning the giving of a satisfactory bond or bonds of indemnity.

Section 5. Regulations.

The issue, transfer, conversion and registration of certificates of stock shall be governed by such other regulations as the Board of Directors may establish.

ARTICLE VI

NOTICES

Section 1. Notices.

If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the Delaware General Corporation Law.

Section 2. Waivers.

A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver. Attendance at any meeting shall constitute waiver of notice except attendance for the express purpose of objecting, at the beginning of the meeting, to the transaction of business because the meeting is not lawfully called or convened.

ARTICLE VII

MISCELLANEOUS

Section 1. Facsimile Signatures.

In addition to the provisions for use of facsimile signatures elsewhere specifically authorized in these Bylaws, facsimile signatures of any officer or officers of the Corporation may be used whenever and as authorized by the Board of Directors or a committee thereof.

Section 2. Corporate Seal.

The Board of Directors may provide a suitable seal, containing the name of the Corporation, which seal shall be in the charge of the Secretary. If and when so directed by the Board of Directors or a committee thereof, duplicates of the seal may be kept and used by the Treasurer or by an Assistant Secretary or Assistant Treasurer.

Section 3. Reliance upon Books, Reports and Records.

Each director, each member of any committee designated by the Board of Directors, and each officer of the Corporation shall, in the performance of his or her duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of its officers or employees, or committees of the Board of Directors so designated, or by any other person as to matters which such director or committee member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

Section 4. Fiscal Year.

The fiscal year of the Corporation shall be as fixed by the Board of Directors.

Section 5. Time Periods.

In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

Section 6. Dispute Resolution.

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of the Corporation to the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to the Delaware General Corporation Law or the Company’s Certificate of Incorporation or Bylaws, and (d) any action asserting a

claim governed by the internal affairs doctrine of the State of Delaware; provided, however, that, in the event that the Court of Chancery of the State of Delaware lacks jurisdiction over any such action or proceeding, the sole and exclusive forum for such action or proceeding shall be another state or federal court located within the State of Delaware. Failure to enforce the foregoing provisions would cause the Corporation irreparable harm, and the Corporation shall be entitled to equitable relief, including injunctive relief and specific performance, to enforce the foregoing provisions. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article. Further, the Court of Chancery of the State of Delaware shall have exclusive jurisdiction to determine any dispute, claim or action brought against the Corporation by any current or former director, officer or other person entitled or purported to be entitled to indemnification from the Corporation by reason of the fact that he or she (or a person for whom he or she is a representative) is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation in any position or capacity for any other corporation, partnership, joint venture, trust employee benefit plan or other enterprise, whether pursuant to the Corporation’s Certificate of Incorporation, these Bylaws or contractual agreement, with respect to any claims thereunder.

ARTICLE VIII

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 1. Right to Indemnification.

Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she (or a person for whom he or she is a representative) is or was a director or an officer of the Corporation or is or was serving at the request of the Corporation in any position or capacity for any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise (hereinafter an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity or in any other capacity shall be indemnified and held harmless by the Corporation to the fullest extent permitted by Delaware law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid in settlement) incurred or suffered by such indemnitee in connection therewith; provided, however, that, except as provided in Section 3 of this Article VIII with respect to proceedings to enforce rights to indemnification, the Corporation shall indemnify any such indemnitee in connection with a proceeding (or part thereof) initiated by such indemnitee only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation..

Section 2. Right to Advancement of Expenses.

In addition to the right to indemnification conferred in Section 1 of this Article VIII, the Corporation shall, to the fullest extent not prohibited by applicable law, pay the expenses (including attorney’s fees) incurred by an indemnitee in defending any such proceeding in advance of its final disposition (hereinafter an “advancement of expenses”); provided, however, that, if the Delaware General Corporation Law requires, an advancement of expenses incurred by an indemnitee in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this Section 2 or otherwise.

Section 3. Right of Indemnitee to Bring Suit.

If a claim under Section 1 or 2 of this Article VIII is not paid in full by the Corporation within 60 days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be 20 days, the indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. Any such suit must be brought in accordance with the provisions of Section 6 of Article VII of these Bylaws. To the fullest extent permitted by law, if successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (i) any suit brought by the indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (ii) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the indemnitee has not met any applicable standard for indemnification set forth in the Delaware General Corporation Law. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the indemnitee is proper in the circumstances because the indemnitee has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel, or its stockholders) that the indemnitee has not met such applicable standard of conduct, shall create a presumption that the indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the indemnitee, be a defense to such suit. In any suit brought by the indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VIII or otherwise shall be on the Corporation.

Section 4. Non-Exclusivity of Rights.

The rights to indemnification and to the advancement of expenses conferred in this Article VIII shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, the Corporation’s Certificate of Incorporation, Bylaws, agreement, vote of stockholders or directors, or otherwise.

Section 5. Insurance.

The Corporation may maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

Section 6. Indemnification of Employees and Agents of the Corporation.

The Corporation may, to the extent authorized from time to time by the Board of Directors or a duly authorized committee thereof, grant rights to indemnification and to the advancement of expenses to any employee or agent of the Corporation to the fullest extent of the provisions of this Article with respect to the indemnification and advancement of expenses of directors and officers of the Corporation.

Section 7. Nature of Rights.

The rights conferred upon indemnitees in this Article VIII shall be contract rights and such rights shall continue as to an indemnitee who has ceased to be a director, officer or agent of the Corporation or

who has ceased serving at the request of the Corporation in any position or capacity for any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise and shall inure to the benefit of the indemnitee’s heirs, executors and administrators. Any amendment, alteration or repeal of this Article VIII that adversely affects any right of an indemnitee or his or her successors shall be prospective only and shall not limit, eliminate or impair any such right with respect to any proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment or repeal.

ARTICLE IX

AMENDMENTS

In furtherance and not in limitation of the powers conferred by law, the Board of Directors is expressly authorized to adopt, amend and repeal these Bylaws subject to the power of the holders of capital stock of the Corporation to adopt, amend or repeal the Bylaws; provided, however, that, with respect to the power of holders of capital stock to adopt, amend and repeal Bylaws of the Corporation, notwithstanding any other provision of these Bylaws or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the capital stock of the Corporation required by law, these Bylaws or the Certificate of Incorporation, the affirmative vote of the holders of 66 ⅔% of the voting power of all of the then-outstanding shares entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of these Bylaws.

Exhibit 4.1

Execution Version

LONESTAR RESOURCES AMERICA INC.

AND EACH OF THE GUARANTORS PARTY HERETO

8.750% SENIOR NOTES DUE 2019

INDENTURE

Dated as of April 4, 2014

WELLS FARGO BANK, NATIONAL ASSOCIATION

TRUSTEE

TABLE OF CONTENTS

		Page

	ARTICLE 1
	DEFINITIONS AND INCORPORATION
	BY REFERENCE
Section 1.01	Definitions	1
Section 1.02	Other Definitions	29
Section 1.03	Incorporation by Reference of Trust Indenture Act	30
Section 1.04	Rules of Construction	30

	ARTICLE 2
	THE NOTES

Section 2.01	Form and Dating	31
Section 2.02	Execution and Authentication	32
Section 2.03	Registrar and Paying Agent	33
Section 2.04	Paying Agent to Hold Money in Trust	33
Section 2.05	Holder Lists	33
Section 2.06	Transfer and Exchange	33
Section 2.07	Replacement Notes	44
Section 2.08	Outstanding Notes	44
Section 2.09	Treasury Notes	45
Section 2.10	Temporary Notes	45
Section 2.11	Cancellation	45
Section 2.12	Defaulted Interest	45
Section 2.13	CUSIP/ISIN Numbers	46

	ARTICLE 3
	REDEMPTION AND PREPAYMENT

Section 3.01	Notices to Trustee	46
Section 3.02	Selection of Notes to Be Redeemed or Purchased	46
Section 3.03	Notice of Redemption	47
Section 3.04	Effect of Notice of Redemption	47
Section 3.05	Deposit of Redemption or Purchase Price	48
Section 3.06	Notes Redeemed or Purchased in Part	48
Section 3.07	Optional Redemption	48
Section 3.08	Open Market Purchases; Mandatory Redemption	49
Section 3.09	Offer to Purchase by Application of Excess Proceeds	49

	ARTICLE 4
	COVENANTS

Section 4.01	Payment of Notes	51
Section 4.02	Maintenance of Office or Agency	51
Section 4.03	Reports	52
Section 4.04	Compliance Certificate	53
Section 4.05	Taxes	53
Section 4.06	Stay, Extension and Usury Laws	54
Section 4.07	Restricted Payments	54
Section 4.08	Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries	58
Section 4.09	Incurrence of Indebtedness and Issuance of Preferred Stock	60

		Page

Section 4.10	Asset Sales	64
Section 4.11	Transactions with Affiliates	66
Section 4.12	Liens	68
Section 4.13	Business Activities	68
Section 4.14	Corporate Existence	68
Section 4.15	Offer to Repurchase Upon Change of Control	69
Section 4.16	Limitation on Sale and Leaseback Transactions	70
Section 4.17	Payments for Consent	71
Section 4.18	Additional Note Guarantees	71
Section 4.19	Designation of Restricted and Unrestricted Subsidiaries	71
Section 4.20	Covenant Suspension	72

	ARTICLE 5
	SUCCESSORS

Section 5.01	Merger, Consolidation or Sale of Assets	72

	ARTICLE 6
	DEFAULTS AND REMEDIES

Section 6.01	Events of Default	74
Section 6.02	Acceleration	75
Section 6.03	Other Remedies	76
Section 6.04	Waiver of Past Defaults	76
Section 6.05	Control by Majority	76
Section 6.06	Limitation on Suits	76
Section 6.07	Rights of Holders of Notes to Receive Payment	77
Section 6.08	Collection Suit by Trustee	77
Section 6.09	Trustee May File Proofs of Claim	77
Section 6.10	Priorities	77
Section 6.11	Undertaking for Costs	78

	ARTICLE 7
	TRUSTEE

Section 7.01	Duties of Trustee	78
Section 7.02	Rights of Trustee	79
Section 7.03	Individual Rights of Trustee	80
Section 7.04	Trustee’s Disclaimer	80
Section 7.05	Notice of Defaults	80
Section 7.06	Reports by Trustee to Holders of the Notes	80
Section 7.07	Compensation and Indemnity	80
Section 7.08	Replacement of Trustee	81
Section 7.09	Successor Trustee by Merger, etc.	82
Section 7.10	Eligibility; Disqualification	82
Section 7.11	Preferential Collection of Claims Against Company	82

	ARTICLE 8
	LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01	Option to Effect Legal Defeasance or Covenant Defeasance	83
Section 8.02	Legal Defeasance and Discharge	83
Section 8.03	Covenant Defeasance	83
Section 8.04	Conditions to Legal or Covenant Defeasance	84

			Page

Section 8.05		Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions	85
Section 8.06		Repayment to Company	85
Section 8.07		Reinstatement	86

		ARTICLE 9
		AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01		Without Consent of Holders of Notes	86
Section 9.02		With Consent of Holders of Notes	87
Section 9.03		Revocation and Effect of Consents	89
Section 9.04		Notation on or Exchange of Notes	89
Section 9.05		Trustee to Sign Amendments, etc.	89

		ARTICLE 10.
		NOTE GUARANTEES

Section 10.01.		Guarantee	89
Section 10.02.		Limitation on Guarantor Liability	90
Section 10.03.		Execution and Delivery of Note Guarantee	90
Section 10.04.		Guarantors May Consolidate, etc., on Certain Terms	91
Section 10.05.		Releases	92

		ARTICLE 11
		SATISFACTION AND DISCHARGE

Section 11.01		Satisfaction and Discharge	92
Section 11.02		Application of Trust Money	93

		ARTICLE 12
		MISCELLANEOUS

Section 12.01		Trust Indenture Act Controls	94
Section 12.02		Notices	94
Section 12.03		Communication by Holders of Notes with Other Holders of Notes	95
Section 12.04		Certificate and Opinion as to Conditions Precedent	95
Section 12.05		Statements Required in Certificate or Opinion	95
Section 12.06		Rules by Trustee and Agents	96
Section 12.07		No Personal Liability of Directors, Officers, Employees and Stockholders	96
Section 12.08		Governing Law	96
Section 12.09		No Adverse Interpretation of Other Agreements	96
Section 12.10		Successors	96
Section 12.11		Severability	96
Section 12.12		Counterpart Originals	96
Section 12.13		Table of Contents, Headings, etc.	97

		EXHIBITS

Exhibit A1	FORM OF NOTE
Exhibit A2	FORM OF REGULATION S TEMPORARY GLOBAL NOTE
Exhibit B	FORM OF CERTIFICATE OF TRANSFER
Exhibit C	FORM OF CERTIFICATE OF EXCHANGE
Exhibit D	FORM OF NOTATION OF GUARANTEE
Exhibit E	FORM OF CERTIFICATE OF ACQUIRING ACCREDITED INVESTOR
Exhibit F	FORM OF SUPPLEMENTAL INDENTURE

iii

INDENTURE dated as of April 4, 2014 among Lonestar Resources America Inc., a Delaware corporation (together with its successors, the “ Company ”), the Guarantors (as defined below) and Wells Fargo Bank, National Association, as trustee.

The Company, the Guarantors and the Trustee agree as follows for the benefit of each other and for the equal and ratable benefit of the Holders (as defined below) of the 8.750% Senior Notes due 2019 (the “ Notes ”):

ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE

Section 1.01 Definitions.

“144A Global Note” means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of, and registered in the name of, the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold in reliance on Rule 144A.

“Accredited Investor” means an “accredited investor” as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act, who are not also QIBs.

“Acquired Debt” means, with respect to any specified Person:

(1) Indebtedness of any other Person existing at the time such other Person is merged with or into or became a Subsidiary of such specified Person, whether or not such Indebtedness is incurred in connection with, or in contemplation of, such other Person merging with or into, or becoming a Restricted Subsidiary of, such specified Person; and

(2) Indebtedness secured by a Lien encumbering any asset acquired by such specified Person.

“ Additional Notes ” means the additional Notes (other than the Initial Notes) issued under this Indenture in accordance with Sections 2.02 and 4.09 hereof, as part of the same series as the Initial Notes.

“ Adjusted Consolidated Net Tangible Assets ” means, as of any date of determination, without duplication:

(a) the sum of:

(i) the discounted future net revenues from proved oil and natural gas reserves of the Company and its Restricted Subsidiaries calculated in accordance with SEC guidelines (before any state or federal income taxes) as estimated in a reserve report prepared or audited by independent petroleum engineers as of the end of the Company’s most recently completed fiscal year, as increased by , as of the date of determination, the discounted future net revenues from:

(A) estimated proved oil and natural gas reserves of the Company and its Restricted Subsidiaries acquired since the date of such year-end reserve report, and

(B) estimated proved oil and natural gas reserves of the Company and its Restricted Subsidiaries attributable to extensions, discoveries and other additions and upward revisions of estimates of proved oil and natural gas reserves (including previously estimated development costs incurred during the period and the accretion of discount since the prior period end) since the date of such year-end reserve report due to exploration, development or exploitation, production or other activities which would, in accordance with standard industry practice, cause such revisions,

and decreased by , as of the date of determination, the discounted future net revenue attributable to:

(C) estimated proved oil and natural gas reserves of the Company and its Restricted Subsidiaries reflected in such reserve report produced or disposed of since the date of such year-end reserve report, and

(D) reductions in estimated proved oil and natural gas reserves of the Company and its Restricted Subsidiaries reflected in such reserve report attributable to downward revisions of estimates of proved oil and natural gas reserves since such year-end due to changes in geological conditions or other factors which would, in accordance with standard industry practice, cause such revisions;

in the case of the preceding clauses (A) through (D), calculated on a pre-tax basis in accordance with SEC guidelines (utilizing the prices utilized in such year-end reserve report) by the Company’s petroleum engineers or any independent petroleum engineers engaged by the Company for such purpose;

(ii) the capitalized costs that are attributable to Oil and Gas Properties of the Company and its Restricted Subsidiaries to which no proved oil and natural gas reserves are attributable, based on the Company’s books and records as of a date no earlier than the last day of the Company’s most recent quarterly or annual period for which internal financial statements are available,

(iii) the Consolidated Net Working Capital of the Company and its Restricted Subsidiaries as of a date no earlier than the last day of the Company’s most recent quarterly or annual period for which internal financial statements are available; and

(iv) the greater of:

(A) the net book value and

(B) the appraised value, as estimated by independent appraisers, of other tangible assets (including Investments in unconsolidated Subsidiaries)

in each case, of the Company and its Restricted Subsidiaries as of a date no earlier than the last day of the Company’s most recent quarterly or annual period for which internal financial statements are available; provided that if no such appraisal has been performed, the Company will not be required to obtain such an appraisal and only clause (iv)(A) of this definition will apply,

minus , to the extent not otherwise taken into account in the immediately preceding clause (a),

(b) the sum of

(i) minority interests;

(ii) to the extent not otherwise taken into account in determining Adjusted Consolidated Net Tangible Assets, any net gas balancing liabilities of the Company and its Restricted Subsidiaries as of the last day of the Company’s most recent annual or quarterly period for which internal financial statements are available;

(iii) to the extent included in clause (a)(i) above, the discounted future net revenues, calculated on a pre-tax basis in accordance with SEC guidelines (utilizing the prices utilized in the Company’s year-end reserve report) by the Company’s petroleum engineers or any independent petroleum engineer engaged by the Company for such purpose, attributable to reserves that are required to be delivered to third parties to fully satisfy the obligations of the Company and its Restricted Subsidiaries with respect to Volumetric Production Payments on the schedules specified with respect thereto; and

(iv) the discounted future net revenues, calculated on a pre-tax basis in accordance with SEC guidelines, attributable to reserves subject to Dollar-Denominated Production Payments that, based on the estimates of production and price assumptions included in determining the discounted future net revenues specified in (a)(i) above, would be necessary to fully satisfy the payment obligations of the Company and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments on the schedules specified with respect thereto.

If the Company changes its method of accounting from the successful efforts method to the full costs method or a similar method of accounting, “Adjusted Consolidated Net Tangible Assets” will continue to be calculated as if the Company were still using the successful efforts method of accounting.

“ Adjusted Reserve Value ” means, as of any date of determination, without duplication:

(a) the discounted future net revenues from proved oil, natural gas liquids and natural gas reserves of the Company and its Restricted Subsidiaries calculated in accordance with SEC guidelines (before any state or federal income taxes) as estimated in the most recent reserve report prepared or audited by the Company’s independent petroleum engineers, as increased by , as of the date of determination, the discounted future net revenues from:

(i) estimated proved oil, natural gas liquids and natural gas reserves of the Company and its Restricted Subsidiaries acquired since the date of such reserve report, and

(ii) estimated proved oil, natural gas liquids and natural gas reserves of the Company and its Restricted Subsidiaries attributable to extensions, discoveries and other additions and upward revisions of estimates of proved oil, natural gas liquids and natural gas reserves (including previously estimated development costs incurred during the period and the accretion of discount since the prior period end) since the date of such reserve report due to exploration, development or exploitation, production or other

activities which would, in accordance with standard industry practice, cause such revisions,

and decreased by , as of the date of determination, the discounted future net revenue attributable to:

(iii) estimated proved oil, natural gas liquids and natural gas reserves of the Company and its Restricted Subsidiaries reflected in such reserve report produced or disposed of since the date of such reserve report, and

(iv) reductions in estimated proved oil, natural gas liquids and natural gas reserves of the Company and its Restricted Subsidiaries reflected in such reserve report attributable to downward revisions of estimates of proved oil, natural gas liquids and natural gas reserves since the date of such report due to changes in geological conditions or other factors which would, in accordance with standard industry practice, cause such revisions;

in the case of the preceding clauses (i) through (iv), calculated on a pre-tax basis in accordance with SEC guidelines by the Company’s petroleum engineers;

minus , to the extent not otherwise taken into account in the immediately preceding clause (a),

(b) the sum of:

(i) to the extent included in clause (a) above, the discounted future net revenues, calculated on a pre-tax basis in accordance with SEC guidelines by the Company’s petroleum engineers or any independent petroleum engineer engaged by the Company for such purpose, attributable to reserves that are required to be delivered to third parties to fully satisfy the obligations of the Company and its Restricted Subsidiaries with respect to Volumetric Production Payments on the schedules specified with respect thereto; and

(ii) the discounted future net revenues, calculated on a pre-tax basis in accordance with SEC guidelines, attributable to reserves subject to Dollar-Denominated Production Payments that, based on the estimates of production and price assumptions included in determining the discounted future net revenues specified in (a) above, would be necessary to fully satisfy the payment obligations of the Company and its Restricted Subsidiaries with respect to Dollar-Denominated Production Payments on the schedules specified with respect thereto.

As of any date of determination, the pricing utilized in the foregoing calculation shall be the unweighted average of the closing prices for the applicable commodity on the first day of each of the twelve months preceding such date of determination.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person. For purposes of this definition, “control,” as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise. For purposes of this definition, the terms “ controlling, ” “ controlled by ” and “ under common control with ” have correlative meanings.

“Agent” means any Registrar, co-registrar, Paying Agent or additional paying agent.

“AI Global Note” means a Global Note substantially in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee that will be issued in a denomination equal to the outstanding principal amount of the Notes sold to Accredited Investors .

“ Applicable Premium ” means, with respect to any Note on any redemption date, the greater of:

(1) 1.0% of the principal amount of the Note; or

(2) the excess of: (a) the present value at such redemption date of (i) the redemption price of the Note at April 15, 2016, (such redemption price being set forth in the table appearing in Section 3.07 hereof) plus (ii) all required interest payments due on the Note through April 15, 2016, (excluding accrued but unpaid interest to the redemption date), computed using a discount rate equal to the Treasury Rate as of such redemption date plus 50 basis points; over (b) the principal amount of the Note.

The Company will calculate the Applicable Premium at least two Business Days prior to the redemption and give written notice thereof to the Trustee.

“Applicable Procedures” means, with respect to any transfer or exchange of or for beneficial interests in any Global Note, the rules and procedures of the Depositary, Euroclear and Clearstream that apply to such transfer or exchange.

“Asset Coverage Ratio” means, as of any date of determination, the ratio of: (1) the aggregate principal amount of Indebtedness of the Company and its Restricted Subsidiaries of such Person of the type referenced under clauses (1), (2) and (4) of the definition of “Indebtedness” outstanding on such date (and, for this purpose, letters of credit will be deemed to have a principal amount equal to the face amount thereof, whether or not drawn), to (2) the Adjusted Reserve Value for the most recent four-quarter period for which internal financial statements are available. The Asset Coverage Ratio shall be calculated using the same methodologies and assumptions used to calculate the Fixed Charge Coverage Ratio.

“ Asset Sale ” means:

(1) the sale, lease, conveyance or other disposition of any assets or rights by the Company or any of the Company’s Restricted Subsidiaries; provided that the sale, lease, conveyance or other disposition of all or substantially all of the assets of the Company and its Restricted Subsidiaries taken as a whole will be governed by Section 4.15 and/or Section 5.01 hereof and not by Section 4.10 hereof; and

(2) the issuance of Equity Interests by any of the Company’s Restricted Subsidiaries or the sale by the Company or any of the Company’s Restricted Subsidiaries of Equity Interests in any of the Company’s Subsidiaries.

Notwithstanding the preceding, none of the following items will be deemed to be an Asset Sale:

(1) any single transaction or series of related transactions that (a) involves assets having a Fair Market Value of less than $7.5 million, or (b) results in Net Proceeds to the Company and its Restricted Subsidiaries of less than $7.5 million;

(2) a transfer of assets between or among the Company and its Restricted Subsidiaries;

(3) an issuance of Equity Interests by a Restricted Subsidiary of the Company to the Company or to a Restricted Subsidiary of the Company;

(4) the sale, lease, conveyance or other disposition of equipment, inventory, products, services or accounts receivable in the ordinary course of business and any sale or other disposition of surplus, damaged, worn-out or obsolete assets (including the abandonment or other disposition of licenses and sublicenses of software, intellectual property or other general intangibles that are, as determined in good faith by the Company, no longer economically practicable to maintain or useful in the conduct of the business of the Company and its Restricted Subsidiaries taken as whole);

(5) licenses and sublicenses by the Company or any of its Restricted Subsidiaries of software or intellectual property in the ordinary course of business;

(6) any surrender or waiver of contract rights or settlement, release, recovery on or surrender of contract, tort or other claims in the ordinary course of business;

(7) the granting of Liens not prohibited by Section 4.12 hereof;

(8) the sale or other disposition of cash or Cash Equivalents or the sale or other disposition of other financial assets in the ordinary course of business;

(9) a Restricted Payment that does not violate Section 4.07 hereof or a Permitted Investment;

(10) the sale or transfer of Hydrocarbons or other mineral products in the ordinary course of business;

(11) the sale, transfer, conveyance or other disposition (whether or not in the ordinary course of business) of Oil and Gas Properties or direct or indirect interests therein to which no proved reserves are attributable at the time of such sale, transfer or other disposition;

(12) the abandonment, farm-out, lease or sublease of developed or undeveloped Oil and Gas Properties in the ordinary course of business;

(13) Asset Swaps;

(14) the disposition of assets or Equity Interests received in settlement of debts owing to the Company as a result of foreclosure, perfection or enforcement of any Lien or debt, which debts were owing thereto;

(15) any sale or other disposition of assets, Equity Interests in an Unrestricted Subsidiary of the Company or any Restricted Subsidiary; and

(16) any Production Payments and Reserve Sales; provided that any such Production Payments and Reserve Sales, shall have been created, incurred, issued, assumed or Guaranteed in connection with the financing of, and within 60 days after the acquisition of, the property that is subject thereto.

“Asset Swap” means any substantially contemporaneous (and in any event occurring within 180 days of each other) purchase and sale or exchange of any assets or properties used or useful in the Oil and

Gas Business between the Company or any of its Restricted Subsidiaries and another Person; provided that the Fair Market Value of the properties or assets traded or exchanged by the Company or such Restricted Subsidiary (together with any cash or Cash Equivalents) is reasonably equivalent, as determined in good faith by the Company, to the Fair Market Value of the properties or assets (together with any cash or Cash Equivalents) to be received by the Company or such Restricted Subsidiary, and provided further , that any net cash or Cash Equivalents received must be applied in accordance with Section 4.10 hereof if then in effect, as if the Asset Swap were an Asset Sale.

“Attributable Debt” in respect of a sale and leaseback transaction means, at the time of determination, the present value of the obligation of the lessee for net rental payments during the remaining term of the lease included in such sale and leaseback transaction including any period for which such lease has been extended or may, at the option of the lessor, be extended. Such present value shall be calculated using a discount rate equal to the rate of interest implicit in such transaction, determined in accordance with GAAP; provided , however , that if such sale and leaseback transaction results in a Capital Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capital Lease Obligation.”

“Bankruptcy Law” means Title 11, U.S. Code or any similar federal or state law for the relief of debtors.

“ Beneficial Owner ” has the meaning assigned to such term in Rule 13d-3 and Rule 13d-5 under the Exchange Act, except that in calculating the beneficial ownership of any particular “person” (as that term is used in Section 13(d)(3) of the Exchange Act), such “person” will be deemed to have beneficial ownership of all securities that such “person” has the right to acquire by conversion or exercise of other securities, whether such right is currently exercisable or is exercisable only after the passage of time. The terms “Beneficially Owns” and “Beneficially Owned” have a corresponding meaning.

“ Board of Directors ” means:

(1) with respect to a corporation, the board of directors of the corporation or any committee thereof duly authorized to act on behalf of such board;

(2) with respect to a partnership, the Board of Directors of the general partner of the partnership;

(3) with respect to a limited liability company, the managing member or members or any controlling committee of managing members thereof; and

(4) with respect to any other Person, the board or committee of such Person serving a similar function.

“Business Day” means any day other than a Legal Holiday.

“Capital Lease Obligation” means, at the time any determination is to be made, the amount of the liability in respect of a capital lease that would at that time be required to be capitalized on a balance sheet prepared in accordance with GAAP, and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be prepaid by the lessee without payment of a penalty.

“Capital Stock” means:

(1) in the case of a corporation, corporate stock;

(2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock;

(3) in the case of a partnership or limited liability company, partnership interests (whether general or limited) or membership interests; and

(4) any other interest or participation that confers on a Person the right to receive a share of the profits and losses of, or distributions of assets of, the issuing Person, but excluding from all of the foregoing any debt securities convertible into Capital Stock, whether or not such debt securities include any right of participation with Capital Stock.

“Cash Equivalents” means:

(1) United States dollars;

(2) Government Securities having maturities of not more than six months from the date of acquisition;

(3) marketable general obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one year from the date of acquisition thereof and, at the time of acquisition thereof, having a credit rating of “A” or better from either S&P or Moody’s;

(4) certificates of deposit and eurodollar time deposits with maturities of six months or less from the date of acquisition, bankers’ acceptances with maturities not exceeding six months and overnight bank deposits, in each case, with any lender party to the Credit Agreement or with any domestic commercial bank having capital and surplus in excess of $500.0 million or that is a lender under a Credit Facility;

(5) repurchase obligations with a term of not more than seven days for underlying securities of the types described in clauses (2), (3) and (4) above entered into with any financial institution meeting the qualifications specified in clause (4) above;

(6) commercial paper having one of the two highest ratings obtainable from Moody’s or S&P and, in each case, maturing within six months after the date of acquisition;

(7) money market funds at least 95% of the assets of which constitute Cash Equivalents of the kinds described in clauses (1) through (5) of this definition; and

(8) marketable short-term money market and similar securities having a rating of at least P-2 or A-2 from either Moody’s or S&P, respectively, and in each case maturing within 24 months after the date of the creation thereof.

“Change of Control” means the occurrence of any of the following:

(1) the direct or indirect sale, lease, transfer, conveyance or other disposition (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all of the properties or assets of the Company and its Subsidiaries taken as a whole

to any Person (including any “person” (as that term is used in Section 13(d)(3) of the Exchange Act));

(2) the adoption of a plan relating to the liquidation or dissolution of the Company;

(3) the consummation of any transaction (including any merger or consolidation), the result of which is that any Person (including any “person” (as defined above), other than the Qualifying Owners and their related parties, becomes the Beneficial Owner, directly or indirectly, of more than 50% of the Voting Stock of the Company, measured by voting power rather than number of shares; or

(4) the first day on which a majority of the members of the Board of Directors of the Company are not Continuing Directors.

Notwithstanding the preceding, a conversion of the Company or any of its Restricted Subsidiaries from a limited partnership, corporation, limited liability company or other form of entity to a limited liability company, corporation, limited partnership or other form of entity (including by way of merger, consolidation, amalgamation or liquidation) or an exchange of all of the outstanding Equity Interests in one form of entity for Equity Interests in another form of entity shall not constitute a Change of Control, so long as following such conversion or exchange the “persons” (as that term is used in Section 13(d)(3) of the Exchange Act) who Beneficially Owned the Capital Stock of the Company immediately prior to such transactions, together with Qualifying Owners, Beneficially Own in the aggregate more than 50% of the Voting Stock of such entity, or Beneficially Own sufficient Equity Interests in such entity to elect a majority of its directors, managers, trustees or other persons serving in a similar capacity for such entity or its general partner, as applicable, and, in either case no “person” (other than a Qualifying Owner) Beneficially Owns more than 50% of the Voting Stock of such entity or its general partner, as applicable.

“Clearstream” means Clearstream Banking, S.A.

“Consolidated EBITDAX” means, with respect to any specified Person for any period, the Consolidated Net Income of such Person for such period plus , without duplication:

(1) an amount equal to any extraordinary loss plus any net loss realized by such Person or any of its Restricted Subsidiaries in connection with an Asset Sale, to the extent such losses were deducted in computing such Consolidated Net Income; plus

(2) provision for taxes based on income or profits of such Person and its Restricted Subsidiaries for such period, to the extent that such provision for taxes was deducted in computing such Consolidated Net Income; plus

(3) the Fixed Charges of such Person and its Restricted Subsidiaries for such period, to the extent that such Fixed Charges were deducted in computing such Consolidated Net Income; plus

(4) any foreign currency translation losses (including losses related to currency remeasurements of Indebtedness) of such Person and its Restricted Subsidiaries for such period, to the extent that such losses were taken into account in computing such Consolidated Net Income; plus

(5) depreciation, depletion, amortization (including amortization of intangibles but excluding amortization of prepaid cash expenses that were paid in a prior period) and other non-

cash charges and expenses (excluding any such non-cash charge or expense to the extent that it represents an accrual of or reserve for cash charges or expenses in any future period or amortization of a prepaid cash charge or expense that was paid in a prior period) of such Person and its Restricted Subsidiaries for such period to the extent that such depreciation, depletion, amortization and other non-cash charges or expenses were deducted in computing such Consolidated Net Income; plus

(6) expenses or charges related to any issuance of Equity Interests, Investment, acquisition, merger, consolidation, disposition, recapitalization, incurrence or repayment of Indebtedness or other similar transaction permitted to be incurred by this Indenture (whether or not successful); plus

(7) consolidated exploration expenses of the Company and its Restricted Subsidiaries; minus

(8) non-cash items increasing such Consolidated Net Income for such period, other than the accrual of revenue in the ordinary course of business; minus

(9) to the extent included in determining Consolidated Net Income, the sum of (x) the amount of deferred revenues that are amortized during such period and that are attributable to reserves that are subject to Volumetric Production Payments and (y) amounts recorded in accordance with GAAP as repayments of principal and interest pursuant to Dollar-Denominated Production Payments;

in each case, on a consolidated basis and determined in accordance with GAAP.

“Consolidated Net Income” means, with respect to any specified Person for any period, the aggregate of the net income (loss) of such Person and its Restricted Subsidiaries for such period, on a consolidated basis (excluding the net income (loss) of any Unrestricted Subsidiary of such Person), determined in accordance with GAAP and without any reduction in respect of preferred stock dividends; provided that:

(1) all extraordinary gains (but not losses) and all gains (but not losses) realized in connection with any Asset Sale or the disposition of securities or the early extinguishment of Indebtedness, together with any related provision for taxes on any such gain, will be excluded;

(2) the net income (but not loss) of any Person that is not a Restricted Subsidiary or that is accounted for by the equity method of accounting will be included only to the extent of the amount of dividends or similar distributions paid in cash to the specified Person or a Restricted Subsidiary of the Person;

(3) the net income (but not loss) of any Restricted Subsidiary will be excluded to the extent that the declaration or payment of dividends or similar distributions by that Restricted Subsidiary of that net income is not at the date of determination permitted without any prior governmental approval (that has not been obtained) or, directly or indirectly, by operation of the terms of its charter or any agreement, instrument, judgment, decree, order, statute, rule or governmental regulation applicable to that Restricted Subsidiary or its stockholders;

(4) the cumulative effect of a change in accounting principles will be excluded;

(5) non-cash gains and losses attributable to movement in the mark-to-market valuation of Hedging Obligations pursuant to FASB ASC 815; and

(6) any write-downs of non-current assets will be excluded, including any “ceiling limitation” write-downs under SEC guidelines.

“Consolidated Net Working Capital” of any Person as of any date of determination means the difference (shown on the balance sheet of such Person and its Restricted Subsidiaries prepared on a consolidated basis in accordance with GAAP as of the end of the most recent fiscal quarter of such Person for which internal financial statements are available) between (i) all current assets of such Person and its Restricted Subsidiaries and (ii) all current liabilities of such Person and its Restricted Subsidiaries except the current portion of long-term Indebtedness.

“continuing” means, with respect to any Default or Event of Default, that such Default or Event of Default has not been cured or waived.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Company who:

(1) was a member of such Board of Directors on the date of this Indenture; or

(2) was nominated for election or elected to such Board of Directors with the approval or consent of a majority of the Continuing Directors who were members of such Board of Directors at the time of such nomination or election.

“Corporate Trust Office of the Trustee” means the address of the Trustee specified in Section 12.02 hereof or such other address as to which the Trustee may give notice to the Company.

“Credit Agreement” means that certain Credit Agreement, dated as of March 14, 2013, by and among the Company, as borrower, the guarantors party thereto, and Wells Fargo Bank, National Association, as administrative agent, including any related Notes, Guarantees, collateral documents, instruments and agreements executed in connection therewith, and, in each case, as amended, restated, modified, renewed, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.

“Credit Facilities” means one or more debt facilities (including the Credit Agreement), indentures or commercial paper facilities, in each case, with banks or other institutional lenders or institutional investors or other lenders or credit providers providing for revolving credit loans, term loans, term debt, debt securities, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit, in each case, as amended, restated, modified, renewed, extended, increased, refunded, replaced in any manner (whether upon or after termination or otherwise) or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time.

“Custodian” means the Trustee, as custodian with respect to the Notes in global form, or any successor entity thereto.

“ Customary Recourse Exceptions ” means with respect to any Non-Recourse Debt of an Unrestricted Subsidiary of the Company, exclusions from the exculpation provisions with respect to such Non-Recourse Debt for the voluntary bankruptcy of such Unrestricted Subsidiary, fraud, misapplication

of cash, environmental claims, waste, willful destruction and other circumstances customarily excluded by lenders from exculpation provisions or included in separate indemnification agreements in non-recourse financings.

“ De Minimis Amount ” means Indebtedness that does not exceed $1.0 million in aggregate principal amount.

“ Deemed Capitalized Leases ” means obligations of the Company or any Restricted Subsidiary of the Company that are classified as “capital lease obligations” under GAAP due to the application of ASC Topic 840 or any subsequent pronouncement having similar effect and, except for such regulation or pronouncement, such obligation would not constitute a Capital Lease Obligation.

“Default” means any event that is, or with the passage of time or the giving of notice or both would be, an Event of Default.

“Definitive Note” means a certificated Note registered in the name of the Holder thereof and issued in accordance with Section 2.06 hereof, substantially in the form of Exhibit A1 hereto except that such Note shall not bear the Global Note Legend and shall not have the “Schedule of Exchanges of Interests in the Global Note” attached thereto.

“Depositary” means, with respect to the Notes issuable or issued in whole or in part in global form, the Person specified in Section 2.03 hereof as the Depositary with respect to the Notes, and any and all successors thereto appointed as depositary hereunder and having become such pursuant to the applicable provision of this Indenture.

“Disqualified Stock” means any Capital Stock that, by its terms (or by the terms of any security into which it is convertible, or for which it is exchangeable, in each case, at the option of the holder of the Capital Stock), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder of the Capital Stock, in whole or in part, on or prior to the date that is 91 days after the date on which the Notes mature. Notwithstanding the preceding sentence, any Capital Stock that would constitute Disqualified Stock solely because the holders of the Capital Stock have the right to require the Company to repurchase such Capital Stock upon the occurrence of a change of control or an asset sale will not constitute Disqualified Stock if the terms of such Capital Stock provide that the Company may not repurchase or redeem any such Capital Stock pursuant to such provisions unless such repurchase or redemption complies with Section 4.07 hereof. The amount of Disqualified Stock deemed to be outstanding at any time for purposes of this Indenture will be the maximum amount that the Company and its Restricted Subsidiaries may become obligated to pay upon the maturity of, or pursuant to any mandatory redemption provisions of, such Disqualified Stock, exclusive of accrued dividends.

For purposes hereof, the maximum fixed repurchase price of any Disqualified Stock which does not have a fixed repurchase price shall be calculated in accordance with the terms of such Disqualified Stock as if such Disqualified Stock were purchased on any date on which Indebtedness shall be required to be determined pursuant to this Indenture, and if such price is based upon, or measured by, the fair market value of such Disqualified Stock, such fair market value to be determined in good faith by the Board of Directors of the issuer of such Disqualified Stock.

“ Dollar-Denominated Production Payments ” means production payment obligations recorded as liabilities in accordance with GAAP, together with all undertakings and obligations in connection therewith.

“Domestic Subsidiary” means any Restricted Subsidiary of the Company that was formed under the laws of the United States or any state of the United States or the District of Columbia or that guarantees or otherwise provides direct credit support for any Indebtedness of the Company.

“Equity Interests” means Capital Stock and all warrants, options or other rights to acquire Capital Stock (but excluding any debt security that is convertible into, or exchangeable for, Capital Stock).

“Equity Offering” means a public or private sale either (1) of Equity Interests of the Company by the Company (other than Disqualified Stock and other than to a Subsidiary of the Company) or (2) of Equity Interests of a direct or indirect parent entity of the Company (other than to the Company or a Subsidiary of the Company) to the extent that the net proceeds therefrom are contributed to the common equity capital of the Company.

“Euroclear” means Euroclear Bank, S.A./N.V., as operator of the Euroclear system.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Existing Indebtedness” means all Indebtedness of the Company and its Subsidiaries (other than Indebtedness under the Credit Agreement) in existence on the date of this Indenture, until such amounts are repaid.

“Fair Market Value” means the value that would be paid by a willing buyer to an unaffiliated willing seller in a transaction not involving distress or necessity of either party, determined in good faith by the Board of Directors of the Company (in the case of amounts of $20.0 million or more) and otherwise by an officer of the Company.

“FASB ASC 815” means Financial Accounting Standards Board—Accounting Standards Codification Topic No. 815, Derivatives and Hedging .

“ Fixed Charge Coverage Ratio ” means with respect to any specified Person for any period, the ratio of the Consolidated EBITDAX of such Person for such period to the Fixed Charges of such Person for such period. In the event that the specified Person or any of its Restricted Subsidiaries incurs, assumes, guarantees, repays, repurchases, redeems, defeases or otherwise discharges any Indebtedness (other than ordinary working capital borrowings) or issues, repurchases or redeems preferred stock subsequent to the commencement of the period for which the Fixed Charge Coverage Ratio is being calculated and on or prior to the date on which the event for which the calculation of the Fixed Charge Coverage Ratio is made (the “ Calculation Date ”), then the Fixed Charge Coverage Ratio will be calculated giving pro forma effect (in accordance with Regulation S-X under the Securities Act) to such incurrence, assumption, Guarantee, repayment, repurchase, redemption, defeasance or other discharge of Indebtedness, or such issuance, repurchase or redemption of preferred stock, and the use of the proceeds therefrom, as if the same had occurred at the beginning of the applicable four-quarter reference period.

In addition, for purposes of calculating the Fixed Charge Coverage Ratio:

(1) acquisitions that have been made by the specified Person or any of its Restricted Subsidiaries, including through mergers or consolidations, or any Person or any of its Restricted Subsidiaries acquired by the specified Person or any of its Restricted Subsidiaries, and including all related financing transactions and including increases in ownership of Restricted Subsidiaries, during the four-quarter reference period or subsequent to such reference period and on or prior to the Calculation Date, or that are to be made on the Calculation Date, will be given pro forma

effect (in accordance with Regulation S-X under the Securities Act) as if they had occurred on the first day of the four-quarter reference period;

(2) the Consolidated EBITDAX attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded;

(3) the Fixed Charges attributable to discontinued operations, as determined in accordance with GAAP, and operations or businesses (and ownership interests therein) disposed of prior to the Calculation Date, will be excluded, but only to the extent that the obligations giving rise to such Fixed Charges will not be obligations of the specified Person or any of its Restricted Subsidiaries following the Calculation Date;

(4) any Person that is a Restricted Subsidiary on the Calculation Date or is to be a Restricted Subsidiary immediately following the Calculation Date will be deemed to have been a Restricted Subsidiary at all times during such four-quarter period;

(5) any Person that is not a Restricted Subsidiary on the Calculation Date or is not to be a Restricted Subsidiary immediately following the Calculation Date will be deemed not to have been a Restricted Subsidiary at any time during such four-quarter period;

(6) if any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the average rate in effect from the beginning of such period to the Calculation Date had been the applicable rate for the entire period (taking into account any Hedging Obligation applicable to such Indebtedness, but if the remaining term of such Hedging Obligation is less than 12 months, then such interest Hedging Obligation shall only be taken into account for that portion of the period equal to the remaining term thereof);

(7) if any Indebtedness that is being given pro-forma effect bears an interest rate at the option of such Person, the interest rate shall be calculated by applying such option rate chosen by such Person; and

(8) interest on Indebtedness that may optionally be determined at an interest rate based upon a factor of a prime or similar rate, a Eurocurrency interbank offered rate, or other rate, shall be deemed to have been based upon the rate actually chosen, or if none, then based upon such optional rate chosen as such Person may designate.

“ Fixed Charges ” means, with respect to any specified Person for any period, the sum, without duplication, of:

(1) the consolidated interest expense of such Person and its Restricted Subsidiaries for such period, whether paid or accrued (excluding (i) write-off of deferred financing costs and (ii) accretion of interest charges on future plugging and abandonment obligations, future retirement benefits and other obligations that do not constitute Indebtedness, but including amortization of debt issuance costs and original issue discount, non-cash interest payments, the interest component of any deferred payment obligations other than that attributable to any Oil and Natural Gas Hedging Contract, the interest component of all payments associated with Capital Lease Obligations and Deemed Capitalized Leases, imputed interest with respect to Attributable Debt, commissions, discounts and other fees and charges incurred in respect of letter of credit or

bankers’ acceptance financings), and net of the effect of all payments made or received pursuant to interest rate Hedging Contracts; plus

(2) the consolidated interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period; plus

(3) any interest on Indebtedness of another Person (other than Non-Recourse Debt of any Unrestricted Subsidiary) that is guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, whether or not such Guarantee or Lien is called upon; plus

(4) all dividends, whether paid or accrued and whether or not in cash, on any series of preferred stock of such Person or any of its Restricted Subsidiaries, other than dividends on Equity Interests payable solely in Equity Interests of the Company (other than Disqualified Stock) or to the Company or a Restricted Subsidiary of the Company.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as have been approved by a significant segment of the accounting profession, which are in effect from time to time. All ratios and computations based on GAAP contained in this Indenture will be computed in conformity with GAAP For the purposes of this Indenture, the term “consolidated” with respect to any Person shall mean such Person consolidated with its Restricted Subsidiaries, and shall not include any Unrestricted Subsidiary, but the interest of such Person in an Unrestricted Subsidiary will be accounted for as an Investment.

“Global Note Legend” means the legend set forth in Section 2.06(f)(2) hereof, which is required to be placed on all Global Notes issued under this Indenture.

“Global Notes” means, individually and collectively, each of the Restricted Global Notes and the Unrestricted Global Notes deposited with or on behalf of and registered in the name of the Depository or its nominee, substantially in the form of Exhibit A1 hereto and that bears the Global Note Legend and that has the “Schedule of Exchanges of Interests in the Global Note” attached thereto, issued in accordance with Sections 2.01, 2.06(b)(3), 2.06(b)(4) or 2.06(d)(2) hereof.

“Government Securities” means direct obligations of, or obligations guaranteed or insured by, the United States of America, and the payment for which the United States pledges its full faith and credit.

“Guarantee” means a guarantee other than by endorsement of negotiable instruments for collection in the ordinary course of business, direct or indirect, in any manner including by way of a pledge of assets or through letters of credit or reimbursement agreements in respect thereof, of all or any part of any Indebtedness (whether arising by virtue of partnership arrangements, or by agreements to keep-well, to purchase assets, goods, securities or services, to take or pay or to maintain financial statement conditions or otherwise).

“Guarantors” means any Subsidiary of the Company that is a party to a Note Guarantee under the provisions of this Indenture, and their respective successors and assigns, in each case, until the Note Guarantee of such Person has been released in accordance with the provisions of this Indenture.

“Hedging Obligations” means, with respect to any specified Person, the obligations of such Person under:

(1) interest rate swap agreements (whether from fixed to floating or from floating to fixed), interest rate cap agreements and interest rate collar agreements;

(2) other agreements or arrangements designed to manage interest rates or interest rate risk; and

(3) Oil and Gas Hedging Contracts.

“Holder” means a Person in whose name a Note is registered.

“ Hydrocarbons ” means oil, natural gas, casing head gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all constituents, elements or compounds thereof and products refined or processed therefrom.

“ Indebtedness ” means, with respect to any specified Person, any indebtedness of such Person (excluding accrued expenses and trade payables), whether or not contingent:

(1) in respect of borrowed money;

(2) evidenced by or issued in exchange for bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof);

(3) in respect of banker’s acceptances;

(4) representing Capital Lease Obligations or Attributable Debt in respect of sale and leaseback transactions;

(5) representing the balance deferred and unpaid of the purchase price of any property or services due more than six months after such property is acquired or such services are completed;

(6) representing any Hedging Obligations; or

(7) in respect of any Guarantee by such Person of production or payment with respect to a Production Payment (but not any other contractual obligation in respect of such Production Payment),

if and to the extent any of the preceding items (other than letters of credit and Hedging Obligations) would appear as a liability upon a balance sheet of the specified Person prepared in accordance with GAAP, but excluding Deemed Capitalized Leases. In addition, the term “Indebtedness” includes all Indebtedness of others secured by a Lien on any asset of the specified Person (whether or not such Indebtedness is assumed by the specified Person) and, to the extent not otherwise included, the Guarantee by the specified Person of any Indebtedness of any other Person. Indebtedness shall be calculated without giving effect to the effects of FASB ASC 815 or similar pronouncements and related interpretations to the extent such effects would otherwise increase or decrease an amount of Indebtedness for any purpose under this Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness; and any such amounts increased or decreased that would have constituted “Indebtedness” under this Indenture but for the application of this sentence shall not be deemed an Incurrence of Indebtedness under this Indenture.

“Indenture” means this Indenture, as amended or supplemented from time to time.

“Indirect Participant” means a Person who holds a beneficial interest in a Global Note through a Participant.

“Initial Notes” means the first $220.0 million aggregate principal amount of Notes issued under this Indenture on the date hereof.

“Initial Purchasers” means Jefferies LLC, Wells Fargo Securities, LLC and GMP Securities L.P.

“Investments” means, with respect to any Person, all direct or indirect investments by such Person in other Persons (including Affiliates) in the forms of loans (including Guarantees or other obligations), advances or capital contributions (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business), purchases or other acquisitions for consideration of Indebtedness, Equity Interests or other securities, together with all items that are or would be classified as investments on a balance sheet prepared in accordance with GAAP. If the Company or any Restricted Subsidiary of the Company sells or otherwise disposes of any Equity Interests of any direct or indirect Restricted Subsidiary of the Company such that, after giving effect to any such sale or disposition, such Person is no longer a Restricted Subsidiary of the Company, the Company will be deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Company’s Investments in such Subsidiary that were not sold or disposed of in an amount determined as provided in Section 4.07(f) hereof. The acquisition by the Company or any Restricted Subsidiary of the Company of a Person that holds an Investment in a third Person will be deemed to be an Investment by the Company or such Restricted Subsidiary in such third Person in an amount equal to the Fair Market Value of the Investments held by the acquired Person in such third Person in an amount determined as provided in Section 4.07(f) hereof. Except as otherwise provided in this Indenture, the amount of an Investment will be determined at the time the Investment is made and without giving effect to subsequent changes in value.

“Legal Holiday” means a Saturday, a Sunday or a day on which banking institutions in the City of New York or at a place of payment are authorized by law, regulation or executive order to remain closed. If a payment date is a Legal Holiday at a place of payment, payment may be made at that place on the next succeeding day that is not a Legal Holiday, and no interest shall accrue on such payment for the intervening period.

“Letter of Transmittal” means the letter of transmittal to be prepared by the Company and sent to all Holders of the Notes for use by such Holders in connection with the Exchange Offer.

“Lien” means, with respect to any asset, any mortgage, lien, pledge, charge, security interest or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, any option or other agreement to sell or give a security interest in and any filing of or agreement to give any financing statement under the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.

“ Moody’s ” means Moody’s Investors Service, Inc., and any successor to the ratings business thereof.

“Net Proceeds” means the aggregate amount of cash proceeds and Cash Equivalents received by the Company or any of its Restricted Subsidiaries in respect of any Asset Sale (including any cash or Cash Equivalents received upon the sale or other disposition of any non-cash consideration received in any Asset Sale), net of the direct costs relating to such Asset Sale, including legal, accounting and investment banking fees, and sales commissions, and any relocation expenses incurred as a result of the

Asset Sale, taxes paid or payable as a result of the Asset Sale, in each case, after taking into account any available tax credits or deductions and any tax sharing arrangements, and amounts required to be applied to the repayment of Indebtedness, other than secured by a Lien on the asset or assets that were the subject of such Asset Sale and any reserve for adjustment or indemnification obligations in respect of the sale price of such asset or assets established in accordance with GAAP.

“ Non-Recourse Debt ” means, with respect to Indebtedness of any Unrestricted Subsidiary, Indebtedness:

(1) as to which neither the Company nor any of its Restricted Subsidiaries (a) provides credit support of any kind (including any undertaking, agreement or instrument that would constitute Indebtedness) or (b) is directly or indirectly liable as a guarantor or otherwise except, in each case for Customary Recourse Exceptions and except by the pledge of (or a guaranty limited in recourse solely to) the Equity Interests of such Unrestricted Subsidiary;

(2) no default with respect to which (including any rights that the holders of the Indebtedness may have to take enforcement action against an Unrestricted Subsidiary) would permit upon notice, lapse of time or both any holder of any other Indebtedness (other than the Notes) of the Company or any of its Restricted Subsidiaries to declare a default on such other Indebtedness or cause the payment of the Indebtedness to be accelerated or payable prior to its Stated Maturity. except for Indebtedness that results from the pledge of (or a guaranty limited in recourse solely to) Equity Interests in such Unrestricted Subsidiary held by the Company or such Restricted Subsidiary to secure Indebtedness of any Unrestricted Subsidiary that constitutes Non-Recourse Debt; and

(3) as to which the lenders will not have any recourse to the Capital Stock or assets of the Company or any of its Restricted Subsidiaries (other than the Equity Interests of such Unrestricted Subsidiary), except for Customary Recourse Exceptions.

For purposes of determining compliance with Section 4.09 hereof, in the event that any Indebtedness of any of the Company’s Unrestricted Subsidiaries ceases to be Non-Recourse Debt of such Unrestricted Subsidiary, such event will be deemed to constitute an incurrence of Indebtedness by a Restricted Subsidiary of the Company.

“Non-U.S. Person” means a Person who is not a U.S. Person.

“Note Guarantee” means the Guarantee by each Guarantor of the Company’s obligations under this Indenture and the Notes, as set forth in this Indenture.

“Notes” has the meaning assigned to it in the preamble to this Indenture. The Initial Notes and the Additional Notes shall be treated as a single class for all purposes under this Indenture, and unless the context otherwise requires, all references to the Notes shall include the Initial Notes and any Additional Notes.

“Obligations” means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness.

“Offering Memorandum” means the Company’s Offering Memorandum, dated April 1, 2014, relating to the Company’s offer and sale of the Initial Notes.

“Officer” means, with respect to any Person, the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Operating Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the Secretary or any Vice-President of such Person.

“Officers’ Certificate” means a certificate signed on behalf of the Company by two Officers of the Company, one of whom must be the principal executive officer, the principal financial officer, the treasurer or the principal accounting officer of the Company, that meets the requirements of Section 12.05 hereof.

“ Oil and Gas Business ” means (i) the acquisition, exploration, exploitation, development, production, treatment, operation, servicing processing, refining and disposition of interests in oil, gas and other Hydrocarbon properties (including the acquisition of properties and interests therein the Company in its reasonable judgment deems necessary or appropriate for the activities described in the foregoing), (ii) the gathering, marketing, treating, processing, storage, selling and transporting of oil, natural gas and other Hydrocarbon products, (iii) any business relating to exploration for or exploitation, development, production, treatment, operation, servicing, processing, refining, storage, transportation or marketing of oil, natural gas and other Hydrocarbon product and other minerals and products produced in association therewith and (iv) any activity that is ancillary or incidental to or necessary or appropriate for the activities described in clauses (i) through (iv) of this definition.

“ Oil and Gas Hedging Contracts ” means any puts, calls, cap transactions, floor or ceiling transactions, collar transactions, forward contract, commodity swap agreement, commodity option agreement or other similar transaction or arrangement in respect of Hydrocarbons to be used, produced, processed or sold by the Company or any of its Restricted Subsidiaries that are customary in the Oil and Gas Business and designed to protect such Person against fluctuation in Hydrocarbons prices and not for speculative purposes.

“ Oil and Gas Properties ” means all Properties, include equity or other ownership interest therein, owned by such Person or any of its Restricted Subsidiaries which contain “proved oil and gas reserves” as defined in Rule 4-10 of Regulation S-X of the Securities Act.

“Opinion of Counsel” means an opinion from legal counsel who is reasonably acceptable to the Trustee, that meets the requirements of Section 12.05 hereof. The counsel may be an employee of or counsel to the Company, any Subsidiary of the Company or the Trustee.

“ Parent ” means Lonestar Resources Ltd, a corporation organized under the laws of the Commonwealth of Australia.

“Participant” means, with respect to the Depositary, Euroclear or Clearstream, a Person who has an account with the Depositary, Euroclear or Clearstream, respectively (and, with respect to DTC, shall include Euroclear and Clearstream).

“ Permitted Business Investments ” means investments made in the ordinary course of, and of a nature that is or shall have become customary in, the Oil and Gas Business as a means of actively exploiting, exploring for, acquiring, developing, processing, gathering, marketing or transporting oil and natural gas through agreements, transactions, interests or arrangements which permit one to share risks or costs, comply with regulatory requirements regarding local ownership or satisfy other objectives customarily achieved through the conduct of Oil and Gas Business jointly with third parties, including:

(1) direct or indirect ownership interests in crude oil, natural gas, other Hydrocarbon properties or any interest therein, gathering, transportation, processing, storage or related systems, or ancillary real property interests and interests therein; and

(2) the entry into and Investments and expenditures in the form of or pursuant to operating agreements, joint ventures, processing agreements, working interests, royalty interests, mineral leases, farm-in agreements, farm-out agreements, development agreements, production sharing agreements, production sales and marketing agreements, area of mutual interest agreements, unitization agreements, pooling arrangements, joint bidding agreements, service contracts, joint venture agreements, partnership agreements (whether general or limited), incentive compensation programs on terms that are customary in the Oil and Gas Business for geologists, geophysicists and other providers of technical services to the Company or any Restricted Subsidiary or other similar or customary agreements, transactions, properties, interests or arrangements.

“ Permitted Investments ” means:

(1) any Investment in the Company or in a Restricted Subsidiary of the Company;

(2) any Investment in Cash Equivalents;

(3) any Investment by the Company or any Restricted Subsidiary of the Company in a Person whose primary business is the Oil and Gas Business, if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Company; or

(b) such Person is merged, consolidated or amalgamated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Company or a Restricted Subsidiary of the Company;

(4) any Investment made as a result of the receipt of non-cash consideration from an Asset Sale that was made pursuant to and in compliance with Section 4.10 hereof;

(5) any acquisition of assets or Capital Stock or other Investment in any Person solely in exchange for the issuance of Equity Interests (other than Disqualified Stock) of the Company;

(6) any Investments received in compromise or resolution of (A) obligations of trade creditors or customers that were incurred in the ordinary course of business of the Company or any of its Restricted Subsidiaries, including pursuant to any plan of reorganization or similar arrangement upon the bankruptcy or insolvency of any trade creditor or customer; or (B) litigation, arbitration or other disputes;

(7) Investments represented by Hedging Obligations;

(8) loans or advances to employees made in the ordinary course of business of the Company or any Restricted Subsidiary of the Company in an aggregate principal amount not to exceed $1.5 million at any one time outstanding;

(9) repurchases of the Notes and Note Guarantees;

(10) any Guarantee of Indebtedness permitted to be incurred by Section 4.09 hereof other than a guarantee of Indebtedness of an Affiliate of the Company that is not a Restricted Subsidiary of the Company;

(11) any Investment existing on, or made pursuant to binding commitments existing on, the date of this Indenture and any Investment consisting of an extension, modification or renewal of any Investment existing on, or made pursuant to a binding commitment existing on, the date of this Indenture; provided that the amount of any such Investment may be increased (a) as required by the terms of such Investment as in existence on the date of this Indenture or (b) as otherwise permitted under this Indenture;

(12) Investments acquired after the date of this Indenture as a result of the acquisition by the Company or any Restricted Subsidiary of the Company of another Person, including by way of a merger, amalgamation or consolidation with or into the Company or any of its Restricted Subsidiaries, or all or substantially all of the assets of another Person, in each case, in a transaction that is not prohibited by Section 5.01 hereof after the date of this Indenture to the extent that such Investments were not made in contemplation of such acquisition, merger, amalgamation or consolidation and were in existence on the date of such acquisition, merger, amalgamation or consolidation;

(13) Permitted Business Investments;

(14) Guarantees of performance or other obligations (other than Indebtedness) arising in the ordinary course of business, including obligations under oil and natural gas exploration, development, joint operating and related agreements and licenses or concessions related to the Oil and Gas Business; and

(15) Investments received as a result of a foreclosure by, or other transfer of title to, the Company or any of its Restricted Subsidiaries with respect to any secured Investment in default;

(16) receivables owing to the Company or any Restricted Subsidiary created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided that such trade terms may include such concessionary trade terms as the Company or any such Restricted Subsidiary deems reasonable under the circumstances;

(17) advances and prepayments for asset purchases in the ordinary course of business;

(18) any transaction that constitutes an Investment to the extent permitted and made in accordance with the provisions of Section 4.11(b) hereof (except transactions described in clauses (3), (5), (6), (11), (12), (13) and (14) thereof); and

(19) other Investments in any Person having an aggregate Fair Market Value (measured on the date each such Investment was made and without giving effect to subsequent changes in value), when taken together with all other Investments made pursuant to this clause (20) that are at the time outstanding not to exceed the greater of (a) $10.0 million and (b) 1.5% of the Company’s Adjusted Consolidated Net Tangible Assets.

“ Permitted Liens ” means:

(1) Liens on assets of the Company or any Guarantor securing Indebtedness and other Obligations under Credit Facilities that was permitted by the terms of this Indenture to be incurred pursuant to clause (1) of the definition of “Permitted Debt” and/or securing Hedging Obligations and/or securing Obligations with respect to Treasury Management Arrangements incurred in the ordinary course of business;

(2) Liens on property of a Person existing at the time such Person becomes a Restricted Subsidiary of the Company or is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company; provided that such Liens were in existence prior to the contemplation of such Person becoming a Restricted Subsidiary of the Company or such merger or consolidation and do not extend to any assets other than those of the Person that becomes a Restricted Subsidiary of the Company or is merged with or into or consolidated with the Company or any Restricted Subsidiary of the Company (together with all improvements, additions, accessions and contractual rights relating primarily thereto and all proceeds thereof);

(3) Liens on property (including Capital Stock) existing at the time of acquisition of the property by the Company or any Subsidiary of the Company; provided that such Liens were in existence prior to such acquisition and not incurred in contemplation of, such acquisition;

(4) Liens to secure the performance of statutory obligations, insurance, surety or appeal bonds, workers’ compensation obligations, leases, utility contracts, tenders, bids, government and other contracts, performance, return-of-money, plugging and abandonment and performance bonds or other obligations of a like nature incurred in the ordinary course of business (including Liens to secure letters of credit issued to assure payment of such obligations), and in connection with workers’ compensation, health, disability or other benefits, unemployment or other insurance or self-insurance obligations and other social security or similar legislation, old age pension or public liability obligations (including Liens to secure guarantees, contingent reimbursement obligations or other contingent obligations with respect to letters of credit or bank guarantees functioning as or supporting or issued to assure payment or performance of any of the foregoing bonds or obligations);

(5) Liens to secure Indebtedness (including Capital Lease Obligations) permitted by Section 4.09(b)(4) hereof covering only the assets acquired with or financed by such Indebtedness Company (together with all improvements, additions, accessions and contractual rights relating primarily thereto and all proceeds thereof);

(6) Liens on the Capital Stock of any Unrestricted Subsidiary to secure Indebtedness of such Unrestricted Subsidiary;

(7) Liens existing on the date of this Indenture, other than Liens securing Indebtedness and other obligations incurred pursuant Section 4.09(b)(1) hereof;

(8) Liens for taxes, assessments or governmental charges or claims that are not yet delinquent or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded; provided that any reserve or other appropriate provision as is required in conformity with GAAP has been made therefor;

(9) landlords’, operators’, vendors’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s, suppliers’, workers’, construction or like Liens arising by contract or statute in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties, each of which is in respect to amounts which are not yet delinquent or are being contested in good faith by appropriate proceedings;

(10) survey exceptions, easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations of, or rights of others for, licenses, rights-of-way, roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of Hydrocarbons, sewers, electric lines, telegraph and telephone lines and other similar purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, Liens related to surface leases and surface operations, or zoning or other restrictions as to the use of real property that were not incurred in connection with Indebtedness and that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of the Company or any of its Restricted Subsidiaries;

(11) Liens created for the benefit of (or to secure) the Notes or the Note Guarantees;

(12) Liens to secure any Permitted Refinancing Indebtedness permitted to be incurred under this Indenture; provided, that:

(a) the new Lien is limited to all or part of the same property and assets that secured or, under the written agreements pursuant to which the original Lien arose, could secure the original Lien (plus improvements and accessions to, such property or proceeds or distributions thereof); and

(b) the Indebtedness secured by the new Lien is not increased to any amount greater than the sum of (x) the outstanding principal amount, or, if greater, committed amount, of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged with such Permitted Refinancing Indebtedness and (y) an amount necessary to pay any fees and expenses, including premiums, related to such renewal, refunding, refinancing, replacement, defeasance or discharge;

(13) Liens on insurance policies and proceeds thereof, or other deposits, to secure insurance premium financings;

(14) filing of Uniform Commercial Code financing statements as a precautionary measure in connection with operating leases and other Uniform Commercial Code security interests not constituting Liens on Indebtedness;

(15) bankers’ Liens, rights of setoff, Liens arising out of judgments or awards not constituting an Event of Default and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings and for which adequate reserves have been made;

(16) Liens on cash, Cash Equivalents or other property arising in connection with the defeasance, discharge or redemption of Indebtedness;

(17) Liens upon specific items of inventory, receivables or other goods or proceeds of the Company or any of its Restricted Subsidiaries securing such Person’s obligations in respect of

bankers’ acceptances or receivables securitizations issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory, receivables or other goods or proceeds and permitted by Section 4.09 hereof;

(18) grants of software and other technology licenses in the ordinary course of business;

(19) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(20) Liens in favor of the Company or any of the Guarantors;

(21) Liens in respect of Production Payments and Reserve Sales, which Liens shall be limited to the property that is the subject of such Production Payments and Reserve Sales;

(22) Liens in pipeline or pipeline facilities that arise under operation of law;

(23) Liens arising under oil and natural gas leases or subleases, assignments, farm-out agreements, farm-in agreements, division orders, contracts for the sale, purchase, exchange, transportation, gathering or processing of Hydrocarbons, unitizations and pooling designations, declarations, orders and agreements, development agreements, joint venture agreements, partnership agreements, operating agreements, royalties, working interests, net profits interests, joint interest billing arrangements, participation 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, licenses, sublicenses and other agreements that are customary in the Oil and Gas Business; provided, however, that all such Liens are limited to the assets that are the subject of the relevant agreement, program, order or contract; and

(24) Liens arising under this Indenture in favor of the Trustee for its own benefit and similar Liens in favor of other trustees, agents and representatives arising under instruments governing Indebtedness permitted to be incurred under this Indenture, provided, however, that such Liens are solely for the benefit of the trustees, agents or representatives in their capacities as such and not for the benefit of the holders of such Indebtedness;

(25) any Lien renewing, extending, refinancing or refunding a Lien permitted by clauses (1) through (24) above and (26) below; provided that (a) the principal amount of the Indebtedness secured by such Lien is not increased except by an amount equal to a reasonable premium or other reasonable amount paid, and fees and expenses reasonably incurred, in connection therewith and by an amount equal to any existing commitments unutilized thereunder and (b) no assets encumbered by any such Lien other than the assets permitted to be encumbered immediately prior to such renewal, extension, refinance or refund are encumbered thereby (other than all improvements, additions, accessions and contractual rights relating primarily thereto and all proceeds thereof); and

(26) Liens incurred by the Company or any Restricted Subsidiary of the Company with respect to Indebtedness permitted to be incurred under this Indenture, provided that, after giving effect to any such incurrence, the aggregate principal amount of all other Indebtedness then outstanding and secured by any Liens incurred pursuant to this clause (26) does not exceed the greater of (a) $10.0 million and (b) 1.5% of the Company’s Adjusted Consolidated Net Tangible Assets; determined at the time such Lien is incurred.

“ Permitted Refinancing Indebtedness ” means any Indebtedness of the Company or any of its Restricted Subsidiaries issued in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge other Indebtedness of the Company or any of its Restricted Subsidiaries (other than intercompany Indebtedness); provided that:

(1) the principal amount (or accreted value, if applicable) of such Permitted Refinancing Indebtedness does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness renewed, refunded, refinanced, replaced, defeased or discharged (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith);

(2) such Permitted Refinancing Indebtedness has a final maturity date no earlier than (a) the final maturity date of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged or (b) 90 days after the final maturity date of the Notes;

(3) such Permitted Refinancing Indebtedness has a Weighted Average Life to Maturity at the time such Permitted Refinancing Indebtedness is incurred that is no shorter than the Weighted Average Life to Maturity of the portion of the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged;

(4) if the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged is subordinated in right of payment to the Notes or the Note Guarantees, such Permitted Refinancing Indebtedness is subordinated in right of payment to the Notes or the Note Guarantees, as applicable, on terms at least as favorable to the Holders of Notes as those contained in the documentation governing the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged; and

(5) such Indebtedness is incurred either by the Company or by the Restricted Subsidiary of the Company that was the obligor on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged and is guaranteed only by Persons who were obligors on the Indebtedness being renewed, refunded, refinanced, replaced, defeased or discharged.

“Person” means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, limited liability company or government or other entity.

“Private Placement Legend” means the legend set forth in Section 2.06(f)(1) hereof to be placed on all Notes issued under this Indenture except where otherwise permitted by the provisions of this Indenture.

“Production Payments” means Dollar-Denominated Production Payments and Volumetric Production Payments, collectively.

“Production Payments and Reserve Sales” means the grant or transfer by the Company or any of its Restricted Subsidiaries to any Person of a royalty, overriding royalty, net profits interest, Production Payment, partnership or other interest in Oil and Gas Properties, reserves or the right to receive all or a portion of the production or the proceeds from the sale of production attributable to such properties where the holder of such interest has recourse solely to such production or proceeds of production, subject to the obligation of the grantor or transferor to operate and maintain, or cause the subject interests to be operated and maintained, in a reasonably prudent manner or other customary standard or subject to the obligation of the grantor or transferor to indemnify for environmental, title or other matters customary in the Oil and

Gas Business, including any such grants or transfers pursuant to incentive compensation programs on terms that are reasonably customary in the Oil and Gas Business for geologists, geophysicists or other providers of technical services to the Company or any of its Restricted Subsidiaries.

“QIB” means a “qualified institutional buyer” as defined in Rule 144A.

“ Qualifying Equity Interests ” means Equity Interests of the Company other than Disqualified Stock.

“Qualifying Owners” means each of Ecofin Energy Resources PLC and Parent or any general partner, managing member, principal or managing director of any of the foregoing.

“Regulation S” means Regulation S promulgated under the Securities Act.

“Regulation S Global Note” means a Regulation S Temporary Global Note or Regulation S Permanent Global Note, as appropriate.

“Regulation S Permanent Global Note” means a permanent Global Note in the form of Exhibit A1 hereto bearing the Global Note Legend and the Private Placement Legend and deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Regulation S Temporary Global Note upon expiration of the Restricted Period.

“Regulation S Temporary Global Note” means a temporary Global Note in the form of Exhibit A2 hereto deposited with or on behalf of and registered in the name of the Depositary or its nominee, issued in a denomination equal to the outstanding principal amount of the Notes initially sold in reliance on Rule 903 of Regulation S.

“Responsible Officer,” when used with respect to the Trustee, means any officer within the Corporate Trust Administration of the Trustee (or any successor group of the Trustee) or any other officer of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of his knowledge of and familiarity with the particular subject.

“Restricted Definitive Note” means a Definitive Note bearing the Private Placement Legend.

“Restricted Global Note” means a Global Note bearing the Private Placement Legend.

“Restricted Investment” means an Investment other than a Permitted Investment.

“Restricted Period” means the 40-day distribution compliance period as defined in Regulation S.

“ Restricted Subsidiary ” of a Person means any Subsidiary of the referent Person that is not an Unrestricted Subsidiary.

“Rule 144” means Rule 144 promulgated under the Securities Act.

“Rule 144A” means Rule 144A promulgated under the Securities Act.

“Rule 903” means Rule 903 promulgated under the Securities Act.

“Rule 904” means Rule 904 promulgated under the Securities Act.

“ S&P ” means Standard & Poor’s Ratings Group, and any successor to the ratings business thereof.

“SEC” means the United States Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended.

“Senior Debt” means:

(1) all Indebtedness of the Company or any of its Restricted Subsidiaries outstanding under Credit Facilities and all obligations under Hedging Contracts with respect thereto;

(2) any other Indebtedness of the Company or any of its Restricted Subsidiaries permitted to be incurred under the terms of this Indenture, unless the instrument under which such Indebtedness is incurred expressly provides that it is subordinated in right of payment to the Notes or any Note Guarantee; and

(3) all obligations with respect to the items listed in the preceding clauses (1) and (2).

Notwithstanding anything to the contrary in the preceding sentence, Senior Debt will not include:

(a) any intercompany Indebtedness of the Company or any of its Restricted Subsidiaries to the Company or any of its Affiliates; or

(b) any Indebtedness that is incurred in violation of this Indenture.

For the avoidance of doubt, “Senior Debt” will not include any trade payables or taxes owed or owing by the Company or any of its Restricted Subsidiaries.

“Significant Subsidiary” means any Restricted Subsidiary that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X promulgated under the Securities Act, as such Regulation is in effect on the date of this Indenture.

“ Stated Maturity ” means, with respect to any installment of interest or principal on any series of Indebtedness, the date on which the payment of interest or principal was scheduled to be paid in the documentation governing such Indebtedness as of the first date it was incurred in compliance with the terms of this Indenture, and will not include any contingent obligations to repay, redeem or repurchase any such interest or principal prior to the date originally scheduled for the payment thereof.

“Subsidiary” means, with respect to any specified Person:

(1) any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency and after giving effect to any voting agreement or stockholders’ agreement that effectively transfers voting power) to vote in the election of directors, managers or trustees of the corporation, association or other business entity is at the time owned or controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that Person (or a combination thereof); and

(2) any partnership or limited liability company of which (a) more than 50% of the capital accounts, distribution rights, total equity and voting interests or general and limited partnership interests, as applicable, are owned or controlled, directly or indirectly, by such Person or one or more of the other Subsidiaries of that Person or a combination thereof, whether in the form of membership, general, special or limited partnership interests or otherwise, and (b) such Person or any Subsidiary of such Person is a controlling general partner or otherwise controls such entity.

“TIA” means the Trust Indenture Act of 1939, as amended (15 U.S.C. §§ 77aaa-77bbbb).

“Treasury Management Arrangement” means any agreement or other arrangement governing the provision of treasury or cash management services, including deposit accounts, overdraft, credit or debit card, funds transfer, automated clearinghouse, zero balance accounts, returned check concentration, controlled disbursement, lockbox, account reconciliation and reporting and trade finance services and other cash management services.

“ Treasury Rate ” means, as of any redemption date, the yield to maturity as of the earlier of (a) such redemption date or (b) the date on which such Notes are defeased or satisfied and discharged, of the most recently issued United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two Business Days prior to such date (or, if such Statistical Release is no longer published, any publicly available source of similar market data)) most nearly equal to the period from the redemption date to April 15, 2016; provided, however , that if the period from the redemption date to April 15, 2016, is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year will be used. Any such Treasury Rate shall be obtained by the Company.

“Trustee” means Wells Fargo Bank, National Association, until a successor replaces it in accordance with the applicable provisions of this Indenture and thereafter means the successor serving hereunder.

“Uniform Commercial Code” means the Uniform Commercial Code as from time to time in effect in the State of New York.

“Unrestricted Definitive Note” means a Definitive Note that does not bear and is not required to bear the Private Placement Legend.

“Unrestricted Global Note” means a Global Note that does not bear and is not required to bear the Private Placement Legend.

“ Unrestricted Subsidiary ” means any Subsidiary of the Company that is designated by the Board of Directors of the Company as an Unrestricted Subsidiary pursuant to a resolution of the Board of Directors of the Company, but only to the extent that such Subsidiary:

(1) has no Indebtedness other than Non-Recourse Debt;

(2) except as permitted by Section 4.11 hereof, is not party to any agreement, contract, arrangement or understanding with the Company or any Restricted Subsidiary of the Company unless the terms of any such agreement, contract, arrangement or understanding are no less favorable to the Company or such Restricted Subsidiary than those that might be obtained at the time from Persons who are not Affiliates of the Company;

(3) is a Person with respect to which neither the Company nor any of its Restricted Subsidiaries has any direct or indirect obligation (a) to subscribe for additional Equity Interests or (b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(4) has not guaranteed or otherwise directly or indirectly provided credit support for any Indebtedness of the Company or any of its Restricted Subsidiaries.

“U.S. Person” means a U.S. Person as defined in Rule 902(k) promulgated under the Securities Act.

“ Volumetric Production Payments ” means production payment obligations recorded as deferred revenue in accordance with GAAP, together with all undertakings and obligations in connection therewith.

“Voting Stock” of any specified Person as of any date means the Capital Stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

“Weighted Average Life to Maturity” means, when applied to any Indebtedness at any date, the number of years obtained by dividing:

(1) the sum of the products obtained by multiplying (a) the amount of each then remaining installment, sinking fund, serial maturity or other required payments of principal, including payment at final maturity, in respect of the Indebtedness, by (b) the number of years (calculated to the nearest one-twelfth) that will elapse between such date and the making of such payment; by

(2) the then outstanding principal amount of such Indebtedness.

Section 1.02 Other Definitions.

		Defined in
Term		Section

“Affiliate Transaction”		4.11
“Asset Sale Offer”		3.09
“Authentication Order”		2.02
“Change of Control Offer”		4.15
“Change of Control Payment”		4.15
“Change of Control Payment Date”		4.15
“Covenant Defeasance”		8.03
“DTC”		2.03
“Event of Default”		6.01
“Excess Proceeds”		4.10
“incur”		4.09
“Legal Defeasance”		8.02
“Offer Amount”		3.09
“Offer Period”		3.09
“Paying Agent”		2.03
“Permitted Debt”		4.09
“Payment Default”		6.01

		Defined in
Term		Section

“Purchase Date”		3.09
“Registrar”		2.03
“Restricted Payments”		4.07

Section 1.03 Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.

The following TIA terms used in this Indenture have the following meanings:

“indenture securities” means the Notes and the Note Guarantees;

“indenture security Holder” means a Holder of a Note;

“indenture to be qualified” means this Indenture;

“indenture trustee” or “institutional trustee” means the Trustee; and

“obligor” on the Notes and the Note Guarantees means the Company and the Guarantors, respectively, and any successor obligor upon the Notes and the Note Guarantees, respectively.

All other terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule under the TIA have the meanings so assigned to them.

Section 1.04 Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP;

(3) “or” is not exclusive;

(4) “including” is not limiting;

(5) words in the singular include the plural, and in the plural include the singular;

(6) “will” shall be interpreted to express a command;

(7) provisions apply to successive events and transactions; and

(8) references to sections of or rules under the Securities Act will be deemed to include substitute, replacement of successor sections or rules adopted by the SEC from time to time.

ARTICLE 2
THE NOTES

Section 2.01 Form and Dating.

(a) General . The Notes and the Trustee’s certificate of authentication will be substantially in the form of Exhibits A1 and A2 hereto. The Notes may have notations, legends or endorsements required by law, stock exchange rule or usage. Each Note will be dated the date of its authentication. The Notes shall be in denominations of $2,000 and integral multiples of $1,000 in excess thereof.

The terms and provisions contained in the Notes will constitute, and are hereby expressly made, a part of this Indenture and the Company, the Guarantors and the Trustee, by their execution and delivery of this Indenture, expressly agree to such terms and provisions and to be bound thereby. However, to the extent any provision of any Note conflicts with the express provisions of this Indenture, the provisions of this Indenture shall govern and be controlling.

(b) Global Notes . Notes issued in global form will be substantially in the form of Exhibits A1 or A2 hereto (including the Global Note Legend thereon and the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Notes issued in definitive form will be substantially in the form of Exhibit A1 hereto (but without the Global Note Legend thereon and without the “Schedule of Exchanges of Interests in the Global Note” attached thereto). Each Global Note will represent such of the outstanding Notes as will be specified therein and each shall provide that it represents the aggregate principal amount of outstanding Notes from time to time endorsed thereon and that the aggregate principal amount of outstanding Notes represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement of a Global Note to reflect the amount of any increase or decrease in the aggregate principal amount of outstanding Notes represented thereby will be made by the Trustee or the Custodian, at the direction of the Trustee, in accordance with instructions given by the Holder thereof as required by Section 2.06 hereof.

(c) Temporary Global Notes. Notes offered and sold in reliance on Regulation S will be issued initially in the form of the Regulation S Temporary Global Note, which will be deposited on behalf of the purchasers of the Notes represented thereby with the Trustee, as custodian for the Depositary, and registered in the name of the Depositary or the nominee of the Depositary for the accounts of designated agents holding on behalf of Euroclear or Clearstream, duly executed by the Company and authenticated by the Trustee as hereinafter provided. The Restricted Period will be terminated upon the receipt by the Trustee of a written certificate from the Depositary, together with copies of certificates from Euroclear and Clearstream certifying that they have received certification of non-United States beneficial ownership of 100% of the aggregate principal amount of the Regulation S Temporary Global Note (except to the extent of any beneficial owners thereof who acquired an interest therein during the Restricted Period pursuant to another exemption from registration under the Securities Act and who will take delivery of a beneficial ownership interest in a 144A Global Note or an AI Global Note bearing a Private Placement Legend, all as contemplated by Section 2.06(b) hereof).

Following the termination of the Restricted Period, the Company shall instruct, which instructions shall be in writing and comply with Rule 9.03(b)(3)(ii)(B) of Regulation S, the Trustee to, and upon such instructions, the Trustee shall, exchange beneficial interests in the Regulation S Temporary Global Note for beneficial interests in the Regulation S Permanent Global Note, pursuant to the Applicable Procedures. Simultaneously with the exchange of such beneficial interests and in accordance with Section 2.06(g) hereof, the Trustee will (i) reduce and endorse the Regulation S Temporary Global Note accordingly and (ii) increase and endorse the Regulation S Permanent Global Note accordingly. The aggregate principal amount of the Regulation S Temporary Global Note and the Regulation S Permanent

Global Note may from time to time be increased or decreased by adjustments made on the records of the Trustee and the Depositary or its nominee, as the case may be, in connection with transfers of interest as hereinafter provided.

(d) Euroclear and Clearstream Procedures Applicable. The provisions of the “Operating Procedures of the Euroclear System” and “Terms and Conditions Governing Use of Euroclear” and the “General Terms and Conditions of Clearstream Banking” and “Customer Handbook” of Clearstream will be applicable to transfers of beneficial interests in the Regulation S Temporary Global Note and the Regulation S Permanent Global Note that are held by Participants through Euroclear or Clearstream.

Section 2.02 Execution and Authentication.

At least one Officer must sign the Notes for the Company by manual, facsimile or electronically transmitted signature.

If an Officer whose signature is on a Note no longer holds that office at the time a Note is authenticated, the Note will nevertheless be valid.

A Note will not be valid until authenticated by the manual signature of the Trustee. The signature will be conclusive evidence that the Note has been authenticated under this Indenture.

The Trustee will, upon receipt of a written order of the Company signed by an Officer (an “ Authentication Order ”), authenticate Notes for original issue (i) on the date hereof as Initial Notes in the aggregate principal amount of $220.0 million and (ii) thereafter any Additional Notes that may be validly issued under this Indenture. The aggregate principal amount of Notes outstanding at any time may not exceed the aggregate principal amount of Notes authorized for issuance by the Company pursuant to one or more Authentication Orders, except as provided in Section 2.07 hereof.

The Trustee shall also authenticate and deliver Notes at the times and in the manner specified in Sections 2.06, 2.07, 2.10, 3.06, 3.09, 4.15 and 9.04 hereof.

With respect to any Additional Notes, the Company shall set forth in an Officers’ Certificate, a copy of which shall be delivered to the Trustee at or prior to original issuance thereof, the following information:

(a) the aggregate principal amount of such Additional Notes to be authenticated and delivered pursuant to this Indenture;

(b) the issue price, the issue date (and the corresponding date from which interest shall accrue thereon and the first interest payment date therefor) and the CUSIP and/or ISIN number of such Additional Notes; and

(c) whether such Additional Notes shall be subject to the restrictions on transfer set forth in Section 2.06 hereof relating to Restricted Global Notes and Restricted Definitive Notes.

The Trustee may appoint an authenticating agent acceptable to the Company to authenticate Notes. An authenticating agent may authenticate Notes whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as an Agent to deal with Holders or an Affiliate of the Company.

Section 2.03 Registrar and Paying Agent.

The Company will maintain an office or agency where Notes may be presented for registration of transfer or for exchange (“ Registrar ”) and an office or agency where Notes may be presented for payment (“ Paying Agent ”). The Registrar will keep a register of the Notes and of their transfer and exchange. The Company may appoint one or more co-registrars and one or more additional paying agents. The term “Registrar” includes any co-registrar and the term “Paying Agent” includes any additional paying agent. The Company may change any Paying Agent or Registrar without notice to any Holder. The Company will notify the Trustee in writing of the name and address of any Agent not a party to this Indenture. If the Company fails to appoint or maintain another entity as Registrar or Paying Agent, the Trustee shall act as such. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.

The Company initially appoints The Depository Trust Company ( “DTC” ) to act as Depositary with respect to the Global Notes.

The Company initially appoints the Trustee to act as the Registrar and Paying Agent and to act as Custodian with respect to the Global Notes.

Section 2.04 Paying Agent to Hold Money in Trust.

The Company will require each Paying Agent other than the Trustee to agree in writing that the Paying Agent will hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of, premium on, if any, or interest, if any, on, the Notes, and will notify the Trustee of any default by the Company in making any such payment. While any such default continues, the Trustee may require a Paying Agent to pay all money held by it to the Trustee. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if other than the Company or a Subsidiary) will have no further liability for the money. If the Company or a Subsidiary acts as Paying Agent, it will segregate and hold in a separate trust fund for the benefit of the Holders all money held by it as Paying Agent. Upon any bankruptcy or reorganization proceedings relating to the Company, the Trustee will serve as Paying Agent for the Notes.

Section 2.05 Holder Lists.

The Trustee will preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of all Holders and shall otherwise comply with TIA §312(a). If the Trustee is not the Registrar, the Company will furnish to the Trustee at least seven Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of the Holders of the Notes and the Company shall otherwise comply with TIA §312(a).

Section 2.06 Transfer and Exchange.

(a) Transfer and Exchange of Global Notes . A Global Note may not be transferred except as a whole by the Depositary to a nominee of the Depositary, by a nominee of the Depositary to the Depositary or to another nominee of the Depositary, or by the Depositary or any such nominee to a successor Depositary or a nominee of such successor Depositary. All Global Notes will be exchanged by the Company for Definitive Notes if:

(1) the Company delivers to the Trustee notice from the Depositary that it is unwilling or unable to continue to act as Depositary or that it is no longer a clearing agency

registered under the Exchange Act and, in either case, a successor Depositary is not appointed by the Company within 120 days after the date of such notice from the Depositary;

(2) the Company in its sole discretion determines that the Global Notes (in whole but not in part) should be exchanged for Definitive Notes and delivers a written notice to such effect to the Trustee; provided that in no event shall the Regulation S Temporary Global Note be exchanged by the Company for Definitive Notes prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act; or

(3) there has occurred and is continuing a Default or Event of Default with respect to the Notes and the Depositary notifies the Trustee of its decision to exchange the Global Notes for Definitive Notes.

Upon the occurrence of either of the preceding events in (1) or (2) above, Definitive Notes shall be issued in such names as the Depositary shall instruct the Trustee. Global Notes also may be exchanged or replaced, in whole or in part, as provided in Sections 2.07 and 2.10 hereof. Every Note authenticated and delivered in exchange for, or in lieu of, a Global Note or any portion thereof, pursuant to this Section 2.06 or Section 2.07 or 2.10 hereof, shall be authenticated and delivered in the form of, and shall be, a Global Note. A Global Note may not be exchanged for another Note other than as provided in this Section 2.06(a), however, beneficial interests in a Global Note may be transferred and exchanged as provided in Section 2.06(b) or (c) hereof.

(b) Transfer and Exchange of Beneficial Interests in the Global Notes . The transfer and exchange of beneficial interests in the Global Notes will be effected through the Depositary, in accordance with the provisions of this Indenture and the Applicable Procedures. Beneficial interests in the Restricted Global Notes will be subject to restrictions on transfer comparable to those set forth herein to the extent required by the Securities Act. Transfers of beneficial interests in the Global Notes also will require compliance with either subparagraph (1) or (2) below, as applicable, as well as one or more of the other following subparagraphs, as applicable:

(1) Transfer of Beneficial Interests in the Same Global Note . Beneficial interests in any Restricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in the same Restricted Global Note in accordance with the transfer restrictions set forth in the Private Placement Legend; provided, however , that prior to the expiration of the Restricted Period, transfers of beneficial interests in the Regulation S Temporary Global Note may not be made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser). Beneficial interests in any Unrestricted Global Note may be transferred to Persons who take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note. No written orders or instructions shall be required to be delivered to the Registrar to effect the transfers described in this Section 2.06(b)(1).

(2) All Other Transfers and Exchanges of Beneficial Interests in Global Notes. In connection with all transfers and exchanges of beneficial interests that are not subject to Section 2.06(b)(1) above, the transferor of such beneficial interest must deliver to the Registrar either:

(A) both:

(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to credit or cause to be credited a beneficial interest in another Global

Note in an amount equal to the beneficial interest to be transferred or exchanged; and

(ii) instructions given in accordance with the Applicable Procedures containing information regarding the Participant account to be credited with such increase; or

(B) both:

(i) a written order from a Participant or an Indirect Participant given to the Depositary in accordance with the Applicable Procedures directing the Depositary to cause to be issued a Definitive Note in an amount equal to the beneficial interest to be transferred or exchanged; and

(ii) instructions given by the Depositary to the Registrar containing information regarding the Person in whose name such Definitive Note shall be registered to effect the transfer or exchange referred to in (1) above;

provided that in no event shall Definitive Notes be issued upon the transfer or exchange of beneficial interests in the Regulation S Temporary Global Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act.

Upon satisfaction of all of the requirements for transfer or exchange of beneficial interests in Global Notes contained in this Indenture and the Notes or otherwise applicable under the Securities Act, the Trustee shall adjust the principal amount of the relevant Global Note(s) pursuant to Section 2.06(g) hereof.

(3) Transfer of Beneficial Interests in a Restricted Global Note for Beneficial Interests in Another Restricted Global Note. A beneficial interest in any Restricted Global Note may be transferred to a Person who takes delivery thereof in the form of a beneficial interest in another Restricted Global Note if the transfer complies with the requirements of Section 2.06(b)(2) hereof and the Registrar receives the following:

(A) if the transferee will take delivery in the form of a beneficial interest in the 144A Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transferee will take delivery in the form of a beneficial interest in the Regulation S Temporary Global Note or the Regulation S Permanent Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transferee will take delivery in the form of a beneficial interest in the AI Global Note, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(4) Transfer and Exchange of Beneficial Interests in a Restricted Global Note for Beneficial Interests in an Unrestricted Global Note. A beneficial interest in any Restricted

Global Note may be exchanged by any holder thereof for a beneficial interest in an Unrestricted Global Note or transferred to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note if the exchange or transfer complies with the requirements of Section 2.06(b)(2) hereof and the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(a) thereof; or

(ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of a beneficial interest in an Unrestricted Global Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this Section 2.06(b)(4), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

If any such transfer is effected pursuant to this Section 2.06(b)(4) at a time when an Unrestricted Global Note has not yet been issued, the Company shall issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee shall authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the aggregate principal amount of beneficial interests transferred pursuant to this Section 2.06(b)(4).

Beneficial interests in an Unrestricted Global Note cannot be exchanged for, or transferred to Persons who take delivery thereof in the form of, a beneficial interest in a Restricted Global Note.

(c) Transfer or Exchange of Beneficial Interests for Definitive Notes. The following provisions of this Section 2.06(c) shall apply to transfers or exchanges of beneficial interests in a Global Note for a Definitive Note pursuant to Section 2.06(a) hereof. Except as provided in Section 2.06(a) hereof, Holders shall not be entitled to effect such an exchange.

(1) Beneficial Interests in Restricted Global Notes to Restricted Definitive Notes. If any holder of a beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Restricted Definitive Note, then, upon receipt by the Registrar of the following documentation:

(A) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for a Restricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (2)(a) thereof;

(B) if such beneficial interest is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such beneficial interest is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such beneficial interest is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such beneficial interest is being transferred to an Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

(F) if such beneficial interest is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

(G) if such beneficial interest is being transferred pursuant to an effective registration statement under the Securities Act, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(c) thereof,

the Trustee shall cause the aggregate principal amount of the applicable Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company shall execute and the Trustee shall authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c) shall be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest shall instruct the Registrar through instructions from the Depositary and the Participant or Indirect Participant. The Trustee shall deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest in a Restricted Global Note pursuant to this Section 2.06(c)(1) shall bear the Private Placement Legend and shall be subject to all restrictions on transfer contained therein.

(2) Beneficial Interests in Regulation S Temporary Global Note to Definitive Notes. Notwithstanding Sections 2.06(c)(1)(A) and (C) hereof, a beneficial interest in the Regulation S Temporary Global Note may not be exchanged for a Definitive Note or transferred to a Person who takes delivery thereof in the form of a Definitive Note prior to (A) the expiration of the Restricted Period and (B) the receipt by the Registrar of any certificates required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act, except in the case of a transfer pursuant to an exemption from the registration requirements of the Securities Act other than Rule 903 or Rule 904.

(3) Beneficial Interests in Restricted Global Notes to Unrestricted Definitive Notes. A holder of a beneficial interest in a Restricted Global Note may exchange such beneficial interest for an Unrestricted Definitive Note or may transfer such beneficial interest to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note only if the Registrar receives the following:

(i) if the holder of such beneficial interest in a Restricted Global Note proposes to exchange such beneficial interest for an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit C hereto, including the certifications in item (1)(b) thereof; or

(ii) if the holder of such beneficial interest in a Restricted Global Note proposes to transfer such beneficial interest to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this Section 2.06(c)(3), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(4) Beneficial Interests in Unrestricted Global Notes to Unrestricted Definitive Notes. If any holder of a beneficial interest in an Unrestricted Global Note proposes to exchange such beneficial interest for a Definitive Note or to transfer such beneficial interest to a Person who takes delivery thereof in the form of a Definitive Note, then, upon satisfaction of the conditions set forth in Section 2.06(b)(2) hereof, the Trustee will cause the aggregate principal amount of the applicable Unrestricted Global Note to be reduced accordingly pursuant to Section 2.06(g) hereof, and the Company will execute and the Trustee will authenticate and deliver to the Person designated in the instructions a Definitive Note in the appropriate principal amount. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) will be registered in such name or names and in such authorized denomination or denominations as the holder of such beneficial interest requests through instructions to the Registrar from or through the Depositary and the Participant or Indirect Participant. The Trustee will deliver such Definitive Notes to the Persons in whose names such Notes are so registered. Any Definitive Note issued in exchange for a beneficial interest pursuant to this Section 2.06(c)(4) will not bear the Private Placement Legend.

(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.

(1) Restricted Definitive Notes to Beneficial Interests in Restricted Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note or to transfer such Restricted Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in a Restricted Global Note, then, upon receipt by the Registrar of the following documentation:

(A) if the Holder of such Restricted Definitive Note proposes to exchange such Note for a beneficial interest in a Restricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (2)(b) thereof;

(B) if such Restricted Definitive Note is being transferred to a QIB in accordance with Rule 144A, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (1) thereof;

(C) if such Restricted Definitive Note is being transferred to a Non-U.S. Person in an offshore transaction in accordance with Rule 903 or Rule 904, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (2) thereof;

(D) if such Restricted Definitive Note is being transferred pursuant to an exemption from the registration requirements of the Securities Act in accordance with Rule 144, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(a) thereof;

(E) if such Restricted Definitive Note is being transferred to an Accredited Investor in reliance on an exemption from the registration requirements of the Securities Act other than those listed in subparagraphs (B) through (D) above, a certificate to the effect set forth in Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable;

(F) if such Restricted Definitive Note is being transferred to the Company or any of its Subsidiaries, a certificate to the effect set forth in Exhibit B hereto, including the certifications in item (3)(b) thereof; or

the Trustee will cancel the Restricted Definitive Note, increase or cause to be increased the aggregate principal amount of, in the case of clause (A) above, the appropriate Restricted Global Note, in the case of clause (B) above, the 144A Global Note, in the case of clause (C) above, the Regulation S Global Note, and in all other cases, the AI Global Note.

(2) Restricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of a Restricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Restricted Definitive Note to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note only if the Registrar receives the following:

(i) if the Holder of such Definitive Notes proposes to exchange such Notes for a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit C hereto, including the certifications in item (1)(c) thereof; or

(ii) if the Holder of such Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of a beneficial interest in the Unrestricted Global Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this Section 2.06(d)(2), if the Registrar so requests or if the Applicable Procedures so require, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

Upon satisfaction of the conditions of any of the subparagraphs in this Section 2.06(d)(2), the Trustee will cancel the Definitive Notes and increase or cause to be increased the aggregate principal amount of the Unrestricted Global Note.

(3) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note for a beneficial interest in an Unrestricted Global Note or transfer such Definitive Notes to a Person who takes delivery thereof in the form of a beneficial interest in an Unrestricted Global Note at any time. Upon receipt of a request for such an exchange or transfer, the Trustee will cancel the applicable Unrestricted Definitive Note and increase or cause to be increased the aggregate principal amount of one of the Unrestricted Global Notes.

If any such exchange or transfer from a Definitive Note to a beneficial interest is effected pursuant to subparagraph (2) or (3) above at a time when an Unrestricted Global Note has not yet been issued, the Company will issue and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee will authenticate one or more Unrestricted Global Notes in an aggregate principal amount equal to the principal amount of Definitive Notes so transferred.

(e) Transfer and Exchange of Definitive Notes for Definitive Notes. Upon request by a Holder of Definitive Notes and such Holder’s compliance with the provisions of this Section 2.06(e), the Registrar will register the transfer or exchange of Definitive Notes. Prior to such registration of transfer or exchange, the requesting Holder must present or surrender to the Registrar the Definitive Notes duly endorsed or accompanied by a written instruction of transfer in form satisfactory to the Registrar duly executed by such Holder or by its attorney, duly authorized in writing. In addition, the requesting Holder must provide any additional certifications, documents and information, as applicable, required pursuant to the following provisions of this Section 2.06(e).

(1) Restricted Definitive Notes to Restricted Definitive Notes. Any Restricted Definitive Note may be transferred to and registered in the name of Persons who take delivery thereof in the form of a Restricted Definitive Note if the Registrar receives the following:

(A) if the transfer will be made pursuant to Rule 144A, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (1) thereof;

(B) if the transfer will be made pursuant to Rule 903 or Rule 904, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications in item (2) thereof; and

(C) if the transfer will be made pursuant to any other exemption from the registration requirements of the Securities Act, then the transferor must deliver a certificate in the form of Exhibit B hereto, including the certifications, certificates and Opinion of Counsel required by item (3) thereof, if applicable.

(2) Restricted Definitive Notes to Unrestricted Definitive Notes. Any Restricted Definitive Note may be exchanged by the Holder thereof for an Unrestricted Definitive Note or transferred to a Person or Persons who take delivery thereof in the form of an Unrestricted Definitive Note if the Registrar receives the following:

(i) if the Holder of such Restricted Definitive Notes proposes to exchange such Notes for an Unrestricted Definitive Note, a certificate from such

Holder in the form of Exhibit C hereto, including the certifications in item (1)(d) thereof; or

(ii) if the Holder of such Restricted Definitive Notes proposes to transfer such Notes to a Person who shall take delivery thereof in the form of an Unrestricted Definitive Note, a certificate from such Holder in the form of Exhibit B hereto, including the certifications in item (4) thereof;

and, in each such case set forth in this Section 2.06(e)(2), if the Registrar so requests, an Opinion of Counsel in form reasonably acceptable to the Registrar to the effect that such exchange or transfer is in compliance with the Securities Act and that the restrictions on transfer contained herein and in the Private Placement Legend are no longer required in order to maintain compliance with the Securities Act.

(3) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who takes delivery thereof in the form of an Unrestricted Definitive Note. Upon receipt of a request to register such a transfer, the Registrar shall register the Unrestricted Definitive Notes pursuant to the instructions from the Holder thereof.

(f) Legends. The following legends will appear on the face of all Global Notes and Definitive Notes issued under this Indenture unless specifically stated otherwise in the applicable provisions of this Indenture.

(1) Private Placement Legend .

(A) Except as permitted by subparagraph (B) below, each Global Note and each Definitive Note (and all Notes issued in exchange therefor or substitution thereof) shall bear the legend in substantially the following form:

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT), (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO IT IN THE JURISDICTION IN WHICH SUCH PURCHASE IS MADE, OR (C) IT IS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144 PROMULGATED UNDER THE SECURITIES ACT ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT

THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO IT IN THE JURISDICTION IN WHICH SUCH PURCHASE IS MADE, (D) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF REGULATION D THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S, OR REGISTRAR’S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144.”

(B) Notwithstanding the foregoing, any Global Note or Definitive Note issued pursuant to subparagraphs (b)(4), (c)(3), (c)(4), (d)(2), (d)(3), (e)(2), (e)(3) or (f) of this Section 2.06 (and all Notes issued in exchange therefor or substitution thereof) will not bear the Private Placement Legend.

(2) Global Note Legend . Each Global Note will bear a legend in substantially the following form:

“THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN DEFINITIVE FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW YORK) (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS

MADE TO CEDE & CO. OR SUCH OTHER ENTITY AS MAY BE REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.”

(3) Regulation S Temporary Global Note Legend. The Regulation S Temporary Global Note will bear a legend in substantially the following form:

“THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A REGULATION S PERMANENT GLOBAL NOTE, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.”

(g) Cancellation and/or Adjustment of Global Notes. At such time as all beneficial interests in a particular Global Note have been exchanged for beneficial interests in another Global Note or Definitive Notes, or a particular Global Note has been redeemed, repurchased or canceled in whole and not in part, each such Global Note will be returned to or retained and canceled by the Trustee in accordance with Section 2.11 hereof. At any time prior to such cancellation, if any beneficial interest in a Global Note is exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note or for Definitive Notes, the principal amount of Notes represented by such Global Note will be reduced accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such reduction; and if the beneficial interest is being exchanged for or transferred to a Person who will take delivery thereof in the form of a beneficial interest in another Global Note, such other Global Note will be increased accordingly and an endorsement will be made on such Global Note by the Trustee or by the Depositary at the direction of the Trustee to reflect such increase.

(h) General Provisions Relating to Transfers and Exchanges.

(1) To permit registrations of transfers and exchanges, the Company will execute and the Trustee will authenticate Global Notes and Definitive Notes upon receipt of an Authentication Order in accordance with Section 2.02 hereof or at the Registrar’s request.

(2) No service charge will be made to a Holder of a beneficial interest in a Global Note or to a Holder of a Definitive Note for any registration of transfer or exchange, but the Company may require payment of a sum sufficient to cover any transfer tax or similar governmental charge payable in connection therewith (other than any such transfer taxes or similar governmental charge payable upon exchange or transfer pursuant to Sections 2.10, 3.06, 3.09, 4.10, 4.15 and 9.05 hereof).

(3) All Global Notes and Definitive Notes issued upon any registration of transfer or exchange of Global Notes or Definitive Notes will be the valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Global Notes or Definitive Notes surrendered upon such registration of transfer or exchange.

(4) Neither the Registrar nor the Company will be required:

(A) to issue, to register the transfer of or to exchange any Notes during a period beginning at the opening of business 15 days before the day of any selection of

Notes for redemption under Section 3.02 hereof and ending at the close of business on the day of selection;

(B) to register the transfer of or to exchange any Note selected for redemption in whole or in part, except the unredeemed portion of any Note being redeemed in part; or

(C) to register the transfer of or to exchange a Note between a record date and the next succeeding interest payment date.

(5) Prior to due presentment for the registration of a transfer of any Note, the Trustee, any Agent and the Company may deem and treat the Person in whose name any Note is registered as the absolute owner of such Note for the purpose of receiving payment of principal of and interest on such Notes and for all other purposes, and none of the Trustee, any Agent or the Company shall be affected by notice to the contrary.

(6) The Trustee will authenticate Global Notes and Definitive Notes in accordance with the provisions of Section 2.02 hereof.

(7) All certifications, certificates and Opinions of Counsel required to be submitted to the Registrar pursuant to this Section 2.06 to effect a registration of transfer or exchange may be submitted by facsimile or electronic image scan.

Section 2.07 Replacement Notes.

If any mutilated Note is surrendered to the Trustee or the Company and the Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, the Company will issue and the Trustee, upon receipt of an Authentication Order, will authenticate a replacement Note if the Trustee’s requirements are met. If required by the Trustee or the Company, an indemnity bond must be supplied by the Holder that is sufficient in the judgment of the Trustee and the Company to protect the Company, the Trustee, any Agent and any authenticating agent from any loss that any of them may suffer if a Note is replaced. The Company may charge for its expenses in replacing a Note.

Every replacement Note is an additional obligation of the Company and will be entitled to all of the benefits of this Indenture equally and proportionately with all other Notes duly issued hereunder.

Section 2.08 Outstanding Notes.

The Notes outstanding at any time are all the Notes authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation, those reductions in the interest in a Global Note effected by the Trustee in accordance with the provisions hereof, and those described in this Section 2.08 as not outstanding. Except as set forth in Section 2.09 hereof, a Note does not cease to be outstanding because the Company or an Affiliate of the Company holds the Note; however, Notes held by the Company or a Subsidiary of the Company shall not be deemed to be outstanding for purposes of Section 3.07(a) hereof. Notes so owned by the Company or an Affiliate of the Company that have been pledged in good faith may be regarded as outstanding if the pledgee establishes to the satisfaction of the Trustee the pledgee’s right so to act with respect to such Notes, including the sole right to vote the Notes both before and after the occurrence of any Event of Default, and that the pledgee is not the Company or an Affiliate of the Company.

If a Note is replaced pursuant to Section 2.07 hereof, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Note is held by a protected purchaser within the meaning of Section 8-405 of the Uniform Commercial Code.

If the principal amount of any Note is considered paid under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to accrue.

If the Paying Agent (other than the Company, a Subsidiary or an Affiliate of any thereof) holds, on a redemption date or other maturity date, money sufficient to pay Notes payable on that date, then on and after that date such Notes will be deemed to be no longer outstanding and will cease to accrue interest.

Section 2.09 Treasury Notes.

In determining whether the Holders of the required principal amount of Notes have concurred in any direction, waiver or consent, Notes owned by the Company or any Guarantor, or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any Guarantor, will be considered as though not outstanding, except that for the purposes of determining whether the Trustee will be protected in relying on any such direction, waiver or consent, only Notes that the Trustee knows are so owned will be so disregarded.

Section 2.10 Temporary Notes.

Until certificates representing Notes are ready for delivery, the Company may prepare and the Trustee, upon receipt of an Authentication Order, will authenticate temporary Notes. Temporary Notes will be substantially in the form of certificated Notes but may have variations that the Company considers appropriate for temporary Notes and as may be reasonably acceptable to the Trustee. Without unreasonable delay, the Company will prepare and the Trustee will authenticate definitive Notes in exchange for temporary Notes.

Holders of temporary Notes will be entitled to all of the benefits of this Indenture.

Section 2.11 Cancellation.

The Company at any time may deliver Notes to the Trustee for cancellation. The Registrar and Paying Agent will forward to the Trustee any Notes surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else will cancel all Notes surrendered for registration of transfer, exchange, payment, replacement or cancellation and will destroy canceled Notes (subject to the record retention requirements of the Exchange Act). Certification of the destruction of all canceled Notes will be delivered to the Company upon written request. The Company may not issue new Notes to replace Notes that it has paid or that have been delivered to the Trustee for cancellation.

Section 2.12 Defaulted Interest.

If the Company defaults in a payment of interest on the Notes, it will pay the defaulted interest in any lawful manner plus, to the extent lawful, interest payable on the defaulted interest, to the Persons who are Holders on a subsequent special record date, in each case at the rate provided in the Notes and in Section 4.01 hereof. The Company will notify the Trustee in writing of the amount of defaulted interest proposed to be paid on each Note and the date of the proposed payment. The Company will fix or cause to be fixed each such special record date and payment date; provided that no such special record date may be less than 10 days prior to the related payment date for such defaulted interest. At least 15 days before

the special record date, the Company (or, upon the written request of the Company, the Trustee in the name and at the expense of the Company) will mail or cause to be mailed to Holders (or sent electronically if DTC is the recipient) a notice that states the special record date, the related payment date and the amount of such interest to be paid.

Section 2.13 CUSIP/ISIN Numbers.

The Company will promptly notify the Trustee in writing of any change in the “CUSIP” or “ISIN” numbers.

ARTICLE 3
REDEMPTION AND PREPAYMENT

Section 3.01 Notices to Trustee.

If the Company elects to redeem Notes pursuant to the optional redemption provisions of Section 3.07 hereof, it must furnish to the Trustee, at least 30 days but not more than 60 days before a redemption date, an Officers’ Certificate setting forth:

(1) the clause of this Indenture pursuant to which the redemption shall occur;

(2) the redemption date;

(3) the principal amount of Notes to be redeemed; and

(4) the redemption price.

Section 3.02 Selection of Notes to Be Redeemed or Purchased.

If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee will select Notes for redemption or purchase on a pro rata basis (or, in the case of Notes issued in global form pursuant to Article 2 hereof, based on a method as DTC or its nominee or successor may require or, where such nominee or successor is the trustee, that most nearly approximates a pro rata selection as the Trustee deems fair and appropriate) unless otherwise required by law or applicable stock exchange or depositary requirements.

In the event of partial redemption or purchase by lot, the particular Notes to be redeemed or purchased will be selected, unless otherwise provided herein, not less than 30 nor more than 60 days prior to the redemption or purchase date by the Trustee from the outstanding Notes not previously called for redemption or purchase.

The Trustee will promptly notify the Company in writing of the Notes selected for redemption or purchase and, in the case of any Note selected for partial redemption or purchase, the principal amount thereof to be redeemed or purchased. Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder shall be redeemed or purchased. Except as provided in the preceding sentence, provisions of this Indenture that apply to Notes called for redemption or purchase also apply to portions of Notes called for redemption or purchase.

Section 3.03 Notice of Redemption.

Subject to the provisions of Section 3.09 hereof, at least 30 days but not more than 60 days before a redemption date, the Company will mail or cause to be mailed by first class mail (or sent electronically if DTC is the recipient), a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of this Indenture pursuant to Articles 8 or 11 hereof.

The notice will identify the Notes to be redeemed and will state:

(1) the redemption date;

(2) the redemption price (if then determined and otherwise the method of determination);

(3) if any Note is being redeemed in part, the portion of the principal amount of such Note to be redeemed and that, after the redemption date upon surrender of such Note, a new Note or Notes in principal amount equal to the unredeemed portion will be issued in the name of the Holder thereof upon cancellation of the original Note;

(4) the name and address of the Paying Agent;

(5) that Notes called for redemption must be surrendered to the Paying Agent to collect the redemption price;

(6) any conditions precedent in regard to the redemption;

(7) that, unless the Company defaults in making such redemption payment or a condition to such redemption has not been satisfied, interest on Notes called for redemption ceases to accrue on and after the redemption date;

(8) the paragraph of the Notes and/or Section of this Indenture pursuant to which the Notes called for redemption are being redeemed; and

(9) that no representation is made as to the correctness or accuracy of the CUSIP/ISIN numbers, if any, listed in such notice or printed on the Notes.

At the Company’s request, the Trustee will give the notice of redemption in the Company’s name and at its expense; provided, however , that the Company has delivered to the Trustee, at least 45 days prior to the redemption date, an Officers’ Certificate requesting that the Trustee give such notice and setting forth the information to be stated in such notice as provided in the preceding paragraph.

Section 3.04 Effect of Notice of Redemption.

Once notice of redemption is mailed (or sent electronically if DTC is the recipient) in accordance with Section 3.03 hereof, Notes called for redemption become irrevocably due and payable on the redemption date at the redemption price. Any redemption or notice of redemption may, at the Company’s discretion, be subject to one or more conditions precedent and, in the case of a redemption with the net cash proceeds of an Equity Offering, be given prior to the completion of the related Equity Offering.

Section 3.05 Deposit of Redemption or Purchase Price.

One Business Day prior to the redemption or purchase date, the Company will deposit with the Trustee or with the Paying Agent money sufficient to pay the redemption or purchase price of and accrued interest, if any, on all Notes to be redeemed or purchased on that date. The Trustee or the Paying Agent will promptly return to the Company any money deposited with the Trustee or the Paying Agent by the Company in excess of the amounts necessary to pay the redemption or purchase price of and accrued interest, if any, on all Notes to be redeemed or purchased.

If the Company complies with the provisions of the preceding paragraph, on and after the redemption or purchase date, interest will cease to accrue on the Notes or the portions of Notes called for redemption or purchase. If a Note is redeemed or purchased on or after an interest record date but on or prior to the related interest payment date, then any accrued and unpaid interest shall be paid to the Person in whose name such Note was registered at the close of business on such record date. If any Note called for redemption or purchase is not so paid upon surrender for redemption or purchase because of the failure of the Company to comply with the preceding paragraph, interest shall be paid on the unpaid principal, from the redemption or purchase date until such principal is paid, and to the extent lawful on any interest not paid on such unpaid principal, in each case at the rate provided in the Notes and in Section 4.01 hereof.

Section 3.06 Notes Redeemed or Purchased in Part.

Upon surrender of a Note that is redeemed or purchased in part, the Company will issue and, upon receipt of an Authentication Order, the Trustee will authenticate for the Holder at the expense of the Company a new Note equal in principal amount to the unredeemed or unpurchased portion of the Note surrendered.

Section 3.07 Optional Redemption.

(a) At any time prior to April 15, 2016, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under this Indenture, at a redemption price equal to 108.750% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the date of redemption (subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant interest payment date), with an amount of cash not greater than the net proceeds from one or more Equity Offerings by the Company; provided that:

(1) at least 65% of the aggregate principal amount of Notes originally issued under this Indenture (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

(2) the redemption occurs within 180 days of the date of the closing of such Equity Offering.

(b) At any time prior to April 15, 2016, the Company may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest, if any, to the date of redemption, subject to the rights of Holders on the relevant record date to receive interest due on the relevant interest payment date.

(d) Except pursuant to Sections 3.07(a), (b) and (c) hereof, the Notes will not be redeemable at the Company’s option prior to April 15, 2016.

(e) On or after April 15, 2016, the Company may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as percentages of principal amount) set forth below, plus accrued and unpaid interest, if any, on the Notes redeemed, to the applicable date of redemption, if redeemed during the twelve-month period beginning on April 15 of the years indicated below, subject to the rights of Holders on the relevant record date to receive interest on the relevant interest payment date:

Year	Percentage
2016	106.563	%
2017	104.375	%
2018 and thereafter	100.000	%

Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

(f) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Sections 3.01 through 3.06 hereof.

Section 3.08 Open Market Purchases; Mandatory Redemption.

The Company may at any time and from time to time purchase Notes in the open market or otherwise. The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

Section 3.09 Offer to Purchase by Application of Excess Proceeds.

In the event that, pursuant to Section 4.10 hereof, the Company is required to commence an offer to all Holders to purchase Notes (an “ Asset Sale Offer ”), it will follow the procedures specified below.

The Asset Sale Offer shall be made to all Holders and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase, prepay or redeem with the proceeds of sales of assets. The Asset Sale Offer will remain open for a period of at least 20 Business Days following its commencement and not more than 30 Business Days, except to the extent that a longer period is required by applicable law (the “ Offer Period ”). No later than three Business Days after the termination of the Offer Period (the “ Purchase Date ”), the Company will apply all Excess Proceeds (the “Offer Amount” ) to the purchase of Notes and such other pari passu Indebtedness (on a pro rata basis based on the principal amount of Notes and such other pari passu Indebtedness surrendered, if applicable) or, if less than the Offer Amount has been tendered, all Notes and other Indebtedness tendered in response to the Asset Sale Offer. Payment for any Notes so purchased will be made in the same manner as interest payments are made.

If the Purchase Date is on or after an interest record date and on or before the related interest payment date, any accrued and unpaid interest, if any, will be paid to the Person in whose name a Note is registered at the close of business on such record date, and no additional interest will be payable to Holders who tender Notes pursuant to the Asset Sale Offer.

Upon the commencement of an Asset Sale Offer, the Company will send, by first class mail, a notice to the Trustee and each of the Holders or, in the case of Global Notes, by electronic means to DTC,

with a copy to the Trustee. The notice will contain all instructions and materials necessary to enable such Holders to tender Notes pursuant to the Asset Sale Offer. The notice, which will govern the terms of the Asset Sale Offer, will state:

(1) that the Asset Sale Offer is being made pursuant to this Section 3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer will remain open;

(2) the Offer Amount, the purchase price and the Purchase Date;

(3) that any Note not tendered or accepted for payment will continue to accrue interest;

(4) that, unless the Company defaults in making such payment, any Note accepted for payment pursuant to the Asset Sale Offer will cease to accrue interest after the Purchase Date;

(5) that Holders electing to have a Note purchased pursuant to an Asset Sale Offer may elect to have Notes purchased in denominations of $2,000 or an integral multiple of $1,000 in excess thereof;

(6) that Holders electing to have Notes purchased pursuant to any Asset Sale Offer will be required to surrender the Note, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Company, a depositary, if appointed by the Company, or a Paying Agent at the address specified in the notice at least three days before the Purchase Date;

(7) that Holders will be entitled to withdraw their election if the Company, the Depositary or the Paying Agent, as the case may be, receives, not later than the expiration of the Offer Period, a telegram, electronic image scan, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Note the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such Note purchased;

(8) that, if the aggregate principal amount of Notes and other pari passu Indebtedness surrendered by holders thereof exceeds the Offer Amount, the Trustee will select the Notes and other pari passu Indebtedness to be purchased on a pro rata basis (except that any Notes represented by a Global Note shall be selected by such method as DTC or its nominee or successor may require or, where such nominee or successor is the Trustee, a method that most nearly approximates pro rata selection as the Trustee deems fair and appropriate unless otherwise required by law) based on the principal amount of Notes surrendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $2,000, or an integral multiple of $1,000 in excess thereof, will be purchased); and

(9) that Holders whose Notes were purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered (or transferred by book-entry transfer).

On or before the Purchase Date, the Company will, to the extent lawful, accept for payment, on a pro rata basis to the extent necessary, the Offer Amount of Notes or portions thereof tendered pursuant to the Asset Sale Offer, of if less than the Offer Amount has been tendered, all Notes tendered, and will deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating that such Notes or portions thereof were accepted for payment by the Company in accordance with the terms of this Section 3.09. The Company, the Depositary for the Asset Sale Offer or

the Paying Agent, as the case may be, will promptly (but in any case not later than five days after the Purchase Date) mail or deliver to each tendering Holder an amount equal to the purchase price of the Notes tendered by such Holder and accepted by the Company for purchase (or, if such Notes are then in global form, it will make such payment thereon through the facilities of DTC), and the Company will promptly issue a new Note, and, upon receipt of an Authentication Order in accordance with Section 2.02 hereof, the Trustee, upon the written request of the Company, will authenticate and mail or deliver (or cause to be transferred by book entry) such new Note to such Holder, in a principal amount equal to any unpurchased portion of the Note surrendered. Any Note not so accepted shall be promptly mailed or delivered by the Company to the Holder thereof. The Company will publicly announce the results of the Asset Sale Offer on the Purchase Date.

ARTICLE 4
COVENANTS

Section 4.01 Payment of Notes.

The Company will pay or cause to be paid the principal of, premium on, if any, and interest, if any, on, the Notes on the dates and in the manner provided in the Notes. Principal, premium, if any, and interest, if any, will be considered paid on the date due if the Paying Agent, if other than the Company or a Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money deposited by the Company in immediately available funds and designated for and sufficient to pay all principal, premium, if any, and interest, if any, then due.

The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at a rate that is 1% higher than the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, if any (without regard to any applicable grace period), at the same rate to the extent lawful.

Section 4.02 Maintenance of Office or Agency.

The Company will maintain in the Borough of Manhattan, the City of New York, an office or agency (which may be an office of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where Notes may be surrendered for registration of transfer or for exchange and where notices and demands to or upon the Company in respect of the Notes and this Indenture may be served. The Company will give prompt written notice to the Trustee of the location, and any change in the location, of such office or agency. If at any time the Company fails to maintain any such required office or agency or fails to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the Corporate Trust Office of the Trustee.

The Company may also from time to time designate one or more other offices or agencies where the Notes may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however , that no such designation or rescission will in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, the City of New York for such purposes. The Company will give prompt written notice to the Trustee of any such designation or rescission and of any change in the location of any such other office or agency.

The Company hereby designates the Corporate Trust Office of the Trustee as one such office or agency of the Company in accordance with Section 2.03 hereof.

Section 4.03 Reports.

(a) So long as any Notes are outstanding, the Company will furnish to the Holders of the Notes and the Trustee:

(1) no later than 90 days after the end of each fiscal year (or 120 days in the case of the fiscal year ended December 31, 2014), (a) audited financial statements prepared in accordance with GAAP (with footnotes to such financial statements), including the audit report on such financial statements issued by the Company’s certified independent accountants, (b) a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” consistent with the presentation thereof in the Offering Memorandum, (c) a presentation of Adjusted EBITDA of the Company and its subsidiaries consistent with the presentation thereof in the Offering Memorandum and derived from such financial statements and (d) a discussion of material legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject consistent with the discussion thereof contained in the “Business” section of the Offering Memorandum;

(2) no later than 45 days after the end of each of the first three calendar quarters of each fiscal year (or 60 days in the case of the calendar quarter ending on March 31, 2014), (a) unaudited quarterly financial statements prepared in accordance with GAAP (with condensed footnotes to such financial statements consistent with past practice), (b) a “Management’s Discussion and Analysis of Financial Condition and Results of Operations” consistent with the presentation thereof in the Offering Memorandum (but omitting the discussion included in the “Overview” section thereof), (c) a presentation of Adjusted EBITDA of the Company and its subsidiaries consistent with the presentation thereof in the Offering Memorandum and derived from such financial statements and (d) a discussion of material legal proceedings to which the Company or any of its subsidiaries is a party or to which any of their property is subject consistent with the discussion thereof contained in the “Business” section of the Offering Memorandum; and

(3) within ten Business Days after the occurrence of any of the following events, a current report that contains a brief summary of the material terms, facts and/or circumstances involved to the extent not otherwise publicly disclosed: (i) entry by the Company or any of its Restricted Subsidiaries into an agreement outside the ordinary course of business that is material to the Company and its Subsidiaries, taken as a whole, any material amendment thereto or termination of any such agreement other than in accordance with its terms (excluding employee compensatory or benefit agreements or plans), (ii) completion of a merger of the Company with or into another Person or a material acquisition or disposition of assets by the Company or any of its Restricted Subsidiaries outside the ordinary course of business, (iii) the institution of, or material development under, bankruptcy proceedings under the U.S. Bankruptcy Code or similar proceedings under state or federal law with respect to the Company or a Significant Subsidiary of the Company, and (iv) the Company’s or any of its Restricted Subsidiary’s incurring Indebtedness outside the ordinary course of business that is material to the Company (other than under a Credit Facility or other arrangement which has been described in the Offering Memorandum or borrowings under a Credit Facility that has otherwise been disclosed previously), or a triggering event that causes the increase or acceleration of any such obligation and, in any such case, the consequences thereof are material to the Company or any of its Restricted Subsidiaries.

(b) So long as any notes are outstanding, the Company will also, within 10 Business Days after furnishing to the Holders of the Notes and the Trustee the annual and quarterly reports required by

Section 4.03(a)(1) and (2) hereof, hold a conference call to discuss such reports and the results of operations for the relevant reporting period.

(c) At any time that any of the Company’s Subsidiaries are Unrestricted Subsidiaries, then the quarterly and annual reports required by Section 4.03(a) hereof will include a reasonably detailed presentation, either on the face of the financial statements or in the footnotes thereto, and in “Management’s Discussion and Analysis of Financial Condition” and “Results of Operations” or other comparable section, of the financial condition and results of operations of the Company and its Restricted Subsidiaries separate from the financial condition and results of operations of the Unrestricted Subsidiaries of the Company.

(d) The availability of the foregoing materials within the time periods specified in the first paragraph of this covenant on a freely accessible page on the Company’s website shall be deemed to satisfy the foregoing delivery obligations.

(e) In addition, the Company and the Guarantors will agree that, for so long as any Notes remain outstanding, the Company will furnish to the Holders and to prospective investors, broker-dealers and securities analysts, upon their request, any information required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act.

(f) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee’s receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company’s compliance with any of the covenants under this Indenture.

Section 4.04 Compliance Certificate.

(a) The Company and each Guarantor (to the extent that such Guarantor is so required under the TIA) shall deliver to the Trustee, within 90 days after the end of each fiscal year, an Officers’ Certificate stating that a review of the activities of the Company and its Subsidiaries during the preceding fiscal year has been made under the supervision of the signing Officers with a view to determining whether the Company has kept, observed, performed and fulfilled its obligations under this Indenture, and further stating, as to each such Officer signing such certificate, that to the best of his or her knowledge the Company has kept, observed, performed and fulfilled each and every covenant contained in this Indenture and is not in default in the performance or observance of any of the terms, provisions and conditions of this Indenture (or, if a Default or Event of Default has occurred, describing all such Defaults or Events of Default of which he or she may have knowledge and what action the Company is taking or proposes to take with respect thereto) and that to the best of his or her knowledge no event has occurred and remains in existence by reason of which payments on account of the principal of, premium on, if any, or interest, if any, on the Notes is prohibited or if such event has occurred, a description of the event and what action the Company is taking or proposes to take with respect thereto.

(b) So long as any of the Notes are outstanding, the Company will deliver to the Trustee, as soon as possible (and in any event within five Business Days after the Company becomes aware) of any Default or Event of Default, an Officers’ Certificate specifying such Default or Event of Default and what action the Company is taking or proposes to take with respect thereto.

Section 4.05 Taxes.

The Company will pay, and will cause each of its Subsidiaries to pay, prior to delinquency, all material taxes, assessments, and governmental levies except such as are contested in good faith and by

appropriate proceedings or where the failure to effect such payment is not adverse in any material respect to the Holders of the Notes.

Section 4.06 Stay, Extension and Usury Laws.

The Company and each of the Guarantors covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Company and each of the Guarantors (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law has been enacted.

Section 4.07 Restricted Payments.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly:

(1) declare or pay any dividend or make any other payment or distribution on account of the Company’s or any of its Restricted Subsidiaries’ Equity Interests (including any payment in connection with any merger or consolidation involving the Company or any of its Restricted Subsidiaries) or to the direct or indirect holders of the Company’s or any of its Restricted Subsidiaries’ Equity Interests in their capacity as such (other than dividends or distributions payable in Equity Interests (other than Disqualified Stock) of the Company and other than dividends or distributions payable to the Company or a Restricted Subsidiary of the Company);

(2) purchase, redeem or otherwise acquire or retire for value (including in connection with any merger or consolidation involving the Company) any Equity Interests of the Company or any direct or indirect parent of the Company;

(3) make any payment on or with respect to, or purchase, redeem, defease or otherwise acquire or retire for value any Indebtedness of the Company or any Guarantor that is contractually subordinated to the Notes or to any Note Guarantee (excluding any intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries), except a payment of interest or principal at the Stated Maturity thereof; or

(4) make any Restricted Investment (all such payments and other actions set forth in these clauses (1) through (4) above being collectively referred to as “ Restricted Payments ”),

unless, at the time of and after giving effect to such Restricted Payment:

(i) no Default or Event of Default has occurred and is continuing or would occur as a consequence of such Restricted Payment;

(ii) the Company would, at the time of such Restricted Payment and after giving pro forma effect thereto as if such Restricted Payment had been made at the beginning of the applicable four-quarter period, have been permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof; and

(iii) such Restricted Payment, together with the aggregate amount of all other Restricted Payments made by the Company and its Restricted Subsidiaries since the date of this Indenture (excluding Restricted Payments permitted by Section 4.07(b)(2) through (9) hereof), is less than the sum, without duplication, of:

(A) 50% of the Consolidated Net Income of the Company for the period (taken as one accounting period) from April 1, 2014 to the end of the Company’s most recently ended fiscal quarter for which internal financial statements are available at the time of such Restricted Payment (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus

(B) 100% of the aggregate net cash proceeds and 100% of the Fair Market Value of securities or other property other than cash (including Capital Stock of Persons engaged in the Oil and Gas Business that become Restricted Subsidiaries or assets used in an Oil and Gas Business) received by the Company since the date of this Indenture as a contribution to its common equity capital or from the issue or sale of Qualifying Equity Interests of the Company or from the issue or sale of convertible or exchangeable Disqualified Stock of the Company or convertible or exchangeable debt securities of the Company, in each case that have been converted into or exchanged for Qualifying Equity Interests of the Company (other than Qualifying Equity Interests and convertible or exchangeable Disqualified Stock or debt securities sold to a Subsidiary of the Company); plus

(C) to the extent that any Restricted Investment that was made after the date of this Indenture is (a) sold for cash (other than to the Company or any Subsidiary of the Company) or otherwise cancelled, liquidated or repaid for cash, or (b) made in an entity that subsequently becomes a Restricted Subsidiary of the Company that is a Guarantor, the initial amount of such Restricted Investment (or, if less, the amount of cash received upon repayment or sale); plus

(D) to the extent that any Unrestricted Subsidiary of the Company designated as such after the date of this Indenture is redesignated as a Restricted Subsidiary after the date of this Indenture, the lesser of (i) the Fair Market Value of the Company’s Restricted Investment in such Subsidiary as of the date of such redesignation or (ii) such Fair Market Value as of the date on which such Subsidiary was originally designated as an Unrestricted Subsidiary after the date of this Indenture; plus

(E) the amount by which Indebtedness (other than any Indebtedness which is by its terms subordinated in right of payment of the Notes and Note Guarantees) of the Company or its Restricted Subsidiaries is reduced on the Company’s balance sheet upon the conversion or exchange (other than by a Subsidiary of the Company) subsequent to the date of this Indenture of any such Indebtedness of the Company or its Restricted Subsidiaries convertible or exchangeable for Equity Interests (other than Disqualified Stock) of the Company, together with the net proceeds, if any, received by the Company or any of its Restricted Subsidiaries upon such conversion or exchange; plus

(F) 50% of any dividends received in cash by the Company or a Restricted Subsidiary of the Company that is a Guarantor after the date of this Indenture from an Unrestricted Subsidiary of the Company, to the extent that such dividends were not otherwise included in the Consolidated Net Income of the Company for such period.

(b) The provisions of Section 4.07(a) hereof will not prohibit:

(1) the payment of any dividend or distribution or the consummation of an irrevocable redemption within 60 days after the date of declaration of the dividend or distribution or giving of notice of the redemption if, at the date of declaration or notice, such dividend or distribution or redemption would have complied with the provisions of this Indenture;

(2) the making of any Restricted Payment in exchange for, or out of or with the net cash proceeds of the substantially concurrent sale (other than to a Subsidiary of the Company) of, Equity Interests of the Company (other than Disqualified Stock) or from the substantially concurrent contribution of common equity capital to the Company; provided that the amount of any such net cash proceeds that are utilized for any such Restricted Payment will not be considered to be net proceeds of Qualifying Equity Interests for purposes of Section 4.07(a)(iii)(B) hereof and will not be considered to be net cash proceeds from an Equity Offering for purposes of Section 3.07 hereof;

(3) the payment of any dividend or distribution (or, in the case of any partnership or limited liability company, any similar distribution) by a Restricted Subsidiary of the Company to the holders of its Equity Interests on a pro rata basis;

(4) the repurchase, redemption, defeasance or other acquisition or retirement for value of Indebtedness of the Company or any Guarantor that is contractually subordinated to the Notes or to any Note Guarantee with the net cash proceeds from a substantially concurrent incurrence of Permitted Refinancing Indebtedness;

(5) as long as no Default has occurred and is continuing or would be caused thereby, the purchase, redemption or other acquisition or retirement for value of any Equity Interests of the Company or any Restricted Subsidiary held by any of the Company’s (or any Restricted Subsidiary’s) current or former officer, director or employee of the Company or any of its Restricted Subsidiaries (or their heirs, estates or permitted transferees) pursuant to any equity subscription agreement, stock option agreement, shareholders’ agreement or similar agreement; provided that the aggregate price paid for all such purchased, redeemed, acquired or retired Equity Interests may not exceed the sum of:

(a) $1.0 million in any fiscal year (with unused amounts in any fiscal year to be carried over to successive fiscal years); plus

(b) the cash proceeds of key man life insurance policies received by the Company and any Restricted Subsidiary after the date of this Indenture;

(6) the repurchase of Equity Interests deemed to occur upon the exercise of stock options to the extent such Equity Interests represent a portion of the exercise price of those stock options and any repurchase or other acquisition of Equity Interests made in lieu of withholding taxes in connection with any exercise or exchange of stock options, warrants, incentives or other rights to acquire Equity Interests;

(7) so long as no Default or Event of Default has occurred and is continuing, the declaration and payment of regularly scheduled or accrued dividends to holders of any class or series of Disqualified Stock of the Company or any preferred stock of any Restricted Subsidiary of the Company issued on or after the date of this Indenture in accordance with the Fixed Charge Coverage Ratio test described in Section 4.09(a) hereof;

(8) payments of cash, dividends, distributions, advances or other Restricted Payments by the Company or any of its Restricted Subsidiaries to allow the payment of cash in lieu of the issuance of fractional shares upon (i) the exercise of options or warrants, (ii) stock dividends or splits or (iii) the conversion or exchange of Capital Stock of any such Person or of Indebtedness into such Capital Stock;

(9) repurchases of Indebtedness of the Company or any Guarantor that is contractually subordinated in right of payment to the Notes or a Note Guarantee at a purchase price not greater than (a) 101% of the principal amount of such subordinated Indebtedness in the event of a Change of Control or (b) 100% of the principal amount of such subordinated Indebtedness in the event of an Asset Sale, in each case plus accrued and unpaid interest thereon, to the extent required by the terms of such Indebtedness, but only if:

(a) in the case of a Change of Control, the Company has first complied with and fully satisfied its obligations under Section 4.15 hereof; or

(b) in the case of an Asset Sale, the Company has complied with and fully satisfied its obligations in accordance with Section 4.10 hereof;

(10) payments or distributions to dissenting stockholders pursuant to applicable law in connection with a merger, consolidation or transfer of all or substantially all of the assets of the Company that complies with Section 5.01 hereof in an aggregate amount not to exceed $5.0 million; and

(11) so long as no Default or Event of Default has occurred and is continuing, other Restricted Payments in an aggregate amount not to exceed $12.5 million since the date of this Indenture.

(c) The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of the Restricted Payment of the asset(s) or securities proposed to be transferred or issued by the Company or such Restricted Subsidiary, as the case may be, pursuant to the Restricted Payment.

(d) For purposes of determining compliance with this covenant, if a Restricted Payment meets the criteria of more than one of the types of Restricted Payments described in clauses (1) through (11) of Section 4.07(b) hereof, the Company, in its sole discretion, may order and classify, and subsequently re-order and re-classify, such Restricted Payment in any manner in compliance with this covenant.

(e) In computing Consolidated Net Income under this Section 4.07, (1) the Company shall use audited financial statements for the portions of the relevant period for which audited financial statements are available on the date of determination and unaudited financial statements and other current financial data based on the books and records of the Company for the remaining portion of such period and (2) the Company shall be permitted to rely in good faith on the internal financial statements of the Company that are available on the date of determination.

(f) For the purpose of this Section 4.07 and the definition of “Permitted Investments,” a contribution, sale or incurrence will be deemed to “substantially concurrent” if the related Restricted Payment or purchase, repurchase, redemption, defeasance or other acquisition or retirement for value or payment of principal or acquisition of assets or Capital Stock or other Investment occurs within 90 days before or after such contribution, sale or incurrence.

Section 4.08 Dividend and Other Payment Restrictions Affecting Restricted Subsidiaries.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or permit to exist or become effective any consensual encumbrance or restriction on the ability of any Restricted Subsidiary to:

(1) pay dividends or make any other distributions on its Capital Stock to the Company or any of its Restricted Subsidiaries or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness owed to the Company or any of its Restricted Subsidiaries; provided that the priority that any series of Preferred Stock of a Restricted Subsidiary has in receiving dividends or liquidating distributions before dividends or liquidating distributions are paid in respect of common stock of such Restricted Subsidiary shall not constitute a restriction on the ability to make dividends or distributions on Capital Stock for purposes of this covenant;

(2) make loans or advances to the Company or any of its Restricted Subsidiaries; or

(3) sell, lease or transfer any of its properties or assets to the Company or any of its Restricted Subsidiaries.

(b) The restrictions in Section 4.08(a) hereof will not apply to encumbrances or restrictions existing under or by reason of:

(1) agreements (including those governing Existing Indebtedness and Credit Facilities) as in effect on the date of this Indenture and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are not, as determined in good faith by the Company, materially more restrictive, taken as a whole, with respect to such dividend and other payment restrictions than those contained in those agreements on the date of this Indenture;

(2) this Indenture, the Notes and the Note Guarantees;

(3) agreements governing other Indebtedness permitted to be incurred under Section 4.09 hereof and any amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings of those agreements; provided that the restrictions therein are not, as determined in good faith by the Company, materially more restrictive, taken as a whole, than those contained in this Indenture, the Notes and the Note Guarantees or the Credit Agreement as in effect on the date of this Indenture;

(4) applicable law, rule, regulation, order, approval, license, permit or similar restriction;

(5) any instrument governing Indebtedness or Capital Stock of a Person acquired by the Company or any of its Restricted Subsidiaries as in effect at the time of such acquisition (except to the extent such Indebtedness or Capital Stock was incurred in connection with or in contemplation of such acquisition), which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person, or the property or assets of the Person, so acquired, and any amendments, restatements, modifications, renewals, extensions, supplements, increases, refundings, replacements or refinancings thereof; provided that (a) the encumbrances and restrictions in any such amendments, restatements, modifications,

renewals, extensions, supplements, increases, refundings, replacements or refinancings are, as determined in good faith by the Company, not materially more restrictive, taken as a whole, than those contained in such instruments in effect on the date of the acquisition, and (b) in the case of Indebtedness, such Indebtedness was permitted by the terms of this Indenture to be incurred;

(6) non-assignment provisions in Hydrocarbon purchase and sale or exchange agreements or similar operational agreements or licenses and sublicenses (including licenses of intellectual property), easements or leases, and provisions restricting the sublease or assignment of any lease governing a leasehold interest (including farm-in agreements or farm-out agreements) relating to leasehold interests in Oil and Gas Properties of the Company or any Restricted Subsidiary, in each case entered into in the ordinary course of business;

(7) purchase money obligations for property acquired in the ordinary course of business and Capital Lease Obligations that impose restrictions on the property purchased or leased of the nature described in Section 4.08(a)(3) hereof;

(8) any agreement for the sale or other disposition of a Restricted Subsidiary that restricts dividends, distributions, loans, advances, sales, leases or transfers by that Restricted Subsidiary pending its sale or other disposition, and any agreement for the sale or other disposition of an asset that restricts the transfer of such asset pending such sale or other disposition;

(9) Permitted Refinancing Indebtedness; provided that the restrictions contained in the agreements governing such Permitted Refinancing Indebtedness are not, as determined in good faith by the Company, materially more restrictive, taken as a whole, than those contained in the agreements governing the Indebtedness being refinanced;

(10) agreements in respect of Liens permitted to be incurred under Section 4.12 hereof, and the security documents relating thereto, that limit the right of the debtor to dispose of the assets subject to such Liens;

(11) provisions limiting the disposition or distribution of assets or property in joint venture agreements (including limited liability company or limited partnership organizational documents entered into in connection therewith), asset sale agreements, sale-leaseback agreements, stock sale agreements, operations agreements, development agreements, area of mutual interest agreements and other similar agreements (including agreements entered into in connection with a Restricted Investment) entered into with the approval of the Company’s Board of Directors, which limitation is applicable only to the assets that are the subject of such agreements;

(12) agreements governing Hedging Obligations entered into in the ordinary course of business;

(13) any agreement or other instrument of a Unrestricted Subsidiary that is designated a Restricted Subsidiary, in each case that is in existence at the time of such designation (but not created in contemplation of or in connection thereof) and any encumbrance or restriction arising therefrom that do not extend to any assets or property of the Company or any other Restricted Subsidiary other than assets and property of such Unrestricted Subsidiary; and

(14) restrictions on cash or other deposits or net worth requirements or similar requirements, imposed by suppliers, landlords or customers under contracts entered into in the ordinary course of business or required by insurance, security or bonding companies.

Section 4.09 Incurrence of Indebtedness and Issuance of Preferred Stock.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to (collectively, “ incur ”) any Indebtedness (including Acquired Debt), and the Company will not issue any Disqualified Stock and will not permit any of its Restricted Subsidiaries to issue any shares of preferred stock; provided , however , that the Company may incur Indebtedness (including Acquired Debt) or issue Disqualified Stock, and the Guarantors may incur Indebtedness (including Acquired Debt) or issue preferred stock, if (a) the Fixed Charge Coverage Ratio for the Company’s most recently ended four full fiscal quarters for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or such Disqualified Stock or such preferred stock is issued, as the case may be, would have been at least 2.25 to 1.0 and (b) the Asset Coverage Ratio as of the last day of the fiscal quarter for which internal financial statements are available immediately preceding the date on which such additional Indebtedness is incurred or Disqualified Stock or preferred stock is issued, as the case may be, would have been not more than 0.75 to 1.0, determined in the case of each of clauses (a) and (b) on a pro forma basis (including a pro forma application of the net proceeds therefrom), as if the additional Indebtedness had been incurred or the Disqualified Stock or the preferred stock had been issued, as the case may be, at the beginning of such four-quarter period.

(b) The provisions of Section 4.09(a) hereof will not prohibit the incurrence of any of the following items of Indebtedness (collectively, “ Permitted Debt ”):

(1) the incurrence by the Company and any Guarantor of additional Indebtedness and letters of credit under Credit Facilities in an aggregate principal amount at any one time outstanding under this clause (1) (with letters of credit being deemed to have a principal amount equal to the maximum potential liability of the Company and its Restricted Subsidiaries thereunder) not to exceed the greater of (a) $140.0 million and (b) 20.0% of the Company’s Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence;

(2) the incurrence by the Company and its Restricted Subsidiaries of the Existing Indebtedness;

(3) the incurrence by the Company and the Guarantors of Indebtedness represented by the Notes and the related Note Guarantees to be issued on the date of this Indenture;

(4) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness (whether represented by Capital Lease Obligations, mortgage financings or purchase money obligations, or otherwise), incurred for the purpose of financing all or any part of the purchase price or cost of design, construction, installation, development, repair or improvement of property, plant or equipment used in the business of the Company or any Restricted Subsidiary (together with improvements, additions, accessions and contractual rights related primarily thereto) and related financing costs, and Attributable Debt in respect of sale and leaseback transactions, in an aggregate outstanding principal amount, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred pursuant to this clause (4), not to exceed the greater of (a) $10.0 million

and (b) 1.5% of the Company’s Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence;

(5) the incurrence by the Company or any of its Restricted Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the net proceeds of which are used to renew, refund, refinance, replace, defease or discharge any Indebtedness (other than intercompany Indebtedness) that was permitted by this Indenture to be incurred under Section 4.09(a) hereof or clauses (2), (3), (4), (5) or (16) of this Section 4.09(b);

(6) the incurrence by the Company or any of its Restricted Subsidiaries of intercompany Indebtedness between or among the Company and any of its Restricted Subsidiaries; provided, however , that:

(A) if the Company or any Guarantor is the obligor on such Indebtedness and the payee is not the Company or a Guarantor, such Indebtedness must be unsecured and expressly subordinated to the prior payment in full in cash of all Obligations then due with respect to the Notes, in the case of the Company, or the Note Guarantee, in the case of a Guarantor; and

(B) (1) any subsequent issuance or transfer of Equity Interests that results in any such Indebtedness being held by a Person other than the Company or a Restricted Subsidiary of the Company and (2) any sale or other transfer of any such Indebtedness to a Person that is not either the Company or a Restricted Subsidiary of the Company,

will be deemed, in each case, to constitute an incurrence of such Indebtedness by the Company or such Restricted Subsidiary, as the case may be, that was not permitted by this clause (6);

(7) the issuance by any of the Company’s Restricted Subsidiaries to the Company or to any of its Restricted Subsidiaries of shares of preferred stock; provided, however , that:

(A) any subsequent issuance or transfer of Equity Interests that results in any such preferred stock being held by a Person other than the Company or a Restricted Subsidiary of the Company; and

(B) any sale or other transfer of any such preferred stock to a Person that is not either the Company or a Restricted Subsidiary of the Company,

will be deemed, in each case, to constitute an issuance of such preferred stock by such Restricted Subsidiary that was not permitted by this clause (7);

(8) the incurrence by the Company or any of its Restricted Subsidiaries of Hedging Obligations not incurred for speculative purposes;

(9) the guarantee by the Company or any of the Guarantors of Indebtedness of the Company or a Restricted Subsidiary of the Company to the extent that the guaranteed Indebtedness was permitted to be incurred by another provision of this Section 4.09; provided that if the Indebtedness being guaranteed is subordinated to or pari passu with the Notes, then the Guarantee must be subordinated or pari passu , as applicable, to the same extent as the Indebtedness guaranteed;

(10) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness in respect of unemployment self-insurance, health, disability, public liability or other benefits obligations or bid, plugging or abandonment, appeal, reimbursement, performance, surety and similar bonds and completion guarantees provided by the Company or a Restricted Subsidiary in the ordinary course of business and any Guarantees or letters of credit functioning as or supporting any of the foregoing bonds or obligations and workers’ compensation claims in the ordinary course of business;

(11) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument inadvertently drawn against insufficient funds, so long as such Indebtedness is covered within five Business Days;

(12) any obligation of a Person in respect of a farm-in agreement or similar arrangement whereby such Person agrees to pay all or a share of the drilling, completion or other expenses of an exploratory or development well (which agreement may be subject to a maximum payment obligation, after which expenses are shared in accordance with the working or participation interest therein or in accordance with the agreement of the parties) or perform the drilling, completion or other operation on such well in exchange for an ownership interest in an oil or natural gas property;

(13) the incurrence by the Company or any Restricted Subsidiary of in-kind obligations relating to net oil or natural gas balancing positions arising in the ordinary course of business, or any final settlement thereof in cash if required pursuant to the terms thereof;

(14) the incurrence by the Company or its Restricted Subsidiaries of Indebtedness consisting of the financing of insurance premiums in customary amounts consistent with the operations and business of the Company and the Restricted Subsidiaries;

(15) the incurrence by the Company or any of its Restricted Subsidiaries of Indebtedness arising from agreements of the Company or any Restricted Subsidiary of the Company providing for indemnification, adjustment of purchase price, holdbacks, earn outs, or similar obligations, in each case incurred or assumed in connection with the disposition or acquisition of any business, assets or Capital Stock of a Subsidiary in a transaction permitted by this Indenture, provided that such obligation is not reflected as a liability on the face of the balance sheet of the Company or any Restricted Subsidiary; and

(14) the incurrence by the Company or any of its Restricted Subsidiaries of additional Indebtedness or the issuance by the Company of any Disqualified Stock in an aggregate principal amount (or accreted value, as applicable) at any time outstanding, including all Permitted Refinancing Indebtedness incurred to renew, refund, refinance, replace, defease or discharge any Indebtedness incurred or Disqualified Stock issued pursuant to this clause (16), not to exceed the greater of (a) $10.0 million and (b) 1.5% of the Company’s Adjusted Consolidated Net Tangible Assets determined as of the date of such incurrence.

The Company will not incur, and will not permit any Guarantor to incur, any Indebtedness (including Permitted Debt) that is contractually subordinated in right of payment to any other Indebtedness of the Company or such Guarantor unless such Indebtedness is also contractually subordinated in right of payment to the Notes and the applicable Note Guarantee on substantially identical terms; provided, however , that no Indebtedness will be deemed to be contractually subordinated in right

of payment to any other Indebtedness of the Company or any Guarantor solely by virtue of being unsecured or by virtue of being secured on a junior priority basis.

For purposes of determining compliance with this Section 4.09, in the event that an item of Indebtedness meets the criteria of more than one of the categories of Permitted Debt described in clauses (1) through (16) above, or is entitled to be incurred pursuant to Section 4.09(a) hereof, the Company will be permitted to divide, classify, redivide or reclassify such item of Indebtedness on the date of its incurrence, or later divide, classify, redivide or reclassify all or a portion of such item of Indebtedness, in any manner that complies with this Section 4.09. Indebtedness under the Credit Agreement will initially be deemed to have been incurred on such date in reliance on the exception provided by clause (1) of the definition of Permitted Debt. The accrual of interest or preferred stock dividends, the accretion or amortization of original issue discount, the payment of interest on any Indebtedness in the form of additional Indebtedness with the same terms, the reclassification of preferred stock as Indebtedness due to a change in accounting principles, fluctuations in the termination value of Hedging Obligations and the payment of dividends or distributions on preferred stock or Disqualified Stock in the form of additional shares of the same class of preferred stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness or an issuance of preferred stock or Disqualified Stock for purposes of this Section 4.09; provided , in each such case, that the amount thereof (excluding any dividends and distributions to the extent payable in Equity Interests (other than Disqualified Stock) of the Company or any Restricted Subsidiary) is included in Fixed Charges of the Company as accrued. For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be utilized, calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred. Notwithstanding any other provision of this Section 4.09, the maximum amount of Indebtedness that the Company or any Restricted Subsidiary may incur pursuant to this Section 4.09 shall not be deemed to be exceeded solely as a result of fluctuations in exchange rates or currency values.

The amount of any Indebtedness outstanding as of any date will be:

(1) the accreted value of the Indebtedness, in the case of any Indebtedness issued with original issue discount;

(2) the principal amount of the Indebtedness, in the case of any other Indebtedness; and

(3) in respect of Indebtedness of another Person secured by a Lien on the assets of the specified Person, the lesser of:

(A) the Fair Market Value of such assets at the date of determination; and

(B) the amount of the Indebtedness of the other Person;

(4) in the case of any Capital Lease Obligation, the amount determined in accordance with the definition thereof;

(5) in the case of any preferred stock other than Disqualified Stock, the greater of its voluntary or involuntary liquidation preference and its maximum fixed redemption price or repurchase price; and

(6) in the case of any Disqualified Stock, the amount deemed outstanding pursuant to the definition of such term.

For purposes of determining compliance with any U.S. dollar-denominated restriction on the incurrence of Indebtedness, the U.S. dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such Indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable U.S. dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such U.S. dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. The principal amount of any Permitted Refinancing Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be calculated based on the currency exchange rate applicable to the currencies in which such Permitted Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Section 4.10 Asset Sales.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, consummate an Asset Sale unless:

(1) the Company or any of its Restricted Subsidiaries receives consideration at the time of the Asset Sale at least equal to the Fair Market Value (measured as of the date of the definitive agreement with respect to such Asset Sale) of the assets or Equity Interests issued or sold or otherwise disposed of; and

(2) at least 75% of the aggregate consideration received in respect of such Asset Sale by the Company and its Restricted Subsidiaries is in the form of cash or Cash Equivalents. For purposes of this provision, each of the following will be deemed to be cash:

(A) any liabilities, as shown on the Company’s most recent consolidated balance sheet, of the Company or any Restricted Subsidiary (other than contingent liabilities and liabilities that are by their terms subordinated to the Notes or any Note Guarantee) that are assumed by the transferee of any such assets pursuant to a customary novation, indemnity or other agreement that releases the Company or such Restricted Subsidiary from or indemnifies against further liability or that are otherwise cancelled or terminated in connection with the transaction with such transferee;

(B) any securities, notes or other obligations received by the Company or any such Restricted Subsidiary from such transferee that are, within 60 days of the Asset Sale converted by the Company or such Restricted Subsidiary into cash, to the extent of the cash received in that conversion;

(C) with respect to any Asset Sale of Oil and Gas Properties by the Company or any Restricted Subsidiary where the Company or such Restricted Subsidiary retains an interest in such property, the costs and expenses of the Company or such Restricted Subsidiary related to the exploration, development, completion or production of such properties and activities related thereto which the transferee (or an Affiliate thereof) agrees to pay; and

(D) any stock or assets of the kind referred to in clauses (2) or (4) of the next paragraph of this Section 4.10.

(b) Within 365 days after the receipt of any Net Proceeds from an Asset Sale, the Company or one or more of its Restricted Subsidiaries may apply an amount equal to the amount of such Net Proceeds:

(1) to repay, prepay, redeem or purchase Senior Debt;

(2) to acquire all or substantially all of the assets of, or any Capital Stock of, one or more other Persons primarily engaged in the Oil and Gas Business, if, after giving effect to any such acquisition of Capital Stock, such Person becomes a Restricted Subsidiary of the Company;

(3) to make capital expenditures in respect of the Company’s or any Restricted Subsidiary’s Oil and Gas Business; or

(4) to acquire other assets that are not classified as current assets under GAAP and that are used or useful in an Oil and Gas Business;

provided that the Company and its Restricted Subsidiaries will be deemed to have complied with this paragraph if and to the extent that, within 365 days after the Asset Sale that generated the Net Proceeds, the Company or such Restricted Subsidiary has entered into and not abandoned or rejected a binding agreement to consummate any such investment described in this paragraph with the good faith expectation that such Net Proceeds will be applied to satisfy such commitment within 180 days after the end of such 365-day period; provided further that if such commitment is later canceled or terminated before such Net Proceeds are applied or otherwise not applied within such 180 day period, then such Net Proceeds shall constitute Excess Proceeds.

Pending the final application of any Net Proceeds, the Company or any of its Restricted Subsidiaries may temporarily reduce revolving credit borrowings or otherwise invest the Net Proceeds in any manner that is not prohibited by this Indenture.

(c) Any Net Proceeds from Asset Sales that are not, within the applicable time period, applied or invested as provided in Section 4.10(b) hereof will constitute “ Excess Proceeds .” When the aggregate amount of Excess Proceeds exceeds $15.0 million, within five days thereof, the Company will make an Asset Sale Offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in this Indenture with respect to offers to purchase, prepay or redeem with the proceeds of sales of assets in accordance with Section 3.09 hereof to purchase, prepay or redeem on a pro rata basis the maximum principal amount of Notes and such other pari passu Indebtedness (plus all accrued interest on the Indebtedness and the amount of all fees and expenses, including premiums, incurred in connection therewith) that may be purchased, prepaid or redeemed out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase, prepayment or redemption, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company may use those Excess Proceeds for any purpose not otherwise prohibited by this Indenture. If the aggregate principal amount of Notes and other pari passu Indebtedness tendered in such Asset Sale Offer exceeds the amount of Excess Proceeds, the Trustee will select the Notes and such other pari passu Indebtedness to be purchased on a pro rata basis (or, in the case of Global Notes, based on a method as DTC or its nominee or successor may require or, where such nominee or successor is the Trustee, a method that most nearly approximates a pro rata selection as the Trustee deems fair and appropriate), based on the amounts tendered (with such adjustments as may be deemed appropriate by the Company so that only Notes in denominations of $2,000, or an integral

multiple of $1,000 in excess thereof, will be purchased). Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero.

(d) The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with each repurchase of Notes pursuant to an Asset Sale Offer. To the extent that the provisions of any securities laws or regulations conflict with Section 3.09 hereof or this Section 4.10, the Company will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under Section 3.09 hereof or this Section 4.10 by virtue of such compliance.

Section 4.11 Transactions with Affiliates.

(a) The Company will not, and will not permit any of its Restricted Subsidiaries to, make any payment to or sell, lease, transfer or otherwise dispose of any of its properties or assets to, or purchase any property or assets from, or enter into or make or amend any transaction, contract, agreement, understanding, loan, advance or guarantee with, or for the benefit of, any Affiliate of the Company (each, an “ Affiliate Transaction ”) involving aggregate payments or consideration to or from the Company or a Restricted Subsidiary in excess of $1.0 million, unless:

(1) the Affiliate Transaction is on terms that are no less favorable to the Company or the relevant Restricted Subsidiary than those that would have been obtained in a comparable transaction by the Company or such Restricted Subsidiary with an unrelated Person or, if in the good faith judgment of the Company’s Board of Directors, no comparable transaction is available with which to compare such Affiliate Transaction, such Affiliate Transaction is otherwise fair to the Company or the relevant Restricted Subsidiary from a financial point of view; and

(2) the Company delivers to the Trustee:

(A) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $10.0 million to or from the Company or a Restricted Subsidiary, an Officers’ Certificate certifying that such Affiliate Transaction or series of related Affiliate Transactions complies with Section 4.11(a)(1) hereof; and

(B) with respect to any Affiliate Transaction or series of related Affiliate Transactions involving aggregate consideration in excess of $20.0 million, a resolution of the Company’s Board of Directors set forth in an Officers’ Certificate certifying that such Affiliate Transaction complies with this covenant and that such Affiliate Transaction has been approved by a majority of the disinterested members of the Company’s Board of Directors.

(b) The following items will not be deemed to be Affiliate Transactions and, therefore, will not be subject to the provisions of Section 4.11(a) hereof:

(1) any employment, consulting, severance, termination or similar agreement or arrangement, stock option or stock ownership plan, employee benefit plan, officer or director compensation or indemnification agreement, restricted stock agreement, severance agreement or other compensation plan or arrangement entered into by the Company or any of its Restricted Subsidiaries in the ordinary course of business and payments, awards, grants or issuances of securities pursuant thereto;

(2) transactions between or among the Company and/or its Restricted Subsidiaries and the issuance of Guarantees for the benefit of the Company or a Restricted Subsidiary;

(3) transactions with a Person (other than an Unrestricted Subsidiary of the Company) that is an Affiliate of the Company solely because the Company owns, directly or through a Restricted Subsidiary, an Equity Interest in, or controls, such Person;

(4) payment of reasonable and customary fees and reimbursements of expenses (pursuant to indemnity arrangements or otherwise) of officers, directors, employees or consultants of the Company or any of its Restricted Subsidiaries;

(5) any issuance of Equity Interests (other than Disqualified Stock) of the Company to, or receipt of capital contributions from, Affiliates of the Company;

(6) Restricted Payments that do not violate Section 4.07 hereof and Permitted Investments;

(7) payments to an Affiliate in respect of the Notes or any other Indebtedness of the Company or any Restricted Subsidiary on the same basis as concurrent payments made or offered to be made in respect thereof to non-Affiliates;

(8) in the case of contracts for exploring for, drilling, developing, producing, processing, gathering, transporting, marketing or storing Hydrocarbons, or activities or services reasonably related or ancillary thereto, or other operational contracts, that are entered into in the ordinary course of business and otherwise in compliance with the terms of this Indenture which are on terms substantially similar to those contained in similar contracts entered into by the Company or any of its Restricted Subsidiaries with unrelated third parties, or if neither the Company nor any Restricted Subsidiary has entered into a similar contract with a third party, then on the terms no less favorable than those available from third parties on an arm’s length basis, in each case as determined in good faith by the Company;

(9) transactions between the Company or any of its Restricted Subsidiaries and any other Person, a director of which is also on the Board of Directors of the Company or any direct or indirect parent company of the Company, and such common director is the sole cause for such other Person to be deemed an Affiliate of the Company or any of its Restricted Subsidiaries; provided, however, that such director abstains from voting as a member of the Board of Directors of the Company or any direct or indirect parent company of the Company, as the case may be, on any transaction with such other Person;

(10) advances to or reimbursements of employees for moving, entertainment and travel expenses and similar expenditures in the ordinary course of business;

(11) transactions effected in accordance with the terms of the agreements of the Company or any Restricted Subsidiary described in the Offering Memorandum under the caption “Certain Relationships and Related-Party Transactions,” as such agreements are in effect on the date of this Indenture, and any amendment or replacement of any of such agreements so long as such amendment or replacement agreement is not materially less advantageous to the Company, taken as a whole, than the agreement so amended or replaced;

(12) loans or advances to employees in the ordinary course of business in accordance with past practices of the Company or the Restricted Subsidiaries, but in any event not to exceed $1.0 million in the aggregate at any one time outstanding;

(13) any transaction in which the Company or any of its Restricted Subsidiaries, as the case may be, delivers to the Trustee a letter from an accounting, appraisal, advisory or investment banking firm of national standing stating that such transaction is fair to the Company or such Restricted Subsidiary from a financial point of view or that such transaction meets the requirements of clause (1) of the preceding paragraph; and

(14) transactions with customers, clients, suppliers or purchasers or sellers of goods or services, or lessors or lessees of property, in each case in the ordinary course of business and otherwise in compliance with this Indenture which are, in the aggregate (taking into account all the costs and benefits associated with such transactions), not materially less favorable to the Company and its Restricted Subsidiaries than those contained in similar contracts entered into by the Company or any of its Restricted Subsidiaries with unrelated third parties, or if neither the Company nor any Restricted Subsidiary has entered into a similar contract with a third party, then on the terms no less favorable than those available from third parties on an arm’s length basis, in each case as determined in good faith by the Company.

Section 4.12 Liens.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or otherwise cause or suffer to exist or become effective any Lien (the “ Initial Lien ”) of any kind (other than Permitted Liens) securing Indebtedness upon any of their property or assets now owned or hereafter acquired, unless all payments due to the Holders under this Indenture and the Notes or Note Guarantees, as applicable, are secured by a Lien on such property or assets on an equal and ratable basis with the other Indebtedness so secured until such time as such other Indebtedness is no longer so secured by a Lien.

Any Lien securing the Notes or Note Guarantees created pursuant to the preceding paragraph shall provide by its terms that such Lien shall be automatically and unconditionally released and discharged upon the unconditional release and discharge of the Initial Lien.

Section 4.13 Business Activities.

The Company will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than the Oil and Gas Business, except to such extent as would not be material to the Company and its Restricted Subsidiaries taken as a whole.

Section 4.14 Corporate Existence.

Subject to Article 5 hereof, the Company shall do or cause to be done all things necessary to preserve and keep in full force and effect:

(1) its corporate existence, and the corporate, partnership or other existence of each of its Subsidiaries, in accordance with the respective organizational documents (as the same may be amended from time to time) of the Company or any such Subsidiary; and

(2) the rights (charter and statutory), licenses and franchises of the Company and its Subsidiaries; provided, however , that the Company shall not be required to preserve any such

right, license or franchise, or the corporate, partnership or other existence of any of its Subsidiaries, if the Board of Directors of the Company shall determine that the preservation thereof is no longer desirable in the conduct of the business of the Company and its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in any material respect to the Holders of the Notes.

Section 4.15 Offer to Repurchase Upon Change of Control.

(a) Upon the occurrence of a Change of Control, the Company will make an offer (a “Change of Control Offer” ) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to the date of purchase (the “Change of Control Payment” ), subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date. Within ten days following any Change of Control, the Company will send a notice to each Holder describing the transaction or transactions that constitute the Change of Control and stating:

(1) that the Change of Control Offer is being made pursuant to this Section 4.15 and that all Notes tendered will be accepted for payment;

(2) the purchase price and the purchase date, which shall be no earlier than 30 days and no later than 60 days from the date such notice is sent (the “Change of Control Payment Date” );

(3) that any Note not tendered will continue to accrue interest;

(4) that, unless the Company defaults in the payment of the Change of Control Payment, all Notes accepted for payment pursuant to the Change of Control Offer will cease to accrue interest after the Change of Control Payment Date;

(5) that Holders electing to have any Notes purchased pursuant to a Change of Control Offer will be required to surrender the Notes, with the form entitled “Option of Holder to Elect Purchase” attached to the Notes completed, or transfer by book-entry transfer, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date;

(6) that Holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, electronic image scan, facsimile transmission or letter setting forth the name of the Holder, the principal amount of Notes delivered for purchase, and a statement that such Holder is withdrawing his election to have the Notes purchased; and

(7) that Holders whose Notes are being purchased only in part will be issued new Notes equal in principal amount to the unpurchased portion of the Notes surrendered, which unpurchased portion must be equal to $2,000 in principal amount or an integral multiple of $1,000 in excess thereof.

The Company will comply with the requirements of Rule 14e-1 under the Exchange Act and any other securities laws and regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of the Notes as a result of a Change of Control. To the extent that the provisions of any securities laws or regulations conflict with this Section 4.15, the Company will comply

with the applicable securities laws and regulations and will not be deemed to have breached its obligations under this Section 4.15 by virtue of such compliance.

(b) On the Change of Control Payment Date, the Company will, to the extent lawful:

(1) accept for payment all Notes or portions of Notes properly tendered and not withdrawn pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Notes or portions of Notes properly tendered; and

(3) deliver or cause to be delivered to the Trustee the Notes properly accepted together with an Officers’ Certificate stating the aggregate principal amount of Notes or portions of Notes being purchased by the Company.

The Paying Agent will promptly send (but in any case not later than five days after the Change of Control Payment Date) to each Holder of Notes properly tendered the Change of Control Payment for such Notes (or, if all the Notes are then Global Notes, make such payment through the facilities of DTC), and the Trustee will promptly authenticate and send (or cause to be transferred by book entry, in the case of Global Notes) to each Holder a new Note equal in principal amount to any unpurchased portion of the Notes surrendered, if any. The Company will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date.

(c) Notwithstanding anything to the contrary in this Section 4.15, the Company will not be required to make a Change of Control Offer upon a Change of Control if (1) a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements set forth in this Section 4.15 and purchases all Notes properly tendered and not withdrawn under the Change of Control Offer, or (2) notice of redemption for all outstanding Notes has been given pursuant to Section 3.07 hereof, unless and until there is a default in payment of the applicable redemption price.

(d) Notwithstanding anything to the contrary contained herein, a Change of Control Offer may be made in advance of a Change of Control, conditioned upon the consummation of such Change of Control, if a definitive agreement is in place for the Change of Control at the time the Change of Control Offer is made.

(e) In the event that Holders of not less than 90% in aggregate principal amount of the outstanding Notes accept a Change of Control Offer and the Company (or any third party making such Change of Control Offer in lieu of the Company as described in paragraph (c) above) purchases all of the Notes held by such Holders, the Company will have the right, upon not less than 30 nor more than 60 days prior notice, given not more than 30 days following the purchase pursuant to the Change of Control Offer described above, to redeem all of the Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interests, if any, on the Notes that remain outstanding, to the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

Section 4.16 Limitation on Sale and Leaseback Transactions.

The Company will not, and will not permit any of its Restricted Subsidiaries to, enter into any sale and leaseback transaction; provided that the Company or any Guarantor may enter into a sale and leaseback transaction if:

(a) the Company or that Guarantor, as applicable, could have (1) incurred Indebtedness in an amount equal to the Attributable Debt relating to such sale and leaseback transaction under the Fixed Charge Coverage Ratio test in Section 4.09(a) hereof and (2) incurred a Lien to secure such Indebtedness pursuant to Section 4.12 hereof;

(b) the gross cash proceeds of that sale and leaseback transaction are at least equal to the Fair Market Value, as determined in good faith by the Board of Directors of the Company and set forth in an Officers’ Certificate delivered to the Trustee, of the property that is the subject of that sale and leaseback transaction; and

(c) the transfer of assets in that sale and leaseback transaction is permitted by, and the Company applies the proceeds of such transaction in compliance with, Section 4.10 hereof.

Section 4.17 Payments for Consent.

The Company will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, pay or cause to be paid any consideration to or for the benefit of any Holder of Notes for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Notes unless such consideration is offered to be paid and is paid to all Holders of the Notes that consent, waive or agree to amend in the time frame set forth in the solicitation documents relating to such consent, waiver or agreement.

Section 4.18 Additional Note Guarantees.

The Company will cause each Restricted Subsidiary that (a) Guarantees any Indebtedness of the Company or any Guarantor under a Credit Facility or (b) is a Domestic Subsidiary that otherwise becomes an obligor with respect to Indebtedness in excess of the De Minimis Amount, to become a Guarantor by executing and delivering a supplemental indenture substantially in the form attached hereto as Exhibit F to the Trustee within 30 days after the date on which it incurred such Indebtedness.

Section 4.19 Designation of Restricted and Unrestricted Subsidiaries.

The Board of Directors of the Company may designate any Restricted Subsidiary to be an Unrestricted Subsidiary if that designation would not cause a Default. If a Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate Fair Market Value of all outstanding Investments owned by the Company and its Restricted Subsidiaries in the Subsidiary designated as an Unrestricted Subsidiary will be deemed to be an Investment made as of the time of the designation and will reduce the amount available for Restricted Payments under Section 4.07 hereof or represent a Permitted Investment under one or more clauses of the definition of Permitted Investments, as determined by the Company. That designation will only be permitted if the Investment would be permitted at that time and if the Restricted Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. The Board of Directors of the Company may redesignate any Unrestricted Subsidiary to be a Restricted Subsidiary if such redesignation would not cause a Default.

Any designation of a Subsidiary of the Company as an Unrestricted Subsidiary will be evidenced to the Trustee by filing with the Trustee a certified copy of a resolution of the Board of Directors of the Company giving effect to such designation and an Officers’ Certificate certifying that such designation complied with the preceding conditions and was permitted by Section 4.07 hereof; provided that such covenant need not be complied with if the Subsidiary to be so designated has total assets of $1,000 or less. If, at any time, any Unrestricted Subsidiary would fail to meet the preceding requirements as an Unrestricted Subsidiary, it will thereafter cease to be an Unrestricted Subsidiary for purposes of this

Indenture and any Indebtedness of such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of the Company as of such date and, if such Indebtedness is not permitted to be incurred as of such date under Section 4.09 hereof, the Company will be in default of such covenant. The Board of Directors of the Company may at any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company; provided that such designation will be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary, and such designation will only be permitted if (1) such Indebtedness is permitted under Section 4.09 hereof, calculated on a pro forma basis as if such designation had occurred at the beginning of the applicable reference period; and (2) no Default or Event of Default would be in existence following such designation.

Section 4.20 Covenant Suspension.

Notwithstanding any provision of this Indenture or of the Notes to the contrary, if at any time following the date of this Indenture (a) the Notes are rated Baa3 or better by Moody’s and BBB- or better by S&P (or, if either such entity ceases to rate the Notes for reasons outside of the control of the Company, the equivalent investment grade credit rating from any other “nationally recognized statistical rating organization” within the meaning of Section 3(a)(62) of the Exchange Act selected by the Company as a replacement agency), and (b) no Default or Event of Default under this Indenture shall have occurred and is continuing, Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.16(a)(1), 4.16(c), and 4.19 and 5.01(a)(4) of this Indenture will be suspended and no Default or Event of Default shall result from any failure to comply with any of the provisions of such Sections.

During any period that the foregoing Sections have been suspended, the Board of Directors of the Company may not designate any of its Subsidiaries as Unrestricted Subsidiaries pursuant to Section 4.19 hereof or clause (2) of the definition of “Unrestricted Subsidiary”.

Notwithstanding the foregoing, if on any subsequent date, the Notes cease to maintain ratings of at least Baa3 or BBB- from Moody’s and S&P, respectively, the foregoing covenants will be reinstituted as of and from the date of such rating decline. Calculations under the reinstated Section 4.07 hereof will be made as if Section 4.07 hereof had been in effect since the date of this Indenture except that no Default will be deemed to have occurred solely by reason of a Restricted Payment made while that covenant was suspended.

ARTICLE 5
SUCCESSORS

Section 5.01 Merger, Consolidation or Sale of Assets.

(a) The Company shall not, directly or indirectly: (1) consolidate or merge with or into another Person (whether or not the Company is the surviving corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all or substantially all of the properties or assets of the Company and its Restricted Subsidiaries taken as a whole, in one or more related transactions, to another Person, unless:

(1) either:

(A) the Company is the surviving corporation; or

(B) the Person formed by or surviving any such consolidation or merger (if other than the Company) or to which such sale, assignment, transfer, conveyance or other disposition has been made is an entity organized or existing under the laws of the United

States, any state of the United States or the District of Columbia; and, if such entity is not a corporation, a co-obligor of the Notes is a corporation organized or existing under any such laws;

(2) the Person formed by or surviving any such consolidation or merger (if other than the Company) or the Person to which such sale, assignment, transfer, conveyance or other disposition has been made assumes all the obligations of the Company under the Notes and this Indenture pursuant to agreements reasonably satisfactory to the Trustee;

(3) immediately after such transaction, no Default or Event of Default exists;

(4) the Company or the Person formed by or surviving any such consolidation or merger (if other than the Company), or to which such sale, assignment, transfer, conveyance or other disposition has been made would, on the date of such transaction after giving pro forma effect thereto and any related financing transactions as if the same had occurred at the beginning of the applicable four-quarter period (a) be permitted to incur at least $1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set forth in Section 4.09(a) hereof, or (b) have had a Fixed Charge Coverage Ratio greater than the actual Fixed Charge Coverage Ratio for the Company for such four-quarter period; and

(5) the Company shall have delivered to the Trustee an Officers’ Certificate and Opinion of Counsel that such consolidation, merger or disposition and such supplemental indenture, if any, comply with this Indenture;

provided that, if the surviving Person is not a corporation, a corporate co-issuer of the Notes shall be added to this Indenture by a supplemental indenture substantially in the form attached hereto as Exhibit F.

(b) For purposes of this covenant, the sale, assignment, transfer, lease, conveyance or other disposition of all or substantially all of the properties or assets of one or more Subsidiaries of the Company, which properties or assets, if held by the Company instead of such Subsidiaries, would constitute all or substantially all of the properties or assets of the Company on a consolidated basis, shall be deemed to be the transfer of all or substantially all of the properties or assets of the Company.

(c) The surviving entity will succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture and the predecessor Company shall be discharged and released from all obligations under this Indenture and the Notes; provided , however , that the Company will not be released from the obligation to pay the principal of, premium, if any, and interest on the Notes in the case of a lease of all or substantially all of the Company’s properties or assets in a transaction that is subject to, and that complies with the provisions of, this covenant.

(d) This Section 5.01 will not apply to any sale, assignment, transfer, conveyance, lease or other disposition of assets between or among the Company and its Restricted Subsidiaries. Sections 5.01(a)(3), (4) and (5) hereof will not apply to (1) any merger or consolidation of the Company with or into one of its Restricted Subsidiaries for any purpose or (2) with or into an Affiliate solely for the purpose of reincorporating or re-organizing the Company in another jurisdiction.

(e) Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the properties or assets of a Person.

ARTICLE 6
DEFAULTS AND REMEDIES

Section 6.01 Events of Default.

Each of the following is an “ Event of Default ”:

(a) default for 30 days in the payment when due of interest, if any, on the Notes;

(b) default in the payment when due (at maturity, upon redemption or otherwise) of the principal of, or premium, if any, on the Notes;

(c) failure by the Company or any of its Restricted Subsidiaries to comply with the provisions of Sections 4.10, 4.15 or 5.01 hereof;

(d) failure by the Company or any of its Restricted Subsidiaries for 60 days (180 days, in the case of a failure to comply with Section 4.03 hereof) after notice to the Company by the Trustee or the Holders of at least 25% in aggregate principal amount of the Notes then outstanding to comply with any of the other agreements in this Indenture;

(e) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any Indebtedness for money borrowed by the Company or any of its Restricted Subsidiaries (or the payment of which is guaranteed by the Company or any of its Restricted Subsidiaries) (other than Indebtedness owing to the Company or a Restricted Subsidiary), whether such Indebtedness or Guarantee now exists, or is created after the date of this Indenture, if that default:

(1) is caused by a failure to pay principal of, or premium on, or interest if any, on such Indebtedness prior to the expiration of the grace period provided in such Indebtedness on the date of such default (a “ Payment Default ”); or

(2) results in the acceleration of such Indebtedness prior to its Stated Maturity,

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $20.0 million or more;

(f) failure by the Company or any of its Restricted Subsidiaries to pay final judgments entered by a court or courts of competent jurisdiction aggregating in excess of $20.0 million, (to the extent not covered by insurance by a reputable and creditworthy insurer as to which the insurer has not disclaimed coverage) which judgments are not paid, discharged or stayed, for a period of 60 days;

(g) the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary, pursuant to or within the meaning of Bankruptcy Law:

(1) commences a voluntary case,

(2) consents to the entry of an order for relief against it in an involuntary case,

(3) consents to the appointment of a custodian of it or for all or substantially all of its property,

(4) makes a general assignment for the benefit of its creditors, or

(5) generally is not paying its debts as they become due;

(h) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that:

(1) is for relief against the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary in an involuntary case;

(2) appoints a custodian of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary or for all or substantially all of the property of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary; or

(3) orders the liquidation of the Company or any of its Restricted Subsidiaries that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary;

and the order or decree remains unstayed and in effect for 60 consecutive days; or

(i) except as permitted by this Indenture, any Note Guarantee is held in any judicial proceeding to be unenforceable or invalid or ceases for any reason to be in full force and effect, or any Guarantor, or any Person acting on behalf of any Guarantor, denies or disaffirms its obligations under its Note Guarantee.

Section 6.02 Acceleration.

In the case of an Event of Default specified in clause (g) or (h) of Section 6.01 hereof, with respect to the Company, any Restricted Subsidiary of the Company that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately.

Upon any such declaration, the Notes shall become due and payable immediately.

The Holders of at least a majority in aggregate principal amount of the then-outstanding Notes by written notice to the Trustee may, on behalf of all of the Holders of all the Notes, rescind an acceleration and its consequences hereunder, if the rescission would not conflict with any judgment or decree and if all existing Events of Default (except nonpayment of principal of, premium on, if any, or interest, if any, on the Notes that has become due solely because of the acceleration) have been cured or waived.

Section 6.03 Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of, premium on, if any, or interest, if any, on the Notes or to enforce the performance of any provision of the Notes or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any of the Notes or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder of a Note in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. All remedies are cumulative to the extent permitted by law.

Section 6.04 Waiver of Past Defaults.

The Holders of at least a majority in aggregate principal amount of the then outstanding Notes by written notice to the Trustee may, on behalf of the Holders of all of the Notes waive any existing Default or Event of Default and its consequences hereunder, except a continuing Default or Event of Default in the payment of principal of, premium on, if any, or interest, if any, on, the Notes (including in connection with an offer to purchase); provided, however , that the Holders of at least a majority in aggregate principal amount of the then outstanding Notes may rescind an acceleration and its consequences, including any related payment default that resulted from such acceleration. Upon any such waiver, such Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereon.

Section 6.05 Control by Majority.

Holders of at least a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture that the Trustee determines may be unduly prejudicial to the rights of other Holders of Notes or that may involve the Trustee in personal liability.

Section 6.06 Limitation on Suits.

No Holder of a Note may pursue any remedy with respect to this Indenture or the Notes unless:

(1) such Holder has previously given the Trustee written notice that an Event of Default is continuing;

(2) Holders of at least 25% in aggregate principal amount of the then outstanding Notes make a written request to the Trustee to pursue the remedy;

(3) such Holder or Holders offer and, if requested, provide to the Trustee security or indemnity reasonably satisfactory to the Trustee against any loss, liability or expense;

(4) the Trustee does not comply with such request within 60 days after receipt of the request and the offer of security or indemnity; and

(5) during such 60-day period, Holders of at least a majority in aggregate principal amount of the then outstanding Notes do not give the Trustee a direction inconsistent with such request.

A Holder of a Note may not use this Indenture to prejudice the rights of another Holder of a Note or to obtain a preference or priority over another Holder of a Note.

Section 6.07 Rights of Holders of Notes to Receive Payment.

Notwithstanding any other provision of this Indenture, the right of any Holder of a Note to receive payment of principal of, premium on, if any, or interest, if any, on the Note, on or after the respective due dates expressed in the Note (including in connection with an offer to purchase), or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder.

Section 6.08 Collection Suit by Trustee.

If an Event of Default specified in Section 6.01(a) or (b) hereof occurs and is continuing, the Trustee is authorized to recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal of, premium on, if any, and interest, if any, remaining unpaid on the Notes and interest on overdue principal and, to the extent lawful, interest and such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel.

Section 6.09 Trustee May File Proofs of Claim.

The Trustee is authorized to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and the Holders of the Notes allowed in any judicial proceedings relative to the Company (or any other obligor upon the Notes), its creditors or its property and shall be entitled and empowered to collect, receive and distribute any money or other property payable or deliverable on any such claims and any custodian in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee, and in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due to it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof. To the extent that the payment of any such compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07 hereof out of the estate in any such proceeding, shall be denied for any reason, payment of the same shall be secured by a Lien on, and shall be paid out of, any and all distributions, dividends, money, securities and other properties that the Holders may be entitled to receive in such proceeding whether in liquidation or under any plan of reorganization or arrangement or otherwise. Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Holder, or to authorize the Trustee to vote in respect of the claim of any Holder in any such proceeding.

Section 6.10 Priorities.

If the Trustee collects any money pursuant to this Article 6, it shall pay out the money in the following order:

First : to the Trustee, its agents and attorneys for amounts due under Section 7.07 hereof, including payment of all compensation, expenses and liabilities incurred, and all advances made, by the Trustee and the costs and expenses of collection;

Second : to Holders of Notes for amounts due and unpaid on the Notes for principal, premium, if any, and interest, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal, premium, if any, and interest, if any, respectively; and

Third : to the Company or to such party as a court of competent jurisdiction shall direct.

The Trustee may fix a record date and payment date for any payment to Holders of Notes pursuant to this Section 6.10.

Section 6.11 Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as a Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of a Note pursuant to Section 6.07 hereof, or a suit by Holders of more than 10% in aggregate principal amount of the then outstanding Notes.

ARTICLE 7
TRUSTEE

Section 7.01 Duties of Trustee.

(a) If an Event of Default has occurred and is continuing, the Trustee will exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in its exercise, as a prudent person would exercise or use under the circumstances in the conduct of such person’s own affairs.

(b) Except during the continuance of an Event of Default:

(1) the duties of the Trustee will be determined solely by the express provisions of this Indenture and the Trustee need perform only those duties that are specifically set forth in this Indenture and no others, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and

(2) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee will examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c) The Trustee may not be relieved from liabilities for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(1) this paragraph does not limit the effect of paragraph (b) of this Section 7.01;

(2) the Trustee will not be liable for any error of judgment made in good faith by a Responsible Officer, unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(3) the Trustee will not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05 hereof.

(d) Whether or not therein expressly so provided, every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), and (c) of this Section 7.01.

(e) No provision of this Indenture will require the Trustee to expend or risk its own funds or incur any liability. The Trustee will be under no obligation to exercise any of its rights or powers under this Indenture at the request of any Holders, unless such Holder has offered to the Trustee security and indemnity satisfactory to it against any loss, liability or expense.

(f) The Trustee will not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law.

Section 7.02 Rights of Trustee.

(a) The Trustee may conclusively rely upon any document believed by it to be genuine and to have been signed or presented by the proper Person. The Trustee need not investigate any fact or matter stated in the document.

(b) Before the Trustee acts or refrains from acting, it may require an Officers’ Certificate or an Opinion of Counsel or both. The Trustee will not be liable for any action it takes or omits to take in good faith in reliance on such Officers’ Certificate or Opinion of Counsel. The Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel will be full and complete authorization and protection from liability in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon.

(c) The Trustee may act through its attorneys and agents and will not be responsible for the misconduct or negligence of any agent appointed with due care.

(d) The Trustee will not be liable for any action it takes or omits to take in good faith that it believes to be authorized or within the rights or powers conferred upon it by this Indenture.

(e) Unless otherwise specifically provided in this Indenture, any demand, request, direction or notice from the Company will be sufficient if signed by an Officer of the Company.

(f) The Trustee will be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request or direction of any of the Holders unless such Holders have offered to the Trustee reasonable indemnity or security satisfactory to the Trustee against the losses, liabilities and expenses that might be incurred by it in compliance with such request or direction.

(g) The Trustee shall not be deemed to have notice of any Event of Default unless a Responsible Officer has actual knowledge thereof or unless written notice of such Event of Default is sent to the Trustee in accordance with the terms of this Indenture, and such notice references the Notes.

Section 7.03 Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Company or any Affiliate of the Company with the same rights it would have if it were not Trustee. However, in the event that the Trustee acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the SEC for permission to continue as trustee (if this Indenture has been qualified under the TIA) or resign. Any Agent may do the same with like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11 hereof.

Section 7.04 Trustee’s Disclaimer.

The Trustee will not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Company’s use of the proceeds from the Notes or any money paid to the Company or upon the Company’s direction under any provision of this Indenture, it will not be responsible for the use or application of any money received by any Paying Agent other than the Trustee, and it will not be responsible for any statement or recital herein or any statement in the Notes or any other document in connection with the sale of the Notes or pursuant to this Indenture other than its certificate of authentication.

Section 7.05 Notice of Defaults.

If a Default or Event of Default occurs and is continuing and if it is known to the Trustee, the Trustee will mail to Holders of Notes (or send electronically if DTC is the recipient) a notice of the Default or Event of Default within 90 days after it occurs. Except in the case of a Default or Event of Default in payment of principal of, premium on, if any, or interest, if any, on, any Note, the Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of the Holders of the Notes.

Section 7.06 Reports by Trustee to Holders of the Notes.

(a) Within 60 days after each May 15 beginning with the May 15 following the date of this Indenture, and for so long as Notes remain outstanding, the Trustee will mail to the Holders of the Notes (or send electronically if DTC is the recipient) a brief report dated as of such reporting date that complies with TIA §313(a) (but if no event described in TIA §313(a) has occurred within the twelve months preceding the reporting date, no report need be transmitted). The Trustee also will comply with TIA §313(b)(2). The Trustee will also transmit by mail (or send electronically if DTC is the recipient) all reports as required by TIA §313(c).

(b) A copy of each report at the time of its being sent to the Holders of Notes will be mailed by the Trustee to the Company and filed by the Trustee with the SEC and each stock exchange on which the Notes are listed in accordance with TIA §313(d). The Company will promptly notify the Trustee when the Notes are listed on any stock exchange.

Section 7.07 Compensation and Indemnity.

(a) The Company will pay to the Trustee from time to time reasonable compensation for its acceptance of this Indenture and services hereunder. The Trustee’s compensation will not be limited by any law on compensation of a trustee of an express trust. The Company will reimburse the Trustee promptly upon request for all reasonable disbursements, advances and expenses incurred or made by it in addition to the compensation for its services. Such expenses will include the reasonable compensation, disbursements and expenses of the Trustee’s agents and counsel.

(b) The Company and the Guarantors will indemnify the Trustee against any and all losses, liabilities or expenses incurred by it arising out of or in connection with the acceptance or administration of its duties under this Indenture, including the costs and expenses of enforcing this Indenture against the Company and the Guarantors (including this Section 7.07) and defending itself against any claim (whether asserted by the Company, the Guarantors, any Holder or any other Person) or liability in connection with the exercise or performance of any of its powers or duties hereunder, except to the extent any such loss, liability or expense is found by a court of competent jurisdiction to have been the result of the Trustee’s negligence or bad faith. The Trustee will notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company will not relieve the Company or any of the Guarantors of their obligations hereunder. The Company or such Guarantor will defend the claim and the Trustee will cooperate in the defense. The Trustee may have separate counsel and the Company will pay the reasonable fees and expenses of such counsel. Neither the Company nor any Guarantor need pay for any settlement made without its consent, which consent will not be unreasonably withheld.

(c) The obligations of the Company and the Guarantors under this Section 7.07 will survive the satisfaction and discharge of this Indenture.

(d) To secure the Company’s and the Guarantors’ payment obligations in this Section 7.07, the Trustee will have a Lien prior to the Notes on all money or property held or collected by the Trustee, except that held in trust to pay principal of, premium on, if any, or interest, if any, on, particular Notes. Such Lien will survive the satisfaction and discharge of this Indenture.

(e) When the Trustee incurs expenses or renders services after an Event of Default specified in clause (g) or (h) of Section 6.01 hereof occurs, the expenses and the compensation for the services (including the fees and expenses of its agents and counsel) are intended to constitute expenses of administration under any Bankruptcy Law.

(f) The Trustee will comply with the provisions of TIA §313(b)(2) to the extent applicable.

Section 7.08 Replacement of Trustee.

(a) A resignation or removal of the Trustee and appointment of a successor Trustee will become effective only upon the successor Trustee’s acceptance of appointment as provided in this Section 7.08.

(b) The Trustee may resign in writing at any time and be discharged from the trust hereby created by so notifying the Company. The Holders of at least a majority in aggregate principal amount of the then outstanding Notes may remove the Trustee by so notifying the Trustee and the Company in writing. The Company may remove the Trustee if:

(1) the Trustee fails to comply with Section 7.10 hereof;

(2) the Trustee is adjudged a bankrupt or an insolvent or an order for relief is entered with respect to the Trustee under any Bankruptcy Law;

(3) a custodian or public officer takes charge of the Trustee or its property; or

(4) the Trustee becomes incapable of acting.

(c) If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company will promptly appoint a successor Trustee. Within one year after the successor Trustee takes office, the Holders of a majority in aggregate principal amount of the then outstanding Notes may appoint a successor Trustee to replace the successor Trustee appointed by the Company.

(d) If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company, or the Holders of at least 10% in aggregate principal amount of the then outstanding Notes may petition any court of competent jurisdiction for the appointment of a successor Trustee.

(e) If the Trustee, after written request by any Holder who has been a Holder for at least six months, fails to comply with Section 7.10 hereof, such Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

(f) A successor Trustee will deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon, the resignation or removal of the retiring Trustee will become effective, and the successor Trustee will have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee will mail a notice of its succession to Holders (or send such notice electronically if DTC is the recipient). The retiring Trustee will promptly transfer all property held by it as Trustee to the successor Trustee; provided all sums owing to the Trustee hereunder have been paid and subject to the Lien provided for in Section 7.07 hereof. Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the Company’s obligations under Section 7.07 hereof will continue for the benefit of the retiring Trustee.

Section 7.09 Successor Trustee by Merger, etc.

If the Trustee consolidates, merges or converts into, or transfers all or substantially all of its corporate trust business to, another corporation, the successor corporation without any further act will be the successor Trustee.

Section 7.10 Eligibility; Disqualification.

There will at all times be a Trustee hereunder that is a corporation organized and doing business under the laws of the United States of America or of any state thereof that is authorized under such laws to exercise corporate trustee power, that is subject to supervision or examination by federal or state authorities and that has a combined capital and surplus of at least $100.0 million as set forth in its most recent published annual report of condition.

This Indenture will always have a Trustee who satisfies the requirements of TIA §310(a)(1), (2) and (5). The Trustee is subject to TIA §310(b).

Section 7.11 Preferential Collection of Claims Against Company.

The Trustee is subject to TIA §311(a), excluding any creditor relationship listed in TIA §311(b). A Trustee who has resigned or been removed shall be subject to TIA §311(a) to the extent indicated therein.

ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE

Section 8.01 Option to Effect Legal Defeasance or Covenant Defeasance.

The Company may at any time, at the option of the Board of Directors evidenced by a resolution set forth in an Officers’ Certificate, elect to have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon compliance with the conditions set forth below in this Article 8.

Section 8.02 Legal Defeasance and Discharge.

Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.02, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to have been discharged from their obligations with respect to all outstanding Notes (including the Note Guarantees) on the date the conditions set forth below are satisfied (hereinafter, “ Legal Defeasance ”). For this purpose, Legal Defeasance means that the Company and the Guarantors will be deemed to have paid and discharged the entire Indebtedness represented by the outstanding Notes (including the Note Guarantees), which will thereafter be deemed to be “outstanding” only for the purposes of Section 8.05 hereof and the other Sections of this Indenture referred to in clauses (1) and (2) below, and to have satisfied all their other obligations under such Notes, the Note Guarantees and this Indenture (and the Trustee, on demand of and at the expense of the Company, shall execute proper instruments acknowledging the same), except for the following provisions which will survive until otherwise terminated or discharged hereunder:

(1) the rights of Holders of outstanding Notes to receive payments in respect of the principal of, premium on, if any, or interest, if any, on such Notes when such payments are due from the trust referred to in Section 8.04 hereof;

(2) the Company’s obligations with respect to such Notes under Sections 2.03, 2.04, 2.06, 2.07, 2.10, 2.11 and 4.02 hereof;

(3) the rights, powers, trusts, duties and immunities of the Trustee hereunder and the Company’s and the Guarantors’ obligations in connection therewith; and

(4) this Article 8.

Subject to compliance with this Article 8, the Company may exercise its option under this Section 8.02 notwithstanding the prior exercise of its option under Section 8.03 hereof.

Section 8.03 Covenant Defeasance.

Upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, the Company and each of the Guarantors will, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, be released from each of their obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10, 4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20 hereof and clause (4) of Section 5.01 hereof with respect to the outstanding Notes on and after the date the conditions set forth in Section 8.04 hereof are satisfied (hereinafter, “ Covenant Defeasance ”), and the Notes will thereafter be deemed not “outstanding” for the purposes of any direction, waiver, consent or declaration or act of Holders (and the consequences of any thereof) in connection with such covenants, but will continue to be deemed “outstanding” for all other purposes hereunder (it being understood that such Notes will not be deemed outstanding for accounting purposes). For this purpose, Covenant Defeasance means that, with

respect to the outstanding Notes and Note Guarantees, the Company and the Guarantors may omit to comply with and will have no liability in respect of any term, condition or limitation set forth in any such covenant, whether directly or indirectly, by reason of any reference elsewhere herein to any such covenant or by reason of any reference in any such covenant to any other provision herein or in any other document and such omission to comply will not constitute a Default or an Event of Default under Section 6.01 hereof, but, except as specified above, the remainder of this Indenture and such Notes and Note Guarantees will be unaffected thereby. In addition, upon the Company’s exercise under Section 8.01 hereof of the option applicable to this Section 8.03, subject to the satisfaction of the conditions set forth in Section 8.04 hereof, Sections 6.01 (c), (d), (e), (f) and (i) hereof will not constitute Events of Default.

Section 8.04 Conditions to Legal or Covenant Defeasance.

In order to exercise either Legal Defeasance or Covenant Defeasance under either Section 8.02 or 8.03 hereof:

(1) the Company must irrevocably deposit with the Trustee, in trust, for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of a nationally recognized investment bank, appraisal firm, or firm of independent public accountants, to pay the principal of, premium, if any, on and interest, if any, on the outstanding Notes on the stated date for payment thereof or on the applicable redemption date, as the case may be, and the Company must specify whether the Notes are being defeased to such stated date for payment or to a particular redemption date;

(2) in the case of an election under Section 8.02 hereof, the Company must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that:

(A) the Company has received from, or there has been published by, the Internal Revenue Service a ruling; or

(B) since the date of this Indenture, there has been a change in the applicable federal income tax law,

in either case to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Legal Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Legal Defeasance had not occurred;

(3) in the case of an election under Section 8.03 hereof, the Company must deliver to the Trustee an Opinion of Counsel reasonably acceptable to the Trustee confirming that the Holders of the outstanding Notes will not recognize income, gain or loss for federal income tax purposes as a result of such Covenant Defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such Covenant Defeasance had not occurred;

(4) no Default or Event of Default shall have occurred and is continuing on the date of such deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit (and any similar concurrent deposit relating to other Indebtedness), and the granting of Liens to secure such borrowings);

(5) such Legal Defeasance or Covenant Defeasance will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than this Indenture and the agreements governing any other Indebtedness being defeased, discharged or replaced) to which the Company or any of the Guarantors is a party or by which the Company or any of the Guarantors is bound;

(6) the Company must deliver to the Trustee an Officers’ Certificate stating that the deposit was not made by the Company with the intent of preferring the Holders of Notes over the other creditors of the Company with the intent of defeating, hindering, delaying or defrauding any creditors of the Company or others; and

(7) the Company must deliver to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that all conditions precedent relating to the Legal Defeasance or the Covenant Defeasance have been complied with.

Section 8.05 Deposited Money and Government Securities to be Held in Trust; Other Miscellaneous Provisions.

Subject to Section 8.06 hereof, all money and non-callable Government Securities (including the proceeds thereof) deposited with the Trustee (or other qualifying trustee, collectively for purposes of this Section 8.05, the “ Trustee ”) pursuant to Section 8.04 hereof in respect of the outstanding Notes will be held in trust and applied by the Trustee, in accordance with the provisions of such Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as Paying Agent) as the Trustee may determine, to the Holders of such Notes of all sums due and to become due thereon in respect of principal, premium, if any, and interest, if any, but such money need not be segregated from other funds except to the extent required by law.

The Company will pay and indemnify the Trustee against any tax, fee or other charge imposed on or assessed against the cash or non-callable Government Securities deposited pursuant to Section 8.04 hereof or the principal and interest received in respect thereof other than any such tax, fee or other charge which by law is for the account of the Holders of the outstanding Notes.

Notwithstanding anything in this Article 8 to the contrary, the Trustee will deliver or pay to the Company from time to time upon the request of the Company any money or non-callable Government Securities held by it as provided in Section 8.04 hereof which, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee (which may be the opinion delivered under Section 8.04(1) hereof), are in excess of the amount thereof that would then be required to be deposited to effect an equivalent Legal Defeasance or Covenant Defeasance.

Section 8.06 Repayment to Company.

Any money deposited with the Trustee or any Paying Agent, or then held by the Company, in trust for the payment of the principal of, premium on, if any, or interest, if any, on any Note and remaining unclaimed for two years after such principal, premium, if any, or interest, if any, has become due and payable shall be paid to the Company on its request or (if then held by the Company) will be discharged from such trust; and the Holder of such Note will thereafter be permitted to look only to the Company for payment thereof, and all liability of the Trustee or such Paying Agent with respect to such trust money, and all liability of the Company as trustee thereof, will thereupon cease; provided, however , that the Trustee or such Paying Agent, before being required to make any such repayment, may at the expense of the Company cause to be published once, in the New York Times and The Wall Street Journal

(national edition), notice that such money remains unclaimed and that, after a date specified therein, which will not be less than 30 days from the date of such notification or publication, any unclaimed balance of such money then remaining will be repaid to the Company.

Section 8.07 Reinstatement.

If the Trustee or Paying Agent is unable to apply any U.S. dollars or non-callable Government Securities in accordance with Section 8.02 or 8.03 hereof, as the case may be, by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, then the Company’s and the Guarantors’ obligations under this Indenture and the Notes and the Note Guarantees will be revived and reinstated as though no deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is permitted to apply all such money in accordance with Section 8.02 or 8.03 hereof, as the case may be; provided, however , that, if the Company makes any payment of principal of, premium on, if any, or interest, if any, on, any Note following the reinstatement of its obligations, the Company will be subrogated to the rights of the Holders of such Notes to receive such payment from the money held by the Trustee or Paying Agent.

ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER

Section 9.01 Without Consent of Holders of Notes.

Notwithstanding Section 9.02 hereof, without the consent of any Holder of Notes, the Company, the Guarantors and the Trustee may amend or supplement this Indenture, the Notes or the Note Guarantees:

(1) to cure any ambiguity, defect or inconsistency;

(2) to provide for uncertificated Notes in addition to or in place of certificated Notes;

(3) to provide for the assumption of the Company’s or a Guarantor’s obligations to the Holders of the Notes and Note Guarantees by a successor to the Company or such Guarantor pursuant to Article 5 or Article 10 hereof;

(4) to make any change that would provide any additional rights or benefits to the Holders of the Notes or that does not adversely affect the legal rights hereunder of any Holder;

(5) to comply with requirements of the SEC in order to effect or maintain the qualification of this Indenture under the TIA;

(6) to conform the text of this Indenture, the Notes or the Note Guarantees to any provision of the “Description of Notes” section of the Offering Memorandum to the extent that such provision in that “Description of Notes” was intended to be a verbatim recitation of a provision of this Indenture, the Notes, the Note Guarantees, which intent may be evidenced by an Officers’ Certificate to that effect;

(7) to allow any Guarantor to execute a supplemental indenture and/or a Note Guarantee with respect to the Notes;

(8) to secure the Notes or the Note Guarantees pursuant to the requirements of Section 4.12 hereof or otherwise;

(9) to evidence or provide for the acceptance of appointment under this Indenture of a successor trustee;

(10) to provide for the conversion, transfer or re-domestication of the Company in accordance with Section 5.01 hereof, or to add a corporate co-issuer of the Notes;

(11) to add to the covenants of the Company and the Restricted Subsidiaries such further covenants, restrictions, conditions or provisions as the Company and the Restricted Subsidiaries shall consider to be appropriate for the benefit of the holders of all or any series of debt securities or to surrender any right or power therein conferred upon the Company or to make the occurrence, or the occurrence and continuance, of a Default in any such additional covenants, restrictions, conditions or provisions an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as set forth therein; provided that in respect of any such additional covenant, restriction, condition or provision, such supplemental indenture may provide for a particular period of grace after Default (which period may be shorter or longer than that allowed in the case of other Defaults) or may provide for an immediate enforcement upon such an Event of Default or may limit the remedies available to the Trustee upon such an Event of Default or may limit the right of the holders of at least a majority in aggregate principal amount of the Notes to waive such an Event of Default;

(12) to add any additional Defaults or Events of Default in respect of the Notes; or

(13) to provide for the issuance of additional Notes in accordance with the limitations set forth in this Indenture as of the date of this Indenture.

Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company and the Guarantors in the execution of any amended or supplemental indenture authorized or permitted by the terms of this Indenture and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee will not be obligated to enter into such amended or supplemental indenture that affects its own rights, duties or immunities under this Indenture or otherwise.

Section 9.02 With Consent of Holders of Notes.

Except as provided below in this Section 9.02, the Company and the Trustee may amend or supplement this Indenture (including Section 3.09, 4.10 and 4.15 hereof) and the Notes and the Note Guarantees with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including Additional Notes, if any) voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default or Event of Default (other than a Default or Event of Default in the payment of the principal of, premium on, if any, or interest, if any, on, the Notes, except a payment default resulting from an acceleration that has been rescinded) or compliance with any provision of this Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of at least a majority in aggregate principal amount of the then outstanding Notes (including Additional Notes, if any) voting as a single class (including consents obtained in connection with a tender offer or exchange offer for, or purchase of, the Notes). Section 2.08 hereof shall determine which Notes are considered to be “outstanding” for purposes of this Section 9.02.

Upon the request of the Company accompanied by a resolution of its Board of Directors authorizing the execution of any such amended or supplemental indenture, and upon the filing with the

Trustee of evidence satisfactory to the Trustee of the consent of the Holders of Notes as aforesaid, and upon receipt by the Trustee of the documents described in Section 7.02 hereof, the Trustee will join with the Company and the Guarantors in the execution of such amended or supplemental indenture unless such amended or supplemental indenture directly affects the Trustee’s own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion, but will not be obligated to, enter into such amended or supplemental Indenture.

It is not necessary for the consent of the Holders of Notes under this Section 9.02 to approve the particular form of any proposed amendment, supplement or waiver, but it is sufficient if such consent approves the substance thereof.

After an amendment, supplement or waiver under this Section 9.02 becomes effective, the Company will mail to the Holders of Notes affected thereby (or send electronically if DTC is the recipient) a notice briefly describing the amendment, supplement or waiver. Any failure of the Company to send such notice, or any defect therein, will not, however, in any way impair or affect the validity of any such amended or supplemental indenture or waiver. Subject to Sections 6.04 and 6.07 hereof, the Holders of a majority in aggregate principal amount of the Notes then outstanding voting as a single class may waive compliance in a particular instance by the Company with any provision of this Indenture, the Notes or the Note Guarantees. However, without the consent of each Holder affected, an amendment, supplement or waiver under this Section 9.02 may not (with respect to any Notes held by a non-consenting Holder):

(1) reduce the principal amount of Notes whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the principal of or change the fixed maturity of any Note or alter or waive any of the provisions with respect to the redemption of the Notes (except as provided above with respect to Sections 3.09, 4.10 and 4.15 hereof);

(3) reduce the rate of or change the time for payment of interest, including default interest, on any Note;

(4) waive a Default or Event of Default in the payment of principal of, premium on, if any, or interest, if any, on, the Notes (except a rescission of acceleration of the Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Notes and a waiver of the payment default that resulted from such acceleration);

(5) make any Note payable in money other than that stated in the Notes;

(6) make any change in the provisions of this Indenture relating to waivers of past Defaults or the rights of Holders of Notes to receive payments of principal of, premium, if any, on, or interest, if any, on the Notes;

(7) waive a redemption payment with respect to any Note (other than a payment required by Sections 3.09, 4.10 or 4.15 hereof);

(8) release any Guarantor from any of its obligations under its Note Guarantee, except in accordance with the terms of this Indenture; or

(9) make any change in the preceding amendment and waiver provisions.

Section 9.03 Revocation and Effect of Consents.

Until an amendment, supplement or waiver becomes effective, a consent to it by a Holder of a Note is a continuing consent by the Holder of a Note and every subsequent Holder of a Note or portion of a Note that evidences the same debt as the consenting Holder’s Note, even if notation of the consent is not made on any Note. However, any such Holder of a Note or subsequent Holder of a Note may revoke the consent as to its Note if the Trustee receives written notice of revocation before the date the amendment, supplement or waiver becomes effective. An amendment, supplement or waiver becomes effective in accordance with its terms and thereafter binds every Holder.

Section 9.04 Notation on or Exchange of Notes.

The Trustee may place an appropriate notation about an amendment, supplement or waiver on any Note thereafter authenticated. The Company in exchange for all Notes may issue and the Trustee shall, upon receipt of an Authentication Order, authenticate new Notes that reflect the amendment, supplement or waiver.

Failure to make the appropriate notation or issue a new Note will not affect the validity and effect of such amendment, supplement or waiver.

Section 9.05 Trustee to Sign Amendments, etc.

The Trustee will sign any amended or supplemental indenture authorized pursuant to this Article 9 if the amendment or supplement does not adversely affect the rights, duties, liabilities or immunities of the Trustee. The Company may not sign an amended or supplemental indenture until the Board of Directors of the Company approves it. In executing any amended or supplemental indenture, the Trustee will be entitled to receive and (subject to Section 7.01 hereof) will be fully protected in relying upon, in addition to the documents required by Section 12.04 hereof, an Officers’ Certificate and an Opinion of Counsel stating that the execution of such amended or supplemental indenture is authorized or permitted by this Indenture.

ARTICLE 10.
NOTE GUARANTEES

Section 10.01. Guarantee.

(a) Subject to this Article 10, each of the Guarantors hereby, jointly and severally, unconditionally guarantees to each Holder of a Note authenticated and delivered by the Trustee and to the Trustee and its successors and assigns, irrespective of the validity and enforceability of this Indenture, the Notes or the obligations of the Company hereunder or thereunder, that:

(1) the principal of, premium, if any, on, and interest, if any, on the Notes will be promptly paid in full when due, whether at maturity, by acceleration, redemption or otherwise, and interest on the overdue principal of, premium on, if any, and interest, if any, on, the Notes, if lawful, and all other obligations of the Company to the Holders or the Trustee hereunder or thereunder will be promptly paid in full or performed, all in accordance with the terms hereof and thereof; and

(2) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that same will be promptly paid in full when due or performed in

accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise.

Failing payment when due of any amount so guaranteed or any performance so guaranteed for whatever reason, the Guarantors will be jointly and severally obligated to pay the same immediately. Each Guarantor agrees that this is a guarantee of payment and not a guarantee of collection.

(b) The Guarantors hereby agree that their obligations hereunder are unconditional, irrespective of the validity, regularity or enforceability of the Notes or this Indenture, the absence of any action to enforce the same, any waiver or consent by any Holder of the Notes with respect to any provisions hereof or thereof, the recovery of any judgment against the Company, any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. Each Guarantor hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest, notice and all demands whatsoever and covenant that this Note Guarantee will not be discharged except by complete performance of the obligations contained in the Notes and this Indenture.

(c) If any Holder or the Trustee is required by any court or otherwise to return to the Company, the Guarantors or any custodian, trustee, liquidator or other similar official acting in relation to either the Company or the Guarantors, any amount paid by either to the Trustee or such Holder, this Note Guarantee, to the extent theretofore discharged, will be reinstated in full force and effect.

(d) Each Guarantor agrees that it will not be entitled to any right of subrogation in relation to the Holders in respect of any obligations guaranteed hereby until payment in full of all obligations guaranteed hereby. Each Guarantor further agrees that, as between the Guarantors, on the one hand, and the Holders and the Trustee, on the other hand, (1) the maturity of the obligations guaranteed hereby may be accelerated as provided in Article 6 hereof for the purposes of this Note Guarantee, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed hereby, and (2) in the event of any declaration of acceleration of such obligations as provided in Article 6 hereof, such obligations (whether or not due and payable) will forthwith become due and payable by the Guarantors for the purpose of this Note Guarantee. The Guarantors will have the right to seek contribution from any non-paying Guarantor so long as the exercise of such right does not impair the rights of the Holders under the Note Guarantee.

Section 10.02. Limitation on Guarantor Liability.

Each Guarantor, and by its acceptance of Notes, each Holder, hereby confirms that it is the intention of all such parties that the Note Guarantee of such Guarantor not constitute a fraudulent transfer or conveyance for purposes of Bankruptcy Law, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar federal or state law to the extent applicable to any Note Guarantee. To effectuate the foregoing intention, the Trustee, the Holders and the Guarantors hereby irrevocably agree that the obligations of such Guarantor will be limited to the maximum amount that will, after giving effect to such maximum amount and all other contingent and fixed liabilities of such Guarantor that are relevant under such laws, and after giving effect to any collections from, rights to receive contribution from or payments made by or on behalf of any other Guarantor in respect of the obligations of such other Guarantor under this Article 10, result in the obligations of such Guarantor under its Note Guarantee not constituting a fraudulent transfer or conveyance.

Section 10.03. Execution and Delivery of Note Guarantee.

To evidence its Note Guarantee set forth in Section 10.01 hereof, each Guarantor hereby agrees that a notation of such Note Guarantee substantially in the form attached as Exhibit D hereto will be endorsed by an Officer of such Guarantor on each Note authenticated and delivered by the Trustee and that this Indenture will be executed on behalf of such Guarantor by one of its Officers.

Each Guarantor hereby agrees that its Note Guarantee set forth in Section 10.01 hereof will remain in full force and effect notwithstanding any failure to endorse on each Note a notation of such Note Guarantee.

If an Officer whose signature is on this Indenture or on the Note Guarantee no longer holds that office at the time the Trustee authenticates the Note on which a Note Guarantee is endorsed, the Note Guarantee will be valid nevertheless.

The delivery of any Note by the Trustee, after the authentication thereof hereunder, will constitute due delivery of the Note Guarantee set forth in this Indenture on behalf of the Guarantors.

In the event that the Company or any of its Restricted Subsidiaries creates or acquires any Domestic Subsidiary after the date of this Indenture, if required by Section 4.18 hereof, the Company will cause such Domestic Subsidiary to comply with the provisions of Section 4.18 hereof and this Article 10, to the extent applicable.

Section 10.04. Guarantors May Consolidate, etc., on Certain Terms.

Except as otherwise provided in Section 10.05 hereof, no Guarantor may sell or otherwise dispose of all or substantially all of its assets to, or consolidate with or merge with or into (whether or not such Guarantor is the surviving Person) another Person, other than the Company or another Guarantor, unless:

(1) immediately after giving effect to such transaction, no Default or Event of Default exists; and

(2) either:

(a) subject to Section 10.05 hereof, the Person acquiring the properties or assets in any such sale or disposition or the Person formed by or surviving any such consolidation or merger (if other than the Guarantor) becomes a Guarantor under this Indenture pursuant to a supplemental indenture substantially in the form attached hereto as Exhibit F; or

(b) such transaction at the date thereof does not violate Section 4.10 hereof.

In case of any such consolidation, merger, sale or conveyance and upon the assumption by the successor Person, by supplemental indenture, executed and delivered to the Trustee and substantially in the form attached hereto as Exhibit F, of the Note Guarantee endorsed upon the Notes and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Guarantor, such successor Person will succeed to and be substituted for the Guarantor with the same effect as if it had been named herein as a Guarantor. Such successor Person thereupon may cause to be signed any or all of the Note Guarantees to be endorsed upon all of the Notes issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee. All the Note Guarantees so issued will in all respects have the same legal rank and benefit under this Indenture as the Note Guarantees theretofore and thereafter issued in accordance with the terms of this Indenture as though all of such Note Guarantees had been issued at the date of the execution hereof.

Except as set forth in Articles 4 and 5 hereof, and notwithstanding clauses 2(a) and (b) above, nothing contained in this Indenture or in any of the Notes will prevent any consolidation or merger of a Guarantor with or into the Company or another Guarantor, or will prevent any sale or conveyance of the property of a Guarantor as an entirety or substantially as an entirety to the Company or another Guarantor.

Section 10.05. Releases.

The Note Guarantee of a Guarantor will automatically be released:

(a) in connection with any sale or other disposition of Capital Stock of that Guarantor by way of merger, consolidation or otherwise to a Person that is not (either before or after giving effect to such transaction) the Company or a Restricted Subsidiary of the Company, if the sale or other disposition does not violate Section 4.10 hereof and the Guarantor ceases to be a Restricted Subsidiary of the Company as a result of the sale or other disposition;

(b) upon any sale or other disposition of all or substantially all of the properties or assets of that Guarantor (including by way of merger or consolidation) to a Person that is not (either before or after giving effect to such transaction) the Company or a Subsidiary Guarantor, if the sale or other disposition at the date thereof does not violate Section 4.10 hereof;

(c) if the Company designates any Restricted Subsidiary that is a Guarantor to be an Unrestricted Subsidiary in accordance with the applicable provisions of this Indenture;

(d) upon legal defeasance, covenant defeasance or satisfaction and discharge of this Indenture as provided in Articles 8 and 11 hereof;

(e) upon the liquidation or dissolution of that Guarantor, provided no Default or Event of Default occurs as a result thereof or has occurred or is continuing;

(f) at such time as such Guarantor (1) does not Guarantee any Indebtedness of the Company or any Guarantor under a Credit Facility (except as a result of payment under any such other Guarantee) and (b) is not a Domestic Subsidiary that is an obligor with respect to any Indebtedness (other than under a Credit Facility) in excess of the De Minimis Amount; or

(g) upon such Guarantor consolidating with, merging into or transferring all of its properties or assets to the Company or another Guarantor, and as a result of, or in connection with, such transaction such Guarantor dissolves or otherwise ceases to exist;

Any Guarantor not released from its obligations under its Note Guarantee as provided in this Section 10.05 will remain liable for the full amount of principal of, premium on, if any, and interest, if any, on, the Notes and for the other obligations of any Guarantor under this Indenture as provided in this Article 10.

ARTICLE 11
SATISFACTION AND DISCHARGE

Section 11.01 Satisfaction and Discharge.

This Indenture will be discharged and will cease to be of further effect as to all Notes issued hereunder, when:

(1) either:

(a) all Notes that have been authenticated, except lost, stolen or destroyed Notes that have been replaced or paid and Notes for whose payment money has been deposited in trust and thereafter repaid to the Company, have been delivered to the Trustee for cancellation; or

(b) all Notes that have not been delivered to the Trustee for cancellation have become due and payable by reason of a notice of redemption being sent or otherwise or will become due and payable within one year and the Company or any Guarantor has irrevocably deposited or caused to be deposited with the Trustee as trust funds in trust solely for the benefit of the Holders, cash in U.S. dollars, non-callable Government Securities, or a combination thereof, in such amounts as will be sufficient, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on the Notes not delivered to the Trustee for cancellation for principal, premium, if any, and interest, if any, to the date of maturity or redemption;

(2) in respect of Section 11.01(1)(b), no Default or Event of Default has occurred and is continuing on the date of the deposit (other than a Default or Event of Default resulting from the borrowing of funds to be applied to such deposit and any similar deposit relating to other Indebtedness and, in each case, the granting of Liens to secure such borrowings) and the deposit will not result in a breach or violation of, or constitute a default under, any other instrument to which the Company or any Guarantor is a party or by which the Company or any Guarantor is bound (other than with respect to the borrowing of funds to be applied concurrently to make the deposit required to effect such satisfaction and discharge and any similar concurrent deposit relating to other Indebtedness, and in each case the granting of Liens to secure such borrowings);

(3) the Company or any Guarantor has paid or caused to be paid all sums payable by it under this Indenture; and

(4) the Company has delivered irrevocable instructions to the Trustee under this Indenture to apply the deposited money toward the payment of the Notes at maturity or on the redemption date, as the case may be.

In addition, the Company must deliver an Officers’ Certificate and an Opinion of Counsel to the Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

Notwithstanding the satisfaction and discharge of this Indenture, if money has been deposited with the Trustee pursuant to subclause (b) of clause (1) of this Section 11.01, the provisions of Sections 11.02 and 8.06 hereof will survive. In addition, nothing in this Section 11.01 will be deemed to discharge those provisions of Section 7.07 hereof, that, by their terms, survive the satisfaction and discharge of this Indenture.

Section 11.02 Application of Trust Money.

Subject to the provisions of Section 8.06 hereof, all money deposited with the Trustee pursuant to Section 11.01 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent (including the Company acting as its own Paying Agent) as the Trustee may determine, to the Persons entitled thereto, of the principal, premium, if any, and interest, if any, for whose payment such money has been deposited with the Trustee; but such money need not be segregated from other funds except to the extent required by law.

If the Trustee or Paying Agent is unable to apply any money or Government Securities in accordance with Section 11.01 hereof by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company’s and any Guarantor’s obligations under this Indenture and the Notes shall be revived and reinstated as though no deposit had occurred pursuant to Section 11.01 hereof; provided that if the Company has made any payment of principal of, premium on, if any, or interest, if any, on, any Notes because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Notes to receive such payment from the money or Government Securities held by the Trustee or Paying Agent.

ARTICLE 12
MISCELLANEOUS

Section 12.01 Trust Indenture Act Controls.

If any provision of this Indenture limits, qualifies or conflicts with the duties imposed by TIA §318(c), the imposed duties will control.

Section 12.02 Notices.

Any notice or communication by the Company, any Guarantor or the Trustee to the others is duly given if in writing and delivered in Person or by first class mail (registered or certified, return receipt requested), facsimile transmission or overnight air courier guaranteeing next day delivery, to the others’ address:

If to the Company and/or any Guarantor:

Lonestar Resources America Inc.
509 Pecan St., Suite 200
Fort Worth, Texas 76102
Facsimile No.: (817) 921-5112
Attention: Douglas W. Banister

With a copy to:
Thompson & Knight LLP
One Arts Plaza

1722 Routh Street, Suite 1500

Dallas, Texas 75201
Facsimile No.: (214) 969-1393
Attention: Joe Dannenmaier, Esq.

If to the Trustee:
Wells Fargo Bank, National Association

750 N. St. Paul Place, Suite 1750
Dallas, Texas 75201
Facsimile No.: (214) 756-7401
Attention: Corporate Trust, Municipal and Escrow Services

The Company, any Guarantor or the Trustee, by notice to the others, may designate additional or different addresses for subsequent notices or communications.

All notices and communications (other than those sent to Holders) will be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when receipt acknowledged, if transmitted by facsimile; and the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery.

Any notice or communication to Holders of Notes in certificated form will be mailed by first class mail, certified or registered, return receipt requested, or by overnight air courier guaranteeing next day delivery to its address shown on the register kept by the Registrar. Notices and communications to Holders of Notes in global form will be sent electronically pursuant to the procedures of the Depositary. Any notice or communication will also be so mailed to any Person described in TIA §313(c), to the extent required by the TIA. Failure to mail or electronically send, as applicable, a notice or communication to a Holder or any defect in it will not affect its sufficiency with respect to other Holders.

If a notice or communication is mailed in the manner provided above within the time prescribed, it is duly given, whether or not the addressee receives it.

If the Company mails a notice or communication to Holders, it will mail a copy to the Trustee and each Agent at the same time.

Section 12.03 Communication by Holders of Notes with Other Holders of Notes.

Holders may communicate pursuant to TIA §312(b) with other Holders with respect to their rights under this Indenture or the Notes. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA §312(c).

Section 12.04 Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

(1) an Officers’ Certificate in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of the signers, all conditions precedent and covenants, if any, provided for in this Indenture relating to the proposed action have been satisfied; and

(2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee (which must include the statements set forth in Section 12.05 hereof) stating that, in the opinion of such counsel, all such conditions precedent and covenants have been satisfied.

Section 12.05 Statements Required in Certificate or Opinion.

Each certificate or opinion with respect to compliance with a condition or covenant provided for in this Indenture (other than a certificate provided pursuant to TIA §314(a)(4)) must comply with the provisions of TIA §314(e) and must include:

(1) a statement that the Person making such certificate or opinion has read such covenant or condition;

(2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based;

(3) a statement that, in the opinion of such Person, he or she has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been satisfied; and

(4) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been satisfied.

Section 12.06 Rules by Trustee and Agents.

The Trustee may make reasonable rules for action by or at a meeting of Holders. The Registrar or Paying Agent may make reasonable rules and set reasonable requirements for its functions.

Section 12.07 No Personal Liability of Directors, Officers, Employees and Stockholders.

No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, this Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

Section 12.08 Governing Law.

THIS INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

Section 12.09 No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret any other indenture, loan or debt agreement of the Company or its Subsidiaries or of any other Person. Any such indenture, loan or debt agreement may not be used to interpret this Indenture.

Section 12.10 Successors.

All agreements of the Company in this Indenture and the Notes will bind its successors. All agreements of the Trustee in this Indenture will bind its successors. All agreements of each Guarantor in this Indenture will bind its successors, except as otherwise provided in Section 10.05 hereof.

Section 12.11 Severability.

In case any provision in this Indenture or in the Notes is invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

Section 12.12 Counterpart Originals.

The parties may sign any number of copies of this Indenture. Each signed copy will be an original, but all of them together represent the same agreement. The exchange of copies of this Indenture and of signature pages by facsimile or PDF transmission shall constitute effective execution and delivery of this Indenture as to the parties hereto and may be used in lieu of the original Indenture for all purposes.

Signatures of the parties hereto transmitted by facsimile or PDF shall be deemed to be their original signatures for all purposes.

Section 12.13 Table of Contents, Headings, etc.

The Table of Contents, Cross-Reference Table and Headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part of this Indenture and will in no way modify or restrict any of the terms or provisions hereof.

[Signatures on following page]

SIGNATURES

Dated as of April 4, 2014

	LONESTAR RESOURCES AMERICA INC.


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	LONESTAR RESOURCES, INC.


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	LONESTAR OPERATING, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	EAGLEFORD GAS, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	EAGLEFORD GAS 2, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	EAGLEFORD GAS 3, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer

	EAGLEFORD GAS 4, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	EAGLEFORD GAS 5, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	EAGLEFORD GAS 6, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	AMADEUS PETROLEUM INC.


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	ALBANY SERVICES, LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	T-N-T ENGINEERING, INC.


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer

	POPLAR ENERGY LLC


	By:	/s/ Frank D. Bracken, III
		Name: Frank D. Bracken, III
		Title: Chief Executive Officer


	WELLS FARGO BANK, NATIONAL ASSOCIATION, AS TRUSTEE


	By:	/s/ John. C. Stohlmann
		Name: John. C. Stohlmann
		Title: Vice President

[Face of Note]


				CUSIP/CINS


8.750% Senior Notes due 2019


No.				$

LONESTAR RESOURCES AMERICA INC.

promises to pay to or registered assigns,

the principal sum of DOLLARS on April 15, 2019.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Dated:

		LONESTAR RESOURCES AMERICA INC.


		By:
			Name:
			Title:

This is one of the Notes referred to
in the within-mentioned Indenture:

WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Trustee

By:
	Authorized Signatory

A1- 1

[Back of Note]

8.750% Senior Notes due 2019

[Insert the Global Note Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Private Placement Legend, if applicable pursuant to the provisions of the Indenture]

[Insert the Unit Legend, if applicable pursuant to the provisions of the Indenture]

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

(1) INTEREST . Lonestar Resources America Inc., a Delaware corporation (the “ Company ”), promises to pay or cause to be paid interest on the principal amount of this Note at 8.750% per annum from April 15, 2014 until maturity. The Company will pay interest, if any, semi-annually in arrears on April 15 and October 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “ Interest Payment Date ”). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that, if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be October 15, 2014. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at a rate that is 1% higher than the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, if any (without regard to any applicable grace period), at the same rate to the extent lawful.

Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

(2) METHOD OF PAYMENT . The Company will pay interest on the Notes (except defaulted interest), if any, to the Persons who are registered Holders of Notes at the close of business on the April 1 or October 1 next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.12 of the Indenture with respect to defaulted interest. The Notes will be payable as to principal, premium, if any, and interest, if any, at the office or agency of the Paying Agent and Registrar within the City and State of New York, or, at the option of the Company, payment of interest, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders; provided that payment by wire transfer of immediately available funds will be required with respect to principal of, premium on, if any, and interest, if any, on, all Global Notes and all other Notes the Holders of which will have provided wire transfer instructions to the Company or the Paying Agent (which, in the case of Holders of Definitive Notes, shall specify a bank account in the United States). Such payment will be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.

(3) PAYING AGENT AND REGISTRAR . Initially, Wells Fargo Bank, National Association, the Trustee under the Indenture, will act as Paying Agent and Registrar. The Company may change the Paying Agent or Registrar without prior notice to the Holders of the Notes. The Company or any of its Subsidiaries may act as Paying Agent or Registrar.

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(4) INDENTURE . The Company issued the Notes under an Indenture dated as of April 4, 2014 (the “ Indenture ”) among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

(5) OPTIONAL REDEMPTION.

(a) At any time prior to April 15, 2016, the Company may on any one or more occasions redeem up to 35% of the aggregate principal amount of Notes issued under the Indenture, at a redemption price equal to 108.750% of the principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, to the date of redemption (subject to the rights of Holders of Notes on the relevant record date to receive interest on the relevant Interest Payment Date), with an amount of cash not greater than the net proceeds from one or more Equity Offerings by the Company; provided that:

(i) at least 65% of the aggregate principal amount of Notes originally issued under the Indenture (excluding Notes held by the Company and its Subsidiaries) remains outstanding immediately after the occurrence of such redemption; and

(ii) the redemption occurs within 180 days of the date of the closing of such Equity Offering.

(b) At any time prior to April 15, 2016, the Company may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest, if any, to the applicable date of redemption, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date.

(c) Except pursuant to the preceding paragraphs of this Section 5 and as provided in clause (d) below, the Notes will not be redeemable at the Company’s option prior to April 15, 2016.

(d) The Company may redeem all (but not a portion of) the Notes when permitted by, and pursuant to the conditions in, Section 4.15(e) of the Indenture.

Year		Percentage
2016		106.653	%

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Year	Percentage
2017	104.375	%
2018 and thereafter	100.000	%

Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

(6) MANDATORY REDEMPTION. The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

(7) REPURCHASE AT THE OPTION OF HOLDER.

(a) Upon the occurrence of a Change of Control, the Company will be required to make an offer (a “ Change of Control Offer ”) to each Holder to repurchase all or any part (equal to $2,000 or an integral multiple of $1,000 in excess thereof) of that Holder’s Notes at a purchase price in cash equal to 101% of the aggregate principal amount of Notes repurchased, plus accrued and unpaid interest, if any, on the Notes repurchased to the date of purchase, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant interest payment date (the “ Change of Control Payment ”). Within ten days following any Change of Control, the Company will mail a notice to each Holder (or send such notice electronically if DTC is the recipient) setting forth the procedures governing the Change of Control Offer as required by the Indenture.

(b) If the Company or a Restricted Subsidiary of the Company consummates any Asset Sales, within five days of each date on which the aggregate amount of Excess Proceeds exceeds $15.0 million, the Company may be required to make an Asset Sale Offer to all Holders of Notes and all holders of other Indebtedness that is pari passu with the Notes containing provisions similar to those set forth in the Indenture with respect to offers to purchase, prepay or redeem with the proceeds of sales of assets, to purchase, prepay or redeem, on a pro rata basis, the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased, prepaid or redeemed out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase, prepayment or redemption, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company or any Restricted Subsidiary may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds allocated to the purchase of Notes, the Trustee will select the Notes to be purchased on a pro rata basis (except that any Notes represented by a Global Note will be selected by such method as DTC may require). Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. Holders of Definitive Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “ Option of Holder to Elect Purchase ” attached to the Notes.

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Notes or a satisfaction and discharge of the Indenture pursuant to Articles 8 or 11 thereof. Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder shall be redeemed or purchased.

(9) DENOMINATIONS, TRANSFER, EXCHANGE . The Notes are in registered form in denominations of $2,000 and integral multiples of $1,000 in excess thereof. The transfer of Notes may be registered and Notes may be exchanged as provided in the Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Company may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Company need not exchange or register the transfer of any Note or portion of a Note selected for redemption, except for the unredeemed portion of any Note being redeemed in part. Also, the Company need not exchange or register the transfer of any Notes for a period of 15 days before a selection of Notes to be redeemed or during the period between a record date and the next succeeding Interest Payment Date.

(10) PERSONS DEEMED OWNERS . The registered Holder of a Note may be treated as the owner of it for all purposes. Only registered Holders have rights under the Indenture.

(11) AMENDMENT, SUPPLEMENT AND WAIVER . Subject to certain exceptions, the Indenture, the Notes or the Note Guarantees may be amended or supplemented with the consent of the Holders of at least a majority in aggregate principal amount of the then-outstanding Notes (including Additional Notes, if any) voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including Additional Notes, if any) voting as a single class. Without the consent of any Holder of Notes, the Indenture, the Notes or the Note Guarantees may be amended or supplemented for certain purposes set forth in the Indenture.

(12) DEFAULTS AND REMEDIES . In the case of an Event of Default arising from certain events of bankruptcy or insolvency with respect to the Company, any Restricted Subsidiary of the Company that is a Significant Subsidiary or any group of Restricted Subsidiaries of the Company that, taken together, would constitute a Significant Subsidiary, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in aggregate principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately. Holders may not enforce the Indenture or the Notes except as provided in the Indenture. Subject to certain limitations, Holders of at least a majority in aggregate principal amount of the then outstanding Notes may direct the time, method and place of conducting any proceeding for exercising any remedy available to the Trustee or exercising any trust or power conferred on it. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal, premium, if any, or interest, if any) if it determines that withholding notice is in their interest. The Holders of at least a majority in aggregate principal amount of the then outstanding Notes by notice to the Trustee may, on behalf of all the Holders of Notes, rescind an acceleration or waive an existing Default or Event of Default and its respective consequences under the Indenture except a continuing Default or Event of Default in the payment of principal of, premium on, if any, or interest, if any, on, the Notes (including in connection with an offer to purchase). The Company is required to deliver to the Trustee annually a statement regarding compliance with the Indenture, and the Company is required, upon becoming aware of any Default or Event of Default, to deliver to the Trustee a statement specifying such Default or Event of Default.

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(13) TRUSTEE DEALINGS WITH COMPANY . The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.

(14) NO RECOURSE AGAINST OTHERS . No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture, the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

(15) AUTHENTICATION . This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

(16) ABBREVIATIONS . Customary abbreviations may be used in the name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint tenants with right of survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).

(17) CUSIP NUMBERS . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Notes, and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption, and reliance may be placed only on the other identification numbers placed thereon.

(18) GOVERNING LAW. THIS NOTE AND THE INDENTURE (INCLUDING THE NOTE GUARANTEES) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to:

Lonestar Resources America Inc.

509 Pecan St., Suite 200

Fort Worth, Texas 76102

Attention: Douglas W. Banister

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ASSIGNMENT FORM

To assign this Note, fill in the form below:


(I) or (we) assign and transfer this Note to:
		(Insert assignee’s legal name)


(Insert assignee’s soc. sec. or tax I.D. no.)





(Print or type assignee’s name, address and zip code)

and irrevocably appoint
to transfer this Note on the books of the Company. The agent may substitute another to act for him.

Date:

				Your Signature:
				(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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Option of Holder to Elect Purchase

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:

o Section 4.10

o Section 4.15

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:

$

Date:

				Your Signature:
				(Sign exactly as your name appears on the face of this Note)

				Tax Identification No.:

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE *

The following exchanges of a part of this Global Note for an interest in another Global Note or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an interest in this Global Note, have been made:

Date of Exchange	Amount of decrease in Principal Amount of this Global Note	Amount of increase in Principal Amount of this Global Note	Principal Amount of this Global Note following such decrease (or increase)	Signature of authorized officer of Trustee or Custodian

* This schedule should be included only if the Note is issued in global form .

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[Face of Regulation S Temporary Global Note]

				CUSIP/CINS

8.750% Senior Notes due 2019


No.				$

LONESTAR RESOURCES AMERICA INC.


promises to pay to or registered assigns,

the principal sum of DOLLARS on April 15, 2019.

Interest Payment Dates: April 15 and October 15

Record Dates: April 1 and October 1

Dated:

	LONESTAR RESOURCES AMERICA INC.


	By:
		Name:
		Title:


This is one of the Notes referred to
in the within-mentioned Indenture:

WELLS FARGO BANK, NATIONAL ASSOCIATION
as Trustee


By:
Authorized Signatory

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[Back of Regulation S Temporary Global Note]
8.750% Senior Notes due 2019

THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR A REGULATION S PERMANENT GLOBAL NOTE, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.

THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.06 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.06(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.11 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES ACT, OR ANY STATE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT (A) IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A PROMULGATED UNDER THE SECURITIES ACT), (B) IT IS A NON-U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION WITHIN THE MEANING OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO IT IN THE JURISDICTION IN WHICH SUCH PURCHASE IS MADE, OR (C) IT IS AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT AND (2) AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH

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SECURITY, PRIOR TO THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144 PROMULGATED UNDER THE SECURITIES ACT ONLY (A) TO THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHICH NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S AND IN ACCORDANCE WITH THE LAWS APPLICABLE TO IT IN THE JURISDICTION IN WHICH SUCH PURCHASE IS MADE, (D) TO AN “ACCREDITED INVESTOR” WITHIN THE MEANING OF REGULATION D THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (E) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S, OR REGISTRAR’S, AS APPLICABLE, RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRUSTEE OR REGISTRAR. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE EXPIRATION OF THE APPLICABLE HOLDING PERIOD WITH RESPECT TO RESTRICTED SECURITIES SET FORTH IN RULE 144.

Capitalized terms used herein have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.

(1) INTEREST . Lonestar Resources America Inc., a Delaware corporation (the “Company” ), promises to pay or cause to be paid interest on the principal amount of this Note at 8.750% per annum from April 15, 2014 until maturity. The Company will pay interest, if any, semi-annually in arrears on April 15 and October 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each, an “Interest Payment Date” ). Interest on the Notes will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of issuance; provided that, if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be October 15, 2014. The Company will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal at a rate that is 1% higher than the then applicable interest rate on the Notes to the extent lawful; it will pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest, if any, (without regard to any applicable grace period), at the same rate to the extent lawful.

Interest will be computed on the basis of a 360-day year comprised of twelve 30-day months.

Until this Regulation S Temporary Global Note is exchanged for one or more Regulation S Permanent Global Notes, the Holder hereof shall not be entitled to receive payments of interest hereon;

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until so exchanged in full, this Regulation S Temporary Global Note shall in all other respects be entitled to the same benefits as other Notes under the Indenture.

(4) INDENTURE . The Company issued the Notes under an Indenture dated as of April 4, 2014 (the “Indenture”) among the Company, the Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the TIA. The Notes are subject to all such terms, and Holders are referred to the Indenture and the TIA for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Notes are unsecured obligations of the Company. The Indenture does not limit the aggregate principal amount of Notes that may be issued thereunder.

(5) OPTIONAL REDEMPTION.

(ii) the redemption occurs within 180 days of the date of the closing of such Equity Offering.

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(b) At any time prior to April 15, 2016, the Company may on any one or more occasions redeem all or a part of the Notes, upon not less than 30 nor more than 60 days’ notice, at a redemption price equal to 100% of the principal amount of the Notes redeemed, plus the Applicable Premium as of, and accrued and unpaid interest, if any, to the applicable date of redemption, subject to the rights of Holders on the relevant record date to receive interest due on the relevant Interest Payment Date.

(c) Except pursuant to the preceding paragraphs of this Section 5 and as provided in clause (d) below, the Notes will not be redeemable at the Company’s option prior to April 15, 2016.

(d) The Company may redeem all (but not a portion of) the Notes when permitted by, and pursuant to the conditions in, Section 4.15(e) of the Indenture.

Year	Percentage
2016	106.653	%
2017	104.375	%
2018 and thereafter	100.000	%

Unless the Company defaults in the payment of the redemption price, interest will cease to accrue on the Notes or portions thereof called for redemption on the applicable redemption date.

(6) MANDATORY REDEMPTION. The Company is not required to make mandatory redemption or sinking fund payments with respect to the Notes.

(7) REPURCHASE AT OPTION OF HOLDER .

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redeem with the proceeds of sales of assets, to purchase, prepay or redeem, on a pro rata basis, the maximum principal amount of Notes and such other pari passu Indebtedness that may be purchased, prepaid or redeemed out of the Excess Proceeds. The offer price in any Asset Sale Offer will be equal to 100% of the principal amount, plus accrued and unpaid interest, if any, to the date of purchase, prepayment or redemption, subject to the rights of Holders of Notes on the relevant record date to receive interest due on the relevant Interest Payment Date, and will be payable in cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer, the Company or any Restricted Subsidiary may use those Excess Proceeds for any purpose not otherwise prohibited by the Indenture. If the aggregate principal amount of Notes tendered into such Asset Sale Offer exceeds the amount of Excess Proceeds allocated to the purchase of Notes, the Trustee will select the Notes to be purchased on a pro rata basis (except that any Notes represented by a Global Note will be selected by such method as DTC may require). Upon completion of each Asset Sale Offer, the amount of Excess Proceeds will be reset at zero. Holders of Definitive Notes that are the subject of an offer to purchase will receive an Asset Sale Offer from the Company prior to any related purchase date and may elect to have such Notes purchased by completing the form entitled “Option of Holder to Elect Purchase” attached to the Notes.

(8) NOTICE OF REDEMPTION . At least 30 days but not more than 60 days before a redemption date, the Company will mail or cause to be mailed by first class mail (or sent electronically if DTC is the recipient), a notice of redemption to each Holder whose Notes are to be redeemed at its registered address, except that redemption notices may be sent more than 60 days prior to a redemption date if the notice is issued in connection with a defeasance of the Notes or a satisfaction and discharge of the Indenture pursuant to Articles 8 or 11 thereof. Notes and portions of Notes selected will be in amounts of $2,000 or whole multiples of $1,000 in excess thereof; except that if all of the Notes of a Holder are to be redeemed or purchased, the entire outstanding amount of Notes held by such Holder shall be redeemed or purchased.

This Regulation S Temporary Global Note is exchangeable in whole or in part for one or more Global Notes only (i) on or after the termination of the 40-day distribution compliance period (as defined in Regulation S) and (ii) upon presentation of certificates (accompanied by an Opinion of Counsel, if applicable) required by Article 2 of the Indenture. Upon exchange of this Regulation S Temporary Global Note for one or more Global Notes, the Trustee shall cancel this Regulation S Temporary Global Note.

(10) PERSONS DEEMED OWNERS . The registered Holder of a Note may be treated as the owner of it for all purposes. Only registered Holders have rights under the Indenture.

(11) AMENDMENT, SUPPLEMENT AND WAIVER . Subject to certain exceptions, the Indenture, the Notes or the Note Guarantees may be amended or supplemented with the consent

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of the Holders of at least a majority in aggregate principal amount of the then-outstanding Notes (including Additional Notes, if any) voting as a single class, and any existing Default or Event of Default or compliance with any provision of the Indenture or the Notes or the Note Guarantees may be waived with the consent of the Holders of a majority in aggregate principal amount of the then outstanding Notes (including Additional Notes, if any) voting as a single class. Without the consent of any Holder of Notes, the Indenture, the Notes or the Note Guarantees may be amended or supplemented for certain purposes set forth in the Indenture.

(14) NO RECOURSE AGAINST OTHERS . No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, the Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

(15) AUTHENTICATION . This Note will not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.

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(18) GOVERNING LAW . THIS NOTE AND THE INDENTURE (INCLUDING THE NOTE GUARANTEES) SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

The Company will furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to:

Lonestar Resources America Inc.

509 Pecan St., Suite 200

Fort Worth, Texas 76102

Attention: Douglas W. Banister

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ASSIGNMENT FORM

To assign this Note, fill in the form below:

(I) or (we) assign and transfer this Note to:
	(Insert assignee’s legal name)


(Insert assignee’s soc. sec. or tax I.D. no.)





(Print or type assignee’s name, address and zip code)

and irrevocably appoint to transfer this Note on the books of the Company. The agent may substitute another to act for him.


Date:

					Your Signature:
					(Sign exactly as your name appears on the face of this Note)

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

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OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Note purchased by the Company pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:

o Section 4.10 o Section 4.15

If you want to elect to have only part of the Note purchased by the Company pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:

Date:

					Your Signature:
					(Sign exactly as your name appears on the face of this Note)

					Tax Identification No.:

Signature Guarantee*:

* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).

A2- 10

SCHEDULE OF EXCHANGES OF INTERESTS IN THE REGULATION S TEMPORARY GLOBAL NOTE

The following exchanges of a part of this Regulation S Temporary Global Note for an interest in another Global Note, or exchanges of a part of another other Restricted Global Note for an interest in this Regulation S Temporary Global Note, have been made:

Date of Exchange	Amount of decrease in Principal Amount of this Global Note	Amount of increase in Principal Amount of this Global Note	Principal Amount of this Global Note following such decrease (or increase)	Signature of authorized officer of Trustee or Custodian

A2- 11

EXHIBIT B

FORM OF CERTIFICATE OF TRANSFER

Lonestar Resources America Inc.

509 Pecan St., Suite 200

Fort Worth, Texas 76102

Attention: Douglas W. Banister

[ Registrar address block ]

Re: 8.750% Senior Notes due 2019

Reference is hereby made to the Indenture, dated as of April 4, 2014 (the “ Indenture ”), among Lonestar Resources America Inc., as issuer (the “ Company ”), the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee. Capitalized terms used but not defined herein shall have the meanings given to them in the Indenture.

, (the “ Transferor ”) owns and proposes to transfer the Note[s] or interest in such Note[s] specified in Annex A hereto, in the principal amount of $ in such Note[s] or interests (the “ Transfer ”), to (the “ Transferee ”), as further specified in Annex A hereto. In connection with the Transfer, the Transferor hereby certifies that:

[CHECK ALL THAT APPLY]

1. o Check if Transferee will take delivery of a beneficial interest in the 144A Global Note or a Restricted Definitive Note pursuant to Rule 144A . The Transfer is being effected pursuant to and in accordance with Rule 144A under the Securities Act of 1933, as amended (the “ Securities Act ”), and, accordingly, the Transferor hereby further certifies that the beneficial interest or Definitive Note is being transferred to a Person that the Transferor reasonably believes is purchasing the beneficial interest or Definitive Note for its own account, or for one or more accounts with respect to which such Person exercises sole investment discretion, and such Person and each such account is a “qualified institutional buyer” within the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A, and such Transfer is in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the 144A Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

2. o Check if Transferee will take delivery of a beneficial interest in the Regulation S Temporary Global Note, the Regulation S Permanent Global Note or a Restricted Definitive Note pursuant to Regulation S . The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and, accordingly, the Transferor hereby further certifies that (i) the Transfer is not being made to a Person in the United States and (x) at the time the buy order was originated, the Transferee was outside the United States or such Transferor and any Person acting on its behalf reasonably believed and believes that the Transferee was outside the United States or (y) the transaction was executed in, on or through the facilities of a designated offshore securities market and neither such Transferor nor any Person acting on its behalf knows that the transaction was prearranged with a buyer in the United States, (ii) no directed selling efforts have been made in contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the transaction is not part of a plan or scheme to evade the registration requirements of the Securities Act and (iv) if the proposed transfer is being made prior to the expiration of the Restricted Period, the transfer is not being made to a U.S. Person or for the account or benefit of a U.S. Person (other than an Initial Purchaser).

B- 1

Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on Transfer enumerated in the Private Placement Legend printed on the Regulation S Permanent Global Note, the Regulation S Temporary Global Note and/or the Restricted Definitive Note and in the Indenture and the Securities Act.

3. o Check and complete if Transferee will take delivery of a beneficial interest in the AI Global Note or a Restricted Definitive Note pursuant to any provision of the Securities Act other than Rule 144A or Regulation S . The Transfer is being effected in compliance with the transfer restrictions applicable to beneficial interests in Restricted Global Notes and Restricted Definitive Notes and pursuant to and in accordance with the Securities Act and any applicable blue sky securities laws of any state of the United States, and accordingly the Transferor hereby further certifies that (check one):

(a) o such Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act;

(b) o such Transfer is being effected to the Company or a subsidiary thereof;

(c) o such Transfer is being effected pursuant to an effective registration statement under the Securities Act and in compliance with the prospectus delivery requirements of the Securities Act;

(d) o such Transfer is being effected to an Accredited Investor and pursuant to an exemption from the registration requirements of the Securities Act other than Rule 144A, Rule 144, Rule 903 or Rule 904, and the Transferor hereby further certifies that it has not engaged in any general solicitation within the meaning of Regulation D under the Securities Act and the Transfer complies with the transfer restrictions applicable to beneficial interests in a Restricted Global Note or Restricted Definitive Notes and the requirements of the exemption claimed, which certification is supported by (1) a certificate executed by the Transferee in the form of Exhibit D to the Indenture and (2) if such Transfer is in respect of a principal amount of Notes at the time of transfer of less than $250,000, an Opinion of Counsel provided by the Transferor or the Transferee (a copy of which the Transferor has attached to this certification), to the effect that such Transfer is in compliance with the Securities Act. Upon consummation of the proposed transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the AI Global Note and/or the Restricted Definitive Notes and in the Indenture and the Securities Act.

4. o Check if Transferee will take delivery of a beneficial interest in an Unrestricted Global Note or of an Unrestricted Definitive Note .

(a) o Check if Transfer is pursuant to Rule 144 . (i) The Transfer is being effected pursuant to and in accordance with Rule 144 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of

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the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(b) o Check if Transfer is Pursuant to Regulation S . (i) The Transfer is being effected pursuant to and in accordance with Rule 903 or Rule 904 under the Securities Act and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any state of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will no longer be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes, on Restricted Definitive Notes and in the Indenture.

(c) o Check if Transfer is Pursuant to Other Exemption . (i) The Transfer is being effected pursuant to and in compliance with an exemption from the registration requirements of the Securities Act other than Rule 144, Rule 903 or Rule 904 and in compliance with the transfer restrictions contained in the Indenture and any applicable blue sky securities laws of any State of the United States and (ii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act. Upon consummation of the proposed Transfer in accordance with the terms of the Indenture, the transferred beneficial interest or Definitive Note will not be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Global Notes or Restricted Definitive Notes and in the Indenture.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.


	[Insert Name of Transferor]


	By:
		Name:
		Title:

Dated:

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ANNEX A TO CERTIFICATE OF TRANSFER

1. The Transferor owns and proposes to transfer the following:

[CHECK ONE OF (a) OR (b)]

(a) o a beneficial interest in the:

(i) o 144A Global Note (CUSIP ), or

(ii) o Regulation S Global Note (CUSIP ), or

(iii) o AI Global Note (CUSIP ); or

(b) o a Restricted Definitive Note.

2. After the Transfer the Transferee will hold:

[CHECK ONE]

(a) o a beneficial interest in the:

(i) o 144A Global Note (CUSIP ), or

(ii) o Regulation S Global Note (CUSIP ), or

(iii) o AI Global Note (CUSIP ); or

(iv) o Unrestricted Global Note (CUSIP ); or

(b) o a Restricted Definitive Note; or

in accordance with the terms of the Indenture.

B- 4

EXHIBIT C

FORM OF CERTIFICATE OF EXCHANGE

Lonestar Resources America Inc.

509 Pecan St., Suite 200

Fort Worth, Texas 76102

Attention: Douglas W. Banister

[ Registrar address block ]

Re: 8.750% Senior Notes due 2019

(CUSIP [ ])

, (the “ Owner ”) owns and proposes to exchange the Note[s] or interest in such Note[s] specified herein, in the principal amount of $ in such Note[s] or interests (the “ Exchange ”). In connection with the Exchange, the Owner hereby certifies that:

1. Exchange of Restricted Definitive Notes or Beneficial Interests in a Restricted Global Note for Unrestricted Definitive Notes or Beneficial Interests in an Unrestricted Global Note

(a) o Check if Exchange is from beneficial interest in a Restricted Global Note to beneficial interest in an Unrestricted Global Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a beneficial interest in an Unrestricted Global Note in an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Global Notes and pursuant to and in accordance with the Securities Act of 1933, as amended (the “ Securities Act ”), (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest in an Unrestricted Global Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(b) o Check if Exchange is from beneficial interest in a Restricted Global Note to Unrestricted Definitive Note . In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(c) o Check if Exchange is from Restricted Definitive Note to beneficial interest in an Unrestricted Global Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for a beneficial interest in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in

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accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the beneficial interest is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

(d) o Check if Exchange is from Restricted Definitive Note to Unrestricted Definitive Note . In connection with the Owner’s Exchange of a Restricted Definitive Note for an Unrestricted Definitive Note, the Owner hereby certifies (i) the Unrestricted Definitive Note is being acquired for the Owner’s own account without transfer, (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to Restricted Definitive Notes and pursuant to and in accordance with the Securities Act, (iii) the restrictions on transfer contained in the Indenture and the Private Placement Legend are not required in order to maintain compliance with the Securities Act and (iv) the Unrestricted Definitive Note is being acquired in compliance with any applicable blue sky securities laws of any state of the United States.

2. Exchange of Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes for Restricted Definitive Notes or Beneficial Interests in Restricted Global Notes

(a) o Check if Exchange is from beneficial interest in a Restricted Global Note to Restricted Definitive Note. In connection with the Exchange of the Owner’s beneficial interest in a Restricted Global Note for a Restricted Definitive Note with an equal principal amount, the Owner hereby certifies that the Restricted Definitive Note is being acquired for the Owner’s own account without transfer. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the Restricted Definitive Note issued will continue to be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the Restricted Definitive Note and in the Indenture and the Securities Act.

(b) o Check if Exchange is from Restricted Definitive Note to beneficial interest in a Restricted Global Note . In connection with the Exchange of the Owner’s Restricted Definitive Note for a beneficial interest in the [CHECK ONE] o 144A Global Note, o Regulation S Global Note, o AI Global Note with an equal principal amount, the Owner hereby certifies (i) the beneficial interest is being acquired for the Owner’s own account without transfer and (ii) such Exchange has been effected in compliance with the transfer restrictions applicable to the Restricted Global Notes and pursuant to and in accordance with the Securities Act, and in compliance with any applicable blue sky securities laws of any state of the United States. Upon consummation of the proposed Exchange in accordance with the terms of the Indenture, the beneficial interest issued will be subject to the restrictions on transfer enumerated in the Private Placement Legend printed on the relevant Restricted Global Note and in the Indenture and the Securities Act.

This certificate and the statements contained herein are made for your benefit and the benefit of the Company.


	[Insert Name of Transferor]


	By:
		Name:
		Title:

Dated:

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EXHIBIT D

FORM OF NOTATION OF GUARANTEE

For value received, each Guarantor (which term includes any successor Person under the Indenture) has, jointly and severally, unconditionally guaranteed, to the extent set forth in the Indenture and subject to the provisions in the Indenture dated as of April 4, 2014 (the “ Indenture ”) among Lonestar Resources America Inc., (the “Company” ), the Guarantors party thereto and Wells Fargo Bank, National Association, as trustee (the “ Trustee ”), (a) the due and punctual payment of the principal of, premium on, if any, and interest, if any, on, the Notes, whether at maturity, by acceleration, redemption or otherwise, the due and punctual payment of interest on overdue principal of, premium on, if any, and interest, if any, on, the Notes, if any, if lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms of the Indenture and (b) in case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantors to the Holders of Notes and to the Trustee pursuant to the Note Guarantee and the Indenture are expressly set forth in Article 10 of the Indenture and reference is hereby made to the Indenture for the precise terms of the Note Guarantee.

Capitalized terms used but not defined herein have the meanings given to them in the Indenture.

	[NAME OF GUARANTOR(S)]


	By:
		Name:
		Title:

D- 1

EXHIBIT E

FORM OF CERTIFICATE FROM

ACQUIRING ACCREDITED INVESTOR

Lonestar Resources America Inc.

509 Pecan St., Suite 200

Fort Worth, Texas 76102

Attention: Douglas W. Banister

[ Registrar address block ]

Re: 8.750% Senior Notes due 2019

In connection with our proposed purchase of $ aggregate principal amount of:

(a) o a beneficial interest in a Global Note, or

(b) o a Definitive Note,

we confirm that:

1. We understand that any subsequent transfer of the Notes or any interest therein is subject to certain restrictions and conditions set forth in the Indenture and the undersigned agrees to be bound by, and not to resell, pledge or otherwise transfer the Notes or any interest therein except in compliance with, such restrictions and conditions and the Securities Act of 1933, as amended (the “ Securities Act ”).

2. We understand that the offer and sale of the Notes have not been registered under the Securities Act, and that the Notes and any interest therein may not be offered or sold except as permitted in the following sentence. We agree, on our own behalf and on behalf of any accounts for which we are acting as hereinafter stated, that if we should sell the Notes or any interest therein, we will do so only (A) to the Company or any subsidiary thereof, (B) in accordance with Rule 144A under the Securities Act to a “qualified institutional buyer” (as defined therein), (C) to an institutional “accredited investor” (as defined below) that, prior to such transfer, furnishes (or has furnished on its behalf by a U.S. broker-dealer) to you and to the Company a signed letter substantially in the form of this letter and, if such transfer is in respect of a principal amount of Notes, at the time of transfer of less than $250,000, an Opinion of Counsel in form reasonably acceptable to the Company to the effect that such transfer is in compliance with the Securities Act, (D) outside the United States in accordance with Rule 904 of Regulation S under the Securities Act, (E) pursuant to the provisions of Rule 144 under the Securities Act or (F) pursuant to an effective registration statement under the Securities Act, and we further agree to provide to any Person purchasing the Definitive Note or beneficial interest in a Global Note from us in a transaction meeting the requirements of clauses (A) through (E) of this paragraph a notice advising such purchaser that resales thereof are restricted as stated herein.

3. We understand that, on any proposed resale of the Notes or beneficial interest therein, we will be required to furnish to you and the Company such certifications, legal opinions and other information as you and the Company may reasonably require to confirm that the proposed sale complies

E- 1

with the foregoing restrictions. We further understand that the Notes purchased by us will bear a legend to the foregoing effect.

4. We are an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and have such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of our investment in the Notes, and we and any accounts for which we are acting are each able to bear the economic risk of our or its investment.

5. We are acquiring the Notes or beneficial interest therein purchased by us for our own account or for one or more accounts (each of which is an institutional “accredited investor”) as to each of which we exercise sole investment discretion.

You and the Company are entitled to rely upon this letter and are irrevocably authorized to produce this letter or a copy hereof to any interested party in any administrative or legal proceedings or official inquiry with respect to the matters covered hereby.


	[Insert Name of Accredited Investor]


	By:
		Name:
		Title:

Dated:

E- 2

EXHIBIT F

FORM OF SUPPLEMENTAL INDENTURE

TO BE DELIVERED BY SUBSEQUENT GUARANTORS

SUPPLEMENTAL INDENTURE (this “ Supplemental Indenture ”), dated as of , among (the “ Guaranteeing Subsidiary ”), a subsidiary of Lonestar Resources America Inc. (or its permitted successor), a Delaware corporation (the “ Company ”), the Company, the other Guarantors (as defined in the Indenture referred to herein) and Wells Fargo Bank, National Association, as trustee under the Indenture referred to below (the “ Trustee ”).

W I T N E S S E T H

WHEREAS, the Company has heretofore executed and delivered to the Trustee an indenture (the “ Indenture ”), dated as of April 4, 2014 providing for the issuance of 8.750% Senior Notes due 2019 (the “ Notes ”);

WHEREAS, the Indenture provides that under certain circumstances the Guaranteeing Subsidiary shall execute and deliver to the Trustee a supplemental indenture pursuant to which the Guaranteeing Subsidiary shall unconditionally guarantee all of the Company’s Obligations under the Notes and the Indenture on the terms and conditions set forth herein (the “ Note Guarantee ”); and

WHEREAS, pursuant to Section 9.01 of the Indenture, the Trustee is authorized to execute and deliver this Supplemental Indenture.

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt of which is hereby acknowledged, the Guaranteeing Subsidiary and the Trustee mutually covenant and agree for the equal and ratable benefit of the Holders of the Notes as follows:

1. CAPITALIZED TERMS. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

2. AGREEMENT TO GUARANTEE. The Guaranteeing Subsidiary hereby agrees to provide an unconditional Guarantee on the terms and subject to the conditions set forth in the Note Guarantee and in the Indenture including but not limited to Article 10 thereof.

4. NO RECOURSE AGAINST OTHERS. No director, officer, employee, incorporator or stockholder of the Company or any Guarantor, as such, will have any liability for any obligations of the Company or the Guarantors under the Notes, this Indenture or the Note Guarantees or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.

5. NEW YORK LAW TO GOVERN. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

6. COUNTERPARTS. The parties may sign any number of copies of this Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement.

7. EFFECT OF HEADINGS. The Section headings herein are for convenience only and shall not affect the construction hereof.

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8. THE TRUSTEE. The Trustee shall not be responsible in any manner whatsoever for or in respect of the validity or sufficiency of this Supplemental Indenture or for or in respect of the recitals contained herein, all of which recitals are made solely by the Guaranteeing Subsidiary and the Company.

F- 2

IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and attested, all as of the date first above written.

Dated: ,

	[GUARANTEEING SUBSIDIARY]

	By:
		Name:
		Title:

	[COMPANY]

	By:
		Name:
		Title:

	[EXISTING GUARANTORS]

	By:
		Name:
		Title:

	[TRUSTEE],
	as Trustee

	By:
		Authorized Signatory

F- 3

Exhibit 10.1

INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT, dated and effective as of [ insert date ] (this “ Agreement ”), is entered into by and between Lonestar Resources US Inc., a Delaware corporation (the “ Company ”) and [ insert name of indemnitee ] (“ Indemnitee ”).

WHEREAS, the Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, to serve the Company, and Indemnitee’s service to the Company substantially benefits the Company;

WHEREAS, individuals are reluctant to serve as directors or officers of corporations or in certain other capacities unless they are provided with adequate protection through insurance or indemnifications against the risks of claims and actions against them arising out of such service;

WHEREAS, Indemnitee does not regard the protection currently provided by applicable law, the Company’s governing documents and any insurance as adequate under the present circumstances, and Indemnitee may not be willing to serve as a director or officer without additional protection;

WHEREAS, Article 10 of the Company’s certificate of incorporation authorizes, but does not require, the Company to indemnify, and to advance expenses on behalf of, its directors, officers, employees and agents through various means including agreements with such individuals; and

WHEREAS, in order to induce Indemnitee to provide or continue to provide services to the Company, the Company deems it reasonable, prudent and necessary for the Company to contractually obligate itself to indemnify, and to advance expenses on behalf of, Indemnitee as permitted by applicable law.

NOW, THEREFORE, intending to be legally bound and in consideration of the mutual provisions set forth in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1 . Certain Definitions .

(a) As used in this Agreement, the following terms have the meanings specified below:

“ Corporate Status ” describes the status of an individual who is or was a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of the Company or any other Enterprise.

“ DGCL ” means the General Corporation Law of the State of Delaware.

“ Enterprise ” means the Company and any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise of which

Indemnitee is or was serving at the request of the Company as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary.

“ Expenses ” include all reasonable attorneys’ fees, retainers, court costs, transcript costs, fees and costs of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, and all other disbursements or expenses of the types customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Expenses also include (i) Expenses incurred in connection with any appeal resulting from any Proceeding, including without limitation the premium, security for, and other costs relating to any cost bond, supersedeas bond or other appeal bond or their equivalent, and (ii) for purposes of Section 12(c), Expenses incurred by Indemnitee in connection with the interpretation, enforcement or defense of Indemnitee’s rights under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

“ Proceeding ” means any threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, audit, inquiry, administrative hearing or proceeding, whether brought in the right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, including any appeal therefrom, in which Indemnitee was, is or will be involved as a party, a potential party, a non-party witness or otherwise by reason of (i) the fact that Indemnitee is or was (whether prior to, on or after the date hereof) a director or officer of the Company, (ii) any action taken by Indemnitee or any action or inaction on Indemnitee’s part while acting (whether prior to, on or after the date hereof) as a director or officer of the Company, or (iii) the fact that Indemnitee is or was serving at the request of the Company (whether prior to, on or after the date hereof) as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of the Company or any other Enterprise, in each case whether or not serving in such capacity at the time any liability or Expense is incurred for which indemnification or advancement of expenses can be provided under this Agreement.

(b) References to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by, such director, officer, employee or agent with respect to an employee benefit plan, its participants or beneficiaries; and a person who acted in good faith and in a manner he or she reasonably believed to be in the best interests of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement.

(c) Any reference in this Agreement to a “Section” refers to the corresponding section of this Agreement, unless the context indicates otherwise. All words used in this

Agreement are to be construed to be of such gender or number as the circumstances require. The words “including,” “includes,” or “include” are to be read as listing non-exclusive examples of the matters referred to, whether or not words such as “without limitation” or “but not limited to” are used in each instance. Any reference to a statute is deemed also to refer to any amendments or successor legislation as in effect at the relevant time.

2. Indemnity in Third-Party Proceedings . The Company shall indemnify Indemnitee in accordance with the provisions of this Section 2 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding, other than a Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 2, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his or her behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal action or proceeding, had no reasonable cause to believe that his or her conduct was unlawful.

3. Indemnity in Proceedings by or in the Right of the Company . The Company shall indemnify Indemnitee in accordance with the provisions of this Section 3 if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding by or in the right of the Company to procure a judgment in its favor. Pursuant to this Section 3, Indemnitee shall be indemnified to the fullest extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding or any claim, issue or matter therein, if Indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company. No indemnification for Expenses shall be made under this Section 3 in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged by a court of competent jurisdiction to be liable to the Company, unless and only to the extent that the Delaware Court of Chancery or any court in which the Proceeding was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnification for such expenses as the Delaware Court of Chancery or such other court shall deem proper.

4. Indemnification for Expenses of a Party Who is Wholly or Partly Successful . To the extent that Indemnitee is a party to or a participant in and is successful (on the merits or otherwise) in defense of any Proceeding or any claim, issue or matter therein, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith. For purposes of this section, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

5. Indemnification for Expenses of a Witness . To the extent that Indemnitee is or was, by reason of his or her Corporate Status, a witness in any Proceeding to which Indemnitee is not a party, Indemnitee shall be indemnified to the extent permitted by applicable law against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection therewith.

6. Additional Indemnification .

(a) Notwithstanding any limitation in Sections 2, 3 or 4, the Company shall indemnify Indemnitee to the fullest extent permitted by applicable law if Indemnitee is, or is threatened to be made, a party to or a participant in any Proceeding (including a Proceeding by or in the right of the Company to procure a judgment in its favor) against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on his or her behalf in connection with the Proceeding or any claim, issue or matter therein.

(b) For purposes of Section 6(a), the meaning of the phrase “to the fullest extent permitted by applicable law” shall include, but not be limited to:

(i) the fullest extent permitted by the provision of the DGCL that authorizes or contemplates additional indemnification by agreement, or the corresponding provision of any amendment to or replacement of the DGCL; and

(ii) the fullest extent authorized or permitted by any amendments to or replacements of the DGCL adopted after the date of this Agreement that increase the extent to which a corporation may indemnify its officers and directors.

7. Exclusions . Notwithstanding any provision in this Agreement, the Company shall not be obligated under this Agreement to make any payment of amounts otherwise indemnifiable hereunder (or for which advancement is provided hereunder) in connection with any Proceeding (or any part of any Proceeding):

(a) for which payment has actually been made to or on behalf of Indemnitee under any statute, insurance policy, agreement, vote or otherwise, except with respect to any excess beyond the amount paid;

(b) initiated by Indemnitee, including any Proceeding (or any part of any Proceeding) initiated by Indemnitee against the Company or its directors, officers, employees, agents or other indemnitees, unless (i) the Company’s board of directors authorized the Proceeding (or the relevant part of the Proceeding) prior to its initiation, (ii) the Company provides the indemnification or advancement, in its sole discretion, pursuant to the powers vested in the Company under applicable law, or (iii) otherwise authorized in Section 12(c) or (iv) otherwise required by applicable law; or

8. Advances of Expenses . The Company shall advance the Expenses incurred by Indemnitee in connection with any Proceeding, and such advancement shall be made as soon as reasonably practicable, but in any event no later than sixty (60) days, after the receipt by the Company of a written statement or statements requesting such advances from time to time (which shall include invoices received by Indemnitee in connection with such Expenses but, in the case of invoices in connection with legal services, any references to legal work performed or to expenditure made that would cause Indemnitee to waive any privilege accorded by applicable law shall not be included with the invoice). Advances shall be unsecured and interest free and made without regard to Indemnitee’s ability to repay such advances. Indemnitee hereby

undertakes to repay to the Company any advance to the extent that it is ultimately determined that Indemnitee is not entitled to be indemnified by the Company. This Section 8 shall not apply to the extent advancement is prohibited by law and shall not apply to any Proceeding for which indemnity is not permitted under this Agreement.

9. Procedures for Notification and Defense of Claim .

(a) Indemnitee shall notify the Company in writing of any matter with respect to which Indemnitee intends to seek indemnification or advancement of Expenses as soon as reasonably practicable following the receipt by Indemnitee of notice thereof. The written notification to the Company shall include, in reasonable detail, a description of the nature of the Proceeding and the facts underlying the Proceeding. The failure by Indemnitee to notify the Company will not relieve the Company from any liability which it may have to Indemnitee hereunder or otherwise than under this Agreement, and any delay in so notifying the Company shall not constitute a waiver by Indemnitee of any rights, except to the extent that such failure or delay materially prejudices the Company.

(b) If, at the time of the receipt of a notice of a Proceeding pursuant to the terms hereof, the Company has directors’ and officers’ liability insurance in effect, the Company shall give prompt notice of the commencement of the Proceeding to the insurers in accordance with the procedures set forth in the applicable policies. The Company shall thereafter take all commercially-reasonable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

(c) In the event the Company may be obligated to make any indemnity in connection with a Proceeding, the Company shall be entitled to assume the defense of such Proceeding with counsel approved by Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee for any fees or expenses of counsel subsequently incurred by Indemnitee with respect to the same Proceeding. Notwithstanding the Company’s assumption of the defense of any such Proceeding, the Company shall be obligated to pay the fees and expenses of Indemnitee’s counsel to the extent (i) the employment of counsel by Indemnitee is authorized by the Company, (ii) counsel for the Company or Indemnitee shall have reasonably concluded that there is a conflict of interest between the Company and Indemnitee in the conduct of any such defense such that Indemnitee needs to be separately represented, (iii) the fees and expenses are non-duplicative and reasonably incurred in connection with Indemnitee’s role in the Proceeding despite the Company’s assumption of the defense, (iv) the Company is not financially or legally able to perform its indemnification obligations or (v) the Company shall not have retained, or shall not continue to retain, such counsel to defend such Proceeding. The Company shall have the right to conduct such defense as it sees fit in its sole discretion. Regardless of any provision in this Agreement, Indemnitee shall have the right to employ counsel in any Proceeding at Indemnitee’s personal expense. The Company shall not be entitled, without the consent of Indemnitee, to assume the defense of any claim brought by or in the right of the Company.

(d) Indemnitee shall give the Company such information and cooperation in connection with the Proceeding as may be reasonably appropriate.

(e) The Company shall not be liable to indemnify Indemnitee for any settlement of any Proceeding (or any part thereof) without the Company’s prior written consent, which shall not be unreasonably withheld.

(f) The Company shall not settle any Proceeding (or any part thereof) without Indemnitee’s prior written consent, which shall not be unreasonably withheld.

10. Procedures upon Application for Indemnification .

(a) To obtain indemnification hereunder, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and as is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification following the final disposition of the Proceeding. The Company shall, as soon as reasonably practicable after receipt of such a request for indemnification, advise the board of directors that Indemnitee has requested indemnification. Any delay in providing the request will not relieve the Company from its obligations under this Agreement, except to the extent such failure is prejudicial.

(b) Upon written request by Indemnitee for indemnification pursuant to Section 10(a), a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case (i) by a majority vote of the disinterested directors, even though less than a quorum of the Company’s board of directors, (ii) by a committee of disinterested directors designated by a majority vote of the disinterested directors, even though less than a quorum of the Company’s board of directors, or (iii) if so directed by the Company’s board of directors, by the stockholders of the Company. If it is determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten (10) days after such determination. Indemnitee shall cooperate with the person, persons or entity making the determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. Any costs or expenses (including attorneys’ fees and disbursements) reasonably incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company, to the extent permitted by applicable law.

11. Presumptions and Effect of Certain Proceedings .

(a) In making a determination with respect to entitlement to indemnification hereunder, the person, persons or entity making such determination shall, to the fullest extent not prohibited by law, presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall, to the fullest extent not prohibited by law, have the burden of proof to overcome that presumption in connection with the making by such person, persons or entity of any determination contrary to that presumption.

(b) The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement) of itself adversely affect the right of Indemnitee to indemnification or create a presumption that Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal Proceeding, that Indemnitee had reasonable cause to believe that his or her conduct was unlawful.

(c) For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith to the extent Indemnitee relied in good faith on (i) the records or books of account of the Enterprise, including financial statements, (ii) information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, (iii) the advice of legal counsel for the Enterprise or its board of directors or counsel selected by any committee of the board of directors or (iv) information or records given or reports made to the Enterprise by an independent certified public accountant, an appraiser, investment banker or other expert selected with reasonable care by the Enterprise or its board of directors or any committee of the board of directors. The provisions of this Section 11(c) shall not be deemed to be exclusive or to limit in any way the other circumstances in which Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement.

(d) Neither the knowledge, actions nor failure to act of any other director, officer, agent or employee of the Enterprise shall be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.

12. Remedies of Indemnitee .

(a) Subject to Section 12(d), in the event that (i) a determination is made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advancement of Expenses is not timely made pursuant to Section 8 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10 of this Agreement within ninety (90) days after the receipt by the Company of the request for indemnification, (iv) payment of indemnification pursuant to this Agreement is not made (A) within thirty (30) days after a determination has been made that Indemnitee is entitled to indemnification or (B) with respect to indemnification pursuant to Sections 4, 5 or 12(c) of this Agreement, within sixty (60) days after receipt by the Company of a written request therefor, or (v) the Company or any other person or entity takes or threatens to take any action to declare this Agreement void or unenforceable, or institutes any litigation or other action or proceeding designed to deny, or to recover from, Indemnitee the benefits provided or intended to be provided to Indemnitee hereunder, Indemnitee shall be entitled to an adjudication by a court of competent jurisdiction of his or her entitlement to such indemnification or advancement of Expenses. Indemnitee shall commence such proceeding seeking an adjudication within one hundred eighty (180) days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided , however , that the foregoing clause shall not apply in respect of a proceeding brought by Indemnitee to enforce his or her rights under Section 4 of this Agreement. The Company shall not oppose Indemnitee’s right to seek any such adjudication in accordance with this Agreement.

(b) In the event that a determination shall have been made pursuant to Section 10 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 12 shall be conducted in all respects as a de novo trial, on the merits, and Indemnitee shall not be prejudiced by reason of that adverse determination. In any judicial proceeding commenced pursuant to this Section 12, the Company shall, to the fullest extent not prohibited by law, have the burden of proving Indemnitee is not entitled to indemnification or advancement of Expenses, as the case may be.

(c) To the extent not prohibited by law, the Company shall indemnify Indemnitee against all Expenses that are incurred by Indemnitee in connection with any action for indemnification or advancement of Expenses from the Company under this Agreement or under any directors’ and officers’ liability insurance policies maintained by the Company to the extent Indemnitee is successful in such action, and, if requested by Indemnitee, shall (as soon as reasonably practicable, but in any event no later than sixty (60) days, after receipt by the Company of a written request therefor) advance such Expenses to Indemnitee, subject to the provisions of Section 8.

(d) Notwithstanding anything in this Agreement to the contrary, no determination as to entitlement to indemnification shall be required to be made prior to the final disposition of the Proceeding.

13. Contribution . To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amounts incurred by Indemnitee, whether for Expenses, judgments, fines or amounts paid or to be paid in settlement, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the events and transactions giving rise to such Proceeding; and (ii) the relative fault of Indemnitee and the Company (and its other directors, officers, employees and agents) in connection with such events and transactions.

14. Non-exclusivity . The rights of indemnification and to receive advancement of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the Company’s certificate of incorporation or bylaws, any agreement, a vote of stockholders or a resolution of directors, or otherwise. To the extent that a change in Delaware law, whether by statute or judicial decision, permits greater indemnification or advancement of Expenses than would be afforded currently under the Company’s certificate of incorporation and bylaws and this Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by such change, subject to the restrictions expressly set forth herein or therein. Except as expressly set forth herein, no right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right and remedy shall be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. Except as expressly set forth herein, the assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other right or remedy.

15. Insurance . To the extent that the Company maintains an insurance policy or policies providing liability insurance for directors, trustees, general partners, managing members, officers, employees, agents or fiduciaries of the Company or any other Enterprise, Indemnitee shall be covered by such policy or policies to the same extent as the most favorably-insured persons under such policy or policies in a comparable position.

16. Subrogation . In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

17. Services to the Company . Indemnitee agrees to serve as a director and/or officer of the Company or, at the request of the Company, as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of another Enterprise, for so long as Indemnitee is duly elected or appointed or until Indemnitee tenders his or her resignation or is removed from such position. Indemnitee may at any time and for any reason resign from such position (subject to any other contractual obligation or any obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in such position. This Agreement shall not be deemed an employment contract between the Company (or any of its subsidiaries or any Enterprise) and Indemnitee. Indemnitee specifically acknowledges that any employment with the Company (or any of its subsidiaries or any Enterprise) is at will, and Indemnitee may be discharged at any time for any reason, with or without cause, with or without notice, except as may be otherwise expressly provided in any executed, written employment contract between Indemnitee and the Company (or any of its subsidiaries or any Enterprise), any existing formal severance policies adopted by the Company’s board of directors or, with respect to service as a director or officer of the Company, the Company’s certificate of incorporation or bylaws or the DGCL. No such document shall be subject to any oral modification thereof.

18. Duration . This Agreement shall continue until and terminate upon the later of (a) ten (10) years after the date that Indemnitee shall have ceased to serve as a director or officer of the Company or as a director, trustee, general partner, managing member, officer, employee, agent or fiduciary of any other Enterprise, as applicable; or (b) one (1) year after the final termination of any Proceeding, including any appeal, then pending in respect of which Indemnitee is granted rights of indemnification or advancement of Expenses hereunder and of any proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement relating thereto. This Agreement shall be binding upon the Company and its successors and assigns and the Company shall require and cause any successor (whether direct or indirect, and whether by purchase, merger, consolidation or otherwise) to all or substantially all of the business or assets of the Company, to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

19. Indemnitee’s Successors . This Agreement shall inure to the benefit of Indemnitee and Indemnitee’s heirs, executors and administrators.

20. Severability . Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order or other applicable law, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Agreement (including without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (ii) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (iii) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any section of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

21. Enforcement . The Company expressly confirms and agrees that it has entered into this Agreement and assumed the obligations imposed on it hereby in order to induce Indemnitee to continue to serve as a director or officer of the Company, and the Company acknowledges that Indemnitee is relying upon this Agreement in serving as a director or officer of the Company.

22. Entire Agreement . This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes all prior agreements and understandings, oral, written and implied, between the parties hereto with respect to the subject matter hereof; provided , however , that this Agreement is a supplement to and in furtherance of the Company’s certificate of incorporation and bylaws and applicable law (and shall not be deemed to limit, diminish or abrogate any rights of Indemnitee thereunder).

23. Modification and Waiver . No supplement, modification or amendment to this Agreement shall be binding unless executed in writing by the parties hereto. No amendment, alteration or repeal of this Agreement shall adversely affect any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his or her Corporate Status prior to such amendment, alteration or repeal. No waiver of any of the provisions of this Agreement shall constitute or be deemed a waiver of any other provision of this Agreement nor shall any waiver constitute a continuing waiver.

24. Notices . All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by facsimile or electronic mail or otherwise delivered by hand, messenger or courier service addressed:

(i) if to Indemnitee, to Indemnitee’s address, facsimile number or electronic mail address as shown on the signature page of this Agreement or in the Company’s records, as may be updated in accordance with the provisions hereof; or

(ii) if to the Company, to:

Lonestar Resources US Inc.
Attn: Chief Executive Officer
600 Bailey Avenue, Suite 200

Fort Worth, TX 76107

with a copy (which will not constitute notice) to:

[ · ]

Each such notice or other communication shall for all purposes of this Agreement be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via an internationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one (1) business day after deposit with the courier), or (ii) if sent via mail, at the earlier of its receipt or five (5) days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail (or, if mailed from outside the United States, another country’s official mail), addressed and mailed as aforesaid, or (iii) if sent via facsimile, upon confirmation of facsimile transfer or, if sent via electronic mail, upon confirmation of delivery when directed to the relevant electronic mail address, if sent during normal business hours of the recipient, or if not sent during normal business hours of the recipient, then on the recipient’s next business day.

25. Applicable Law and Consent to Jurisdiction . This Agreement and the legal relations between the parties shall be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. The Company and Indemnitee hereby irrevocably and unconditionally (i) agree that any action or proceeding arising out of or in connection with this Agreement shall be brought only in the Delaware Court of Chancery, and not in any other state or federal court in the United States of America or any court in any other country, (ii) consent to submit to the exclusive jurisdiction of the Delaware Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement, (iii) waive any objection to the laying of venue of any such action or proceeding in the Delaware Court of Chancery, and (iv) waive, and agree not to plead or to make, any claim that any such action or proceeding brought in the Delaware Court of Chancery has been brought in an improper or inconvenient forum.

26. Counterparts . This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement. This Agreement may also be executed and delivered by facsimile signature and in counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.

27. Captions . The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction hereof.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed as of the date first written above.

LONESTAR RESOURCES US INC.


By:
Name:
Title:

INDEMNITEE:



Name:

Address:

Exhibit 10.2

EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) is by and between Lonestar Resources, Inc. (the “Company”), on the one hand, and [ · ] (the “Executive”), on the other (collectively, the “Parties”).

RECITALS

WHEREAS, the Company desires to employ the Executive, and the Executive desires to be employed by the Company, upon the terms and subject to the conditions set forth in this Agreement;

NOW, THEREFORE, in consideration of the covenants and agreements herein after set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged the parties hereto agree as follows:

AGREEMENT

1. EFFECTIVENESS OF AGREEMENT

This Agreement shall become effective as of [ · ] (“Effective Date”).

2. EMPLOYMENT AND DUTIES

2.1 General . The Company hereby employs the Executive, and the Executive agrees to serve, as [ · ], upon the terms and conditions herein contained. Executive will report to the Chief Executive Officer or the Board of Directors of Lonestar Resources US Inc. (the “Board”). The Executive shall have all of the responsibilities and powers normally associated with such position. The Executive is a highly skilled and experienced professional possessing valuable knowledge of oil and gas operations. The Executive will perform duties and services commensurate with the Executive’s positions in order to achieve the goals and objectives of the Company. The Executive will also perform such other duties and services commensurate with the Executive’s position for other operations of affiliates of the Company, as may be reasonably designated from time to time by the Chief Executive Officer or the Board. The Executive will serve the Company faithfully and perform his duties to the best of his ability, applying his best levels of skill, judgment, professionalism, knowledge and diligence commensurate with his experience and level of position.

2.2 Exclusive Services . Except during vacation periods and reasonable periods of absence due to sickness, personal injury or disability, the Executive shall devote his full working time throughout the Employment Term (as defined in Section 2.3) to the services required of him hereunder. The Executive shall render his services exclusively

to the Company during the Employment Term and shall use his best efforts, judgment and energy to improve and advance the business and interests of the Company in a manner consistent with the duties of his position. Executive may serve on Boards of Directors of charities, provided that such service does not pose a conflict of interest.

2.3 Term of Employment . The Executive’s employment under this Agreement shall commence as of the Effective Date and shall terminate on [ · ], unless terminated sooner pursuant to this Agreement (the “Final Employment Date”), such time period hereinafter referred to as the “Employment Term.”

2.4 Reimbursement of Expenses . The Company shall reimburse the Executive for reasonable travel and other business expenses incurred by him in the fulfillment of his duties hereunder upon presentation by the Executive of an itemized account of such expenditures, including receipts as appropriate.

3. SALARY

3.1 Base Salary . The Executive shall be compensated on a twice monthly basis at a Base Salary rate that if annualized would produce an annual Base Salary of USD $[ · ]. The Board, or if applicable, the Board’s Compensation Committee (excluding Executive) will review annually the Executive’s performance and determine the amount of increase, if any. The Company shall withhold such appropriate deductions as shall be required to be withheld by applicable law and regulations. The Base Salary shall be payable in arrears in equal installments not less frequently than twice monthly in accordance with the payroll practices of the Company.

3.2 Annual Cash Bonus . Based on whether and the extent to which during a year Executive achieves reasonable performance objectives, Executive will be eligible for an Annual Cash Bonus between zero percent (0%) and fifty percent (50%) of Base Salary for that calendar year, provided that the Executive’s overall performance is at least satisfactory and provided that at the date of the award the Executive has not been given notice of termination and has not resigned. The Annual Cash Bonus will be set within ten weeks of the end of each annual period ending on 31 st December and will be paid on or before March 14 of the calendar year immediately following each annual period ending on 31 st December. The first such Annual Cash Bonus will be for the period from the Effective Date through [ · ], and will be set at between zero percent (0%) and fifty percent (50%) of the Base Salary received during that period with the percentage rate determined by [the short-term incentive plan in force for the Company’s Executives for that year and provided that the Executive’s overall performance is at least satisfactory]. In the

event the Executive’s employment has terminated and the Executive is due an Annual Cash Bonus, that Annual Cash Bonus will be paid at such time as would have been paid had the Executive still been employed by the Company. Additionally, if Executive is terminated without Cause or resigns with Good Reason, Executive will be entitled to a prorated portion of the Annual Cash Bonus up to the Date of Termination or resignation with Good Reason using the same standards and methodology set forth in the first two sentences of this subsection; the prorated Annual Cash Bonus will be paid at such time as it would have been paid had the Executive still been employed by the Company.

4. BENEFITS

4.1 Employee Plans . Executive will be entitled to participate in the health care and other employee benefit plans offered to executives by the Company. The costs of participating in the health care plan will be paid for by the Company. Executive shall participate in such plans on the same basis as similarly situated Company employees.

4.2 Share Option Plans . Executive will be entitled to participate in any share option plans initiated by Lonestar Resources US Inc. Any participation in any such plan will be governed by the rules of the plan and a separate invitation issued by Lonestar Resources US Inc. to the Executive.

4.3 Vacation . The Executive shall, during the Employment Term, accrue 4 weeks of vacation, in addition to Company holidays. Executive will also accrue 2 weeks of sick leave. Accrued but unused vacation can be rolled over to the next year, with a maximum roll over time of 2 years, so that Executive cannot have more than 10 weeks of accrued but unused vacation at any one time. Sick leave is to be used only in the calendar year it is granted with no rollover privileges.

4.4 Car Allowance . During the term of this Agreement, the Company will provide Executive with a car allowance in the amount of $[ · ] per month.

4.5 Executive Medical Benefit . In addition to the medical benefits provided to Executive pursuant to Section 4.1 above, the Company shall provide Executive with a supplemental medical expense benefit in an amount of $[ · ] per annum, for Executive’s use in connection with medical expenses not otherwise covered through the benefits provided to him pursuant to Section 4.1 above.

5. TERMINATION OF EMPLOYMENT

5.1 Termination Without Cause .

5.1.1 General . If the Executive’s employment is terminated by the Company without Cause (as defined in Section 5.3 of this Agreement) or if Executive resigns his employment for Good Reason (as defined in Section 5.4 herein), all Company obligations cease except that, on the condition that Executive executes and does not revoke a release satisfactory to the Company, the Company shall continue to pay the Executive the Base Salary (at the rate in effect on the date of such termination or resignation) and benefits defined in Section 4 above through to the Final Employment Date (the “Severance Period”) at such intervals as the same would have been paid had the Executive remained n the active service of the Company.

5.1.2 Conditions Applicable to the Severance Period . If during the Severance Period the Executive breaches his obligations under Section 7 of this Agreement, the Company may cease to make any further payments described in Section 5.1.1, provided that the Company shall not make less than one payment during the Severance Period.

5.1.3 Death or Disability During Severance Period . In the event of the Executive’s death or disability during the Severance Period, payments of Base Salary and all other benefits, including without limitation health insurance benefits under this Section 5.1.3 shall continue to be made during the remainder of the Severance Period to the beneficiary designated in writing for this purpose by the Executive or, if no such beneficiary is specifically designated, to the Executive’s estate.

5.1.4 Date of Termination . The date of termination of employment without Cause shall be the date specified in a written notice of termination to the Executive.

5.2 Termination for Cause or Executive’s Resignation Without Good Reason .

5.2.1 General . If, prior to the expiration of the Employment Term, the Executive’s employment is terminated by the Company for Cause (as defined in paragraph 5.3 of this Agreement), or the Executive resigns from his employment without Good Reason hereunder (in which case the Executive must give no less than thirty (30) days’ written notice to the Company), the Executive shall be entitled only to (i) payment of his Base Salary as then in effect through and including the date of termination or resignation, and (ii) accrued but unused

vacation. The Executive shall have no further right to receive any other compensation or benefits after such termination or resignation of employment, except as determined in accordance with the terms of the employee benefit plans or programs of the Company or as required by law (e.g., COBRA). In the event that a court subsequently finds that Cause did not exist, damages shall be equal to and shall not exceed the post-termination amount that would be due for the applicable Severance Period for a” without Cause” termination under section 5.1.1.

5.2.2 Process for Termination for Cause and Date of Termination . Prior to terminating Executive’s employment for Cause (as defined in paragraph 5.3 of this Agreement), the Company will notify in writing Executive of the specific reason(s) for the proposed termination and afford Executive the opportunity to respond and cure within (15) days immediately following such notification . The Company may or may not exercise its discretion to suspend the Executive with pay . The Company will within ten (10) days immediately following receipt of the Executive’s written response notify in writing the Executive of the Company’s decision . The date of termination for Cause shall be the date specified in the written notice of termination to the Executive.

5.3 Cause .

Termination for “Cause” shall mean termination of the Executive’s employment because of:

(i) Material Breach: any act or omission that constitutes a material breach by the Executive of any of the obligations or performance standards stated in or under this Agreement; or

(ii) Performance Objectives: the failure of the Executive to achieve assigned long-term performance objectives that would be reasonable for a company of the Company’s size, assets and funding, in a timely manner in a way that supports the Company’s strategy and business plan as adopted by the Board of Directors of the Company, except that market price fluctuations and other events beyond Executive’s control shall not qualify as Cause; or

(iii) Intentional Violation of Law: any willful and material violation by the Executive of any federal or state law or regulation directly related to the business of the Company, or any of its subsidiaries, or the Executive’s perpetration of an act constituting a felony, or any willful perpetration by the Executive of fraud or similar crime of moral turpitude; or

(iv) Other Misconduct: any other willful misconduct by the Executive which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or any of its subsidiaries or affiliates.

5.4 Good Reason .

Resignation for Good Reason shall mean a resignation of Executive’s employment because of an occurrence of any of the following without Executive’s prior written consent:

(i) A material diminution in Executive’s Base Salary as originally set in this Agreement and as it may be amended from time to time during the term of this Agreement; or

(ii) A material diminution in Executive’s broad authority, or responsibilities from those envisaged in the Company’s business planning and as may be amended from time to time during the term of this Agreement; or

(iii) A material change in the principal office location at which Executive must perform services for the Company to another location.

The Executive cannot terminate his employment for Good Reason unless he has provided written notice to the Company of the existence of the circumstances providing grounds for termination for Good Reason within 30 days of the initial existence of such grounds and the Company has had at least 60 days from the date on which such notice is provided to cure such circumstances. If the Executive does not terminate his employment for Good Reason within 60 days after the first occurrence of the applicable grounds, then the Executive will be deemed to have waived his right to terminate for Good Reason with respect to such grounds.

5.5. Deductions .

If as of the Final Employment Date Executive owes money in any amount to the Company, the Company may, at its sole discretion and without further notice or action, deduct any amount Executive owes from any and all amount, money or equity Company may owe Executive including, without limitation, from any wages, compensation, expense reimbursements, severance payments, stock options, stock or other amounts that may be due from the Company to Executive on or after the Final Employment Date. For clarity, the above deduction may include severance amounts, so that if Executive is to be paid during the Severance Period but Executive owes the Company any amount, the Company may deduct what the Company is owed from any amounts that may be owed to Executive during the Severance Period.

6. DEATH OR DISABILITY

In the event of termination of employment by reason of death or Disability causing the Executive to be unable to perform the essential functions of his job (“Disability”), the Company’s sole obligation, provided Executive or his estate executes and does not revoke a release satisfactory to the Company, shall be to continue to make payment of the Base Salary to the Executive’s legal representatives (in the case of Executive’s death) or to Executive (in the case of Executive’s Disability) for a period that is the shorter of (i) twelve (12) months beginning on the date of death or Disability, or (ii) the remainder of the Employment Term. All health insurance for the Executive’s family shall be extended for the same period. Other benefits shall be determined in accordance with the benefit plans maintained by the Company, and the Company shall have no further obligation hereunder.

7. NON-SOLICITATION; CONFIDENTIAL INFORMATION: NON-COMPETITION .

7.1 Acknowledgment . Executive understands that the nature of Executive’s position gives him access to and knowledge of Confidential Information and places him in a position of trust and confidence with the Company and that the Executive will benefit from the Company’s goodwill. Executive understands and acknowledges that the Company invested significant time and expense in developing the Confidential Information and goodwill.

Executive further understands and acknowledges that the restrictive covenants below are necessary to protect the Company’s legitimate business interests in its Confidential Information and goodwill. Executive further understands and acknowledges that the Company’s ability to reserve these for the exclusive knowledge and use of the Company is of great competitive importance and commercial value to the Company and that the Company would be irreparably harmed if the Executive violates the restrictive covenants below.

7.2 Non-solicitation . For so long as the Executive is employed by the Company and continuing for one year after termination or resignation of employment, the Executive shall not, without the prior written consent of the Company, directly or indirectly, as a sole proprietor, member of a partnership, stockholder or investor, officer or director of a corporation, or as an Executive, associate, consultant or agent of any person, partnership, corporation or other business organization or entity other than the Company:

(a) Solicit or endeavor to entice away from the Company, or any of its subsidiaries or affiliates, any person or entity who is employed by the Company, or any of its subsidiaries or affiliates,

(b) endeavor to entice away from the Company, or any of its subsidiaries or affiliates, or solicit with respect to services then being rendered or planned, proposed or

contemplated to be rendered by the Company or any such subsidiary or affiliate, any person or entity who is, or was within the then most recent twelve-month period, a person or entity with which the Company or any affiliated company does or may do business,

(c) disclose to any competitor of the Company the name or address of any past or present person or entity with which the Company does or may do business, and/or

(d) advise or suggest that any person or entity with which the Company does or may do business withdraw, curtail or cancel business with the Company. Before seeking an employment or other relationship with any business in the oil and gas industry at any time up to one year following discontinuation of employment with the Company, Executive shall provide to such business a notice advising that he is subject to a non-solicitation agreement and stating that if employment or other relationship ensues then the Executive and business will need to comply with the non-solicitation agreement. For the purposes of this Section7.2, ownership of securities having no more than one percent of the outstanding voting power of any entity which is listed on any national securities exchange or traded actively in the national over-the-counter market shall not be deemed in violation of this Section 7.2 so long as the Executive has no other connection or relationship with such entity.

7.3 Confidential Information . The parties acknowledge and agree that during the employment of Executive, the Company will disclose confidential information (as defined herein) to Executive. The Executive covenants and agrees with the Company that he will not at any time, except in performance of his obligations to the Company hereunder or with the prior written consent of the Company, directly or in directly, disclose such Confidential Information disclosed to him by the Company during his employment by the Company, or Confidential Information of any of its subsidiaries or affiliates. The term “Confidential Information” means information treated as confidential by the Company and not previously disclosed to the public, with respect to the Company’s, or any of its affiliates’ or subsidiaries’, products, facilities, applications and methods, proprietary information, trade secrets and other intellectual property, systems, procedures, manuals, confidential reports, product price lists, customer lists, technical information, financial information (including the revenues, costs or profits associated with any of the Company’s products), business plans, prospects or opportunities, and which should reasonably be deemed confidential, but shall exclude any information which (i) is generally known by the general public other than as a result of disclosure by any employee of the Company or (ii) the Executive is required to disclose under any applicable laws, regulations or directives of any government agency, tribunal or authority having jurisdiction in the matter or under subpoena or other process of law, provided that before making such disclosure the Executive provides at least five working days’ notice to the Company along with all relevant paperwork. Before seeking an

employment or other relationship with any business in the oil and gas industry, Executive shall provide such business with written notification advising that Executive is subject to a confidentiality agreement and stating that if an employment or other relationship ensues then the Executive and business will have to comply with the confidentiality agreement.

7.4 Non-Competition . For so long as the Executive is employed by the Company, and for one year immediately following termination, the Executive shall not, directly or indirectly in the Restricted Geographical Area, as a sole proprietor, member of a partnership, stockholder, investor, officer or director of a corporation, or as an employee, associate, consultant or agent of any person, partnership, corporation or other business organization or entity (other than the Company or any of its subsidiaries or affiliates) render any service to or in any way be affiliated with any person or business that is engaged in the oil and gas business in the Restricted Geographical Area without the prior written consent of the Company. Before performing services for any oil and gas person or entity in the Restricted Geographical Area at any time up to one year immediately following discontinuation of employment with the Company, the Executive shall inform such company in writing that he is subject to a non-competition agreement and provide a copy of such notice to Company. Executive agrees that these temporal and geographical scopes are reasonable and no greater than necessary to protect Company’s interest. For the purposes of this Section 7.4, ownership of securities having no more than two percent (2%) of the outstanding voting power of any competitor which is listed on any national securities exchange or traded actively in the national over-the-counter market shall not be deemed in violation of this Section 7.4 so long as the Executive has no other connection or relationship with such competitor. The Restricted Geographical Area is defined as within the same County as any of the properties or prospects in which the Company has mineral rights or is actively engaged in, or has been actively engaged in, serious negotiations for the acquisition of mineral rights (for example, but not limited to, through a written agreement with a potential vendor in the form of a Letter of Intent, where a Purchase and Sale Agreement is or has been under active negotiation or exists, or through negotiation of a Joint Development Agreement; but for the avoidance of doubt, entering into a non-disclosure agreement on its own would not be deemed to be “serious negotiations” for the purpose of this paragraph).

7.5 Exclusive Property . The Executive confirms that all Confidential Information is and shall remain the exclusive property of the Company. All business records, papers and documents kept or made by the Executive relating to the business of the Company shall be and remain the property of the Company.

7.6 Injunctive Relief . Without intending to limit the remedies available to the Company, the Executive agrees and acknowledges that in the event of a breach of any of the covenants contained in this Section 7, the Company shall be entitled to seek in a court of competent jurisdiction only in Tarrant County, Texas, temporary, preliminary and/or permanent injunctive relief restraining the Executive from engaging in activities

prohibited by this Section 7 or such other relief as may be required specifically to enforce any of the covenants in this Section 7 and such can be sought without the posting of a bond. If for any reason it is held that the restrictions under this Section 7 are no treason able or that consideration therefore is inadequate, such restrictions shall be interpreted or modified to include as much of the duration and scope identified in this Section 7 as will render such restrictions valid and enforceable.

8. MISCELLANEOUS

8.1 Notices . All notices or communications hereunder shall be in writing, addressed as follows:

To the Company:		Lonestar Resources, Inc.
		509 Pecan, Suite 200,
		Fort Worth, Texas 76102
Telecopier No.:		817-806-5112

With a copy to:		[ · ]


Telecopier No.:		[ · ]

To the Executive:		[ · ]


Telecopier No.:		[ · ]

All such notices shall be conclusively deemed to be received and shall be effective (i) if sent by hand delivery, upon receipt, or (ii) if sent by telecopy or facsimile transmission, upon confirmation of receipt by the sender of such transmission, or (iii) if sent by registered or certified mail, on the fifth day after the day on which such notice is mailed to the correct address listed herein.

8.2 Severability . Each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be prohibited by or invalid under applicable law, such provision will be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

8.3 Assignment . The Company’s rights and obligations under this Agreement shall be assignable by the Company. Neither this Agreement nor any rights here under shall be assignable or otherwise subject to hypothecation by the Executive except as specifically provided in this Agreement.

8.4 Entire Agreement . This Agreement, along with the agreements referred to herein, represents the entire agreement of the Company on the one hand, and the Executive, on the other, related to the subject matter hereof and shall supersede any and all previous contracts, arrangements or understandings between the Company on the one hand, and the Executive, on the other related to the subject matter hereof. This Agreement may be amended at any time by mutual written agreement of the Parties hereto. In the case of any conflict between any express term of this Agreement and any statement contained in any employment manual, memo or rule of general applicability of the Company, this Agreement shall control.

8.5 Withholding . The payment of any amount pursuant to this Agreement shall be subject to applicable withholding and payroll taxes and such other deductions as may be required under the Company’s employee benefit plans, if any.

8.6 Governing Law and Venue . This Agreement shall, except where otherwise specified in this Agreement, be construed, interpreted, and governed in accordance with the laws of the State of Texas without reference to Texas rules relating to conflict of law. Venue and jurisdiction shall lie exclusively in courts within Tarrant County, Texas, concerning any and all disputes between Executive and Company, including without limitation, issues and disputes involving stock options or shares.

8.7 Attorney’s Fees . If any action at law or inequity is necessary to enforce or to interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney’s fees, costs, and necessary disbursements in addition to any relief such prevailing party may be awarded.

8.8 Reimbursements . Payment of reimbursement amounts and the provision of in-kind benefits by the Company under this Agreement that constitute Deferred Compensation shall be subject to the following:

(a) Such reimbursements shall be made promptly after the Executive submits reasonable evidence of having incurred the amounts subject to reimbursement, provided that the Executive is required to provide such evidence no later than October 31 of the calendar year following the year in which such expenses are incurred (or such earlier date that is generally applicable, or such later date, established by the Company that is not later than the end of the calendar year following the year in which such expenses are incurred).

(b) To the extent required to avoid accelerated recognition of taxable income or imposition of additional tax under Code Section 409A, the amount of expenses eligible for reimbursement, or in-kind benefits provided, during the Executive’s taxable year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other taxable year.

(c) The reimbursement of an eligible expense under this Agreement will be made on or before the last day of the Executive’s taxable year following the taxable year in which the expense was incurred.

(d) The Executive’s right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

The term “Deferred Compensation” means payments or benefits that would be considered to be provided under a nonqualified deferred compensation plan as that term is defined in Treas. Reg. §1.409A-1. The foregoing provisions of this Section 9.8 are intended to conform the payments and benefits under this Agreement to the requirements of Code Section 409A, and shall not be construed to permit delay by the Company of payment of amounts due earlier in accordance with this Agreement.

8.9 Code Section 409A . This Agreement is intended to be interpreted and operated to the fullest extent possible so that the payments and benefits under this Agreement either shall be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (“Code Section 409A”) or shall comply with the requirements of Code Section 409A. All options granted pursuant to the terms of this Agreement are intended to be exempt from Section 409A pursuant to Treasury Regulation §1.409A-1(b)(4) or §1.409A-1(b)(5). Payments payable under this Agreement triggered by a termination of employment that are deferred compensation subject to (but not otherwise exempt from) Code Section 409A shall not be made unless such termination of employment constitutes a separation from service within the meaning of Code Section 409A. Notwithstanding any other provision in this Agreement to the contrary, if the Executive is a “specified employee” on the date of his separation from service within the meaning of Code Section 409A and Treasury Regulation §1.409A-1(h), payments and benefits payable under this Agreement due to a separation from service that are deferred compensation subject to (but not otherwise exempt from) Code Section 409A that would otherwise be paid or provided during the six-month period commencing on the separation from service, will be deferred until the first day of the seventh month following the separation from service if such deferral is necessary to avoid the additional tax under Code Section 409A. In the case of a series of payments, the first payment shall include the amounts the Executive would have been entitled to receive during the six-month waiting period. Each payment made under this Agreement shall be designated as a “separate payment” within the meaning of code Section 409A. If the Executive’s taxable year is other than the calendar year, then, to the extent required by Section 409A, the term “calendar year” (when used in this Agreement) shall instead mean the Executive’s taxable year.

[SIGNATURE PAGE TO FOLLOW]

IN WITNESS THEREOF, the Company has caused this Employment Agreement to be duly executed and dated and the Executive has hereunto set his hand and dated as below.

		LONESTAR RESOURCES, INC.



		Name: Frank D. Bracken, III
		Title: Chief Executive Officer
		Date:

		EXECUTIVE


		[ · ]

		Date:

Exhibit 10.3

CREDIT AGREEMENT

DATED AS OF
JULY 28, 2015

AMONG

LONESTAR RESOURCES AMERICA INC.,
AS BORROWER,

CITIBANK, N.A.,
AS ADMINISTRATIVE AGENT,

AND

THE LENDERS PARTY HERETO

SOLE LEAD ARRANGER AND SOLE BOOKRUNNER

CITIBANK, N.A.

TABLE OF CONTENTS

		Page

ARTICLE I Definitions and Accounting Matters

Section 1.01.	Terms Defined Above	1
Section 1.02.	Certain Defined Terms	1
Section 1.03.	Types of Loans and Borrowings	24
Section 1.04.	Terms Generally; Rules of Construction	24
Section 1.05.	Accounting Terms and Determinations; GAAP	25
Section 1.06.	Amounts of Letters of Credit	26
Section 1.07.	Joint Preparation; Construction of Indemnities and Releases	26
Section 1.08.	Determination of Time	26

ARTICLE II The Credits

Section 2.01.	Commitments	26
Section 2.02.	Loans and Borrowings	26
Section 2.03.	Requests for Borrowings	27
Section 2.04.	Interest Elections	28
Section 2.05.	Funding of Borrowings	29
Section 2.06.	Termination and Reduction of Aggregate Maximum Credit Amounts	30
Section 2.07.	Borrowing Base	30
Section 2.08.	Letters of Credit	35
Section 2.09.	Collateral	40
Section 2.10.	Defaulting Lenders	40

ARTICLE III Payments of Principal and Interest; Prepayments; Fees

Section 3.01.	Repayment of Loans	43
Section 3.02.	Interest	43
Section 3.03.	Alternate Rate of Interest	44
Section 3.04.	Prepayments	44
Section 3.05.	Fees	46

ARTICLE IV Payments; Pro Rata Treatment; Sharing of Payments

Section 4.01.	Payments Generally; Pro Rata Treatment; Sharing of Payments	46
Section 4.02.	Presumption of Payment by the Borrower	48
Section 4.03.	Disposition of Proceeds	48

ARTICLE V Increased Costs; Break Funding Payments; Taxes; Illegality

Section 5.01.	Increased Costs	48
Section 5.02.	Break Funding Payments	49
Section 5.03.	Taxes	50
Section 5.04.	Mitigation Obligations; Replacement of Lenders	53
Section 5.05.	Illegality	54

ARTICLE VI Conditions Precedent

Section 6.01.	Effective Date	55
Section 6.02.	Each Credit Event	57

ARTICLE VII Representations and Warranties

Section 7.01.	Organization; Powers	58
Section 7.02.	Authority; Enforceability	58
Section 7.03.	Approvals; No Conflicts	59
Section 7.04.	Financial Condition; No Material Adverse Change	59
Section 7.05.	Litigation	59
Section 7.06.	Environmental Matters	60
Section 7.07.	Compliance with the Laws and Agreements; No Defaults	61
Section 7.08.	Investment Company Act	61
Section 7.09.	Taxes	61
Section 7.10.	ERISA	61
Section 7.11.	Disclosure; No Material Misstatements	62
Section 7.12.	Insurance	63
Section 7.13.	Restriction on Liens	63
Section 7.14.	Subsidiaries	63
Section 7.15.	Location of Business and Offices	63
Section 7.16.	Properties; Titles, Etc.	63
Section 7.17.	Maintenance of Properties	64
Section 7.18.	Material Gas Imbalances, Prepayments	65
Section 7.19.	Marketing of Production	65
Section 7.20.	Swap Agreements	65
Section 7.21.	Use of Loans and Letters of Credit	65
Section 7.22.	Solvency	65
Section 7.23.	International Operations	66
Section 7.24.	Anti-Corruption Laws and Sanctions	66
Section 7.25.	Security Instruments	66

ARTICLE VIII Affirmative Covenants

Section 8.01.	Financial Statements; Other Information	66
Section 8.02.	Notices of Material Events	70
Section 8.03.	Existence; Conduct of Business	70
Section 8.04.	Payment of Obligations	71
Section 8.05.	Performance of Obligations under Loan Documents	71
Section 8.06.	Operation and Maintenance of Properties	71
Section 8.07.	Insurance	72
Section 8.08.	Books and Records; Inspection Rights	72
Section 8.09.	Compliance with Laws	72
Section 8.10.	Environmental Matters	73
Section 8.11.	Further Assurances	74
Section 8.12.	Reserve Reports	74
Section 8.13.	Title Information	75
Section 8.14.	Additional Collateral; Additional Guarantors	76
Section 8.15.	ERISA Compliance	77
Section 8.16.	Keepwell	77

ARTICLE IX Negative Covenants

Section 9.01.	Financial Covenants	78
Section 9.02.	Debt	78
Section 9.03.	Liens	79
Section 9.04.	Dividends, Distributions and Redemptions; Redemption of Permitted Senior Debt	79
Section 9.05.	Investments, Loans and Advances	80
Section 9.06.	Nature of Business; International Operations	82
Section 9.07.	Limitation on Leases	82
Section 9.08.	Proceeds of Loans	82
Section 9.09.	ERISA Compliance	82
Section 9.10.	Sale or Discount of Receivables	83
Section 9.11.	Mergers, Etc.	83
Section 9.12.	Sale of Properties	84
Section 9.13.	Environmental Matters	84
Section 9.14.	Transactions with Affiliates	84
Section 9.15.	Subsidiaries	85
Section 9.16.	Negative Pledge Agreements; Dividend Restrictions	85
Section 9.17.	Gas Imbalances, Take-or-Pay or Other Prepayments	85
Section 9.18.	Swap Agreements	85
Section 9.19.	Marketing Activities	86

ARTICLE X Events of Default; Remedies

Section 10.01.	Events of Default	87
Section 10.02.	Remedies	89

ARTICLE XI The Agents

Section 11.01.	Appointment; Powers	90
Section 11.02.	Rights as a Lender	91
Section 11.03.	Exculpatory Provisions	91
Section 11.04.	Reliance by Administrative Agent	92
Section 11.05.	Delegation of Duties	92
Section 11.06.	Resignation of Administrative Agent and/or Issuing Bank	93
Section 11.07.	Non-Reliance on Administrative Agent and Other Lenders	94
Section 11.08.	No Other Duties, etc.	94
Section 11.09.	Administrative Agent May File Proofs of Claim	94
Section 11.10.	Collateral and Guaranty Matters	95
Section 11.11.	Secured Swap Agreements and Secured Treasury Management Agreements	95

ARTICLE XII Miscellaneous

Section 12.01.	Notices	96
Section 12.02.	Waivers; Amendments	98
Section 12.03.	Expenses, Indemnity; Damage Waiver	100
Section 12.04.	Successors and Assigns	102
Section 12.05.	Survival; Revival; Reinstatement	106
Section 12.06.	Counterparts; Integration; Effectiveness; Electronic Signatures	107
Section 12.07.	Severability	107
Section 12.08.	Right of Setoff	107

iii

Section 12.09.	Governing Law; Jurisdiction; Consent to Service of Process; Waiver of Jury Trial	108
Section 12.10.	Headings	109
Section 12.11.	Confidentiality	109
Section 12.12.	Interest Rate Limitation	110
Section 12.13.	EXCULPATION PROVISIONS	111
Section 12.14.	Collateral Matters; Swap Agreements; Treasury Management Agreements	111
Section 12.15.	No Third Party Beneficiaries	111
Section 12.16.	No Advisory or Fiduciary Responsibility	111
Section 12.17.	Time of the Essence	112
Section 12.18.	USA Patriot Act Notice	112
Section 12.19.	ENTIRE AGREEMENT	113

ANNEXES, EXHIBITS AND SCHEDULES

Annex I		List of Maximum Credit Amounts

Exhibit A		Form of Note
Exhibit B		Form of Borrowing Request
Exhibit C		Form of Interest Election Request
Exhibit D		Form of Compliance Certificate
Exhibit E		Form of Swap Agreement Certificate
Exhibit F		Security Instruments
Exhibit G		Form of Assignment and Assumption
Exhibit H		Property Certificate
Exhibit I		Reconciliation Schedule
Exhibit J-1		Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-2		Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-3		Form of U.S. Tax Compliance Certificate (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes)
Exhibit J-4		Form of U.S. Tax Compliance Certificate (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes)

Schedule 7.05		Litigation
Schedule 7.06		Environmental
Schedule 7.14		Subsidiaries and Partnerships
Schedule 7.18		Material Gas Imbalances
Schedule 7.19		Marketing Contracts
Schedule 7.20		Current Swap Agreements
Schedule 9.02		Existing Debt
Schedule 9.03		Existing Liens
Schedule 9.05		Existing Investments

THIS CREDIT AGREEMENT dated as of July 28, 2015 is among LONESTAR RESOURCES AMERICA INC. , a Delaware corporation duly formed and existing under the laws of the State of Delaware (the “Borrower” ); each of the Lenders from time to time party hereto; and CITIBANK, N.A. , a national banking association (in its individual capacity, “Citibank” ), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “Administrative Agent” ).

R E C I T A L S

A. The Borrower has requested that the Lenders provide certain loans to and extensions of credit on behalf of the Borrower.

B. The Lenders have agreed to make such loans and extensions of credit subject to the terms and conditions of this Agreement.

C. In consideration of the mutual covenants and agreements herein contained and of the loans, extensions of credit and commitments hereinafter referred to, the parties hereto agree as follows:

ARTICLE I
Definitions and Accounting Matters

Section 1.01. Terms Defined Above . As used in this Agreement, each term defined above has the meaning indicated above.

Section 1.02. Certain Defined Terms . As used in this Agreement, the following terms have the meanings specified below:

“ABR” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“Act” has the meaning set forth in Section 12.18 .

“Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, an interest rate per annum (rounded upwards, if necessary, to the next 1/100 of 1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the Statutory Reserve Rate.

“Administrative Agent” has the meaning set forth in the Preamble.

“Administrative Questionnaire” means an Administrative Questionnaire in a form supplied from time to time by the Administrative Agent.

“Affected Loans” has the meaning assigned such term in Section 5.05 .

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

“ Agent Parties ” has the meaning set forth in Section 12.01(d) .

“Agents” means, collectively, the Administrative Agent and other agents subsequently named; and “Agent” shall mean either the Administrative Agent or such other agent, as the context requires.

“Aggregate Maximum Credit Amount” at any time shall equal the sum of the Maximum Credit Amounts of the respective Lenders, as the same may be reduced or terminated pursuant to Section 2.06 . The initial Aggregate Maximum Credit Amount is $500,000,000.

“Agreement” means this Credit Agreement, as the same may from time to time be amended, modified, supplemented or restated.

“ Alternate Base Rate ” means, for any day, a rate per annum equal to the greater of (a) the Prime Rate in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1%, and (c) the Adjusted LIBO Rate (based on an Interest Period of 30 days) in effect on such day plus 1%. Any change in the Alternate Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate or the Adjusted LIBO Rate shall be effective from and including the effective date of such change in the Prime Rate or the Federal Funds Effective Rate or the Adjusted LIBO Rate, respectively.

“Anti-Corruption Laws” means all state or federal laws, rules, and regulations applicable to the Borrower or any of its Affiliates from time to time concerning or relating to bribery or corruption, including the FCPA.

“Applicable Margin” means, for any day, with respect to any ABR Loan or Eurodollar Loan, or with respect to the Commitment Fee Rate, as the case may be, the rate per annum set forth in the Borrowing Base Utilization Grid below based upon the Borrowing Base Utilization Percentage then in effect:

Borrowing Base Utilization Grid

Level	Borrowing Base Utilization Percentage	Eurodollar Loans		ABR Loans		Commitment Fee Rate		Letter of Credit Fee
1	<25%	1.75	%	0.75	%	0.375	%	1.75	%
2	> 25% <50%	2.00	%	1.00	%	0.375	%	2.00	%
3	> 50% <75%	2.25	%	1.25	%	0.500	%	2.25	%
4	> 75% <90%	2.50	%	1.50	%	0.500	%	2.50	%
5	> 90%	2.75	%	1.75	%	0.500	%	2.75	%

Each change in the Applicable Margin shall apply during the period commencing on the effective date of such change and ending on the date immediately preceding the effective date of the next such change, provided , however, that if at any time the Borrower fails to deliver a Reserve Report pursuant to Section 8.12(a) , then the “Applicable Margin” means the rate per annum set forth on the grid when the Borrowing Base Utilization Percentage is at its highest level.

“Applicable Percentage” means, with respect to any Lender, the percentage of the Aggregate Maximum Credit Amounts represented by such Lender’s Maximum Credit Amount as such percentage is set forth on Annex I or in any Assignment and Assumption pursuant to which any Lender became a party hereto, as may be adjusted pursuant to any assignment or amendment to this Agreement. If the Maximum Credit Amounts have terminated or expired, the Applicable Percentages shall be determined based upon the Maximum Credit Amounts most recently in effect, giving effect to any assignments.

“Approved Counterparty” means (a) any Lender or any Affiliate of a Lender, or (b) any other Person engaged in the business of writing Swap Agreements whose long term senior unsecured debt rating is A-/A3 by S&P or Moody’s (or their equivalent) or higher and that is reasonably acceptable to the Administrative Agent, or (c) any other Person from time to time approved by the Required Lenders.

“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.

“Approved Petroleum Engineers” means (a) W.D. Von Gonten & Co., (b) LaRoche Petroleum Consultants, Ltd., and (c) any other independent petroleum engineers reasonably acceptable to the Administrative Agent.

“Arranger” means Citibank, in its capacities as the sole lead arranger and sole bookrunner hereunder.

“ASC 815” means the Accounting Standards Codification No. 815 (Derivatives and Hedging), as issued by the Financial Accounting Standards Board.

“Asset Disposition” means the sale, assignment, lease, license, transfer, exchange or other disposition by any Loan Party of any Oil and Gas Property included in the Borrowing Base, provided that the sale of the Hydrocarbons in the ordinary course of business shall not be deemed to be an Asset Disposition.

“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 12.04(b) ), and accepted by the Administrative Agent, in substantially the form of Exhibit G or any other form approved by the Administrative Agent.

“Availability Period” means the period from and including the Effective Date to but excluding the Termination Date.

“BDO” means BDO USA, LLP.

“Board” means the Board of Governors of the Federal Reserve System of the United States of America or any successor Governmental Authority.

“Borrowing” means Loans of the same Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect.

“Borrowing Base” has the meaning set forth in Section 2.07 .

“Borrowing Base Deficiency” occurs if at any time the total Revolving Credit Exposures exceeds the Borrowing Base then in effect.

“Borrowing Base Utilization Percentage” means, as of any day, the fraction expressed as a percentage, the numerator of which is the sum of the Revolving Credit Exposures of the Lenders on such day, and the denominator of which is the Borrowing Base in effect on such day.

“Borrowing Request” means a request by the Borrower for a Borrowing in accordance with Section 2.03 .

“Business Day” means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or Dallas, Texas are authorized or required by law to remain closed; and if such day relates to a Borrowing or continuation of, a payment or prepayment of principal of or interest on, or a conversion of or into, or the Interest Period for, a Eurodollar Loan or a notice by the Borrower with respect to any such Borrowing or continuation, payment, prepayment, conversion or Interest Period, any

day which is also a day on which dealings in dollar deposits are carried out in the London interbank market.

“Capital Expenditures” means, in respect of any Person, for any period, the aggregate (determined without duplication) of all exploration and development expenditures and costs that are capital in nature and any other expenditures that are capitalized on the balance sheet of such Person in accordance with GAAP.

“Capital Leases” means, in respect of any Person, all leases which shall have been, or should have been, in accordance with GAAP, recorded as capital leases on the balance sheet of the Person liable (whether contingent or otherwise) for the payment of rent thereunder.

“Cash Collateralize” means, to pledge and deposit with or deliver to the Administrative Agent, for the benefit of one or more of the Issuing Bank or Lenders, as collateral for LC Exposure or obligations of Lenders to fund participations in respect of LC Exposure, cash or deposit account balances or, if the Administrative Agent and the Issuing Bank shall agree in their reasonable discretion, other credit support, in each case pursuant to documentation in form and substance reasonably satisfactory to the Administrative Agent and the Issuing Bank. “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 any loss, casualty or other insured damage to, or any nationalization, taking under power of eminent domain or by condemnation or similar proceeding of, any Property of the Borrower or any of its Subsidiaries having a fair market value in excess of $1,000,000.

“ Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) of Equity Interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Parent, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by Persons who were neither (i) nominated by the board of directors of the Parent nor (ii) appointed by directors so nominated, or (c) the Parent ceases to own directly or indirectly 99.99% of the issued and outstanding Equity Interests in the Borrower.

“Change in Law” means the occurrence, after the date of this Agreement, 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 concerning capital adequacy 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.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor statute.

“ Collateral ” means all of the “Collateral” and Mortgaged Property referred to in the Security Instruments, and all of the other Property and other Equity Interests of the Loan Parties and other Persons

that is or is intended under the terms of the Security Instruments to be subject to Liens in favor of the Administrative Agent for the benefit of the Secured Parties.

“Commitment” means, with respect to each Lender, the commitment of such Lender to make Loans and to acquire participations in Letters of Credit hereunder, expressed as an amount representing the maximum aggregate amount of such Lender’s Revolving Credit Exposure hereunder, as such commitment may be (a) modified from time to time pursuant to Section 2.06 and (b) modified from time to time pursuant to assignments by or to such Lender pursuant to Section 12.04(b) , and “Commitments” means the aggregate amount of the Commitments of all of the Lenders. The amount representing each Lender’s Commitment shall at any time be the lesser of such Lender’s Maximum Credit Amount and such Lender’s Applicable Percentage of the then effective Borrowing Base.

“Commitment Fee Rate” has the meaning set forth in the definition of “Applicable Margin” .

“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.

“Communications” has the meaning set forth in Section 12.01(d) .

“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.

“Consolidated Subsidiaries” means each Subsidiary of the Borrower (whether now existing or hereafter created or acquired) the financial statements of which shall be (or should have been) consolidated with the financial statements of the Borrower in accordance with GAAP.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. For the purposes of this definition, and without limiting the generality of the foregoing, any Person that owns directly or indirectly 10% or more of the Equity Interests having ordinary voting power for the election of the directors or managers or other governing body of a Person (other than as a limited partner of such other Person) will be deemed to “control” such other Person. “Controlling” and “Controlled” have meanings correlative thereto.

“Debt” means, for any Person, the sum of the following (without duplication): (a) all obligations of such Person for borrowed money or evidenced by bonds, bankers’ acceptances, debentures, notes or other similar instruments; (b) all obligations of such Person (whether contingent or otherwise) in respect of letters of credit, surety or other bonds and similar instruments; (c) all accounts payable and all accrued expenses, liabilities or other obligations of such Person to pay the deferred purchase price of Property or services; (d) all obligations under Capital Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in the other clauses of this definition) of others secured by (or for which the holder of such Debt has an existing right, contingent or otherwise, to be secured by) a Lien on any Property of such Person, whether or not such Debt is assumed by such Person; (g) all Debt (as defined in the other clauses of this definition) of others guaranteed by such Person or in which such Person otherwise assures a creditor against loss of the Debt (howsoever such assurance shall be made) to the extent of the lesser of the amount of such Debt and the maximum stated amount of such guarantee or assurance against loss; (h) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position or covenants of others or to purchase the Debt or Property of others; (i) obligations to deliver commodities, goods or services, including, without limitation, Hydrocarbons, in consideration of one or more advance payments, other than gas balancing arrangements in the ordinary course of business; (j) obligations to pay for goods or services even if such goods or services are not actually received or

utilized by such Person; (k) any Debt of a partnership for which such Person is liable either by agreement, by operation of law or by a Governmental Requirement but only to the extent of such liability; (l) Disqualified Capital Stock; and (m) the undischarged balance of any production payment created by such Person or for the creation of which such Person directly or indirectly received payment. The Debt of any Person shall include all obligations of such Person of the character described above to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is not included as a liability of such Person under GAAP.

“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 any event or condition which constitutes an Event of Default or which upon notice, lapse of time or both would, unless cured or waived, become an Event of Default.

“Defaulting Lender” means, subject to Section 2.10(b) , any Lender that (a) has failed to (i) fund all or any portion of its Loans within two Business Days of the date such Loans 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 good faith 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 Bank 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 Bank 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 a Loan hereunder and states that such position is based on such Lender’s good faith 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, 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 2.10(b) ) upon delivery of written notice of such determination to the Borrower, the Issuing Bank and each Lender.

“Disqualified Capital Stock” means any Equity Interest that, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event,

matures or is mandatorily redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock), pursuant to a sinking fund obligation or otherwise, or is convertible or exchangeable for Debt or redeemable for any consideration other than other Equity Interests (which would not constitute Disqualified Capital Stock) at the option of the holder thereof, in whole or in part, or requires the payment of any cash dividend or any other scheduled payment constituting a return of capital, in the case of each of the foregoing, on or prior to the date that is one year after the earlier of (a) the Maturity Date and (b) the date on which there are no Loans, LC Exposure or other obligations hereunder outstanding and all of the Commitments are terminated.

“dollars” or “$” refers to lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary that is organized under the laws of the United States of America or any state thereof or the District of Columbia.

“EBITDAX” means net income, less non-cash revenue or expense associated with Swap Agreements resulting from ASC 815, less income or plus loss from discontinued operations and extraordinary items, plus income taxes (including franchise taxes to the extent based upon that income), plus interest expense, plus depreciation, accretion of asset retirement obligations, depletion, and amortization, plus IDC and other exploration expenses deducted in determining net income under successful efforts accounting. For the purposes of calculating EBITDAX for any period of four consecutive fiscal quarters (each, a “Reference Period” ), (i) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Disposition, EBITDAX for such Reference Period shall be calculated on a pro forma basis as if such Material Disposition occurred on the first day of such Reference Period, and (ii) if during such Reference Period the Borrower or any Subsidiary shall have made a Material Acquisition, EBITDAX for such Reference Period shall be calculated on a pro forma basis as if such Material Acquisition occurred on the first day of such Reference Period.

“Effective Date” means the date on which the conditions specified in Section 6.01 are satisfied (or waived in accordance with Section 12.02 ).

“Eligible Assignee” means any Person that meets the requirements to be an assignee under Section 12.04(b)(iii) , (v) and (vi) (subject to such consents, if any, as may be required under Section 12.04(b)(iii) ). Notwithstanding the foregoing or anything to the contrary herein or in any other Loan Document, “Eligible Assignee” shall not include any Loan Party or any Loan Party’s Affiliates or Subsidiaries.

“Engineering Reports” has the meaning assigned such term in Section 2.07(c)(i) .

“Environmental Laws” means any and all Governmental Requirements pertaining in any way to health, safety, the environment or the preservation or reclamation of natural resources, or the management, release or threatened release of any Hazardous Materials in effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting or at any time has conducted business, or where any Property of the Borrower or any Subsidiary is located, including without limitation, the Oil Pollution Act of 1990 ( “OPA” ), as amended, the Clean Air Act, as amended, the Comprehensive Environmental, Response, Compensation, and Liability Act of 1980 ( “CERCLA” ), as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 ( “RCRA” ), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and other environmental conservation or protection Governmental Requirements. The term “oil” shall have the meaning specified in OPA, the terms “hazardous substance” and “release” (or

“threatened release”) have the meanings specified in CERCLA, the terms “solid waste” and “disposal” (or “disposed”) have the meanings specified in RCRA and the term “oil and gas waste” shall have the meaning specified in Section 91.1011 of the Texas Natural Resources Code ( “Section 91.1011” ); provided , however, that (a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and (b) to the extent the laws of the state or other jurisdiction in which any Property of the Borrower or any Subsidiary is located establish a meaning for “oil,” “hazardous substance,” “release,” “solid waste,” “disposal” or “oil and gas waste” which is broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall apply.

“Equity Interests” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such Equity Interest.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute.

“ERISA Affiliate” means each trade or business (whether or not incorporated) which together with the Borrower or a Subsidiary would be deemed to be a “single employer” within the meaning of Section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of Section 414 of the Code.

“ERISA Event” means (a) a “Reportable Event” described in Section 4043 of ERISA and the regulations issued thereunder, (b) the withdrawal of the Borrower, a Subsidiary or any ERISA Affiliate 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 of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC, (e) the receipt of a notice of withdrawal liability pursuant to Section 4202 of ERISA or (f) the institution of proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan.

“Eurodollar” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default” has the meaning assigned such term in Section 10.01 .

“Excepted Liens” means: (a) Liens for Taxes, assessments or other governmental charges or levies which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP; (b) Liens in connection with workers’ compensation, unemployment insurance or other social security, old age pension or public liability obligations which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP; (c) statutory landlord’s liens, operators’, vendors’, carriers’, warehousemen’s, repairmen’s, mechanics’, suppliers’, workers’, materialmen’s, construction or other like Liens arising by operation of law in the ordinary course of business or incident to the exploration, development, operation and maintenance of Oil and Gas Properties each of which is in respect of obligations that are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP; (d) contractual Liens which arise in the ordinary course of business under operating agreements, joint venture agreements, oil and gas partnership agreements, oil and gas leases, farm-out agreements, division orders, contracts for the sale,

transportation or exchange of oil and natural gas, unitization and pooling declarations and agreements, area of mutual interest agreements, overriding royalty agreements, marketing agreements, processing agreements, net profits agreements, development agreements, gas balancing or deferred production agreements, injection, repressuring and recycling agreements, salt water or other disposal agreements, seismic or other geophysical permits or agreements, and other agreements which are usual and customary in the oil and gas business and are for claims which are not delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been established and maintained in accordance with GAAP, provided that any such Lien referred to in this clause does not materially impair the use of the Property covered by such Lien for the purposes for which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; (e) 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 creditor depository institution, provided that no such deposit account is a dedicated cash collateral account or is subject to restrictions against access by the depositor in excess of those set forth by regulations promulgated by the Board and no such deposit account is intended by Borrower or any of its Subsidiaries to provide collateral to the depository institution; (f) easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations in any Property of the Borrower or any Subsidiary for the purpose of roads, pipelines, transmission lines, transportation lines, distribution lines for the removal of gas, oil, coal or other minerals or timber, and other like purposes, or for the joint or common use of real estate, rights of way, facilities and equipment, which do not secure any monetary obligations and which in the aggregate do not materially impair the use of such Property for the purposes of which such Property is held by the Borrower or any Subsidiary or materially impair the value of such Property subject thereto; (g) minor defects and irregularities in title to any Property which do not secure any monetary obligations and which in the aggregate do not materially impair use of such Property for the purposes for which such Property is held by the Borrower and any Subsidiary or materially impair the value of such Property subject thereto; (h) Liens on cash or securities pledged to secure performance of tenders, surety and appeal bonds, government contracts, performance and return of money bonds, bids, trade contracts, leases, statutory obligations, regulatory obligations and other obligations of a like nature incurred in the ordinary course of business and (i) judgment and attachment Liens not giving rise to an Event of Default, provided that any appropriate legal proceedings which may have been duly initiated for the review of such judgment shall not have been finally terminated or the period within which such proceeding may be initiated shall not have expired and no action to enforce such Lien has been commenced; provided , further that Liens described in clauses (a) through (e) shall remain “Excepted Liens” only for so long as no action to enforce such Lien has been commenced (and not stayed) and no intention to subordinate the first priority Lien granted in favor of the Administrative Agent and the Lenders is to be hereby implied or expressed by the permitted existence of such Excepted Liens.

“Excluded Swap Obligation” means, with respect to any Loan Party, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Loan Party of, or the grant by such Loan 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 Loan 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 Guarantor or the grant of such security interest becomes effective with respect to such Swap Obligations. 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 Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a law in effect on the date on which (i) such Lender acquires such interest in the Loan or Commitment (other than pursuant to an assignment request by the Borrower under Section 5.04(b) ) or (ii) such Lender changes its lending office, except in each case to the extent that, pursuant to Section 5.3 , amounts with respect to such Taxes were payable either to such Lender’s assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (c) Taxes attributable to such Recipient’s failure to comply with Section 5.03(g) and (d) any U.S. federal withholding Taxes imposed under FATCA.

“Existing Credit Agreement” means that certain Credit Agreement dated as of March 14, 2013, as amended, by and among the Borrower, the lenders party thereto, and Wells Fargo Bank, National Association, as Administrative Agent.

“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) and any current or future regulations or official interpretations thereof.

“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.

“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it, provided that if the Federal Funds Effective Rate shall be less than zero, such rate shall be deemed to be zero for purposes of this Agreement.

“Financial Officer” means, for any Person, the chief financial officer, principal accounting officer, treasurer or controller of such Person. Unless otherwise specified, all references herein to a Financial Officer means a Financial Officer of the Borrower.

“Financial Statements” means the financial statement or statements of the Borrower and its Consolidated Subsidiaries referred to in Section 7.04(a) .

“Foreign Lender” means (a) if the Borrower is a U.S. Person, a Lender that is not a U.S. Person, and (b) if the Borrower is not a U.S. Person, a Lender that is resident or organized under the laws of a jurisdiction other than that in which the Borrower is resident for tax purposes.

“Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.

“Fronting Exposure” means, at any time there is a Defaulting Lender, with respect to the Issuing Bank, such Defaulting Lender’s Applicable Percentage of the outstanding LC Exposure with respect to Letters of Credit issued by such Issuing Bank other than LC Exposure 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 generally accepted accounting principles in the United States of America as in effect from time to time subject to the terms and conditions set forth in Section 1.05 .

“Governmental Authority” means the government of the United States of America, any other nation or any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, 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).

“Governmental Requirement” means any law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement, whether now or hereinafter in effect, including, without limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority.

“Guarantors” means (a) each Subsidiary of the Borrower that guarantees or is required to guarantee the Obligations hereunder (including pursuant to Sections 6.01 and 8.14(b) ), and (b) each other Person that guarantees the Obligations.

“Guaranty Agreement” means an agreement executed by one or more of the Guarantors in form and substance reasonably satisfactory to the Administrative Agent, unconditionally guaranteeing on a joint and several basis, payment of the Obligations, as the same may be amended, modified or supplemented from time to time.

“Highest Lawful Rate” means, with respect to each Lender, the maximum nonusurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Notes or on other Obligations under laws applicable to such Lender which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum nonusurious interest rate than applicable laws allow as of the date hereof.

“Hydrocarbon Interests” means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases (excluding coal and timber), or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, net profit interests and production payment interests, including any reserved or residual interests of whatever nature. Unless otherwise indicated herein, each reference to the term “ Hydrocarbon Interests ” shall mean Hydrocarbon Interests of the Borrower and its Subsidiaries.

“Hydrocarbons” means oil, gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and all products refined or separated therefrom. Unless otherwise indicated herein, each reference to the term “ Hydrocarbons ” shall mean Hydrocarbons of the Borrower and its Subsidiaries.

“IDC” means Intangible Drilling and Development Costs, as defined in Section 263 of the Code.

“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 Loan Party under any Loan Document and (b) to the extent not otherwise described in (a), Other Taxes.

“Indemnitees” has the meaning set forth in Section 12.03(c) .

“Information” has the meaning set forth in Section 12.11 .

“Initial Reserve Report” means collectively, the report of W.D. Von Gonten & Co. and the report of LaRoche Petroleum Consultants, Ltd., each dated as of January 1, 2015, with respect to certain Oil and Gas Properties of the Borrower and its Subsidiaries.

“Interest Election Request” means a request by the Borrower to convert or continue a Borrowing in accordance with Section 2.04 .

“Interest Payment Date” means (a) with respect to any ABR Loan, the last day of each March, June, September and December, and (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period.

“Interest Period” means with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months thereafter, as the Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day and (b) any Interest Period pertaining to a Eurodollar Borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. Interest shall accrue from and including the first day of an Interest Period to but excluding the last day of such Interest Period, subject to prepayment or repayment of the same in accordance with the Loan Documents. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“Interim Redetermination” has the meaning assigned such term in Section 2.07(b) .

“Interim Redetermination Date” means the date on which a Borrowing Base that has been redetermined pursuant to an Interim Redetermination becomes effective as provided in Section 2.07(d) .

“Investment” means, for any Person: (a) the acquisition (whether for cash, Property, services or securities or otherwise) of Equity Interests of any other Person or any agreement to make any such acquisition (including, without limitation, any “short sale” or any sale of any securities at a time when such securities are not owned by the Person entering into such short sale) or any capital contribution to any other Persons; (b) the making of any deposit with, or advance, loan or capital contribution to, assumption of Debt of, purchase or other acquisition of any other Debt or equity participation or interest in, or other extension of credit to, any other Person (including the purchase of Property from another Person subject to an understanding or agreement, contingent or otherwise, to resell such Property to such Person, but excluding any such advance, loan or extension of credit having a term not exceeding ninety (90) days representing the purchase price of inventory or supplies sold by such Person in the ordinary course of business); (c) the purchase or acquisition (in one or a series of transactions) of Property of another Person that constitutes a business unit or (d) the entering into of any guarantee of, or other contingent obligation (including the deposit of any Equity Interests to be sold) with respect to, Debt or

other liability of any other Person and (without duplication) any amount committed to be advanced, lent or extended to such Person.

“IRS” means the United States Internal Revenue Service.

“Issuing Bank” means Citibank, in its capacity as the issuer of Letters of Credit hereunder, and its successors in such capacity as provided in Section 2.08(i) . The Issuing Bank may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect to Letters of Credit issued by such Affiliate.

“LC Collection Account” has the meaning assigned such term in Section 2.08(j) .

“LC Commitment” at any time means $2,500,000.

“LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of Credit.

“LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all LC Disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Lender at any time shall be its Applicable Percentage of the total LC Exposure at such time. For purposes of computing the amount available to be drawn under any Letter of Credit, the amount of such Letter of Credit shall be determined in accordance with Section 1.06 . For all purposes of this Agreement, if on any date of determination a Letter of Credit has expired by its terms but any amount may still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP, such Letter of Credit shall be deemed to be “outstanding” in the amount so remaining available to be drawn.

“Lenders” means the Persons listed on Annex I and any other Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption.

“Letter of Credit” means any letter of credit issued pursuant to this Agreement.

“Letter of Credit Agreements” means all letter of credit applications and other agreements (including any amendments, modifications or supplements thereto) submitted by the Borrower, or entered into by the Borrower (whether for itself or any Subsidiary as the account party), with the Issuing Bank relating to any Letter of Credit.

“LIBO Rate” means, with respect to any Eurodollar Borrowing for any Interest Period, the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such Service, or any successor to or substitute for such Service, providing rate quotations comparable to those currently provided on such page of such Service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period, provided that if the LIBO rate shall be less than zero, such rate will be deemed to be zero for purposes of this Agreement. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for such Interest Period shall be the rate at which dollar deposits of $5,000,000 and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two Business Days prior to the commencement of such

Interest Period, provided that if the LIBO Rate shall be less than zero, such rate will be deemed to be zero for purposes of this Agreement.

“Lien” means any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of the Property, whether such interest is based on the common law, statute or contract, and whether such obligation or claim is fixed or contingent, and including but not limited to (a) the lien or security interest arising from a deed of trust, mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes or (b) production payments and the like payable out of Oil and Gas Properties. The term “Lien” shall include easements, restrictions, servitudes, permits, conditions, covenants, exceptions or reservations. For the purposes of this Agreement, the Borrower and its Subsidiaries, as applicable, shall be deemed to be the owner of any Property which they have acquired or hold subject to a conditional sale agreement, or leases under a financing lease or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person in a transaction intended to create a financing.

“Loan Documents” means this Agreement, the Notes, the Letter of Credit Agreements, the Letters of Credit, the Property Certificate, any Reconciliation Schedule, the Security Instruments and any other documents, certificates or agreements that are required to be delivered pursuant to any of the foregoing documents, together with any and all renewals, extensions and restatements of, and amendments and modifications to, any such agreements, documents and instruments, but excluding any Secured Swap Agreements and Secured Treasury Management Agreements.

“ Loan Party ” means as applicable, any of the Borrower and each Guarantor and “ Loan Parties ” means all of the foregoing.

“Loans” means the loans made by the Lenders to the Borrower pursuant to this Agreement.

“Majority Lenders” means, at any time, Lenders having Loans, LC Exposure and unused Commitments representing more than 50% of the sum of all Loans, LC Exposure and unused Commitments at such time (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(d) ); provided that the Loans, LC Exposure and Commitment of any Defaulting Lender shall be disregarded for purposes of making a determination of Required Lenders.

“Material Acquisition” means any acquisition of Property or series of related acquisitions of Property that involves the payment of consideration by the Borrower and its Subsidiaries in excess of $5,000,000.

“Material Adverse Effect” means a material adverse change in, or material adverse effect on (a) the business, operations, Property, condition (financial or otherwise) or prospects of the Borrower and the Subsidiaries taken as a whole, (b) the ability of the Borrower, any Subsidiary or any Guarantor to perform any of its obligations under any Loan Document, (c) the validity or enforceability of any Loan Document or (d) the rights and remedies of or benefits available to the Administrative Agent, any other Agent, the Issuing Bank or any Lender under any Loan Document.

“Material Disposition” means any disposition of Property or series of related dispositions of property that yields gross proceeds to the Borrower or any of its Subsidiaries (valued at the initial principal amount thereof in the case of non-cash proceeds consisting of notes or other debt securities and valued at fair market value in the case of other non cash proceeds) in excess of $5,000,000.

“Material Gas Imbalance” means, with respect to all gas balancing agreements to which the Borrower or any Subsidiary is a party or by which any mineral interest owned by the Borrower or any

Subsidiary is bound, a net gas imbalance to the Borrower or any Subsidiary, individually or taken as a whole in excess of $1,000,000. Gas imbalances will be determined based on written agreements, if any, specifying the method of calculation thereof, or, alternatively, if no such agreements are in existence, gas imbalances will be calculated by multiplying (x) the volume of gas imbalance as of the date of calculation (expressed in thousand cubic feet) by (y) the heating value in Btu’s per thousand cubic feet, times the Henry Hub average daily spot price for the month immediately preceding the date of calculation.

“Material Indebtedness” means as of any date of determination, Debt (other than the Loans and Letters of Credit) or obligations in respect of one or more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate principal amount exceeding 5% of the Borrowing Base then in effect. For purposes of determining Material Indebtedness, the “principal amount” of the obligations of the Borrower or any Subsidiary in respect of any Swap Agreement at any time shall be the Swap Termination Value thereof.

“Maturity Date” means the earlier of (a) the five year anniversary of the Effective Date and (b) the date that is 181 days prior to the earliest maturity date, any scheduled amortization, or any required repurchase or redemption (other than a required offer to repurchase or redeem as a result of change of control or asset sale) of any senior unsecured notes.

“Maximum Credit Amount” means, as to each Lender, the amount set forth opposite such Lender’s name on Annex I under the caption “Maximum Credit Amounts”, as the same may be (a) reduced or terminated from time to time in connection with a reduction or termination of the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b), or (b) modified from time to time pursuant to any assignment permitted by Section 12.04(b) .

“Minimum Collateral Amount” means, at any time, (i) with respect to Cash Collateral consisting of cash or deposit account balances, an amount equal to 105% of the Fronting Exposure of the Issuing Bank 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 Bank in their reasonable discretion.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto that is a nationally recognized rating agency.

“Mortgaged Property” and “ Mortgaged Properties ” means any Property owned by the Borrower or any Guarantor which is subject to the Liens existing and to exist under the terms of the Security Instruments.

“Mortgages” means the mortgages, deeds of trust, leasehold mortgages, assignments of leases and rents, assignments of proceeds of production, security documents and the like (including all amendments, modifications and supplements thereto) delivered pursuant to this Agreement in order to grant Liens in Oil and Gas Properties of the Borrower and its Subsidiaries for the ratable benefit of the Secured Parties.

“Multiemployer Plan” means a Plan which is a multiemployer plan as defined in Section 3(37) or 4001 (a)(3) of ERISA.

“New Borrowing Base Notice” has the meaning assigned such term in Section 2.07(d) .

“Non-Consenting Lender” means any Lender that does not approve any consent, waiver or amendment that (a) (i) other than a Borrowing Base increase, requires the approval of all affected Lenders

in accordance with the terms of Section 12.02 and (ii) has been approved by the Required Lenders, or (b) would increase the Borrowing Base and 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.

“Notes” means the promissory notes of the Borrower described in Section 2.02(d) and being substantially in the form of Exhibit A , together with all amendments, modifications, replacements, extensions and rearrangements thereof.

“ Obligations ” means (a) any and all amounts owing or to be owing by the Borrower, any Subsidiary or any Guarantor or other Loan Party (including without limitation, all debts, liabilities, obligations, covenants and duties of each such Person, whether direct or indirect (including those acquired by assumption), absolute or contingent, due or to become due, now existing or hereafter arising), and including interest and fees that accrue after the commencement by or against any Loan Party or any Affiliate of any Loan Party of any proceeding under any Debtor Relief Laws naming such Person as the debtor in such proceeding, regardless of whether such interest and fees are allowed claims in such proceeding: (i) to the Administrative Agent, the Issuing Bank, any Lender or any other Secured Party under any Loan Document; (ii) to any Swap Lender under any Secured Swap Agreement (which shall be deemed to be the Swap Termination Value as of the date the amount of Obligations is being determined), and (iii) to any Treasury Management Party under any Secured Treasury Management Agreement, and (b) all renewals, extensions and/or rearrangements of any of the above ; provided that notwithstanding anything to the contrary herein or in any Loan Document, “Obligations” shall not include, with respect to any Loan Party, any Excluded Swap Obligations of such Loan Party.

“OFAC” means the Office of Foreign Assets Control of the United States Department of the Treasury.

“Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and Properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles, interests and estates described or referred to above, including any and all Property, real or personal, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing. Unless otherwise indicated

herein, each reference to the term “ Oil and Gas Properties ” shall mean Oil and Gas Properties of the Borrower and its Subsidiaries.

“Organizational Documents” mean, (a) with respect to any corporation, the certificate or articles of incorporation and the bylaws (or equivalent or comparable constitutive documents with respect to any non US jurisdiction); (b) with respect to any limited liability company, the certificate or articles of formation or organization and operating agreement; and (c) with respect to any partnership, joint venture, trust or other form of business entity, the partnership, joint venture or other applicable agreement of formation or organization and any agreement, instrument, filing or notice with respect thereto filed in connection with its formation or organization with the applicable Governmental Authority in the jurisdiction of its formation or organization and, if applicable, any certificate or articles of formation or organization of such entity.

“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 Loan Document, or sold or assigned an interest in any Loan or Loan 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 Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 5.04(b) ).

“Parent” means Lonestar Resources Limited, an Australian limited company.

“Participant” has the meaning set forth in Section 12.04(d) .

“Participant Register” has the meaning set forth in Section 12.04(d) .

“PBGC” means the Pension Benefit Guaranty Corporation, or any successor thereto.

“Permitted Employee Loans” means those loans made by Borrower to certain employees, in an aggregate principal amount not exceeding $500,000, in order for such employees to pay certain tax liabilities, pursuant to notes maturing not more than two years after the Effective Date.

“Permitted Senior Debt” means Debt consisting of notes or bonds from time to time issued pursuant to one or more public or private capital markets financings; provided that:

(a) the aggregate principal amount (or accreted value, if applicable) of all such Debt outstanding at any one time (without duplication and taking into account all concurrent payments or redemptions of Permitted Senior Debt with the proceeds of other Permitted Senior Debt) shall not exceed $300,000,000;

(b) such Debt does not have any scheduled principal amortization prior to the date which is 91 days after the Maturity Date as in effect on the date such Permitted Senior Debt is incurred;

(c) such Debt does not mature sooner than the date which is 91 days after the Maturity Date as in effect on the date such Permitted Senior Debt is incurred;

(d) the non-default interest rate on the outstanding principal amount of such Debt does not exceed 12% per annum, and does not add scheduled recurring fees to the holders thereof;

(e) any Subsidiary or other Person that guarantees such Debt shall also have guaranteed the Obligations pursuant to the Guaranty Agreement;

(f) if such Debt is senior subordinated Debt, such Debt is expressly subordinate to the payment in full of all of the Obligations on terms and conditions reasonably satisfactory to the Administrative Agent;

(g) such Debt does not have any mandatory prepayment, redemption, defeasance, tender, sinking fund or repurchase provisions (other than customary change of control or asset sale tender offer provisions and provisions regarding prepayment from the net cash proceeds of certain debt issuances, in each case, to the extent required or allowed to be applied first to the Obligations);

(h) such Debt is unsecured Debt and the Borrower shall be deemed to have represented and warranted to the Lenders, at the time of the incurrence of such Debt, that such Debt and any guarantees thereof are on terms, taken as a whole, not materially less favorable to the Borrower and its Subsidiaries as market terms for issuers of similar size and credit quality given the then prevailing market conditions as reasonably determined by the Borrower;

(i) the financing documentation entered into by the Borrower and its Subsidiaries in connection therewith shall constitute Permitted Senior Debt Documents; and

(j) such Debt is not redeemable at the option of the holder thereof prior to the date which is one 91 days after the Maturity Date as in effect on the date such Debt is incurred (other than pursuant to customary change of control or asset sale tender offer provisions).

“Permitted Senior Debt Documents” means, with respect to any Permitted Senior Debt, each indenture or other agreement pursuant to which such Permitted Senior Debt is issued or incurred, and any notes, certificates, security agreement, mortgage or other documents made or delivered by the Borrower or any Subsidiary in connection with such Permitted Senior Debt, as the same may be amended, modified or supplemented in accordance with Section 9.04(b) .

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Plan” means any employee pension benefit plan, as defined in Section 3(2) of ERISA, which (a) is currently or hereafter sponsored, maintained or contributed to by the Borrower, a Subsidiary or an ERISA Affiliate or (b) was at any time during the six calendar years preceding the date hereof, sponsored, maintained or contributed to by the Borrower or a Subsidiary or an ERISA Affiliate.

“ Platform ” has the meaning set forth in Section 12.01(d) .

“Pledge Agreements” means one or more pledge agreements in form and substance reasonably satisfactory to the Administrative Agent pursuant to which the Equity Interests of a Subsidiary are

pledged to the Administrative Agent for the ratable benefit of the Lenders to secure the payment of the Obligations and the reimbursement of obligations under the Letters of Credit, as such agreements may be amended, modified or supplemented from time to time.

“Prime Rate” means the rate of interest per annum publicly announced from time to time by Administrative Agent as its prime rate for loans in dollars; each change in the Prime Rate shall be effective from and including the date such change is publicly announced as being effective. Such rate is set by Administrative Agent as a general reference rate of interest, taking into account such factors as Administrative Agent may deem appropriate; it being understood that many of Administrative Agent’s commercial or other loans are priced in relation to such rate, that it is not necessarily the lowest or best rate actually charged to any customer and that Administrative Agent may make various commercial or other loans at rates of interest having no relationship to such rate.

“Production Report” shall have the meaning given such term in Section 8.01(o) .

“Projected Production” means, for any calendar month, the internally forecasted, reasonably anticipated projected production of crude oil, natural gas and natural gas liquids from all Oil and Gas Properties of the Borrower and its Subsidiaries for such calendar month.

“Property” means any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible, including, without limitation, cash, securities, accounts and contract rights.

“Property Certificate” has the meaning assigned such term in Section 6.01(q) .

“Proposed Borrowing Base” has the meaning assigned to such term in Section 2.07(c)(i) .

“Proposed Borrowing Base Notice” has the meaning assigned to such term in Section 2.07(c)(ii) .

“Proved Developed Producing Reserves” means Proved Reserves which are categorized as both “Developed” and “Producing” in the Reserve Definitions.

“Proved Reserves” means “Proved Reserves” as defined in the Reserve Definitions.

“ Public Lender ” has the meaning assigned to such term in Section 8.02 .

“ Qualified ECP Guarantor ” means, in respect of any Swap Obligation, each Loan 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.

“Recipient” means (a) the Administrative Agent, (b) any Lender and (c) the Issuing Bank, as applicable.

“Recognized Value” means the value, as determined or deemed to be determined by all of the Lenders or the Required Lenders, as applicable, attributed to the Oil and Gas Properties in the most recent determination of the Borrowing Base, based upon the discounted present value of the estimated net cash flow to be realized from the production of Hydrocarbons from such interests and the other standards specified in Section 2.07 .

“Reconciliation Schedule” means a schedule substantially in the form of Exhibit I confirming that, except as set forth therein, (i) each well or unit described on the exhibits to the Mortgages is also included in the most recently delivered Reserve Report, and (ii) the respective net revenue interests and working interests for each well or unit described on the exhibits to the Mortgages are also the net revenue interests and working interests for the same well or unit included in the most recently delivered Reserve Report

“Redemption” means with respect to any Debt, the repurchase, redemption, prepayment, repayment, defeasance or any other acquisition or retirement for value (or the segregation of funds with respect to any of the foregoing) of such Debt. “ Redeem ” has the correlative meaning thereto.

“Redetermination Date” means, with respect to any Scheduled Redetermination or any Interim Redetermination, the date that the redetermined Borrowing Base related thereto becomes effective pursuant to Section 2.07(d) .

“Register” has the meaning assigned such term in Section 12.04(c) .

“Regulation D” means Regulation D of the Board, as the same may be amended, supplemented or replaced from time to time.

“Related Parties” means, with respect to any specified Person, such Person’s Affiliates and the respective partners, directors, managers, officers, employees, agents, trustees, administrators, representatives and advisors (including attorneys, accountants and experts) of such Person and of such Person’s Affiliates.

“Remedial Work” has the meaning assigned such term in Section 8.10(a) .

“Required Lenders” means, at any time, Lenders having Loans, LC Exposure and unused Commitments representing more than 66.67% of the sum of all Loans, LC Exposure and unused Commitments at such time (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(d) ); provided that the Loans, LC Exposure and Commitment of any Defaulting Lender shall be disregarded for purposes of making a determination of Required Lenders.

“Reserve Definitions” means, at any time, the Definitions for Oil and Gas Reserves promulgated by the Society of Petroleum Engineers (or any generally recognized successor) as in effect at such time and reasonably acceptable to the Administrative Agent.

“Reserve Report” means the Initial Reserve Report and each other report, in form and substance reasonably satisfactory to the Administrative Agent, setting forth, as of each January 1 or July 1 (or such other date in the event of an Interim Redetermination) the oil and gas reserves attributable to the Oil and Gas Properties of the Borrower and the Subsidiaries, together with a projection of the rate of production and future net income, taxes, operating expenses and Capital Expenditures with respect thereto as of such date, based upon the economic and pricing assumptions consistent with the Administrative Agent’s lending requirements at the time.

“Responsible Officer” means, as to any Person, the chief executive officer, the president, any Financial Officer or any vice president of such Person. Unless otherwise specified, all references to a Responsible Officer herein shall mean a Responsible Officer of the Borrower.

“Restricted Payment” means any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in the Borrower or any of its Subsidiaries, or any

payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, Redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any of its Subsidiaries or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any of its Subsidiaries.

“Revolving Credit Exposure” means, with respect to any Lender at any time, the sum of the outstanding principal amount of such Lender’s Loans and its LC Exposure at such time.

“S&P” means Standard & Poor’s Ratings Group, a division of The McGraw-Hill Companies, Inc., and any successor thereto that is a nationally recognized rating agency.

“Sanctioned Country” means, at any time, a country or territory which is itself the subject or target of any Sanctions (including, at the time of this Agreement, 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 OFAC, 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 clauses (a) or (b).

“Sanctions” means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by the U.S. government, including those administered by OFAC, the U.S. Department of the Treasury or the U.S. Department of State.

“Scheduled Redetermination” has the meaning assigned such term in Section 2.07(b) .

“Scheduled Redetermination Date” means the date on which a Borrowing Base that has been redetermined pursuant to a Scheduled Redetermination becomes effective as provided in Section 2.07(d) .

“SEC” means the Securities and Exchange Commission or any successor Governmental Authority.

“Secured Parties” means the Administrative Agent, each Lender, each Swap Lender and each Treasury Management Party.

“Secured Swap Agreement” means any Swap Agreement between the Borrower or any Subsidiary and any Swap Lender; provided that the term “Secured Swap Agreement” shall not include any transactions entered into after the time that such Swap Lender ceases to be a Lender or an Affiliate of a Lender.

“Secured Treasury Management Agreement” means any Treasury Management Agreement that is entered into by and between the Borrower and any Treasury Management Party.

“Security Agreements” means one or more security agreements in form and substance reasonably satisfactory to the Administrative Agent pursuant to which a security interest in all of the assets of the Borrower or a Subsidiary is granted to the Administrative Agent for the ratable benefit of the Lenders to secure the payment of the Obligations and the reimbursement of obligations under the Letters of Credit, as such agreements may be amended, modified or supplemented from time to time.

“Security Instruments” means the Guaranty Agreements, the Security Agreements, the Pledge Agreements, the Mortgages, and other agreements, instruments or certificates described or referred to in

Exhibit F , and any and all other agreements, instruments, consents or certificates now or hereafter executed and delivered by the Borrower or any other Person (other than Secured Swap Agreements, Secured Treasury Management Agreements and participation or similar agreements between any Lender and any other lender or creditor with respect to any Obligations pursuant to this Agreement) in connection with, or as security for or to guarantee the payment or performance of the Obligations, the Notes, this Agreement, or reimbursement obligations under the Letters of Credit, as such agreements may be amended, modified, supplemented or restated from time to time.

“Statutory Reserve Rate” means a fraction (expressed as a decimal), the numerator of which is the number one and the denominator of which is the number one minus the aggregate of the maximum reserve percentages (including any marginal, special, emergency or supplemental reserves) expressed as a decimal established by the Board to which the Administrative Agent is subject, with respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve percentages shall include those imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be subject to such reserve requirements without benefit of or credit for proration, exemptions or offsets that may be available from time to time to any Lender under such Regulation D or any comparable regulation. The Statutory Reserve Rate shall be adjusted automatically on and as of the effective date of any change in any reserve percentage.

“Subsidiary” means: (a) any Person of which at least a majority of the outstanding Equity Interests having by the terms thereof ordinary voting power to elect a majority of the board of directors, board of managers or other governing body of such Person (irrespective of whether or not at the time Equity Interests of any other class or classes of such Person shall have or might have voting power by reason of the happening of any contingency) is at the time directly or indirectly owned or controlled by the Borrower or one or more of its Subsidiaries or by the Borrower and one or more of its Subsidiaries and (b) any partnership of which the Borrower or any of its Subsidiaries is a general partner. Unless otherwise indicated herein, each reference to the term “Subsidiary” shall mean a Subsidiary of the Borrower.

“Super Majority Lenders” means, at any time, Lenders having Loans, LC Exposure and unused Commitments representing more than 80% of the sum of all Loans, LC Exposure and unused Commitments at such time (without regard to any sale by a Lender of a participation in any Loan under Section 12.04(d) ); provided that the Loans, LC Exposure and Commitment of any Defaulting Lender shall be disregarded for purposes of making a determination of Required Lenders.

“Swap Agreement” means (a) any and all rate swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, forward sale of production, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward bond or forward bond price or forward bond index transactions, interest rate options, forward foreign exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions, currency options, spot contracts, or any other similar transactions or any combination of any of the foregoing (including any options to enter into any of the foregoing), whether or not any such transaction is governed by or subject to any master agreement, (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any other master agreement (any such master agreement, together with any related schedules, a “Master Agreement” ), including any such obligations or liabilities under any Master Agreement and (c) any and all agreements, contracts or transactions that constitute a “swap” within the meaning of Section 1a(47) of the Commodity Exchange Act.

“Swap Agreement Certificate” has the meaning given such term in Section 8.01(f) .

“Swap Lender” means any Person that is a counterparty to a Swap Agreement with the Borrower or any Subsidiary, which Swap Agreement was entered into prior to the time, or during the time, that such Person was a Lender or an Affiliate of a Lender (including any such Swap Agreement in existence prior to the date hereof), even if such Person subsequently ceases to be a Lender or an Affiliate of a Lender; provided that, so long as any Lender is a Defaulting Lender, such Lender will not be a Swap Lender with respect to any Swap Agreement entered into while such Lender was a Defaulting Lender.

“Swap Obligation” means, with respect to any Loan Party, 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.

“Swap Termination” means any Swap Agreement, which has been given value in the then effective Borrowing Base, (a) is terminated or (b) is not fully performed for any reason by the counterparty thereto (unless such counterparty is a Non-Defaulting Lender or an Affiliate of a Non-Defaulting Lender).

“Swap Termination Value” means, in respect of any one or more Swap Agreements, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Agreements, (a) for any date on or after the date such Swap Agreements have been closed out and termination value(s) determined in accordance therewith, such termination value(s) and (b) for any date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market value(s) for such Swap Agreements, as determined by the counterparties to such Swap Agreements.

“Synthetic Lease” means, as to any Person, any lease (including a lease that may be terminated by the lessee at any time) of any Property (whether real, personal or mixed) (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the Property so leased for U.S. Federal income tax purposes, other than any such lease under which such Person is the lessor.

“Taxes” means any and 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 Date” means the earlier of the Maturity Date and the date of termination of the Commitments.

“Total Debt” means, at any date, all Debt of the Borrower and the Consolidated Subsidiaries on a consolidated basis, excluding (i) non-cash obligations under ASC 815, (ii) accounts payable and other accrued liabilities (for the deferred purchase price of Property or services) from time to time incurred in the ordinary course of business which are not greater than 90 days past the date of invoice or delinquent or which are being contested in good faith by appropriate action and for which adequate reserves are maintained in accordance with GAAP, and (iii) Debt permitted under Section 9.02(d) that is secured by cash or cash equivalents in amounts equal to such Debt.

“Transactions” means, with respect to (a) the Borrower, the execution, delivery and performance by the Borrower of this Agreement, and each other Loan Document to which it is a party, the borrowing of Loans, the use of the proceeds thereof and the issuance of Letters of Credit hereunder, and the grant of Liens by the Borrower on Mortgaged Properties and other Properties pursuant to the Security Instruments and (b) each Guarantor, the execution, delivery and performance by such Guarantor of each Loan

Document to which it is a party, the guaranteeing of the Obligations and the other obligations under the Guaranty Agreement by such Guarantor and such Guarantor’s grant of the security interests and provision of collateral under the Security Instruments, and the grant of Liens by such Guarantor on Mortgaged Properties and other Properties pursuant to the Security Instruments.

“Treasury Management Agreement” means any agreement to provide cash management services, including treasury, depositing, overdraft, credit or debit card, electronic funds transfer and other cash management arrangements.

“Treasury Management Party” means any Person that is a Lender or an Affiliate of a Lender, in its capacity as a party to such Treasury Management Agreement, provided that, so long as any Lender is a Defaulting Lender, such Lender will not be a Treasury Management Party with respect to any Treasury Management Agreement entered into while such Lender was a Defaulting Lender.

“Type” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Alternate Base Rate or the Adjusted LIBO Rate.

“U.S. Borrower” means any Borrower that is a U.S. Person.

“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 5.03(g) .

“Wholly-Owned Subsidiary” means (a) any Subsidiary of which all of the outstanding Equity Interests, on a fully-diluted basis, are owned by the Borrower or one or more of the Wholly-Owned Subsidiaries or are owned by the Borrower and one or more of the Wholly-Owned Subsidiaries or (b) if permitted by this Agreement, any Subsidiary that is organized in a foreign jurisdiction and is required by the applicable laws and regulations of such foreign jurisdiction to be partially owned by the government of such foreign jurisdiction or individual or corporate citizens of such foreign jurisdiction, provided that the Borrower, directly or indirectly, owns the remaining Equity Interests in such Subsidiary and, by contract or otherwise, controls the management and business of such Subsidiary and derives economic benefits of ownership of such Subsidiary to substantially the same extent as if such Subsidiary were a Wholly-Owned Subsidiary.

“Withholding Agent” means any Loan Party and the Administrative Agent.

Section 1.03. Types of Loans and Borrowings . For purposes of this Agreement, Loans and Borrowings, respectively, may be classified and referred to by Type (e.g., a “Eurodollar Loan” or a “Eurodollar Borrowing” ).

Section 1.04. Terms Generally; Rules of Construction . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth in the Loan Documents), (b) any reference herein to any law or

regulation shall be construed as referring to such law or regulation as amended, modified, codified, supplemented or reenacted, in whole or in part, and in effect from time to time, (c) any reference herein to any Person shall be construed to include such Person’s successors and assigns (subject to the restrictions contained in the Loan Documents), (d) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (e) in the computation of periods of time from a specified date to a later specified date, the word “from” means “from and including;” the words “to” and “until” each mean “to but excluding;” and the word “through” means “to and including”, (f) any reference herein to Articles, Sections, Annexes, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Annexes, Exhibits and Schedules to, this Agreement, (g) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (h) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including, cash, securities, accounts and contract rights. References in this Agreement and the other Loan Documents to “reasonable”, “reasonably” and words of similar import when applied to any request or demand which the Lender is permitted to make hereunder or under any other Loan Document or as applied to a determination of the reasonableness of the amount or the incurrence of any expense shall be interpreted and construed from the perspective of a lender in a senior credit facility where such lender is regulated by various governmental agencies, seeks a high level of assurance regarding the operations, collateral position, condition (financial or otherwise) and Properties of the Borrower and other Persons guaranteeing or otherwise connected to such facility and seeks a high level of assurance and advice regarding its rights and duties under the Loan Documents, and the Borrower and any other Person guaranteeing or otherwise connected to such facility shall comply with such request or demand or accept such determination unless the Borrower or such other Person proves that such request, demand or determination is or was unreasonable.

Section 1.05. Accounting Terms and Determinations; GAAP .

(a) Generally . All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant to this Agreement shall be prepared in conformity with, GAAP applied on a consistent basis, as in effect from time to time, applied in a manner consistent with that used in preparing the Financial Statements, except as otherwise specifically prescribed herein.

(b) Changes in GAAP . If at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the Required 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 Required 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.

(c) Consolidation of Variable Interest Entities . All references herein to consolidated financial statements of the Borrower and its Subsidiaries or to the determination of any amount for the Borrower and its Subsidiaries on a consolidated basis or any similar reference shall, in each case, be deemed to include each variable interest entity that the Borrower is required to consolidate pursuant to FASB Interpretation No. 46 — Consolidation of Variable Interest Entities:

an interpretation of ARB No. 51 (January 2003) as if such variable interest entity were a Subsidiary as defined herein.

(d) Rounding . Any financial ratios required to be maintained by the Borrower pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number).

Section 1.06. Amounts of Letters of Credit . Unless otherwise specified herein, the amount of a Letter of Credit at any time shall be deemed to be the stated amount of such Letter of Credit in effect at such time; provided , however, that, in determining whether the LC Exposure is greater than the LC Commitment, with respect to any Letter of Credit that, by its terms or the terms of any document related thereto, provides for one or more automatic increases in the stated amount thereof, the amount of such Letter of Credit shall be deemed to be the maximum stated amount of such Letter of Credit after giving effect to all such increases, whether or not such maximum stated amount is in effect at such time.

Section 1.07. Joint Preparation; Construction of Indemnities and Releases . This Agreement and the other Loan Documents have been reviewed and negotiated by sophisticated parties with access to legal counsel, and no rule of construction shall apply hereto or thereto which would require or allow any Loan Document to be construed against any party because of its role in drafting such Loan Document. All indemnification and release of liability provisions of this Agreement shall be construed broadly (and not narrowly) in favor of the Persons receiving indemnification or releases of liability.

Section 1.08. Determination of Time . Unless otherwise specified, all references herein to times of day shall be references to Central time (daylight or standard, as applicable) in Dallas, Texas.

ARTICLE II
The Credits

Section 2.01. Commitments . Subject to the terms and conditions and relying upon the representations and warranties set forth herein, each Lender agrees to make Loans to the Borrower during the Availability Period in an aggregate principal amount that will not result in (a) such Lender’s Revolving Credit Exposure exceeding such Lender’s Commitment or (b) the total Revolving Credit Exposures exceeding the total Commitments. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrower may borrow, repay and reborrow the Loans.

Section 2.02. Loans and Borrowings .

(a) Borrowings; Several Obligations . Each Loan shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their respective Commitments. The failure of any Lender to make any Loan required to be made by it shall not relieve any other Lender of its obligations hereunder; provided that the Commitments are several and no Lender shall be responsible for any other Lender’s failure to make Loans as required.

(b) Types of Loans . Subject to Section 3.03 , each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may request in accordance herewith. Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of the Borrower to repay such Loan in accordance with the terms of this Agreement.

(c) Minimum Amounts; Limitation on Number of Borrowings . At the commencement of each Interest Period for any Eurodollar Borrowing, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000. At the time that each ABR Borrowing is made, such Borrowing shall be in an aggregate amount that is an integral multiple of $500,000 and not less than $1,000,000; provided that an ABR Borrowing may be in an aggregate amount that is equal to the entire unused balance of the total Commitments or that is required to finance the reimbursement of an LC Disbursement as contemplated by Section 2.08(e) . Borrowings of more than one Type may be outstanding at the same time, provided that there shall not at any time be more than a total of six (6) Eurodollar Borrowings outstanding. Notwithstanding any other provision of this Agreement, the Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Maturity Date.

(d) Evidence of Debt . The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by Administrative Agent in the ordinary course of business. The accounts or records maintained by Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by Lenders to Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of Borrower hereunder to pay any amount owing with respect to the Obligations. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of Administrative Agent in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error. Upon the request of any Lender made through Administrative Agent, Borrower shall execute and deliver to such Lender (through Administrative Agent) a Note, which shall evidence such Lender’s Loans in addition to such accounts or records. Each Lender may attach schedules to its Note and endorse thereon the date, Type (if applicable), amount and maturity of its Loans and payments with respect thereto. In addition to the accounts and records referred to above, each Lender and Administrative Agent shall maintain in accordance with its usual practice accounts or records evidencing the purchases and sales by such Lender of participations in Letters of Credit. In the event of any conflict between the accounts and records maintained by Administrative Agent and the accounts and records of any Lender in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error.

Section 2.03. Requests for Borrowings . To request a Borrowing, the Borrower shall notify the Administrative Agent of such request by telephone (a) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., three Business Days before the date of the proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00 a.m., one Business Day before the date of the proposed Borrowing; provided that no such notice shall be required for any deemed request of an ABR Borrowing to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e) . Each such telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery or sent by facsimile or electronic transmission to the Administrative Agent of a written Borrowing Request in substantially the form of Exhibit B and signed by the Borrower. Each such telephonic and written Borrowing Request shall specify the following information in compliance with Section 2.02 :

(i) the aggregate amount of the requested Borrowing;

(ii) the date of such Borrowing, which shall be a Business Day;

(iii) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “Interest Period”;

(v) the amount of the then effective Borrowing Base, the current total Revolving Credit Exposures (without regard to the requested Borrowing) and the pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing); and

(vi) the location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05 .

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be an ABR Borrowing. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. Each Borrowing Request shall constitute a representation that the amount of the requested Borrowing shall not cause the total Revolving Credit Exposures to exceed the total Commitments (i.e., the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

Promptly following receipt of a Borrowing Request in accordance with this Section 2.03 , the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

Section 2.04. Interest Elections .

(a) Conversion and Continuance . Each Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, the Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section 2.04 . The Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.

(b) Interest Election Requests . To make an election pursuant to this Section 2.04 , the Borrower shall notify the Administrative Agent of such election by telephone by the time that a Borrowing Request would be required under Section 2.03 if the Borrower were requesting a Borrowing of the Type resulting from such election to be made on the effective date of such election. Each such telephonic Interest Election Request shall be irrevocable and shall be confirmed promptly by hand delivery or sent by facsimile or electronic transmission to the Administrative Agent of a written Interest Election Request in substantially the form of Exhibit C and signed by the Borrower.

(c) Information in Interest Election Requests . Each telephonic and written Interest Election Request shall specify the following information in compliance with Section 2.02 :

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information to be specified pursuant to Section 2.04(c)(iii) and (iv) shall be specified for each resulting Borrowing);

(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period”.

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then the Borrower shall be deemed to have selected an Interest Period of one month’s duration. If such Interest Election Request does not specify a Type, then the Borrower shall be deemed to have selected an ABR Borrowing.

(d) Notice to Lenders by the Administrative Agent . Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(e) Effect of Failure to Deliver Timely Interest Election Request and Events of Default and Borrowing Base Deficiencies on Interest Election . If the Borrower fails to deliver a timely Interest Election Request with respect to a Eurodollar Borrowing prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of Default or a Borrowing Base Deficiency has occurred and is continuing: (i) no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing (and any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective) and (ii) unless repaid, each Eurodollar Borrowing shall be converted to an ABR Borrowing at the end of the Interest Period applicable thereto.

Section 2.05. Funding of Borrowings .

(a) Funding by Lenders . Each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds by 3:00 p.m., to the account of the Administrative Agent most recently designated by it for such purpose by notice to the Lenders. The Administrative Agent will make such Loans available to the Borrower by promptly crediting the amounts so received, in like funds, to an account of the Borrower maintained with the Administrative Agent and designated by the Borrower in the applicable Borrowing Request; provided that ABR Loans made to finance the reimbursement of an LC Disbursement as provided in Section 2.08(e) shall be remitted by the Administrative Agent to the Issuing Bank. Nothing herein shall be deemed to obligate any Lender to obtain the funds for its Loan in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for its Loan in any particular place or manner.

(b) Presumption of Funding by the Lenders . Unless the Administrative Agent shall have received notice from a Lender (x) in the case of ABR Loans, prior to 12:00 noon on the date of the proposed Borrowing and (y) otherwise, prior to the proposed date of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.05(a) and may, in reliance upon such

assumption, make available to the Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Borrowing available to the Administrative Agent, then the applicable Lender and the Borrower severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation, plus any administrative, processing or similar fees customarily charged by Administrative Agent in connection with the foregoing, and (ii) in the case of a payment to be made by the Borrower, the interest rate applicable to the Type of Loan elected by the Borrower with respect to such amount. If the Borrower and such Lender shall pay such interest to the Administrative Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its share of the applicable Borrowing to the Administrative Agent, then the amount so paid shall constitute such Lender’s Loan included in such Borrowing. Any payment by the Borrower shall be without prejudice to any claim the Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent.

Section 2.06. Termination and Reduction of Aggregate Maximum Credit Amounts .

(a) Scheduled Termination of Commitments . Unless previously terminated, the Commitments shall terminate on the Maturity Date. If at any time the Aggregate Maximum Credit Amounts or the Borrowing Base is terminated or reduced to zero, then the Commitments shall terminate on the effective date of such termination or reduction.

(b) Optional Termination and Reduction of Aggregate Credit Amounts .

(i) The Borrower may at any time terminate, or from time to time reduce, the Aggregate Maximum Credit Amounts; provided that (A) each reduction of the Aggregate Maximum Credit Amounts shall be in an amount that is an integral multiple of $1,000,000 and not less than $5,000,000 and (B) the Borrower shall not terminate or reduce the Aggregate Maximum Credit Amounts if, after giving effect to any concurrent prepayment of the Loans in accordance with Section 3.04(c) , the total Revolving Credit Exposures would exceed the total Commitments.

(ii) The Borrower shall notify the Administrative Agent of any election to terminate or reduce the Aggregate Maximum Credit Amounts under Section 2.06(b)(i) at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by the Borrower pursuant to this Section 2.06(b)(ii) shall be irrevocable. Any termination or reduction of the Aggregate Maximum Credit Amounts shall be permanent and may not be reinstated. Each reduction of the Aggregate Maximum Credit Amounts shall be made ratably among the Lenders in accordance with each Lender’s Applicable Percentage.

Section 2.07. Borrowing Base .

(a) Initial Borrowing Base . The term “Borrowing Base” means, as of the date of the determination thereof, the designated loan value as calculated by all of the Lenders or the

Required Lenders (and including any Lenders who have been deemed to have approved such Borrowing Base), as applicable, in their sole discretion assigned to the discounted present value of future net income accruing to the Mortgaged Property, based upon the Lenders’ in-house evaluation of the Mortgaged Property. The Lenders’ or Required Lenders’ (and including any Lenders who have been deemed to have approved such Borrowing Base) determination of the Borrowing Base will be made in accordance with then-current practices, economic and pricing parameters, methodology, assumptions, and customary procedures and standards established by each such Lender from time to time for its petroleum industry customers. For the period from and including the Effective Date to but excluding the first Redetermination Date, the amount of the Borrowing Base shall be $180,000,000.

(b) Scheduled and Interim Redeterminations . The Borrowing Base shall be redetermined semi-annually in accordance with this Section 2.07 (a “Scheduled Redetermination” ), and, subject to Section 2.07(d) , such redetermined Borrowing Base shall become effective and applicable to the Borrower, the Agents, the Issuing Bank and the Lenders on or about April 1st and October 1st of each year, commencing October 1, 2015. In addition, the Borrower may, by notifying the Administrative Agent thereof, one time during any 12-month period, and the Administrative Agent may, one time during any 12-month period, at the direction of the Required Lenders, by notifying the Borrower thereof, each elect to cause the Borrowing Base to be redetermined between Scheduled Redeterminations (an “Interim Redetermination” ) in accordance with this Section 2.07 .

(i) Each Scheduled Redetermination and each Interim Redetermination shall be effectuated as follows: Upon receipt by the Administrative Agent of (A) the Reserve Report and the certificate required to be delivered by the Borrower to the Administrative Agent, in the case of a Scheduled Redetermination, pursuant to Section 8.12(a) and (c) , and, in the case of an Interim Redetermination, pursuant to Section 8.12(b) and (c) , and (B) such other reports, data and supplemental information, including, without limitation, the information provided pursuant to Section 8.12(c) , as may, from time to time, be reasonably requested by the Required Lenders (the Reserve Report, such certificate and such other reports, data and supplemental information being the “Engineering Reports” ), the Administrative Agent shall evaluate the information contained in the Engineering Reports and shall, in its sole discretion, propose a new Borrowing Base (the “Proposed Borrowing Base” ) based upon such information and such other information (including, without limitation, the status of title information with respect to the Oil and Gas Properties as described in the Engineering Reports and the existence of any other Debt) as the Administrative Agent deems appropriate in its sole discretion and consistent with its normal oil and gas lending criteria as it exists at the particular time. In no event shall the Proposed Borrowing Base exceed the Aggregate Maximum Credit Amounts.

(ii) The Administrative Agent shall notify the Borrower and the Lenders of the Proposed Borrowing Base (the “Proposed Borrowing Base Notice” ):

(A) in the case of a Scheduled Redetermination (x) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on or before March 1st and September 1st of such year following the date of delivery or (y) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower

pursuant to Section 8.12(a) and (c) in a timely and complete manner, then promptly after the Administrative Agent has received complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the Proposed Borrowing Base in accordance with Section 2.07(c)(i) ; and

(B) in the case of an Interim Redetermination, promptly, and in any event, within fifteen (15) days after the Administrative Agent has received the required Engineering Reports.

(iii) Any Proposed Borrowing Base that would increase the Borrowing Base then in effect must be approved or deemed to have been approved by all of the Lenders as provided in this Section 2.07(c)(iii) ; and any Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect must be approved or be deemed to have been approved by the Required Lenders as provided in this Section 2.07(c)(iii) . Upon receipt of the Proposed Borrowing Base Notice, each Lender shall have fifteen (15) days to agree with the Proposed Borrowing Base or disagree with the Proposed Borrowing Base by proposing an alternate Borrowing Base. All decisions regarding the Borrowing Base shall be made by each Lender in its sole discretion. If at the end of such fifteen (15) days, any Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such non-response shall be deemed to be an approval of the Proposed Borrowing Base. If, at the end of such 15-day period, all of the Lenders, in the case of a Proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Lenders, in the case of a Proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or been deemed to have approved, as aforesaid, then the Proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in Section 2.07(d) . If, however, at the end of such 15-day period, all of the Lenders or the Required Lenders, as applicable, have not approved or been deemed to have approved, as aforesaid, the Proposed Borrowing Base, then the Administrative Agent shall poll the Lenders to ascertain the highest Borrowing Base then acceptable to all of the Lenders or the Required Lenders, as applicable, and such amount shall become the new Borrowing Base, effective on the date specified in Section 2.07(d) .

(d) Effectiveness of a Redetermined Borrowing Base . After a redetermined Borrowing Base is approved or is deemed to have been approved by all of the Lenders or the Required Lenders, as applicable, pursuant to Section 2.07(c)(iii) , the Administrative Agent shall notify the Borrower and the Lenders of the amount of the redetermined Borrowing Base (the “New Borrowing Base Notice” ), and such amount shall become the new Borrowing Base, effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders:

(i) in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on April 1st or October 1st, as applicable, following such notice, or (B) if the Administrative Agent shall not have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and (c) in a timely and complete manner, then on the Business Day next succeeding delivery of such notice; and

(ii) in the case of an Interim Redetermination, on the Business Day next succeeding delivery of such notice.

Such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under Section 2.07(e) or otherwise hereunder, whichever occurs first. Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower.

(e) Borrowing Base Reductions .

(i) If the sum of (A) the Recognized Value of the aggregate of Asset Dispositions occurring in any period between Scheduled Redeterminations, plus (B) the Recognized Value of Swap Terminations occurring in the same period exceeds 5% of the then effective Borrowing Base, then the Borrowing Base shall be reduced in an amount determined by the Administrative Agent in its discretion in accordance with the standards set forth in Section 2.07(a) taking into account both Recognized Value or attributed value of such Asset Dispositions and the Recognized Value given to such Swap Agreements. Any redetermination of the Borrowing Base pursuant to this Section 2.07(e) shall not be considered an Interim Redetermination requested by Administrative Agent within the meaning of Section 2.07(b) .

(ii) The Borrowing Base may be reduced as provided in Section 8.13(c) .

(iii) If the Borrower incurs any Permitted Senior Debt in reliance on Section 9.02(j) after the Effective Date, then the Borrowing Base then in effect shall be reduced immediately upon the date of such incurrence by an amount equal to the product of (A) 0.25 multiplied by (B) the difference between (I) the proceeds resulting from such issuance, minus (II) the amount of such proceeds applied to repay any outstanding Permitted Senior Debt. The Borrowing Base as so reduced shall become the new Borrowing Base immediately upon the date of such incurrence, effective and applicable to the Borrower, the Administrative Agent, the Issuing Bank and the Lenders on such date until the next redetermination or modification thereof hereunder. For purposes of this Section 2.07(e)(iii) , if any such Debt is issued at a discount or otherwise sold for less than “par”, the reduction shall be calculated based upon the stated principal amount without reference to such discount.

(f) Borrowing Base Deficiency .

(i) If, at any time, a Borrowing Base Deficiency exists, then Administrative Agent shall give notice to Borrower of such Borrowing Base Deficiency (such notice, a “Borrowing Base Deficiency Notice” ), and Borrower shall within 15 days following receipt of such Borrowing Base Deficiency Notice elect whether to (A) prepay an amount which would, if prepaid immediately, reduce the total Revolving Credit Exposures to the amount of the Borrowing Base, (B) mortgage such other Oil and Gas Properties as are acceptable to the Required Lenders, pursuant to security documents acceptable to Administrative Agent having Recognized Values which, in the opinion of the Required Lenders, based upon the Required Lenders’ evaluation of the engineering data provided them, taken in the aggregate are sufficient to increase the Borrowing Base to an amount at least equal to the total Revolving Credit Exposures, or (C) do any combination of the foregoing as is acceptable to Administrative Agent such that the Borrowing Base is an amount at least equal to the total Revolving Credit Exposure. If Borrower fails to make an election within 15 days after Borrower’s receipt of the Borrowing Base Deficiency

Notice, then Borrower shall be deemed to have selected the prepayment option specified in clause (A) above.

(ii) Borrower shall deliver such prepayments or mortgages of additional Oil and Gas Properties in accordance with its election (or deemed election) pursuant to clause (f)(i) above as follows:

(A) Prepayment Elections . If Borrower elects (or is deemed to have elected) to prepay an amount in accordance with clause (f)(i)(A) above, then Borrower may make such prepayment in one installment within 45 days after Borrower’s notice of its election (or date of deemed election) or, if no Event of Default exists, in six equal consecutive monthly installments beginning within 45 days after Borrower’s notice of its election (or date of deemed election) and continuing on the same day of each month thereafter.

(B) Elections to Mortgage Additional Oil and Gas Properties . If Borrower elects to mortgage additional oil and gas properties in accordance with clause (f)(i)(B) above, then (1) such property shall be acceptable to Administrative Agent and the Required Lenders with Recognized Values determined by Administrative Agent and the Required Lenders in accordance with this Section 2.07 and (2) Borrower shall execute, acknowledge and deliver to Administrative Agent security instruments acceptable to Administrative Agent within 45 days after Borrower’s notice of its election (or such longer time as determined by Administrative Agent); provided , however (x) if none of the additional Oil and Gas Properties offered by Borrower are acceptable to the Required Lenders, Borrower shall be deemed to have elected the prepayment option specified in clause (f)(i)(A) (and Borrower shall make such prepayment in accordance with clause (f)(ii)(A) ); and (y) if the aggregate Recognized Values of additional Oil and Gas Properties which are acceptable to the Required Lenders are insufficient to eliminate the Borrowing Base Deficiency, then Borrower shall be deemed to have selected the option specified in clause (f)(i)(C) (and Borrower shall make prepayment and deliver security instruments as provided clause (f)(ii)(C) ).

(C) Combination Elections . If Borrower elects (or is deemed to have elected) to eliminate the Borrowing Base Deficiency by a combination of prepayment and mortgaging of additional Oil and Gas Properties in accordance with clause (f)(i)(C) , then within 45 days after Borrower’s notice of its election (or date of deemed election) (or such longer time as determined by Administrative Agent), Borrower shall execute, acknowledge and deliver to Administrative Agent security instruments reasonably acceptable to Administrative Agent covering such additional Oil and Gas Properties and pay Administrative Agent the amount by which the Borrowing Base Deficiency exceeds the Recognized Values of such additional Oil and Gas Properties in one installment within 45 days after Borrower’s notice of its election (or date of deemed election) or, if no Event of Default exists, in six equal consecutive monthly installments beginning within 45 days after notice of its election (or date of deemed election) and continuing on the same day of each month thereafter.

Section 2.08. Letters of Credit .

(a) General . Subject to the terms and conditions set forth herein, the Borrower may request the issuance of dollar denominated Letters of Credit for its own account or for the account of any of its Subsidiaries, in a form reasonably acceptable to the Administrative Agent and the Issuing Bank, at any time and from time to time during the Availability Period; provided that (i) the Borrower may not request the issuance, amendment, renewal or extension of Letters of Credit hereunder if a Borrowing Base Deficiency exists at such time or would exist as a result thereof and (ii) the minimum amount of any such Letter of Credit shall be $50,000. In the event of any inconsistency between the terms and conditions of this Agreement and the terms and conditions of any form of letter of credit application or other agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions . To request the issuance of a Letter of Credit (or the amendment, renewal or extension of an outstanding Letter of Credit), the Borrower shall hand deliver or send by facsimile (or transmit by electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to the Issuing Bank and the Administrative Agent (not less than five (5) Business Days in advance of the requested date of issuance, amendment, renewal or extension) a notice:

(i) requesting the issuance of a Letter of Credit or identifying the Letter of Credit to be amended, renewed or extended;

(ii) specifying the date of issuance, amendment, renewal or extension (which shall be a Business Day);

(iii) specifying the date on which such Letter of Credit is to expire (which shall comply with Section 2.08(c) );

(iv) specifying the amount of such Letter of Credit;

(v) specifying the name and address of the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew or extend such Letter of Credit; and

(vi) specifying the amount of the then effective Borrowing Base and whether a Borrowing Base Deficiency exists at such time, the current total Revolving Credit Exposures (without regard to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit) and the pro forma total Revolving Credit Exposures (giving effect to the requested Letter of Credit or the requested amendment, renewal or extension of an outstanding Letter of Credit).

Each notice shall constitute a representation by the Borrower that after giving effect to the requested issuance, amendment, renewal or extension, as applicable, (i) the LC Exposure shall not exceed the LC Commitment and (ii) the total Revolving Credit Exposures shall not exceed the total Commitments (i.e. the lesser of the Aggregate Maximum Credit Amounts and the then effective Borrowing Base).

If requested by the Issuing Bank, the Borrower also shall submit a letter of credit application on the Issuing Bank’s standard form in connection with any request for a Letter of Credit.

(c) Expiration Date . Each Letter of Credit shall expire at or prior to the close of business on the earlier of (i) the date that is eighteen months after the date of the issuance of such Letter of Credit (or, in the case of any renewal or extension thereof, eighteen months after such renewal or extension) and (ii) the date that is five Business Days prior to the Maturity Date; provided , however, that a Letter of Credit may, upon the request of the Borrower, include a provision whereby such Letter of Credit shall be renewed automatically for additional consecutive periods of 12 months or less (but not beyond the date that is five Business Days prior to the Maturity Date) unless the Issuing Bank notifies the beneficiary thereof at least 30 days (or such longer period as may be specified in such Letter of Credit) prior to the then-applicable expiration date that such Letter of Credit will not be renewed.

(d) Participations . By the issuance of a Letter of Credit (or an amendment to a Letter of Credit increasing the amount thereof) and without any further action on the part of the Issuing Bank or the Lenders, the Issuing Bank hereby grants to each Lender, and each Lender hereby acquires from the Issuing Bank, a participation in such Letter of Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn under such Letter of Credit. In consideration and in furtherance of the foregoing, each Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by the Issuing Bank and not reimbursed by the Borrower on the date due as provided in Section 2.08(e) , or of any reimbursement payment required to be refunded to the Borrower for any reason. Each Lender acknowledges and agrees that its obligation to acquire participations pursuant to this Section 2.08(d) in respect of Letters of Credit is absolute and unconditional and shall not be affected by any circumstance whatsoever, including any amendment, renewal or extension of any Letter of Credit or the occurrence and continuance of a Default, the existence of a Borrowing Base Deficiency or reduction or termination of the Commitments, and that each such payment shall be made without any offset, abatement, withholding or reduction whatsoever.

(e) Reimbursement . If the Issuing Bank shall make any LC Disbursement in respect of a Letter of Credit, the Borrower shall reimburse such LC Disbursement by paying to the Administrative Agent an amount equal to such LC Disbursement not later than 12:00 noon, on the date that such LC Disbursement is made, if the Borrower shall have received notice of such LC Disbursement prior to 10:00 a.m., on such date, or, if such notice has not been received by the Borrower prior to such time on such date, then not later than 12:00 noon, on (i) the Business Day that the Borrower receives such notice, if such notice is received prior to 10:00 a.m., on the day of receipt, or (ii) the Business Day immediately following the day that the Borrower receives such notice, if such notice is not received prior to such time on the day of receipt; provided that if such LC Disbursement is not less than $1,000,000, the Borrower shall, subject to the conditions to Borrowing set forth herein, be deemed to have requested, and the Borrower does hereby request under such circumstances, that such payment be financed with an ABR Borrowing in an equivalent amount and, to the extent so financed, the Borrower’s obligation to make such payment shall be discharged and replaced by the resulting ABR Borrowing. If the Borrower fails to make such payment when due, the Administrative Agent shall notify each Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each Lender shall pay to the Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the same manner as provided in Section 2.05 with respect to Loans made by such Lender (and Section 2.05 shall apply, mutatis mutandis, to the payment obligations of the Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so received by it from the Lenders. Promptly following receipt by the Administrative Agent of any payment from the Borrower pursuant to this Section 2.08(e) , the Administrative Agent shall

distribute such payment to the Issuing Bank or, to the extent that Lenders have made payments pursuant to this Section 2.08(e) to reimburse the Issuing Bank, then to such Lenders and the Issuing Bank as their interests may appear. Any payment made by a Lender pursuant to this Section 2.08(e) to reimburse the Issuing Bank for any LC Disbursement (other than the funding of ABR Loans as contemplated above) shall not constitute a Loan and shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

(f) Obligations Absolute . The Borrower’s obligation to reimburse LC Disbursements as provided in Section 2.08(e) shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Agreement under any and all circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any Letter of Credit, any Letter of Credit Agreement or this Agreement, or any term or provision therein, (ii) any draft or other document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of Credit against presentation of a draft or other document that does not comply with the terms of such Letter of Credit or any Letter of Credit Agreement, or (iv) any other event or circumstance whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of this Section 2.08(f) , constitute a legal or equitable discharge of, or provide a right of setoff against, the Borrower’s obligations hereunder. Neither the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their Related Parties shall have any liability or responsibility by reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or failure to make any payment thereunder (irrespective of any of the circumstances referred to in the preceding sentence), or any error, omission, interruption, loss or delay in transmission or delivery of any draft, notice or other communication under or relating to any Letter of Credit (including any document required to make a drawing thereunder), any error in interpretation of technical terms or any consequence arising from causes beyond the control of the Issuing Bank; provided that the foregoing shall not be construed to excuse the Issuing Bank from liability to the Borrower to the extent of any direct damages (as opposed to consequential damages, claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when determining whether drafts and other documents presented under a Letter of Credit comply with the terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent jurisdiction), the Issuing Bank shall be deemed to have exercised all requisite care in each such determination. In furtherance of the foregoing and without limiting the generality thereof, the parties agree that, with respect to documents presented which appear on their face to be in substantial compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion, either accept and make payment upon such documents without responsibility for further investigation, regardless of any notice or information to the contrary, or refuse to accept and make payment upon such documents if such documents are not in strict compliance with the terms of such Letter of Credit.

(g) Disbursement Procedures . The Issuing Bank shall, promptly following its receipt thereof, examine all documents purporting to represent a demand for payment under a Letter of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by telephone (confirmed in writing or by facsimile or electronic transmission) of such demand for payment and whether the Issuing Bank has made or will make an LC Disbursement thereunder; provided that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such LC Disbursement.

(h) Interim Interest . If the Issuing Bank shall make any LC Disbursement, then, until the Borrower shall have reimbursed the Issuing Bank for such LC Disbursement (either with its own funds or a Borrowing under Section 2.08(e) ), the unpaid amount thereof shall bear interest, for each day from and including the date such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC Disbursement, at the rate per annum then applicable to ABR Loans. Interest accrued pursuant to this Section 2.08(h) shall be for the account of the Issuing Bank, except that interest accrued on and after the date of payment by any Lender pursuant to Section 2.08(e) to reimburse the Issuing Bank shall be for the account of such Lender to the extent of such payment.

(i) Replacement of the Issuing Bank . The Issuing Bank may be replaced at any time by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Bank. At the time any such replacement shall become effective, the Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to Section 3.05(b) . From and after the effective date of any such replacement, (i) the successor Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to such successor and all previous Issuing Banks, as the context shall require. After the replacement of the Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of the Issuing Bank under this Agreement with respect to Letters of Credit issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit.

(j) Cash Collateral - Default . If (i) any Event of Default shall occur and be continuing and the Borrower receives notice from the Administrative Agent or the Required Lenders demanding the deposit of cash collateral pursuant to this Section 2.08(j) , or (ii) the Borrower is required to pay to the Administrative Agent the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c) , then the Borrower shall deposit, in an account with the Administrative Agent (the “LC Collection Account” ), in the name of the Administrative Agent and for the benefit of the Lenders, an amount in cash equal to, in the case of an Event of Default, the LC Exposure, and in the case of a payment required by Section 3.04(c) , the amount of such excess as provided in Section 3.04(c) , as of such date plus any accrued and unpaid interest thereon; provided that the obligation to deposit such cash collateral shall become effective immediately, and such deposit shall become immediately due and payable, without demand or other notice of any kind, upon the occurrence of any Event of Default with respect to the Borrower or any Subsidiary described in Section 10.01(h) or Section 10.01(i) . The Borrower hereby grants to the Administrative Agent, for the benefit of the Issuing Bank and the Lenders, an exclusive first priority and continuing perfected security interest in and Lien on the LC Collection Account and all cash, checks, drafts, certificates and instruments, if any, from time to time deposited or held in the LC Collection Account, all deposits or wire transfers made thereto, any and all investments purchased with funds deposited in such account, all interest, dividends, cash, instruments, financial assets and other Property from time to time received, receivable or otherwise payable in respect of, or in exchange for, any or all of the foregoing, and all proceeds, products, accessions, rents, profits, income and benefits therefrom, and any substitutions and replacements therefor. The Borrower’s obligation to deposit amounts pursuant to this Section 2.08(j) shall be absolute and unconditional, without regard to whether any beneficiary of any such Letter of Credit has attempted to draw down all or a portion of such amount under the terms of a Letter of Credit, and, to the fullest extent permitted by applicable law, shall not be subject to any defense or be affected by a right of set-off, counterclaim or

recoupment which the Borrower or any of its Subsidiaries may now or hereafter have against any such beneficiary, the Issuing Bank, the Administrative Agent, the Lenders or any other Person for any reason whatsoever. Such deposit shall be held as collateral securing the payment and performance of the Borrower’s and the Guarantors’ obligations under this Agreement and the other Loan Documents. The Administrative Agent shall have exclusive dominion and control, including the exclusive right of withdrawal, over the LC Collection Account. Other than any interest earned on the investment of such deposits, which investments shall be made at the option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall not bear interest. Interest or profits, if any, on such investments shall accumulate in the LC Collection Account. Moneys in the LC Collection Account shall be applied by the Administrative Agent to reimburse the Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has been accelerated, be applied to satisfy other obligations of the Borrower and the Guarantors under this Agreement or the other Loan Documents. If the Borrower is required to provide an amount of Cash Collateral hereunder as a result of the occurrence of an Event of Default, and the Borrower is not otherwise required to Cash Collateralize the excess attributable to an LC Exposure in connection with any prepayment pursuant to Section 3.04(c) , then such amount (to the extent not applied as aforesaid) shall be returned to the Borrower within 3 Business Days after all Events of Default have been cured or waived.

(k) Cash Collateral — Defaulting Lender . 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 Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender (determined after giving effect to Section 2.10(a)(iv) and any Cash Collateral provided by such Defaulting Lender) in an amount not less than the Minimum Collateral Amount.

(i) 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 Bank, and agrees to maintain, a first priority security interest in all such Cash Collateral as security for the Defaulting Lender’s obligation to fund participations in respect of LC Exposure, to be applied pursuant to clause (ii) 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 Bank 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).

(ii) Application . Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under this Section 2.08(k) or Section 2.10 in respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s obligation to fund participations in respect of LC Exposure (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.

(iii) Termination of Requirement . Cash Collateral (or the appropriate portion thereof) provided to reduce the Issuing Bank’s Fronting Exposure shall no longer be

required to be held as Cash Collateral pursuant to this Section 2.08(k) following (A) the elimination of the applicable Fronting Exposure (including, without limitation, by the termination of Defaulting Lender status of the applicable Lender or reduction of the Fronting Exposure), or (B) the determination by the Administrative Agent and the Issuing Bank that there exists excess Cash Collateral; provided that, subject to Section 2.10 , the Person providing Cash Collateral and the Issuing Bank 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 Loan Documents.

(iv) Any payment of Cash Collateral by the Borrower shall be without prejudice to any claim the Borrower may have against the applicable Defaulting Lender.

Section 2.09. Collateral .

(a) Mortgaged Property . The payment and performance of the Notes and all of the other Obligations hereunder and under the Loan Documents and under the Secured Swap Agreements and under Secured Treasury Management Agreements shall be secured by a first and superior Lien (subject to Excepted Liens) against the interest of the Borrower and each Subsidiary in a portion of their Oil and Gas Properties, the Recognized Value of which represents at least 80% of the Recognized Value of all of their proved Oil and Gas Properties, pursuant to the terms of one or more Mortgages in favor of the Administrative Agent for the ratable benefit of the Secured Parties, which Mortgages shall be reasonably satisfactory in form and substance to the Administrative Agent.

(b) Guarantees and Pledges of Equity Interests . The payment and performance of the Notes and all of the other Obligations hereunder and under the Loan Documents, and under the Secured Swap Agreements and Secured Treasury Management Agreements, (A) shall be unconditionally guaranteed by each Subsidiary pursuant to one or more Guaranty Agreements, and (B) shall be secured by a first priority Lien (subject to Excepted Liens) against the Equity Interests of each Subsidiary pursuant to a Pledge Agreement. Reference is made to Section 8.14 of this Agreement for further provisions with respect to additional Guarantors and additional collateral.

(c) Personal Property of Borrowers and Subsidiaries . The payment and performance of the Notes and all of the other Obligations hereunder and under the Loan Documents and under Secured Swap Agreements and under Secured Treasury Management Agreements shall also be secured by a first priority Lien (subject to Excepted Liens) against all personal property of the Borrowers and each Subsidiary pursuant to the terms of one or more Security Agreements in favor of the Administrative Agent for the ratable benefit of the Secured Parties which shall be in form and substance reasonably acceptable to the Administrative Agent.

Section 2.10. 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 Required Lenders and in Section 12.02 .

(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 X or otherwise) or received by the Administrative Agent from a Defaulting Lender pursuant to Section 12.08 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 Bank hereunder; third , to Cash Collateralize the Issuing Bank’s Fronting Exposure with respect to such Defaulting Lender in accordance with Section 2.08(k) ; fourth , as the Borrower may request (so long as no Event of Default exists), to the funding of any Loan 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 Loans under this Agreement and (y) Cash Collateralize the Issuing Bank’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 2.08(k) ; sixth , to the payment of any amounts owing to the Lenders or the Issuing Bank as a result of any judgment of a court of competent jurisdiction obtained by any Lender or the Issuing Bank against such Defaulting Lender as a result of such Defaulting Lender’s breach of its obligations under this Agreement; seventh , so long as no 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 Loans or LC Disbursements in respect of which such Defaulting Lender has not fully funded its appropriate share, and (y) such Loans were made or the related Letters of Credit were issued at a time when the conditions set forth in Section 6.02 were satisfied or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender until such time as all Loans and funded and unfunded participations in LC Exposure are held by the Lenders pro rata in accordance with the Commitments without giving effect to Section 2.10(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 2.10(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 under Section 3.05(a) 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 fees under Section 3.05(b) for any period during which that Lender is a Defaulting Lender only to the extent allocable to its Applicable Percentage of the stated amount of Letters of Credit for which it has provided Cash Collateral pursuant to Section 2.08(k) .

(C) With respect to any 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 LC Exposure that has been reallocated to such Non-Defaulting Lender pursuant to clause (iv) below, (y) pay to the Issuing Bank the amount of any such fee otherwise payable to such Defaulting Lender to the extent allocable to such Issuing Bank’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 LC Exposure shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Applicable Percentages (calculated without regard to such Defaulting Lender’s Commitment) but only to the extent that (x) the conditions set forth in Section 6.02 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 Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s Maximum Credit Amount. 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.

(v) Cash Collateral . If the reallocation described in clause (iv) above cannot, or can only partially, be effected, the Borrower shall, without prejudice to any right or remedy available to it hereunder or under law, Cash Collateralize the Issuing Bank’s Fronting Exposure in accordance with the procedures set forth in Section 2.08(k) .

(b) Defaulting Lender Cure . If the Borrower, the Administrative Agent and Issuing Bank 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 Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans 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 2.10(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 Bank 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 III
Payments of Principal and Interest; Prepayments; Fees

Section 3.01. Repayment of Loans . The Borrower hereby unconditionally promises to pay to the Administrative Agent for the account of each Lender the then unpaid principal amount of each Loan on the Termination Date.

Section 3.02. Interest .

(a) ABR Loans . The Loans comprising each ABR Borrowing shall bear interest at the Alternate Base Rate plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate.

(b) Eurodollar Loans . The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin, but in no event to exceed the Highest Lawful Rate.

(c) Post-Default Rate . Notwithstanding the foregoing, (i) if an Event of Default has occurred and is continuing, or if any principal of or interest on any Loan or any fee or other amount payable by the Borrower or any Guarantor hereunder or under any other Loan Document is not paid when due, whether at stated maturity, upon acceleration or otherwise, and including any payments in respect of a Borrowing Base Deficiency under Section 3.04(c) , then all Loans outstanding, in the case of an Event of Default, and such overdue amount, in the case of a failure to pay amounts when due, shall bear interest, after as well as before judgment, at a rate per annum equal to two percent (2%) plus the rate applicable to ABR Loans as provided in Section 3.02(a) , but in no event to exceed the Highest Lawful Rate, and (ii) during any Borrowing Base Deficiency (after the expiration of the cure periods provided in Section 2.07(f) ), all Loans outstanding at such time shall bear interest, after as well as before judgment, at the rate then applicable to such Loans, plus the Applicable Margin, if any, plus an additional two percent (2%), but in no event to exceed the Highest Lawful Rate.

(d) Interest Payment Dates . Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan and on the Termination Date; provided that (i) interest accrued pursuant to Section 3.02(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than an optional prepayment of an ABR Loan prior to the Termination Date), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment, and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e) Interest Rate Computations . All interest hereunder shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days in a leap year), except that interest computed by reference to the Alternate Base Rate at times when the

Alternate Base Rate is based on the Prime Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent, and such determination shall be conclusive absent manifest error, and be binding upon the parties hereto.

(f) No Fees Paid to Defaulting Lenders . Notwithstanding any provision of this Agreement to the contrary, if a Lender becomes a Defaulting Lender, then all fees shall cease to accrue on the unfunded portion of the Commitment of such Defaulting Lender.

Section 3.03. Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the LIBO Rate for such Interest Period; or

(b) the Administrative Agent is advised by the Majority Lenders that the Adjusted LIBO Rate or LIBO Rate, as applicable, for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by telephone, facsimile or electronic transmission as promptly as practicable thereafter and, until the Administrative Agent notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective (and shall be deemed to be a request for an ABR Borrowing), and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

Section 3.04. Prepayments .

(a) Optional Prepayments . The Borrower shall have the right at any time and from time to time to prepay any Borrowing in whole or in part, subject to prior notice in accordance with Section 3.04(b) .

(b) Notice and Terms of Optional Prepayment . The Borrower shall notify the Administrative Agent by telephone (confirmed in writing) of any prepayment hereunder (i) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., three Business Days before the date of prepayment, or (ii) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., one Business Day before the date of prepayment. Each such notice shall be irrevocable and shall specify the prepayment date and the principal amount of each Borrowing or portion thereof to be prepaid. Promptly following receipt of any such notice relating to a Borrowing, the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of an advance of a Borrowing of the same Type as provided in Section 2.02 . Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the extent required by Section 3.02 and any break funding payments required by Section 5.02 .

(i) If, after giving effect to any termination or reduction of the Aggregate Maximum Credit Amounts pursuant to Section 2.06(b) , the total Revolving Credit Exposures exceeds the total Commitments, then the Borrower shall (A) prepay the Borrowings on the date of such termination or reduction in an aggregate principal amount equal to such excess, and (B) if any excess remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such excess to be held as Cash Collateral as provided in Section 2.08(j) .

(ii) If, other than upon any adjustment to the Borrowing Base pursuant to Section 2.07(e) , a Borrowing Base Deficiency exists, then the Borrower shall take such actions as required by Section 2.07(f) to cure such Borrowing Base Deficiency, including making any prepayment required by such section.

(iii) If, upon any adjustments to the Borrowing Base pursuant to Section 2.07(e) , a Borrowing Base Deficiency exists, then the Borrower shall (A) prepay the Borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency, and (B) if any Borrowing Base Deficiency remains after prepaying all of the Borrowings as a result of an LC Exposure, pay to the Administrative Agent on behalf of the Lenders an amount equal to such Borrowing Base Deficiency to be held as Cash Collateral as provided in Section 2.08(j) . The Borrower shall be obligated to make such prepayment and/or deposit of Cash Collateral on the date it or any Subsidiary receives cash proceeds as a result of such Asset Disposition or Swap Termination, as the case may be; provided that all payments required to be made pursuant to this Section 3.04(c)(iii) must be made on or prior to the Termination Date.

(iv) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied, first, ratably to any ABR Borrowings then outstanding, and, second, to any Eurodollar Borrowings then outstanding, and if more than one Eurodollar Borrowing is then outstanding, to each such Eurodollar Borrowing in order of priority beginning with the Eurodollar Borrowing with the least number of days remaining in the Interest Period applicable thereto and ending with the Eurodollar Borrowing with the most number of days remaining in the Interest Period applicable thereto.

(v) Each prepayment of Borrowings pursuant to this Section 3.04(c) shall be applied ratably to the Loans included in the prepaid Borrowings. Prepayments pursuant to this Section 3.04(c) shall be accompanied by accrued interest to the extent required by Section 3.02 .

(d) No Premium or Penalty . Prepayments permitted or required under this Section 3.04 shall be without premium or penalty, except as required under Section 5.02 .

(e) No Effect on Swap Agreements . Prepayments permitted or required under this Section 3.04 shall not affect the Borrower’s obligation to continue making payments under any Swap Agreement, which shall remain in full force and effect notwithstanding such prepayment, subject to the terms of such Swap Agreement.

Section 3.05. Fees .

(a) Commitment Fees . The Borrower agrees to pay to the Administrative Agent for the account of each Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Commitment of such Lender during the period from and including the Effective Date to but excluding the Termination Date. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Termination Date, commencing on the first such date to occur after the date hereof. All commitment fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case such commitment fees shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(b) Letter of Credit Fees . The Borrower agrees to pay (i) to the Administrative Agent for the account of each Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the Applicable Margin on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date on which such Lender’s Commitment terminates and the date on which such Lender ceases to have any LC Exposure, (ii) to the Issuing Bank a fronting fee, which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC Disbursements) during the period from and including the Effective Date to but excluding the later of the date of termination of the Commitments and the date on which there ceases to be any LC Exposure, provided that in no event shall such fee be less than $500 during any quarter, and (iii) to the Issuing Bank, for its own account, its standard fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation fees and fronting fees accrued through and including the last day of March, June, September and December of each year shall be payable on the third Business Day following such last day, commencing on the first such date to occur after the Effective Date; provided that all such fees shall be payable on the Termination Date and any such fees accruing after the Termination Date shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this Section 3.05(b) shall be payable within 10 days after demand. All participation fees and fronting fees shall be computed on the basis of a year of 360 days, unless such computation would exceed the Highest Lawful Rate, in which case such fees shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(c) Administrative Agent Fees . The Borrower agrees to pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times separately agreed upon between the Borrower and the Administrative Agent.

ARTICLE IV
Payments; Pro Rata Treatment; Sharing of Payments

Section 4.01. Payments Generally; Pro Rata Treatment; Sharing of Payments .

(a) Payments by the Borrower . The Borrower shall make each payment required to be made by it hereunder (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable under Section 5.01 , Section 5.02 , Section 5.03 or

otherwise) prior to 11:00 a.m., on the date when due, in immediately available funds, without defense, deduction, recoupment, set-off or counterclaim. Fees, once paid, shall be fully earned and shall not be refundable under any circumstances. Any amounts received after such time on any date may, in the discretion of the Administrative Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent at its offices specified in Section 12.01 , except payments to be made directly to the Issuing Bank as expressly provided herein and except that payments pursuant to Section 5.01 , Section 5.02 , Section 5.03 and Section 12.03 shall be made directly to the Persons entitled thereto. The Administrative Agent shall distribute any such payments received by it for the account of any other Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments hereunder shall be made in dollars.

(b) Application of Insufficient Payments . If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements, interest and fees then due hereunder, such funds shall be applied (i) first, towards payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties, and (ii) second, towards payment of principal and unreimbursed LC Disbursements then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of principal and unreimbursed LC Disbursements then due to such parties.

(c) Sharing of Payments by Lenders . If any Lender shall, by exercising any right of set-off or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or participations in LC Disbursements or other obligations hereunder resulting in such Lender receiving payment of a proportion of the aggregate amount of its Loans and participations in LC Disbursements 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 Loans and participations in LC Disbursements 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 Loans and participations in LC Disbursements 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 Section 4.01(c) 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) or any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or Participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the provisions of this Section 4.01(c) shall apply). The Borrower, each Subsidiary, each Guarantor and each other Loan 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 the Borrower, each Subsidiary, each Guarantor and each other Loan Party rights of set-off and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of the Borrower, each Subsidiary, each Guarantor and each other Loan Party in the amount of such participation.

Section 4.02. Presumption of Payment by the Borrower . Unless the Administrative Agent shall have received notice from the Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent may assume that the Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if the Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

Section 4.03. Disposition of Proceeds . The Security Instruments contain an assignment by the Borrower and/or the Guarantors unto and in favor of the Administrative Agent for the benefit of the Secured Parties of all of the Borrower’s or each Guarantor’s interest in and to production and all proceeds attributable thereto which may be produced from or allocated to the Mortgaged Property. The Security Instruments further provide in general for the application of such proceeds to the satisfaction of the Obligations and other obligations described therein and secured thereby. Notwithstanding the assignment contained in such Security Instruments, unless an Event of Default has occurred and is continuing, (a) the Administrative Agent and the Lenders agree that they will neither notify the purchaser or purchasers of such production nor take any other action to cause such proceeds to be remitted to the Administrative Agent or the Lenders, but the Lenders will instead permit such proceeds to be paid to the Borrower and its Subsidiaries and (b) the Lenders hereby authorize the Administrative Agent to take such actions as may be necessary to cause such proceeds to be paid to the Borrower and/or such Subsidiaries.

ARTICLE V
Increased Costs; Break Funding Payments; Taxes; Illegality

Section 5.01. Increased Costs .

(a) Increased Costs, Generally . 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 such reserve requirement reflected in the Adjusted LIBO Rate) or the Issuing Bank;

(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 Bank or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans 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 Loan (or of maintaining its obligation to make any such Loan) or to increase the cost to such Lender, the Issuing Bank 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, the Issuing Bank or other Recipient hereunder (whether of principal, interest or any other amount), then, upon request of such Lender, the Issuing Bank or other Recipient, the Borrower will pay to such Lender, the Issuing Bank or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender, the Issuing Bank 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 Bank determines that any Change in Law affecting such Lender or the Issuing Bank or any lending office of such Lender or such Lender’s or the Issuing Bank’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 Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitment of such Lender or the Loans made by, or participations in Letters of Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in Section 5.01(a) or (b) of this Section shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender or the Issuing Bank, 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 Bank to demand compensation pursuant to this Section 5.01 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section 5.01 for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’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 5.02. Break Funding Payments . In the event of (a) the payment of any principal of any Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan into an ABR Loan other than on the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto, (d) the assignment of any Eurodollar Loan other than on the last day of the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section 5.04(b) , or (e) the replacement of a Non-Consenting Lender in accordance with the terms of Section 5.04(b) , then, in any such event, the Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan,

such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the eurodollar market.

A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 5.02 shall be delivered to the Borrower and shall be conclusive absent manifest error. The Borrower shall pay such Lender the amount shown as due on any such certificate within 10 days after receipt thereof.

Section 5.03. Taxes .

(a) Issuing Bank . For purposes of this Section 5.03 , the term “Lender” includes the Issuing Bank 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 Loan Party under any Loan 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 Loan 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 Loan 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 Loan Parties shall jointly and severally indemnify each Recipient, within 10 days after 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 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 shall be 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, and 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 any Loan Party has not already

indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of the Loan Parties to do so), (ii) any Taxes attributable to such Lender’s failure to comply with the provisions of Section 12.04(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 Loan 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 Loan 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 Loan Party to a Governmental Authority pursuant to this Section 5.03 , such Loan 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 .

(i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan 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 (or as prescribed by law) 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 5.03 (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, in the event that the Borrower is a U.S. Borrower,

(A) any Lender that is a U.S. Person shall deliver to the Borrower and the Administrative Agent on or prior to the date on which such 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 IRS Form W-9 certifying that such Lender 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 Loan Document, executed originals of IRS Form W-8BEN 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 Loan Document, IRS Form W-8BEN 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 J-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

(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, a U.S. Tax Compliance Certificate substantially in the form of Exhibit J-2 or Exhibit J-4 , 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 J-3 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 Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender 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 Lender 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 Lender has complied with such Lender’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 Lender 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) 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 5.03 (including by the payment of additional amounts pursuant to this Section 5.03 ), 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 indemnification payments or additional amounts giving rise to such refund 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.

(i) Survival . Each party’s obligations under this Section 5.03 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 Loan Document.

Section 5.04. Mitigation Obligations; Replacement of Lenders .

(a) Designation of Different Lending Office . If any Lender requests compensation under Section 5.01 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 5.03 , then such Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans 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 5.01 or

Section 5.03 , 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 (other than a Defaulting Lender) in connection with any such designation or assignment.

(b) Replacement of Lenders . If any Lender requests compensation under Section 5.01 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 5.03 , and in each case, such Lender has declined or is unable to designate a different lending office in accordance with Section 5.04(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 12.04(b) ), all of its interests, rights (other than its existing rights to payments pursuant to Section 5.01 or Section 5.03 ) and obligations under this Agreement and the related Loan 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 received the prior written consent of the Administrative Agent and paid to the Administrative Agent the assignment fee specified in Section 12.04 ,

(ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in LC Disbursements, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 5.02 ), 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 5.01 or payments required to be made pursuant to Section 5.03 , such assignment will result in a reduction in such compensation or payments thereafter,

(iv) such assignment does not conflict with the applicable law, 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.

Section 5.05. Illegality . Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its applicable lending office to honor its obligation to make or maintain Eurodollar Loans either generally or having a particular Interest Period hereunder, then (a) such Lender shall promptly notify the Borrower and the Administrative Agent thereof and such Lender’s obligation to make such Eurodollar Loans shall be suspended (the “Affected Loans” ) until such time as such Lender may again make and maintain such Eurodollar Loans and (b) all Affected Loans which would otherwise be made by such Lender shall be made instead as ABR Loans (and, if such Lender so

requests by notice to the Borrower and the Administrative Agent, all Affected Loans of such Lender then outstanding shall be automatically converted into ABR Loans on the date specified by such Lender in such notice) and, to the extent that Affected Loans are so made as (or converted into) ABR Loans, all payments of principal which would otherwise be applied to such Lender’s Affected Loans shall be applied instead to its ABR Loans.

ARTICLE VI
Conditions Precedent

Section 6.01. Effective Date . The obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective until the date on which each of the following conditions is satisfied (or waived in accordance with Section 12.02 ):

(a) The Administrative Agent, the Arranger and the Lenders shall have received all commitment, facility and agency fees and all other fees and amounts due and payable on or prior to the Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower hereunder (including, without limitation, the reasonable fees and expenses of Winstead PC, counsel to the Administrative Agent).

(b) The Borrower shall have deposited $5,000 with Winstead PC, counsel for the Administrative Agent, to be held by such counsel and applied toward payment of costs and expenses for recordation of the Mortgages, as provided pursuant to Section 12.03(a) . If such deposit exceeds the amount of such costs and expenses, the excess shall be returned to the Borrower. If such deposit is less than such costs and expenses, the deficit shall be paid by Borrower pursuant to Section 12.03(a) .

(c) The Administrative Agent shall have received a certificate of the Secretary, an Assistant Secretary, Responsible Officer or other duly authorized officer reasonably satisfactory to the Administrative Agent of the Borrower and each Guarantor, each setting forth (i) resolutions of its board of directors or board of managers (or equivalent body) authorizing the execution, delivery and performance of the Loan Documents to which it is a party and, in the case of the Borrower, the borrowings hereunder, and that such resolutions have not been modified, rescinded or amended and are in full force and effect, (ii) the officers of the Borrower or such Guarantor (y) who are authorized to sign the Loan Documents to which the Borrower or such Guarantor is a party and (z) who will, until replaced by another officer or officers duly authorized for that purpose, act as its representative for the purposes of signing documents and giving notices and other communications in connection with this Agreement and the transactions contemplated hereby, (iii) specimen signatures of such authorized officers, and (iv) the articles or certificate of incorporation and bylaws, or certificate of formation and partnership agreement, or certificate of formation and limited liability company agreement (as the case may be) of the Borrower, and each Guarantor, certified as being true and complete. The Administrative Agent and the Lenders may conclusively rely on such certificate until the Administrative Agent receives notice in writing from the Borrower to the contrary.

(d) The Administrative Agent shall have received certificates of the appropriate State agencies with respect to the existence, qualification and good standing of the Borrower and each Guarantor.

(e) The Administrative Agent shall have received a compliance certificate which shall be substantially in the form of Exhibit D , duly and properly executed by a Responsible Officer and dated as of the Effective Date.

(f) The Administrative Agent shall have received from each party hereto counterparts (in such number as may be requested by the Administrative Agent) of this Agreement signed on behalf of such party.

(g) The Administrative Agent shall have received duly executed Notes payable to the order of each Lender requesting a Note dated as of the date hereof.

(h) The Administrative Agent shall have received from each party thereto duly executed counterparts (in such number as may be requested by the Administrative Agent) of the Security Instruments, including the Guaranty Agreement and the other Security Instruments described on Exhibit F . In connection with the execution and delivery of the Security Instruments, the Administrative Agent shall:

(i) be reasonably satisfied that the Security Instruments create first priority, perfected Liens (subject only to Excepted Liens identified in clauses (a), (b), (c), (d) and (f) of the definition thereof, but subject to the provisos at the end of such definition) on at least 80% of the total Recognized Value of the Oil and Gas Properties evaluated in the Initial Reserve Report; and

(ii) have received certificates, together with undated, blank stock powers (if applicable) for each such certificate, representing all of the certificated issued and outstanding Equity Interest of each Person the Equity Interest of which are required to be pledged pursuant to the Loan Documents.

(i) The Administrative Agent shall have received an opinion of DuBois, Bryant & Campbell, LLP, counsel to the Borrower, in form and substance satisfactory to the Administrative Agent.

(j) The Administrative Agent shall have received a certificate of insurance coverage of the Borrower evidencing that the Borrower is carrying insurance in accordance with Section 7.12 and either (i) a letter from the Borrower’s insurance agent in a form reasonably acceptable to Administrative Agent or (ii) copies of the policies of insurance evidencing that the Borrower is carrying insurance in accordance with Section 7.12.

(k) The Administrative Agent shall have received title opinions and other title information and data as the Administrative Agent may reasonably request satisfactory to the Administrative Agent setting forth the status of title to at least 80% of the total value of the proved Oil and Gas Properties evaluated in the Initial Reserve Report.

(l) The Administrative Agent shall be reasonably satisfied with the environmental condition of the Oil and Gas Properties of the Borrower and its Subsidiaries.

(m) The Administrative Agent shall have received a certificate of a Responsible Officer of the Borrower certifying that the Borrower has received all consents and approvals required by Section 7.03 .

(n) The Administrative Agent shall have received the financial statements referred to in Section 7.04(a) and the Initial Reserve Report accompanied by a certificate covering the matters described in Section 8.12(c) .

(o) The Administrative Agent shall have received appropriate UCC search certificates reflecting no prior Liens encumbering the Properties of the Borrower and the Subsidiaries (other than Excepted Liens identified in clauses (a), (b), (c), (d), (f) and (h) of the definition thereof, but subject to the provisos at the end of such definition) for each of the following jurisdictions: Delaware, Texas, Montana, and any other jurisdiction requested by the Administrative Agent; other than those being assigned or released on or prior to the Effective Date or Liens permitted by Section 9.03 .

(p) The Administrative Agent shall have received certificates (whether one or more, the “Property Certificate” ) for each Oil and Gas Property described as an exhibit to a Mortgage, which Property Certificates shall be in substantially the form of Exhibit H attached hereto containing the information as provided therein.

(q) The Administrative Agent shall have received evidence of the payment in full of all amounts due under the Existing Credit Agreement, the termination of all commitments to lend thereunder and the release of all Liens securing such obligations and any other obligations secured thereby.

(r) The Administrative Agent and the Lenders shall have received, and be reasonably satisfied in form and substance with, all documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including but not restricted to the USA Patriot Act.

(s) The Administrative Agent shall have received such other documents as the Administrative Agent or special counsel to the Administrative Agent may reasonably request.

The Administrative Agent shall notify the Borrower and the Lenders of the Effective Date, and such notice shall be conclusive and binding. Notwithstanding the foregoing, the obligations of the Lenders to make Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not become effective unless each of the foregoing conditions is satisfied (or waived pursuant to Section 12.02 ) at or prior to 2:00 p.m., on July 31, 2015 (and, in the event such conditions are not so satisfied or waived, the Commitments shall terminate at such time).

Without limiting the generality of the provisions of Section 11.04 , for purposes of determining compliance with the conditions specified in this Section 6.01 , each Lender that has signed this Agreement 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 a Lender unless the Administrative Agent shall have received notice from such Lender prior to the proposed closing date specifying its objection thereto.

Section 6.02. Each Credit Event . The obligation of each Lender to make a Loan on the occasion of any Borrowing (including the initial funding), and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is subject to the satisfaction of the following conditions:

(a) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default shall have occurred and be continuing.

(b) At the time of and immediately after giving effect to such Borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no event, development or circumstance has occurred or shall then exist that has resulted in, or could reasonably be expected to have, a Material Adverse Effect.

(c) The representations and warranties of the Borrower and the Guarantors set forth in this Agreement and in the other Loan Documents shall be true and correct in all material respects (without duplication of materiality) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such Borrowing or the date of issuance, amendment, renewal or extension of such Letter of Credit, as applicable, such representations and warranties shall continue to be true and correct in all material respects (without duplication of materiality) as of such specified earlier date.

(d) The making of such Loan or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, would not conflict with, or cause any Lender or the Issuing Bank to violate or exceed, any applicable Governmental 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 Loan, 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 Loan Document.

(e) The receipt by the Administrative Agent of a Borrowing Request in accordance with Section 2.03 or a request for a Letter of Credit in accordance with Section 2.08(b) , as applicable.

Each request for a Borrowing and each request for the issuance, amendment, renewal or extension of any Letter of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the matters specified in Section 6.02(a) through (d) .

ARTICLE VII
Representations and Warranties

The Borrower represents and warrants to the Administrative Agent, the Issuing Bank and the Lenders that:

Section 7.01. Organization; Powers . Each of the Borrower and the Subsidiaries is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, has all requisite power and authority, and has all material governmental licenses, authorizations, consents and approvals necessary, to own its assets and to carry on its business as now conducted, and is qualified to do business in, and is in good standing in, every jurisdiction where such qualification is required, except where failure to have such power, authority, licenses, authorizations, consents, approvals and qualifications could not reasonably be expected to have a Material Adverse Effect.

Section 7.02. Authority; Enforceability . The Transactions are within the Borrower’s and each Guarantor’s powers under its Organizational Documents and have been duly authorized by all necessary action (including, without limitation, any action required to be taken by any class of managers, directors, partners or owners of Equity Interests of the Borrower or any other Person, whether interested or disinterested, in order to ensure the due authorization of the Transactions). Each Loan Document to

which the Borrower and each Guarantor is a party has been duly executed and delivered by the Borrower and such Guarantor and constitutes a legal, valid and binding obligation of the Borrower and such Guarantor, as applicable, enforceable in accordance with its terms, subject to Debtor Relief Laws or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

Section 7.03. Approvals; No Conflicts . The Transactions (a) do not require any consent or approval of, registration or filing with, or any other action by, any Governmental Authority or any other third Person (including members, shareholders, partners or any class of managers, directors, or partners, whether interested or disinterested, of the Borrower or any other Person), nor is any such consent, approval, registration, filing or other action necessary for the validity or enforceability of any Loan Document or the consummation of the transactions contemplated thereby, except such as have been obtained or made and are in full force and effect other than (i) the recording and filing of the Security Instruments as required by this Agreement, (ii) those third party approvals or consents which, if not made or obtained, would not cause a Default hereunder, could not reasonably be expected to have a Material Adverse Effect or do not have an adverse effect on the enforceability of the Loan Documents, and (iii) consents by, required notices to, or other actions by state and federal governmental entities in connection with the assignment of state and federal oil and gas leases or other interests therein that are customarily obtained subsequent to such assignments, (b) will not violate any applicable law or Organizational Documents of the Borrower or any Subsidiary or any order of any Governmental Authority, (c) will not violate or result in a default under any indenture, agreement or other instrument binding upon the Borrower or any Subsidiary or its Properties, or give rise to a right thereunder to require any payment to be made by the Borrower or such Subsidiary and (d) will not result in the creation or imposition of any Lien on any Property of the Borrower or any Subsidiary (other than the Liens created by the Loan Documents.

Section 7.04. Financial Condition; No Material Adverse Change .

(a) The financial statements of Borrower heretofore furnished to the Lenders present fairly, in all material respects, the financial condition and results of operations and cash flows of the Borrower and its Consolidated Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end audit adjustments and the absence of footnotes in the case of the unaudited quarterly financial statements.

(b) Since March 31, 2015, (i) there has been no event, development or circumstance that has had or could reasonably be expected to have a Material Adverse Effect and (ii) the business of the Borrower and its Subsidiaries has been conducted only in the ordinary course consistent with past business practices.

(c) Neither the Borrower nor any Subsidiary has on the date hereof any material Debt (including Disqualified Capital Stock) or any contingent liabilities, off-balance sheet liabilities or partnerships, liabilities for taxes, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in the Financial Statements.

Section 7.05. Litigation .

(a) Except as set forth on Schedule 7.05 , there are no actions, suits, investigations or proceedings by or before any arbitrator or Governmental Authority pending against or, to the knowledge of the Borrower, threatened against or affecting the Borrower or any Subsidiary (i) not fully covered by insurance (except for normal deductibles) as to which there is a reasonable

possibility of an adverse determination that, if adversely determined, could reasonably be expected, individually or in the aggregate, to result in a Material Adverse Effect, or (ii) that involve any Loan Document or the Transactions.

(b) Since the date of this Agreement, there has been no change in the status of the matters disclosed in Schedule 7.05 that, individually or in the aggregate, has resulted in, or materially increased the likelihood of, a Material Adverse Effect.

Section 7.06. Environmental Matters . Except as set forth in Schedule 7.06 or that could not be reasonably expected to have a Material Adverse Effect (or with respect to (c), (d) and (e) below, where the failure to take such actions could not be reasonably expected to have a Material Adverse Effect):

(a) neither any Property of the Borrower or any Subsidiary nor the operations conducted thereon violate any order or requirement of any court or Governmental Authority or any Environmental Laws.

(b) no Property of the Borrower or any Subsidiary nor the operations currently conducted thereon are in violation of or subject to any existing, pending or threatened action, suit, investigation, inquiry or proceeding by or before any court or Governmental Authority or to any remedial obligations under Environmental Laws.

(c) all notices, permits, licenses, exemptions, approvals or similar authorizations, if any, required to be obtained or filed in connection with the operation or use of any and all Property of the Borrower and each Subsidiary, including, without limitation, past or present treatment, storage, disposal or release of a hazardous substance, oil and gas waste or solid waste into the environment, have been duly obtained or filed, and the Borrower and each Subsidiary have not received written notice stating that they are not in compliance with the terms and conditions of all such notices, permits, licenses and similar authorizations.

(d) to Borrower’s knowledge, all hazardous substances, solid waste and oil and gas waste, if any, generated at any and all Property of the Borrower or any Subsidiary have in the past been transported, treated and disposed of in accordance with Environmental Laws.

(e) the Borrower has taken all steps reasonably necessary to determine and has determined that no oil, hazardous substances, solid waste or oil and gas waste, have been disposed of or otherwise released and there has been no threatened release of any oil, hazardous substances, solid waste or oil and gas waste on or to any Property of the Borrower or any Subsidiary except in compliance with Environmental Laws.

(f) to the extent applicable, all Property of the Borrower and each Subsidiary currently satisfies all design, operation, and equipment requirements imposed by the OPA, and the Borrower does not have any reason to believe that such Property, to the extent subject to the OPA, will not be able to maintain compliance with the OPA requirements during the term of this Agreement.

(g) neither the Borrower nor any Subsidiary has any known contingent liability or Remedial Work in connection with any release or threatened release of any oil, hazardous substance, solid waste or oil and gas waste into the environment, except as referred to or reflected or provided for in the Financial Statements.

Section 7.07. Compliance with the Laws and Agreements; No Defaults .

(a) Each of the Borrower and each Subsidiary is in compliance with all Governmental Requirements applicable to it or its Property and all agreements and other instruments binding upon it or its Property, and possesses all licenses, permits, franchises, exemptions, approvals and other governmental authorizations necessary for the ownership of its Property and the conduct of its business, except where the failure to do so, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.

(b) Neither the Borrower nor any Subsidiary is in default nor has any event or circumstance occurred which, but for the expiration of any applicable grace period or the giving of notice, or both, would constitute a default or would require the Borrower or a Subsidiary to Redeem or make any offer to Redeem under any indenture, note, credit agreement or instrument pursuant to which any Material Indebtedness is outstanding or by which the Borrower or any Subsidiary or any of their Properties is bound.

Section 7.08. Investment Company Act . Neither the Borrower nor any Subsidiary is an “investment company” or a company “controlled” by an “investment company,” within the meaning of, or subject to regulation under, the Investment Company Act of 1940, as amended.

Section 7.09. Taxes . Each of the Borrower and its Subsidiaries has timely filed or caused to be filed all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes required to have been paid by it, except (a) Taxes that are being contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary, as applicable, has set aside on its books adequate reserves in accordance with GAAP or (b) to the extent that the failure to do so could not reasonably be expected to result in a Material Adverse Effect. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of Taxes and other governmental charges are, in the reasonable opinion of Borrower, adequate. No Tax Lien has been filed and, to the knowledge of the Borrower, no claim is being asserted with respect to any such Tax or other such governmental charge.

Section 7.10. ERISA .

(a) The Borrower, the Subsidiaries and each ERISA Affiliate have complied in all material respects with ERISA and, where applicable, the Code regarding each Plan.

(b) Each Plan is, and has been, maintained in substantial compliance with ERISA and, where applicable, the Code.

(c) No act, omission or transaction has occurred which could result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate (whether directly or indirectly) of (i) either a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (ii) breach of fiduciary duty liability damages under Section 409 of ERISA.

(d) No Plan (other than a defined contribution plan) or any trust created under any such Plan has been terminated since September 2, 1974. No liability to the PBGC (other than for the payment of current premiums which are not past due) by the Borrower, any Subsidiary or any ERISA Affiliate has been or is expected by the Borrower, any Subsidiary or any ERISA Affiliate to be incurred with respect to any Plan. No ERISA Event with respect to any Plan has occurred.

(e) Full payment when due has been made of all amounts which the Borrower, the Subsidiaries or any ERISA Affiliate is required under the terms of each Plan or applicable law to have paid as contributions to such Plan as of the date hereof, and no accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists with respect to any Plan.

(f) The actuarial present value of the benefit liabilities under each Plan which is subject to Title IV of ERISA does not, as of the end of the Borrower’s most recently ended fiscal year, 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. The term “actuarial present value of the benefit liabilities” shall have the meaning specified in Section 4041 of ERISA.

(g) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains, or contributes to an employee welfare benefit plan, as defined in Section 3(1) of ERISA, including, without limitation, any such plan maintained to provide benefits to former employees of such entities, that may not be terminated by the Borrower, a Subsidiary or any ERISA Affiliate in its sole discretion at any time without any material liability.

(h) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate sponsors, maintains or contributes to, or has at any time in the six-year period preceding the date hereof sponsored, maintained or contributed to, any Multiemployer Plan.

(i) Neither the Borrower, the Subsidiaries nor any ERISA Affiliate is required to provide security under Section 401(a)(29) of the Code due to a Plan amendment that results in a material increase in current liability for the Plan.

Section 7.11. Disclosure; No Material Misstatements . The Borrower has disclosed or delivered to the Administrative Agent and the Lenders all agreements, instruments and corporate or other restrictions to which it or any of its Subsidiaries is subject, and all other matters known to it, that, individually or in the aggregate, could reasonably be expected to result in a Material Adverse Effect. None of the other reports, financial statements, certificates or other information furnished by or on behalf of the Borrower or any Subsidiary to the Administrative Agent or any Lender or any of their Affiliates in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or under any other Loan Document (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that, with respect to projected financial information, the Borrower represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time. There is no fact known to the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect or in the future is reasonably likely to have a Material Adverse Effect and which has not been set forth in this Agreement or the Loan Documents or the other documents, certificates and statements furnished to the Administrative Agent or the Lenders by or on behalf of the Borrower or any Subsidiary prior to, or on, the date hereof in connection with the transactions contemplated hereby (other than industry wide risks normally associated with the types of businesses conducted by Borrower and its Subsidiaries). There are no statements or conclusions in any Reserve Report which are based upon or include misleading information or fail to take into account material information regarding the matters reported therein, it being understood that projections concerning volumes attributable to the Oil and Gas Properties and production and cost estimates contained in each Reserve Report are necessarily based upon professional opinions, estimates and projections and that the Borrower and the Subsidiaries do not warrant that such opinions, estimates and projections will ultimately prove to have been accurate.

Section 7.12. Insurance . The Borrower has, and has caused all of its Subsidiaries to have, (a) all insurance policies sufficient for the compliance by each of them with all material Governmental Requirements and all material agreements and (b) insurance coverage in at least amounts and against such risk (including, without limitation, public liability) that are commercially reasonable and usually insured against by companies similarly situated and engaged in the same or a similar business for the assets and operations of the Borrower and its Subsidiaries. The Administrative Agent has been named as an additional insured in respect of such liability insurance policies, and the Administrative Agent in its capacity as such has been named as loss payee with respect to Property loss insurance.

Section 7.13. Restriction on Liens . Neither the Borrower nor any of the Subsidiaries is a party to any material agreement or arrangement (other than the Permitted Senior Debt Documents, Capital Leases creating Liens permitted by Section 9.03(c) , but then only on the Property subject of such Capital Lease), or subject to any order, judgment, writ or decree, which either restricts or purports to restrict its ability to grant Liens to the Administrative Agent and the Lenders on or in respect of their Properties to secure the Obligations and the Loan Documents.

Section 7.14. Subsidiaries . Except as set forth on Schedule 7.14 or as disclosed in writing to the Administrative Agent (which shall promptly furnish a copy to the Lenders), which shall be a supplement to Schedule 7.14 , the Borrower has no Subsidiaries and the Borrower has no Foreign Subsidiaries. Each Subsidiary on such schedule is a Wholly-Owned Subsidiary and is a Consolidated Subsidiary.

Section 7.15. Location of Business and Offices . The Borrower’s jurisdiction of organization is Delaware; the name of the Borrower as listed in the public records of its jurisdiction of organization is Lonestar Resources America Inc.; and the organizational identification number of the Borrower in its jurisdiction of organization is 5282689 (or, in each case, as set forth in a notice delivered to the Administrative Agent pursuant to Section 8.01(n) in accordance with Section 12.01 ). The Borrower’s principal place of business and chief executive offices are located at the address specified in Section 12.01 (or as set forth in a notice delivered pursuant to Section 8.01(n) and Section 12.01(c) ). Each Subsidiary’s jurisdiction of organization, name as listed in the public records of its jurisdiction of organization, organizational identification number in its jurisdiction of organization, and the location of its principal place of business and chief executive office is stated on Schedule 7.14 (or as set forth in a notice delivered pursuant to Section 8.01(n) ).

Section 7.16. Properties; Titles, Etc .

(a) Each of the Borrower and the Subsidiaries has good and defensible title to its respective Oil and Gas Properties evaluated in the most recently delivered Reserve Report and good title to, or valid leasehold interests in, licenses of, or rights to use, all its personal Properties, in each case, free and clear of all Liens except Liens permitted by Section 9.03 . After giving full effect to the Excepted Liens, the Borrower or the Subsidiary specified as the owner owns the net interests in production attributable to the Hydrocarbon Interests as reflected in the most recently delivered Reserve Report, and the ownership of such Properties shall not in any material respect obligate the Borrower or such Subsidiary to bear the costs and expenses relating to the maintenance, development and operations of each such Property in an amount in excess of the working interest of each Property set forth in the most recently delivered Reserve Report that is not offset by a corresponding proportionate increase in the Borrower’s or such Subsidiary’s net revenue interest in such Property. The ownership by the Borrower or any Subsidiary of the Hydrocarbons and the undivided interests therein specified on the exhibits to the Mortgages are the same interests reflected in the most recently delivered Reserve Report.

(b) All material leases and agreements necessary for the conduct of the business of the Borrower and the Subsidiaries are valid and subsisting, in full force and effect, and there exists no default or event or circumstance which with the giving of notice or the passage of time or both would give rise to a default under any such lease or leases, which could reasonably be expected to have a Material Adverse Effect.

(c) The rights and Properties presently owned, leased or licensed by the Borrower and the Subsidiaries including, without limitation, all easements and rights of way, include all rights and Properties necessary to permit the Borrower and the Subsidiaries to conduct their business in all material respects in the same manner as its business has been conducted prior to the date hereof.

(d) All of the Properties of the Borrower and the Subsidiaries which are reasonably necessary for the operation of their businesses are in good working condition (ordinary wear and tear excepted) and are maintained in accordance with prudent business standards.

(e) Each of the Borrower and each Subsidiary owns, or is licensed to use, all trademarks, tradenames, copyrights, patents and other intellectual Property material to its business, and the use thereof by the Borrower and such Subsidiary does not infringe upon the rights of any other Person, except for any such infringements that, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. The Borrower and its Subsidiaries either own or have valid licenses or other rights to use all databases, geological data, geophysical data, engineering data, seismic data, maps, interpretations and other technical information used in their businesses as presently conducted, subject to the limitations contained in the agreements governing the use of the same, which limitations are customary for companies engaged in the business of the exploration and production of Hydrocarbons, with such exceptions as could not reasonably be expected to have a Material Adverse Effect.

Section 7.17. Maintenance of Properties . Except for such acts or failures to act as could not be reasonably expected to have a Material Adverse Effect, and subject to the prior rights and limitations of Borrower as an owner of any non-operated working interests, the Oil and Gas Properties (and Properties unitized therewith) of the Borrower and its Subsidiaries have been maintained, operated and developed in a good and workmanlike manner and in conformity with all Governmental Requirements and in conformity with the provisions of all leases, subleases or other contracts comprising a part of the Hydrocarbon Interests and other contracts and agreements forming a part of the Oil and Gas Properties of the Borrower and its Subsidiaries. Specifically in connection with the foregoing, except for those as could not be reasonably expected to have a Material Adverse Effect, (i) no Oil and Gas Property of the Borrower or any Subsidiary is subject to having allowable production reduced below the full and regular allowable (including the maximum permissible tolerance) because of any overproduction (whether or not the same was permissible at the time) and (ii) none of the wells comprising a part of the Oil and Gas Properties (or Properties unitized therewith) of the Borrower or any Subsidiary is deviated from the vertical more than the maximum permitted by Governmental Requirements (except with respect to horizontal wells permitted by Governmental Authority), and such wells are, in fact, bottomed under and are producing from, and the well bores are wholly within, the Oil and Gas Properties (or in the case of wells located on Properties unitized therewith, such unitized Properties) of the Borrower or such Subsidiary. All pipelines, wells, gas processing plants, platforms and other material improvements, fixtures and equipment owned in whole or in part by the Borrower or any of its Subsidiaries that are necessary to conduct normal operations are being maintained in a state adequate to conduct normal operations, and with respect to such of the foregoing which are operated by the Borrower or any of its Subsidiaries, in a manner consistent with the Borrower’s or its Subsidiaries’ past practices (other than

those the failure of which to maintain in accordance with this Section 7.17 could not reasonably be expected to have a Material Adverse Effect).

Section 7.18. Material Gas Imbalances, Prepayments . Except as set forth on Schedule 7.18 or on the most recent certificate delivered pursuant to Section 8.12(c) , on a net basis there are no Material Gas Imbalances, take or pay or other prepayments which would require the Borrower or any of its Subsidiaries to deliver Hydrocarbons produced from the Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor.

Section 7.19. Marketing of Production . Except for contracts listed and in effect on the date hereof on Schedule 7.19 , and thereafter either disclosed in writing to the Administrative Agent or included in the most recently delivered Reserve Report (with respect to all of which contracts the Borrower represents that it or its Subsidiaries are receiving a price for all production sold thereunder which is computed substantially in accordance with the terms of the relevant contract and are not having deliveries curtailed substantially below the subject Property’s delivery capacity), no material agreements exist which are not cancelable on 60 days’ notice or less without penalty or detriment for the sale of production from the Borrower’s or its Subsidiaries’ Hydrocarbons (including, without limitation, calls on or other rights to purchase, production, whether or not the same are currently being exercised) that (a) pertain to the sale of production at a fixed price and (b) have a maturity or expiry date of longer than six (6) months from the date hereof.

Section 7.20. Swap Agreements . Schedule 7.20 , as of the date hereof, and after the date hereof, each report required to be delivered by the Borrower pursuant to Section 8.01(f) , sets forth, a true and complete list of all Swap Agreements of the Borrower and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark to market value thereof, all credit support agreements relating thereto (including any margin required or supplied) and the counterparty to each such agreement.

Section 7.21. Use of Loans and Letters of Credit . The proceeds of the Loans and the Letters of Credit shall be used to provide working capital for exploration and production operations, to refinance Debt under the Existing Credit Agreement and for general corporate purposes. The Borrower and its Subsidiaries are not engaged principally, or as one of its or their important activities, in the business of extending credit for the purpose, whether immediate, incidental or ultimate, of buying or carrying margin stock (within the meaning of Regulation T, U or X of the Board). No part of the proceeds of any Loan or Letter of Credit will be used for any purpose which violates the provisions of Regulations T, U or X of the Board. The Borrower will not request any Borrowing or Letter of Credit, and the Borrower shall not use, and shall procure that its Subsidiaries and its or their respective directors, officers, employees and agents shall not use, the proceeds of any Borrowing or Letter of Credit (x) in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any Person in violation of any Anti-Corruption Laws, (y) for the purpose of funding, financing or facilitating any activities, business or transaction of or with any Sanctioned Person, or in any Sanctioned Country, or (z) in any manner that would result in the violation of any Sanctions applicable to any party hereto.

Section 7.22. Solvency . After giving effect to the transactions contemplated hereby, (a) the aggregate assets (after giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement), at a fair valuation, of the Borrower and the Guarantors, taken as a whole, will exceed the aggregate Debt of the Borrower and the Guarantors on a consolidated basis, as the Debt becomes absolute and matures, (b) each of the Borrower and the Guarantors will not have incurred or intended to incur, and will not believe that it will incur, Debt beyond its ability to pay such Debt (after taking into account the timing and amounts of cash to be received by each of the

Borrower and the Guarantors and the amounts to be payable on or in respect of its liabilities, and giving effect to amounts that could reasonably be received by reason of indemnity, offset, insurance or any similar arrangement) as such Debt becomes absolute and matures and (c) each of the Borrower and the Guarantors will not have (and will have no reason to believe that it will have thereafter) unreasonably small capital for the conduct of its business.

Section 7.23. International Operations . None of the Borrower and its Subsidiaries own, and have not acquired or made any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to, any Oil and Gas Properties located outside of the geographical boundaries of the United States or in the offshore federal waters of the United States of America.

Section 7.24. Anti-Corruption Laws and Sanctions . The Borrower has implemented and maintains in effect policies and/or procedures designed to ensure compliance by the Borrower and the Subsidiaries and their respective directors, officers, employees and agents with Anti-Corruption Laws and applicable Sanctions, and the Borrower and the Subsidiaries and their respective officers and employees and, to the knowledge of the Borrower, their respective directors and officers, are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. None of (a) the Borrower and the Subsidiaries or any of their respective directors, officers or employees, or (b) to the knowledge of the Borrower, any agent of the Borrower or any Subsidiary that will act in any capacity in connection with or benefit from the credit facility established hereby, is a Sanctioned Person. No Borrowing or Letter of Credit, use of proceeds or other transaction contemplated by this Agreement by Borrower or its Subsidiaries will violate any Anti-Corruption Law or applicable Sanctions.

Section 7.25. Security Instruments . The Mortgages are effective to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a legal, valid and enforceable Lien on all of the Borrower’s and each Guarantor’s right, title and interest in and to the Mortgaged Property thereunder and the proceeds thereof, and when the Mortgages are filed in the offices of the Counties in which the Oil and Gas Properties are located, the Mortgages shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of the Borrower and each Guarantor in such Mortgaged Property and the proceeds thereof, in each case prior and superior in right to any other Person, other than with respect to the rights of persons pursuant to Liens expressly permitted by Section 9.03 .

ARTICLE VIII
Affirmative Covenants

Until the Commitments have expired or been terminated and the principal of and interest on each Loan and all fees payable hereunder, and all other amounts payable under the Loan Documents shall have been paid in full and all Letters of Credit shall have expired or terminated and all LC Disbursements shall have been reimbursed and all other Obligations have been paid in full, the Borrower covenants and agrees with the Lenders that:

Section 8.01. Financial Statements; Other Information . The Borrower will furnish to the Administrative Agent and each Lender:

(a) Annual Financial Statements . As soon as available, but in any event in accordance with then applicable law and not later than 90 days after the end of each fiscal year of the Borrower, its audited consolidated balance sheet and related statements of operations, stockholders’ equity and cash flows as of the end of and for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all reported on by BDO or other independent public accountants of recognized national standing (without a “going concern” or like qualification or exception and without any qualification or exception as to the scope of such

audit) to the effect that such consolidated financial statements present fairly in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied.

(b) Quarterly Financial Statements . As soon as available, but in any event in accordance with then applicable law and not later than 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Borrower (beginning with the fiscal quarter ending June 30, 2015), its unaudited consolidated balance sheet and related unaudited statements of operations, stockholders’ equity and cash flows as of the end of and for such fiscal quarter and the then elapsed portion of the fiscal year, setting forth in each case in comparative form the figures for the corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the previous fiscal year, all certified by one of its Financial Officers as presenting fairly in all material respects the financial condition and results of operations of the Borrower and its Consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of footnotes.

(c) Certificate of Financial Officer — Compliance . Concurrently with any delivery of financial statements under Section 8.01(a) or Section 8.01(b) , a certificate of a Financial Officer in substantially the form of Exhibit D hereto (i) certifying as to whether a Default has occurred and, if a Default has occurred, specifying the details thereof and any action taken or proposed to be taken with respect thereto, (ii) setting forth reasonably detailed calculations demonstrating compliance with Section 9.01 and (iii) stating whether any change in GAAP or in the application thereof has occurred since the date of the audited financial statements referred to in Section 7.04 (or, if later, the most recently delivered audited financial statements pursuant to Section 8.01(a) ) and, if any such change has occurred, specifying the effect of such change on the financial statements accompanying such certificate.

(d) Certificate of Accounting Firm — Defaults . Concurrently with any delivery of financial statements under Section 8.01(a) , a certificate of the accounting firm that reported on such financial statements stating whether they obtained knowledge during the course of their examination of such financial statements of any Default (which certificate may be limited to the extent required by accounting rules or guidelines).

(e) Annual Budget . Within thirty (30) days after the end of each fiscal year of the Borrower, a report, in a form satisfactory to the Administrative Agent, prepared by or on behalf of the Borrower detailing on a monthly basis (i) the projected production of Hydrocarbons by the Borrower and the Subsidiaries and the assumptions used in calculating such projections, (ii) a proposed annual operating budget for the Borrower and the Subsidiaries for such fiscal year, (iii) the projected capital expenditures to be incurred by the Borrower and the Subsidiaries, with a breakdown of those capital expenditures to be used for the development of proved undeveloped reserves in the Oil and Gas Properties of the Borrower and the Subsidiaries, and the assumptions used in calculating such projections, and (iv) such other information as may be reasonably requested by the Administrative Agent.

(f) Certificate of Financial Officer — Swap Agreements . Concurrently with any delivery of financial statements under Section 8.01(a) and Section 8.01(b) , a certificate of a Financial Officer (a “Swap Agreement Certificate” ), in form of Exhibit E hereto, setting forth as of the last Business Day of the fiscal quarter or fiscal year for which such financial statements are being delivered, a true and complete list of all Swap Agreements of the Borrower and each Subsidiary, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support

agreements relating thereto not listed on Schedule 7.20 , any margin required or supplied under any credit support document, and the counterparty to each such agreement.

(g) Certificate of Insurer — Insurance Coverage . Concurrently with any delivery of financial statements under Section 8.01(a) , a certificate of insurance coverage from each insurer with respect to the insurance required by Section 8.07 , in form and substance satisfactory to the Administrative Agent, and, if requested by the Administrative Agent or any Lender, all copies of the applicable policies.

(h) Other Accounting Reports . Promptly upon receipt thereof, a copy of each other report or letter submitted to the Borrower or any of its Subsidiaries by independent accountants in connection with any annual, interim or special audit made by them of the books of the Borrower or any such Subsidiary, and a copy of any response by the Borrower or any such Subsidiary, or the board of directors (or other governing body) of the Borrower or any such Subsidiary, to such letter or report.

(i) SEC and Other Filings; Reports to Shareholders . Promptly after the same become publicly available, copies of all periodic and other reports, proxy statements and other materials filed by the Parent or any of its Subsidiaries with any securities commission having jurisdiction over such Person, including the Australian Securities Exchange or any other national securities exchange, or distributed by the Parent to its shareholders generally, as the case may be. Documents required to be delivered pursuant to this clause (i) may be delivered electronically and if so delivered shall be deemed to have been delivered on the date (x) on which the Borrower posts such documents, or provides a link thereto on the Borrower’s website on the Internet; or (ii) on which such documents are posted on the Borrower’s behalf on IntraLinks/SyndTrak or another relevant 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 written request by the Administrative Agent, the Borrower shall deliver paper copies of such documents to the Administrative Agent for further distribution to each Lender until a written request to cease delivering paper copies is given by the Administrative Agent and (ii) the Borrower shall notify (which may be by facsimile or electronic mail) the Administrative Agent of the posting of any such documents and provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents.

(j) Notices Under Material Instruments . Promptly after the furnishing thereof, copies of any financial statement, report or notice furnished to or by any Person pursuant to the terms of any preferred stock designation, indenture, loan or credit or other similar agreement (including, without limitation, the Permitted Senior Debt Documents), other than this Agreement and not otherwise required to be furnished to the Lenders pursuant to any other provision of this Section 8.01 .

(k) Lists of Purchasers . Concurrently with the delivery of any Reserve Report to the Administrative Agent pursuant to Section 8.12 , a list of the names and addresses of the Persons purchasing Hydrocarbons from the Borrower or any Subsidiary per Section 8.12(c)(v) .

(l) Notice of Sales of Oil and Gas Properties and Swap Terminations . In the event the Borrower or any Subsidiary intends to sell, transfer, assign or otherwise dispose of any Oil or Gas Properties (other than Hydrocarbons in the ordinary course of business) or any Equity Interests in any Subsidiary in accordance with Section 9.12 , prior written notice of such disposition, the price thereof and the anticipated date of closing and any other details thereof requested by the Administrative Agent or any Lender. In the event Borrower or any Subsidiary

receives notice or otherwise has knowledge of any Swap Termination, prompt written notice thereof.

(m) Notice of Casualty Events . Prompt written notice, and in any event within three Business Days, of the occurrence of any Casualty Event or the commencement of any action or proceeding that could reasonably be expected to result in a Casualty Event.

(n) Information Regarding Borrower and Guarantors . Prompt written notice (and in any event within thirty (30) days prior thereto) of any change (i) in the Borrower or any Guarantor’s corporate name or in any trade name used to identify such Person in the conduct of its business or in the ownership of its Properties, (ii) in the location of the Borrower or any Guarantor’s chief executive office or principal place of business, (iii) in the Borrower or any Guarantor’s identity or corporate structure or in the jurisdiction in which such Person is incorporated or formed, (iv) in the Borrower or any Guarantor’s jurisdiction of organization or such Person’s organizational identification number in such jurisdiction of organization, and (v) in the Borrower or any Guarantor’s federal taxpayer identification number, if any.

(o) Production Reports and Lease Operating Statements . Within 45 days after the end of each fiscal quarter, a report (a “Production Report” ) setting forth, for each calendar month during the then current fiscal year to date, (i) the volume of production and sales attributable to production (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Oil and Gas Properties, individually and in the aggregate, and (ii) the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such calendar month.

(p) Material Gas Imbalance Reports . If there are any Material Gas Imbalances, then within 45 days after the end of each fiscal quarter, a report setting forth, for the quarter during the then current fiscal year to date, the existence of any Material Gas Imbalances listed on a property-by-property basis.

(q) Notices of Certain Changes . Promptly, but in any event within five (5) Business Days after the execution thereof, copies of any amendment, modification or supplement to any of the Permitted Senior Debt Documents or the Organizational Documents of the Borrower or any Subsidiary.

(r) Permitted Senior Debt Incurrence . Written notice that it is considering incurring Permitted Senior Debt at least five (5) Business Days prior to the proposed incurrence of such Permitted Senior Debt. In connection therewith the Borrower will from time to time provide to the Administrative Agent copies of existing drafts of the Permitted Senior Debt Documents as requested by the Administrative Agent, and the Borrower will also promptly deliver to the Administrative Agent and the Lenders copies, certified by a Responsible Officer as true and complete, of each Permitted Senior Debt Document following the incurrence of any Permitted Senior Debt.

(s) PATRIOT Act . Promptly after the request by any Lender, all documentation and other information that such Lender reasonably requests in order to comply with its ongoing obligations under applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act.

(t) Other Requested Information . Promptly following any request therefor, such other information regarding the operations, business affairs and financial condition of the

Borrower or any Subsidiary or Affiliate (including, without limitation, any Plan or Multiemployer Plan and any reports or other information required to be filed under ERISA), or compliance with the terms of this Agreement or any other Loan Document, as the Administrative Agent or any Lender may reasonably request.

Section 8.02. Notices of Material Events . The Borrower will furnish to the Administrative Agent and each Lender prompt written notice of the following:

(a) the occurrence of any Default;

(b) the filing or commencement of, or the threat in writing of, any action, suit, proceeding, investigation or arbitration by or before any arbitrator or Governmental Authority against or affecting the Borrower or any Affiliate thereof not previously disclosed in writing to the Lenders or any material adverse development in any action, suit, proceeding, investigation or arbitration (whether or not previously disclosed to the Lenders) that, in either case, if adversely determined, could reasonably be expected to result in a Material Adverse Effect;

(c) the occurrence of any ERISA Event that, alone or together with any other ERISA Events that have occurred, is reasonably expected to result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000; and

(d) any other development that results in, or could reasonably be expected to result in, a Material Adverse Effect.

Each notice delivered under this Section 8.02 shall be accompanied by a statement of a Responsible Officer setting forth the details of the event or development requiring such notice and any action taken or proposed to be taken with respect thereto.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arrangers may, at their option, make available to the Lenders and the Issuing Bank the Communications by posting the Communications on the Platform and (b) certain of the Lenders (each, a “ Public Lender ”) may have personnel who do not wish to receive material non-public information with respect to the Borrower or its Affiliates, or any of the other Loan Parties, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons’ securities. The Borrower hereby agrees that (w) all Communications that are to be made available to Public Lenders that Borrower determines is not material non-public information shall be clearly and conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word “PUBLIC” shall appear prominently on the first page thereof; (x) by marking Communications “PUBLIC,” the Borrower shall be deemed to have authorized the Administrative Agent, the other Agents, the Arrangers, the Issuing Bank and the Lenders to treat such Communications as not containing any material non-public information with respect to the Borrower, any of the Loan Parties, or any of their securities for purposes of United States Federal and state securities laws (provided, however, that to the extent such Communications constitute Information, they shall be treated as set forth in Section 12.11 ); (y) all Communications marked “PUBLIC” are permitted to be made available through a portion of the Platform designated “Public Side Information;” and (z) the Administrative Agent, the other Agents and each of the Arrangers shall be entitled to treat any Communications that are not marked “PUBLIC” as being suitable only for posting on a portion of the Platform not designated “Public Side Information.”

Section 8.03. Existence; Conduct of Business . The Borrower will, and will cause each Subsidiary to, do or cause to be done all things necessary to preserve, renew and keep in full force and effect its legal existence and the rights, licenses, permits, privileges and franchises material to the conduct

of its business and maintain, if necessary, its qualification to do business in each other jurisdiction in which its Oil and Gas Properties is located or the ownership of its Properties requires such qualification, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect; provided that the foregoing shall not prohibit any merger, consolidation, liquidation or dissolution permitted under Section 9.11 .

Section 8.04. Payment of Obligations . The Borrower will, and will cause each Subsidiary to, pay its obligations, including Tax liabilities of the Borrower and all of its Subsidiaries before the same shall become delinquent or in default, except where (a) the validity or amount thereof is being contested in good faith by appropriate proceedings, (b) the Borrower or such Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with GAAP and (c) the failure to make payment pending such contest could not reasonably be expected to result in a Material Adverse Effect or result in the seizure or levy of any material Property of the Borrower or any Subsidiary.

Section 8.05. Performance of Obligations under Loan Documents . The Borrower will pay the Loans according to the terms hereof, and the Borrower will, and will cause each Subsidiary to, do and perform every act and discharge all of the obligations to be performed and discharged by them under the Loan Documents, including, without limitation, this Agreement, at the time or times and in the manner specified.

Section 8.06. Operation and Maintenance of Properties . The Borrower, at its own expense, will, and will cause each Subsidiary to:

(a) operate its Oil and Gas Properties and other material Properties or cause such Oil and Gas Properties and other material Properties to be operated in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, applicable pro ration requirements and Environmental Laws, and all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to regulate the development and operation of its Oil and Gas Properties and the production and sale of Hydrocarbons and other minerals therefrom, except, in each case, in those circumstances where a reasonably prudent operator under similar circumstances and in accordance with customary industry practice would be prudent not to do so, and the failure to comply could not reasonably be expected to have a Material Adverse Effect.

(b) operate and maintain in a careful and efficient manner in accordance with the practices of the industry and in compliance with all applicable contracts and agreements and in compliance with all Governmental Requirements, including, without limitation, all applicable laws, rules and regulations of every other Governmental Authority from time to time constituted to regulate the gathering, transportation or processing of Hydrocarbons and other minerals therefrom, except, in each case, in those circumstances where a reasonably prudent operator under similar circumstances and in accordance with customary industry practice would be prudent not to do so, and the failure to comply could not reasonably be expected to have a Material Adverse Effect, any pipelines, compressor stations, wells, gas or crude oil processing facilities, field gathering systems, tanks, tank batteries, pumps, pumping units, fixtures, valves, fittings, machinery, parts, engines, boilers, meters, apparatus, appliances, tools, implements, casing, tubing, rods, cables, wires, towers, surface and other material improvements, fixtures and equipment owned in whole or in part by the Borrower or any of its Subsidiaries that are useful or necessary to conduct normal operations relating to gathering, transportation, processing or removal of Hydrocarbons and other minerals therefrom.

(c) keep and maintain all Property material to the conduct of its business in good working order and condition, ordinary wear and tear excepted, and preserve, maintain and keep in good repair, working order and efficiency (ordinary wear and tear excepted) all of its material Oil and Gas Properties, any gas or crude oil processing facilities or equipment and other material Properties, including, without limitation, all equipment, machinery and facilities.

(d) promptly pay and discharge, or make reasonable and customary efforts to cause to be paid and discharged, all delay rentals, royalties, expenses and indebtedness accruing under the leases or other agreements affecting or pertaining to its Oil and Gas Properties and will do all other things necessary to keep unimpaired their rights with respect thereto and prevent any forfeiture thereof or default thereunder.

(e) promptly perform or make reasonable and customary efforts to cause to be performed, in accordance with industry standards, the obligations required by each and all of the assignments, deeds, leases, sub-leases, contracts and agreements affecting its interests in its Oil and Gas Properties, any gas or crude oil processing facilities and other material Properties.

(f) operate its Oil and Gas Properties, any gas or crude oil processing facilities and other material Properties or cause or make reasonable and customary efforts to cause such Oil and Gas Properties, gas or crude oil processing facilities and other material Properties to be operated in accordance with the practices of the industry and in material compliance with all applicable contracts and agreements and in compliance in all material respects with all Governmental Requirements, except, in each case, in those circumstances where a reasonably prudent operator under similar circumstances and in accordance with customary industry practice would be prudent not to do so, and the failure to comply could not reasonably be expected to have a Material Adverse Effect.

To the extent the Borrower is not the operator of any Property, the Borrower shall use reasonable efforts to cause the operator to comply with this Section 8.06 .

Section 8.07. Insurance . The Borrower will, and will cause each Subsidiary to, maintain, with financially sound and reputable insurance companies, insurance in such amounts and against such risks as are customarily maintained by companies engaged in the same or similar businesses operating in the same or similar locations. The loss payable clauses or provisions in said insurance policy or policies insuring any of the collateral for the Loans shall be endorsed in favor of and made payable to the Administrative Agent as its interests may appear and such policies shall name the Administrative Agent in its capacity as such as “additional insured” and provide that the insurer will endeavor to give at least 30 days prior notice of any cancellation to the Administrative Agent.

Section 8.08. Books and Records; Inspection Rights . The Borrower will, and will cause each Subsidiary to, keep proper books of record and account in which full, true and correct entries are made of all dealings and transactions in relation to its business and activities in accordance with GAAP to the extent applicable thereto. The Borrower will, and will cause each Subsidiary to, permit any representatives designated by the Administrative Agent or any Lender, upon reasonable prior notice, to visit and inspect its Properties, to examine and make extracts from its books and records, and to discuss its affairs, finances and condition with its officers and independent accountants, all at such reasonable times and as often as reasonably requested.

Section 8.09. Compliance with Laws . The Borrower will, and will cause each Subsidiary to, (a) comply with all laws, rules, regulations and orders of any Governmental Authority applicable to it or its Property, except where the failure to do so, individually or in the aggregate, could not reasonably be

expected to result in a Material Adverse Effect, and (b) maintain in effect and enforce policies and/or procedures designed to ensure compliance by the Borrower, the Subsidiaries and each of their respective directors, officers and employees with Anti-Corruption Laws and applicable Sanctions.

Section 8.10. Environmental Matters .

(a) The Borrower shall at its sole expense: (i) comply, and shall cause its Properties and operations and each Subsidiary and each Subsidiary’s Properties and operations to comply, with all applicable Environmental Laws, the breach of which could be reasonably expected to have a Material Adverse Effect; (ii) not dispose of or otherwise release, and shall cause each Subsidiary not to dispose of or otherwise release, any oil, oil and gas waste, hazardous substance, or solid waste on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties or any other Property to the extent caused by the Borrower’s or any of its Subsidiaries’ operations except in compliance with applicable Environmental Laws, the disposal or release of which could reasonably be expected to have a Material Adverse Effect; (iii) timely obtain or file, and shall cause each Subsidiary to timely obtain or file, all notices, permits, licenses, exemptions, approvals, registrations or other authorizations, if any, required under applicable Environmental Laws to be obtained or filed in connection with the operation or use of the Borrower’s or its Subsidiaries’ Properties, which failure to obtain or file could reasonably be expected to have a Material Adverse Effect; (iv) promptly commence and diligently prosecute to completion, and shall cause each Subsidiary to promptly commence and diligently prosecute to completion, any assessment, evaluation, investigation, monitoring, containment, cleanup, removal, repair, restoration, remediation or other remedial obligations (collectively, the “Remedial Work” ) in the event any Remedial Work is required or reasonably necessary under applicable Environmental Laws because of or in connection with the actual or suspected past, present or future disposal or other release of any oil, oil and gas waste, hazardous substance or solid waste on, under, about or from any of the Borrower’s or its Subsidiaries’ Properties, which failure to commence and diligently prosecute to completion could reasonably be expected to have a Material Adverse Effect; (v) conduct, and cause its Subsidiaries to conduct, their respective operations and businesses in a manner that will not expose any Property or Person to any oil, oil and gas waste, hazardous substance or solid waste that could reasonably be expected to form the basis for a claim for damages or compensation; and (vi) establish and implement, and shall cause each Subsidiary to establish and implement, such procedures as may be reasonably necessary to continuously determine and assure that the Borrower’s and its Subsidiaries’ obligations under this Section 8.10(a) are timely and fully satisfied, which failure to establish and implement could reasonably be expected to have a Material Adverse Effect.

(b) The Borrower will promptly, but in no event later than five days of the occurrence of a triggering event, notify the Administrative Agent and the Lenders in writing of any threatened action, investigation or inquiry by any Governmental Authority or any threatened demand or lawsuit by any landowner or other third party against the Borrower or its Subsidiaries or their Properties of which the Borrower has knowledge in connection with any Environmental Laws (excluding routine testing and corrective action) if the Borrower reasonably anticipates that such action will result in liability (whether individually or in the aggregate) in excess of $1,000,000, not fully covered by insurance, subject to normal deductibles.

(c) The Borrower will, and will cause each Subsidiary to, provide environmental audits and tests in accordance with American Society of Testing Materials standards upon request by the Administrative Agent and no more than once per year in the absence of any Event of Default (or as otherwise required to be obtained by the Administrative Agent or the Lenders by

any Governmental Authority), in connection with any future Material Acquisitions of Oil and Gas Properties or other Properties.

Section 8.11. Further Assurances .

(a) The Borrower at its sole expense will, and will cause each Subsidiary to, promptly execute and deliver to the Administrative Agent all such other documents, agreements and instruments reasonably requested by the Administrative Agent, including a Reconciliation Schedule, to comply with, cure any defects or accomplish the conditions precedent, covenants and agreements of the Borrower or any Subsidiary, as the case may be, in the Loan Documents, including the Notes, or to further evidence and more fully describe the collateral intended as security for the Obligations, or to correct any omissions in this Agreement or the Security Instruments, or to state more fully the obligations secured therein, or to perfect, protect or preserve any Liens created pursuant to this Agreement or any of the Security Instruments or the priority thereof, or to make any recordings, file any notices or obtain any consents, all as may be necessary or appropriate, in the sole discretion of the Administrative Agent, in connection therewith.

(b) The Borrower hereby authorizes the Administrative Agent to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Mortgaged Property or other Property covered by the Lien of the Security Instruments without the signature of the Borrower or any other Guarantor where permitted by law. A carbon, photographic or other reproduction of the Security Instruments or any financing statement covering the Mortgaged Property or such other Property or any part thereof shall be sufficient as a financing statement where permitted by law.

Section 8.12. Reserve Reports .

(a) On or before March 1st and September 1st of each year, commencing September 1, 2015, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report evaluating the Oil and Gas Properties of the Borrower and its Subsidiaries as of the immediately preceding January 1st and July 1st, respectively. The Reserve Report as of January 1 of each year shall be prepared by one or more Approved Petroleum Engineers, and the July 1 Reserve Report of each year shall be prepared by or under the supervision of the chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding Reserve Report prepared by an Approved Petroleum Engineer.

(b) In the event of an Interim Redetermination, the Borrower shall furnish to the Administrative Agent and the Lenders a Reserve Report prepared by or under the supervision of the chief engineer of the Borrower who shall certify such Reserve Report to be true and accurate and to have been prepared in accordance with the procedures used in the immediately preceding Reserve Report prepared by an Approved Petroleum Engineer. For any Interim Redetermination requested by the Administrative Agent or the Borrower pursuant to Section 2.07(b) , the Borrower shall provide such Reserve Report with an “as of” date as required by the Administrative Agent as soon as possible, but in any event no later than thirty (30) days following the receipt of such request.

(c) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent and the Lenders a certificate from a Responsible Officer certifying that: (i) the information contained in the Reserve Report and any other information delivered in

connection therewith is true and correct in all material respects, it being understood that each Reserve Report is necessarily based upon professional opinions, estimates and projections, and the Borrower does not warrant that the same will prove to be accurate, (ii) the Borrower or its Subsidiaries own good and defensible title to the Oil and Gas Properties evaluated in such Reserve Report and such Properties are free of all Liens except for Liens permitted by Section 9.03 , (iii) except as set forth on an exhibit to the certificate, on a net basis there are no Material Gas Imbalances, take or pay or other prepayments in excess of the volume specified in Section 7.18 with respect to its Oil and Gas Properties evaluated in such Reserve Report which would require the Borrower or any Subsidiary to deliver Hydrocarbons either generally or produced from such Oil and Gas Properties at some future time without then or thereafter receiving full payment therefor, (iv) none of their Oil and Gas Properties have been sold since the date of the last Borrowing Base determination except Hydrocarbons sold in the ordinary course and other Oil and Gas Properties as set forth on an exhibit to the certificate, which certificate shall list all of its Oil and Gas Properties (other than Hydrocarbons sold in the ordinary course of business) sold and in such detail as reasonably required by the Administrative Agent, (v) attached to the certificate is a list of all marketing agreements entered into subsequent to the later of the date hereof or the most recently delivered Reserve Report which the Borrower could reasonably be expected to have been obligated to list on Schedule 7.19 had such agreement been in effect on the date hereof, (vi) attached to the certificate is a list of the names and addresses of the purchasers which accounted for at least 75% of the total natural gas and oil revenues of the Borrower and its Subsidiaries during the 12-month period ended as of the immediately preceding December 31 or June 30, as applicable and (vii) attached thereto is a schedule of the Oil and Gas Properties evaluated by such Reserve Report that are Mortgaged Properties and demonstrating the percentage of the total value of the proved Oil and Gas Properties that the value of such Mortgaged Properties represent in compliance with Section 8.14(a) .

(d) With the delivery of each Reserve Report, the Borrower shall provide to the Administrative Agent and the Lenders an engineering update based upon then-current SEC pricing (an “SEC Report” ). Borrower may (but is not obligated to) provide additional SEC Reports to Administrative Agent and the Lenders not more than one time during each fiscal quarter.

Section 8.13. Title Information .

(a) On or before the delivery to the Administrative Agent and the Lenders of each Reserve Report required by Section 8.12(a) and at such other times as Agent shall reasonably request, the Borrower will deliver title information in form and substance acceptable to the Administrative Agent covering enough of the Oil and Gas Properties evaluated by such Reserve Report that were not included in the immediately preceding Reserve Report, so that the Administrative Agent shall have received together with title information previously delivered to the Administrative Agent, satisfactory title information on at least 80% of the Recognized Value of the proved Oil and Gas Properties evaluated by such Reserve Report.

(b) If the Borrower has provided title information for additional Properties under Section 8.13(a) , the Borrower shall, within 60 days of notice from the Administrative Agent that title defects or exceptions exist with respect to such additional Properties, either (i) cure any such title defects or exceptions (including defects or exceptions as to priority) which are not permitted by Section 9.03 raised by such information, (ii) substitute acceptable Mortgaged Properties with no title defects or exceptions except for Excepted Liens (other than Excepted Liens described in clauses (e), (g) and (h) of such definition) having an equivalent value or (iii) deliver title information in form and substance acceptable to the Administrative Agent so that the

Administrative Agent shall have received, together with title information previously delivered to the Administrative Agent, satisfactory title information on at least 80% of the Recognized Value of the proved Oil and Gas Properties evaluated by such Reserve Report.

(c) If the Borrower is unable to cure any title defect requested by the Administrative Agent or the Lenders to be cured within the 60-day period or the Borrower does not comply with the requirements to provide acceptable title information covering 80% of the Recognized Value of the proved Oil and Gas Properties evaluated in the most recent Reserve Report, such default shall not be a Default, but instead the Administrative Agent shall have the right to exercise the following remedy in its sole discretion from time to time, 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. To the extent that the Administrative Agent is not satisfied with title to any Mortgaged Property after the 60-day period has elapsed, such unacceptable Mortgaged Property shall not count towards the 80% requirement, and 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 Administrative Agent to cause the Borrower to be in compliance with the requirement to provide acceptable title information on 80% of the Recognized Value of the proved Oil and Gas Properties. This new Borrowing Base shall become effective immediately after receipt of such notice.

Section 8.14. Additional Collateral; Additional Guarantors .

(a) In connection with each redetermination of the Borrowing Base, the Borrower shall review the Reserve Report and the list of current Mortgaged Properties (as described in Section 8.12(c)(vii) ) to ascertain whether the Mortgaged Properties represent at least 80% of the Recognized Value of the proved Oil and Gas Properties evaluated in the most recently completed Reserve Report after giving effect to exploration and production activities, acquisitions, dispositions and production. In the event that the Mortgaged Properties do not represent at least 80% of such Recognized Value, then the Borrower shall, and shall cause its Subsidiaries to, grant, within thirty (30) days of delivery of the certificate required under Section 8.12(c) , to the Administrative Agent as security for the Obligations a first-priority Lien interest ( provided that Excepted Liens of the type described in clauses (a) to (d) and (f) of the definition thereof may exist, but subject to the provisos at the end of such definition) on additional Oil and Gas Properties not already subject to a Lien of the Security Instruments such that after giving effect thereto, the Mortgaged Properties will represent at least 80% of such total value. All such Liens will be created and perfected by and in accordance with the provisions of Mortgages, deeds of trust, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Subsidiary grants a Lien on its Oil and Gas Properties to the Administrative Agent for the ratable benefit of the Secured Parties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b) .

(b) The Borrower shall promptly cause each Subsidiary to guarantee the Obligations pursuant to a Guaranty Agreement. In connection with any such guaranty, the Borrower shall, or shall cause such Subsidiary to, promptly, (i) pledge all of the Equity Interests of such new Subsidiary pursuant to a Pledge Agreement (including, without limitation, delivery of original stock certificates, if any, evidencing the Equity Interests of such Subsidiary, together with an appropriate undated stock powers for each certificate duly executed in blank by the registered owner thereof) and (ii) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent.

(c) If the Borrower elects to provide additional Mortgaged Properties in lieu of making any mandatory prepayment pursuant to Section 3.04(c) , then the Borrower shall, or shall cause its Subsidiaries to, grant to the Administrative Agent as security for the Obligations a first-priority Lien interest (subject only to Excepted Liens) on additional Oil and Gas Properties not already subject to a Lien of the Security Instruments. All such Liens will be created and perfected by and in accordance with the provisions of Mortgages, deeds of trust, security agreements and financing statements or other Security Instruments, all in form and substance reasonably satisfactory to the Administrative Agent and in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes. In order to comply with the foregoing, if any Subsidiary places such a Lien on its Oil and Gas Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor and comply with Section 8.14(b) .

(d) In the event that (i) the Required Lenders waive the provisions of Section 9.15 to permit the Borrower or any Domestic Subsidiary to become the owner of a Foreign Subsidiary (such waiver to be granted in the sole discretion of the Required Lenders), and (ii) such Foreign Subsidiary has total assets in excess of $1,000,000, then the Borrower shall promptly, or shall cause such Domestic Subsidiary to promptly, guarantee the Obligations pursuant to the Guaranty Agreement. In connection with any such guaranty, the Borrower shall, or shall cause such Domestic Subsidiary to, (i) execute and deliver a supplement to the Guaranty Agreement, (ii) pledge 65% of all the Equity Interests of such Foreign Subsidiary (including, without limitation, delivery of original stock certificates evidencing such Equity Interests of such Foreign Subsidiary, together with appropriate stock powers for each certificate duly executed in blank by the registered owner thereof) and (iii) execute and deliver such other additional closing documents, certificates and legal opinions as shall reasonably be requested by the Administrative Agent.

Section 8.15. ERISA Compliance . The Borrower will promptly furnish and will cause the Subsidiaries and any ERISA Affiliate to promptly furnish to the Administrative Agent (i) promptly after the filing thereof with the United States Secretary of Labor, the Internal Revenue Service or the PBGC, copies of each annual and other report with respect to each Plan or any trust created thereunder, (ii) immediately upon becoming aware of the occurrence of any ERISA Event or of any “prohibited transaction,” as described in Section 406 of ERISA or in Section 4975 of the Code, in connection with any Plan or any trust created thereunder, a written notice signed by the President or the principal Financial Officer of the Borrower, the Subsidiary or the ERISA Affiliate, as the case may be, specifying the nature thereof, what action the Borrower, the Subsidiary or the ERISA Affiliate, as applicable, is taking or proposes to take with respect thereto, and, when known, any action taken or proposed by the Internal Revenue Service, the Department of Labor or the PBGC with respect thereto, and (iii) immediately upon receipt thereof, copies of any notice of the PBGC’s intention to terminate or to have a trustee appointed to administer any Plan. With respect to each Plan (other than a Multiemployer Plan), the Borrower will, and will cause each Subsidiary and ERISA Affiliate to, (i) satisfy in full and in a timely manner, without incurring any late payment or underpayment charge or penalty and without giving rise to any lien, all of the contribution and funding requirements of Section 412 of the Code (determined without regard to subsections (d), (e), (f) and (k) thereof) and of Section 302 of ERISA (determined without regard to sections 303, 304 and 306 of ERISA), and (ii) pay, or cause to be paid, to the PBGC in a timely manner, without incurring any late payment or underpayment charge or penalty, all premiums required pursuant to sections 4006 and 4007 of ERISA.

Section 8.16. 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 Loan Party to honor all of its obligations under each Loan Document in respect of Swap Obligations (provided, however, that each Qualified ECP Guarantor shall only be liable under

this Section 8.16 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 8.16 , 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 all of the Obligations have been fully and finally paid . Each Qualified ECP Guarantor intends that this Section 8.16 constitute, and this Section 8.16 shall be deemed to constitute, a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

ARTICLE IX
Negative Covenants

Until the Commitments have expired or terminated and the principal of and interest on each Loan and all fees payable hereunder and all other amounts payable under the Loan Documents have been paid in full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been reimbursed, and all other Obligations have been paid in full, the Borrower covenants and agrees with the Lenders that:

Section 9.01. Financial Covenants .

(a) Ratio of Total Debt to EBITDAX . The Borrower will not, as of the last day of any fiscal quarter, permit its ratio of Total Debt as of such time to EBITDAX to exceed 4.0 to 1.0. EBITDAX shall be calculated at the end of each fiscal quarter using the results of the twelve-month period ending with that fiscal quarter end.

(b) Current Ratio . The Borrower will not permit, as of the last day of any fiscal quarter, its ratio of (i) consolidated current assets (including the unused amount of the total Commitments, but excluding non-cash assets under ASC 815) to (ii) consolidated current liabilities (excluding non-cash obligations under ASC 815 and current maturities under this Agreement) to be less than 1.0 to 1.0.

Section 9.02. Debt . The Borrower will not, and will not permit any Subsidiary to, incur, create, assume or suffer to exist any Debt, except:

(a) the Notes or other Obligations arising under the Loan Documents or any guaranty of or suretyship arrangement for the Notes or other Obligations;

(b) accounts payable and accrued expenses, liabilities or other obligations to pay the deferred purchase price of Property or services, from time to time incurred in the ordinary course of business which are not greater than 90 days past the date of invoice or delinquent or which are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordance with GAAP;

(d) Debt associated with bonds or surety obligations required by Governmental Requirements in connection with the operation of the Oil and Gas Properties;

(e) intercompany Debt between the Borrower and any Subsidiary or between Subsidiaries to the extent permitted by Section 9.05(g) ; provided that such Debt is not held, assigned, transferred, negotiated or pledged to any Person other than the Borrower or one of its

Wholly-Owned Subsidiaries, and, provided further, that any such Debt owed by either the Borrower or a Guarantor shall be subordinated to the Obligations on terms set forth in the Guaranty Agreement;

(f) endorsements of negotiable instruments for collection in the ordinary course of business;

(g) Debt existing on the date hereof and disclosed to the Lenders on Schedule 9.02 ;

(h) Debt approved by the Required Lenders and subordinated to Borrower’s obligations to Lenders in a manner acceptable to the Administrative Agent in its sole discretion;

(i) other Debt not to exceed $1,000,000 in the aggregate at any one time outstanding;

(j) Permitted Senior Debt and any guarantees thereof; provided that (i) the aggregate principal amount (or accreted value, if applicable) of all Permitted Senior Debt outstanding at any one time (without duplication, and taking into account all concurrent payments or redemptions of Permitted Senior Debt with the proceeds of other Permitted Senior Debt, to the extent otherwise permitted hereunder) shall not exceed $300,000,000, (ii) the Borrower shall comply with Section 8.01(r); and (iii) the Borrowing Base then in effect shall be adjusted to the extent required by Section 2.07(e)(iii), and the Borrower shall make any prepayment required by Section 3.04(c)(iii). Upon each such incurrence of Permitted Senior Debt, the Borrower shall be deemed to represent and warrant to the Lenders that both before and immediately after giving effect to the incurrence of such Permitted Senior Debt (and any concurrent repayment of other Permitted Senior Debt refinanced with such Permitted Senior Debt then being incurred, as the case may be, with the proceeds of such incurrence), no Event of Default shall occur and be continuing or would result therefrom; and

(k) Debt arising under Swap Agreements permitted under Section 9.18 hereof.

Section 9.03. Liens . The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or permit to exist any Lien on any of its Properties (now owned or hereafter acquired), except:

(a) Liens securing the payment of any Obligations;

(b) Excepted Liens;

(d) Liens existing on the date hereof and disclosed to the Lenders on Schedule 9.03 ; and

(e) Liens on Property not constituting collateral for the Obligations and not otherwise permitted by the foregoing clauses of this Section 9.03 ; provided that the aggregate principal or face amount of all Debt secured under this Section 9.03(e) shall not exceed $1,000,000 at any time.

Section 9.04. Dividends, Distributions and Redemptions; Redemption of Permitted Senior Debt .

(a) Dividends, Distributions and Redemptions . The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital to its stockholders, members or partners or make any distribution of its Property to its Equity Interest holders, provided that, so long as no Default has occurred and is continuing or will result therefrom and no Borrowing Base Deficiency then exists:

(i) the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock);

(ii) Subsidiaries may declare and pay dividends and distributions ratably with respect to their Equity Interests;

(iii) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries; and

(iv) the Borrower may make Restricted Payments to the Parent to fund selling, general and administrative expenses of Parent, not to exceed $750,000 in any twelve-month period.

(b) Redemption of Permitted Senior Debt and Amendment of Permitted Senior Debt Documents . The Borrower will not, and will not permit any Subsidiary to: (i) prior to the date that is 91 days after the Maturity Date call, make or offer to make any optional or voluntary Redemption of or otherwise optionally or voluntarily Redeem (whether in whole or in part) any Permitted Senior Debt; provided that, so long as no Event of Default or Borrowing Base Deficiency shall have occurred and be continuing or would result therefrom, the Borrower may optionally prepay Permitted Senior Debt, in whole or in part, with the proceeds of Permitted Senior Debt; (ii) in the case of Permitted Senior Debt or any Permitted Senior Debt Documents related thereto, amend, modify, waive or otherwise change, consent or agree to any amendment, modification, waiver or other change to, any of the terms of any such Permitted Senior Debt or any Permitted Senior Debt Document related thereto if the effect thereof would be cause such Debt no longer to qualify as Permitted Senior Debt pursuant to the definition thereof, or (iii) with respect to any Permitted Senior Debt that is subordinated to the Obligations or any other Debt, designate any such Debt (other than obligations of the Borrower and the Subsidiaries pursuant to the Loan Documents) as “Specified Senior Indebtedness” or “Specified Guarantor Senior Indebtedness” or give any such other Debt any other similar designation for the purposes of such Permitted Senior Debt Document related to such Permitted Senior Debt that is subordinated to the Obligations or any other Debt.

Section 9.05. Investments, Loans and Advances . The Borrower will not, and will not permit any Subsidiary to, make or permit to remain outstanding any Investments in or to any Person, except that the foregoing restriction shall not apply to:

(a) Investments reflected in the Financial Statements or which are disclosed to the Lenders in Schedule 9.05 ;

(b) accounts receivable arising in the ordinary course of business;

(c) direct obligations of the United States or any agency thereof, or obligations guaranteed by the United States or any agency thereof, in each case maturing within one year from the date of creation thereof;

(d) commercial paper maturing within one year from the date of creation thereof rated in the highest grade by S&P or Moody’s;

(e) deposits maturing within one year from the date of creation thereof with, including certificates of deposit issued by, any Lender or any office located in the United States of any other bank or trust company which is organized under the laws of the United States or any state thereof, has capital, surplus and undivided profits aggregating at least $100,000,000 (as of the date of such bank or trust company’s most recent financial reports) and has a short term deposit rating of no lower than A2 or P2, as such rating is set forth from time to time, by S&P or Moody’s, respectively or, in the case of any Foreign Subsidiary, a bank organized in a jurisdiction in which the Foreign Subsidiary conducts operations having assets in excess of $500,000,000 (or its equivalent in another currency);

(f) deposits in money market funds investing exclusively in Investments described in Section 9.05(c) , Section 9.05(d) or Section 9.05(e) ;

(g) Investments (i) made by the Borrower in or to the Guarantors, and (ii) made by any Subsidiary in or to the Borrower or any Guarantor;

(h) Investments (including, without limitation, capital contributions) in general or limited partnerships or other types of entities (each a “venture”) entered into by the Borrower or a Subsidiary with others in the ordinary course of business; provided that (i) any such venture is engaged exclusively in oil and gas exploration, development, production, processing and related activities, including transportation, (ii) the interest in such venture is acquired in the ordinary course of business and on fair and reasonable terms and (iii) such venture interests acquired and capital contributions made (valued as of the date such interest was acquired or the contribution made) do not exceed, in the aggregate at any time outstanding an amount equal to $1,000,000;

(i) Investments made by the Borrower or a Guarantor in direct ownership interests in additional Oil and Gas Properties and gas gathering systems related thereto or 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, provided that (A) the Borrower shall be in compliance, on a pro forma basis after giving effect to any such Investment, with the financial covenants set forth in Section 9.01 recomputed as of the last day of the most recently ended fiscal quarter of the Borrower for which financial statements are available, and (B) no Event of Default shall have occurred and be continuing or would result therefrom;

(j) Permitted Employee Loans and other loans or advances to employees, managers, officers or directors in the ordinary course of business of the Borrower or any of its Subsidiaries, in each case only as permitted by applicable law, including Section 402 of the Sarbanes Oxley Act of 2002, but in any event all such amounts under this clause (j) not to exceed $600,000 in the aggregate at any time (which amount is in addition to the Investments otherwise permitted by this Section 9.05 );

(k) Investments in stock, obligations or securities received in settlement of debts arising from Investments permitted under this Section 9.05 owing to the Borrower or any Subsidiary as a result of a bankruptcy or other insolvency proceeding of the obligor in respect of such debts or upon the enforcement of any Lien in favor of the Borrower or any of its Subsidiaries; provided that the Borrower shall give the Administrative Agent prompt written notice in the event that the aggregate amount of all Investments held at any one time under this Section 9.05(k) exceeds $1,000,000; and

(l) other Investments not to exceed $1,000,000 in the aggregate at any time.

Section 9.06. Nature of Business; International Operations . The Borrower will not, and will not permit any Subsidiary to, allow any material change to be made in the character of its business as currently conducted by it and business activities reasonably incidental thereto as an independent oil and gas exploration and production company with operations in the continental United States. From and after the date hereof, the Borrower and its Subsidiaries will not acquire or make any other expenditure (whether such expenditure is capital, operating or otherwise) in or related to, any Oil and Gas Properties not located within the geographical boundaries of the United States or in the offshore federal waters of the United States.

Section 9.07. Limitation on Leases . The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any obligation for the payment of rent or hire of Property of any kind whatsoever (real or personal but excluding (a) Capital Leases, leases of Hydrocarbon Interests, and leases of drilling rigs and (b) leases of compression equipment not to exceed $5,000,000 in any period of twelve consecutive calendar months), under leases or lease agreements which would cause the aggregate amount of all payments made by the Borrower and the Subsidiaries pursuant to all such leases or lease agreements, including, without limitation, any residual payments at the end of any lease, to exceed $1,000,000 in any period of twelve consecutive calendar months during the life of such leases.

Section 9.08. Proceeds of Loans . The Borrower will not permit the proceeds of the Loans to be used for any purpose other than those permitted by Section 7.21 . Neither the Borrower nor any Person acting on behalf of the Borrower has taken or will take any action which might cause any of the Loan Documents to violate Regulations T, U or X or any other regulation of the Board or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect. If requested by the Administrative Agent, the Borrower will furnish to the Administrative Agent and each Lender a statement to the foregoing effect in conformity with the requirements of FR Form U-1 or such other form referred to in Regulation U, Regulation T or Regulation X of the Board, as the case may be.

Section 9.09. ERISA Compliance . The Borrower will not, and will not permit any Subsidiary to, at any time:

(a) engage in, or permit any ERISA Affiliate to engage in, any transaction in connection with which the Borrower, a Subsidiary or any ERISA Affiliate could be subjected to either a civil penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of ERISA or a tax imposed by Chapter 43 of Subtitle D of the Code.

(b) terminate, or permit any ERISA Affiliate to terminate, any Plan in a manner, or take any other action with respect to any Plan, which could result in any liability of the Borrower, a Subsidiary or any ERISA Affiliate to the PBGC.

(c) fail to make, or permit any ERISA Affiliate 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 any ERISA Affiliate is required to pay as contributions thereto.

(d) permit to exist, or allow any ERISA Affiliate to permit to exist, any accumulated funding deficiency 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 ERISA Affiliate to permit, the actuarial present value of the benefit liabilities under any Plan maintained by the Borrower, a Subsidiary or any ERISA Affiliate which 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. The term “actuarial present value of the benefit liabilities” shall have the meaning specified in Section 4041 of ERISA.

(f) contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any Multiemployer Plan.

(g) acquire, or permit any ERISA Affiliate to acquire, an interest in any Person that causes such Person to become an ERISA Affiliate with respect to the Borrower or a Subsidiary or with respect to any ERISA Affiliate of the Borrower or a Subsidiary 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, (i) any Multiemployer Plan, or (ii) 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 ERISA Affiliate to incur, a liability to or on account of a Plan under sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA.

(i) contribute to or assume an obligation to contribute to, or permit any ERISA Affiliate to contribute to or assume an obligation to contribute to, any employee welfare benefit plan, as defined in Section 3(1) of ERISA, including, without limitation, any such plan 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 material liability.

(j) amend, or permit any ERISA Affiliate to amend, a Plan resulting in an increase in current liability such that the Borrower, a Subsidiary or any ERISA Affiliate is required to provide material security to such Plan under Section 401(a)(29) of the Code.

Section 9.10. 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, the Borrower will not, and will not permit any Subsidiary to, discount or sell (with or without recourse) any of its notes receivable or accounts receivable.

Section 9.11. Mergers, Etc . Neither the Borrower nor any of its Subsidiaries will merge into or with or consolidate with any other Person, or sell, transfer, lease or otherwise dispose of (whether in one

transaction or in a series of transactions) all or substantially all of its Property to any other Person or liquidate or dissolve, except that any Wholly-Owned Subsidiary may merge with, or participate in a consolidation with, any other Wholly-Owned Subsidiary and the Borrower may merge with, or participate in a consolidation with, any Wholly-Owned Subsidiary so long as the Borrower is the continuing or surviving corporation.

Section 9.12. Sale of Properties . The Borrower will not, and will not permit any Subsidiary to, sell, assign, farm-out, convey or otherwise transfer any Property (other than to the Borrower or a Guarantor) except for:

(a) the sale of Hydrocarbons in the ordinary course of business, and the sale or other transfer in the ordinary course of business of Oil and Gas Properties (or interests therein) to which no proved reserves or oil or gas are attributed;

(b) farmouts of undeveloped acreage or depths and assignments in connection with such farmouts and reassignments of Oil and Gas Property to a farmor upon expiration or termination of a farmout;

(c) the sale or transfer of equipment that is no longer necessary for the business of the Borrower or such Subsidiary or is replaced by equipment of at least comparable value and use;

(d) provided no Event of Default has occurred and is continuing or would result therefrom, Asset Dispositions; provided that (i) 100% of the consideration received in respect of such Asset Disposition shall be cash, (ii) the consideration received in respect of such sale or other disposition shall be equal to or greater than the fair market value of the Oil and Gas Property disposed (as reasonably determined by the board of directors 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), and (iii) if applicable, the Borrowing Base shall be reduced, effective immediately upon such Asset Disposition in accordance with Section 2.07(e)(i) , and if any Borrowing Base Deficiency shall result from such reduction, Borrower shall immediately prepay the Loans outstanding hereunder in an amount sufficient to eliminate such Borrowing Base Deficiency; and

(e) sales and other dispositions of Properties not regulated by Section 9.12(a) to (d) having a fair market value not to exceed $1,000,000 during any 12-month period.

Section 9.13. Environmental Matters . The Borrower will not, and will not permit any Subsidiary to, cause or permit any of its Property to be in violation of, or do anything or permit anything to be done which will subject any such Property to any Remedial Work under any Environmental Laws, assuming disclosure to the applicable Governmental Authority of all relevant facts, conditions and circumstances, if any, pertaining to such Property where such violations or remedial obligations could reasonably be expected to have a Material Adverse Effect.

Section 9.14. Transactions with Affiliates . The Borrower will not, and will not permit any Subsidiary to, enter into any transaction, including, without limitation, any purchase, sale, lease or exchange of Property or the rendering of any service, with any Affiliate (other than the Guarantors and Wholly-Owned Subsidiaries of the Borrower) unless such transactions are otherwise permitted under this Agreement and are upon fair and reasonable terms no less favorable to it than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate. The restrictions in this Section 9.14

do not apply to Restricted Payments permitted under Section 9.04 or to the terms of any additional Equity Investments in the Borrower.

Section 9.15. Subsidiaries . The Borrower will not, and will not permit any Subsidiary to, create or acquire any additional Subsidiary unless the Borrower gives written notice to the Administrative Agent of such creation or acquisition and complies with Section 8.14(b) and Section 8.14(c) . The Borrower shall not, and shall not permit any Subsidiary to, sell, assign or otherwise dispose of any Equity Interests in any Subsidiary except in compliance with Section 9.12(d) . Neither the Borrower nor any Subsidiary shall have any Foreign Subsidiaries and each Subsidiary shall be a Wholly-Owned Subsidiary.

Section 9.16. Negative Pledge Agreements; Dividend Restrictions . The Borrower will not, and will not permit any Subsidiary to, create, incur, assume or suffer to exist any contract, agreement or understanding (other than this Agreement, the Security Instruments, the Permitted Senior Debt Documents or Capital Leases creating Liens permitted by Section 9.03(c) ) which in any way prohibits or restricts (or which requires the consent of or notice to other Persons in connection therewith): (a) the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Administrative Agent and the Lenders, (b) any Subsidiary from paying dividends or making distributions to the Borrower or any Guarantor, (c) paying any Debt owed to, the Borrower or any other Subsidiary, (d) making loans or advances to, or other Investments in, the Borrower or any other Subsidiary, or (e) transferring any of its assets to the Borrower or any other Subsidiary.

Section 9.17. Gas Imbalances, Take-or-Pay or Other Prepayments . The Borrower will not, and will not permit any Subsidiary to, (a) incur, become or remain liable for, any Material Gas Imbalance, or (b) except in those circumstances where in accordance with customary industry practice it would otherwise be prudent to do so and such actions or transactions individually or in the aggregate will not have a Material Adverse Effect, allow take-or-pay or other prepayments with respect to the Oil and Gas Properties of the Borrower or any Subsidiary that would require the Borrower or such Subsidiary to deliver Hydrocarbons at some future time without then or thereafter receiving full payment therefor.

Section 9.18. Swap Agreements . The Borrower will not, and will not permit any Subsidiary to, enter into any Swap Agreements with any Person other than:

(a) Swap Agreements in respect of commodities:

(i) which are for combined durations of not more than 60 months;

(ii) with an Approved Counterparty; and

(iii) the notional volumes for which (when aggregated with other commodity Swap Agreements then in effect other than basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is executed, 90% of the reasonably anticipated Projected Production from total Proved Reserves during the period during which such Swap Agreement is in effect for each of crude oil and natural gas, calculated separately, provided that

(A) not more than 25% of total hedged volumes will be comprised of hedged volumes from properties other than Proved Developed Producing Reserves, as included in the most recently delivered SEC Report for each of crude oil and natural gas, calculated separately; and

(B) the aggregate notional volumes of all such Swap Agreements (other than put and floor options and basis differential swaps on volumes already hedged pursuant to other Swap Agreements) in any current or future fiscal quarter, as listed in the most recently delivered Swap Agreement Certificate, shall not exceed 100% of gross volumes of crude oil and natural gas production for the most recently completed fiscal quarter, as set forth on the most recently delivered Production Report, for each of crude oil and natural gas, calculated separately;

At all times, clause (a)(iii) above shall be deemed to refer to the most recent SEC Report, Production Report and Swap Agreement Certificate received by the Administrative Agent, as applicable.

If any Swap Agreement Certificate reflects, or if the Borrower otherwise determines and so notifies the Administrative Agent, that after the end of any fiscal quarter the requirements of clause (a)(iii)(B) above are not met, then if requested by the Administrative Agent, the Borrower shall within 30 days of such request, terminate, create off-setting positions, or otherwise unwind or monetize existing Swap Agreements such that, at such time, the Borrower is then in compliance with the requirements of clause (a)(iii)(B) above.

(b) Swap Agreements in respect of interest rates with an Approved Counterparty, as follows: (i) Swap Agreements effectively converting interest rates from fixed to floating, the notional amounts of which (when aggregated with all other Swap Agreements of the Borrower and the Subsidiaries then in effect effectively converting interest rates from fixed to floating) do not exceed 50% of the then outstanding principal amount of the Borrower’s Debt for borrowed money which bears interest at a fixed rate and (ii) Swap Agreements effectively converting interest rates from floating to fixed, the notional amounts of which (when aggregated with all other Swap Agreements of the Borrower and the Subsidiaries then in effect effectively converting interest rates from floating to fixed) do not exceed 75% of the then outstanding principal amount of the Borrower’s Debt for borrowed money which bears interest at a floating rate.

In no event shall any Swap Agreement contain any requirement, agreement or covenant for the Borrower or any Subsidiary to post collateral (other than the Collateral) or margin to secure their obligations under such Swap Agreement or to cover market exposures. The restrictions in this Section 9.18 do not apply to the purchase of puts, floors or similar options, and the 90% limit above shall be calculated separately for price hedges and for basis hedges.

Section 9.19. 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 (i) 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, (ii) 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 its Subsidiaries that the Borrower or one of its Subsidiaries 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 (iii) other contracts for the purchase and/or sale of Hydrocarbons of third parties (A) which have generally offsetting provisions (i.e. corresponding pricing mechanics, delivery dates and points and volumes) such that no “position” is taken and (B) for which appropriate credit support has been taken to alleviate the material credit risks of the counterparty thereto.

ARTICLE X
Events of Default; Remedies

Section 10.01. Events of Default . The occurrence or existence of any one or more of the following events shall constitute an “Event of Default” :

(a) the Borrower shall fail to pay any principal of any Loan or any reimbursement obligation in respect of any LC Disbursement when and as the same shall become due and payable (other than LC Disbursements which are repaid through an ABR Borrowing as permitted by Section 2.8(e) hereof), whether at the due date thereof or at a date fixed for prepayment thereof, by acceleration or otherwise;

(b) the Borrower shall fail to pay any interest on any Loan or any fee or any other amount (other than an amount referred to in Section 10.01(a) ) payable under any Loan Document, when and as the same shall become due and payable, and such failure shall continue unremedied for a period of three Business Days;

(c) any representation or warranty made or deemed made by or on behalf of the Borrower or any Subsidiary in or in connection with any Loan Document or any amendment or modification of any Loan Document or waiver under such Loan Document, or in any report, certificate, financial statement or other document furnished pursuant to or in connection with any Loan Document or any amendment or modification thereof or waiver thereunder, shall prove to have been incorrect in any material respect when made or deemed made (except that to the extent any such representation or warranty is otherwise qualified by materiality, such representation or warranty shall be true and correct when made or deemed made);

(d) the Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in Section 8.01(j) , Section 8.01(n) , Section 8.01(q) , Section 8.02 , Section 8.03 , Section 8.14 , Section 8.15 or in Article IX ;

(e) the Borrower or any Subsidiary shall fail to observe or perform any covenant, condition or agreement contained in this Agreement (other than those specified in Section 10.01(a) , Section 10.01(b) or Section 10.01(d) ) or any other Loan Document, and such failure shall continue unremedied for a period of 30 days after the earlier to occur of (A) notice thereof from the Administrative Agent to the Borrower (which notice will be given at the request of any Lender) or (B) a Responsible Officer of the Borrower or such Subsidiary otherwise becoming aware of such default;

(f) the Borrower or any Subsidiary shall fail to make any payment (whether of principal or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same shall become due and payable (after giving effect to any applicable notice and cure period);

(g) any event or condition occurs that results in any Material Indebtedness becoming due prior to its scheduled maturity or that enables or permits (with or without the giving of notice, the lapse of time or both) the holder or holders of any Material Indebtedness or any trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to require the Redemption thereof or any offer to Redeem to be made in respect thereof, prior to its scheduled maturity or require the Borrower or any Subsidiary to make an offer in respect thereof;

(h) an involuntary proceeding shall be commenced or an involuntary petition shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or any Subsidiary or its debts, or of a substantial part of its assets, under any Debtor Relief Laws whether Federal, state or foreign, or similar law, now or hereafter in effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60 days or an order or decree approving or ordering any of the foregoing shall be entered;

(i) the Borrower or any Subsidiary shall (i) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or other relief under any Debtor Relief Law, whether Federal, state or foreign, or similar law, now or hereafter in effect, (ii) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition described in Section 10.01(h) , (iii) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator, conservator or similar official for the Borrower or any Subsidiary or for a substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed against it in any such proceeding, (v) make a general assignment for the benefit of creditors or (vi) take any action for the purpose of effecting any of the foregoing;

(j) the Borrower or any Subsidiary shall become unable, admit in writing its inability or fail generally to pay its debts as they become due;

(k) (i) one or more judgments for the payment of money in an aggregate amount in excess of $1,000,000 (to the extent not covered by independent third party insurance provided by insurers of the highest claims paying rating or financial strength as to which the insurer does not dispute coverage and is not subject to an insolvency proceeding) or (ii) any one or more non-monetary judgments that have, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, shall be rendered against the Borrower, any Subsidiary or any combination thereof and the same shall remain undischarged for a period of 30 consecutive days during which execution shall not be effectively stayed, or any action shall be legally taken by a judgment creditor to attach or levy upon any assets of the Borrower or any Subsidiary to enforce any such judgment;

(l) the Loan Documents after delivery thereof shall for any reason, except to the extent permitted by the terms thereof, cease to be in full force and effect and valid, binding and enforceable in accordance with their terms against the Borrower or a Guarantor party thereto or shall be repudiated by any of them, or cease to create a valid and perfected Lien of the priority required thereby on any of the collateral purported to be covered thereby, except to the extent permitted by the terms of this Agreement, or the Borrower or any Subsidiary or any of their Affiliates shall so state in writing;

(m) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when taken together with all other ERISA Events that have occurred, will result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding $1,000,000 in any year;

(n) There occurs under any Swap Agreement an early Termination Date (as defined in such Swap Agreement) resulting from (i) any event of default under such Swap Agreement to which the Borrower or any Subsidiary is the Defaulting Party (as defined in such Swap Agreement), or (ii) any Termination Event (as so defined) under such Swap Agreement as to which the Borrower or any Subsidiary is an Affected Party (as so defined) and, in either event,

the Swap Termination Value owed by the Borrower or such Subsidiary as a result thereof constitutes Material Indebtedness;

(o) a Change in Control shall occur; or

(p) an “Event of Default” shall occur under the Permitted Senior Debt Documents.

Section 10.02. Remedies .

(a) In the case of an Event of Default other than one described in Section 10.01(h) , Section 10.01(i) or Section 10.01(j) , at any time thereafter during the continuance of such Event of Default, the Administrative Agent may, and at the request of the Required Lenders, shall, by notice to the Borrower, take either or both of the following actions, at the same or different times: (i) terminate the Commitments, and thereupon the Commitments shall terminate immediately, and (ii) declare the Notes and the Loans then outstanding to be due and payable in whole (or in part, in which case any principal not so declared to be due and payable may thereafter be declared to be due and payable), and thereupon the principal of the Loans so declared to be due and payable, together with accrued interest thereon and all fees and other obligations other than Obligations outstanding under Secured Swap Agreements and Secured Treasury Management Agreements of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.08(j) ), shall become due and payable immediately, without presentment, demand, protest, notice of intent to accelerate, notice of acceleration or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor; and in case of an Event of Default described in Section 10.01(h) , Section 10.01(i) or Section 10.01(j) , the Commitments shall automatically terminate and the Notes and the principal of the Loans then outstanding, together with accrued interest thereon and all fees and the other obligations other than Obligations outstanding under Secured Swap Agreements and Secured Treasury Management Agreements of the Borrower and the Guarantors accrued hereunder and under the Notes and the other Loan Documents (including, without limitation, the payment of cash collateral to secure the LC Exposure as provided in Section 2.08(j) ), shall automatically become due and payable, without presentment, demand, protest or other notice of any kind, all of which are hereby waived by the Borrower and each Guarantor.

(b) In the case of the occurrence of an Event of Default, the Administrative Agent and the Lenders will have all other rights and remedies available at law and equity.

(c) After the earliest to occur of (w) the exercise of remedies provided for in Section 10.02(a) , (x) the maturity of the Loans, (y) the Loans automatically becoming due and payable, or (z) the LC Exposure has been required to be Cash Collateralized, any amounts received on account of the Obligations shall be applied by the Administrative Agent in the following order:

(i) First , to payment or reimbursement of that portion of the Obligations constituting fees, expenses and indemnities payable to the Administrative Agent in its capacity as such;

(ii) Second , pro rata to payment or reimbursement of that portion of the Obligations constituting fees, expenses and indemnities payable to the Lenders;

(iii) Third , pro rata to payment of accrued interest on the Loans;

(iv) Fourth , pro rata to payment of principal outstanding on the Loans, Obligations owing to any Swap Lender, and Obligations owed to any Treasury Management Party;

(v) Fifth , pro rata to any other Obligations and to serve as Cash Collateral to be held by the Administrative Agent to secure the LC Exposure; and

(vi) Sixth , any excess, after all of the Obligations shall have been indefeasibly paid in full in cash, shall be paid to the Borrower or as otherwise required by any Governmental Requirement.

Amounts used to Cash Collateralize the aggregate undrawn amount of Letters of Credit pursuant to clause (v) above shall be applied to satisfy drawings under such Letters of Credit as they occur. If any amount remains on deposit as Cash Collateral after all Letters of Credit have either been fully drawn or expired, such remaining amount shall be applied to the other Obligations, if any, in the order set forth above.

Notwithstanding the foregoing, Obligations owing to any Swap Lender and Obligations arising under Secured Treasury Management Agreements shall be excluded from the application described above if the Administrative Agent has not received written notice thereof, together with such supporting documentation as the Administrative Agent may request, from the applicable Swap Lender or Treasury Management Party, as the case may be. Each Swap Lender and Treasury Management Party not a party to this Agreement that has given the notice contemplated by the preceding sentence shall, by such notice, be deemed to have acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of Article XI hereof for itself and its Affiliates as if a “Lender” party hereto.

Notwithstanding the foregoing provisions of this subsection (c), or anything to the contrary herein or in any other Loan Document, no amount received from any Loan Party shall be applied to any Excluded Swap Obligation of such Loan Party, but appropriate adjustments shall be made with respect to payments from other Loan Parties to preserve the allocation to Obligations otherwise set forth above in this Section 10.02(c) .

ARTICLE XI
The Agents

Section 11.01. Appointment; Powers .

(a) Each of the Lenders and the Issuing Bank hereby irrevocably appoints Citibank to act on its behalf as the Administrative Agent hereunder and under the other Loan 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 Bank, and neither the Borrower nor any other Loan 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 Loan 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) The Administrative Agent shall also act as the “collateral agent” under the Loan Documents, and each of the Lenders (including in its capacities as a potential Swap Lender and/or Treasury Management Party) and the Issuing Bank hereby irrevocably appoints and authorizes the Administrative Agent to act as the agent of such Lender and the Issuing Bank for purposes of acquiring, holding and enforcing any and all Liens on Collateral granted by any of the Loan Parties to secure any of the Obligations, together with such powers and discretion as are reasonably incidental thereto. In this connection, the Administrative Agent, as “collateral agent” and any co-agents, sub-agents and attorneys-in-fact appointed by the Administrative Agent pursuant to Section 11.05 for purposes of holding or enforcing any Lien on the Collateral (or any portion thereof) granted under the Security Instruments, or for exercising any rights and remedies thereunder at the direction of the Administrative Agent, shall be entitled to the benefits of all provisions of this Article XI and Article XII (including Section 12.03(c) , as though such co-agents, sub-agents and attorneys-in-fact were the “collateral agent” under the Loan Documents) as if set forth in full herein with respect thereto.

Section 11.02. Rights as a Lender . The Person serving as the Administrative Agent hereunder shall 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 Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its 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 11.03. Exculpatory Provisions .

(a) The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents, and its 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 Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative Agent will 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 Loan 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 Loan 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 its 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 Required Lenders (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 12.02 and 10.02 )), 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 Bank.

(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 Loan 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 Loan Document or any other agreement, instrument or document, or the creation, perfection or priority of any Lien purported to be created by the Security Instruments, (v) the value or sufficiency of any of the Collateral, or (vi) the satisfaction of any condition set forth in Article VI or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent.

Section 11.04. 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 a Loan, 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 Bank, the Administrative Agent may presume that such condition is satisfactory to such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Bank prior to the making of such Loan 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 11.05. 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 Loan 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 Loans as well as activities as 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 11.06. Resignation of Administrative Agent and/or Issuing Bank .

(a) The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Bank and the Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, so long as no Event of Default then exists in consultation with the Borrower, to appoint a successor, which shall be a bank with an office in the United States, or an Affiliate of any such bank with an office in the United States. 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, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent meeting the qualifications set forth above; provided that if the Administrative Agent shall notify the Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents and (ii) 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 Bank directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section. 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 retired) Administrative Agent (except for any indemnity, fees or other payments owed to the retiring Administrative Agent), and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section) . 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 Administrative Agent’s resignation hereunder and under the other Loan Documents, the provisions of this Article and Section 12.03 shall continue in effect for the benefit of such retiring 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 Administrative Agent was acting as Administrative Agent.

(b) Any resignation by Citibank as Administrative Agent pursuant to this Section shall also constitute its resignation as Issuing Bank. After the resignation of the Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Bank under this Agreement and the other Loan Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not be required to issue additional Letters of Credit or to extend, renew or increase any existing Letter of Credit, including, without limitation, any Letter of Credit with an auto-extend feature (for the avoidance of doubt, the retiring Issuing Bank is authorized to notify any and each beneficiary of each Letter of Credit (in accordance with the terms of such Letter of Credit) that any such Letter of Credit will not be renewed, extended or increased, automatically or otherwise). Upon the acceptance of a successor’s appointment as Administrative Agent hereunder, (i) such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring Issuing Bank (except for any indemnity, fees or other payments owed to the retiring Issuing Bank), (ii) the retiring Issuing Bank shall be discharged from all of its respective duties and obligations hereunder or under the other Loan Documents, and (iii) the successor Issuing Bank shall issue letters of credit in substitution for the Letters of Credit, if any, outstanding at the time of such succession or make other arrangements satisfactory to the retiring Issuing Bank to effectively assume the obligations of the retiring Issuing Bank with respect to such Letters of Credit.

(c) In addition to the foregoing, if a Lender becomes, and during the period it remains, a Defaulting Lender, the Issuing Bank may, upon prior written notice to the Borrower and the Administrative Agent, resign as Issuing Bank, effective at the close of business on a date specified in such notice (which date may not be less than 30 days after the date of such notice); provided that such resignation by the Issuing Bank will have no effect on the validity or enforceability of any Letter of Credit then outstanding or on the obligations of the Borrower or any Lender under this Agreement with respect to any such outstanding Letter of Credit or otherwise to the Issuing Bank.

Section 11.07. Non-Reliance on Administrative Agent and Other Lenders . Each Lender and the Issuing Bank 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 Bank 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 Loan Document or any related agreement or any document furnished hereunder or thereunder.

Section 11.08. No Other Duties, etc . Anything herein to the contrary notwithstanding, none of the Bookrunners, Arrangers, Documentation Agents or Syndication Agents listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Bank hereunder. No Bookrunner, Arranger, Documentation Agent or Syndication Agent listed on the cover page hereof shall have or be deemed to have any fiduciary relationship with any Lender.

Section 11.09. 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 Loan Party, the Administrative Agent (irrespective of whether the principal of any Loan or LC Exposure 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 Loans, LC Exposure 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 Bank and the Administrative Agent (including any claim for the reasonable compensation, expenses, disbursements and advances of the Lenders, the Issuing Bank and the Administrative Agent and their respective agents and counsel and all other amounts due the Lenders, the Issuing Bank and the Administrative Agent under Sections 3.05 and 12.03 ) 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 Bank 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 Bank, 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 Section 12.03 .

Section 11.10. Collateral and Guaranty Matters .

(a) Each of Lenders and the other Secured Parties (including each Lender in its capacity as a potential Swap Lender and/or Treasury Management Party), and the Issuing Bank, 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 Loan Document (x) upon termination of all of the Commitments and payment in full of all 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 Bank shall have been made), (y) 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 Loan Documents, or (z) subject to Section 12.02 , 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 Loan Document to the holder of any Lien on such property that is permitted by Section 9.03 ; and

(iii) to release any Guarantor from its obligations under the Guaranty Agreement if such Person ceases to be a Subsidiary as a result of a transaction permitted under the Loan Documents.

Upon request by the Administrative Agent at any time, the Required Lenders 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 Agreement pursuant to this Article XI . In each case as specified in this Section 11.10 , the Administrative Agent will, at the Borrower’s expense, execute and deliver to the applicable Loan Party such documents as such Loan Party may reasonably request to evidence the release of such item of Collateral from the assignment and security interest granted under the Security Instruments or to subordinate its interest in such item, or to release such Guarantor from its obligations under the Guaranty Agreement, in each case in accordance with the terms of the Loan Documents and this Section 11.10 .

(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 Loan 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.

Section 11.11. Secured Swap Agreements and Secured Treasury Management Agreements . No Swap Lender or Treasury Management Party that obtains the benefits of Section 10.02(c), any Guaranty Agreement or any Collateral by virtue of the provisions hereof or of any Guaranty Agreement or any Security Instrument shall have any right to notice of any action or to consent to, direct or object to any action hereunder or under any other Loan Document or otherwise in respect of the Collateral (including the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case, only

to the extent expressly provided in the Loan Documents. Notwithstanding any other provision of this Article XI to the contrary, the Administrative Agent shall not be required to verify the payment of, or that other satisfactory arrangements have been made with respect to, Obligations arising under Secured Swap Agreements and/or Secured Treasury Management Agreements unless the Administrative Agent has received written notice of such Obligations, together with such supporting documentation as the Administrative Agent may request, from the applicable Swap Lender or Treasury Management Party, as the case may be.

ARTICLE XII
Miscellaneous

Section 12.01. Notices .

(a) Except in the case of notices and other communications expressly permitted to be given by telephone (and subject to Section 12.01(b) ), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified or registered mail or sent by facsimile or electronic transmission, as follows:

(i) if to the Borrower, to it at

Lonestar Resources America Inc.
                                                                                                600 Bailey Avenue, Suite 200
                                                                                                Fort Worth, TX 76107
                                                                                                Attention: Frank D. Bracken III
                                                                                                Facsimile: (817) 546-8641
                                                                                                Telephone: (817) 546-6400
                                                                                                fbracken@lonestarresources.com

(ii) if to the Administrative Agent, to it at

Citibank, N.A.
                                                                                                2001 Ross Avenue, Suite 4300
                                                                                                Dallas, TX 75201-2998
                                                                                                Attention: Jarrod Bourgeois
                                                                                                Facsimile: (972) 419-3589
                                                                                                Telephone: (214) 647-0857

with a copy to the Administrative Agent at:

Citibank, N.A.
Commercial Syndications
Commercial Loan Operations
6801 Colwell Blvd, Irving, TX 75039
Attention: Cheryl Bradford
Facsimile: (866) 634-5642
Telephone: (469) 220-3204

if to the Issuing Bank, to it at

Citibank, N.A.
Commercial Syndications

Commercial Loan Operations
6801 Colwell Blvd, Irving, TX 75039
Attention: Cheryl Bradford
Facsimile: (866) 634-5642
Telephone: (469) 220-3204

(iii) if to a Lender, to it at its address (or facsimile number or email address) set forth in its Administrative Questionnaire.

Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in paragraph (b) below, shall be effective as provided in said paragraph (b).

(b) Notices and other communications to the Lenders and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including e mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or the Issuing Bank pursuant to Article II , Article III , Article IV and Article V if such Lender or the Issuing Bank, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or the Borrower may, in its 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.

Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor, provided that, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next business day for the recipient.

(c) Any party hereto may change its address or facsimile number or email address for notices and other communications hereunder by notice to the other parties hereto.

(d) (i) Each Loan Party agrees that the Administrative Agent may, but shall not be obligated to, make the Communications (as defined below) available to the Issuing Bank and the other Lenders by posting the Communications on Debt Domain, Intralinks, Syndtrak or a substantially similar electronic transmission system (the “ Platform ”).

(ii) The Platform is provided “as is” and “as available.” The Agent Parties (as defined below) do not warrant the adequacy of the Platform and expressly disclaim liability for errors or omissions in the Communications. No warranty of any kind, express, implied or statutory, including, without limitation, any warranty of

merchantability, fitness for a particular purpose, non-infringement of third-party rights or freedom from viruses or other code defects, is made by any Agent Party in connection with the Communications or the Platform. In no event shall the Administrative Agent or any of its Related Parties (collectively, the “ Agent Parties ”) have any liability to the Borrower or the other Loan Parties, any Lender or any other Person or entity for damages of any kind, including, without limitation, direct or indirect, special, incidental or consequential damages, losses or expenses (whether in tort, contract or otherwise) arising out of any Loan Party’s or the Administrative Agent’s transmission of communications through the Platform. “ Communications ” means, collectively, any notice, demand, communication, information, document or other material provided by or on behalf of any Loan Party pursuant to any Loan Document or the transactions contemplated therein which is distributed to the Administrative Agent, any Lender or the Issuing Bank by means of electronic communications pursuant to this Section, including through the Platform.

(iii) Each Public Lender agrees to cause at least one individual at or on behalf of such Public Lender to at all times have selected the “Private Side Information” or similar designation on the content declaration screen of the Platform in order to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance procedures and applicable Law, including United States Federal and state securities Laws, to make reference to Communications that are not made available through the “Public Side Information” portion of the Platform and that may contain material non-public information with respect to the Borrower, any of the other Loan Parties, or their securities for purposes of United States Federal or state securities laws.

Section 12.02. Waivers; Amendments .

(a) No failure on the part of the Administrative Agent, any other Agent, the Issuing Bank or any Lender to exercise and no delay in exercising, and no course of dealing with respect to, any right, power or privilege, or any abandonment or discontinuance of steps to enforce such right, power or privilege, under any of the Loan Documents shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under any of the Loan Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies of the Administrative Agent, any other Agent, the Issuing Bank and the Lenders hereunder and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies that they would otherwise have. No waiver of any provision of this Agreement or any other Loan Document or consent to any departure by the Borrower therefrom shall in any event be effective unless the same shall be permitted by Section 12.02(b) , and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. Without limiting the generality of the foregoing, the making of a Loan or issuance of a Letter of Credit shall not be construed as a waiver of any Default, regardless of whether the Administrative Agent, any other Agent, any Lender or the Issuing Bank may have had notice or knowledge of such Default at the time.

Notwithstanding anything to the contrary contained herein or in any other Loan Document, the authority to enforce rights and remedies hereunder and under the other Loan Documents against the Loan Parties or any of them shall be vested exclusively in, and all actions and proceedings at law in connection with such enforcement shall be instituted and maintained exclusively by, the Administrative Agent in accordance with Section 10.02 for the benefit of all the Lenders and the Issuing Bank; provided , however, that the foregoing shall not prohibit (a) the Administrative Agent from exercising on its own behalf the rights and remedies that inure to its

benefit (solely in its capacity as the Administrative Agent) hereunder and under the other Loan Documents, (b) the Issuing Bank from exercising the rights and remedies that inure to its benefit (solely in its capacity as Issuing Bank) hereunder and under the other Loan Documents, (c) any Lender from exercising setoff rights in accordance with Section 12.08 (subject to the terms of Section 4.01 ), or (d) any Lender from filing proofs of claim or appearing and filing pleadings on its own behalf during the pendency of a proceeding relative to any Loan Party under any Debtor Relief Law; and provided , further, that if at any time there is no Person acting as the Administrative Agent hereunder and under the other Loan Documents, then (i) the Required Lenders shall have the rights otherwise ascribed to the Administrative Agent pursuant to Section 10.02 and (ii) in addition to the matters set forth in clauses (b), (c) and (d) of the preceding proviso and subject to Section 4.01 , any Lender may, with the consent of the Required Lenders, enforce any rights and remedies available to it and as authorized by the Required Lenders.

(b) Neither this Agreement nor any provision hereof nor any other Loan Document or any provision thereof may be waived, amended or modified, except pursuant to an agreement or agreements in writing entered into by the Borrower and the Majority Lenders or by the Borrower and the Administrative Agent with the consent of the Majority Lenders; provided that no such agreement shall

(i) increase the Commitment or the Maximum Credit Amount of any Lender without the written consent of such Lender,

(ii) increase the Borrowing Base without the written consent of each Lender, decrease or maintain the Borrowing Base without the consent of the Required Lenders, or modify Section 2.07 in any manner without the consent of each Lender,

(iii) reduce the principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce any fees payable hereunder, or reduce any other Obligations hereunder or under any other Loan Document, without the written consent of each Lender affected thereby,

(iv) postpone the scheduled date of payment or prepayment of the principal amount of any Loan or LC Disbursement, or any interest thereon, or any fees payable hereunder, or any other Obligations hereunder or under any other Loan Document, or reduce the amount of, waive or excuse any such payment, or postpone or extend the Termination Date without the written consent of each Lender affected thereby,

(v) change Section 4.01(b) or Section 4.01(c) or Section 10.02(c) in a manner that would alter the pro rata sharing of payments required thereby, without the written consent of each Lender affected thereby and if applicable, each Swap Lender and each Treasury Management Party affected thereby,

(vi) waive or amend Section 3.04(c) , Section 6.02 , Section 8.14 , Section 10.02(c) , Section 11.11 or Section 12.14 or change the definition of the terms “Domestic Subsidiary”, “Foreign Subsidiary” or “Subsidiary”, without the written consent of each Lender affected thereby,

(vii) release any Guarantor (except as set forth in the Guaranty Agreement), release all or substantially all of the collateral (other than as provided in Section 11.10 ), without the written consent of each Lender affected thereby, or

(viii) change any of the provisions of this Section 12.02(b) or the definition of “Required Lenders”, “Majority Lenders”, “Super Majority Lenders” or any other provision hereof specifying the number or percentage of Lenders required to waive, amend or modify any rights hereunder or under any other Loan Documents or make any determination or grant any consent hereunder or any other Loan Documents, without the written consent of each Lender affected thereby;

provided further that, notwithstanding the foregoing or any other provision to the contrary, (A) no such agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent, any other Agent, or the Issuing Bank hereunder or under any other Loan Document without the prior written consent of the Administrative Agent, such other Agent or the Issuing Bank, as the case may be, and (B) nothing in this Section 12.02 shall cause any waiver, amendment, modification or consent to (I) any fee letter between the Borrower and any Lender, Agent or the Administrative Agent or Issuing Bank to require the consent of the Majority Lenders, (II) any Letter of Credit Agreements between the Borrower or any Subsidiary of the Borrower and the Issuing Bank to require the consent of the Majority Lenders, (III) any Letter of Credit issued by the Issuing Bank pursuant to the terms of this Agreement to require the consent of the Majority Lenders except as specifically required by Section 2.08 ,(IV) any Swap Agreement, to require the consent of the Majority Lenders, or (V) any Treasury Management Agreement to require the consent of the Majority Lenders.

(c) Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove of any amendment, waiver or consent hereunder, except that the Commitment of such Lender may not be increased or extended without the consent of such Defaulting Lender.

Section 12.03. Expenses, Indemnity; Damage Waiver .

(a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the Administrative Agent and its Affiliates, including, without limitation, the reasonable fees, charges and disbursements of outside counsel and other outside consultants for the Administrative Agent, the reasonable travel, photocopy, mailing, courier, telephone and other similar expenses, and the cost of environmental audits and surveys and appraisals, in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration (both before and after the execution hereof and including advice of counsel to the Administrative Agent as to the rights and duties of the Administrative Agent and the Lenders with respect thereto) of this Agreement and the other Loan Documents and any amendments, modifications or waivers of or consents related to the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all costs, expenses, Taxes, assessments and other charges incurred by any Agent or any Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by this Agreement or any Security Instrument or any other document referred to therein, (iii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iv) all out-of-pocket expenses incurred by any Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel for any Agent, the Issuing Bank or any Lender, in connection with the enforcement or protection of its rights in connection with this Agreement or any other Loan Document, including its rights under this Section 12.03 , or in connection with the Loans made or Letters of Credit issued hereunder, including, without limitation, all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit.

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(b) THE BORROWER SHALL INDEMNIFY THE ADMINISTRATIVE AGENT (AND ANY SUB-AGENT THEREOF), EACH LENDER AND THE ISSUING BANK, 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, PENALTIES 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 OR BY THE BORROWER OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS AGREEMENT, ANY OTHER LOAN 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 LOAN OR LETTER OF CREDIT OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK 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 OTHER LOAN PARTIES, OR ANY ENVIRONMENTAL LIABILITY RELATED IN ANY WAY TO THE BORROWER OR ANY OF ITS SUBSIDIARIES, OR OTHER LOAN PARTIES, 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 LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES, PENALTIES OR RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY THE BORROWER OR ANY OTHER LOAN PARTY AGAINST AN INDEMNITEE FOR MATERIAL BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER LOAN DOCUMENT, IF THE BORROWER OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION. THIS SECTION 12.03(b) SHALL NOT APPLY WITH RESPECT TO TAXES OTHER THAN ANY TAXES THAT REPRESENT LOSSES, CLAIMS, DAMAGES, ETC. ARISING FROM ANY NON-TAX CLAIM.

(c) To the extent that the Borrower for any reason fails to indefeasibly pay any amount required to be paid by it to any Agent (or any sub-agent thereof), the Arranger or the Issuing Bank or any Related Party of the foregoing under Section 12.03(a) or (b) , each Lender severally agrees to pay to such Agent (or any such sub-agent), the Issuing Bank, 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 total Revolving Credit Exposure at such time) of such unpaid amount (including any such

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unpaid amount in respect of a claim asserted by such Lender); provided that with respect to such unpaid amounts owed to the Issuing Bank solely in its capacity as such, only the Lenders shall be required to pay such unpaid amounts, such payment to be made severally among them based on such Lenders’ Applicable Percentage (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) provided, further, 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 Issuing Bank 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 Issuing Bank in connection with such capacity.

(d) To the fullest extent permitted by applicable law, the Borrower shall not 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 Loan Document or any agreement or instrument contemplated hereby or thereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in paragraph (b) 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 Loan Documents or the transactions contemplated hereby or thereby.

(e) All amounts due under this Section 12.03 shall be payable promptly, but in any event not later than ten days after demand therefor.

(f) The provisions of this Section 12.03 shall remain operative and in full force and effect regardless of the expiration of the term of this Agreement, the consummation of the transactions contemplated hereby, the repayment of any of the Loans, the expiration of the Commitments, the expiration of any Letter of Credit, the invalidity or unenforceability of any term or provision of this Agreement or any other Loan Document, or any investigation made by or on behalf of the Administrative Agent, any Lender or the Issuing Bank.

Section 12.04. 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 Loan 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

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portion of its Commitment and the Loans at the time owing to it); provided that in each case 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 Loans at the time owing to it (in each case) 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 Loans outstanding thereunder) or, if the applicable Commitment is not then in effect, the principal outstanding balance of the Loans 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 Event of 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 Loan or the Commitment assigned.

(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) an Event of 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 five Business Days after having received notice thereof and provided , further , that the Borrower’s consent shall not be required during the primary syndication of the Loans;

(B) the consent of the Administrative Agent shall be required for assignments in respect of the Loans or any unfunded Commitments if such assignment is to a Person that is not a Lender with a Commitment, an Affiliate of such Lender or an Approved Fund with respect to such Lender; and

(C) the consent of the Issuing Bank shall be required for any assignment in respect of the Loans or any unfunded Commitment.

(iv) Assignment and Assumption . The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption, together

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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) to any Loan Party or any of Affiliate of any Loan Party 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 Loans 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 Bank, and each other Lender hereunder (and interest accrued thereon), and (y) acquire (and fund as appropriate) its full pro rata share of all Loans and participations in Letters of Credit in accordance with its Applicable Percentage. 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.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, 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 Article V and Section 12.03 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.

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(c) Register . The Administrative Agent, acting solely for this purpose as an agent of the Borrower, shall maintain at one of its offices in Dallas, Texas, 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 Loans owing to, each Lender pursuant to the terms hereof from time to time (the “ Register ”). The entries in the Register shall be conclusive absent manifest error, and the Borrower, the Administrative Agent 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.

(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 (except (x) a natural Person or (y) any Loan Party or any Subsidiary of a Loan Party or any Affiliate of an Loan Party or Subsidiary of a Loan Party) (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 Loans 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 Bank 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 12.03(c) with respect to any payments made by such Lender to its Participant(s).

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Sections 12.02(b) to the extent that it affects such Participant. The Borrower agrees that each Participant shall be entitled to the benefits of Article V (subject to the requirements and limitations therein, including the requirements under Section 5.03(g) (it being understood that the documentation required under Section 5.03(g) shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section; provided that such Participant (A) agrees to be subject to the provisions of Section 5.04 as if it were an assignee under paragraph (b) of this Section; and (B) shall not be entitled to receive any greater payment under Sections 5.01 or 5.03 , with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Borrower’s request and expense, to use reasonable efforts to cooperate with the Borrower to effectuate the provisions of Section 5.04(b) with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 12.08 as though it were a Lender; provided that such Participant agrees to be subject to Section 4.01(c) 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 Loans or other obligations under the Loan 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 Loan Document) to any

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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.

(f) Prohibited Transfer . Notwithstanding any other provisions of this Section 12.04 , no transfer or assignment of the interests or obligations of any Lender or any grant of participations therein shall be permitted if such transfer, assignment or grant would require the Borrower and the Subsidiaries to file a registration statement with the SEC or to qualify the Loans under the “Blue Sky” laws of any state.

Section 12.05. Survival; Revival; Reinstatement .

(a) All covenants, agreements, representations and warranties made by the Borrower and the other Loan Parties herein and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the other parties hereto and shall survive the execution and delivery of this Agreement and the making of any Loans and issuance of any Letters of Credit, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Administrative Agent, any other Agent, the Issuing Bank or any Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder, and shall continue in full force and effect as long as the principal of or any accrued interest on any Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated. The provisions of Section 5.01 , Section 5.02 , Section 5.03 and Section 12.03 and Article XI shall survive and remain in full force and effect regardless of the consummation of the transactions contemplated hereby, the repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments or the termination of this Agreement, any other Loan Document or any provision hereof or thereof.

(b) To the extent that any payments on the Obligations or proceeds of any collateral are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor in possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Obligations so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Administrative Agent’s and the Lenders’ Liens, security interests, rights, powers and remedies under this Agreement and each Loan Document shall continue in full force and effect. In such event, each Loan Document shall be automatically reinstated and the Borrower shall take such action as may be reasonably requested by the Administrative Agent and the Lenders to effect such reinstatement.

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Section 12.06. Counterparts; Integration; Effectiveness; Electronic Signatures .

(a) This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.

(b) This Agreement, the other Loan Documents and any separate letter agreements with respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subject matter hereof and thereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof and thereof. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

(c) Except as provided in Section 6.01 , 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 which, when taken together, bear the signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 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.

(d) Electronic Execution of Assignments . The words “execution,” “signed,” “signature,” and words of like import in any Assignment and Assumption or in any amendment or other modification hereof (including waivers and consents) 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 12.07. Severability . Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof or thereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

Section 12.08. Right of Setoff . If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Bank, and each of their respective Affiliates 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, in whatever currency) at any time held and other obligations (of whatsoever kind and in whatever currency, including, without limitation, obligations under Swap Agreements and Treasury Management Agreements) at any time owing by such Lender or the Issuing Bank, or any such Affiliate, to or for the credit or the account of the Borrower, any Subsidiary, or other Loan Party against any and all of the obligations of the Borrower, any Subsidiary, or other Loan Party now or hereafter existing under this Agreement or any other Loan Documents to such Lender or the Issuing Bank or their respective Affiliates, irrespective of whether or not such Lender, Issuing Bank or Affiliate shall have made any demand under this Agreement or any other Loan Document

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and although such obligations of the Borrower, such Subsidiary or such Guarantor may be contingent or unmatured or are owed to a branch, office or Affiliate of such Lender or the Issuing Bank different from the branch, office or Affiliate holding such deposit or obligated on such indebtedness; provided that in the event that any Defaulting Lender shall exercise any such right of setoff, (x) all amounts so set off shall be paid over immediately to the Administrative Agent for further application in accordance with the provisions of Section 2.10 and, pending such payment, shall be segregated by such Defaulting Lender from its other funds and deemed held in trust for the benefit of the Administrative Agent, the Issuing Bank, and the Lenders, and (y) the Defaulting Lender shall provide promptly to the Administrative Agent a statement describing in reasonable detail the Obligations owing to such Defaulting Lender as to which it exercised such right of setoff. The rights of each Lender, the Issuing Bank and their respective Affiliates under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Bank or their respective Affiliates may have. The rights of each Lender under this Section 12.08 are in addition to other rights and remedies (including other rights of setoff) which such Lender or its Affiliates may have. Each Lender and the Issuing Bank agrees to notify the Borrower and the Administrative Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such setoff and application.

Section 12.09. Governing Law; Jurisdiction; Consent to Service of Process ; Waiver of Jury Trial .

(a) Governing Law . This Agreement and the other Loan Documents and any claims, controversy, dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or relating to this Agreement or any other Loan Document (except, as to any other Loan Document, as expressly set forth therein) and the transactions contemplated hereby and thereby shall be governed by, and construed in accordance with, the law of the State of Texas.

(b) Submission to Jurisdiction . The parties hereto irrevocably and unconditionally agrees that it will not commence any action, litigation or proceeding of any kind or description, whether in law or equity, whether in contract or in tort or otherwise, against the Administrative Agent, any Lender, the Issuing Bank, or any Related Party of the foregoing in any way relating to this Agreement or any other Loan Document or the transactions relating hereto or thereto, in any forum other than the courts of the State of Texas sitting in Dallas County, and of the United States District Court of the Northern District of Texas, and any appellate court from any thereof, and each of the parties hereto irrevocably and unconditionally submits to the jurisdiction of such courts and agrees that all claims in respect of any such action, litigation or proceeding may be heard and determined in such Texas State court or, to the fullest extent permitted by applicable law, in such federal court. Each of the parties hereto agrees that a final judgment in any such action, litigation or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Agreement or in any other Loan Document shall affect any right that the Administrative Agent, any Lender or the Issuing Bank may otherwise have to bring any action or proceeding relating to this Agreement or any other Loan Document against the Borrower or any other Loan Party or its properties in the courts of any jurisdiction.

(c) Waiver of Venue . Each party hereto irrevocably and unconditionally waives, to the fullest extent permitted by applicable law, 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 or any other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.

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(d) Service of Process . Each party hereto irrevocably consents to service of process in the manner provided for notices in Section 12.01 . Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted by applicable law.

(e) Waiver of Jury Trial . EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (i) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (ii) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 12.10. Headings . Article and Section headings and the Table of Contents used herein and in the other Loan Documents are for convenience of reference only, are not part of this Agreement and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement or any other Loan Document.

Section 12.11. Confidentiality . Each of the Administrative Agent, the Lenders and the Issuing Bank 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 Loan Document or any action or proceeding relating to this Agreement or any other Loan 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 Loans or (ii) the CUSIP Service Bureau or any similar agency in connection with the issuance and monitoring of CUSIP numbers with respect to the Loans; (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 Bank or any of their respective Affiliates on a nonconfidential basis from a source other than the Borrower.

For purposes of this Section, “ Information ” means all information received from the Borrower or any of its Subsidiaries relating to the Borrower or any of its Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Bank on a nonconfidential basis prior to disclosure by the Borrower or any of its

109

Subsidiaries; provided that, in the case of information received from the Borrower or any of its Subsidiaries after the date hereof, such information is clearly identified at the time of delivery as confidential. Any 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.

Each of the Lenders acknowledges and agrees that (a) the Information may include material non-public information concerning the Borrower or another Loan Party, as the case may be, (b) it has developed compliance procedures regarding the use of material non-public information and (c) it will handle such material non-public information in accordance with applicable law, including United States Federal and state securities laws.

Section 12.12. Interest Rate Limitation . It is the intention of the parties hereto that each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby would be usurious as to any Lender under laws applicable to it (including the laws of the United States of America and the State of Texas or any other jurisdiction whose laws may be mandatorily applicable to such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents or any agreement entered into in connection with or as security for the Notes, it is agreed as follows: (i) the aggregate of all consideration which constitutes interest under law applicable to any Lender that is contracted for, taken, reserved, charged or received by such Lender under any of the Loan Documents or agreements or otherwise in connection with the Notes shall under no circumstances exceed the maximum amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower); and (ii) in the event that the maturity of the Notes is accelerated by reason of an 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 under law applicable to any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Lender as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Lender to the Borrower). All sums paid or agreed to be paid to any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Lender, be amortized, prorated, allocated and spread throughout the stated term of the Loans evidenced by the Notes until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time (i) the amount of interest payable to any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Lender pursuant to this Section 12.12 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Lender would be less than the amount of interest payable to such Lender computed at the Highest Lawful Rate applicable to such Lender, then the amount of interest payable to such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Lender until the total amount of interest payable to such Lender shall equal the total amount of interest which would have been payable to such Lender if the total amount of interest had been computed without giving effect to this Section 12.12 . To the extent that Chapter 303 of the Texas Finance Code is relevant for the purpose of determining the Highest Lawful Rate applicable to a Lender, such Lender elects to determine the applicable rate ceiling under such Chapter by the weekly ceiling from time to time in effect. Chapter 346 of the Texas Finance Code does not apply to the Borrower’s obligations hereunder.

110

Section 12.13. EXCULPATION PROVISIONS . EACH OF THE PARTIES HERETO SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; THAT IT HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND HAS RECEIVED THE ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS RESULT IN ONE PARTY ASSUMING THE LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS ON THE BASIS THAT THE PARTY HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT “CONSPICUOUS.”

Section 12.14. Collateral Matters; Swap Agreements; Treasury Management Agreements . The benefit of the Security Instruments and of the provisions of this Agreement relating to any collateral securing the Obligations shall also extend to and be available to any Swap Lender and any Treasury Management Party with respect to amounts payable by the Borrower, any Subsidiary, and any Guarantor under any Secured Swap Agreement and/or Secured Treasury Management Agreement on a pari passu basis with respect to repayment of principal outstanding on Loans due under this Agreement. Except as otherwise provided in Section 12.02(b)(v) , no Swap Lender or Treasury Management Party shall have any voting rights under any Loan Document as a result of the existence of obligations owed to it under any such Swap Agreements or Treasury Management Agreements. All Swap Agreements between the Borrower or any Subsidiary and any Swap Lender are independent agreements governed by the terms thereof and will remain in full force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of the Loans created under this Agreement except as otherwise provided in said Swap Agreement, and any payoff statement from any Lender relating to this Agreement shall not apply to said Swap Agreement with such Swap Lender except as otherwise expressly provided in such payoff statement. All Treasury Management Agreements between the Borrower and any Treasury Management Party are independent agreements governed by the terms thereof and will remain in force and effect, unaffected by any repayment, prepayment, acceleration, reduction, increase or change in the terms of the Loans created under this Agreement except as otherwise provided in said Treasury Management Agreement, and any payoff statement from any Lender relating to this Agreement shall not apply to said Treasury Management Agreement with such Treasury Management Party except as otherwise expressly provided in such payoff statement.

Section 12.15. No Third Party Beneficiaries . This Agreement, the other Loan Documents, and the agreement of the Lenders to make Loans and the Issuing Bank to issue, amend, renew or extend Letters of Credit hereunder are solely for the benefit of the Borrower, and no other Person (including, without limitation, any Subsidiary of the Borrower, any obligor, contractor, subcontractor, supplier or materialman) shall have any rights, claims, remedies or privileges hereunder or under any other Loan Document against the Administrative Agent, any other Agent, the Issuing Bank or any Lender for any reason whatsoever. There are no third party beneficiaries.

Section 12.16. No Advisory or Fiduciary Responsibility . The Borrower and each other Loan Party acknowledges and agrees, and acknowledges its Affiliates’ understanding, that in connection with

111

all aspects of (x) the transaction evidenced by this Agreement and the other Loan Documents, (y) the Transactions and (z) each other transaction contemplated hereby and by the other Loan Documents (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document) that:

(a) (i) the arranging and other services regarding this Agreement and the other Loan Documents provided by the Agents and the Arrangers, are arm’s-length commercial transactions between the Borrower, each other Loan Party and their respective Affiliates, on the one hand, and the Administrative Agent, the other Agents and each of the Arrangers, on the other hand,

(ii) each of the Borrower and the other Loan Parties has consulted its own legal, accounting, regulatory and tax advisors to the extent it has deemed appropriate, and

(iii) the Borrower and each other Loan Party is capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents;

(b) (i) each of the Administrative Agent, the other Agents and each of the Arrangers, 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, any other Loan Party or any of their respective Affiliates, or any other Person;

(ii) none of the Administrative Agent, the other Agents nor any of the Arrangers has any obligation to the Borrower, any other Loan Party or any of their respective Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents;

(iii) any of the Administrative Agent, the other Agents and the Arrangers, and any of their respective Affiliates, may be engaged in a broad range of transactions that involve interests that differ from those of the Borrower, the other Loan Parties and their respective Affiliates, and none of the Administrative Agent, the other Agents nor any of the Arrangers has any obligation to disclose any of such interests to the Borrower, any other Loan Party or any of their respective Affiliates.

To the fullest extent permitted by law, each of the Borrower and the other Loan Parties hereby waives and releases any claims that it may have against the Administrative Agent, any of the other Agents or any of the Arrangers with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby and by the other Loan Documents.

Section 12.17. Time of the Essence . Time is of the essence of the Loan Documents.

Section 12.18. USA Patriot Act Notice . Each Lender that is subject to the Act (as hereinafter defined) and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies the Borrower 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 each Loan Party, which information includes the name and address of each Loan Party and other information that will allow such Lender or the Administrative Agent, as applicable, to identify each Loan Party in accordance with the Act. The Borrower shall, promptly following a request by the Administrative Agent or any Lender, provide all documentation and other information that the

112

Administrative Agent or such Lender requests in order to comply with its ongoing obligations under applicable “know your customer” an anti-money laundering rules and regulations, including the Act.

Section 12.19. ENTIRE AGREEMENT . THIS AGREEMENT AND THE OTHER LOAN 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 Page Intentionally Left Blank. Signature Pages Follow.]

113

The parties hereto have caused this Agreement to be duly executed as of the day and year first above written.

BORROWER:	LONESTAR RESOURCES AMERICA INC.


	By:	/s/ Frank D. Bracken III
	Name:	Frank D. Bracken III
	Title:	Chief Executive Officer

Signature Page S- 1

ADMINISTRATIVE AGENT:	CITIBANK, N.A.,
	as Administrative Agent


	By:	/s/ Jarrod Bourgeois
	Name:	Jarrod Bourgeois
	Title:	Senior Vice President


LENDERS:	CITIBANK, N.A.


	By:	/s/ Jarrod Bourgeois
	Name:	Jarrod Bourgeois
	Title:	Senior Vice President

Signature Page S- 2

LENDERS:	ABN AMRO CAPITAL USA LLC


	By:	/s/ Darrell Holley
	Name:	Darrell Holley
	Title:	Managing Director

	By:	/s/ David Montgomery
	Name:	David Montgomery
	Title:	Executive Director

Signature Page S- 3

LENDERS:	TEXAS CAPITAL BANK, N.A.


	By:	/s/ Grant W. Leigh
	Name:	Grant W. Leigh
	Title:	Senior Vice President

Signature Page S- 4

LENDERS:	BOKF, N.A.


	By:	/s/ Colin Watson
	Name:	Colin Watson
	Title:	Vice President

Signature Page S- 5

LENDERS:	COMERICA BANK


	By:	/s/ Brandon W. White
	Name:	Brandon W. White
	Title:	Vice President

Signature Page S- 6

LENDERS:	COMPASS BANK


	By:	/s/ Blake Kirshman
	Name:	Blake Kirshman
	Title:	Senior Vice President

Signature Page S- 7

LENDERS:	BARCLAYS BANK PLC


	By:	/s/ Marguerite Sutton
	Name:	Marguerite Sutton
	Title:	Vice President

Signature Page S- 8

ANNEX I
LIST OF MAXIMUM CREDIT AMOUNTS

Aggregate Maximum Credit Amounts

Name of Lender	Applicable Percentage		Maximum Credit Amount
Citibank, N.A.	33.333333334	%	$	166,666,666.66
ABN AMRO Capital USA LLC	22.222222222	%	$	111,111,111.11
Texas Capital Bank, N.A.	13.888888889	%	$	69,444,444.44
BOKF, N.A.	11.111111111	%	$	55,555,555.56
Comerica Bank	8.333333333	%	$	41,666,666.67
Compass Bank	8.333333333	%	$	41,666,666.67
Barclays Bank PLC	2.777777778	%	$	13,888,888.89

TOTAL	100.000000000	%	$	500,000,000.00

Solo Page

EXHIBIT A
FORM OF NOTE

, 20

FOR VALUE RECEIVED, LONESTAR RESOURCES AMERICA INC. , a Delaware corporation (the “Borrower” ), hereby promises to pay to the order of (the “Lender” ), at the principal office of CITIBANK, N.A. (the “Administrative Agent” ), the aggregate unpaid principal amount of the Loans made by the Lender to the Borrower under the Credit Agreement, as hereinafter defined, in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement.

The date, amount, Type, interest rate, Interest Period and maturity of each Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, may be endorsed by the Lender on the schedules attached hereto or any continuation thereof or on any separate record maintained by the Lender. Failure to make any such notation or to attach a schedule shall not affect any Lender’s or the Borrower’s rights or obligations in respect of such Loans or affect the validity of such transfer by any Lender of this Note.

This Note is one of the Notes referred to in the Credit Agreement dated as of , 20 among the Borrower, the Administrative Agent, and the other agents and lenders signatory thereto (including the Lender), and evidences Loans made by the Lender thereunder (such Credit Agreement as the same may be amended, supplemented or restated from time to time, the “Credit Agreement” ). Capitalized terms used in this Note have the respective meanings assigned to them in the Credit Agreement.

This Note is issued pursuant to, and is subject to the terms and conditions set forth in, the Credit Agreement and is entitled to the benefits provided for in the Credit Agreement and the other Loan Documents. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events, for prepayments of Loans upon the terms and conditions specified therein and other provisions relevant to this Note.

THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.

	LONESTAR RESOURCES AMERICA INC.


	By:
	Name:
	Title:

EXHIBIT B
FORM OF BORROWING REQUEST

, 20

LONESTAR RESOURCES AMERICA INC. , a Delaware corporation (the “Borrower” ), pursuant to Section 2.03 of the Credit Agreement dated as of July 28, 2015 (together with all amendments, restatements, supplements or other modifications thereto, the “Credit Agreement” ) among the Borrower, CITIBANK, N.A. , as Administrative Agent and the other agents and lenders (the “ Lenders ” ) which are or become parties thereto (unless otherwise defined herein, each capitalized term used herein is defined in the Credit Agreement), hereby requests a Borrowing as follows:

1. Aggregate amount of the requested Borrowing is $ ;

2. Date of such Borrowing is , 20 ;

3. Requested Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing];

4. In the case of a Eurodollar Borrowing, the initial Interest Period applicable thereto is ;

5. Amount of Borrowing Base in effect on the date hereof is $ ;

6. Total Revolving Credit Exposures on the date hereof (i.e., outstanding principal amount of Loans and total LC Exposure) is $ ; and

7. Pro forma total Revolving Credit Exposures (giving effect to the requested Borrowing) is $ ; and

8. Location and number of the Borrower’s account to which funds are to be disbursed, which shall comply with the requirements of Section 2.05 of the Credit Agreement, is as follows:

The undersigned certifies that he/she is the of the Borrower, and that as such he/she is authorized to execute this certificate on behalf of the Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled to receive the requested Borrowing under the terms and conditions of the Credit Agreement.

	LONESTAR RESOURCES AMERICA INC.


	By:
	Name:
	Title:

Solo

EXHIBIT C
FORM OF INTEREST ELECTION REQUEST

, 20

LONESTAR RESOURCES AMERICA INC. , a Delaware corporation (the “Borrower” ), pursuant to Section 2.04 of the Credit Agreement dated as of July 28, 2015 (together with all amendments, restatements, supplements or other modifications thereto, the “Credit Agreement” ) among the Borrower, CITIBANK, N.A. , as Administrative Agent and the other agents and lenders which are or become parties thereto (unless otherwise defined herein, each capitalized term used herein is defined in the Credit Agreement), hereby makes an Interest Election Request as follows:

(i) The Borrowing to which this Interest Election Request applies, and if different options are being elected with respect to different portions thereof, the portions thereof to be allocated to each resulting Borrowing (in which case the information specified pursuant to (iii) and (iv) below shall be specified for each resulting Borrowing) is [ ];

(ii) The effective date of the election made pursuant to this Interest Election Request is , 20 ;[and]

(iii) The resulting Borrowing is to be [an ABR Borrowing] [a Eurodollar Borrowing][; and]

[(iv) [If the resulting Borrowing is a Eurodollar Borrowing] The Interest Period applicable to the resulting Borrowing after giving effect to such election is [ ]].

The undersigned certifies that he/she is the [ ] of the Borrower, and that as such he/she is authorized to execute this certificate on behalf of the Borrower. The undersigned further certifies, represents and warrants on behalf of the Borrower that the Borrower is entitled to receive the requested continuation or conversion under the terms and conditions of the Credit Agreement.

	LONESTAR RESOURCES AMERICA INC.


	By:
	Name:
	Title:

EXHIBIT D
FORM OF
COMPLIANCE CERTIFICATE

The undersigned hereby certifies that he/she is the of LONESTAR RESOURCES AMERICA INC. , a Delaware corporation (the “Borrower” ), and that as such he/she is authorized to execute this certificate on behalf of the Borrower. With reference to the Credit Agreement dated as of July 28, 2015 (together with all amendments, restatements, supplements or other modifications thereto being the “Agreement” ) among the Borrower, CITIBANK, N.A. , as Administrative Agent, and the other agents and lenders (the “Lenders” ) which are or become a party thereto, and such Lenders, the undersigned represents and warrants as follows (each capitalized term used herein having the same meaning given to it in the Agreement unless otherwise specified):

(a) The representations and warranties of the Borrower contained in Article VII of the Agreement and in the Loan Documents and otherwise made in writing by or on behalf of the Borrower pursuant to the Agreement and the Loan Documents were true and correct in all material respects when made, and are repeated at and as of the time of delivery hereof and are true and correct in all material respects at and as of the time of delivery hereof, except to the extent such representations and warranties are expressly limited to an earlier date or the Required Lenders have expressly consented in writing to the contrary.

(b) The Borrower has performed and complied with all agreements and conditions contained in the Agreement and in the Loan Documents required to be performed or complied with by it prior to or at the time of delivery hereof [or specify default and describe].

(c) Since , 20 , no change has occurred, either in any case or in the aggregate, in the condition, financial or otherwise, of the Borrower or any Subsidiary which could reasonably be expected to have a Material Adverse Effect [or specify event].

(d) There exists no Default or Event of Default [or specify Default and describe].

(e) Attached hereto are the detailed computations necessary to determine whether the Borrower is in compliance with Section 9.01 as of the end of the [fiscal quarter][fiscal year] ending [ ].

EXECUTED AND DELIVERED this day of , 20 .

	LONESTAR RESOURCES AMERICA INC.


	By:
	Name:
	Title:

For the Quarter/Year ended ( “Statement Date” )

SCHEDULE 2

to the Compliance Certificate
($ in 000’s)

I.	Section 9.01(a) — Ratio of Total Debt to EBITDAX.

	A.	Total Debt

		1.	Debt, less	$

		2.	Non-cash obligations under ASC 815, less	($ )

		3.	Accounts payable and other accrued liabilities not greater than 90 days past due or which are being contested in good faith	($ )

		4.	Total Debt	$

	B.	EBITDAX

		1.	consolidated net income, less	$

		2.	non-cash revenue or expense associated with Swap Agreements resulting from ASC 815, less	($ )

		3.	income or plus loss from discontinued operations and extraordinary items, plus	($ )

		4.	income taxes, plus	$

		5.	interest expense, plus	$

		6.	depreciation, plus	$

		7.	accretion of asset retirement obligations, plus	$

		8.	depletion, plus	$

		9.	amortization, plus	$

		10.	IDC and other exploration expenses deducted in determining net income	$

		11.	non-cash and extraordinary items	$

		12.	Total EBITDAX	$

	C.	Ratio (Line II.A.4 ÷ Line II.B.12)	to 1.0

		Maximum Permitted: 4.0 to 1.0

II.	Section 9.01(c) — Current Ratio

	A.	Current Assets (including Borrowing Base availability):	$

	B.	Current Liabilities (excluding current maturities of Obligations)	$

	C.	Ratio (Line II.A ÷ Line II.B)	to 1.0

		Minimum Required: 1.0 to 1.0

EXHIBIT E
SWAP AGREEMENT CERTIFICATE

TO: CITIBANK, N.A., as Administrative Agent

FOR FISCAL QUARTER ENDED: , 201 (the “Statement Date” )

Reference is made to that certain Credit Agreement among LONESTAR RESOURCES AMERICA INC. , a Delaware corporation (the “Borrower” ) , the Lenders from time to time party thereto, and CITIBANK, N.A., as Administrative Agent dated as of July 28, 2015 (as amended, restated or otherwise modified from time to time, the “Credit Agreement” ). The defined terms used herein have the same meanings as are provided in the Credit Agreement.

This Swap Agreement Certificate (this “Certificate” ) is executed and delivered in accordance with Section 8.01(f) of the Credit Agreement. Each officer executing this Certificate on behalf of a Borrower certifies that he/she is a current duly elected or appointed Financial Officer of such Borrower and that he/she is authorized to execute this Certificate on behalf of such Borrower.

The undersigned certifies that:

1. Attached hereto as Schedule 1 is a list of all Swap Agreements of each Borrower and each Subsidiary existing as of the Statement Date, the material terms thereof (including the type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support agreements relating thereto not listed on Schedule 7.20 to the Credit Agreement, any margin required or supplied under any credit support document, and the counterparty to each such agreement.

2. Attached hereto as Schedule 2 are detailed computations necessary to determine whether the Borrowers are in compliance with Section 9.18(a) as of the Statement Date.

EXECUTED AND DELIVERED this day of , 20 .

	LONESTAR RESOURCES AMERICA INC.


	By:
	Name:
	Title:

For the Quarter ended , 201 (“Statement Date”)

SCHEDULE 1

to the Swap Agreement Certificate

($ in 000’s)

List of Swap Agreements per Section 8.01(f)

Type

Term

Effective
Date

Termination
Date

Notional
Volumes

Net
Mark-
to-
Market
Value

New Credit
Support
Agreements

Margin
Required
or
Supplied

Counter-
party

For the Quarter ended , 201 (“Statement Date”)

SCHEDULE 2

to the Swap Agreement Certificate

Section 9.18(a)(iii)(B) Compliance

1.	The aggregate notional volumes of all commodity Swap Agreements (other than put and floor options and basis differential swaps on volumes already hedged pursuant to other Swap Agreements) in any current or future fiscal quarter, for each of crude oil and natural gas, calculated separately:

	A. Crude Oil:

	B. Natural Gas:

2.	Gross volumes of crude oil and natural gas production for the most recently completed fiscal quarter, as set forth on the most recently delivered Production Report, for each of crude oil and natural gas, calculated separately:

	A. Crude Oil:

	B. Natural Gas:

3.	Compliance with Section 9.18(a)(iii)(B) of the Credit Agreement:

	A. Crude Oil: Line 1(A) < Line 2(A)	Select: [Yes] [No]

	B. Natural Gas: Line 1(B) < Line 2(B)	Select: [Yes] [No]

EXHIBIT F
SECURITY INSTRUMENTS

1. Guaranty Agreement dated as of July 28, 2015, by Guarantors, in favor of the Administrative Agent and the Lenders.

2. Security Agreement dated as of July 28, 2015, by Borrower in favor of the Administrative Agent and the Lenders.

3. Security Agreement dated as of July 28, 2015, by each Subsidiary in favor of the Administrative Agent and the Lenders.

4. Financing Statement in respect of item 2/item 7.

5. Financing Statements in respect of item 3:

a. Albany Services L L C

b. Amadeus Petroleum Inc.

c. Eagleford Gas, LLC

d. Eagleford Gas 2, LLC

e. Eagleford Gas 3, LLC

f. Eagleford Gas 4, LLC

g. Eagleford Gas 5, LLC

h. Eagleford Gas 6, LLC

i. Eagleford Gas 7, LLC

j. Eagleford Gas 8, LLC

k. Eagleford Gas 9, LLC

l. Lonestar Operating, LLC

m. Lonestar Resources, Inc.

n. Poplar Energy, LLC

o. T-N-T Engineering, Inc.

6. Stock Powers delivered in respect of item 2.

a. Albany Services L L C

b. Eagleford Gas, LLC

c. T-N-T Engineering, Inc.

7. Deed of Trust, Mortgage, Security Agreement, Assignment of Production and Financing Statement dated as of July 28, 2015 by each of the following entities, each as mortgagor, in favor of Mary C. Tucker, as Trustee, for the benefit the Administrative Agent, the Lenders and others:

a. Eagleford Gas, LLC

b. Eagleford Gas 2, LLC

c. Eagleford Gas 3, LLC

d. Eagleford Gas 4, LLC

e. Eagleford Gas 5, LLC

f. Eagleford Gas 6, LLC

g. Eagleford Gas 7, LLC

h. Eagleford Gas 8, LLC

i. Amadeus Petroleum Inc.

j. Lonestar Resources Inc.

EXHIBIT G
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 [Insert name of Assignor] (the “Assignor” ) and [Insert name of Assignee] (the “Assignee” ). Capitalized terms used but not defined herein shall have the meanings given to them in the Credit Agreement identified below (as amended, the “Credit Agreement” ), receipt of a copy of which is hereby acknowledged by the 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 Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, 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 rights and obligations in its capacity as a Lender 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 under the respective facilities identified below (including 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) 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 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 pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned Interest” ). Such sale and assignment is without recourse to the Assignor and, except as expressly provided in this Assignment and Assumption, without representation or warranty by the Assignor.

1. Assignor:

2. Assignee:

[and is an Affiliate/Approved Fund of [identify Lender](1) ]

3. Borrower: LONESTAR RESOURCES AMERICA INC.

4. Administrative Agent: CITIBANK, N.A. , as the administrative agent under the Credit Agreement

5. Credit Agreement: The Credit Agreement dated as of July 28, 2015 among

LONESTAR RESOURCES AMERICA INC. , the Lenders parties
thereto, CITIBANK, N.A. , as Administrative Agent, and the other
agents parties thereto

(1) Select as applicable.

6. Assigned Interest:

Commitment Assigned	Aggregate Amount of Commitment/Loans for all Lenders	Amount of Commitment/Loans Assigned	Percentage Assigned of Commitment/Loans(2)
	$	$		%
	$	$		%
	$	$		%

Effective Date: , 20 [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The terms set forth in this Assignment and Assumption are hereby agreed to:

	ASSIGNOR

	[NAME OF ASSIGNOR]


	By:
	Name:
	Title:


	ASSIGNEE

	[NAME OF ASSIGNEE]


	By:
	Name:
	Title:

(2) Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of all Lenders thereunder.

[Consented to and](3) Accepted:

CITIBANK, N.A. ,
as Administrative Agent


By:
Name:
Title:


[Consented to:](4)

[NAME OF RELEVANT PARTY]


By:
Name:
Title:

(3) To be added only if the consent of the Administrative Agent is required by the terms of the Credit Agreement.

(4) To be added only if the consent of the Borrower and/or other parties (e.g. Issuing Bank) is required by the terms of the Credit Agreement.

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties .

1.1 Assignor . The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or other adverse claim and (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 (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 Loan Document, (ii) the execution, legality, validity, enforceability, genuineness, sufficiency or value of the Loan 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 Loan 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 Loan Document.

1.2 Assignee . The 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 satisfies the requirements, if any, specified in the Credit Agreement that are required to be satisfied by it in order to acquire the Assigned Interest and become a Lender, (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 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, together with copies of the most recent financial statements delivered pursuant to Section 8.01 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Assumption and to purchase the Assigned Interest on the basis of which it has made such analysis and decision independently and without reliance on the Administrative Agent or any other Lender, and (vi) 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 Assignee; and (b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the 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 Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations which by the terms of the Loan 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 Assigned Interest (including payments of principal, interest, fees and other amounts) to the Assignor for amounts which have accrued to but excluding the Effective Date and to the Assignee for amounts which have accrued from and after the Effective Date.

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 facsimile 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 law of the State of Texas.

EXHIBIT H

PROPERTY CERTIFICATE

TO: CITIBANK, N.A. , as Administrative Agent

Reference is made to that certain Credit Agreement dated as of July 28, 2015 (the “Credit Agreement” ), among LONESTAR RESOURCES AMERICA INC. , the Lenders from time to time party thereto, and CITIBANK, N.A. , as Administrative Agent. The defined terms used in this Certificate shall have the same meanings as provided therefor in the Credit Agreement, unless the context hereof otherwise requires or provides. This is the Property Certificate referred to in the Credit Agreement.

The Borrower has mortgaged to the Administrative Agent its entire interest in the Mortgaged Property. The Borrower HEREBY CERTIFIES to the Administrative Agent that true, complete and correct responses for items A through E below for each Mortgaged Property are described on the exhibit to this Property Certificate:

A. Well, lease or unit name, as appropriate.

B. Operator’s name and address.

C. First purchaser’s name and address.

D. Lease number or other designation used by payor to identify lease or leases in accounting for revenues, costs and joint interest transactions.

E. The ownership interest of with respect to the well, lease or unit. Such ownership interest does and will entitle to receive a decimal share of all oil, gas or other hydrocarbons produced from, or allocated to, such well or unit equal to not less than the decimal share set forth in the column headed “Net Revenue Interest.” Such ownership interest shall cause to be obligated to bear a decimal share of the cost of the operation of such well, lease or unit equal to not more than the decimal share set forth in the column headed “Working Interest.”

All of the information listed on the attachments to this Property Certificate is true, complete and correct in all material respects. This Property Certificate is given for the purpose of inducing the Lenders to enter into the Credit Agreement, and the undersigned recognizes that the Lenders are relying upon this Property Certificate in connection with the transactions contemplated by the Loan Agreement and that but for the statements made herein, the Lenders would not enter into the Credit Agreement.

EXECUTED on the date of the notary certification below to be effective as of , 20 .

	LONESTAR RESOURCES AMERICA INC.


	By
	Name:
	Title:

SWORN TO AND SUBSCRIBED before me this day of , 20 , by , the of LONESTAR RESOURCES AMERICA INC., a Delaware corporation, on behalf of said corporation.


	Notary Public in and for
	the State of Texas

EXHIBIT I

RECONCILIATION SCHEDULE

TO: CITIBANK, N.A., as Administrative Agent

Reference is made to that certain Credit Agreement among LONESTAR RESOURCES AMERICA INC. , the Lenders from time to time party thereto, and CITIBANK, N.A. , as Administrative Agent dated as of July 28, 2015 (the “Credit Agreement” ). The defined terms used herein have the same meanings as are provided in the Credit Agreement. This is the Reconciliation Schedule described in the Credit Agreement.

The Borrower has previously furnished the Administrative Agent with a reserve appraisal prepared by , dated as of , 20 (the “Reserve Appraisal” ), which appraises Oil and Gas Properties owned by the Borrower. The names on the Oil and Gas Properties listed on the Reserve Appraisal vary from the names of the Oil and Gas Properties mortgaged to the Administrative Agent pursuant to the Mortgages. Attached to this Reconciliation Schedule is a chart which reconciles the discrepancies in these names. The Borrower certifies as follows:

(a) Each well and unit that is described on the exhibits attached to the Mortgages is also listed in the Reserve Appraisal and on the attached reconciliation chart.

(b) The property listed in column A of the attached reconciliation chart which has the same number as the property listed in column B of the attached reconciliation chart is one and the same property.

IN WITNESS WHEREOF, the undersigned has executed this Reconciliation Schedule as of , 20 .

	LONESTAR RESOURCES AMERICA INC.


	By
	Name:
	Title:

PROPERTY RECONCILIATION CHART

The information listed in column A is reproduced exactly from the Reserve Appraisal. The information listed in column B is reproduced exactly from the descriptions attached to the Mortgages. The property listed in column A which has the same number as the property listed in column B is one and the same property. If a property in column B is left blank, it is not mortgaged to Lender.

	A Reserve Appraisal				B Mortgage Exhibits
	Name	WI	NRI		Name	WI	NRI
1.				1.
2.				2.
3.				3.
4.				4.
5.				5.
6..				6..
7..				7..
8.				8.
9.				9.
10.				10.
11.				11.
12.				12.
13.				13.
14.				14.
15.				15.
16.				16.
17.				17.
18.				18.
19.				19.
20.				20.
21.				21.
22.				22.
23.				23.
24.				24.
25.				25.

	A Reserve Appraisal				B Mortgage Exhibits
	Name	WI	NRI		Name	WI	NRI
26.				26.
27.				27.
28.				28.
29.				29.
30.				30.
31.				31.
32.				32.
33.				33.
34.				34.
35.				35.
36.				36.
37.				37.
38.				38.
39.				39.
40.				40.
41.				41.
42.				42.
43.				43.
44.				44.
45.				45.
46.				46.
47.				47.
48.				48.

EXHIBIT J-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 July 28, 2015 (as amended, supplemented or otherwise modified from time to time, the “Credit Agreement” ), among LONESTAR RESOURCES AMERICA INC. , and each Lender from time to time party thereto, and CITIBANK, N.A. , as Administrative Agent.

Pursuant to the provisions of Section 5.03 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. By executing this certificate, the undersigned agrees that (x) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (y) 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[ ]

Solo Page

EXHIBIT J-2

FORM OF U.S. TAX COMPLIANCE CERTIFICATE
(FOR FOREIGN PARTICIPANTS THAT ARE NOT PARTNERSHIPS
FOR U.S. FEDERAL INCOME TAX PURPOSES)

Pursuant to the provisions of Section 5.03 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. By executing this certificate, the undersigned agrees that (x) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender in writing, and (y) 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 LENDER]


By:
	Name:
	Title:

Date: , 20[ ]

Solo Page

EXHIBIT J-3

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 5.03 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 Loan 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 (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN 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 (x) if the information provided on this certificate changes, the undersigned shall promptly so inform the Borrower and the Administrative Agent, and (y) 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[ ]

Solo Page

EXHIBIT J-4

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 5.03 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 (ii) an IRS Form W-8IMY accompanied by an IRS Form W-8BEN 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 (x) if the information provided on this certificate changes, the undersigned shall promptly so inform such Lender and (y) 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 LENDER]


By:
	Name:
	Title:

Date: , 20[ ]

Solo Page

SCHEDULE 7.05
LITIGATION

I. Pena — 3C-C4 Family Limited Mineral Partnership v. Eagleford Gas 4, LLC

a. Cause NO. 14-05-00085-CVL, 81 st Judicial District- LaSalle County, Texas

i. Cause of Action — Breach of contract with Pena family not returning $250,000 owed under agreement.

ii. Litigation Status — Defendant (us) is prepping for discovery

II. Peters — C layton Williams Energy, Inc. v. Robert A. Williamson, et al v. Eagleford Gas 5, LLC and Eli Rebich.

a. Cause NO. 14-001392-CV-361, 85 th Judicial District — Brazos County, Texas

i. Cause of Action — Fraudulent Inducement by Eli Rebich as Defendant, and removal of clouded title by CWEI against Robert A. Williamson, et al

ii. Litigation Status — CWEI has filed a counter claim against defendants to clear the cloud on the title.

III. Roger Terrell Miller, et al v. Lonestar Operating, LLC

a. Cause NO. 15-001025-CV-272, 272 nd Judicial District — Brazos County, Texas.

i. Cause of Action — Breach of Contract, Road Use Agreement

ii. Litigation Status — Plaintiff filed suit 4-29-2015. Defendant’s Response filed 6-26-2015. No trial date set.

SCHEDULE 7.06
ENVIRONMENTAL

None

SCHEDULE 7.14
SUBSIDIARIES AND PARTNERSHIPS

Subsidiaries	Jurisdiction of Organization	Organizational Identification Number	Principal Place of Business and Chief Executive Office
Amadeus Petroleum Inc.	Texas	108312500	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Albany Services L L C	Texas	703468922	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
T-N-T Engineering, Inc.	Texas	119115600	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Lonestar Resources, Inc.	Delaware	4847650	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Lonestar Operating, LLC	Texas	800545384	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas, LLC	Texas	801331712	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 2, LLC	Texas	801475640	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 3, LLC	Texas	801585263	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 4, LLC	Texas	801855641	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 5, LLC	Texas	801857448	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 6, LLC	Texas	801927115	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 7, LLC	Texas	802037342	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 8, LLC	Texas	802053438	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Eagleford Gas 9, LLC	Texas	802053444	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128
Poplar Energy, LLC	Texas	801394693	600 Bailey Avenue, Ste. 200 Fort Worth, TX 76107-2128

SCHEDULE 7.18
MATERIAL GAS IMBALANCES

None

SCHEDULE 7.19
MARKETING CONTRACTS

Long Term Crude Oil Sales Agreements

PROPERTY	TERM	PURCHASER
Ranger Beall Ranch	MTM with 30 days written notice	Trafigura Trading LLC
Asherton	MTM with 30 days written notice	Trafigura Trading LLC
La Salle & Frio County	MTM with 30 days written notice	Trafigura Trading LLC
Gonzo	Initial term 7/1-9/30/15; MTM thereafter with 30 days written notice	Vitol, Inc.
Pirate	Initial term 7/1-9/30/15; MTM thereafter with 30 days written notice	Vitol, Inc.
Brazos County	MTM with 30 days written notice	BP Products North America
Harvey Johnson	MTM with 30 days written notice	BP Products North America

Long Term Natural Gas Marketing Agreements

FIELD	STATE	TERM	MARKETER
Burns Ranch	Texas	MTM with 30 days written notice	Texla Energy Management
Dunn	Texas	MTM with 30 days written notice	Texla Energy Management
Pirate	Texas	MTM with 30 days written notice	Texla Energy Management
Harvey Johnson	Texas	MTM with 30 days written notice	Texla Energy Management
Ranger Beall Ranch	Texas	MTM with 30 days written notice	Texla Energy Management
Amadeus Properties	Texas	MTM with 30 days written notice	Texla Energy Management
Asherton	Texas	MTM with 30 days written notice	Texla Energy Management

MTM means month to month

SCHEDULE 7.20
EXISTING SWAP AGREEMENTS

Lonestar Resources America WTI Crude Oil Swaps

Period	Volume (Bbl)	Swap Price
Jul – Sep 2015	49,700	$	93.65
Jul – Sept 2015	32,016	$	88.87
Jul – Dec 2015	117,500	$	87.00
Jul – Dec 2015	73,600	$	59.52
Jul – Dec 2015	128,800	$	81.25
Oct – Dec 2015	45,500	$	92.25
Oct – Dec 2015	29,992	$	87.80
Jan – Dec 2016	205,000	$	84.45
Jan – Dec 2016	183,400	$	56.90
Jan – Dec 2016	309,000	$	90.45
Jan – Dec 2016	135,600	$	63.20

Lonestar Resources America Crude Oil 3-Way Collar

Period	Volume (Bbl)	Puts	Calls
Jan – Dec 2017	365,100	$40.00 / $60.00	$	85.00

SCHEDULE 9.02
EXISTING DEBT

1. $50,000 letter of credit issued by Texas Capital Bank on behalf of Lonestar Operating, LLC for the benefit of the Texas Railroad Commission.

2. $75,000 performance obligation of Poplar Energy, LLC for the benefit of the Bureau of Indian Affairs.

3. $250,000 letter of credit issued by Wells Fargo Bank, N.A. under the Existing Credit Agreement on behalf of T-N-T Engineering, Inc. for the benefit of the Texas Railroad Commission (the “WF Letter of Credit” ).(1)

(1) Issuing Bank will issue a backstop Letter of Credit for the benefit of Wells Fargo Bank, and a new Letter of Credit for the benefit of the Texas Railroad Commission, upon receipt of which the Texas Railroad Commission will return the WF Letter of Credit.

SCHEDULE 9.03
EXISTING LIENS

1. Lien of Texas Capital Bank against certificate of deposit number 2116000285 to secure $50,000 letter of credit listed as item 1 on Schedule 9.02.

2. Lien of Bureau of Indian Affairs against certificate of deposit number 2116000276 to secure $75,000 performance obligation listed as item 2 on Schedule 9.02.

SCHEDULE 9.05
EXISTING INVESTMENTS

Permitted Employee Loans

Employee Name	Current Principal Amount of Loan
Frank D. Bracken, III	$	382,083.71
Thomas H. Olle	$	62,229.40

Exhibit 21.1

List of Subsidiaries

Name		State of Organization

Lonestar Resources America Inc.		Delaware

LNR America Inc.		Delaware

Lonestar Resources, Inc.		Delaware

Lonestar Operating LLC		Texas

Amadeus Petroleum Inc.		Texas

T-N-T Engineering, Inc.		Texas

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to use in this registration statement of our report dated December 31, 2015, relating to the consolidated financial statements of Lonestar Resources America, Inc., which is contained herein.

/s/ BDO USA, LLP

Dallas, Texas

December 31, 2015

Exhibit 23.2

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS

We hereby consent to the use in this registration statement on Form 10 (including any amendments thereto, related appendices, exhibits and financial statements) (the “Registration Statement”) filed by Lonestar Resources US Inc. of our reports dated January 29, 2015 and March 22, 2014, with respect to the estimated proved reserves and future cash flow of Lonestar Resources, Inc. as of December 31, 2014 and December 31, 2013, respectively.

We further consent to all references to our firm as experts in the Registration Statement.

W.D. VON GONTEN & CO.

State of Texas Registration Number F-1855

By:	/s/ Phillip R. Hunter
	Phillip R. Hunter, P.E.

Houston, Texas

December 29, 2015

Exhibit 23.3

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS

We hereby consent to the use in this registration statement on Form 10 (including any amendments thereto, related appendices, exhibits and financial statements) (the “Registration Statement”) filed by Lonestar Resources US Inc. of our reports dated January 30, 2015 and January 28, 2014, with respect to the estimated proved reserves and future cash flow of Amadeus Petroleum, Inc. as of December 31, 2014 and December 31, 2013, respectively.

We further consent to all references to our firm as experts in the Registration Statement.

LAROCHE PETROLEUM CONSULTANTS, LTD.

State of Texas Registration Number F-1360

By:	/s/ William M. Kazmann
	William M. Kazmann, Partner

Dallas, Texas

December 22, 2015

Exhibit 99.1

March 22, 2014

Mr. Allen W. Paschal

Lonestar Resources, Inc.

509 Pecan Street, Suite 200

Fort Worth, TX 76102

	Re:	Lonestar Resources, Inc.
		Eagle Ford Shale Properties
		Estimate of Reserves and Revenues
		SEC Year-End Pricing
		“As of” January 1, 2014

Dear Mr. Paschal:

At your request, W.D. Von Gonten & Co. has prepared estimates of future reserves and projected net revenues for certain property interests owned by Lonestar Resources, Inc. (Lonestar). These properties include producing and undeveloped locations located in Dimmit, Gonzales, LaSalle, and Wilson Counties, Texas. The undeveloped locations included herein have been classified as Proved per the guidelines established by the Society of Petroleum Engineers (SPE) and the Securities and Exchange Commission (SEC). At the request of Lonestar, this report was prepared utilizing the 2013 SEC year-end pricing scenario.

Our conclusions, as of January 1, 2014, are as follows:

Net to Lonestar Resources, Inc.

2013 SEC Year-End Pricing	Proved Developed		Proved		Total
2013 SEC Year-End Pricing	Producing		Undeveloped		Proved

Net Oil, MBbls	3,801.4		6,688.3		10,489.6

Net Gas, MMcf	4,354.5		8,296.4		12,651.0

Net NGLs, MBbls	638.6		1,202.8		1,841.5

Net Equiv., MBOE	5,165.8		9,273.8		14,439.6

FNR Disc. @ 10%, $	173,018,688		171,501,156		344,519,750

Allocation % by Classification	50.2	%	49.8	%	100.0	%

*Due to computer rounding, numbers in the above table may not sum exactly.

Report Qualifications

Purpose of Report —The purpose of this report is to provide Lonestar and its financial advisors with an estimate of future reserves and net revenues attributable to certain interests owned by Lonestar in the Eagle Ford shale play effective January 1, 2014.

Scope of Work — W.D. Von Gonten & Co. was engaged by Lonestar to estimate the remaining reserves and future production forecasts associated with the producing and undeveloped properties included in this report. Once reserves were estimated, future net revenues were determined utilizing the SEC 2013 year-end pricing scenario.

Reporting Requirements — The Society of Petroleum Engineers (SPE) requires Proved reserves to be economically recoverable with prices and costs in effect on the “as of” date of the report. In conjunction with the World Petroleum Council (WPC), American Association of Petroleum Geologists (AAPG), and the Society of Petroleum Evaluation Engineers (SPEE), the SPE has issued Petroleum Resources Management System ( 2007 ed. ), which sets forth the definitions and requirements associated with the classification of both reserves and resources. In addition, the SPE has issued

Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserve Information, which sets requirements for the qualifications and independence of reserve estimators and auditors.

Securities and Exchange Commission (SEC) Regulation S-X 210, Rule 4-10, and Regulation S-K 229, Item 1200 (as revised in December 2008, effective 1-1-10), and Financial Accounting Standards Board (FASB) Statement No. 69 requires oil and gas reserve information to be reported by publicly held companies as supplemental financial information. These regulations and standards provide for estimates of Proved reserves and revenues discounted at 10% and based on constant prices and costs.

The estimated Proved reserves herein have been prepared in conformance with all SEC definitions and requirements in the above referenced publications as well as all SPE, WPC, AAPG, and SPEE definitions and requirements.

The Securities and Exchange Commission Regulation S-X definitions of proved reserves are as follows:

Proved Reserves; Securities and Exchange Commission Regulation S-X §210.4-10(a)(22)

Proved oil and gas reserves are those quantities of oil and gas, 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 the project within a reasonable time.

Developed Oil and Gas Reserves- Securities and Exchange Commission Regulation S-X §210.4-10(a)(6)

Developed oil and gas reserves are reserves of any category that can be expected to be recovered: (i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and (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.

Undeveloped Reserves-Securities and Exchange Commission Regulation S-X §210.4-10(a)(31)

Undeveloped oil and gas reserves are reserves of any category 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. (i) 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. (ii) 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. (iii) Under no circumstances shall estimates for 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, as defined in paragraph (a)(2) of Section 210.4-10(a) of Regulation S-X, or by other evidence using reliable technology establishing reasonable certainty.

Projections — The attached reserves and revenue projections are on a calendar year basis with the first time period being January 1, 2014 through December 31, 2014.

Property Discussion

Lonestar currently owns interests in 21 Proved Developed Producing (PDP) horizontal Eagle Ford shale wells located in Dimmit, Gonzales, and LaSalle Counties, Texas. Lonestar currently operates 19 of the producing wells, while Chesapeake Energy Corporation (Chesapeake) operates the remaining two wells in the Centavo lease. As of December 31, 2013, the current gross production rates from the producing wells are approximately 3,360 barrels of oil and 6,185 Mcf of gas per day.

Currently, there are 37 Proved Undeveloped (PUD) locations to be completed in the Eagle Ford shale and operated by either Chesapeake or Lonestar. The first well is scheduled to start producing in March 2014.

Reserve Estimates

Producing Properties — Reserve estimates for the PDP property were based on volumetric calculations, log analysis, decline curve analysis, and/or analogy to nearby production. Where applicable, these estimates were further supported by rate transit analysis and/or numerical reservoir simulation as part of a shale field study conducted by us independent of this report.

Undeveloped Properties — The undeveloped reserves were necessarily estimated using volumetric calculations, log analysis, core analysis, geophysical interpretation and reservoir simulation. In addition, W.D. Von Gonten & Co. has performed a field study of the Eagle Ford shale play independent of this report. Our conclusions from that field study have fortified our confidence in the producing and undeveloped reserves included herein. W.D. Von Gonten & Co. has developed a methodology for evaluating the resource and reserve potential for shale plays which is unique to the industry. The ultimate goal of the evaluation is to assess reserves volumetrically and with numerical reservoir simulation. The results are then verified using decline curve analysis of historical production data. This methodology is a common practice with conventional reservoirs, but mostly non-existent in the realm of unconventional reservoirs, including the Eagle Ford shale.

Reserves and schedules of production included in this report are only estimates. The amount of available data, reservoir and geological complexity, reservoir drive mechanism, and mechanical aspects can have a material effect on the accuracy of these reserve estimates. Due to inherent uncertainties in future production rates, commodity prices, and geologic conditions, it should be realized that the reserve estimates, the reserves actually recovered, the revenue derived therefrom and the actual cost incurred could be more or less than the estimated amounts.

We consider the assumptions, data, methods, and procedures used in this report appropriate hereof, and we have used all such methods and procedures that we consider necessary and appropriate to prepare the estimates of reserves and future net revenues.

Product Prices

The estimated revenues shown herein were based on the SEC 2013 year-end pricing guidelines. SEC pricing is determined by averaging the first day of each month’s closing price for the previous calendar year using published benchmark oil and gas prices. This method renders a price of $96.94 per barrel of oil and $3.67 per MMBtu of gas. These prices were held constant throughout the life of the properties, as per SEC guidelines.

Pricing differentials were applied to all properties on an individual property basis in order to reflect prices actually received at the wellhead. Pricing differentials are typically utilized to account for transportation charges, geographical differentials, quality adjustments, any marketing bonuses or deductions, and any other factors that may affect the price actually received at the wellhead. For the majority of the producing properties, Lonestar provided historical pricing data for a twelve month time period spanning January through December 2013. Where applicable we applied the historical averages extracted from the provided pricing data for this report. For certain properties current historical pricing was very limited at the time of this report. Therefore, W.D. Von Gonten & Co.

utilized price differentials developed from a combination of our regional experience with the Eagle Ford shale play and the data provided by Lonestar.

The natural gas liquids (NGL) price differential utilized in this evaluation was based on a comparison of the historical price received versus the average NYMEX oil price.

A gas volume shrinkage factor has been applied to each property. This shrinkage accounts for any line loss, generation of NGLs, and/or fuel usage before the actual sales point.

Operating Expenses and Capital Cost

Historical monthly operating expense data ranging from January through December 2013 for the properties were provided by Lonestar. Based on a combination of this information and our experience with similar properties in the region, W.D. Von Gonten & Co. applied a combination of fixed and variable monthly expenses to each individual property.

Capital costs necessary to perform well completion operations and to develop undeveloped locations were supplied by Lonestar. Where available, these costs were verified from actual recent work in the area of interest and/or provided Authorities for Expenditures (AFEs).

All operating expenses and capital costs were held flat for the life of the properties.

Other Considerations

Abandonment Costs — Cost estimates regarding future plugging and abandonment procedures associated with these properties were supplied by Lonestar for the purposes of this report. As we have not inspected the properties personally, W.D. Von Gonten & Co. expresses no warranties as to the accuracy or reasonableness of this assumption. A third party study would be necessary in order to accurately estimate all future abandonment liabilities.

Additional Costs — Costs were not deducted for general and administrative expenses, depletion, depreciation and/or amortization (a non-cash item), or federal income tax.

Data Sources — Data furnished by Lonestar included basic well information, lease acreage maps, ownership interests, completion and drilling reports, pricing contracts, and daily production data. Public data sources such as IHS Energy and the U.S. Geological Survey (USGS) were used to gather any additional necessary data.

Context — We specifically advise that any particular reserve estimate for a specific property not be used out of context with the overall report. The revenues and present worth of future net revenues are not represented to be market value either for individual properties or on a total property basis. The estimation of fair market value for oil and gas properties requires additional analysis other than evaluating undiscounted and discounted future net revenues.

While the oil and gas industry may be subject to regulatory changes from time to time that could affect an industry participant’s ability to recover its oil and gas reserves, we are not aware of any such governmental actions which would restrict the recovery of the January 1, 2014 estimated oil and gas volumes. The reserves in this report can be produced under current regulatory guidelines. Actual future commodity prices may differ substantially from the utilized pricing scenario which may or may not extend or limit the estimated reserve and revenue quantities presented in this report.

We have not inspected the properties included in this report, nor have we conducted independent well tests. W.D. Von Gonten & Co. and our employees have no direct ownership in any of the properties included in this report. Our fees are based on hourly expenses and are not related to the reserves and revenue estimates produced in this report.

Thank you for the opportunity to assist Lonestar Resources, Inc. with this project.

	Respectfully submitted,


	William D. Von Gonten, Jr., P.E.
	TX # 73244


	Taylor D. Matthes

	Blake B. Coleman

Exhibit 99.2

January 29, 2015

Mr. Tom Olle

Lonestar Resources, Inc.

600 Bailey Avenue, Suite 200

Fort Worth, TX 76107

	Re:	Lonestar Resources, Inc.
		Estimate of Reserves and Revenues
		Provided 2014 SEC Year-End Pricing
		“As of” January 1, 2015

Dear Mr. Olle:

At your request, W.D. Von Gonten & Co. has prepared estimates of future reserves and projected net revenues for certain property interests owned by Lonestar Resources, Inc. (Lonestar). The undeveloped locations included herein have been classified as Proved per the guidelines established by the Society of Petroleum Engineers (SPE) and the Securities and Exchange Commission (SEC). At the request of Lonestar, this report was prepared utilizing a provided 2014 SEC year-end pricing scenario.

Our conclusions, as of January 1, 2015, are as follows:

Provided SEC 2014 Year-End Pricing	Net to Lonestar Resources, Inc.
	Proved Developed				Proved		Total
	Producing		Non-Producing		Undeveloped		Proved

Reserve Estimates
Oil/Cond., Mbbl	6,971.5		73.3		13,816.6		20,861.4
Gas, MMcf	8,360.4		—		13,167.4		21,527.8
NGL, Mbbl	1,211.6		—		1,832.6		3,044.1
Oil/Cond. Equivalent, MBOE	9,576.5		73.3		17,843.7		27,493.5

Proved Revenues
Oil, $ (91.4) %	644,062,062		6,674,640		1,279,168,250		1,929,904,875
Gas, $ (4.1) %	33,759,070		—		53,172,602		86,931,664
NGL, $ (4.5) %	37,667,039		—		56,995,234		94,662,273
Total, $	715,488,125		6,674,640		1,389,335,875		2,111,498,750

Expenditures
Advalorem Taxes, $	11,691,100		95,514		23,686,615		35,473,227
Severance Taxes, $	34,983,812		307,033		67,104,320		102,395,156
Direct Operating Expense, $	181,047,297		2,020,000		177,731,875		360,799,250
Variable Operating Expense, $	14,738,590		215,152		32,194,527		47,148,270
Total, $	242,460,797		2,637,699		300,717,375		545,815,875

Investments					‘
Total, $	1,264,196		750,000		305,967,062		307,981,250

Estimated Future Net Revenues(FNR)
Undiscounted FNR, $	471,763,219		3,286,939		782,651,625		1,257,701,750
FNR Disc. @ 10%, $	294,190,156		2,040,082		347,407,438		643,637,750

Allocation Percentage by Classification
FNR Disc. @ 10%	45.7	%	0.3	%	54.0	%	100.0	%

*Due to computer rounding, numbers in the above table may not sum exactly.

Report Qualifications

The Securities and Exchange Commission Regulation S-X definitions of proved reserves are as follows:

Proved Reserves; Securities and Exchange Commission Regulation S-X §210.4-10(a)(22)

Proved oil and gas reserves are those quantities of oil and gas, 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 the project within a reasonable time.

Developed Oil and Gas Reserves- Securities and Exchange Commission Regulation S-X §210.4-10(a)(6)

Undeveloped Reserves-Securities and Exchange Commission Regulation S-X §210.4-10(a)(31)

recompletion. (i) 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. (ii) 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. (iii) Under no circumstances shall estimates for 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, as defined in paragraph (a)(2) of Section 210.4-10(a) of Regulation S-X, or by other evidence using reliable technology establishing reasonable certainty.

Projections — The attached reserves and revenue projections are on a calendar year basis with the first time period being January 1, 2015 through December 31, 2015.

Property Discussion

The Lonestar properties include producing and undeveloped locations located in Brazos, Dimmit, Frio, Gonzales, LaSalle, and Wilson Counties, Texas. Lonestar currently owns interests in 48 Proved Developed Producing (PDP) horizontal Eagle Ford shale wells, of which, Lonestar currently operates 45 of the producing wells, while Modern Exploration, Inc. (Modern) operates the remaining three wells. As of December 31, 2014, the current gross production rates from all of the producing wells are approximately 6,480 barrels of oil and 8,900 Mcf of gas per day.

Currently, there are 62 Proved Undeveloped (PUD) locations to be completed in the Eagle Ford shale and operated by either Lonestar or Modern. The first well is scheduled to start producing in February 2015.

Reserve Estimates

Product Prices

The estimated revenues shown herein were based on SEC year-end pricing guidelines. SEC pricing is determined by averaging the first day of each month’s closing price for the previous calendar year using published benchmark oil and gas prices. The provided scenario utilized for this report is price of $94.99 per barrel of oil and $4.35 per MMBtu of gas. These prices were held constant throughout the life of the properties, as per SEC guidelines.

Pricing differentials were applied to all properties on an individual property basis in order to reflect prices actually received at the wellhead. Pricing differentials are typically utilized to account for transportation charges, geographical differentials, quality adjustments, any marketing bonuses or deductions, and any other factors that may affect the price actually received at the wellhead. For the majority of the producing properties, Lonestar provided historical pricing data for the time period spanning November 2013 through November 2014. Where applicable, we applied the historical averages extracted from the provided pricing data for this report. For certain properties current historical pricing was very limited at the time of this report. Therefore, W.D. Von Gonten & Co. utilized price differentials developed from a combination of our “regional experience and expertise” with the Eagle Ford shale play and the data provided by Lonestar.

The natural gas liquids (NGL) price differential utilized in this evaluation was based on a comparison of the historical price received versus the average NYMEX oil price.

A gas volume shrinkage factor has been applied to each property. This shrinkage accounts for any line loss, generation of NGLs, and/or fuel usage before the actual sales point.

Operating Expenses and Capital Cost

Historical monthly operating expense data ranging from November 2013 through October 2014 for the properties were provided by Lonestar. Based on a combination of this information and our experience with similar properties in the region, W.D. Von Gonten & Co. applied a combination of fixed and variable monthly expenses to each individual property.

All operating expenses and capital costs were held flat for the life of the properties.

Other Considerations

Additional Costs — Costs were not deducted for general and administrative expenses, depletion, depreciation and/or amortization (a non-cash item), or federal income tax.

While the oil and gas industry may be subject to regulatory changes from time to time that could affect an industry participant’s ability to recover its oil and gas reserves, we are not aware of any such governmental actions which would restrict the recovery of the January 1, 2015 estimated oil and gas volumes. The reserves in this report can be produced under current regulatory guidelines. Actual future commodity prices may differ substantially from the utilized pricing scenario which may or may not extend or limit the estimated reserve and revenue quantities presented in this report.

Thank you for the opportunity to assist Lonestar Resources, Inc. with this project.

	Respectfully submitted,


	William D. Von Gonten, Jr., P.E.
	TX # 73244


	Taylor D. Matthes

Exhibit 99.3

January 28, 2014

Mr. Tom Olle

Senior Vice President Operations

Amadeus Petroleum, Inc.

509 Pecan St., Suite 200

Fort Worth, TX 76102

Dear Mr. Olle:

At your request, LaRoche Petroleum Consultants, Ltd. (LPC) has estimated the proved reserves and future cash flow, as of December 31, 2013, to the Amadeus Petroleum, Inc. (Amadeus) interest in certain properties located in multiple counties in Texas. The work for this report was completed as of the date of this letter. This report was prepared to provide Amadeus with Securities and Exchange Commission (SEC) compliant reserve estimates. It is our understanding that the properties evaluated by LPC comprise 100 percent (100%) of Amadeus’s proved reserves. We believe the assumptions, data, methods, and procedures used in preparing this report, as set out below, are appropriate for the purpose of this report. This report has been prepared using constant prices and costs and conforms to our understanding of the SEC guidelines, reserves definitions, and applicable financial accounting rules.

Summarized below are LPC’S estimates of net reserves and future net cash flow. Future net revenue is prior to deducting estimated production and ad valorem taxes. Future net cash flow is after deducting these taxes, operating expenses, and future capital expenditures but before consideration of federal income taxes. The discounted cash flow values included in this report are intended to represent the time value of money and should not be construed to represent an estimate of fair market value. We estimate the net reserves and future net cash flow to the Amadeus interest, as of December 31, 2013, to be:

	Net Reserves		Future Net Cash Flow ($)
Category	Oil (Barrels)	Gas (Mcf)	Total		Present Worth at 10%
Proved Developed
Producing	2,317,243	3,474,117	$	147,754,453	$	66,217,797
Non-Producing	76,642	458,932	6,912,837		3,653,308
Proved Undeveloped	599,950	789,138	29,725,387		7,252,567

Total Proved	2,993,835	4,722,187	$	184,392,677	$	77,123,672

The oil reserves include crude oil and condensate. Oil reserves are expressed in barrels which are equivalent to 42 United States gallons. Gas reserves are expressed in thousands of standard cubic feet (Mcf) at the contract temperature and pressure bases.

The estimated reserves and future cash flow shown in this report are for proved developed producing reserves and, for certain properties, proved developed non-producing and proved undeveloped reserves. This report does not include any value that could be attributed to

2435 N. Central Expy, Suite 1500 · Richardson, Texas 75080

Phone (214) 363-3337 · Fax (214) 363-1608

interests in undeveloped acreage beyond those tracts for which undeveloped reserves have been estimated.

With regard to the Raccoon Bend Field in Austin and Waller Counties, Texas, an existing agreement, as amended, between the working interest owners and ExxonMobil Corporation (Exxon) requires an annual payment on January 31 to Exxon of fifty percent of the net working interest oil revenue in accordance with a three-tier price and volume schedule. Based on the pricing used herein and forecasted production in this report, the projected payments to Exxon due from the Amadeus interest would be approximately $6.9 million over the life of the properties. The present value of these payments discounted at ten percent is approximately $3.6 million as shown on the attached Schedule 1. The impact of this contractual liability is not included in the reserves or cash flows in this report.

Estimates of reserves for this report were prepared using standard geological and engineering methods generally accepted by the petroleum industry. The reserves in this report have been estimated using deterministic methods. The method or combination of methods utilized in the evaluation of each reservoir included consideration of the stage of development of the reservoir, quality and completeness of basic data, and production history. Recovery from various reservoirs and leases was estimated after consideration of the type of energy inherent in the reservoirs, the structural positions of the properties, and reservoir and well performance. In some instances, comparisons were made to similar properties where more complete data were available. We have used all methods and procedures that we considered necessary under the circumstances to prepare this report. We have excluded from our consideration all matters to which the controlling interpretation may be legal or accounting rather than engineering or geoscience.

The estimated reserves and future cash flow amounts in this report are related to hydrocarbon prices. Historical prices through December 2013 were used in the preparation of this report as required by SEC guidelines; however, actual future prices may vary significantly from the SEC prices. In addition, future changes in environmental and administrative regulations may significantly affect the ability of Amadeus to produce oil and gas at the projected levels. Therefore, volumes of reserves actually recovered and amounts of cash flow actually received may differ significantly from the estimated quantities presented in this report.

Benchmark prices used in this report are based on the twelve-month, unweighted arithmetic average of the first day of the month price for the period January 2013 through December 2013. Gas prices used in this report are referenced to a Henry Hub price of $3.67 per MMBtu, as published in the Platts Gas Daily, and are adjusted for energy content, transportation fees, and regional price differentials. Oil prices are referenced to a West Texas Intermediate crude oil price of $93.42 per barrel, as posted by Plains All American Pipeline, L.P, and are adjusted for gravity, crude quality, transportation fees, and regional price differentials. These reference prices are held constant in accordance with SEC guidelines. The weighted average prices after adjustments over the life of the properties are $95.56 per barrel for oil and $5.69 per Mcf for gas.

Lease and well operating expenses are based on data obtained from Amadeus. Expenses for the properties operated by Amadeus include direct lease and field level costs. Leases and wells operated by others include all direct expenses as well as general and administrative costs and overhead costs allowed under the specific joint operating agreements. For operated properties, field costs have been divided into fixed field operating costs per well

and variable operating costs per unit of production. The field operating costs are held constant in accordance with SEC guidelines.

Capital costs and timing of all investments have been provided by Amadeus and are included as required for workovers, new development wells, and production equipment. Amadeus has represented to us that they have the ability and intent to implement their capital expenditure program as scheduled. Amadeus’s e stimates of the cost to plug and abandon the wells net of salvage value are included and scheduled at the end of the economic life of individual properties. These costs are held constant.

LPC has made no investigation of possible gas volume and value imbalances that may have resulted from the overdelivery or underdelivery to the Amadeus interest. Our projections are based on the Amadeus interest receiving its net revenue interest share of estimated future gross oil and gas production.

Technical information necessary for the preparation of the reserve estimates herein was furnished by Amadeus or was obtained from state regulatory agencies and commercially available data sources. No special tests were obtained to assist in the preparation of this report. For the purpose of this report, the individual well test and production data as reported by the above sources were accepted as represented together with all other factual data presented by Amadeus including the extent and character of the interest evaluated.

An on-site inspection of the properties has not been performed nor has the mechanical operation or condition of the wells and their related facilities been examined by LPC. In addition, the costs associated with the continued operation of uneconomic properties are not reflected in the cash flows.

The evaluation of potential environmental liability from the operation and abandonment of the properties is beyond the scope of this report. In addition, no evaluation was made to determine the degree of operator compliance with current environmental rules, regulations, and reporting requirements. Therefore, no estimate of the potential economic liability, if any, from environmental concerns is included in the projections presented herein.

The reserves included in this report are estimates only and should not be construed as exact quantities. They may or may not be recovered; if recovered, the revenues therefrom and the costs related thereto could be more or less than the estimated amounts. These estimates should be accepted with the understanding that future development, production history, changes in regulations, product prices, and operating expenses would probably cause us to make revisions in subsequent evaluations. A portion of these reserves are for behind-pipe zones, undeveloped locations, and producing wells that lack sufficient production history to utilize performance-related reserve estimates. Therefore, these reserves are based on estimates of reservoir volumes and recovery efficiencies along with analogies to similar production. These reserve estimates are subject to a greater degree of uncertainty than those based on substantial production and pressure data. It may be necessary to revise these estimates up or down in the future as additional performance data become available. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering and geological data; therefore, our conclusions represent informed professional judgments only, not statements of fact.

The results of our third party study were prepared in accordance with the disclosure requirements set forth in the SEC regulations and intended for public disclosure as an exhibit in filings made with the SEC by Amadeus.

We have provided Amadeus with a digital version of the original signed copy of this report letter. In the event there are any differences between the digital version included in filings made by Amadeus and the original signed report letter, the original signed report letter shall control and supersede the digital version.

The technical persons responsible for preparing the reserve estimates presented herein meet the requirements regarding 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. The technical person primarily responsible for overseeing the preparation of reserves estimates herein is William M. Kazmann. Mr. Kazmann is a Professional Engineer licensed in the State of Texas who has thirty-eight years of engineering experience in the oil and gas industry. Mr. Kazmann earned Bachelor of Science and Master of Science degrees in Petroleum Engineering from the University of Texas at Austin and has prepared reserves estimates for his employers and his own companies throughout his career. He has prepared and overseen preparation of reports for public filings for LPC for the past seventeen years. LPC is an independent firm of petroleum engineers, geologists, and geophysicists and are not employed on a contingent basis. Data pertinent to this report are maintained on file in our office.

	Very truly yours,

	LaRoche Petroleum Consultants, Ltd.
	State of Texas Registration Number F-1360

	William M. Kazmann
	Licensed Professional Engineer
	State of Texas No. 45012

WMK: SS

13-917

SCHEDULE 1

RACCOON BEND EXXON/MOBIL ROYALTY

R E S E R V E S A N D E C O N O M I C S

AS OF DATE: 01/2014

GROSS OIL

GROSS GAS

NET OIL

NET GAS

NET NGL

NET OIL

NET GAS

NET NGL

TOTAL

END

PRODUCTION

REVENUE

MO-YEAR

MBBLS

MMCF

MBBLS

MMCF

MBBLS

12-2014

0.000

-734.239

12-2015

0.000

-716.612

12-2016

0.000

-618.693

12-2017

0.000

-517.752

12-2018

0.000

-449.942

12-2019

0.000

-413.206

12-2020

0.000

-369.955

12-2021

0.000

-325.527

12-2022

0.000

-292.385

12-2023

0.000

-265.953

12-2024

0.000

-243.205

12-2025

0.000

-217.781

12-2026

0.000

-203.622

12-2027

0.000

-186.768

12-2028

0.000

-170.354

12-2029

0.000

-155.792

12-2030

0.000

-140.854

12-2031

0.000

-125.757

12-2032

0.000

-113.060

12-2033

0.000

-102.688

S TOT

0.000

-6364.145

AFTER

0.000

-570.390

TOTAL

0.000

-6934.535

NET OIL

NET GAS

NET NGL

SEVERANCE

AD VALOREM

NET OPER

EQUITY

UNDISC NET

10.0% DISC

END

PRICE

TAXES

EXPENSES

INVESTMENT

CASHFLOW

MO-YEAR

12-2014

0.00

0.000

-734.239

-667.490

12-2015

0.00

0.000

-716.612

-592.241

12-2016

0.00

0.000

-618.693

-464.833

12-2017

0.00

0.000

-517.752

-353.632

12-2018

0.00

0.000

-449.942

-279.379

12-2019

0.00

0.000

-413.206

-233.244

12-2020

0.00

0.000

-369.955

-189.845

12-2021

0.00

0.000

-325.527

-151.861

12-2022

0.00

0.000

-292.385

-124.000

12-2023

0.00

0.000

-265.953

-102.536

12-2024

0.00

0.000

-243.205

-85.242

12-2025

0.00

0.000

-217.781

-69.392

12-2026

0.00

0.000

-203.622

-58.982

12-2027

0.00

0.000

-186.768

-49.182

12-2028

0.00

0.000

-170.354

-40.781

12-2029

0.00

0.000

-155.792

-33.905

12-2030

0.00

0.000

-140.854

-27.867

12-2031

0.00

0.000

-125.757

-22.619

12-2032

0.00

0.000

-113.060

-18.486

12-2033

0.00

0.000

-102.688

-15.264

S TOT

0.00

0.000

-6364.145

-3580.781

AFTER

0.00

0.000

-570.390

-53.012

TOTAL

0.00

0.000

-6934.535

-3633.793

OIL

GAS

P.W. %

P.W., M$

GROSS WELLS

1.0

0.0

LIFE, YRS.

42.00

9.00

-3818.533

GROSS ULT., MB & MMF

0.000

DISCOUNT%

10.00

-3633.793

GROSS CUM., MB & MMF

0.000

UNDISCOUNTED PAYOUT, YRS.

42.00

15.00

-2925.609

GROSS RES., MB & MMF

0.000

DISCOUNTED PAYOUT, YRS.

42.00

20.00

-2449.214

NET RES., MB & MMF

0.000

UNDISCOUNTED NET/INVEST.

0.00

25.00

-2107.104

NET REVENUE, M$

0.000

DISCOUNTED NET/INVEST.

0.00

30.00

-1849.400

INITIAL PRICE, $

0.000

RATE-OF-RETURN, PCT.

0.00

45.00

-1353.806

INITIAL N.I., PCT.

0.000

INITIAL W.I., PCT.

0.000

65.00

-997.299

85.00

-788.885

100.00

-681.696

Exhibit 99.4

January 30, 2015

Mr. Tom Olle

Senior Vice President Operations

Amadeus Petroleum, Inc.

509 Pecan St., Suite 200

Fort Worth, TX 76102

Dear Mr. Olle:

At your request, LaRoche Petroleum Consultants, Ltd. (LPC) has estimated the proved reserves and future cash flow, as of December 31, 2014, to the Amadeus Petroleum, Inc. (Amadeus) interest in certain properties located in multiple counties in Texas. The work for this report was completed as of the date of this letter. This report was prepared to provide Amadeus with Securities and Exchange Commission (SEC) compliant reserve estimates. It is our understanding that the properties evaluated by LPC comprise 100 percent (100%) of Amadeus’ proved reserves. We believe the assumptions, data, methods, and procedures used in preparing this report, as set out below, are appropriate for the purpose of this report. This report has been prepared using constant prices and costs and conforms to our understanding of the SEC guidelines, reserves definitions, and applicable financial accounting rules.

Summarized below are LPC’s estimates of net reserves and future net cash flow. Future net revenue is prior to deducting estimated production and ad valorem taxes. Future net cash flow is after deducting these taxes, operating expenses, and future capital expenditures but before consideration of federal income taxes. The discounted cash flow values included in this report are intended to represent the time value of money and should not be construed to represent an estimate of fair market value. We estimate the net reserves and future net cash flow to the Amadeus interest, as of December 31, 2014, to be:

	Net Reserves		Future Net Cash Flow ($)
Category	Oil (Barrels)	Gas (Mcf)	Total		Present Worth at 10%
Proved Developed
Producing	2,075,438	3,275,835	$	126,047,344	$	52,839,633
Non-Producing	64,652	354,511	5,175,836		2,753,304
Proved Undeveloped	609,396	810,272	31,298,402		6,590,464

Total Proved	2,749,486	4,440,618	$	162,521,582	$	62,183,401

2435 N. Central Expy, Suite 1500 · Richardson, Texas 75080

Phone (214) 363-3337 · Fax (214) 363-1608

interests in undeveloped acreage beyond those tracts for which undeveloped reserves have been estimated.

The estimated reserves and future cash flow amounts in this report are related to hydrocarbon prices. Historical prices through December 2014 were used in the preparation of this report as required by SEC guidelines; however, actual future prices may vary significantly from the SEC prices. In addition, future changes in environmental and administrative regulations may significantly affect the ability of Amadeus to produce oil and gas at the projected levels. Therefore, volumes of reserves actually recovered and amounts of cash flow actually received may differ significantly from the estimated quantities presented in this report.

Benchmark prices used in this report are based on the twelve-month, unweighted arithmetic average of the first day of the month price for the period January 2014 through December 2014. Gas prices used in this report are referenced to a Henry Hub price of $4.35 per MMBtu, as published in the Platts Gas Daily, and are adjusted for energy content, transportation fees, and regional price differentials. Oil prices are referenced to a Cushing West Texas Intermediate crude oil price of $94.99 per barrel, as published in Platts Oilgram, and are adjusted for gravity, crude quality, transportation fees, and regional price differentials. These reference prices are held constant in accordance with SEC guidelines. The weighted average prices after adjustments over the life of the properties are $90.74 per barrel for oil and $6.50 per Mcf for gas.

responsible for overseeing the preparation of reserves estimates herein is William M. Kazmann. Mr. Kazmann is a Professional Engineer licensed in the State of Texas who has thirty-eight years of engineering experience in the oil and gas industry. Mr. Kazmann earned Bachelor of Science and Master of Science degrees in Petroleum Engineering from the University of Texas at Austin and has prepared reserves estimates for his employers and his own companies throughout his career. He has prepared and overseen preparation of reports for public filings for LPC for the past seventeen years. LPC is an independent firm of petroleum engineers, geologists, and geophysicists and are not employed on a contingent basis. Data pertinent to this report are maintained on file in our office.

	Very truly yours,

	LaRoche Petroleum Consultants, Ltd.
	State of Texas Registration Number F-1360


	Larry Menke
	Licensed Professional Engineer
	State of Texas No. 54885


	William M. Kazmann
	Licensed Professional Engineer
	State of Texas No. 45012

WMK: SS

14-917