EXCO RESOURCES INC (Form: S-3, Received: 08/02/2017 16:35:26)

Large accelerated filer

Accelerated filer

Non-accelerated filer

☐ (Do not check if a smaller reporting company)

Smaller reporting company

Emerging growth company

As filed with the Securities and Exchange Commission on August 2, 2017

Registration No. 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-3

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

EXCO Resources, Inc.

(Exact name of registrant as specified in its charter)

Texas

74-1492779

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

12377 Merit Drive, Suite 1700

Dallas, TX 75251

(214) 368-2084

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Heather L. Lamparter

Vice President, General Counsel and Secretary

12377 Merit Drive, Suite 1700

Dallas, TX 75251

(214) 368-2084

(Name, address, including zip code, and telephone number, including area code, of agent for service)

With a copy to:

W. Scott Wallace

Jennifer T. Wisinski

Haynes and Boone, LLP

2323 Victory Avenue, Suite 700

Dallas, TX 75219

(214) 651-5000

Approximate date of commencement of proposed sale to the public: From time to time after the date this registration statement becomes effective, as determined by the selling shareholder.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. ☐

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: ☒

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

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

If this Form is a registration statement pursuant to General Instruction I.D. or a post-effective amendment thereto that shall become effective upon filing with the Commission pursuant to Rule 462(e) under the Securities Act, check the following box. ☐

If this Form is a post-effective amendment to a registration statement filed pursuant to General Instruction I.D. filed to register additional securities or additional classes of securities pursuant to Rule 413(b) under the Securities Act, check the following box. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

CALCULATION OF REGISTRATION FEE



Title of Each Class of Securities to be Registered	Amount to be Registered (1) (2)	Proposed Maximum Offering Price Per Share (3)	Proposed Maximum Aggregate Offering Price (3)	Amount of Registration Fee (4) (5)
Common Shares, par value $0.001 per share	72,694,293	$1.84	$133,757,499.12	$15,502.49

(1)	Pursuant to Rule 416 under the Securities Act of 1933, as amended, or the Securities Act, the common shares offered by this registration statement shall be deemed to cover such additional securities as may be issued as a result of share splits, share dividends or similar transactions.

(2)

Represents (i) 2,745,754 common shares that have been issued to the selling shareholders as payment-in-kind, or PIK, interest payments on our outstanding 1.75 Lien Term Loans due October 26, 2020, or 1.75 Lien Term Loans, (ii) up to 46,686,177 common shares that may be issued to the selling shareholders as future PIK interest payments on our outstanding 8.0% / 11.0% 1.5 Lien Senior Secured PIK Toggle Notes due 2022, or 1.5 Lien Notes, and 1.75 Lien Term Loans and (iii) up to 23,262,362 common shares that may be issued to the selling shareholders upon the exercise of warrants, or the Warrants, held by the selling shareholders. This registration statement is being filed pursuant to a registration rights agreement under which we agreed to register the resale of (i) such number of common shares our management reasonably estimates to be issued as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans and (ii) all of the common shares underlying the Warrants. For purposes of this registration statement, we have assumed that we will issue a maximum aggregate of 49,431,931 common shares as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans, including common shares previously issued as PIK interest payments under the 1.75 Lien Term Loans, which represents a reasonable estimate by our management of the number of common shares to be issued as PIK interest payments under the 1.75 Lien Term Loans and 1.5 Lien Term Loans based on recent prices of our common shares. However, the total number of common shares that will be issued under the PIK feature of the 1.5 Lien Notes and 1.75 Lien Term Loans will substantially depend on whether we elect to pay future interest in cash, our common shares or additional indebtedness, prevailing market conditions, available liquidity and the price per share of our common shares, as well as our ability to meet the requirements for making PIK interest payments in our common shares under the indenture governing the 1.5 Lien Notes and the credit agreement governing the 1.75 Lien Term Loans.

(3)	Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) under the Securities Act and based upon the average of the high and low sale prices of our common shares on the New York Stock Exchange on August 1, 2017.

(4)	Calculated in accordance with Rule 457(c) under the Securities Act.

(5)

Pursuant to Rule 457(p) of the Securities Act and the guidance provided by the staff of the SEC in Compliance and Disclosure Interpretation 212.26 of Questions and Answers of General Applicability, the filing fee due for this registration statement is being offset in its entirety by the $125,875.00 filing fee previously paid with respect to the Registration Statement on Form S-3 (File No. 333-208379) initially filed by EXCO Resources, Inc. on December 8, 2015 and declared effective on December 30, 2015, or the Prior Registration Statement, which registered an aggregate of $1,250,000,000 of securities that were not sold. Accordingly, the securities registered under the Prior Registration Statement are deemed deregistered upon the filing of this registration statement.

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

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

SUBJECT TO COMPLETION, DATED AUGUST 2, 2017

Prospectus

72,694,293 Shares

LOGO

EXCO Resources, Inc.

Common Shares

The selling shareholders named in this prospectus may use this prospectus to offer and resell from time to time up to 72,694,293 common shares, which consists of (i) 2,745,754 common shares that have been issued to the selling shareholders as payment-in-kind, or PIK, interest payments on our outstanding 1.75 Lien Term Loans due October 26, 2020, or 1.75 Lien Term Loans, (ii) up to 46,686,177 common shares that may be issued to the selling shareholders as future PIK interest payments on our outstanding 8.0% / 11.0% 1.5 Lien Senior Secured PIK Toggle Notes due 2022, or the 1.5 Lien Notes, and 1.75 Lien Term Loans and (iii) up to 23,262,362 common shares that may be issued to the selling shareholders upon the exercise of warrants, or the Warrants, held by the selling shareholders, in each case as more fully described in this prospectus in “Summary — The Refinancing Transaction” beginning on page 1. The registration statement of which this prospectus forms a part is being filed pursuant to a registration rights agreement, or the Registration Rights Agreement, under which we agreed to register the resale of (i) such number of common shares our management reasonably estimates to be issued as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans and (ii) all of the common shares underlying the Warrants. For purposes of this registration statement, we have assumed that we will issue a maximum aggregate of 49,431,931 common shares as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans, including common shares previously issued as PIK interest payments under the 1.75 Lien Term Loans, which represents a reasonable estimate by our management of the number of common shares to be issued as PIK interest payments under the 1.75 Lien Term Loans and 1.5 Lien Term Loans based on recent prices of our common shares. However, the total number of common shares that will be issued under the PIK feature of the 1.5 Lien Notes and 1.75 Lien Term Loans will substantially depend on whether we elect to pay future interest in cash, our common shares or additional indebtedness, prevailing market conditions, available liquidity and the price per share of our common shares, as well as our ability to meet the requirements for making PIK interest payments in our common shares under the indenture governing the 1.5 Lien Notes, or the 1.5 Lien Notes Indenture, and the credit agreement governing the 1.75 Lien Term Loans, or the 1.75 Lien Term Loan Credit Agreement.

The shares subject to resale hereunder will be issued by us and acquired by the selling shareholders prior to any resale of shares pursuant to this prospectus.

We will not receive any of the proceeds from the sale of our common shares by the selling shareholders. However, we will receive the proceeds of any cash exercise of the Warrants. See “Use of Proceeds” beginning on page 8 of this prospectus for additional information.

The selling shareholders named in this prospectus, or their respective donees, pledgees, transferees, distributees, beneficiaries or other successors-in-interest, may offer or resell the shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. The selling shareholders may also resell the common shares to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions. The selling shareholders will bear all commissions and discounts, if any, attributable to the sale of shares. We will bear all costs, expenses and fees in connection with the registration of the shares. For additional information on the methods of sale that may be used by the selling shareholders, see “Plan of Distribution” beginning on page 23 of this prospectus.

Our common shares are listed on the New York Stock Exchange, or NYSE, under the symbol “XCO.” On August 1, 2017, the last reported sale price of our common shares on the NYSE was $1.81 per share.

On June 12, 2017, at 5:00 P.M. Central Time, we effected a 1-for-15 reverse stock split of our issued, outstanding and treasury common shares, as well as reduced our authorized common shares from 780,000,000 common shares to 260,000,000 common shares. No fractional shares were issued in the reverse share split. Instead, to the extent the reverse share split resulted in a shareholder owning a fractional common share, such fractional share was rounded up to the nearest whole common share. Except as otherwise provided herein, all share and per-share amounts of our common shares have been adjusted to give effect to the reverse share split for all periods presented. See “Description of Capital Stock” beginning on page 26 of this prospectus for additional information.

An investment in our common shares involves risks. See “ Risk Factors ” beginning on page 7 of this prospectus and “Risk Factors” in our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which are incorporated by reference in this prospectus and in any applicable prospectus supplement.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

The date of this prospectus is , 2017.

TABLE OF CONTENTS


	Page
ABOUT THIS PROSPECTUS		i
FORWARD-LOOKING STATEMENTS		ii
SUMMARY		1
RISK FACTORS		7
USE OF PROCEEDS		8
SELLING SHAREHOLDERS		9
PLAN OF DISTRIBUTION		23
DESCRIPTION OF CAPITAL STOCK		26
EXPERTS		29
INDEPENDENT PETROLEUM ENGINEERS		29
LEGAL MATTERS		30
INCORPORATION BY REFERENCE		30
WHERE YOU CAN FIND MORE INFORMATION		31
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION		F-1

ABOUT THIS PROSPECTUS

This prospectus is part of a registration statement on Form S-3 that we have filed with the Securities and Exchange Commission, or the SEC, using a “shelf” registration process. The selling shareholders named in this prospectus may resell, from time to time, in one or more offerings, the common shares offered by this prospectus. Information about the selling shareholders may change over time. When the selling shareholders sell common shares under this prospectus, we will, if necessary and required by law, provide a prospectus supplement that will contain specific information about the terms of that offering. Any prospectus supplement may also add to, update, modify or replace information contained in this prospectus. If a prospectus supplement is provided and the description of the offering in the prospectus supplement varies from the information in this prospectus, you should rely on the information in the prospectus supplement. You should carefully read this prospectus and the accompanying prospectus supplement, if any, along with all of the information incorporated by reference herein and therein, before making an investment decision.

You should rely only on the information contained or incorporated by reference in this prospectus or any applicable prospectus supplement. We have not, and the selling shareholders have not, authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. This prospectus is not an offer to sell, nor are the selling shareholders seeking an offer to buy, the shares offered by this prospectus in any jurisdiction where the offer or sale is not permitted. No offers or sales of any of the common shares are to be made in any jurisdiction in which such an offer or sale is not permitted. You should assume that the information contained in this prospectus or in any applicable prospectus supplement is accurate only as of the date on the front cover thereof or the date of the document incorporated by reference, regardless of the time of delivery of this prospectus or any applicable prospectus supplement or any sales of the common shares offered hereby or thereby.

Except where the context otherwise requires or as otherwise indicated, all references in this prospectus to “EXCO,” “EXCO Resources,” “Company,” “we,” “us” and “our” refer to EXCO Resources, Inc. and its consolidated subsidiaries. In the discussion of our common shares and related matters, these terms refer solely to EXCO Resources, Inc.

FORWARD-LOOKING STATEMENTS

This prospectus and the documents incorporated herein by reference contain forward-looking statements, as defined in Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements relate to, among other things, the following:

•

our future financial and operating performance and results;

•

our business strategy;

•

market prices;

•

our future use of commodity derivative financial instruments;

•

our liquidity and capital resources; and

•

our plans and forecasts.

We have based these forward-looking statements on our current assumptions, expectations and projections about future events. We use the words “may,” “expect,” “anticipate,” “estimate,” “believe,” “continue,” “intend,” “plan,” “potential,” “project,” “budget” and other similar words to identify forward-looking statements. The statements that contain these words should be read carefully because they discuss future expectations, contain projections of results of operations or our financial condition and/or state other “forward-looking” information. We do not undertake any obligation to update or revise any forward-looking statements, except as required by applicable securities laws. These statements also involve risks and uncertainties that could cause our actual results or financial condition to materially differ from our expectations in this prospectus and the documents incorporated herein by reference, including, but not limited to:

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our ability to continue as a going concern;

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cash flow and liquidity;

•

our ability and decisions to pay interest on the 1.5 Lien Notes and 1.75 Lien Term Loans in cash, common shares or additional indebtedness;

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future capital requirements and availability of financing, including limitations on our ability to incur certain types of indebtedness under our debt agreements and to refinance or replace existing debt obligations as they mature;

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our ability to meet our current and future debt service obligations, including our upcoming 2018 debt maturities;

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our ability to maintain compliance with our debt covenants;

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fluctuations in the prices of oil and natural gas;

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the availability of oil and natural gas;

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disruption of credit and capital markets and the ability of financial institutions to honor their commitments;

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estimates of reserves and economic assumptions, including estimates related to acquisitions and dispositions of oil and natural gas properties;

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geological concentration of our reserves;

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risks associated with drilling and operating wells;

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exploratory risks, including those related to our activities in shale formations;

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discovery, acquisition, development and replacement of oil and natural gas reserves;

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outcome of divestitures of non-core assets, including the expected sale of our assets in the South Texas region;

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our ability to enter into transactions as a result of our credit rating, including commodity derivatives with financial institutions and services with vendors;

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timing and amount of future production of oil and natural gas;

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availability of drilling and production equipment;

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availability of water, sand and other materials for drilling and completion activities;

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marketing of oil and natural gas;

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political and economic conditions and events in oil-producing and natural gas-producing countries;

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title to our properties;

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litigation;

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competition;

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our ability to attract and retain key personnel;

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general economic conditions, including costs associated with drilling and operations of our properties;

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our ability to comply with the listing requirements of, and maintain the listing of our common shares on, the NYSE;

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environmental or other governmental regulations, including legislation to reduce emissions of greenhouse gases, legislation of derivative financial instruments, regulation of hydraulic fracture stimulation and elimination of income tax incentives available to our industry;

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receipt and collectability of amounts owed to us by purchasers of our production and counterparties to our commodity derivative financial instruments;

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decisions whether or not to enter into commodity derivative financial instruments;

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potential acts of terrorism;

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our ability to manage joint ventures with third parties, including the resolution of any material disagreements and our partners’ ability to satisfy obligations under these arrangements;

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actions of third party co-owners of interests in properties in which we also own an interest;

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fluctuations in interest rates;

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our ability to effectively integrate companies and properties that we acquire; and

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our ability to execute our business strategies and other corporate actions.

We believe that it is important to communicate our expectations of future performance to our investors. However, events may occur in the future that we are unable to accurately predict, or over which we have no control. We caution users of the financial statements not to place undue reliance on any forward-looking statements. When considering our forward-looking statements, keep in mind the risk factors and other cautionary statements in this prospectus and the documents incorporated herein by reference. The risk factors noted in this prospectus and the documents incorporated herein by reference provide examples of risks, uncertainties and events that may cause our actual results to differ materially from those contained in any forward-looking statement. Please see “Risk Factors” beginning on page 7 of this prospectus and in our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and in any applicable prospectus supplement for a discussion of certain risks related to our business and an investment in our common shares.

iii

Our revenues, operating results and financial condition depend substantially on prevailing prices for oil and natural gas and the availability of capital from our credit agreement and other sources. Declines in oil or natural gas prices may have a material adverse effect on our financial condition, liquidity, results of operations, the amount of oil or natural gas that we can produce economically and the ability to fund our operations. Historically, oil and natural gas prices and markets have been volatile, with prices fluctuating widely, and they are likely to continue to be volatile.

SUMMARY

This summary highlights selected information contained elsewhere or incorporated by reference in this prospectus. This summary does not contain all of the information that you should consider before investing in our common shares. You should carefully read the entire prospectus, especially the risks of investing in our common shares discussed under “Risk Factors” in this prospectus beginning on page 7 and in our most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any accompanying prospectus supplement and the risk factors discussed in the documents incorporated by reference herein.

Our Company

We are an independent oil and natural gas company engaged in the exploration, exploitation, acquisition, development and production of onshore U.S. oil and natural gas properties with a focus on shale resource plays. Our principal operations are conducted in certain key U.S. oil and natural gas areas including Texas, Louisiana and the Appalachia region. Our primary strategy focuses on the exploitation and development of our shale resource plays and the pursuit of leasing and acquisition opportunities. We plan to carry out this strategy by executing on a strategic plan that incorporates the following three core objectives: (i) restructuring the balance sheet to enhance our capital structure and extend structural liquidity; (ii) transforming ourselves into the lowest cost producer; and (iii) optimizing and repositioning our portfolio.

EXCO Resources, Inc. is a Texas corporation that was incorporated in October 1955. Our common shares trade on the NYSE under the symbol “XCO.” Our principal executive office is located at 12377 Merit Drive, Suite 1700, Dallas, Texas 75251. Our telephone number is (214) 368-2084. Our website address is www.excoresources.com. The information available on or through our website is not part of this prospectus.

The Refinancing Transaction

On March 15, 2017, we completed a series of transactions to improve our capital structure, including the issuance of $300.0 million in aggregate principal amount of 1.5 Lien Notes and the exchange of an aggregate of approximately $682.8 million principal amount of our outstanding indebtedness under (i) the Term Loan Credit Agreement, dated as of October 19, 2015, by and among the Company, as borrower, certain subsidiaries, the lenders party thereto, Hamblin Watsa Investment Counsel Ltd., or Hamblin Watsa, as administrative agent, and Wilmington Trust, National Association, as collateral trustee, or the Fairfax Term Loan, and (ii) the Term Loan Credit Agreement, dated as of October 19, 2015, by and among the Company, as borrower, certain subsidiaries, the lenders party thereto, and Wilmington Trust, National Association, as administrative agent and collateral trustee, or the Exchange Term Loan, and together with the Fairfax Term Loan, the Second Lien Term Loans, for approximately $682.8 million in aggregate principal amount of new 1.75 Lien Term Loans (such term loans, the 1.75 Lien Term Loans, and such exchange, the Second Lien Term Loan Exchange). As a result of the Second Lien Term Loan Exchange, the Fairfax Term Loan was deemed satisfied and paid in full and was terminated. In connection with the Second Lien Term Loan Exchange, the credit agreement governing the Exchange Term Loan was amended to eliminate substantially all of the covenants and events of default included therein.

The 1.5 Lien Notes were issued to certain affiliates of Hamblin Watsa and Fairfax Financial Holdings Limited, or Fairfax Financial, Energy Strategic Advisory Services LLC, or ESAS, certain affiliates of Oaktree Capital Management, LP, or Oaktree, and Gen IV Investment Opportunities, LLC and certain of its affiliates, or Gen IV, and collectively with Hamblin Watsa, Fairfax Financial, ESAS and Oaktree, the Commitment Parties. Certain affiliates of Hamblin Watsa and Fairfax Financial, ESAS, and Gen IV and certain of its affiliates, as lenders of the Second Lien Term Loans, also participated in the Second Lien Term Loan Exchange. As part of the offering of the 1.5 Lien Notes, the Commitment Parties were granted a contractual preemptive right that

generally provides such parties, subject to certain conditions, to purchase all or any portion of common shares that we propose to issue in certain offerings for cash in the future.

In connection with these transactions, we also issued (i) warrants representing the right to purchase an aggregate of up to 21,505,383 common shares (assuming a cash exercise) to the purchasers of the 1.5 Lien Notes, or the 1.5 Lien Notes Warrants, (b) warrants representing the right to purchase an aggregate of up to 431,433 of our common shares (assuming a cash exercise) to certain of the Commitment Parties, or the Commitment Fee Warrants, and (c) warrants representing the right to purchase an aggregate of up to 1,325,546 of our common shares (assuming a cash exercise) to certain of the lenders that participated in the Second Lien Term Loan Exchange, or the Amendment Fee Warrants. We refer to the 1.5 Lien Notes Warrants, Commitment Fee Warrants and Amendment Fee Warrants, collectively, as the “Warrants” herein.

The proceeds from the issuance of the 1.5 Lien Notes were utilized to repay all of the outstanding indebtedness under the Company’s Amended and Restated Credit Agreement, dated as of July 31, 2013, as amended, or the EXCO Resources Credit Agreement, as well as to pay transaction fees and expenses and for other general corporate purposes.

In addition, in connection with these transactions, the EXCO Resources Credit Agreement was amended to reduce the borrowing base to $150.0 million, permit the issuance of the 1.5 Lien Notes and the 1.75 Lien Term Loans and modify certain financial covenants.

On June 20, 2017, we issued a total of 2,745,754 common shares as an interest payment under the credit agreement governing the 1.75 Lien Term Loans. These common shares were issued to make an interest payment due in the amount of $27,594,629.49 based on the PIK share interest rate of 15% per annum under the 1.75 Lien Term Loans. The PIK common share payment was in lieu of a cash interest payment of $22,995,524.57 at an interest rate of 12.5% per annum under the 1.75 Lien Term Loans. We intend to use the cash retained by making the PIK common share payment to fund the development of natural gas properties in North Louisiana.

For additional information concerning the foregoing transactions, please see “Selling Shareholders — Material Relationships — Refinancing Transaction” beginning on page 17 of this prospectus.

South Texas Asset Sale and Pro Forma Financial Information

On April 7, 2017, EXCO Operating Company, LP, a Delaware limited partnership, or EOC, and EXCO Land Company, LLC, a Delaware limited liability company, or EXCO Land, and together with EOC, the Sellers, both of which are our wholly owned subsidiaries, entered into a purchase and sale agreement with VOG Palo Verde LP, a Delaware limited partnership and subsidiary of Venado Oil and Gas, LLC, or Venado, to divest our oil and natural gas properties and surface acreage in South Texas. The purchase price of $300.0 million is subject to closing conditions and adjustments based on an effective date of January 1, 2017. Concurrently with the execution of the agreement, Venado made a deposit of $30.0 million with a third party escrow agent.

Pursuant to the terms of the purchase agreement, the closing of the transaction was originally anticipated to occur on June 1, 2017, or the Original Scheduled Closing Date, unless certain conditions had not been satisfied or waived on or prior to the Original Scheduled Closing Date. The purchase agreement includes conditions to the closing, including the Sellers’ representation and warranty regarding all material contracts being in full force and effect be true as of the Original Scheduled Closing Date. On May 31, 2017, Chesapeake Energy Marketing, L.L.C., or Chesapeake, purportedly terminated a long term natural gas sales contract with an expiration of June 30, 2032, between Chesapeake and Raider Marketing, LP, our wholly owned subsidiary, or Raider. As a result of the purported termination of the contract, we were forced to shut-in certain wells beginning on June 1, 2017.

On June 6, 2017, we filed a petition, application for temporary restraining order and temporary injunction against Chesapeake. In the lawsuit, we assert breach of contract, tortious interference with existing contract, tortious interference with prospective business relations, and declaratory relief that the contract is still in full force and effect. On June 7, 2017, Chesapeake filed to remove the lawsuit to the United States District Court Northern District of Texas. On June 9, 2017, the District Court denied our motion for temporary restraining order. The lawsuit remains pending in federal court.

Due to the purported contract termination, the closing conditions were not anticipated to be satisfied or waived by the Original Scheduled Closing Date. Therefore, the Sellers entered into an amendment to extend the Original Scheduled Closing Date to August 15, 2017. Upon the execution of the amendment, the third party escrow agent released to Venado $20.0 million of the $30.0 million deposit made by Venado.

The amendment provides that the closing conditions will be deemed satisfied by (i) the reinstatement of the natural gas sales contract or by the entry into a new gathering agreement with terms and conditions that are acceptable to Venado in its sole discretion and (ii) upon the productivity of wells that were shut-in on or around the Original Scheduled Closing Date returning to certain levels. We subsequently entered into a short-term sales contract, which allowed our production to come back on-line, satisfying condition (ii). The amendment further provides that we use commercially reasonable efforts to negotiate and execute an extension and amendment to a certain lease. No assurance can be given as to the satisfaction of these closing conditions, and, in particular, the outcome of condition (i) as it is outside our control and dependent on Venado’s acceptance of a new gathering agreement or reinstatement of the natural gas sales contract that is currently subject to litigation, as discussed above.

This prospectus includes unaudited pro forma financial information giving effect to the sale of the South Texas properties in order to comply with the financial statement requirements related to registration statements filed under the Securities Act. This pro forma financial information is presented for informational purposes only and should be read in conjunction with our historical financial statements and related notes thereto, which are incorporated by reference into this prospectus. For additional information concerning the sale of the South Texas properties, please see (i) our Current Report on Form 8-K, dated April 7, 2017 and filed with the SEC on April 13, 2017, and (ii) our Current Report on Form 8-K, dated June 20, 2017 and filed with the SEC on June 23, 2017, each of which is incorporated by reference herein. For additional information concerning the pro forma financial information giving effect to the sale of the South Texas properties, please see “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page F-1 of this prospectus. For additional information concerning the uncertainties related to the sale of the South Texas properties, please see “Risk Factors” on page 7 of this prospectus.

The Offering

This summary highlights the more detailed information concerning this offering found elsewhere in this prospectus, and you should read the entire prospectus carefully. Cross-references contained in this summary section will direct you to a more complete discussion of a particular topic elsewhere in this prospectus.

Common shares offered by the selling shareholders

Up to 72,694,293 common shares, consisting of (i) 2,745,754 common shares that have been issued to the selling shareholders as PIK interest payments on our outstanding 1.75 Lien Term Loans, (ii) up to 46,686,177 shares that may be issued to the selling shareholders as future PIK interest payments on our outstanding 1.5 Lien Notes and 1.75 Lien Term Loans and (iii) up to 23,262,362 shares that may be issued to the selling shareholders upon the exercise of the Warrants held by the selling shareholders.

The registration statement of which this prospectus forms a part is being filed pursuant to the Registration Rights Agreement under which we agreed to register the resale of (i) such number of common shares our management reasonably estimates to be issued as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans and (ii) all of the common shares underlying the Warrants. For purposes of this registration statement, we have assumed that we will issue a maximum aggregate of 49,431,931 common shares as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans, including common shares previously issued as PIK interest payments under the 1.75 Lien Term Loans, which represents a reasonable estimate by our management of the number of common shares to be issued as PIK interest payments under the 1.75 Lien Term Loans and 1.5 Lien Term Loans based on recent prices of our common shares. However, the total number of common shares that will be issued under the PIK feature of the 1.5 Lien Notes and 1.75 Lien Term Loans will substantially depend on whether we elect to pay future interest in cash, our common shares or additional indebtedness, prevailing market conditions, available liquidity and the price per share of our common shares, as well as our ability to meet the requirements for making PIK interest payments in our common shares under the indenture governing the 1.5 Lien Notes Indenture and the 1.75 Lien Term Loan Credit Agreement.

Selling shareholders

All of the common shares are being offered by the selling shareholders named herein. See “Selling Shareholders” on beginning page 9 of this prospectus for more information on the selling shareholders.

Use of proceeds

We will not receive any proceeds from the sale of the shares in this offering. However, we will receive the proceeds of any cash exercise of the Warrants. See “Use of Proceeds” beginning on page 8 of this prospectus for additional information.

Registration rights

Under the terms of the Registration Rights Agreement, we have agreed to file this registration statement with respect to the registration of the resale by the selling shareholders of the common shares offered hereby. We have agreed that, upon this registration statement being declared effective, we will use our best efforts to maintain the effectiveness of this registration statement until the common shares have been sold in accordance with the registration statement, subject to certain limitations and exceptions. See “Selling Shareholders — Material Relationships — The Refinancing Transaction — Registration Rights Agreement” beginning on page 19 of this prospectus for additional information.

Plan of distribution

The selling shareholders named in this prospectus, or their respective pledgees, donees, transferees, distributees, beneficiaries or other successors-in-interest, may offer or sell the shares from time to time through public or private transactions at prevailing market prices, at prices related to prevailing market prices or at privately negotiated prices. The selling shareholders may also resell the common shares to or through underwriters, broker-dealers or agents, who may receive compensation in the form of discounts, concessions or commissions. See “Plan of Distribution” beginning on page 23 of this prospectus for additional information on the methods of sale that may be used by the selling shareholders.

NYSE symbol

XCO

Charter amendment; reverse share split

After giving effect to our reverse share split on June 12, 2017, our amended and restated certificate of formation, as amended, authorizes us to issue 260,000,000 common shares. As of July 25, 2017, after giving effect to the reverse share split, we had 20,411,000 common shares outstanding, a total of approximately 930,326 common shares reserved for issuance pursuant to the EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan and approximately 5,333,333 common shares reserved for issuance upon the exercise of outstanding warrants held by ESAS.

For additional information, see “Description of Capital Stock” beginning on page 26 of this prospectus for additional information.

Risk factors

Investing in our common shares involves risks. For a discussion of certain risks associated with an investment in our common shares, please see “Risk Factors” beginning on page 7 of this prospectus and “Risk Factors” contained in Part I. Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016, and the risk factors discussed in the documents incorporated by reference herein.

Selected Financial Data

Reverse Share Split

All share and per-share data in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016 and our quarterly report on Form 10-Q for the quarter ended March 31, 2017, each of which is incorporated by reference herein, has not been adjusted to give effect to the reverse stock split. However, except as otherwise provided herein, all share and per-share amounts of our common shares in this prospectus have been adjusted to give effect to the reverse share split for all periods presented.

Selected Financial Data

The following selected financial data includes, for all periods presented, the impact of our reverse share split:


	Three Months Ended March 31,		Year Ended December 31,
(in thousands, except per share amounts)	2017		2016			2015			2014		2013		2012
Net income (loss)	$	8,193	$	(225,258	)	$	(1,192,381	)	$	120,669	$	22,204	$	(1,393,285	)

Basic net income (loss) per share	$	0.44	$	(12.10	)	$	(65.37	)	$	6.75	$	1.55	$	(97.51	)

Diluted net income (loss) per share	$	0.44	$	(12.10	)	$	(65.37	)	$	6.74	$	1.44	$	(97.51	)

Cash dividends declared per share	$	—	$	—		$	—		$	2.25	$	3.00	$	2.40

Weighted average common shares and common share equivalents outstanding:
Basic		18,715		18,619			18,241			17,884		14,334		14,288
Diluted		18,739		18,619			18,241			17,892		15,394		14,288

RISK FACTORS

An investment in our securities involves certain risks. Before investing in our securities, you should carefully consider the risk factors set forth below as well as the risk factors set forth in our most recent Annual Report on Form 10-K, or any updates in our Quarterly Reports on Form 10-Q or Current Reports on Form 8-K, together with all of the other information appearing in this prospectus or incorporated by reference into this prospectus. The risks so described are not the only risks facing our company. Additional risks not presently known to us or that we currently deem immaterial may also impair our business operations. Any of these risks could materially and adversely affect our business, financial condition, results of operations and cash flows and could result in a loss of all or part of your investment. In any case, the value of the securities offered by means of this prospectus could decline due to any of these risks, and you may lose all or part of your investment.

We have entered into an agreement to divest our properties located in South Texas. The failure to complete such divestiture, or if completed on terms that are less favorable than we currently anticipate, would have a substantial material adverse effect on us and could cause us to be in default under the EXCO Resources Credit Agreement and cause an acceleration of all of our outstanding debt obligations.

The disposition of our South Texas properties may not close on the terms and conditions set forth in the agreement or at all. If the disposition of such properties does not close, we may be forced to sell or liquidate such properties on terms that are substantially less favorable to us, and we may not be able to sell or liquidate such properties at all. The failure to dispose of the South Texas properties pursuant to the agreement or otherwise may contribute to a breach of the EXCO Resources Credit Agreement’s minimum liquidity test and the aggregate revolving credit exposure ratio test. A breach of these covenants, if not cured, would result in an event of default under the EXCO Resources Credit Agreement.

If an event of default occurs under the EXCO Resources Credit Agreement, the lenders could accelerate the loans outstanding under the EXCO Resources Credit Agreement and we would not be able to submit any additional borrowing requests we might submit. In addition, an event of default under the EXCO Resources Credit Agreement would constitute an event of default under our other debt agreements, including the agreements governing the 1.5 Lien Notes, the 1.75 Lien Term Loans, the Exchange Term Loan, our senior unsecured notes due September 15, 2018, or the 2018 Notes, and our senior unsecured notes due April 15, 2022, or the 2022 Notes, and would allow the lenders under such debt agreements to accelerate the outstanding amount of such debt.

If any of our debt under the EXCO Resources Credit Agreement, the 1.5 Lien Notes, the 1.75 Lien Term Loans, the Exchange Term Loan, the 2018 Notes and the 2022 Notes is accelerated, we would not have sufficient liquidity to repay such indebtedness and would need additional sources of capital to do so. We could attempt to obtain additional sources of capital from asset sales, public or private issuances of debt, equity or equity-linked securities, debt for equity swaps, or any combination thereof. However, we cannot provide any assurances that we will be successful in obtaining capital from such transactions on acceptable terms, or at all, and if we fail to obtain sufficient additional capital to repay the outstanding indebtedness and provide sufficient liquidity to meet our operating needs, it may be necessary for us to seek protection from creditors under Chapter 11 of the U.S. Bankruptcy Code, or an involuntary petition for bankruptcy may be filed against us.

USE OF PROCEEDS

We will not receive any proceeds from the sale of our common shares by the selling shareholders. We will, however, receive proceeds of any cash exercises of the Warrants which, if received, would be used by us for working capital and general corporate purposes.

SELLING SHAREHOLDERS

General

The registration statement, of which this prospectus forms a part, relates to the registration for resale of up to 72,694,293 common shares, consisting of (i) 2,745,754 common shares that have been issued to the selling shareholders as PIK interest payments on our outstanding 1.75 Lien Term Loans, (ii) up to 46,686,177 shares that may be issued to the selling shareholders as future PIK interest payments on our outstanding 1.5 Lien Notes and 1.75 Lien Term Loans and (iii) up to 23,262,362 shares that may be issued to the selling shareholders upon the exercise of the Warrants held by the selling shareholders.

Under the Registration Rights Agreement, we are required to file a registration statement registering (i) such number of common shares our management reasonably estimates to be issued as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans and (ii) all of the common shares underlying the Warrants, by September 11, 2017.

The table below sets forth the name of each selling shareholder, the number of our common shares beneficially owned by such selling shareholder as of July 25, 2017, the number of our common shares being offered by such selling shareholder, the number of our common shares such selling shareholder will beneficially own if it sells all of the shares being registered and such selling shareholder’s percentage of ownership of our common shares if all of their shares in the offering are sold.

The shares being offered hereby are being registered to permit public secondary trading. The selling shareholders, including their respective donees, pledgees, transferees, distributees, beneficiaries or other successors-in-interest may offer all or part of the shares for resale from time to time. However, the selling shareholders are under no obligation to resell all or any portion of such shares, nor are the selling shareholders obligated to resell any shares immediately, under this prospectus.

All information with respect to share ownership has been furnished by or on behalf of the selling shareholders. We believe, based on information supplied by the selling shareholders, that except as may otherwise be indicated in the notes to the table below, the selling shareholders have sole voting and investment power with respect to the common shares owned by them. Because the selling shareholders may resell all or part of their shares, no estimates can be given as to the number of common shares that will be held by the selling shareholders upon termination of any offering made hereby. For purposes of the table below, however, we have assumed that after termination of this offering none of the shares covered by this prospectus will be held by the selling shareholders.

To our knowledge, no selling shareholder has had any position with, held any office of, or had any other material relationship with us during the past three years, except as described in (i) this prospectus, including in the footnotes to the table below and under “Material Relationships” below, (ii) our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on March 16, 2017, including Note 13 to our consolidated financial statements, which information is incorporated herein by reference, and (iii) the other documents incorporated herein by reference.

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act. The percentages of shares beneficially owned are based on 20,411,000 of our common shares outstanding as of July 25, 2017, after giving effect to our reverse share split, as set forth in the following table and more fully described in the applicable footnotes.

In computing the number of shares beneficially owned by a person and the percentage ownership of that person, common shares subject to options, warrants or rights held by that person that are currently exercisable or

exercisable within 60 days of July 25, 2017 are deemed outstanding, but are not deemed outstanding for computing the percentage ownership of any other person.


	Shares beneficially owned prior to offering
Name and address of selling shareholder	Number		Options, warrants or rights exercisable within 60 Days (1)		Number of shares being Offered (2)		Shares beneficially owned after the offering
Name and address of selling shareholder	Number				Number of shares being Offered (2)		Number		Percent
Avenue Energy Opportunities Fund, L.P. (3)		—		—		667,328		—		—
Bank of America, N.A. (4)		—		—		251,014		—		—
Energy Strategic Advisory Services LLC (5)		1,415,708		5,017,922		10,801,259		1,415,708		6.9	%
Canadian Imperial Bank of Commerce (6)		3,894		31,403		547,561		3,894		*
Chou Opportunity Fund (7)		—		—		1,342,009		—		—
Chou Associates Fund (8)		—		—		2,660,095		—		—
Chou Bond Fund (9)		—		—		154,848		—		—
Chou Income Fund (10)		—		—		154,848		—		—
Chou RRSP Fund (11)		—		—		625,861		—		—
Advent Capital (No. 3) Ltd (12) (13)		208,792		372,209		608,727		208,792		1.0	%
Federated Insurance Company of Canada (12) (14)		—		643,440		1,796,106		—		—
TIG Insurance Company (12) (15)		31,314		1,043,585		1,705,836		31,314		*
TIG Insurance Company (Barbados) Ltd. (12) (16)		—		15,702		273,781		—		—
Fairfax Financial Holdings Master Trust Fund (12) (17)		50,000		764,260		1,546,991		50,000		*
Brit Insurance (Gibraltar) PCC Limited (12) (18)		—		313,680		1,346,817		—		—
Brit Syndicates Limited (12) (19)		—		1,498,471		3,158,997		—		—
Clearwater Select Insurance Company (12) (20)		425,982		441,796		1,813,862		425,982		2.1	%
Newline Corporate Name Limited (12) (21)		—		407,253		1,211,545		—		—
Northbridge General Insurance Corporation (12) (22)		337,055		2,342,357		9,039,205		337,055		1.7	%
Northbridge Personal Insurance Corporation (12) (23)		—		91,069		1,587,926		—		—
Odyssey Reinsurance Company (12) (24)		398,164		3,223,472		9,090,027		398,164		2.0	%
United States Fire Insurance Company (12) (25)		—		119,331		2,080,729		—		—
Wentworth Insurance Company Ltd (12) (26)		—		908,713		4,065,767		—		—
Zenith Insurance Company (CAD) (12) (27)		—		34,544		602,318		—		—
Zenith Insurance Company (US) (12) (28)		277,386		329,571		1,034,945		277,386		1.4	%
Advanced Series Trust — AST JPMorgan Strategic Opportunities Portfolio (29)		—		—		3,625		—		—
JPMorgan Strategic Income Opportunities Fund (30)		—		—		270,178		—		—
JPMorgan Tax Aware Income Opportunities Fund (31)		—		—		5,413		—		—
JPMorgan Total Return Fund (32)		—		—		3,369		—		—
Gen IV Investment Opportunities, LLC (33)		—		2,150,538		7,906,735		—		—
Vega Asset Partners, L.P. (34)		—		681,004		1,273,694		—		—
NB Distressed Debt Investment Fund Limited (35)		—		—		229,391		—		—
NB Distressed Debt Master Fund LP (36)		—		—		132,952		—		—
OCM EXCO Holdings LLC (37)		1,321,539		2,831,542		4,700,034		1,321,539		6.5	%

*	Less than 1%.

(1)

Does not include shares issuable upon the exercise of the warrants issued by us to ESAS in 2015, which do not become exercisable, if at all, until March 31, 2019. Includes all of the shares underlying the 1.5 Lien Notes Warrants, Amendment Fee Warrants and Commitment Fee Warrants, and in each case assumes a cash exercise of such Warrants.

(2)

The shares subject to resale hereunder will be issued by us prior to any resale of shares pursuant to this prospectus. This registration statement is being filed pursuant to a registration rights agreement under which we agreed to register the resale of (i) such number of common shares our management reasonably estimates

to be issued as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans and (ii) all of the common shares underlying the Warrants. For purposes of this registration statement, including this selling shareholders table, we have assumed that we will issue a maximum aggregate of 49,431,931 common shares as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans, including common shares previously issued as PIK interest payments under the 1.75 Lien Term Loans, which represents a reasonable estimate by our management of the number of common shares to be issued as PIK interest payments under the 1.75 Lien Term Loans and 1.5 Lien Term Loans based on recent prices of our common shares. For purposes of this selling shareholders table, the maximum number of PIK interest shares (calculated in the manner described above) has been distributed among the selling shareholders pro rata based on their respective holdings of 1.5 Lien Notes and 1.75 Lien Term Loans. The total number of common shares that will be issued under the PIK feature of the 1.5 Lien Notes and 1.75 Lien Term Loans will substantially depend on whether we elect to pay future interest in cash, our common shares or additional indebtedness, prevailing market conditions, available liquidity and the price per share of our common shares, as well as our ability to meet the requirements for making PIK interest payments in our common shares under the indenture governing the 1.5 Lien Notes and the credit agreement governing the 1.75 Lien Term Loans.

(3)

Marc Lasry is the Chairman and Chief Executive Officer of Avenue Energy Opportunities Fund, L.P. and has the power to direct the affairs of Avenue Energy Opportunities Fund, L.P. The number of shares offered hereby represents (i) 51,994 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 615,334 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. The business address of Avenue Energy Opportunities Fund, L.P. is 399 Park Avenue, 6th Floor, New York, New York 10022.

(4)

The number of shares offered hereby represents (i) 19,558 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 231,456 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. The business address of Bank of America, N.A. is 214 N. Tryon Street, Charlotte, North Carolina 28255.

(5)

ESAS is the selling shareholder. ESAS is owned by Bluescape Energy Recapitalization and Restructuring Fund III LP, or Bluescape Fund, and the Fund is directed by its general partner, Bluescape Energy Partners III GP LLC, or Bluescape. Mr. Charles John Wilder, Jr. serves as the sole manager of Bluescape and has the power to direct the affairs of Bluescape. The number of shares offered hereby represents (i) 192,609 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 5,590,728 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 5,017,922 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise). The business address for ESAS is 200 Crescent Court, Suite 1900, Dallas, Texas 75201.

(6)

The number of shares offered hereby represents (i) 40,216 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 475,942 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 31,403 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise). The business address for Canadian Imperial Bank of Commerce is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

V. Prem Watsa is the President of 810679 Ontario Ltd. Roger Lace is the President of Drax Holdings Limited. Brian Bradstreet is the President of The Bradstreet Family Foundation. On April 1, 2016, Canadian Imperial Bank of Commerce entered into a Participation Agreement with 810679 Ontario Ltd., Drax Holdings Limited and The Bradstreet Family Foundation, or collectively, the Participants, whereby Canadian Imperial Bank of Commerce granted participation to the Participants in all or a portion of its rights with respect to the Exchange Term Loan. Canadian Imperial Bank of Commerce’s interest in the Exchange Term Loan was exchanged for 1.75 Lien Term Loans and Amendment Fee Warrants in March 2017 as described above.

(7)

Chou America Management Inc. has the power to direct the affairs of Chou Opportunity Fund, and Francis Chou has the power to direct the affairs of Chou America Management Inc. as its Fund Manager. The number of shares offered hereby represents (i) 104,561 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 1,237,448 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. The business address for Chou Opportunity Fund is 110 Sheppard Avenue East, Suite 301, Box 18, Toronto, Ontario, M2N6Y8.

(8)

Chou Associates Management Inc. has the power to direct the affairs of Chou Associates Fund, and Francis Chou has the power to direct the affairs of Chou Associates Management Inc. as its Fund Manager. The number of shares offered hereby represents (i) 207,258 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 2,452,837 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. The business address for Chou Associates Fund is 110 Sheppard Avenue East, Suite 301, Box 18, Toronto, Ontario, M2N6Y8.

(9)

Chou Associates Management Inc. has the power to direct the affairs of Chou Bond Fund, and Francis Chou has the power to direct the affairs of Chou Associates Management Inc. as its Fund Manager. The number of shares offered hereby represents (i) 12,065 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 142,783 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. The business address for Chou Bond Fund is 110 Sheppard Avenue East, Suite 301, Box 18, Toronto, Ontario, M2N6Y8.

(10)

Chou America Management Inc. has the power to direct the affairs of Chou Income Fund, and Francis Chou has the power to direct the affairs of Chou America Management Inc. as its Fund Manager. The number of shares offered hereby represents (i) 12,065 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 142,783 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. The business address for Chou Income Fund is 110 Sheppard Avenue East, Suite 301, Box 18, Toronto, Ontario, M2N6Y8.

(11)

Chou Associates Management Inc. has the power to direct the affairs of Chou RRSP Fund, and Francis Chou has the power to direct the affairs of Chou Associates Management Inc. as its Fund Manager. The number of shares offered hereby represents (i) 48,763 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 577,098 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. The business address for Chou RRSP Fund is 110 Sheppard Avenue East, Suite 301, Box 18, Toronto, Ontario, M2N6Y8.

(12)

V. Prem Watsa is the Chairman of the board of directors of Fairfax Financial. Each of 1109519 Ontario Limited, or 1109519, The Sixty Two Investment Company Limited, or Sixty Two, 810679 Ontario Limited or 810679, and Prenstin Holdings Limited, or Prenstin, and, together with 1109519, Sixty Two and 810679, the Watsa Entities, are controlled by V. Prem Watsa. V. Prem Watsa, together with the Watsa Entities, control approximately 42.6% of the total votes attached to all voting shares of Fairfax Financial. V. Prem Watsa is Chairman and Chief Executive Officer of Hamblin Watsa. Hamblin Watsa is a wholly-owned subsidiary of Fairfax Financial, and is the investment manager of Fairfax Financial Holdings Master Trust Fund and as such has voting and dispositive power with respect to the shares of common stock held by Fairfax Financial Holdings Master Trust Fund. Brit Insurance (Gibraltar) PCC Limited and Brit Syndicates Limited are wholly-owned subsidiaries of Brit Insurance Holdings Limited, which is a wholly-owned subsidiary of Brit Limited. Fairfax Financial is the majority shareholder of Brit Limited. Newline Corporate Name Limited, Clearwater Select Insurance Company, Odyssey Reinsurance Company, Zenith Insurance Company (a U.S. entity), United States Fire Insurance Company, Zenith Insurance Company (a Canadian entity), Northbridge Personal Insurance Corporation, Northbridge General Insurance Corporation, Federated Insurance Company of Canada, TIG Insurance (Barbados) Limited, Wentworth Insurance Company Ltd., Advent Capital (No. 3) Ltd and TIG Insurance Company are indirect wholly-owned subsidiaries of Fairfax Financial.

(13)

The number of shares offered hereby represents (i) up to 236,518 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (ii) up to 358,423 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise) and 14,286 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Advent Capital (No. 3) Ltd is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(14)

The number of shares offered hereby represents (i) 60,324 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 1,092,342 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 573,477 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 47,105 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 22,858 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Federated Insurance Company of Canada is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(15)

The number of shares offered hereby represents (i) up to 662,251 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (ii) up to 1,003,585 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise) and 40,000 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for TIG Insurance Company is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(16)

The number of shares offered hereby represents (i) 20,108 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 237,971 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 15,702 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise). The business address for TIG Insurance Company (Barbados) Ltd. is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(17)

The number of shares offered hereby represents (i) 24,130 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 758,601 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 716,846 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 18,842 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 28,572 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Fairfax Financial Holdings Master Trust Fund is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(18)

The number of shares offered hereby represents (i) 67,596 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 965,541 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 250,897 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 52,783 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 10,000 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Brit Insurance (Gibraltar) PCC Limited is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(19)

The number of shares offered hereby represents (i) 57,509 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 1,603,017 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 1,397,850 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 44,906 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 55,715 common shares issuable upon the exercise of Commitment Fee

Warrants (assuming a cash exercise). The business address for Brit Syndicates Limited is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(20)

The number of shares offered hereby represents (i) 88,476 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 1,283,590 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 358,423 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 69,087 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 14,286 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Clearwater Select Insurance Company is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(21)

The number of shares offered hereby represents (i) 44,238 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 760,054 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 358,423 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 34,544 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 14,286 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Newline Corporate Name Limited is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(22)

The number of shares offered hereby represents (i) 422,265 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 6,274,583 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 1,935,484 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 329,730 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 77,143 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Northbridge General Insurance Corporation is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(23)

The number of shares offered hereby represents (i) 116,626 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 1,380,231 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 91,069 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise). The business address for Northbridge Personal Insurance Corporation is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(24)

The number of shares offered hereby represents (i) 309,661 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 5,556,894 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 2,867,384 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 241,802 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 114,286 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Odyssey Reinsurance Corporation is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(25)

The number of shares offered hereby represents (i) 152,820 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 1,808,578 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 119,331 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise). The business address for United States Fire Insurance Company is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(26)

The number of shares offered hereby represents (i) 209,122 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 2,947,932 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 716,846 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 163,295 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 28,572 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Wentworth Insurance Company Ltd is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(27)

The number of shares offered hereby represents (i) 44,238 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 523,536 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 34,544 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise). The business address for Zenith Insurance Company (CAD) is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(28)

The number of shares offered hereby represents (i) 40,217 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 665,157 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 286,739 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise), 31,403 common shares issuable upon the exercise of Amendment Fee Warrants (assuming a cash exercise) and 11,429 common shares issuable upon the exercise of Commitment Fee Warrants (assuming a cash exercise). The business address for Zenith Insurance Company (US) is c/o Hamblin Watsa Investment Counsel Ltd., 95 Wellington Street West, Suite 802, Toronto, Ontario, Canada M5J 2N7.

(29)

The number of shares offered hereby represents (i) 283 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 3,342 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto.

(30)

The number of shares offered hereby represents (i) 21,051 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 249,127 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto.

(31)

The number of shares offered hereby represents (i) 422 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 4,991 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto.

(32)

The number of shares offered hereby represents (i) 263 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 3,106 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto.

(33)

Gen IV Investment Opportunities, LLC is managed by LSP Generation IV, LLC, its managing director. Paul Segal serves as President of LSP Generation IV, LLC and has the power to direct the affairs of LSP Generation IV, LLC. The number of shares offered hereby represents (i) 337,918 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 5,418,279 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 2,150,538 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise). The business address for Gen IV Investment Opportunities, LLC is 1700 Broadway, 35th Floor, New York, NY 10019.

(34)

Vega Asset Partners, L.P. is managed by Vega Energy GP, LLC, its general partner. Paul Segal serves as President of Vega Energy GP, LLC and has the power to direct the affairs of Vega Energy GP, LLC. The number of shares offered hereby represents (i) 11,166 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans, (ii) up to 581,524 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (iii) up to 681,004 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise). The business address for Vega Asset Partners, L.P. is 1700 Broadway, 35th Floor, New York, NY 10019.

(35)

The number of shares offered hereby represents (i) 17,873 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 211,518 common shares that may be issued as PIK payments on the 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. Voting and investment control over the shares to be held by NB Distressed Debt Investment Fund Limited will be exercised by Michael Holmberg of Neuberger Berman Investment Advisers LLC, or NBIA, its investment manager. NBIA is an affiliate of Neuberger Berman BD LLC, a U.S. registered broker-dealer. The business address of NB Distressed Debt Investment Fund Limited is c/o Neuberger Berman Investment Advisers LLC, 190 South LaSalle Street, Suite 2400, Chicago, Illinois 60603.

(36)

The number of shares offered hereby represents (i) 10,359 common shares previously issued as a PIK payment on the 1.75 Lien Term Loans and (ii) up to 122,593 common shares that may be issued as PIK payments on the 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto. Voting and investment control over the shares to be held by NB Distressed Debt Master Fund LP will be exercised by Michael Holmberg of NBIA, its investment manager. NBIA is an affiliate of Neuberger Berman BD LLC, a U.S. registered broker-dealer. The business address of NB Distressed Debt Master Fund LP is c/o Neuberger Berman Investment Advisers LLC, 190 South LaSalle Street, Suite 2400, Chicago, Illinois 60603.

(37)

OCM Opportunities Fund V, L.P., or Opps V, OCM Opportunities Fund VI, L.P., or Opps VI, and OCM Opportunities Fund VII, L.P., or Opps VII, are the members of OCM EXCO Holdings, LLC, or EXCO Holdings. OCM Opportunities Fund V GP, L.P., or Opps V GP, is the general partner of Opps V. OCM Opportunities Fund VI GP, L.P., Opps VI GP, is the general partner of Opps VI. OCM Opportunities Fund VII GP, L.P., or Opps VII GP, is the general partner of Opps VII. OCM Opportunities Fund VII GP, Ltd., or Opps VII Ltd., is the general partner of Opps VII GP. Oaktree Value Opportunities Fund GP, L.P., or VOF GP, is the general partner of Oaktree Value Opportunities Fund Holdings, L.P., or VOF. Oaktree Value Opportunities Fund GP, Ltd., or VOF Ltd., is the general partner of VOF GP.

OCM Principal Opportunities Fund III GP, L.P., or POF 3 GP, is the general partner of each of OCM Principal Opportunities Fund III, L.P., or POF 3, and OCM Principal Opportunities Fund IIIA, L.P., or POF 3A. OCM Principal Opportunities Fund IV Delaware GP, Inc., or POF 4D GP, is the general partner of OCM Principal Opportunities Fund IV Delaware, L.P., or POF 4D. OCM Principal Opportunities Fund IV, L.P., or POF 4, is the sole shareholder of POF 4D GP. OCM Principal Opportunities Fund IV GP, L.P., or POF 4 GP, is the general partner of POF 4. OCM Principal Opportunities Fund IV GP, Ltd., or POF 4 Ltd., is the general partner of POF 4 GP, Oaktree Capital Management, L.P., or OCM, is the sole director of each of Opps VII Ltd., VOF Ltd. and POF 4 Ltd. Oaktree Holdings, Inc. is the general partner of OCM. Oaktree Fund GP I, L.P., or GPI, is the sole shareholder of each of Opps VII Ltd., VOF Ltd. and POF 4 Ltd. and is the general partner of each of Opps V GP, Opps VI GP and POF 3 GP.

Oaktree Capital I, L.P. is the general partner of GPI. The general partner of Oaktree Capital I, L.P. is OCM Holdings I, LLC. The managing member of OCM Holdings I, LLC is Oaktree Holdings, LLC. The managing member of Oaktree Holdings, LLC and the sole shareholder of Oaktree Holdings, Inc. is Oaktree Capital Group, LLC. The duly elected manager of Oaktree Capital Group, LLC is Oaktree Capital Group Holdings GP, LLC. Oaktree Capital Group Holdings GP, LLC is managed by an executive committee consisting of Howard S. Marks, Bruce A. Karsh, Sheldon M. Stone, John B. Frank, and Jay S. Wintrob, or the OCGH GP Members. In such capacity, the OCGH GP Members may be deemed to have indirect beneficial ownership of the common shares held directly by EXCO Holdings, VOF, POF 3, POF 3A and POF 4D, or, together, the Oaktree Shareholders. Each OCGH GP Member and each of the partners, managing members, directors and managers described above expressly disclaims beneficial ownership of the common shares held directly by the Oaktree Shareholders, except to the extent of his or its pecuniary interests therein.

The number of shares offered hereby represents (i) up to 1,868,492 common shares that may be issued as PIK payments on the 1.5 Lien Notes and 1.75 Lien Term Loans based on the assumptions set forth in Footnote 2 hereto and (ii) up to 2,831,542 common shares issuable upon the exercise of 1.5 Lien Notes Warrants (assuming a cash exercise).

The business address for EXCO Holdings is c/o Oaktree Capital Management, L.P., 333 S. Grand Avenue, 28th Floor, Los Angeles, CA 90071.

The selling shareholders, or their respective affiliates, set forth in the table above may participate from time to time in equity or debt financing arrangements with us or our subsidiaries.

Material Relationships

The Refinancing Transaction

Related Parties . As described above under “Summary — The Refinancing Transaction,” certain of the Commitment Parties participated in the offering of the 1.5 Lien Notes and the Warrants, and certain affiliates of Fairfax Financial, certain affiliates of Gen IV and ESAS participated in the Second Lien Term Loan Exchange. In addition, certain of these entities are related parties to members of our board of directors, and certain of our directors may have direct or indirect interests in holdings of the 1.5 Lien Notes, 1.75 Lien Term Loans and/or the Warrants, including:

•

Samuel Mitchell, a member of our Board of Directors, serves as a Managing Director of Hamblin Watsa, wholly owned subsidiary of Fairfax Financial, and certain affiliates of Fairfax Financial hold, directly or indirectly, $151.0 million in aggregate principal amount of 1.5 Lien Notes and approximately $412.1 million in aggregate principal amount of 1.75 Lien Term Loans, as well as 1.5 Lien Notes Warrants representing the right to purchase an aggregate of up to 10,824,377 common shares (assuming a cash exercise) at an exercise price equal to $13.95 per share, Commitment Fee Warrants representing the right to purchase an aggregate of up to 431,433 common shares (assuming a cash exercise) at an exercise price equal to $0.01 per share and Amendment Fee Warrants representing the right to purchase an aggregate of up to 1,294,143 common shares (assuming a cash exercise) at an exercise price equal to $0.01. In connection with our June 20, 2017 interest payment on our 1.75 Lien Term Loans in PIK common shares, certain affiliates of Fairfax Financial were issued 1,657,330 of our common shares. Certain affiliates of Fairfax Financial are also the beneficial owners of approximately 46.9% of our common shares based on public filings with the SEC and our internal records.

•

John Wilder, a member of our Board of Directors, serves as the sole manager and has the power to direct the affairs of Bluescape, which serves as the general partner of and directs Bluescape Fund, the owner of ESAS. ESAS holds $70.0 million in aggregate principal amount of 1.5 Lien Notes and approximately $47.9 million in aggregate principal amount of 1.75 Lien Term Loans, as well as 1.5 Lien Notes Warrants representing the right to purchase an aggregate of up to 5,017,922 common shares (assuming a cash exercise) at an exercise price equal to $13.95 per share. In connection with our June 20, 2017 interest payment on our 1.75 Lien Term Loans in PIK common shares, ESAS was issued 192,609 of our common shares. ESAS is the beneficial owner of approximately 24.1% of our common shares based on public filings with the SEC and our internal records.

•

B. James Ford, a member of our Board of Directors, serves as a Senior Advisor of Oaktree. Certain affiliates of Oaktree hold, directly or indirectly, $39.5 million in aggregate principal amount of 1.5 Lien Notes and 1.5 Lien Notes Warrants representing the right to purchase an aggregate of up to 2,831,542 common shares (assuming a cash exercise) at an exercise price equal to $13.95 per share. Certain affiliates of Oaktree are also the beneficial owners of approximately 20.0% of our common shares based on public filings with the SEC.

PIK Payments . Each of the 1.5 Lien Indenture and the 1.75 Lien Term Loan Credit Agreement allows us, on the terms and conditions described below, to make PIK interest payments on the 1.5 Lien Notes and the 1.75 Lien Term Loans, as applicable, in common shares, or, in certain circumstances, additional 1.5 Lien Notes or 1.75 Lien Term Loans, as applicable.

Under the 1.5 Lien Indenture and the 1.75 Lien Term Loan Credit Agreement, the price of our common shares for determining PIK payments is based on the trailing 20-day volume weighted average price on the

Determination Date (as defined in the 1.5 Lien Indenture or the 1.75 Lien Term Loan Credit Agreement, as applicable).

Our ability to make PIK payments in our common shares under the 1.5 Lien Notes and 1.75 Lien Term Loans is subject to the following conditions, among others: (i) the issuance of our common shares as a PIK payment shall not result in a beneficial owner of the 1.5 Lien Notes or 1.75 Lien Term Loans, as applicable, such beneficial owner’s affiliates and any person subject to aggregation with such beneficial owner or its affiliates under Sections 13(d) and 14(d) of the Exchange Act beneficially owning (as defined in Rules 13d-3 or 13d-5 under the Exchange Act, except that for purposes of this clause (i) such holder shall be deemed to have “beneficial ownership” of all shares that any such holder has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of our voting capital stock or any of our direct or indirect parent entities (or their successors by merger, consolidation or purchase of all or substantially all of their assets) (we refer to such limitation on beneficial ownership as Beneficial Ownership Limitation herein), (ii) the number of common shares issued as a PIK payment shall not exceed the amount of common shares that we are authorized to issue under our charter and (iii) the common shares issued as a PIK payment shall be (a) listed on the NYSE or any other exchange on which our common shares are then listed or the over the counter market and (b) duly authorized, validly issued and non-assessable, and the issuance of such PIK common shares shall not be subject to any preemptive or similar rights. If the foregoing conditions are not met and we otherwise have the ability to elect to make PIK interest payments, we may make PIK interest payments in additional 1.5 Lien Notes or 1.75 Lien Term Loans, as applicable.

Prior to December 31, 2018, we may make PIK payments on the 1.5 Lien Notes and the 1.75 Lien Term Loans in our sole discretion. After December 31, 2018, we are permitted to make PIK payments only in the following percentages of interest due based on our liquidity, which is defined as (i) the sum of (a) our unrestricted cash and cash equivalents and (b) any amounts available to be borrowed under the EXCO Resources Credit Agreement (to the extent then available and including any replacement or refinancing thereof) less (ii) the face amount of any letters of credit outstanding under the EXCO Resources Credit Agreement (including any replacement or refinancing thereof):


Liquidity Level	PIK Payment Percentage
Less than $150 million		100	%
$150 million or greater but less than $175 million		75	%
$175 million or greater but less than $200 million		50	%
$200 million or greater but less than $225 million		25	%
$225 million or greater		0	%

Warrants . In connection with the offering of the 1.5 Lien Notes and the Second Lien Term Loan Exchange, we issued the 1.5 Lien Notes Warrants, the Commitment Fee Warrants and the Amendment Fee Warrants, with the aggregate number of Common Shares underlying such Warrants and the exercise price of such Warrants as follows:


Warrant Series	Aggregate Number of Common Shares Underlying Warrants (Assuming Cash Exercise)		Per Share Exercise Price of Warrants
1.5 Lien Notes Warrants		21,505,383	$	13.95
Commitment Fee Warrants		431,433	$	0.01
Amendment Fee Warrants		1,325,546	$	0.01

Of the total number of Warrants issued:

•

certain affiliates of Fairfax Financial and Hamblin Watsa were issued 1.5 Lien Notes Warrants representing the right to purchase an aggregate of up to 10,824,377 common shares (assuming a cash

exercise), Commitment Fee Warrants representing the right to purchase an aggregate of up to 431,433 common shares (assuming a cash exercise) and Amendment Fee Warrants representing the right to purchase an aggregate of up to 1,294,143 common shares (assuming a cash exercise);

•

ESAS was issued 1.5 Lien Notes Warrants representing the right to purchase an aggregate of up to 5,017,922 common shares (assuming a cash exercise), a cash commitment fee of $2.1 million and a cash amendment fee of approximately $1.6 million; and

•

certain affiliates of Oaktree were issued 1.5 Lien Notes Warrants representing the right to purchase an aggregate of up to 2,831,542 common shares (assuming a cash exercise) and a cash commitment fee of approximately $1.2 million.

Each series of Warrants was issued under a different form of warrant agreement, but other than the per share exercise price of the Warrants and the persons to whom the Warrants were issued, the terms and conditions of the Warrants are substantially the same among all three series.

Subject to certain exceptions and limitations, the Warrants may not be exercised if, as a result of such exercise, the beneficial ownership of such holder of such Warrant or its affiliates and any other person subject to aggregation with such holder or its affiliates under Sections 13(d) 14(d) of the Exchange Act would exceed the Beneficial Ownership Limitation.

Each of the Warrants has an exercise term lasting until May 31, 2022, and may be exercised by cash or cashless exercise, provided that we may require cashless exercise if the cash exercise of any Warrant would negatively impact our ability to utilize net operating losses for U.S. federal income tax purposes.

The 1.5 Lien Notes Warrants are subject to an anti-dilution adjustment in the event that we issue common share equivalents at an effective price per share less than the applicable exercise price of the 1.5 Lien Notes Warrants. The Commitment Fee Warrants and the Amendment Fee Warrants are subject to an anti-dilution adjustment in the event that we issue common share equivalents at an effective price per share less than $10.50 per share. In addition, all of the Warrants are subject to customary anti-dilution adjustments in the event of share splits, dividends, subdivisions, combinations, reclassifications or other similar events.

Registration Rights Agreement . Simultaneously with the closing of the offering of the 1.5 Lien Notes and the Second Lien Term Loan Exchange, we entered into a registration rights agreement with the holders of the 1.5 Lien Notes, 1.75 Lien Term Loans and Warrants, dated as of March 15, 2017, pursuant to which we agreed, upon certain terms and conditions, to file a registration statement to register the resale of (i) such number of common shares our management reasonably estimates to be issued as PIK interest payments on the 1.5 Lien Notes and 1.75 Lien Term Loans and (ii) all of the common shares underlying the Warrants, by September 11, 2017. In addition, the Registration Rights Agreement provides certain incidental “piggy-back” registration rights, which generally allow the holders of the 1.5 Lien Notes, 1.75 Lien Term Loans and Warrants to participate in registered offerings of our common shares that are initiated by us or on behalf of other holders of our securities.

Contractual Preemptive Right . As part of the offering of the 1.5 Lien Notes, the Commitment Parties were granted a contractual preemptive right that generally provides such parties, subject to certain conditions, to purchase all or any portion of common shares that we propose to issue in certain offerings for cash in the future.

Additional Information Concerning the Refinancing Transaction . The foregoing summary of the offering of the 1.5 Lien Notes, the Second Lien Term Loan Exchange and the offering of the Warrants, as well as the agreements related thereto, does not purport to be complete, and is qualified in its entirety by reference to the disclosure contained in, and exhibits attached to, our Current Report on Form 8-K, dated March 15, 2017 and filed with the SEC on March 15, 2017, which is incorporated by reference herein.

Fairfax Second Lien Term Loan

On October 19, 2015, as part of a series of transactions by which we restructured a portion of our indebtedness, we entered into the Fairfax Term Loan, pursuant to which, on October 26, 2015, the lenders party thereto issued us $300.0 million in aggregate principal amount of senior secured second lien term loans, the proceeds of which were used to repay outstanding indebtedness under the EXCO Resources Credit Agreement. In addition, affiliates of Fairfax Financial were the record holders of approximately $112.1 million in principal amount of the Exchange Term Loan as of December 31, 2016. As an administrative agent of the Fairfax Term Loan, Fairfax Financial received a one-time fee of $6.0 million from us upon closing. For the year ended December 31, 2016, Fairfax Financial received $49.9 million of interest payments under the Fairfax Term Loan and Exchange Term Loan. As described above, the Fairfax Term Loan was deemed repaid in full in connection with the Second Lien Term Loan Exchange, and the portion of the Exchange Term Loan held by affiliates of Fairfax Financial was exchanged for 1.75 Lien Term Loans in connection with the Second Lien Term Loan Exchange.

Mr. Mitchell, a member of our Board of Directors, is a Managing Director of Hamblin Watsa and a member of Hamblin Watsa’s investment committee, which consists of seven members that manage the investment portfolio of Fairfax Financial. Based on filings with the SEC and our internal records, Fairfax Financial is the beneficial owner of approximately 46.9% of our outstanding common shares.

Exchange Second Lien Term Loan

On October 19, 2015, in connection with the Fairfax Term Loan and our restructuring transactions, we also entered into the Exchange Term Loan, pursuant to which on October 26, 2015 and November 4, 2015, the lenders party thereto issued us $291.3 million and $108.7 million, respectively, in aggregate principal amount of senior secured second lien term loans, the proceeds of which were used to repurchase a portion of our outstanding unsecured notes.

In the first quarter of 2016, ESAS entered into an agreement with an unaffiliated lender under the Exchange Term Loan, pursuant to which the lender made periodic payments to ESAS or received periodic payments from ESAS based on changes in the market value of the Exchange Term Loan, and the lender made periodic payments to ESAS based on the interest rate of the Exchange Term Loan. As of December 31, 2016, the agreement effectively provided ESAS with the economic consequences of ownership of approximately $47.9 million in principal amount of the Exchange Term Loan without direct ownership of, or consent rights with respect to, the Exchange Term Loan. In January 2017, ESAS irrevocably purchased and assumed all the rights and obligations from this unaffiliated lender and became a direct lender under a portion of the Exchange Term Loan. As described above, the portion of the Exchange Term Loan held by ESAS was exchanged for 1.75 Lien Term Loans in connection with the Second Lien Term Loan Exchange.

Mr. Wilder, the Executive Chairman of our Board of Directors, serves as the sole manager and has the power to direct the affairs of Bluescape, which serves as the general partner of and directs Bluescape Fund, the owner of ESAS, and may be deemed to share ESAS’ interest in the Exchange Term Loan or our common shares. Based on public filings with the SEC and our internal records, ESAS is the beneficial owner of approximately 24.1% of our outstanding common shares.

Services and Investment Agreement

On March 31, 2015, we and ESAS entered into a services and investment agreement. Pursuant to the services and investment agreement, on March 31, 2015, ESAS began providing strategic advisory services to us that will continue until the earlier of termination of the services and investment agreement and March 31, 2019. As consideration for the services provided under the services and investment agreement, we agreed to pay ESAS a monthly fee of $300,000 and an annual incentive payment of between zero and $2.4 million per year that will be based on our common share price achieving certain performance hurdles as compared to a peer group under the terms of the services and investment agreement.

In addition, in connection with the entry into the services and investment agreement, we issued to ESAS the following warrants: a warrant exercisable for 1 million of our common shares with a strike price of $41.25 per share and a term of 49 months, a warrant exercisable for approximately 1.3 million common shares with a strike price of $60.00 per share and a term of 60 months, a warrant exercisable for approximately 1.3 million common shares with a strike price of $105.00 per share and a term of 72 months, and a warrant exercisable for approximately 1.6 million common shares with a strike price of $150.00 per share and a term of 72 months. The exercisability of these warrants is subject to our share price achieving certain performance hurdles as compared to a peer group under the terms of the warrants. We also issued ESAS approximately 392,157 common shares and ESAS agreed to acquire additional common shares in open market purchases such that ESAS would own common shares with an aggregate cost basis of at least $50 million as of the first anniversary of the closing date. ESAS completed these open market purchases in December 2015.

Pursuant to the services and investment agreement, on September 8, 2015, we and ESAS entered into a nomination letter agreement. The nomination letter agreement provides that, during the term of the services and investment agreement, ESAS will have the right to nominate one director for election to our board of directors. Pursuant to the services and investment agreement, Mr. Wilder was appointed as a member of our board of directors and as the nominee of ESAS under the nomination letter agreement.

Under the terms of the services and investment agreement, we also entered into a registration rights agreement with ESAS pursuant to which we agreed to prepare and file a resale registration statement with respect to the common shares that we issued to ESAS, as well as the warrants issued to ESAS and the common shares underlying such warrants. We filed these registration statements in April 2015 and September 2015, respectively, and they were declared effective by the SEC in July 2015 and October 2015, respectively.

For additional information concerning the services and investment agreement, the warrants and the nomination letter agreement, please see our Current Report on Form 8-K, dated March 31, 2015 and filed with the SEC on April 2, 2015, as amended by Amendment No. 1 to Current Report on Form 8-K, filed with the SEC on May 26, 2015, and our Current Report on Form 8-K, dated September 8, 2015 and filed with the SEC on September 9, 2015, each of which is incorporated by reference herein.

Prior Registration Rights Agreements

Certain of the selling shareholders are parties to a registration rights agreement entered into on October 3, 2005, as amended and restated on December 30, 2005, or the 2005 Registration Rights Agreement, by and among EXCO Holdings Inc. (our predecessor by merger) and the Initial Holders (as defined therein). In addition, certain of our common shares acquired in the future by the holders of registrable securities under the 2005 Registration Rights Agreement will be covered by such agreement. Certain selling shareholders also have registration rights pursuant to a registration rights agreement entered into on March 28, 2007, or the 2007 Registration Rights Agreement.

For additional information concerning the 2005 Registration Rights Agreement, please see our Current Report on Form 8-K dated February 8, 2006 and filed with the SEC on February 21, 2006 and our Current Report on Form 8-K dated January 17, 2014 and filed with the SEC on January 21, 2014, each of which is incorporated by reference herein. For additional information concerning the 2007 Registration Rights Agreement, please see our Current Report on Form 8-K dated September 28, 2007 and field with the SEC on September 28, 2007, which is incorporated by reference herein.

Oaktree Letter Agreement

Pursuant to a letter agreement that we entered into in March 2007 with funds managed by Oaktree, including OCM EXCO Holdings LLC, Oaktree has the right to nominate one director for election at any annual meeting of shareholders, provided that Oaktree’s nomination right is contingent upon Oaktree beneficially

owning at least 666,667 of our common shares. Oaktree currently beneficially owns more than 666,667 of our common shares and has nominated B. James Ford for election to our board of directors at our upcoming annual meeting of shareholders to be held on May 31, 2017.

For additional information concerning this letter agreement, please see our Current Report on Form 8-K dated March 28, 2007 and filed with the SEC on April 2, 2007, which is incorporated by reference herein.

PLAN OF DISTRIBUTION

We are registering the common shares offered hereby to permit the resale of these shares by the selling shareholders, which as used herein includes donees, pledgees, transferees, distributees, beneficiaries or other successors-in-interest selling common shares or interests in common shares received after the date of this prospectus from the selling shareholders as a gift, pledge, partnership distribution or other transfer, from time to time. We will not receive any of the proceeds from the sale by the selling shareholders of the common shares; however we will receive the proceeds of any cash exercise of the Warrants. We will bear all fees and expenses incident to our obligation to register the common shares. To the extent required, this prospectus may be amended or supplemented from time to time to describe a specific plan of distribution.

The selling shareholders may sell all or a portion of the common shares beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents or otherwise. The selling shareholders will act independently of us in making decisions regarding the timing, manner and size of each sale. If the common shares are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The common shares may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, at negotiated prices or otherwise. These sales may be effected in transactions, which may involve, without limitation:

•

one or more block transactions, including transactions in which the broker or dealer so engaged will attempt to sell the common shares as an agent but may position and resell a portion of the block as a principal to facilitate the transaction, or in crosses, in which the same broker acts as an agent on both sides of the trade;

•

on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale;

•

in the over-the-counter market;

•

in transactions otherwise than on these exchanges or systems or in the over-the-counter market;

•

ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

•

block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

•

purchases by a broker-dealer or market maker as principal and resale by the broker-dealer for its account;

•

an exchange distribution or over the counter market transaction;

•

through distribution by a selling shareholder or its successor in interest to its members, general or limited partners or shareholders (or their respective members, general or limited partners or shareholders);

•

privately negotiated transactions;

•

short sales;

•

the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

•

sales pursuant to Rule 144 promulgated under the Securities Act;

•

broker-dealers may agree with the selling shareholder(s) to sell a specified number of such shares at a stipulated price per share;

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underwritten offerings;

•

distributions to creditors and equity holders of us or the selling shareholders;

•

a combination of any such methods of sale; and

•

any other method permitted pursuant to applicable law.

If the selling shareholders effect such transactions by selling common shares to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts or concessions from the selling shareholders or commissions from purchasers of the common shares for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved). In connection with sales of common shares or otherwise, the selling shareholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common shares in the course of hedging in positions they assume. The selling shareholders may also sell common shares short and deliver common shares covered by a prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders may also loan or pledge common shares to broker-dealers that in turn may sell such shares.

In connection with sales of the common shares or otherwise, the selling shareholders may enter into sale, forward sale and derivative transactions with third parties, or may sell securities not covered by this prospectus to third parties in privately negotiated transactions. If the applicable prospectus supplement indicates, in connection with those sale, forward sale or derivative transactions, the third parties may sell securities covered by this prospectus and the applicable prospectus supplement, including in short sale transactions and by issuing securities that are not covered by this prospectus but are exchangeable for or represent beneficial interests in the common shares. The third parties also may use shares received under those sale, forward sale or derivative arrangements or shares pledged by the selling shareholders or borrowed from the selling shareholders or others to settle such third-party sales or to close out any related open borrowings of common shares. The third parties may deliver this prospectus in connection with any such transactions. Any third party in such sale transactions will be an underwriter and will be identified in the applicable prospectus supplement (or a post-effective amendment to the registration statement of which this prospectus is a part).

The aggregate proceeds to the selling shareholders from the sale of the common shares offered by them will be the purchase price of the common shares less discounts, concessions or commissions, if any. The selling shareholders reserve the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common shares to be made directly or through agents. We will not receive any of the proceeds from this offering except that we will receive the proceeds from any cash exercise of the Warrants.

The selling shareholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, provided that such transactions meet the criteria and conform to the requirements of that rule.

The selling shareholders may pledge or grant a security interest in some or all of the common shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the common shares from time to time pursuant to a prospectus or any amendment to such prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending, if necessary, the list of selling shareholders to include the pledgee, transferee or other successors in interest as selling shareholders under such prospectus. The selling shareholders also may transfer and donate the common shares in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of such prospectus.

The selling shareholders and any broker-dealer participating in the distribution of the common shares may be deemed to be an “underwriter” within the meaning of the Securities Act with respect to any securities such entity sells pursuant to this prospectus. At the time a particular offering of the common shares is made, a

prospectus, if required, will be distributed which will set forth the aggregate amount of common shares being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions or concessions allowed or reallowed or paid to broker-dealers. If a selling shareholder is deemed to be an underwriter, such selling shareholder may be subject to certain statutory liabilities under the Securities Act and other applicable securities laws.

Under the securities laws of some states, the common shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the common shares may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

There can be no assurance that the selling shareholders will sell any or all of the common shares registered pursuant to this registration statement.

Each selling shareholder and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the common shares by the selling shareholders and any other participating person. Regulation M may also restrict the ability of any person engaged in the distribution of the common shares to engage in market-making activities with respect to the common shares. All of the foregoing may affect the marketability of the common shares and the ability of any person or entity to engage in market-making activities with respect to the common shares.

We will pay all expenses of the registration of the common shares, including, without limitation, SEC filing fees and expenses of compliance with federal securities or state “blue sky” or securities laws; provided, however, that the selling shareholders will pay all discounts and commissions, if any, to underwriters, selling brokers, dealer managers and similar persons. We will indemnify each selling shareholder against liabilities, including some liabilities under the Securities Act, in accordance with the Registration Rights Agreement, or such selling shareholder(s) will be entitled to contribution. We may be indemnified by a selling shareholder against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by such selling shareholder specifically for use in a prospectus, in accordance with the Registration Rights Agreement, or we may be entitled to contribution.

Once sold under the registration statement, the common shares will be freely tradable in the hands of persons other than our affiliates.

DESCRIPTION OF CAPITAL STOCK

Our amended and restated certificate of formation authorizes us to issue a total of 270,000,000 shares of capital stock, consisting of 260,000,000 common shares, par value $0.001 per share, and 10,000,000 preferred shares, par value $0.001 per share. The following description of our capital stock is intended to be a summary, and you should read it in conjunction with our amended and restated certificate of formation, as amended, and third amended and restated bylaws filed with the SEC.

Common shares

On June 12, 2017, at 5:00 P.M. Central Time, we effected a 1-for-15 reverse stock split of our issued, outstanding and treasury common shares, as well as reduced our authorized common shares from 780,000,000 common shares to 260,000,000 common shares. As a result, under our amended and restated certificate of formation, as amended, we may issue 260,000,000 common shares with a par value of $0.001 per share. As of July 25, 2017, after giving effect to the reverse share split, we had 20,411,000 common shares outstanding. All of our common shares have one vote per share. Shareholders may not utilize cumulative voting for the election of directors. The vote or concurrence of two-thirds of the outstanding voting common shares is necessary to effectuate:

•

any amendment to the amended and restated certificate of formation;

•

the approval of any merger or consolidation;

•

any sale, lease, exchange or other disposition not in the ordinary course of business of all, or substantially all, of our property or assets; or

•

our dissolution.

Holders of our common shares may receive dividends, when and as declared by our board of directors, if funds are legally available for the payment of dividends, subject to the preferential dividend rights of any outstanding preferred shares. Our common shares have no preemptive, conversion, sinking fund, redemption or similar provisions. In the event of our liquidation, holders of our common shares participate on a pro rata basis in the distribution of any of our assets that are remaining after the payment of liabilities and any liquidation preference on outstanding preferred shares. All of our outstanding common shares are fully paid and nonassessable.

As described above, our amended and restated certificate of formation, as amended, authorizes us to issue 260,000,000 common shares. As of July 25, 2017, after giving effect to the reverse share split, we had 20,411,000 common shares outstanding, a total of approximately 930,326 common shares reserved for issuance pursuant to the EXCO Resources, Inc. Amended and Restated 2005 Long-Term Incentive Plan and approximately 5,333,333 common shares reserved for issuance upon the exercise of outstanding warrants held by ESAS.

Our amended and restated certificate of formation, as amended, is filed as Exhibit 4.1 hereto and is incorporated by reference herein.

Preferred shares

Our amended and restated certificate of formation, as amended, authorizes the issuance of up to 10,000,000 preferred shares. As of July 25, 2017, we did not have any preferred shares outstanding. Under our amended and restated certificate of formation, as amended, our board of directors has the authority to create new series of preferred shares, and the shares of each series shall have rights and preferences as designated by resolution of the board of directors. In the designation of any series of preferred shares, the board of directors has authority, without further action by the holders of our common shares, to fix the number of shares constituting that series

and to fix the dividend rights, dividend rate, conversion rights, terms of redemption and the liquidation preferences of that series of preferred shares. The issuance of additional preferred shares could further adversely affect the voting power of holders of our common shares and the likelihood that holders of our common shares will receive dividend payments and payments upon liquidation and could have the effect of delaying, deferring or preventing a change in control.

Anti-takeover effects of provisions of Texas law, our certificate of formation and bylaws

Under the Texas Business Organizations Code, or TBOC, class voting is required in connection with certain amendments of a corporation’s charter, a merger or consolidation requiring shareholder approval and certain sales of all or substantially all of the corporation’s assets.

Our amended and restated certificate of formation, as amended, currently permits our board of directors to issue up to 10,000,000 preferred shares and to establish, by resolution, one or more series of preferred shares and the powers, designations, preferences and participating, optional or other special rights of each preferred share. The preferred shares may be issued on terms that are unfavorable to the holders of our common shares, including the grant of superior voting rights, the grant of preferences in favor of preferred shareholders in the payment of dividends and upon our liquidation and the designation of conversion rights that entitle holders of our preferred shares to convert their shares into our common shares on terms that are dilutive to holders of our common shares.

The issuance of additional preferred shares may make a takeover or change in control of us more difficult, and may discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise. It could, therefore, prevent shareholders from receiving a premium over the market price for the common shares they hold.

Our amended and restated certificate of formation, as amended, and third amended and restated bylaws provide that special meetings of our shareholders may be called by one or more shareholders only if such shareholder(s) hold shares aggregating at least 25% of the voting power at a meeting at which the holders of all shares entitled to vote on the action or actions were present and voted. Our third amended and restated bylaws also provide that any shareholder seeking to bring business before, or to nominate candidates for election as directors at, an annual meeting of shareholders must be a shareholder of record at the time we give notice of the annual meeting, be entitled to vote at the annual meeting and provide timely notice of his, her or its proposal in writing to the corporate secretary. Furthermore, our third amended and restated bylaws provide that any amendment to the third amended and restated bylaws by our shareholders must be approved by the affirmative vote of two-thirds of the outstanding shares entitled to vote on such amendment. These provisions could have the effect of discouraging attempts to acquire us or change the policies formulated by our management even if some or a majority of our shareholders believe these actions are in their best interest. These provisions could, therefore, prevent shareholders from receiving a premium over the market price for the common shares they hold.

Texas law and certain corporate provisions

In our amended and restated certificate of formation, as amended, we opted out of Section 21.606 of the TBOC, or the Texas Business Combination Law. The Texas Business Combination Law provides that a Texas corporation may not engage in specified types of business combinations, including mergers, consolidations and asset sales, with a person, or an affiliate or associate of that person, who is an “affiliated shareholder.” For purposes of this law, an “affiliated shareholder” is generally defined as the holder of 20% or more of the corporation’s voting shares, for a period of three years from the date that person became an affiliated shareholder. The law’s prohibitions do not apply if:

•

the business combination or the acquisition of shares by the affiliated shareholder was approved by the board of directors of the corporation before the affiliated shareholder became an affiliated shareholder; or

•

the business combination was approved by the affirmative vote of the holders of at least two-thirds of the outstanding voting shares of the corporation not beneficially owned by the affiliated shareholder, at a meeting of shareholders called for that purpose, not less than six months after the affiliated shareholder became an affiliated shareholder.

Limitations on liability

Our amended and restated certificate of formation, as amended, provides that to the fullest extent permitted by Texas law, our directors will have no personal liability to us or our shareholders for any acts or omissions in the director’s performance of his or her duties as a director. Section 7.001 of the TBOC permits us to limit the personal liability of directors to us or our shareholders for monetary damages for any act or omission in a director’s capacity as director, except for liability for any of the following:

(i)

A breach of the director’s duty of loyalty to us or our shareholders;

(ii)

An act or omission not in good faith that constitutes a breach of duty of the director to us or an act or omission that involves intentional misconduct or knowing violation of law;

(iii)

A transaction from which the director received an improper benefit, regardless of whether the benefit resulted from an action taken within the scope of the director’s duties; or

(iv)

An act or omission for which the liability of a director is expressly provided by an applicable statute.

Article XIV of our amended and restated certificate of formation further provides that if Texas law is amended to authorize further elimination of the personal liability of directors for or with respect to any acts or omissions in the performance of their duties as directors, then the liability of a director shall be eliminated to the fullest extent permitted by Texas law, as so amended. Any repeal or modification of Article XIV by our shareholders will not adversely affect any right or protection of a director existing immediately prior to such repeal or modification.

Article XIII of our amended and restated certificate of formation and Article VI of our third amended and restated bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by Texas law. Our third amended and restated bylaws further provide that we must pay or reimburse reasonable expenses incurred by one of our directors or officers who was, is or is threatened to be made a named defendant or respondent in a proceeding to the maximum extent permitted under Texas law.

Indemnification arrangements

Our amended and restated certificate of formation, as amended, provides that to the fullest extent permitted by Texas law, our directors will have no personal liability to us or our shareholders for any acts or omissions in the director’s performance of his or her duties as a director. We maintain insurance for our officers and directors against certain liabilities, including liabilities under the Securities Act and the Exchange Act, the premiums of which we pay. The effect of these policies is to indemnify any of our officers and directors against expenses, judgments, attorney’s fees and other amounts paid in settlements incurred by an officer or director upon a determination that such person acted in good faith.

Transfer agent and registrar

The transfer agent and registrar for our common shares is Continental Stock Transfer & Trust Company, 17 Battery Place, New York, New York 10004-1123, (212) 509-4000.

EXPERTS

The consolidated financial statements of EXCO Resources, Inc. as of December 31, 2016 and 2015, and for each of the years in the three-year period ended December 31, 2016, and management’s assessment of the effectiveness of internal control over financial reporting as of December 31, 2016 have been incorporated by reference herein in reliance upon the report of KPMG LLP, independent registered public accounting firm, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.

The report on the consolidated financial statements dated March 16, 2017, contains an explanatory paragraph that states the consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the consolidated financial statements, probable failure to comply with a financial covenant in its credit facility as well as significant liquidity needs, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of that uncertainty.

INDEPENDENT PETROLEUM ENGINEERS

Netherland, Sewell & Associates, Inc., independent petroleum engineers, Dallas, Texas, prepared the Proved Reserves estimates with respect to our shale properties included in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference in this prospectus and elsewhere in the registration statement in reliance upon the authority of said firm as experts in petroleum engineering.

Ryder Scott Company, L.P., independent petroleum engineers, Houston, Texas, prepared the Proved Reserves estimates with respect to our shale properties in the South Texas region included in our Annual Report on Form 10-K for the year ended December 31, 2016, which is incorporated by reference in this prospectus and elsewhere in the registration statement in reliance upon the authority of said firm as experts in petroleum engineering.

Lee Keeling and Associates, Inc., independent petroleum engineers, Tulsa, Oklahoma, prepared the Proved Reserves estimates with respect to our non-shale properties included in our Annual Report on Form 10-K for the year ended December 31, 2015, which is incorporated by reference in this prospectus and elsewhere in the registration statement in reliance upon the authority of said firm as experts in petroleum engineering.

LEGAL MATTERS

The validity of the common shares offered hereby has been passed upon for us by Haynes and Boone, LLP, Dallas, Texas.

INCORPORATION BY REFERENCE

The SEC allows us to “incorporate by reference” the information we have filed with it, which means that we can disclose important information to you by referring you to those documents. The information we incorporate by reference is an important part of this prospectus. We incorporate by reference the documents listed below and any future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and prior to the effectiveness of the registration statement and prior to the termination of the offering (excluding any disclosures that are furnished and not filed):

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Our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 16, 2017;

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Our Definitive Proxy Statement on Schedule 14A, filed with the SEC on April 24, 2017;

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Our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 10, 2017;

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Our Current Reports on Form 8-K filed with the SEC on January 6, 2017, January 20, 2017, February 2, 2017, March 3, 2017, March 15, 2017, March 31, 2017, April 7, 2017, April 13, 2017, June 1, 2017, June 22, 2017 and June 23, 2017; and

•

The Section entitled “Description of Capital Stock — Common Stock” located in our Current Report on Form 8-K filed with the SEC on September 28, 2007.

Information contained in this prospectus modifies or supersedes, as applicable, the information contained in earlier-dated documents incorporated by reference. Information contained in later-dated documents incorporated by reference will automatically supplement, modify or supersede, as applicable, the information contained in this prospectus or in earlier-dated documents incorporated by reference.

We will furnish without charge to each person, including any beneficial owner, to whom a copy of this prospectus is delivered, upon request in writing, by telephone or via the internet, a copy of the information that has been incorporated by reference in this prospectus (other than an exhibit to these filings, unless we have specifically incorporated that exhibit by reference in this prospectus). You should direct any requests for copies to:

EXCO Resources, Inc.

12377 Merit Drive, Suite 1700

Dallas, Texas 75251

(214) 368-2084

Attn: General Counsel and Secretary

WHERE YOU CAN FIND MORE INFORMATION

This prospectus does not contain all of the information included in the registration statement and all of the exhibits and schedules thereto. For further information about EXCO, you should refer to the registration statement. Summaries of agreements or other documents in this prospectus are not necessarily complete. Please refer to the exhibits to the registration statement for complete copies of such documents.

We are subject to the informational requirements of the Exchange Act, and in accordance with the requirements of the Exchange Act, we file annual, quarterly and current reports, proxy statements and other information with the SEC. Our SEC filings, including this registration statement, are available over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at the Public Reference Room of the SEC at 100 F. Street, N.E., Washington, D.C. 20549. You may also obtain copies of the documents at prescribed rates by writing to the SEC at that address. Please call 1-800-SEC-0330 for further information on the operations of the Public Reference Room.

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on our website at www.excoresources.com as soon as reasonably practicable after we electronically file such material with, or otherwise furnish it to, the SEC. Information on our website is not incorporated by reference in this prospectus and is not a part of this prospectus.

UNAUDITED PRO FORMA CONDENSED COMBINED

FINANCIAL INFORMATION

On April 7, 2017, the Sellers entered into a definitive agreement with Venado to divest our oil and natural gas properties and surface acreage in South Texas. The purchase price of $300.0 million is subject to closing conditions and adjustments based on an effective date of January 1, 2017.

The purchase agreement includes conditions to the closing that were not anticipated to be satisfied or waived by the Original Scheduled Closing Date. Therefore, the Sellers entered into an amendment to extend the Original Scheduled Closing Date to August 15, 2017. Upon the execution of the amendment, the third party escrow agent released to Venado $20.0 million of the $30.0 million deposit made by Venado.

The amendment provides that the closing conditions will be deemed satisfied by (i) the reinstatement of a certain natural gas sales contract or by the entry into a new gathering agreement with terms and conditions that are acceptable to Venado in its sole discretion and (ii) upon the productivity of wells that were shut-in on or around the Original Scheduled Closing Date returning to certain levels. We subsequently entered into a short-term sales contract, which allowed our production to come back on-line, satisfying condition (ii). The amendment further provides that we use commercially reasonable efforts to negotiate and execute an extension and amendment to a certain lease. No assurance can be given as to the satisfaction of these closing conditions, and, in particular, the outcome of condition (i) as it is outside our control and dependent on Venado’s acceptance of a new gathering agreement or reinstatement of the natural gas sales contract that is currently subject to litigation, as discussed in “Summary — South Texas Asset Sale and Pro Forma Financial Information.”

Unaudited pro forma financial information

The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and do not purport to be indicative of the results of operations that would have actually occurred had the above described transaction occurred on the indicated date or that may be achieved in the future. The unaudited pro forma condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K for the year ended December 31, 2016, filed on March 16, 2017, and our Quarterly Report on Form 10-Q for the three months ended March 31, 2017, filed on May 10, 2017. Management believes the assumptions used in these unaudited pro forma financial statements provide a reasonable basis for presenting the effect of these transactions.

On June 12, 2017, at 5:00 P.M. Central Time, we effected a 1-for-15 reverse stock split of our issued, outstanding and treasury common shares, as well as reduced our authorized common shares from 780,000,000 common shares to 260,000,000 common shares. All share amounts of our common shares have been adjusted to give effect to the reverse share split. As these pro forma financial statements are based on our latest financial statements filed with the Securities and Exchange Commission in its Form 10-K and Form 10-Q, they do not reflect the impact of any other transactions occurring after March 31, 2017.

F-1

Pro forma balance sheet

The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2017 is based on our unaudited condensed consolidated balance sheet as of March 31, 2017. The pro forma condensed consolidated balance sheet gives effect to the divestiture of the South Texas properties and related adjustments as if it had occurred on March 31, 2017.

F-2

EXCO Resources, Inc.

Unaudited pro forma condensed consolidated balance sheet

As of March 31, 2017


(in thousands)	EXCO Resources, Inc. Consolidated			Pro forma adjustments			Pro forma EXCO Resources, Inc. Consolidated
Assets
Current assets:
Cash and cash equivalents	$	32,029		$	300,000	(a)	$	332,029
Restricted cash		15,595						15,595
Accounts receivable, net:
Oil and natural gas		32,323						32,323
Joint interest		20,435						20,435
Other		4,300						4,300
Derivative financial instruments — commodity derivatives		1,012						1,012
Inventory and other		7,131			(1,419	)(b)		5,712

Total current assets		112,825						411,406

Equity investments		24,682						24,682
Oil and natural gas properties (full cost accounting method):
Unproved oil and natural gas properties and development costs not being amortized		101,944			(1,562	)(c)		100,382
Proved developed and undeveloped oil and natural gas properties		2,953,279			(86,962	)(d)		2,866,317
Accumulated depletion		(2,713,447	)					(2,713,447	)

Oil and natural gas properties, net		341,776						253,252

Other property and equipment, net		23,405			(11,674	)(e)		11,731
Deferred financing costs, net		4,205						4,205
Derivative financial instruments — commodity derivatives		662						662
Goodwill		163,155			(47,578	)(f)		115,577

Total assets	$	670,710					$	821,515

Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and accrued liabilities		48,927						48,927
Revenues and royalties payable		105,995						105,995
Accrued interest payable		6,575						6,575
Current portion of asset retirement obligations		344						344
Income taxes payable		—						—
Derivative financial instruments — commodity derivatives		9,376			(215	)(g)		9,161
Current portion of long-term debt		50,000						50,000

Total current liabilities		221,217						221,002

Long-term debt		1,142,782						1,142,782
Deferred income taxes		3,830						3,830
Derivative financial instruments — commodity derivatives		—						—
Derivative financial instruments — common share warrants		155,136						155,136
Asset retirement obligations and other long-term liabilities		13,188			(3,342	)(h)		9,846
Commitments and contingencies		—						—
Shareholders’ equity:
Common shares, $0.001 par value; 260,000,000 authorized shares; 18,945,195 shares issued and 18,905,550 shares outstanding at March 31, 2017		19						19
Additional paid-in capital		3,536,350						3,536,350
Accumulated deficit		(4,394,180	)		154,362	(i)		(4,239,818	)
Treasury shares, at cost; 39,645 at March 31, 2017		(7,632	)					(7,632	)

Total shareholders’ equity		(865,443	)					(711,081	)

Total liabilities and shareholders’ equity	$	670,710					$	821,515

See accompanying notes.

F-3

EXCO Resources, Inc.

Notes to pro forma condensed consolidated balance sheet

As of March 31, 2017

(Unaudited)

(a)	Adjustment for cash proceeds of $300.0 million, excluding purchase price adjustments or transaction costs. The purchase price of $300.0 million is subject to customary closing conditions and adjustments based on an effective date of January 1, 2017.

(b)	Adjustment to eliminate inventory associated with the South Texas properties.

(c)	Adjustment to eliminate the carrying value of unproved oil and natural gas properties associated with the South Texas properties.

(d)

Adjustment to eliminate carrying value allocated to the proved oil and natural gas properties associated with the South Texas properties estimated based on the relative value of the assets sold and retained. The estimate was derived from the present value of estimated future net revenues from our proved reserves as of March 31, 2017 by applying the average price as prescribed by the SEC, less estimated future expenditures (based on current costs) to develop and produce the proved reserves, discounted at 10%.

(e)	Adjustment to eliminate the property and equipment associated with the South Texas properties that primarily consisted of surface acreage.

(f)	Adjustment to eliminate goodwill allocated to the South Texas properties based on the relative fair values of oil and natural gas properties sold to total estimated fair value of our total oil and natural gas properties, including unproved properties, as of March 31, 2017.

(g)

Adjustment to eliminate derivative financial instrument liabilities allocated to the South Texas properties. We do not designate our commodity derivative financial instruments as hedging instruments for financial accounting purposes and individual contracts were not specifically assigned to the South Texas properties. However, the South Texas properties represent predominantly all of our oil production and the contracts were originally entered into to mitigate the commodity price risk associated with the related production. Therefore, we believe it was reasonable to include a pro forma adjustment related to eliminate the impact of our oil derivative financial instruments.

(h)	Adjustment to eliminate the asset retirement obligation associated with the South Texas properties.

(i)	Adjustment to record the estimated gain on the sale of the South Texas properties as follows:


(in thousands)
Gross proceeds	$	300,000
Add: Transfer of asset retirement obligations and other liabilities		3,557
Less: Carrying value of properties sold		(101,617	)
Less: Carrying value of goodwill eliminated		(47,578	)

Gain on sale	$	154,362

F-4

Pro forma statements of operations

The following unaudited condensed consolidated pro forma financial information presents statements of operations for the three months ended March 31, 2017 is based on our unaudited condensed consolidated financial statements for the three months ended March 31, 2017 and the historical financial records related to the South Texas properties for the year ended March 31, 2017. The pro forma financial information gives effect to the divestiture of the South Texas properties as if it had occurred on January 1, 2017.

EXCO Resources, Inc.

Unaudited pro forma condensed consolidated statement of operations

Three months ended March 31, 2017


(in thousands)	EXCO Resources, Inc. Consolidated			Pro forma adjustments			Pro forma EXCO Resources, Inc. Consolidated
Revenues:
Oil and natural gas	$	69,356		$	(15,301	)(1)	$	54,055
Purchased natural gas and marketing		7,173						7,173

Total revenues		76,529						61,228

Costs and expenses:
Oil and natural gas operating costs		8,498			(2,873	)(1)		5,625
Production and ad valorem taxes		3,435			(1,390	)(1)		2,045
Gathering and transportation		27,353			(499	)(1)		26,854
Purchased natural gas		6,452						6,452
Depletion, depreciation and amortization		11,508			(1,115	)(2)		10,393
Impairment of oil and natural gas properties		—						—
Accretion of discount on asset retirement obligations		212			(64	)(3)		148
General and administrative		4,415						4,415
Other operating items		1,069						1,069

Total costs and expenses		62,942						57,001

Operating income		13,587						4,227
Other income (expense):
Interest expense, net		(19,952	)					(19,952	)
Gain on derivative financial instruments — commodity derivatives		15,533			775	(4)		16,308
Gain on derivative financial instruments — common share warrants		6,004						—
Loss on restructuring and extinguishment of debt		(6,272	)					(6,272	)
Other income (expense)		4			(143	)(5)		(139	)
Equity income		317						317

Total other expense		(4,366	)					(9,738	)

Income (loss) before income taxes		9,221						(5,511	)
Income tax expense		1,028						1,028

Net income (loss)	$	8,193					$	(6,539	)

See accompanying notes.

F-5

EXCO Resources, Inc.

Notes to pro forma condensed consolidated statements of operations

For the three months ended March 31, 2017

(Unaudited)

(1)	Pro forma adjustment to eliminate oil and natural gas revenues and direct operating expenses attributable to the South Texas properties.

(2)	Pro forma adjustment to eliminate depletion expense based upon our historical consolidated depletion rate applied to production attributable to the South Texas properties.

(3)	Pro forma adjustment to eliminate accretion of discount on asset retirement obligations attributable to the South Texas properties.

(4)

Pro forma adjustment to eliminate the gain on derivative financial instruments allocated to the South Texas properties. We do not designate our commodity derivative financial instruments as hedging instruments for financial accounting purposes and individual contracts were not specifically assigned to the South Texas properties. However, the South Texas properties represent predominantly all of our oil production and the contracts were originally entered into to mitigate the commodity price risk associated with the related production. Therefore, we believe it was reasonable to include a pro forma adjustment related to eliminate the impact of our oil derivative financial instruments.

(5)	Pro forma adjustment to eliminate other income attributable to the South Texas properties.

F-6

Pro forma statements of operations

The following unaudited condensed consolidated pro forma financial information presents statements of operations for the year ended December 31, 2016 is based on our audited consolidated financial statements for the year ended December 31, 2016 and the historical financial records related to the South Texas properties for the year ended December 31, 2016. The pro forma financial information gives effect to the divestiture of the South Texas properties as if it had occurred on January 1, 2016.

EXCO Resources, Inc.

Unaudited pro forma condensed consolidated statement of operations

Year ended December 31, 2016


(in thousands)	EXCO Resources, Inc. Consolidated			Pro forma adjustments			Pro forma EXCO Resources, Inc. Consolidated
Revenues:
Oil and natural gas	$	248,649		$	(58,701	)(1)	$	189,948
Purchased natural gas and marketing		22,352						22,352

Total revenues		271,001						212,300

Costs and expenses:
Oil and natural gas operating costs		34,609			(11,573	)(1)		23,036
Production and ad valorem taxes		15,380			(5,391	)(1)		9,989
Gathering and transportation		106,460			(2,725	)(1)		103,735
Purchased natural gas		23,557						23,557
Depletion, depreciation and amortization		75,982			(7,778	)(2)		68,204
Impairment of oil and natural gas properties		160,813			(68,166	)(3)		92,647
Accretion of discount on asset retirement obligations		2,210			(236	)(4)		1,974
General and administrative		48,700						48,700
Other operating items		24,239						24,239

Total costs and expenses		491,950						396,081

Operating loss		(220,949	)					(183,781	)
Other income (expense):
Interest expense, net		(70,438	)					(70,438	)
Loss on derivative financial instruments		(34,137	)		(3,322	)(5)		(37,459	)
Gain on extinguishment of debt		119,457						119,457
Other income (expense)		43			(185	)(6)		(142	)
Equity loss		(16,432	)					(16,432	)

Total other expense		(1,507	)					(5,014	)

Loss before income taxes		(222,456	)					(188,795	)
Income tax expense		2,802						2,802

Net loss	$	(225,258	)				$	(191,597	)

See accompanying notes.

F-7

EXCO Resources, Inc.

Notes to pro forma condensed consolidated statements of operations

For the year ended December 31, 2016

(Unaudited)

(1)	Pro forma adjustment to eliminate oil and natural gas revenues and direct operating expenses attributable to the South Texas properties.

(2)	Pro forma adjustment to eliminate depletion expense based upon our historical consolidated depletion rate applied to production attributable to the South Texas properties.

(3)

Pro forma adjustment to eliminate the estimated impairment of proved oil and natural gas properties resulting from the full cost pool ceiling limitation tests allocated to the South Texas properties based on the relative value of the assets sold and retained. The estimate was derived from the present value of estimated future net revenues from our proved reserves by applying the average price as prescribed by the SEC, less estimated future expenditures (based on current costs) to develop and produce the proved reserves, discounted at 10%.

(4)	Pro forma adjustment to eliminate accretion of discount on asset retirement obligations attributable to the South Texas properties.

(5)

(6)	Pro forma adjustment to eliminate other income attributable to the South Texas properties.

F-8

72,694,293 Shares

LOGO

EXCO Resources, Inc.

Common Shares

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution.

The following table sets forth the expenses in connection with this registration statement. All of the amounts shown are estimates, except for the Securities and Exchange Commission, or the SEC, registration fee.


SEC registration fee	$	15,502
Printing and engraving expenses		3,000	*
Accounting fees and expenses		20,000	*
Engineering fees and expenses		3,000	*
Legal fees and expenses		50,000	*
Miscellaneous expenses		5,000	*

Total		96,502	*

Estimate.

Item 15. Indemnification of Directors and Officers.

EXCO Resources, Inc.

Article XIV of our amended and restated certificate of formation, as amended, provides that to the fullest extent permitted by Texas law, our directors will have no personal liability to us or our shareholders for any acts or omissions in the director’s performance of his or her duties as a director. Section 7.001 of the TBOC permits a Texas corporation to limit the personal liability of its directors to such corporation or its shareholders for monetary damages for any act or omission in a director’s capacity as director, except for liability for any of the following:

(i)

A breach of the director’s duty of loyalty to us or our shareholders;

(ii)

An act or omission not in good faith that constitutes a breach of duty of the director to us or an act or omission that involves intentional misconduct or knowing violation of law;

(iii)

A transaction from which the director received an improper benefit, regardless of whether the benefit resulted from an action taken within the scope of the director’s duties; or

(iv)

An act or omission for which the liability of a director is expressly provided by an applicable statute.

Article XIV further provides that if Texas law is amended to authorize further elimination of the personal liability of directors for or with respect to any acts or omissions in the performance of their duties as directors, then the liability of a director shall be eliminated to the fullest extent permitted by Texas law, as so amended. Any repeal or modification of Article XIV by our shareholders will not adversely affect any right or protection of a director existing immediately prior to such repeal or modification.

Article XIII of our amended and restated certificate of formation, as amended, and Article VI of our third amended and restated bylaws provide that we must indemnify our directors and officers to the fullest extent permitted by Texas law. Our third amended and restated bylaws further provide that we must pay or reimburse reasonable expenses incurred by one of our directors or officers who was, is or is threatened to be made a named defendant or respondent in a proceeding to the maximum extent permitted under Texas law.

Under Sections 8.101, 8.102 and 8.103 of the TBOC, subject to the procedures and limitations stated therein, a Texas corporation may indemnify a director who was, is or is threatened to be made a respondent in a

II-1

proceeding against a judgment and reasonable expenses actually incurred by the person in connection with the proceeding if it is determined that the person seeking indemnification:

(i)

acted in good faith;

(ii)

reasonably believed that his or her conduct was in or was not opposed to our best interests; and

(iii)

in the case of a criminal proceeding, did not have a reasonable cause to believe his or her conduct was unlawful.

Under Section 8.105 of the TBOC, a Texas corporation may indemnify an officer as provided by its governing documents, by action of its board of directors, by action of its shareholders, by contract or by common law.

Sections 8.051 and 8.105 of the TBOC require a Texas corporation to indemnify a director, former director or officer against reasonable expenses actually incurred by the director, former director or officer in connection with a proceeding in which the director, former director or officer is a respondent because the director, former director or officer is or was in that position if the director, former director or officer has been wholly successful, on the merits or otherwise, in the defense of the proceeding.

The TBOC prohibits a Texas corporation from indemnifying a director in respect of a proceeding in which the director is found liable to the corporation or is found liable because a personal benefit was improperly received by him or her, other than for reasonable expenses actually incurred by him or her in connection with the proceeding, not including a judgment, penalty, fine or tax. The TBOC prohibits a Texas corporation entirely from indemnifying a director in respect of any such proceeding in which the director is found liable for willful or intentional misconduct in the performance of his or her duties to the corporation, breach of the duty of loyalty to the corporation or an act or omission not committed in good faith that constitutes a breach of a duty owed by the director to the corporation.

Under Sections 8.052 and 8.105 of the TBOC, a court may order a Texas corporation to indemnify a director, former director or officer if the court determines that the director, former director or officer is fairly and reasonably entitled to indemnification in view of all the relevant circumstances. If, however, the director, former director or officer is found liable to the corporation or is found liable on the basis that a personal benefit was improperly received by him or her, the indemnification will be limited to reasonable expenses actually incurred by him or her in connection with the proceeding.

Insurance and indemnification agreements

We maintain insurance for our officers and directors against certain liabilities, including liabilities under the Securities Act and the Exchange Act, the premiums of which we pay. The effect of these policies is to indemnify any of our officers and directors against expenses, judgments, attorney’s fees and other amounts paid in settlements incurred by an officer or director upon a determination that such person acted in good faith.

Item 16. Exhibits.

A list of exhibits filed herewith is contained in the Exhibit Index that immediately precedes such exhibits and is incorporated by reference herein.

Item 17. Undertakings.

(a)

The undersigned registrant hereby undertakes:

(1)

To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement,

(i)

To include any prospectus required by Section 10(a)(3) of the Securities Act;

II-2

(ii)

To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

(iii)

To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;

provided, however, that the undertakings set forth in paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) above do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the SEC by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement, or is contained in a form of prospectus filed pursuant to Rule 424(b) that is part of the registration statement.

(2)

That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3)

To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(4)

That, for the purpose of determining liability under the Securities Act to any purchaser:

(i)

Each prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and

(ii)

Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for the purpose of providing the information required by Section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however , that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date.

II-3

(5)

That, for the purpose of determining liability of the registrant under the Securities Act to any purchaser in the initial distribution of the securities:

The undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)

Any preliminary prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424;

(ii)

Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;

(iii)

The portion of any other free writing prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and

(iv)

Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

(b)

The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of the registrant’s annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c)

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

II-4

Signatures

Pursuant to the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, State of Texas, on August 2, 2017.


EXCO RESOURCES, INC.

By:	/s/ Harold L. Hickey
	Name:	Harold L. Hickey
	Title:	Chief Executive Officer and President

Power of Attorney

Each person whose signature appears below constitutes and appoints Harold L. Hickey, Tyler S. Farquharson and Heather L. Lamparter, severally, each with full power to act alone and without the others, his true and lawful attorney-in-fact, with full power of substitution, and with the authority to execute in the name of each such person, any and all amendments (including without limitation, post-effective amendments) to this registration statement, to sign any and all additional registration statements relating to the same offering of securities as this registration statement that are filed pursuant to Rule 462(b) of the Securities Act, and to file such registration statements with the SEC, together with any exhibits thereto and other documents therewith, necessary or advisable to enable the registrant to comply with the Securities Act, and any rules, regulations and requirements of the SEC in respect thereof, which amendments may make such other changes in the registration statement as the aforesaid attorney-in-fact executing the same deems appropriate.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date

/s/ Harold L. Hickey Harold L. Hickey	Chief Executive Officer and President (Principal Executive Officer)	August 2, 2017

/s/ Tyler S. Farquharson Tyler S. Farquharson	Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)	August 2, 2017

/s/ Brian N. Gaebe Brian N. Gaebe	Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)	August 2, 2017

/s/ C. John Wilder C. John Wilder	Executive Chairman and Director	August 2, 2017

/s/ B. James Ford B. James Ford	Director	August 2, 2017

/s/ Anthony R. Horton Anthony R. Horton	Director	August 2, 2017

/s/ Randall E. King Randall E. King	Director	August 2, 2017


Signature	Title	Date

/s/ Samuel A. Mitchell Samuel A. Mitchell	Director	August 2, 2017

/s/ Robert L. Stillwell Robert L. Stillwell	Director	August 2, 2017

/s/ Stephen J. Toy Stephen J. Toy	Director	August 2, 2017

EXHIBIT INDEX


Exhibit No.		Exhibit Description

*#2.1		Purchase and Sale Agreement, dated as of April 7, 2017, by and among EXCO Operating Company, LP, EXCO Land Company LLC and VOG Palo Verde LP.

*#2.2		First Amendment to Purchase and Sale Agreement, dated as of May 31, 2017, by and among EXCO Operating Company, LP, EXCO Land Company LLC and VOG Palo Verde LP.

*#2.3		Second Amendment to Purchase and Sale Agreement, dated as of June 20, 2017, by and among EXCO Operating Company, LP, EXCO Land Company LLC and VOG Palo Verde LP.

*4.1		Amended and Restated Certificate of Formation of EXCO Resources, Inc., as amended through June 2, 2017.

4.2		Third Amended and Restated Bylaws of EXCO Resources, Inc., filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated September 8, 2015 and filed on September 9, 2015 and incorporated by reference herein.

4.3		Indenture, dated September 15, 2010, by and between EXCO Resources, Inc. and Wilmington Trust Company, as trustee, filed as an Exhibit to EXCO’s Current Report on Form 8-K (File No. 001-32743), dated September 10, 2010 and filed on September 15, 2010 and incorporated by reference herein.

4.4		First Supplemental Indenture, dated September 15, 2010, by and among EXCO Resources, Inc., certain of its subsidiaries and Wilmington Trust Company, as trustee, including the form of 7.500% Senior Notes due 2018, filed as an Exhibit to EXCO’s Current Report on Form 8-K (File No. 001-32743), dated September 10, 2010 and filed on September 15, 2010 and incorporated by reference herein.

4.5		Second Supplemental Indenture, dated as of February 12, 2013, by and among EXCO Resources, Inc., EXCO/HGI JV Assets, LLC, EXCO Holding MLP, Inc. and Wilmington Trust Company, as trustee, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated February 12, 2013 and filed on February 19, 2013 and incorporated by reference herein.

4.6		Third Supplemental Indenture, dated April 16, 2014, by and among EXCO Resources, Inc., certain of its subsidiaries and Wilmington Trust Company, as trustee, including the form of 8.500% Senior Notes due 2022, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated April 11, 2014 and filed on April 16, 2014 and incorporated by reference herein.

4.7		Fourth Supplemental Indenture, dated May 12, 2014, by and among EXCO Resources, Inc., EXCO Land Company, LLC and Wilmington Trust Company, as trustee, filed as an Exhibit to EXCO’s Quarterly Report on Form 10-Q for the Quarter Ended June 30, 2014 and filed on July 30, 2014 and incorporated by reference herein.

4.8		Fifth Supplemental Indenture, dated November 24, 2015, by and among EXCO Resources, Inc., certain of its subsidiaries, and Wilmington Trust Company, as trustee, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated November 24, 2015 and filed on November 25, 2015 and incorporated by reference herein.

4.9		Sixth Supplemental Indenture, dated August 9, 2016, by and among EXCO Resources, Inc., certain of its subsidiaries, and Wilmington Trust Company, as trustee, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated August 9, 2016 and filed on August 10, 2016 and incorporated by reference herein.

4.10		Specimen Stock Certificate for EXCO’s common stock, filed as an Exhibit to EXCO’s Registration Statement on Form S-3, filed on December 17, 2013 and incorporated by reference herein.


Exhibit No.		Exhibit Description

4.11		First Amended and Restated Registration Rights Agreement dated as of December 30, 2005, by and among EXCO Holdings Inc. and the Initial Holders (as defined therein), filed as an Exhibit to EXCO’s Amendment No. 1 to its Registration Statement on Form S-l (File No. 333-129935), filed on January 6, 2006 and incorporated by reference herein.

4.12		Registration Rights Agreement, dated March 28, 2007, by and among EXCO Resources, Inc. and the other parties thereto with respect to the 7.0% Cumulative Convertible Perpetual Preferred Stock and the Hybrid Preferred Stock, filed as an Exhibit to EXCO’s Current Report on Form 8-K (File No. 001-32743) dated March 28, 2007 and filed on April 2, 2007 and incorporated by reference herein.

4.13		Registration Rights Agreement, dated March 28, 2007, by and among EXCO Resources, Inc. and the other parties thereto with respect to the Hybrid Preferred Stock, filed as an Exhibit to EXCO’s Current Report on Form 8-K (File No. 001-32743) dated March 28, 2007 and filed on April 2, 2007 and incorporated by reference herein.

4.14		Joinder Agreement to Registration Rights Agreement, dated January 17, 2014, by and among EXCO Resources, Inc. and WLR IV Exco AIV One, L.P., WLR IV Exco AIV Two, L.P., WLR IV Exco AIV Three, L.P., WLR IV Exco AIV Four, L.P., WLR IV Exco AIV Five, L.P., WLR IV Exco AIV Six, L.P., WLR Select Co-Investment XCO AIV, L.P., WLR/GS Master Co-Investment XCO AIV, L.P. and WLR IV Parallel ESC, L.P, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated January 17, 2014 and filed on January 21, 2014 and incorporated by reference herein.

4.15		Joinder Agreement to Registration Rights Agreement, dated January 17, 2014, by and among EXCO Resources, Inc. and Advent Syndicate 780, Clearwater Insurance Company, Northbridge General Insurance Company, Odyssey Reinsurance Company, Clearwater Select Insurance Company, Riverstone Insurance Limited, Zenith Insurance Company and Fairfax Master Trust Fund, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated January 17, 2014 and filed on January 21, 2014 and incorporated by reference herein.

4.16		Warrant, dated as of March 31, 2015, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 31, 2015 and filed on April 2, 2015 and incorporated by reference herein.

4.17		Warrant, dated as of March 31, 2015, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 31, 2015 and filed on April 2, 2015 and incorporated by reference herein.

4.18		Warrant, dated as of March 31, 2015, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 31, 2015 and filed on April 2, 2015 and incorporated by reference herein.

4.19		Warrant, dated as of March 31, 2015, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 31, 2015 and filed on April 2, 2015 and incorporated by reference herein.

4.20		Registration Rights Agreement, dated as of April 21, 2015, by and between EXCO Resources, Inc. and Energy Strategic Advisory Services LLC, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated April 21, 2015 and filed on April 27, 2015 and incorporated by reference herein.

4.21		Indenture, dated as of March 15, 2017, by and among EXCO Resources, Inc., as issuer, certain of its subsidiaries, as guarantors, and Wilmington Trust, National Association, as trustee and collateral trustee, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 15, 2017 and filed on March 15, 2017 and incorporated by reference herein.

4.22		1.75 Lien Term Loan Credit Agreement, dated as of March 15, 2017, by and among EXCO Resources, Inc., as borrower, certain subsidiaries of borrower, as guarantors, the lenders party thereto, and Wilmington Trust, National Association, as administrative agent and collateral trustee, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 15, 2017 and filed on March 15, 2017 and incorporated by reference herein.


Exhibit No.		Exhibit Description

4.23		Form of Financing Warrant, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 15, 2017 and filed on March 15, 2017 and incorporated by reference herein.

4.24		Form of Commitment Fee Warrant, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 15, 2017 and filed on March 15, 2017 and incorporated by reference herein.

4.25		Form of Amendment Fee Warrant, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 15, 2017 and filed on March 15, 2017 and incorporated by reference herein.

4.26		Registration Rights Agreement, dated as of March 15, 2017, by and among EXCO Resources, Inc. and the investors specified on the signatures thereto, filed as an Exhibit to EXCO’s Current Report on Form 8-K, dated March 15, 2017 and filed on March 15, 2017 and incorporated by reference herein.

*5.1		Opinion of Haynes and Boone, LLP.

*23.1		Consent of KPMG LLP.

*23.2		Consent of Lee Keeling and Associates, Inc.

*23.3		Consent of Netherland, Sewell & Associates, Inc.

*23.4		Consent of Ryder Scott Company, L.P.

*23.5		Consent of Haynes and Boone, LLP (included in the opinion filed as Exhibit 5.1).

*24.1		Powers of Attorney (included on the signature page hereto).

*	Filed herewith.

#	Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. EXCO Resources, Inc. hereby undertakes to furnish supplementally copies of any of the omitted schedules and exhibits upon request by the Securities and Exchange Commission.

Exhibit 2.1

Execution Version

PURCHASE AND SALE AGREEMENT

by and among

EXCO OPERATING COMPANY, LP

and

EXCO LAND COMPANY, LLC

as Seller

and

VOG PALO VERDE LP

as Buyer

dated

April 7, 2017

TABLE OF CONTENTS


			Page
ARTICLE I DEFINITIONS AND INTERPRETATION				1

	1.1	Defined Terms		1
	1.2	References and Rules of Construction		22

ARTICLE II PURCHASE AND SALE				23

	2.1	Purchase and Sale		23
	2.2	Excluded Assets		23
	2.3	Revenues and Expenses		23
	2.4	Closing		24
	2.5	Place of Closing		24
	2.6	Closing Obligations		24

ARTICLE III PURCHASE PRICE				25

	3.1	Purchase Price		25
	3.2	Deposit		25
	3.3	Adjustments to Purchase Price		26
	3.4	Preliminary Settlement Statement		27
	3.5	Final Settlement Statement		28
	3.6	Disputes		28
	3.7	Allocation of Purchase Price; Allocated Values		29
	3.8	Allocation of Consideration for Tax Purposes		29

ARTICLE IV CONDITIONS TO CLOSING				30

	4.1	Joint Conditions to Closing		30
	4.2	Buyer’s Conditions to Closing		31
	4.3	Seller’s Conditions to Closing		31

ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER				32

	5.1	Organization, Existence and Qualification		32
	5.2	Authority, Approval and Enforceability		32
	5.3	No Conflicts		33
	5.4	Foreign Person		33
	5.5	Litigation		33
	5.6	Material Contracts		33
	5.7	No Violation of Laws		34
	5.8	Consents		35
	5.9	Preferential Purchase Rights		35
	5.10	Burdens		35
	5.11	Imbalances		35
	5.12	Current Commitments		35
	5.13	Asset Taxes		35
	5.14	Brokers’ Fees		36

TABLE OF CONTENTS


			Page
	5.15	Suspense Funds		36
	5.16	Advance Payments		36
	5.17	Environmental		36
	5.18	Employees		37
	5.19	Wells; Plug and Abandon Notice		37
	5.20	Non-Consent Operations		37
	5.21	Permits		38
	5.22	Payouts		38
	5.23	Bankruptcy; Solvency		38

ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER				38

	6.1	Organization, Existence and Qualification		38
	6.2	Authority, Approval and Enforceability		39
	6.3	No Conflicts		39
	6.4	Consents		39
	6.5	Litigation		39
	6.6	Financing		39
	6.7	Regulatory		40
	6.8	Independent Evaluation		40
	6.9	Brokers’ Fees		40
	6.10	Accredited Investor		40

ARTICLE VII COVENANTS				40

	7.1	Conduct of Business		40
	7.2	HSR Act		43
	7.3	Governmental Bonds		43
	7.4	Record Retention		43
	7.5	Amendment of Schedules		43
	7.6	Non-Solicitation; No-Hire		44
	7.7	Employee Matters		44
	7.8	Successor Operator		45
	7.9	Records		45
	7.10	Confidentiality		45
	7.11	Marketing Process Records		46
	7.12	Release of Escrow Amount		46
	7.13	Financing Cooperation		47
	7.14	Financing Statements and Cooperation		48
	7.15	Transition Services Agreement		49
	7.16	NAESB		49

ARTICLE VIII ACCESS; DISCLAIMERS				49

	8.1	Access		49
	8.2	Disclaimers		51

TABLE OF CONTENTS


			Page
ARTICLE IX TITLE MATTERS; CASUALTY; TRANSFER RESTRICTIONS				53

	9.1	Seller’s Title		53
	9.2	Notice of Title Defects; Defect Adjustments		53
	9.3	Casualty Loss		61
	9.4	Consents to Assign; Preferential Purchase Rights		61

ARTICLE X ENVIRONMENTAL MATTERS				63

	10.1	Notice of Environmental Defects		63
	10.2	NORM		66

ARTICLE XI TERMINATION; DEFAULT AND REMEDIES				66

	11.1	Right of Termination		66
	11.2	Effect of Termination		67
	11.3	Return of Documentation and Confidentiality		68

ARTICLE XII ASSUMPTION; INDEMNIFICATION; SURVIVAL				68

	12.1	Assumption by Buyer		68
	12.2	Indemnities of Seller		69
	12.3	Indemnities of Buyer		70
	12.4	Limitation on Liability		70
	12.5	Express Negligence		71
	12.6	Exclusive Remedy		71
	12.7	Indemnification Procedures		71
	12.8	Survival		73
	12.9	Waiver of Right to Rescission		74
	12.10	Insurance		74
	12.11	Non-Compensatory Damages		74

ARTICLE XIII MISCELLANEOUS				75

	13.1	Exhibits and Schedules		75
	13.2	Expenses		75
	13.3	Taxes		75
	13.4	Assignment		76
	13.5	Preparation of Agreement		77
	13.6	Publicity		77
	13.7	Notices		77
	13.8	Further Cooperation		78
	13.9	Filings, Notices and Certain Governmental Approvals		79
	13.10	Entire Agreement; Conflicts		79
	13.11	Parties in Interest		79
	13.12	Amendment		80
	13.13	Waiver; Rights Cumulative		80

iii

TABLE OF CONTENTS


		Page
13.14	Conflict of Law Jurisdiction, Venue; Jury Waiver		80
13.15	Severability		81
13.16	Removal of Name; Utilities		81
13.17	Counterparts		81
13.18	Time is of the Essence		81
13.19	No Recourse		81
13.20	Waiver of Claims Against Debt Financing Sources		82

LIST OF EXHIBITS AND SCHEDULES


EXHIBITS:
Exhibit A-1(a)	—	Eagle Ford Leases
Exhibit A-1(b)	—	Austin Chalk Leases
Exhibit A-1(c)	—	Buda Leases
Exhibit A-1(d)	—	Fee Minerals
Exhibit A-2	—	Wells
Exhibit A-3	—	Field Offices and Surface Interests
Exhibit A-4	—	Target Area
Exhibit B	—	Excluded Assets
Exhibit C-1	—	Form of Assignment
Exhibit C-2	—	Form of Assignment and Assumption Agreement
Exhibit D	—	Form of Non-Foreign Affidavit
Exhibit E-1	—	Form of Seller Certificate
Exhibit E-2	—	Form of Buyer Certificate
Exhibit F	—	[Reserved]
Exhibit G	—	Form of Defects Escrow Agreement
Exhibit H	—	Transferred Cores
Exhibit I	—	Form of Consent


SCHEDULES:
Schedule 1.1(a)	—	Seller Knowledge Persons
Schedule 1.1(b)	—	Environmental Defects
Schedule 1.1(c)	—	Raider Contracts
Schedule 1.1(d)	—	Certain Definitions
Schedule 5.5	—	Litigation
Schedule 5.6(a)	—	Material Contracts
Schedule 5.6(b)	—	Material Contract Matters
Schedule 5.7	—	Violation of Laws
Schedule 5.8(a)	—	Consents
Schedule 5.8(b)	—	Subject Consents
Schedule 5.10	—	Burdens
Schedule 5.11	—	Imbalances
Schedule 5.12	—	Current Commitments
Schedule 5.13	—	Asset Taxes
Schedule 5.15	—	Suspense Funds
Schedule 5.17	—	Environmental
Schedule 5.18(c)	—	Employee Benefit Plans
Schedule 5.19	—	Wells; Plug and Abandon Notice
Schedule 5.21	—	Permits
Schedule 5.22	—	Payouts
Schedule 7.1	—	Conduct of Business
Schedule 7.3	—	Bonds
Schedule 7.13	—	Asset Information
Schedule 12.7(g)	—	Indemnification Procedures

PURCHASE AND SALE AGREEMENT

This PURCHASE AND SALE AGREEMENT (this “ Agreement ”) is executed as of April 7, 2017 (the “ Execution Date ”), by and among EXCO OPERATING COMPANY, LP, a Delaware limited partnership (“ EOC ”), EXCO LAND COMPANY, LLC, a Delaware limited liability company (“ EXCO Land ” and together with EOC, “ Seller ”), and VOG PALO VERDE LP, a Delaware limited partnership (“ Buyer ”). Seller and Buyer are each a “ Party ”, and collectively the “ Parties ”.

RECITALS

Seller desires to sell and assign, and Buyer desires to purchase and pay for, the Assets (as hereinafter defined).

NOW, THEREFORE , for and in consideration of the mutual promises contained herein, the benefits to be derived by each Party hereunder, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows:

ARTICLE I

DEFINITIONS AND INTERPRETATION

1.1 Defined Terms . Capitalized terms used herein shall have the meanings set forth in this Section 1.1 , unless the context otherwise requires.

“ Accounting Arbitrator ” shall have the meaning set forth in Section 3.6 .

“ Adjusted Purchase Price ” shall have the meaning set forth in Section 3.3 .

“ AFE ” shall have the meaning set forth in Section 5.12 .

“ Affiliate ” shall mean any Person that, directly or indirectly, through one or more intermediaries, controls, is controlled by or is under common control with, another Person. The term “ control ” and its derivatives with respect to any Person shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“ Agreement ” shall have the meaning set forth in the introductory paragraph herein.

“ Allocable Amount ” shall have the meaning set forth in Section 3.8.

“ Allocated Value ” shall have the meaning set forth in Section 3.7 .

“ Allocation Schedule ” shall have the meaning set forth in Section 3.8.

“ Applicable Contracts ” shall mean all Contracts (a) to which any party constituting Seller is a party (or is a successor or assign of a party), (b) that pertain to any of the Assets and (c) that shall be binding on Buyer after the Effective Time, but (for the avoidance of doubt)

exclusive of any (x) master service agreements, (y) blanket agreements or (z) similar Contracts that do not relate exclusively to the ownership or operation of the Assets, which in the case of (x), (y), and (z) shall not be binding on Buyer after the Effective Time.

“ Arbitration Notice ” shall have the meaning set forth in Section 4.1(b) .

“ Asset Taxes ” shall mean ad valorem, property, excise, sales, use, severance, production or similar Taxes (including any interest, fine, penalty or additions to Tax imposed by a Governmental Authority in connection with such Taxes) based upon operation or ownership of the Assets or the production of Hydrocarbons therefrom but excluding, for the avoidance of doubt, (a) income, capital gains, franchise Taxes and similar Taxes, and (b) Transfer Taxes.

“ Assets ” shall mean all of Seller’s right, title and interest in and to the following, excluding the Excluded Assets:

(a) all Hydrocarbon leases and oil, gas and mineral leases, subleases, overriding royalty interests, production payments, working interests, net profits interest and other leasehold interests, whether producing or non-producing located in the Target Area, including those as set forth in Exhibit A-1(a), Exhibit A-1(b) , and Exhibit A-1(c) (the “ Leases ”);

(b) all fee minerals, lessor royalties, and other rights to Hydrocarbons in place located in the Target Area, including those as set forth in Exhibit A-1(d) (the “ Fee Minerals ”);

(c) all wells (including all oil, gas, water, CO2, disposal or injection wells) located upon the Leases, Fee Minerals or Units or otherwise used in connection with the ownership or operation of the Assets, including the wells as set forth in Exhibit A-2 (the “ Wells ”);

(d) all presently existing unitization, pooling and/or communitization agreements, declarations or designations and statutorily, judicially or administratively created drilling, spacing and/or production units, whether recorded or unrecorded, insofar as the same are attributable or allocated to the Leases and/or Fee Minerals, and all of Seller’s interest in and to the properties covered or units created thereby which are attributable to the Leases and/or Fee Minerals (such interest in such properties or units, collectively, the “ Units ”);

(e) other than the surface fee interests described in clause (f) below, all easements, surface leases, permits, licenses, servitudes, rights of way, surface use agreements and all other rights and appurtenances situated on or used in connection with the Leases, Fee Minerals, Wells, Units, and/or Personal Property but excluding the Permits (the “ Easements ”);

(f) the field offices set forth in Exhibit A-3 and the surface fee interests set forth in Exhibit A-3 (the “ Surface Interests ”);

(g) all tangible personal property, equipment, fixtures and improvements, including all injection wells, salt water disposal facilities, gathering systems, well heads, flow lines, casing, tubing, pumps, motors, gauges, valves, heaters, treaters, water lines, vessels, tanks, tank batteries, boilers, separators, treating equipment, compressors, SCADA and wellhead communication systems hardware located on the Leases, Fee Minerals, Units, Easements and/or

Surface Interests, other equipment, automation systems including meters and related telemetry on wells, power lines, telephone and communication lines and other appurtenances owned in connection with the production, gathering, treating, storing, transportation or marketing of Hydrocarbons from the Wells, in each case, to the extent relating to the ownership or operation of the other Assets (the “ Personal Property ”);

(h) all Applicable Contracts, including those Contracts as set forth in Schedule 5.6(a) ;

(i) subject to Section 3.3 , all Hydrocarbons in, on, under or produced from the Leases, Fee Minerals and/or any Unit from and after the Effective Time and the proceeds thereof;

(j) to the extent assignable, all Permits directly relating to the ownership or operation of the other Assets ( provided that Seller will cooperate in good faith with Buyer’s efforts to obtain any consent required to assign the Permits to Buyer);

(k) all rights, benefits and obligations arising from or in connection with any Imbalances as of the Effective Time;

(l) to the extent assignable (i) without payment of fees or other penalties to any Third Party under any Contract (unless Buyer has separately agreed in writing to pay such fee or other penalty) and (ii) with consent obtained by Buyer ( provided that Seller will cooperate in good faith with Buyer’s efforts to obtain any such consent to assign), if required, all geophysical and other seismic and related technical data and information relating to the Assets;

(m) the cores described on Exhibit H and the related Contracts described on Exhibit H ;

(n) to the extent assignable, all rights, claims and causes of action (including all rights of indemnity recovery, set-off and/or refunds) of Seller and/or its Affiliates to the extent, and only to the extent, that such rights, claims or causes of action relate to the Assumed Obligations; and

(o) the Records.

“ Assigned CHK NAESB ” shall have the meaning set forth in Section 7.16 .

“ Assignment ” shall mean the Assignment and Bill of Sale from Seller to Buyer pertaining to the Assets and substantially in the form of Exhibit C-1 .

“ Assignment and Assumption Agreement ” shall mean the Assignment and Assumption Agreement assigning the Raider Contracts from Raider Marketing, LP, a Texas limited partnership, to Buyer and substantially in the form of Exhibit C-2 .

“ Assumed Obligations ” shall have the meaning set forth in Section 12.1 .

“ Austin Chalk Formation ” shall mean from the stratigraphic equivalent of the top of the Austin Chalk Formation at a measured depth of 4,953’ to the base of the Austin Chalk Formation at a measured depth of 5,508’ as measured in the Gamma Ray Log dated February 13, 2010 of the EXCO Resources operated TRAYLOR NORTH 1H (42-507-32746) located in Zavala County, Texas.

“ Buda Formation ” shall mean from the stratigraphic equivalent of the top of the Buda Formation at a measured depth of 5,745’ to the base of the Buda Formation at a measured depth of 5,860’ as measured in the Gamma Ray Log dated February 13, 2010 of the EXCO Resources operated TRAYLOR NORTH 1H (42-507-32746) located in Zavala County, Texas.

“ Burdens ” shall mean royalties (including lessor royalties), overriding royalties, production payments, net profits interests and other similar burdens upon, measured by or payable out of production.

“ Business Day ” shall mean a day (other than a Saturday or Sunday) on which commercial banks in Texas are generally open for business.

“ Business Employee ” shall have the meaning set forth in Section 5.18(a).

“ Buyer ” shall have the meaning set forth in the introductory paragraph of this Agreement.

“ Buyer Indemnified Parties ” shall have the meaning set forth in Section 12.2 .

“ Buyer’s Representatives ” shall have the meaning set forth in Section 8.1(a) .

“ Casualty Loss ” shall have the meaning set forth in Section 9.3(b) .

“ CEMI ” shall have the meaning set forth in Section 7.16.

“ CHK NAESB ” shall mean that certain Gas Sales and Purchase Base Contract, dated September 1, 2009, by and between CEMI and EOC, as amended .

“ Claim ” shall have the meaning set forth in Section 12.7(b) .

“ Claim Notice ” shall have the meaning set forth in Section 12.7(b) .

“ Closing ” shall have the meaning set forth in Section 2.4.

“ Closing Adjusted Purchase Price ” shall mean the Purchase Price as adjusted pursuant to Section 3.3.

“ Closing Date ” shall have the meaning set forth in Section 2.4 .

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“ Confidentiality Agreement ” shall mean that certain Confidentiality Agreement, dated as of January 5, 2017, by and between Venado Oil & Gas, LLC and EXCO Resources, Inc.

“ Consent Form ” shall have the meaning set forth in Section 9.4(a) .

“ Contract ” shall mean any: contract; agreement; agreement regarding indebtedness; indenture; debenture; note, bond or loan; collective bargaining agreement; mortgage; license agreement; farmin and/or farmout agreement; participation, exploration or development agreement; crude oil, condensate or natural gas purchase and sale, gathering, processing, transportation or marketing agreement; operating agreement; balancing agreement; unitization agreement; facilities or equipment lease; production handling agreement; or other similar contract, but in each case specifically excluding, however, any Lease, Fee Mineral, Easement, Permit, or other instrument creating, assigning or evidencing an interest in any Asset or any real property related to or used or held for use in connection with the operation of any Asset.

“ Crude Purchase Agreements ” shall mean each of (a) that certain Purchase Agreement, dated as of August 1, 2016, by and between Flint Hills Resources, LP and EOC, as amended, and (b) that certain Crude Oil Purchase Contract, dated July 31, 2013, by and between EOC and Chesapeake Energy Marketing, L.L.C. (f/k/a Chesapeake Energy Marketing, Inc.), as amended.

“ Cure Period ” shall have the meaning set forth in Section 9.2(c)(i) .

“ Customary Post-Closing Consents ” shall mean the consents and approvals from Governmental Authorities for the assignment of the Assets to Buyer that are customarily obtained after such assignment of properties similar to the Assets.

“ Defect Claim Date ” shall mean May 19, 2017.

“ Defect Deductible ” shall mean 2% of the amount equal to (a) the unadjusted Purchase Price, less (b) the Allocated Value of any Assets that are excluded pursuant to the provisions of Section 9.2(d)(iii) or Section 10.1(c)(ii) .

“ Defects Escrow ” shall have the meaning set forth in Section 9.2(c)(i).

“ Defects Escrow Agreement ” shall mean that certain escrow agreement dated as of the Closing Date by and among Buyer, Seller and the Escrow Agent, substantially in the form attached hereto as Exhibit G .

“ Defensible Title ” shall mean such title of Seller that, although not constituting perfect, merchantable or marketable title, is deducible of record and/or title evidenced by unrecorded instruments or elections made pursuant to joint operating agreements, pooling agreements or unitization agreements, which, as of the Effective Time and immediately prior to Closing and subject to and except for Permitted Encumbrances:

(a) with respect to the Target Formation for each Well, entitles Seller to receive during the entirety of the productive life of such Well not less than the Net Revenue Interest for such Well as set forth in Exhibit A-2 , without decrease throughout the productive life of such Well, except for (i) decreases in connection with those operations in which Seller or its successors or assigns may from and after the Execution Date be a non-consenting co-owner to the extent permitted under this Agreement, (ii) decreases resulting from the establishment or amendment from and after the Execution Date of pools or units to the extent permitted under this

Agreement, (iii) decreases resulting from actions by Buyer, (iv) decreases required to allow other Working Interest owners to make up past underproduction or pipelines to make up past overdeliveries, and (v) as otherwise expressly set forth in Exhibit A-2 ;

(b) with respect to the Target Formation for each Well, obligates Seller to bear during the entirety of the productive life of such Well not more than the Working Interest for such Well as set forth in Exhibit A-2 , without increase throughout the productive life of such Well, except (i) increases resulting from contribution requirements with respect to defaulting co-owners from and after the Execution Date under applicable operating agreements, (ii) increases to the extent that they are accompanied by a proportionate increase in Seller’s Net Revenue Interest in such Well, (iii) increases resulting from the establishment or amendment from and after the Execution Date of pools or units, (iv) increases resulting from actions by Buyer, and (v) as otherwise expressly set forth in Exhibit A-2 ;

(c) with respect to the Target Formation for each Lease or Fee Mineral, is subject to only those aggregate Burdens set forth for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable;

(d) with respect to the Target Formation for each Lease or Fee Mineral, entitles Seller to the Net Acres in such Target Formation as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable; and

(e) is free and clear of all Encumbrances.

“ Deposit ” shall have the meaning set forth in Section 3.2 .

“ Dispute Notice ” shall have the meaning set forth in Section 3.5 .

“ DOJ ” shall mean the Department of Justice.

“ Eagle Ford Formation ” shall mean from the stratigraphic equivalent of the top of the Eagle Ford Shale Formation at a measured depth of 5,508’ to the base of the Eagle Ford Shale Formation at a measured depth of 5,745’ as measured in the Gamma Ray Log dated February 13, 2010 of the EXCO Resources operated TRAYLOR NORTH 1H (42-507-32746) located in Zavala County, Texas.

“ Easements ” shall have the meaning set forth in the definition of “ Assets ”.

“ Effective Time ” shall mean 12:01 AM (Prevailing Central Time) on January 1, 2017.

“ Employee Benefit Plan ” shall mean each (a) “employee benefit plan” (within the meaning of Section 3(3) of ERISA, whether or not subject to ERISA), (b) employment, termination, consulting, severance, retention or change in control agreement or arrangement, and (c) deferred compensation, incentive compensation, equity or equity-based, retirement, savings, pension, health, dental, vision or life insurance, death benefit, vacation, paid time off, fringe benefit, retiree, welfare or other benefit or compensation plan, program, Contract or agreement; in each case, which is sponsored, contributed to or maintained by Seller or any of its Affiliates for the benefit of any Business Employee.

“ Employee List ” shall have the meaning set forth in Section 5.18(a).

“ Encumbrance ” shall mean any lien, security interest, pledge, deed of trust, collateral assignment, option, charge, defect or other encumbrance.

“ Environmental Arbitrator ” shall have the meaning set forth in Section 10.1(f) .

“ Environmental Condition ” shall mean a condition, event or circumstance in, on, under or with respect to an Asset (including the air, soil, subsurface, surface waters, ground waters and/or sediments) (a) that causes an Asset or Seller, with respect to any Asset, not to be in compliance with any Environmental Law or (b) for which Remediation is presently required (or if known or confirmed, would be presently required) under Environmental Laws. For the avoidance of doubt, (i) the fact that a Well is no longer capable of producing sufficient quantities of oil or gas to continue to be classified as a “producing well” or that such a Well should be temporarily abandoned or permanently plugged and abandoned shall not, in each case, form the basis of an Environmental Condition, (ii) the fact that a pipe is temporarily not in use shall not form the basis of an Environmental Condition and (iii) the physical condition of any surface or subsurface production equipment (including water or oil tanks, separators or other ancillary equipment) shall not form the basis of an Environmental Condition, except with respect to (i), (ii) or (iii) above, where the fact, condition or equipment (A) causes or has caused any environmental pollution, contamination or degradation where Remediation is presently required (or if known or confirmed, would be presently required) under Environmental Laws or (B) is, or the use or condition of which is, a violation of Environmental Law.

“ Environmental Defect ” shall mean any Environmental Condition with respect to an Asset, excluding those Environmental Conditions as set forth on Schedule 1.1(b) .

“ Environmental Defect Notice ” shall have the meaning set forth in Section 10.1(a) .

“ Environmental Defect Property ” shall have the meaning set forth in Section 10.1(a) .

“ Environmental Indemnity Agreement ” shall have the meaning set forth in Section 10.1(c)(iii) .

“ Environmental Laws ” shall mean all applicable Laws in effect as of the Execution Date relating to pollution or the protection of health, safety and welfare and the environment, including those Laws relating to the generation, storage, handling, use, treatment, transportation, disposal or other management of Hazardous Substances. For the avoidance of doubt, the term “ Environmental Laws ” does not include good or desirable operating practices or standards that may be voluntarily employed or adopted by other oil and gas well operators to the extent such practices or standards are recommended, but not required, by a Governmental Authority or applicable Laws.

“ EOC ” shall have the meaning set forth in the introductory paragraph herein.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

“ Escrow Account ” shall mean the account maintained by the Escrow Agent pursuant to the Escrow Agreement.

“ Escrow Agent ” shall mean JP Morgan Chase Bank, N.A., in its capacity as escrow agent under the Escrow Agreement.

“ Escrow Agreement ” shall mean that certain Escrow Agreement, dated as of the Execution Date, by and among Seller, Buyer and Escrow Agent.

“ Escrow Claim Notice ” shall have the meaning set forth in Section 7.12(a) .

“ Escrow Disbursement ” shall have the meaning set forth in Section 7.12(b) .

“ Escrow Release Time ” shall have the meaning set forth in Section 7.12(c) .

“ Escrow Holdback ” shall mean $10,000,000.

“ Escrowed Assignment ” shall have the meaning set forth in Section 9.2(c)(i).

“ Escrowed Title Defect Property ” shall have the meaning set forth in Section 9.2(c)(i).

“ Excluded Assets ” shall mean (a) all of Seller’s corporate minute books and corporate and financial and Tax records that relate to Seller’s business generally (including the ownership and operation of the Assets); (b) to the extent that they do not relate to the Assumed Obligations for which Buyer is indemnifying Seller, all trade credits, all accounts, receivables and all other proceeds, income or revenues attributable to the Assets with respect to any period of time prior to the Effective Time; (c) except to the extent directly relating to any Assumed Obligation, all claims and causes of action of Seller arising under or with respect to any Applicable Contracts that are attributable to periods of time prior to the Effective Time (including claims for adjustments or refunds, but excluding Imbalances); (d) subject to Section 9.3 , all rights and interests relating to the Assets (i) under any existing policy or agreement of insurance, (ii) under any bond or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events, or damage to or destruction of property prior to the Closing; (e) except to the extent of the adjustments set forth in Section 3.3(a)(i) , all Hydrocarbons produced and sold from the Assets with respect to all periods prior to the Effective Time and the proceeds thereof; (f) all claims of Seller or its Affiliates for refunds of or loss carry forwards with respect to (i) Asset Taxes or any other Taxes paid by Seller or its Affiliates attributable to any Tax period (or portion thereof) prior to the Effective Time, (ii) income Taxes paid by Seller or its Affiliates or (iii) any Taxes attributable to the Excluded Assets; (g) all personal computers, network equipment and associated peripherals and telephone equipment (including cellular telephones); (h) all of Seller’s proprietary computer software, patents, trade secrets, copyrights, names, trademarks, logos and other intellectual property; (i) all documents and instruments of Seller that may be protected by an attorney-client privilege, other than title opinions, environmental reports or evaluations, and any documents and instruments, in each case, that have been prepared by Third Parties and that relate to or cover any Assumed Obligations; (j) all data that cannot be disclosed to Buyer as a result of confidentiality arrangements under agreements with Third Parties ( provided that Seller shall use commercially reasonable efforts, without the obligation to make any payments, to have the holder thereof waive any such confidentiality

obligations or permit Buyer to execute a joinder agreement); (k) all audit rights arising under any of the (i) Applicable Contracts or otherwise with respect to any period prior to the Effective Time or (ii) Excluded Assets, except for any Imbalances; (l) all geophysical and other seismic and related technical data and information relating to the Assets to the extent that such geophysical and other seismic and related technical data and information is not transferable without payment of a fee or other penalty to any Third Party under any Contract (unless Buyer has separately agreed in writing to pay such fee or other penalty) and without consent (unless Buyer has obtained such consent; provided that Seller will cooperate in good faith with Buyer’s efforts to obtain any consent required to assign such data and information to Buyer); (m) Seller’s and/or its Affiliates’ membership to Integrated Reservoir Solutions, a division of Core Laboratories, LP, Eagle Ford Shale Evaluation — Reservoir Characterization Consortium; (n) documents prepared or received by Seller or its Affiliates or their representatives with respect to (i) lists of prospective purchasers for the Assets, (ii) bids submitted by other prospective purchasers of the Assets, (iii) analyses by Seller or its Affiliates of any bids submitted by any prospective purchaser, (iv) correspondence between or among Seller or its representatives, on the one hand, and any prospective purchaser other than Buyer, on the other hand and (v) correspondence between Seller and any of its representatives with respect to any bids, prospective purchasers or the transactions contemplated by this Agreement; (o) any Assets that are excluded pursuant to the provisions of Section 9.2(d)(iii), Section 9.4 or Section 10.1(c)(ii) ; (p) any master service agreements, blanket agreements or similar Contracts; (q) all overhead costs and expenses paid by Third Party non-operators to Seller or any of its Affiliates pursuant to any applicable joint operating agreement prior to the Closing Date; (r) the assets as set forth in Exhibit B ; (s) SCADA and other communication equipment not located on the Leases, Fee Minerals, Units, Easements or Surface Interests; (t) all assets of or related to any Employee Benefit Plan or any other compensation or benefit plan, program, policy or arrangement that is or was at any time established, sponsored, maintained or contributed to by Seller or any of its Affiliates or with respect to which Seller or any of its Affiliates has any current or contingent liability or obligations (whether or not held in trust); and (u) the Raider Services Agreement.

“ EXCO Land ” shall have the meaning set forth in the introductory paragraph herein.

“ Execution Date ” shall have the meaning set forth in the introductory paragraph of this Agreement.

“ Fee Minerals ” shall have the meaning set forth in the definition of “ Assets ”.

“ Final Payment Date ” shall have the meaning set forth in Section 3.5 .

“ Final Price ” shall have the meaning set forth in Section 3.5 .

“ Final Settlement Statement ” shall have the meaning set forth in Section 3.5 .

“ Finance Related Parties ” shall have the meaning set forth in Section 13.20 .

“ Financing ” shall mean one or more transactions entered into by Buyer or its Affiliates with one or more Financing Sources whereby Buyer will obtain customary reserve-based financing.

“ Financing Sources ” shall mean the agents, arrangers and/or lenders that have committed to provide or arrange all or part of the Financing, including the parties to any joinder agreements, indentures or credit agreements entered into in connection therewith; provided that, for the avoidance of doubt, Buyer, Buyer’s Affiliates, Seller’s lenders (acting in such capacity) and the Escrow Agent (acting in such capacity) shall be deemed not to be a “ Financing Source ”.

“ Franchise Tax Liability ” shall mean any Liability for Tax imposed by a state on Seller’s or any of its Affiliates’ gross or net income and/or capital for the privilege of engaging in business in that state (including Texas margin Tax liability) that was or is attributable to Seller’s ownership of the Assets.

“ FTC ” shall mean the Federal Trade Commission.

“ Fundamental Representations ” shall mean the representations and warranties of Seller set forth in Section 5.1 , Section 5.2 , Section 5.3(a), Section 5.14 and Section 5.23 .

“ GAAP ” shall mean generally accepted accounting principles in the United States, consistently applied.

“ Gas Imbalance ” shall mean all Well Gas Imbalances and Pipeline Gas Imbalances.

“ Governmental Authority ” shall mean any federal, state, local, municipal, tribal or other government; any governmental, regulatory or administrative agency, commission, body or other authority exercising or entitled to exercise any administrative, executive, judicial, legislative, regulatory or taxing authority or power, and any court or arbitral (public or private) or governmental tribunal, including any tribal authority having or asserting jurisdiction.

“ Hard Consent ” shall mean a consent (a) if the failure to obtain such consent (i) would cause the assignment of the Assets affected thereby to Buyer to be void or would provide a counterparty with the express right to void such assignment or (ii) would cause the termination of an Asset under the express terms thereof or (b) that is denied in writing.

“ Hazardous Substances ” shall mean any pollutants, contaminants, toxics or hazardous or extremely hazardous substances, materials, wastes, constituents, compounds or chemicals that are regulated by, or may form the basis of liability under, any Environmental Laws, including NORM and other substances referenced in Section 10.2 .

“ Hedge Contract ” shall mean any swap, forward, future or derivatives transaction or option or other similar hedge Contract.

“ HSR Act ” shall mean the Hart Scott Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

“ Hydrocarbons ” shall mean oil, condensate, gas, casinghead gas and other liquid or gaseous hydrocarbons or any combination thereof, and any minerals produced in association therewith.

“ Imbalances ” shall mean all Well Imbalances and Pipeline Imbalances.

“ Income Tax Liability ” shall mean any Liability of Seller or its Affiliates attributable to any federal, state or local income Tax measured by or imposed on the net income, profits, revenue or similar measure that was or is attributable to Seller’s ownership of the Assets.

“ Indemnified Party ” shall have the meaning set forth in Section 12.7(a) .

“ Indemnifying Party ” shall have the meaning set forth in Section 12.7(a) .

“ Indemnity Deductible ” shall mean 2% of the unadjusted Purchase Price.

“ Indemnity Limitation Exclusions ” shall mean the obligation to indemnify the Buyer Indemnified Parties pursuant to (a) Section 12.2(a) for the breach of any of the Fundamental Representations or the representations and warranties set forth in Section 5.4 or Section 5.13 , (b) Section 12.2(b) , (c) Section 12.2(c) , or (d) Section 12.2(d).

“ Individual Environmental Defect Threshold ” shall have the meaning set forth in Section 10.1(e) .

“ Individual Title Defect Threshold ” shall have the meaning set forth in Section 9.2(i) .

“ Instruction Letter ” shall have the meaning set forth in Section 7.12(b) .

“ Knowledge ” shall mean, with respect to Seller, the actual knowledge of the Persons as set forth in Schedule 1.1(a) .

“ Law ” shall mean any applicable statute, law (including common law), rule, regulation, ordinance, order, code, ruling, judgment, writ, injunction, decree or other official act or legally enforceable requirement of or by any Governmental Authority.

“ Leases ” shall have the meaning set forth in the definition of “ Assets ”.

“ Liabilities ” shall mean any and all claims, causes of action, payments, charges, judgments, assessments, liabilities, losses, damages, penalties, fines and costs and expenses, including any attorneys’ fees, legal or other expenses incurred in connection therewith and including liabilities, costs, losses and damages for personal injury or death or property damage or environmental damage or remediation.

“ Material Adverse Effect ” shall have the meaning set forth in Schedule 1.1(d) .

“ Material Contract ” shall have the meaning set forth in Section 5.6(a) .

“ Net Acres ” shall mean, as computed separately with respect to the applicable Target Formation:

(a) for any Lease, (i) the number of gross acres in the lands covered by such Lease, multiplied by (ii) the undivided fee simple mineral interest (expressed as a percentage) in the lands covered by such Lease, multiplied by (iii) Seller’s Working Interest in such Lease; provided that if items (ii) and/or (iii) vary as to different areas of such lands (including tracts or depths) covered by such Lease, a separate calculation shall be done for each such area as if it were a separate Lease; and

(b) for any Fee Mineral, (i) the number of gross acres in the lands covered by such Fee Mineral, multiplied by (ii) Seller’s undivided fee simple mineral interest (expressed as a percentage) in the lands covered by such Fee Mineral; provided that if item (ii) varies as to different areas of such lands (including tracts or depths) covered by such Fee Mineral, a separate calculation shall be done for each such area as if it were a separate Fee Mineral.

“ Net Revenue Interest ” shall mean, with respect to any Well, the interest in and to all Hydrocarbons produced, saved and sold from or allocated to such Well (as applicable), after giving effect to all Burdens.

“ NORM ” shall mean naturally occurring radioactive material.

“ Outside Date ” shall mean August 1, 2017.

“ Paradigm Contract ” shall mean that certain Oil Gathering Agreement, dated August 4, 2014, by and between Paradigm Midstream Services — ST, LLC and EOC.

“ Party ” and “ Parties ” shall have the meaning set forth in the introductory paragraph of this Agreement.

“ Party Affiliate ” shall have the meaning set forth in Section 13.19.

“ Permit ” shall mean any permits, licenses, authorizations, registrations, consents or approvals, waivers, allowances, orders, variances or water rights (including water withdrawal, storage, discharge, treatment, injection and disposal rights), in each case, granted or issued by any Governmental Authority.

“ Permitted Encumbrances ” shall mean:

(a) the terms and conditions of all Leases (and any other instrument creating or assigning any interest in a Lease) and all Burdens if the net cumulative effect of such Lease terms and conditions and Burdens does not operate to (i) reduce the Net Revenue Interest of Seller with respect to the Target Formation in any Well to an amount less than the Net Revenue Interest for such Well as set forth in Exhibit A-2 , (ii) obligate Seller to bear a Working Interest with respect to the Target Formation in any Well in any amount greater than the Working Interest for such Well as set forth in Exhibit A-2 (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest for such Well as set forth in Exhibit A-2 in the same proportion as any increase in such Working Interest), (iii) reduce the Net Acres of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount less than the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, and (iv) does not operate to increase the Burdens of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount above the Burdens for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable;

(b) the terms and conditions of the Easements included in the Assets if the net cumulative effect of such terms and conditions does not operate to (i) reduce the Net Revenue Interest of Seller with respect to the Target Formation in any Well to an amount less than the Net Revenue Interest for such Well as set forth in Exhibit A-2 , (ii) obligate Seller to bear a Working Interest with respect to the Target Formation in any Well in any amount greater than the Working Interest for such Well as set forth in Exhibit A-2 (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest for such Well as set forth in Exhibit A-2 in the same proportion as any increase in such Working Interest), (iii) reduce the Net Acres of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount less than the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, and (iv) does not operate to increase the Burdens of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount above the Burdens for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable;

(d) liens for Taxes or assessments not yet due or delinquent or, if delinquent, which are being contested in good faith and disclosed on Schedule 5.13 ;

(e) Customary Post-Closing Consents and any required notices to, or filings with, Governmental Authorities in connection with the consummation of the transactions contemplated by this Agreement to the extent customarily filed following Closing;

(f) to the extent not triggered prior to Closing, conventional rights of reassignment upon final intention to abandon or release any of the Assets;

(g) such Title Defects as Buyer has expressly waived in writing;

(h) all applicable Permits and Laws and all rights reserved to or vested in any Governmental Authority: (i) to control or regulate any Asset in any manner; (ii) by the terms of any right, power, franchise, grant, license or permit, or by any provision of Law, to terminate such right, power, franchise, grant, license or permit or to purchase, condemn, expropriate or recapture or to designate a purchaser of any of the Assets; (iii) to use such property in a manner which would not reasonably be expected to materially impair the use of such property for the purposes for which it is currently owned and operated; or (iv) to enforce any obligations or duties affecting the Assets to any Governmental Authority with respect to any franchise, grant, license or permit;

(i) rights of a common owner of any interest in the Easements or Permits held by Seller and such common owner as tenants in common or through common ownership, to the extent that the same does not prevent or substantially impair the ownership, operation or use of the Assets subject thereto as such Assets are currently owned, operated and used;

(j) easements, conditions, covenants, restrictions, servitudes, permits, rights-of-way, surface leases and other rights in the Assets for the purpose of operations, facilities, pipelines, transmission lines, transportation lines, distribution lines and other like purposes, or

for the joint or common use of rights-of-way, facilities and equipment, to the extent, individually or in the aggregate, such rights would not prevent or substantially impair the ownership, operation or use of the Assets subject thereto as such Assets are currently owned, operated and used;

(k) vendors, carriers, warehousemen’s, repairmen’s, mechanics’, workmen’s, materialmen’s, construction or other like liens arising by operation of Law in the ordinary course of business or incident to the construction or improvement of any property in respect of obligations which are not yet due or delinquent;

(l) any calls on production under existing Applicable Contracts;

(m) any limitations (including drilling and operating limitations) imposed on the Assets by reason of the rights of subsurface owners or operators in a common property (including the rights of coal, utility and timber owners), to the extent that the same does not prevent or substantially impair the ownership, operation or use of the Assets subject thereto as such Assets are currently owned, operated and used;

(n) any mortgagor liens burdening a lessor’s interest in the Leases that (i) post-dates the creation of the applicable Lease or (ii) pre-dates the creation of the applicable Lease and (A) is not in foreclosure proceedings of which Seller has received service or written notice and, to Seller’s Knowledge, is not in default or (B) has been subordinated to the applicable Lease;

(o) liens created under Leases or Easements included in the Assets and/or operating agreements or production sales contracts or by operation of Law in respect of obligations that are not yet due or delinquent;

(p) any Encumbrance affecting the Assets that is discharged by Seller at or prior to Closing;

(q) any matters expressly identified as an Encumbrance in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) , Exhibit A-1(d) or Exhibit A-2 ;

(r) any obligations or duties affecting the Assets to any municipality or public authority, including any zoning and planning ordinances and municipal regulations (but excluding eminent domain or condemnation);

(s) the terms and conditions of the Applicable Contracts, if the net cumulative effect of such Applicable Contracts does not operate to (i) prevent or substantially impair the ownership, operation or use of the Assets subject thereto as such Assets are currently owned, operated and used, (ii) reduce the Net Revenue Interest of Seller with respect to the Target Formation in any Well to an amount less than the Net Revenue Interest for such Well as set forth in Exhibit A-2 , (iii) obligate Seller to bear a Working Interest with respect to the Target Formation in any Well in any amount greater than the Working Interest for such Well as set forth in Exhibit A-2 (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest for such Well as set forth in Exhibit A-2 in the same proportion as any increase in such Working Interest), (iv) reduce the Net Acres of Seller with respect to the applicable Target

Formation in any Lease or Fee Mineral to an amount less than the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, and (v) does not operate to increase the Burdens of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount above the Burdens for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable;

(t) the terms and conditions of this Agreement;

(u) the litigation, suits and proceedings as set forth in Schedule 5.5 ;

(v) any matter that would not constitute a Title Defect under the definition of “Title Defect” in this Agreement; and

(w) all other Encumbrances, Contracts, instruments, obligations, defects and irregularities affecting any of the Assets that does not operate to (i) prevent or substantially impair the ownership, operation or use of the Assets subject thereto as such Assets are currently owned, operated and used, (ii) reduce the Net Revenue Interest of Seller with respect to the Target Formation in any Well to an amount less than the Net Revenue Interest for such Well as set forth in Exhibit A-2 , (iii) obligate Seller to bear a Working Interest with respect to the Target Formation in any Well in any amount greater than the Working Interest for such Well as set forth in Exhibit A-2 (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest for such Well as set forth in Exhibit A-2 in the same proportion as any increase in such Working Interest), (iv) reduce the Net Acres of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount less than the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, and (v) does not operate to increase the Burdens of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount above the Burdens for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable.

“ Person ” shall mean any individual, firm, corporation, partnership, limited liability company, joint venture, association, trust, unincorporated organization, Governmental Authority or any other entity.

“ Personal Property ” shall have the meaning set forth in the definition of “ Assets ”.

“ Pipeline Imbalance ” shall mean any marketing imbalance between the quantity of crude oil or other liquid Hydrocarbons attributable to the Assets required to be delivered by Seller under any Contract or Law relating to the purchase and sale, gathering, transportation, storage, processing or marketing of such crude oil or other liquid Hydrocarbons and the quantity of crude oil or other liquid Hydrocarbons attributable to the Assets actually delivered by Seller pursuant to the relevant Contract or at Law, together with any appurtenant rights and obligations concerning production balancing at the delivery point into the relevant sale, gathering, transportation, storage or processing facility.

“ Pipeline Gas Imbalance ” shall mean any marketing imbalance between the quantity of gaseous Hydrocarbons attributable to the Assets required to be delivered by Seller under any

Contract or Law relating to the purchase and sale, gathering, transportation, storage, processing or marketing of such gaseous Hydrocarbons and the quantity of gaseous Hydrocarbons attributable to the Assets actually delivered by Seller pursuant to the relevant Contract or at Law, together with any appurtenant rights and obligations concerning production balancing at the delivery point into the relevant sale, gathering, transportation, storage or processing facility.

“ Post-Closing Tax Return ” shall have the meaning set forth in Section 13.3(d) .

“ Pre-Closing Tax Return ” shall have the meaning set forth in Section 13.3(d) .

“ Preferential Purchase Right ” shall mean each preferential purchase right, right of first refusal or similar right pertaining to an Asset and the transactions contemplated hereby.

“ Preliminary Escrow Release Amount” shall mean an amount equal to (a) one-half of the Escrow Holdback, less (b) the sum of (x) the aggregate amount of all Escrow Disbursements made on or before the Preliminary Escrow Release Time, plus (y) the aggregate amount attributable to all pending Claims for which a Claim Notice has been delivered to Seller pursuant to Section 12.7(b) on or before the Preliminary Escrow Release Time; in each case, to the extent no Escrow Disbursement has been made with respect to such Claim.

“ Preliminary Settlement Statement ” shall have the meaning set forth in Section 3.4 .

“ Property Expenses ” shall mean all (a) operating expenses (but excluding all insurance premiums or any other costs of insurance attributable to Seller’s and/or its Affiliates’ insurance and to coverage periods from and after the Effective Time) incurred in the ownership and operation of the Assets in the ordinary course of business and, where applicable, in accordance with the relevant operating or unit agreement, (b) capital expenditures incurred in the ownership and operation of the Assets in the ordinary course of business and, where applicable, in accordance with the relevant operating or unit agreement, and (c) overhead costs charged or chargeable (as if Seller as operator was charging such overhead costs to itself) to the Assets under the relevant operating agreement or unit agreement, if any, including costs of title examination, costs of surface preparation for drilling and costs of drilling wells; but, in each case, excluding Liabilities attributable to (i) personal injury or death, property damage or violation of any Law, (ii) obligations to plug wells and dismantle or decommission facilities, (iii) the Remediation of or other cost associated with any Environmental Condition, including any costs associated with the Environmental Conditions set forth on Schedule 1.1(b) , (iv) obligations with respect to Imbalances, (v) obligations to pay Working Interests, Burdens or other interest owners revenues or proceeds attributable to sales of Hydrocarbons relating to the Assets, including those held in suspense, (vi) any Retained Obligations, (vii) any amounts paid to obtain any Hard Consent and/or any specified payment obligation required pursuant to any Lease or Applicable Contract in order to transfer of any Asset to Buyer, (viii) Title Defect Amounts or amounts paid to cure any Title Defects, (ix) Asset Taxes, (x) costs of Lease renewals and/or extensions of the Leases or (xi) any marketing fees applicable to the Assets under the Raider Services Agreement.

“ Purchase Price ” shall have the meaning set forth in Section 3.1 .

“ Raider Contracts ” shall mean those Contracts as set forth in Schedule 1.1(c) .

“ Raider Services Agreement ” shall mean that certain Marketing Services Agreement by and between EOC, EXCO Services, Inc. and Raider Marketing, LP.

“ Records ” shall mean all of Seller’s and its Affiliates’ files, records and data (including electronic data) including but not limited to lease files, land files, wells files, mud logs, digital well files, drilling logs, drilling surveys, division order files, abstracts, title files, engineering and/or production files, maps and Tax and accounting records; in each case, to the extent related to the Assets (and excluding Excluded Assets).

“ Recourse Parties ” shall have the meaning set forth in Section 13.19.

“ Remediation ” shall mean, with respect to an Environmental Condition, the investigation, monitoring, removal, response, construction, closure, disposal or other corrective actions or cure (in each case) required or allowed under Environmental Laws that completely addresses and resolves for current use the identified Environmental Condition in its entirety as compared to any other response that is required or allowed under Environmental Laws.

“ Remediation Amount ” shall mean, with respect to an Environmental Condition, the cost of the most cost-effective Remediation of such Environmental Condition that is reasonably available (considered as a whole taking into consideration any material negative impact such response may have on the operations of the relevant Assets, as well as the health and safety of any potentially affected Person, and giving due regard for customary industry practices and risk insurance requirements); provided , however , that “ Remediation Amount ” shall not include (a) the costs of Buyer’s and/or its Affiliate’s employees or attorneys, (b) the costs of Buyer’s and/or its Affiliate’s environmental consultants solely to the extent related to Buyer’s environmental due diligence pursuant to Section 8.1(b) , (c) expenses to the extent that they are ordinary costs of doing business regardless of the presence of an Environmental Condition (e.g., those costs that would ordinarily be incurred in the day-to-day operations of the Assets or in connection with Permit renewal/amendment activities), (d) overhead costs of Buyer and/or its Affiliates, (e) costs and expenses that would not have been required under Environmental Laws as they exist on the Closing Date or, if prior to the Closing Date, the date on which the Remediation action is being undertaken, or (f) any costs or expenses relating to the assessment, remediation, removal, abatement, transportation and disposal of any asbestos, asbestos-containing materials or NORM (unless required to address a violation of Environmental Law).

“ Replacement NAESB ” shall have the meaning set forth in Section 7.16 .

“ Requisite Financial Statement Information” shall have the meaning set forth in Section 7.14(a) .

“ Retained Obligations ” shall have the meaning set forth in Section 12.1(b) .

“ Scheduled Closing Date ” shall have the meaning set forth in Section 2.4 .

“ Securities Act ” shall have the meaning set forth in Section 6.10.

“ Seller ” shall have the meaning set forth in the introductory paragraph of this Agreement.

“ Seller Certificate ” shall have the meaning set forth in Section 4.2(c).

“ Seller Indemnified Parties ” shall have the meaning set forth in Section 12.3 .

“ Special Warranty ” shall have the meaning set forth in Section 9.1(b) .

“ Straddle Period ” shall mean any Tax period beginning before and ending after the Effective Time.

“ Subject Title Defect ” shall have the meaning as set forth in Section 9.2(c)(i) .

“ Surface Interests ” shall have the meaning set forth in the definition of “ Assets ”.

“ Suspense Funds ” shall mean all amounts held by Seller in suspense that are attributable to the Assets.

“ Target Area ” shall mean that area as set forth in Exhibit A-4 .

“ Target Formation ” shall mean (a) with respect to each Lease as set forth in Exhibit A-1(a) and each Fee Mineral as set forth in Exhibit A-1(d) , the Eagle Ford Formation, (b) with respect to each Lease as set forth in Exhibit A-1(b) , the Austin Chalk Formation, (c) with respect to each Lease as set forth in Exhibit A-1(c) , the Buda Formation, and (d) with respect to each Well, the currently producing formation for such Well.

“ Tax ” or “ Taxes ” shall mean (i) all taxes, assessments, duties, levies, imposts or other similar charges imposed by a Governmental Authority, including all income, franchise, profits, capital gains, capital stock, transfer, gross receipts, sales, use, transfer, service, occupation, ad valorem, property, excise, severance, windfall profit, premium, stamp, license, payroll, employment, social security, unemployment, disability, environmental (including taxes under Code Section 59A), alternative minimum, add-on, value-added, withholding (including backup withholding) and other taxes, assessments, duties, levies, imposts or other similar charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), and all estimated taxes, deficiency assessments, additions to tax, additional amounts imposed by any Governmental Authority, penalties and interest and (ii) any liability for amounts described in clause (i) of any other Person imposed upon as transferee or successor, by contract, or otherwise.

“ Tax Returns ” shall mean any report, return, election, document, estimated Tax filing, declaration or other filing provided to any Taxing Authority, including any amendments thereto.

“ Taxing Authority ” shall mean, with respect to any Tax, the Governmental Authority that imposes such Tax, and the Governmental Authority (if any) charged with the collection of such Tax, including any Governmental Authority that imposes, or is charged with collecting, social security or similar charges or premiums.

“ Termination Date ” means the date on which a Party is entitled to terminate this Agreement pursuant to Section 11.1 .

“ Third Party ” shall mean any Person other than a Party to this Agreement or an Affiliate of a Party to this Agreement.

“ Title Arbitrator ” shall have the meaning set forth in Section 9.2(j) .

“ Title Benefit ” shall mean, with respect to the Target Formation for any Well or Lease, any right, circumstance or condition existing as of the Effective Time or immediately prior to Closing that (without duplication) operates to: (a) increase the Net Revenue Interest of Seller with respect to the Target Formation in such Well above that shown for such Well as set forth in Exhibit A-2 , as applicable; (b) decrease the Working Interest of Seller in any Well below that shown for such Well as set forth in Exhibit A-2 , to the extent the same causes a decrease in Seller’s Working Interest that is proportionately greater than the decrease (if any) in Seller’s Net Revenue Interest therein below that as set forth in Exhibit A-2 ; (c) decrease the Burdens with respect to any Lease or Fee Mineral below the Burdens shown for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable; or (d) increase the Net Acres of Seller in any Lease or Fee Mineral above that shown for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable.

“ Title Benefit Amount ” shall have the meaning set forth in Section 9.2(e) .

“ Title Benefit Notice ” shall have the meaning set forth in Section 9.2(b) .

“ Title Benefit Property ” shall have the meaning set forth in Section 9.2(e) .

“ Title Defect ” shall mean any Encumbrance, defect or other matter that causes Seller not to have Defensible Title, solely with respect to the Target Formation for such Lease, Fee Mineral or Well, to any Lease as set forth in Exhibit A-1(a) , Exhibit A-1(b) or Exhibit A-1(c) , Fee Mineral as set forth in Exhibit A-1(d) or any Well as set forth in Exhibit A-2 ; provided that the following shall not be considered Title Defects:

(a) defects arising out of lack of corporate or other entity authorization, unless Buyer provides evidence that such corporate or other entity action was not authorized or results in another Person’s actual and superior claim of title to the relevant Asset;

(b) defects based on a gap in Seller’s chain of title in the applicable county records, unless such gap is shown to exist in such records by an abstract of title, title opinion or landman’s title chain or run sheet which documents shall be included in a Title Defect Notice and could reasonably be expected to result in another Person’s actual and superior claim of title to the relevant Asset;

(c) defects based upon the failure to record any state Leases included in the Assets or any assignments of interests in such Leases included in the Assets in any applicable county records, unless such failure results in another Person’s actual and superior claim of title to such Leases;

(d) defects arising from any prior oil and gas lease relating to the lands covered by the Leases not being surrendered of record, unless Buyer provides evidence that such prior oil and gas lease is still in effect and could reasonably be expected to result in another Person’s actual and superior claim of title to the relevant Lease;

(e) defects that affect only which Person has the right to receive Burden payments (rather than the amount of the proper payment of such Burden payment) and that do not affect the validity of the underlying Lease or Fee Mineral, in each case, to the extent same do not, individually or in the aggregate (i) operate to reduce the Net Revenue Interest of Seller with respect to the Target Formation in any Well to an amount less than the Net Revenue Interest for such Well as set forth in Exhibit A-2 , (ii) obligate Seller to bear a Working Interest with respect to the Target Formation in any Well in any amount greater than the Working Interest for such Well as set forth in Exhibit A-2 (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest for such Well as set forth in Exhibit A-2 in the same proportion as any increase in such Working Interest), (iii) operate to increase the Burdens with respect to any Lease or Fee Mineral above the Burdens shown for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, or (iv) operate to reduce the Net Acres of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount less than the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable;

(f) defects based solely on the lack of information in Seller’s files, unless Buyer provides evidence that such defects result in another Person’s actual and superior claim of title to the relevant Asset;

(g) any Permit, Easement, renewal or extension of any of the Lease, unit designation, production and drilling unit, or production sharing arrangement, (in each case) not yet obtained, formed or created, so long as the same are not required in connection with the ownership or operation of the Assets as currently owned and operated;

(h) Encumbrances created under deeds of trust, mortgages and similar instruments by the lessor under a Lease covering the lessor’s surface and/or mineral interests in the land covered thereby that would customarily be accepted in taking or purchasing such Leases and for which a reasonably prudent lessee would not customarily seek a subordination of such Encumbrance to the oil and gas leasehold estate prior to conducting drilling activities on the Lease;

(i) all defects or irregularities that have been cured or remedied by applicable statutes of limitation or statutes of prescription;

(j) all defects or irregularities resulting from lack of survey, unless such survey is required by applicable Law;

(k) all defects or irregularities resulting from the liens, production payments or mortgages that have expired on their own terms or the enforcement of which are barred by applicable statute of limitations;

(l) all defects in the chain of title consisting of the failure to recite marital status in a document or omissions of successions of heirship or estate proceedings, unless Buyer provides evidence that such failure results in another Person’s actual and superior claim of title to the relevant Asset;

(m) defects based upon the exercise of any Preferential Purchase Rights or failure to obtain any consents;

(n) defects or irregularities resulting from or related to probate proceedings or the lack thereof, which defects or irregularities have been outstanding for 10 years or more unless Buyer provides evidence that such probate proceedings or lack thereof results in another Person’s actual and superior claim of title to the relevant Asset;

(o) any Permits, Easements, renewals or extensions of any of the Leases, unit designations, production and drilling units, or production sharing arrangements, (in each case) not yet obtained, formed or created, in each case, to the extent same do not, individually or in the aggregate, (i) operate to reduce the Net Revenue Interest of Seller with respect to the Target Formation in any Well to an amount less than the Net Revenue Interest for such Well as set forth in Exhibit A-2 , (ii) obligate Seller to bear a Working Interest with respect to the Target Formation in any Well in any amount greater than the Working Interest for such Well as set forth in Exhibit A-2 (unless the Net Revenue Interest for such Well is greater than the Net Revenue Interest for such Well as set forth in Exhibit A-2 in the same proportion as any increase in such Working Interest), (iii) operate to increase the Burdens with respect to any Lease or Fee Mineral above the Burdens shown for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, or (iv) operate to reduce the Net Acres of Seller with respect to the applicable Target Formation in any Lease or Fee Mineral to an amount less than the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable;

(p) all defects arising from any change in Laws following the Execution Date;

(q) defects based on the failure to properly and timely pay, in accordance with the terms of any Lease, compensatory royalties arising out of any offset drilling obligations, which compensatory royalties are due by Seller and/or any of its Affiliates prior to the Closing Date and attributable to the Assets (net to Seller’s interest); and

(r) any Encumbrance or loss of title affecting ownership interests in formations other than the Target Formation.

“ Title Defect Amount ” shall have the meaning set forth in Section 9.2(g) .

“ Title Defect Notice ” shall have the meaning set forth in Section 9.2(a) .

“ Title Defect Property ” shall have the meaning set forth in Section 9.2(a) .

“ Title Indemnity Agreement ” shall have the meaning set forth in Section 9.2(d)(ii) .

“ Transaction Documents ” shall mean those documents executed and delivered pursuant to or in connection with this Agreement.

“ Transfer Taxes ” shall have the meaning set forth in Section 13.3(a) .

“ Transferred Employee ” shall have the meaning set forth in Section 7.7(a).

“ Transition Services Agreement ” shall have the meaning set forth in Section 7.15 .

“ Treasury Regulations ” shall mean the regulations promulgated by the United States Department of the Treasury pursuant to and in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any corresponding provision or provisions of succeeding, similar, substitute, proposed or final Treasury Regulations.

“ Units ” shall have the meaning set forth in the definition of “ Assets ”.

“ Well Imbalance ” shall mean any imbalance at the wellhead between the amount of crude oil or other liquid Hydrocarbons produced from a Well and allocable to the interests of Seller therein and the shares of crude oil or other liquid Hydrocarbons production from the relevant Well to which Seller is entitled, together with any appurtenant rights and obligations concerning future in kind and/or cash balancing at the wellhead.

“ Well Gas Imbalance ” shall mean any imbalance at the wellhead between the amount of gaseous Hydrocarbons produced from a Well and allocable to the interests of Seller therein and the shares of gaseous Hydrocarbons production from the relevant Well to which Seller is entitled, together with any appurtenant rights and obligations concerning future in kind and/or cash balancing at the wellhead.

“ Wells ” shall have the meaning set forth in the definition of “ Assets ”.

“ Working Interest ” shall mean, with respect to any Well or Lease, the interest in and to such Well or Lease that is burdened with the obligation to bear and pay costs and expenses of maintenance, development and operations on or in connection with such Well or Lease, but without regard to the effect of any Burdens and other similar burdens upon, measured by or payable out of production therefrom.

1.2 References and Rules of Construction . All references in this Agreement to Exhibits, Schedules, Articles, Sections, subsections and other subdivisions refer to the corresponding Exhibits, Schedules, Articles, Sections, subsections and other subdivisions of or to this Agreement unless expressly provided otherwise. Titles appearing at the beginning of any Articles, Sections, subsections and other subdivisions of this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,” “hereunder” and “hereof,” and words of similar import, refer to this Agreement as a whole and not to any particular Article, Section, subsection or other subdivision unless expressly so limited. The words “this Article,” “this Section” and “this subsection,” and words of similar import, refer only to the Article, Section or subsection hereof in which such words occur. Wherever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limiting the foregoing in any respect”. All references to “$” or “dollars” shall be deemed references to United States dollars. Each accounting term not defined herein shall have the meaning given to it under GAAP as interpreted as of the Execution Date. Pronouns in

masculine, feminine or neuter genders shall be construed to state and include any other gender, and words, terms and titles (including terms defined herein) in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. The words “shall” and “will” are used interchangeably throughout this Agreement and shall accordingly be given the same meaning, regardless of which word is used. References to any date and/or time shall mean such date or time, as applicable, in Dallas, Texas and for purposes of calculating the time period in which any notice or action is to be given or undertaken hereunder, such period shall be deemed to begin at 12:01 a.m. on the applicable date in Dallas, Texas.

ARTICLE II

PURCHASE AND SALE

2.1 Purchase and Sale . Subject to the terms and conditions of this Agreement, Seller agrees to sell, and Buyer agrees to purchase and pay for, the Assets.

2.2 Excluded Assets . Seller shall reserve and retain all of the Excluded Assets.

2.3 Revenues and Expenses .

(a) Seller shall be entitled to all of the rights of ownership attributable to the Assets (including the right to all production, proceeds of production and other proceeds) and shall remain responsible for all Property Expenses, in each case, attributable to the period of time prior to the Effective Time. Subject to the occurrence of Closing, Buyer shall be entitled to all of the rights of ownership attributable to the Assets (including the right to all production, proceeds of production and other proceeds), and shall be responsible for all Property Expenses, in each case, from and after the Effective Time. Subject to Section 13.3(a) , all Property Expenses that are: (a) incurred with respect to operations conducted or production prior to the Effective Time shall be paid by or allocated to Seller and (b) incurred with respect to operations conducted or production from and after the Effective Time shall be paid by or allocated to Buyer.

(b) Such amounts that are received or paid during the period from the Execution Date up to Closing shall be accounted for in the Preliminary Settlement Statement or Final Settlement Statement, as applicable. Such amounts that are received or paid after Closing but prior to the date of the delivery of the Final Settlement Statement shall be accounted for in the Final Settlement Statement. If, after the delivery of the Final Settlement Statement, (i) any Party receives monies belonging to the other, including proceeds of production, then (unless accounted for in the Final Settlement Statement that is agreed to, or deemed agreed to, by the Parties) such amount shall, within 10 Business Days after the end of the month in which such amounts were received, be paid over to the proper Party, (ii) any Party pays monies for Property Expenses which are the obligation of the other Party hereto, then (unless accounted for in the Final Settlement Statement that is agreed to, or deemed agreed to, by the Parties) such other Party shall, within 10 Business Days after the end of the month in which the applicable invoice and proof of payment of such invoice were received, reimburse the Party which paid such Property Expenses, (iii) a Party receives an invoice of an expense or obligation which is owed by the other Party, then (unless accounted for in the Final Settlement Statement that is agreed to, or deemed agreed to, by the Parties) such Party receiving the invoice shall promptly forward such invoice to the Party obligated to pay the same, and (iv) an invoice or other evidence of an

obligation is received by a Party, which is partially an obligation of both Seller and Buyer, then (unless accounted for in the Final Settlement Statement that is agreed to, or deemed agreed to, by the Parties) the Parties shall consult with each other, and each shall promptly pay its portion of such obligation to the obligee. After Closing, each Party shall be entitled to participate in all joint interest audits and other audits of Property Expenses for which such Party is entirely or in part responsible under the terms of this Section 2.3 .

(c) Notwithstanding anything in this Agreement to the contrary, the final accounting for any and all Property Expenses and all production, production proceeds and other proceeds relating to the Assets shall occur on the 12-month anniversary of the Closing Date, and there shall be no adjustment for, or obligation to pay, any Property Expenses or such proceeds between the Parties following such 12-month anniversary.

2.4 Closing . Subject to the conditions set forth in this Agreement, the sale by Seller and the purchase by Buyer of the Assets pursuant to this Agreement (the “ Closing ”) shall occur on or before 9:00 a.m. (Prevailing Central Time) on June 1, 2017 (the “ Scheduled Closing Date ”) or such other date as Buyer and Seller may agree upon in writing; provided that if the conditions to Closing in Article IV have not yet been satisfied or waived by the Scheduled Closing Date, then Closing shall occur five Business Days after such conditions have been satisfied or waived. The date Closing actually occurs shall be the “ Closing Date ”.

2.5 Place of Closing . Closing shall be held at the offices of Latham & Watkins LLP, located at 811 Main Street, Suite 3700, Houston, Texas 77002.

2.6 Closing Obligations . At Closing, the following documents shall be delivered and the following events shall occur, the execution of each document and the occurrence of each event being a condition precedent to the others and each being deemed to have occurred simultaneously with the others:

(a) Seller and Buyer shall acknowledge the Preliminary Settlement Statement and Buyer shall deliver to Seller, to the account designated in the Preliminary Settlement Statement, by direct bank or wire transfer in same day funds, the Closing Adjusted Purchase Price (after giving effect to the Deposit and the Escrow Holdback);

(b) Seller and Buyer shall execute and deliver to the Escrow Agent a joint instruction directing the Escrow Agent to release to Seller from the Escrow Account an amount equal to the Deposit, less the Escrow Holdback;

(c) Seller and Buyer shall execute, acknowledge and deliver the Assignment, in sufficient counterparts to facilitate recording in the applicable counties where the Assets are located;

(d) Seller shall cause Raider Marketing LP to execute and deliver, and Buyer shall execute and deliver, the Assignment and Assumption Agreement;

(e) Seller shall deliver an executed statement described in Treasury Regulation §1.1445-2(b)(2), substantially in the form of Exhibit D ;

(f) Seller and Buyer shall execute and deliver all forms and applications required by applicable Governmental Authorities to designate Buyer as owner and/or, to the extent Seller was the operator thereof, operator of record, as applicable, with respect to the Assets on forms prepared by Seller;

(g) Seller shall deliver releases of any mortgages, deeds of trust, pledges, financing statements and security agreements made by Seller or its Affiliates for borrowed money affecting Seller’s interest in the Assets ( provided that, prior to Closing, Seller shall deliver to Buyer written copies of any such releases with sufficient time to allow Buyer and the Financing Sources reasonable opportunity to provide comments thereto);

(h) Seller and Buyer shall execute the Transition Services Agreement;

(i) Seller shall deliver evidence reasonably satisfactory to Buyer that the Raider Services Agreement has been terminated with respect to the Assets effective on or prior to the Closing Date; and

(j) Seller and Buyer shall execute and deliver any other agreements, instruments and documents which are required by other terms of this Agreement to be executed and/or delivered at Closing.

ARTICLE III

PURCHASE PRICE

3.1 Purchase Price . The aggregate purchase price for the Assets shall be $300,000,000 (the “ Purchase Price ”), adjusted in accordance with this Agreement and payable by Buyer to Seller at Closing by wire transfer in same day funds to a bank account of Seller (the details of which shall be provided by to Buyer in the Preliminary Settlement Statement).

3.2 Deposit . Concurrently with the execution of this Agreement, Buyer has deposited by wire transfer in same day funds into the Escrow Account an amount equal to 10% of the Purchase Price (such amount, together with any interest earned thereon, the “ Deposit ”). On the Closing Date (or at such time prior thereto, as may be required by the Escrow Agent in order to release such funds at Closing), Seller and Buyer shall provide an Instruction Letter instructing the Escrow Agent to release an amount equal to (i) the Deposit less (ii) the Escrow Holdback to Seller at Closing. The Escrow Holdback shall be held by the Escrow Agent and released after Closing pursuant to Section 7.12 . If Closing occurs, the Deposit (including, for the avoidance of doubt, the Escrow Holdback and all interest accrued on the Deposit) shall be applied toward the Purchase Price. If this Agreement is terminated prior to Closing in accordance with Section 11.1 , the provisions of Section 11.2 shall be applicable and the Deposit shall be handled in accordance therewith.

3.3 Adjustments to Purchase Price . The Purchase Price shall be adjusted as follows, and the resulting amount shall be herein called the “ Adjusted Purchase Price ”:

(a) The Purchase Price shall be adjusted upward by the following amounts (without duplication):

(i) to the extent that the proceeds for such volumes have not been received by Seller or its Affiliates, an amount equal to the value of all (A) Hydrocarbons attributable to the Leases, Fee Minerals and/or Wells in pipelines (including linefill), tanks, central facilities or storage facilities above the pipeline sales connection, in each case, as of the Effective Time, plus (B) the unsold inventory of gas products attributable to the Leases, Fee Minerals and/or Wells as of the Effective Time, in each case such value to be based upon the contract price in effect as of the Effective Time (or if no such contract is in effect, the market value in the area as of the Effective Time), less (1) amounts payable as Burdens out of such production, (2) amounts attributable to interests of other Working Interest owners, and (3) severance taxes deducted by the purchaser of such production;

(ii) an amount equal to any of the following amounts paid by Seller or its Affiliates: (A) all Property Expenses, (B) all Burdens upon, measured by or payable out of proceeds of production, (C) rentals and other lease maintenance payments, and (D) costs of acquiring necessary Easements (for the avoidance of doubt, excluding any costs to transfer such Easements to Buyer); (in each case) net of any sales, excise or similar Taxes in connection therewith reimbursed to Seller or its Affiliates, as applicable, by any Third Party purchaser and that are attributable to the ownership or operation of the Assets from and after the Effective Time up to Closing (whether paid prior to, on, or after the Effective Time);

(iii) to the extent that Seller’s interest in any of the Wells is underproduced with respect to any Hydrocarbons as of the Effective Time, the sum of $0.0], which is an amount equal to the product of (A) the underproduced volumes times (B) $49.09/Bbl for liquid Hydrocarbons;

(iv) to the extent that any Hydrocarbons attributable to Seller’s interest in any of the Wells have been overdelivered as of the Effective Time, the sum of $0.00, which is an amount equal to the product of (A) the overdelivered volumes times (B) $49.09/Bbl for liquid Hydrocarbons;

(v) the amount of all Asset Taxes prorated to Buyer in accordance with Section 13.3(b) but paid or payable by Seller; and

(vi) any other amount provided for elsewhere in this Agreement or otherwise agreed upon by Seller and Buyer.

(b) The Purchase Price shall be adjusted downward by the following amounts (without duplication):

(i) an amount equal to all proceeds received by Seller or its Affiliates attributable to the ownership or operation of the Assets from and after the Effective Time up to Closing, including the sale of Hydrocarbons produced from the Assets or allocable thereto, net of any sales, excise or similar Taxes in connection therewith not reimbursed to Seller or its Affiliates, as applicable, by a Third Party purchaser;

(ii) the amount of all Asset Taxes prorated to Seller in accordance with Section 13.3(b) but paid or payable by Buyer;

(iii) to the extent that Seller’s interest in any of the Wells is overproduced with respect to any Hydrocarbons as of the Effective Time, the sum of $0.00, which is an amount equal to the product of (A) the overproduced volumes times (B) $49.09/Bbl for liquid Hydrocarbons;

(iv) to the extent that any Hydrocarbons attributable to Seller’s interest in any of the Wells have been underdelivered as of the Effective Time, the sum of $0.00, which is an amount equal to the product of (A) the underdelivered volumes times (B) $49.09/Bbl for liquid Hydrocarbons;

(v) any reductions to the Purchase Price in accordance with Section 9.2(d) ;

(vi) any reductions to the Purchase Price in accordance with Section 9.3(b) ;

(vii) any reductions to the Purchase Price in accordance with Section 10.1(c) ;

(viii) the Allocated Value of any Assets excluded from the transactions contemplated hereby pursuant to Section 8.1(b) , Section 9.2(d)(iii) , Section 9.4 or Section 10.1(c)(ii) ; and

(ix) any other amount provided for elsewhere in this Agreement or otherwise agreed upon by Seller and Buyer.

(c) For the avoidance of doubt, in the event Seller or its Affiliates receive an overpayment of proceeds for which Buyer receives an adjustment to the Purchase Price under Section 3.3(b) and Seller is subsequently required to reimburse or otherwise account for such overpayment to a Third Party, Seller shall, upon delivery to Buyer of reasonable documentation of Seller’s reimbursement or accounting to such Third Party, be entitled to a reimbursement from Buyer of such overpayment amount, which if such amount is known prior to the issuance of the Final Settlement Statement, shall be reflected as an adjustment on the Final Settlement Statement.

3.4 Preliminary Settlement Statement . Not less than five Business Days prior to Closing, Seller shall prepare in good faith and submit to Buyer for review a draft settlement statement (the “ Preliminary Settlement Statement ”) that shall set forth the Closing Adjusted Purchase Price and provide reasonable supporting documentation of the adjustments used to determine such amount, together with any amounts to be deposited in the Defects Escrow and the designation of Seller’s accounts for the wire transfers of funds. Within three Business Days of receipt of the Preliminary Settlement Statement, Buyer shall deliver to Seller a written report containing all changes with the explanation therefor that Buyer proposes to be made to the Preliminary Settlement Statement and the Closing Adjusted Purchase Price. The Preliminary Settlement Statement, as agreed upon by the Parties, shall be used to adjust the Purchase Price at Closing; provided that if the Parties do not agree upon an adjustment set forth in the Preliminary Settlement Statement, then (absent manifest error) the amount of such adjustment used to determine the Closing Adjusted Purchase Price shall be that amount set forth in the draft Preliminary Settlement Statement delivered by Seller to Buyer pursuant to this Section 3.4 .

3.5 Final Settlement Statement . On or before the later of (a) five Business Days following the resolution of any arbitration proceeding pursuant to Section 9.2(j) or Section 10.1(f) and (b) 120 days after Closing, a final settlement statement (the “ Final Settlement Statement ”) shall be prepared by Seller based on actual income and expenses during the period from and after the Effective Time until Closing and which takes into account all final adjustments made to the Purchase Price and shows the resulting final Adjusted Purchase Price. The Final Settlement Statement shall set forth the actual proration of the amounts required by this Agreement. As soon as practicable, and in any event within 30 days after receipt of the Final Settlement Statement, Buyer shall return to Seller a written report containing any proposed changes to the final adjustments to the Purchase Price (other than those adjustments with respect to title and environmental matters) and an explanation of any such changes and the reasons therefor (the “ Dispute Notice ”). Buyer’s failure to deliver to Seller a Dispute Notice detailing proposed changes to the Final Settlement Statement by such date shall be deemed to be an acceptance by Buyer of the Final Settlement Statement delivered by Seller and any changes to the Final Settlement Statement as initially prepared by Seller that are proposed or requested by Buyer and not included in the Dispute Notice shall be deemed waived, and Seller’s determinations with respect to all such adjustments in the Final Settlement Statement that are not addressed in the Dispute Notice shall prevail. If the final Purchase Price set forth in the Final Settlement Statement is mutually agreed upon by Seller and Buyer or deemed agreed pursuant to the foregoing (or determined by the Accounting Arbitrator pursuant to Section 3.6 ), the Final Settlement Statement and such final Adjusted Purchase Price (the “ Final Price ”), shall be final and binding on the Parties. Any difference in the Closing Adjusted Purchase Price as paid at Closing pursuant to the Preliminary Settlement Statement and the Final Price shall be paid by the owing Party on or before the date that is 10 Business Days following agreement or deemed agreement (or determination by the Accounting Arbitrator, as applicable) (such date, the “ Final Payment Date ”) to the owed Party. In addition, on or before the Final Payment Date, Seller shall transfer to Buyer all Suspense Funds. All amounts paid or transferred pursuant to this Section 3.5 shall be delivered in United States currency by wire transfer of immediately available funds to the account specified in writing by the relevant Party.

3.6 Disputes . If Seller and Buyer are unable to resolve the matters addressed in the Dispute Notice, each of Buyer and Seller shall within 20 Business Days after the delivery of such Dispute Notice, summarize its position with regard to such matters in the Dispute Notice in a written document of 20 pages or less and submit such summaries to the Dallas, Texas office of Ernst & Young or such other Person as the Parties may mutually select (subject to the last sentence in this Section 3.6 , the “ Accounting Arbitrator ”), together with the Dispute Notice, the Final Settlement Statement and any other documentation such Party may desire to submit. The Parties shall instruct the Accounting Arbitrator to render, within 20 Business Days after receiving the Parties’ respective submissions, a decision choosing either Seller’s position or Buyer’s position with respect to each matter addressed in any Dispute Notice, based on the materials described above. The Accounting Arbitrator, once appointed, shall have no ex parte communications with the Parties concerning the expert determination or the underlying dispute. Any decision rendered by the Accounting Arbitrator pursuant hereto shall be final, conclusive and binding on Seller and Buyer and shall be enforceable against any of the Parties in any court

of competent jurisdiction. Seller and Buyer shall each bear its own legal fees and other costs of presenting its case. The costs of such Accounting Arbitrator shall be borne one-half by Seller and one-half by Buyer. In the event that Ernst & Young declines to serve as the Accounting Arbitrator and the Parties are unable to agree, within five Business Days of Ernst & Young declining to so serve, upon another Person to serve as Accounting Arbitrator, then the Accounting Arbitrator shall be selected by lot from among the independent national accounting firms that have not represented any Party or its Affiliates at any time during the three-year period of time immediately preceding its designation hereunder. THE ACCOUNTING ARBITRATOR SHALL ACT AS AN EXPERT FOR THE LIMITED PURPOSE OF DETERMINING THE SPECIFIC DISPUTE PRESENTED TO IT, SHALL NOT CONSIDER, HEAR OR DECIDE ANY MATTERS EXCEPT THE SPECIFIC DISPUTES PRESENTED AND SHALL NOT AWARD DAMAGES, INTEREST OR PENALTIES (INCLUDING PUNITIVE OR EXEMPLARY DAMAGES, CONSEQUENTIAL, SPECIAL OR INDIRECT DAMAGES) TO ANY PARTY. IN ADDITION, THE ACCOUNTING ARBITRATOR SHALL AGREE IN WRITING TO KEEP STRICTLY CONFIDENTIAL THE SPECIFICS AND EXISTENCE OF ANY MATTERS SUBMITTED AS WELL AS ALL PROPRIETARY RECORDS OF THE PARTIES, IF ANY, REVIEWED BY THE ACCOUNTING ARBITRATOR IN THE PROCESS OF RESOLVING SUCH DISPUTES.

3.7 Allocation of Purchase Price; Allocated Values . Buyer and Seller agree that the unadjusted Purchase Price shall be allocated among the Assets as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) , Exhibit A-1(d) and Exhibit A-2 , as applicable. The “ Allocated Value ” for any Asset equals the portion of the unadjusted Purchase Price allocated to such Asset as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) , Exhibit A-1(d) and Exhibit A-2 , as applicable. Such Allocated Values shall be used in calculating adjustments to the Purchase Price as provided herein. Buyer and Seller also agree (a) that the Allocated Values, as adjusted, shall be used by Seller and Buyer as the basis for reporting asset values and other items for purposes of this Section 3.7 , and (b) that neither they nor their Affiliates shall take positions inconsistent with such Allocated Values in notices to Governmental Authorities, in audit or other proceedings with respect to Taxes, in notices to Preferential Purchase Right holders or in other documents or notices relating to the transactions contemplated by this Agreement.

3.8 Allocation of Consideration for Tax Purposes . Seller and Buyer agree that the portion of the Purchase Price, as adjusted, attributable to the Assets and the Assumed Obligations and other amounts treated for Tax purposes as consideration for a sale transaction (to the extent known at such time) (collectively, the “ Allocable Amount ”) shall be allocated among the various Assets for Tax purposes. The initial draft of such allocations shall be prepared by Seller in a manner consistent with the related Allocated Values as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) , Exhibit A-1(d) and Exhibit A-2 , as applicable, and shall be provided to Buyer no later than 30 days after delivery of the Final Settlement Statement. Seller and Buyer shall then cooperate to prepare a final schedule of the Allocable Amount among the Assets, which shall also be materially consistent with the Allocated Values (as adjusted, the “ Allocation Schedule ”). The Allocation Schedule shall be updated to reflect any adjustments to the Allocable Amount. The allocation of the Allocable Amount shall be reflected on a completed Internal Revenue Service Form 8594 (Asset Acquisition Statement under Section 1060), which Form shall be timely filed separately by Seller and Buyer with the Internal Revenue Service pursuant to the requirements of Section 1060(b) of the Code. In the event that Seller and Buyer

reach an agreement with respect to the Allocation Schedule, neither Party shall take any position inconsistent with the allocations set forth in the Allocation Schedule unless required by applicable Law or with the consent of the other Parties.

ARTICLE IV

CONDITIONS TO CLOSING

4.1 Joint Conditions to Closing . The obligations of Buyer and Seller to consummate the transactions provided for herein are subject, at the option of Buyer or Seller, respectively, to the fulfillment by Buyer or Seller, respectively, or waiver by Buyer or Seller, respectively, on or prior to Closing, of each of the following conditions:

(a) No Legal Proceedings . No suit, action or other proceeding by any Third Party shall be pending before any Governmental Authority (i) seeking to restrain, prohibit, enjoin or declare illegal or (ii) seeking substantial damages in connection with, the Assets or the transactions contemplated by this Agreement.

(b) Title Defects and Environmental Defects . The sum of (i) the aggregate amount of all Title Defect Amounts agreed (or deemed agreed) to by the Parties, in each case, that exceed the Individual Title Defect Threshold ( less the aggregate amount of all Title Benefit Amounts agreed (or deemed agreed) to by the Parties), plus (ii) the Allocated Value for all Assets for which Seller has made an election to exclude pursuant to Section 9.2(d)(iii) , plus (iii) all Remediation Amounts agreed (or deemed agreed) to by the Parties, in each case, that exceed the Individual Environmental Defect Threshold, plus (iv) the aggregate amount of all Casualty Losses following the Execution Date agreed to by the Parties or, if not agreed prior to such date, as reasonably determined by Seller in good faith, plus (v) the Allocated Value of the Assets excluded from the transaction pursuant to Section 8.1 or Section 9.4 shall be not more than 20% of the Purchase Price. Notwithstanding any other provision herein to the contrary, in the event a Party notifies the other Party of its intention to terminate this Agreement in accordance with Section 11.1(d) for failure of the conditions set forth in this Section 4.1(b) , such other Party may, prior to giving effect to Section 11.1(d) , elect by written notice (an “ Arbitration Notice ”) to submit all unresolved disputes with respect to any Title Defects, Title Benefits, Title Defect Amounts, Title Benefit Amounts, Environmental Defects or Remediation Amounts to expert arbitration in accordance with Section 9.2(j) and/or Section 10.1(f) , as applicable; provided that, in lieu of the timing provided in Section 9.2(j) and/or Section 10.1(f) , as applicable, the Parties shall select a Title Arbitrator or Environmental Arbitrator, as applicable, within five Business Days of the delivery of the Arbitration Notice, each Party shall submit such Party’s position to the Title Arbitrator or Environmental Arbitrator, as applicable, within 10 Business Days of the delivery of an Arbitration Notice and each Party shall instruct the Title Arbitrator or Environmental Arbitrator, as applicable, to deliver a determination of (A) the Environmental Defect Amount(s) attributable to all disputed Environmental Defects, (B) the Title Defect Amount(s) attributable to all disputed Title Defects and/or (C) the Title Benefit Amount(s) attributable to all disputed Title Benefits, as applicable within 20 Business Days of the delivery of the Arbitration Notice. For the avoidance of doubt, (1) if a Party elects to initiate arbitration in accordance with this Section 4.1(b) , neither Party may terminate this Agreement pursuant to Section 11.1(d) for failure of the conditions in this Section 4.1(b) until final resolution of such arbitration and (2) a Party’s initiation of arbitration in accordance with this Section 4.1(b) , shall not prevent Buyer, prior to giving effect to Section 11.1(d) , from electing to waive any asserted Title Defect or Environmental Defect, as applicable.

(c) HSR Act . If applicable, (i) the waiting period under the HSR Act applicable to the consummation of the transactions contemplated hereby shall have expired, (ii) notice of early termination shall have been received, or (iii) a consent order shall have been issued (in form and substance satisfactory to Seller) by or from applicable Governmental Authorities.

4.2 Buyer’s Conditions to Closing . The obligations of Buyer to consummate the transactions provided for herein are subject, at the option of Buyer, to the fulfillment by Seller or waiver by Buyer, on or prior to Closing, of each of the following conditions:

(a) Representations . Each of (i) the Fundamental Representations shall be true and correct in all material respects on and as of the Closing Date and (ii) the representations and warranties of Seller set forth in Article V (other than the Fundamental Representations) shall be true and correct in all respects on and as of the Closing Date, without giving effect to any qualifiers as to materiality, Material Adverse Effect or material adverse effect (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date), except for those breaches, if any, of such representations and warranties that in the aggregate would not have a Material Adverse Effect; provided that, for purposes of this Section 4.2(a)(ii) , any breach(es) that (A) could reasonably be expected to cause Buyer to incur any Liability or (B) decreases the value of the Assets, in each case of (A) or (B), in an aggregate amount equal to or greater than 15% of the unadjusted Purchase Price shall be deemed a “Material Adverse Effect”.

(b) Performance . Seller shall have performed or complied with, in all material respects, all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Seller is required prior to or at the Closing Date.

(c) Closing Certificate . Seller shall have executed and delivered to Buyer an officer’s certificate, dated as of the Closing Date and substantially in the form of Exhibit E-1 , certifying that the conditions set forth in Section 4.2(a) and Section 4.2(b) have been fulfilled and, if applicable, any exceptions to such conditions that have been waived by Buyer (the “ Seller Certificate ”).

(d) Closing Deliverables . Seller shall be ready, willing and able to deliver to Buyer at the Closing the documents and items required to be delivered by Seller under Section 2.6 .

4.3 Seller’s Conditions to Closing . The obligations of Seller to consummate the transactions provided for herein are subject, at the option of Seller, to the fulfillment by Buyer or waiver by Seller, on or prior to Closing, of each of the following conditions:

(a) Representations . Each of the representations and warranties of Buyer set forth in Article VI (i) that are qualified by the term “material”, “Material Adverse Effect” or other materiality qualifiers shall be true and correct in all respects (such qualifiers in their terms shall be applicable for purposes of this Section 4.3(a) ), and (ii) that are not qualified by

materiality qualifiers shall be true and correct in all material respects, in each case, as of the Closing Date as though made on and as of the Closing Date (other than representations and warranties that refer to a specified date, which need only be true and correct on and as of such specified date).

(b) Performance . Buyer shall have performed or complied with, in all material respects, all obligations, agreements and covenants contained in this Agreement as to which performance or compliance by Buyer is required prior to or at the Closing Date.

(c) Closing Certificate . Buyer shall have executed and delivered to Seller an officer’s certificate, dated as of the Closing Date and substantially in the form of Exhibit E-2 , certifying that the conditions set forth in Section 4.3(a) and Section 4.3(b) have been fulfilled and, if applicable, any exceptions to such conditions that have been waived by Seller.

(d) Closing Deliverables . Buyer shall be ready, willing and able to deliver to Seller at the Closing the documents and items required to be delivered by Buyer under Section 2.6 .

(e) Replacement Bonds . Buyer shall have obtained, in the name of Buyer, replacements for Seller’s and/or its Affiliates’ bonds, letters of credit and guarantees, and such other bonds, letters of credit and guarantees to the extent required to be obtained by Closing by Section 7.3.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer the following:

5.1 Organization, Existence and Qualification . Seller is duly formed and validly existing under the Laws of the state of its formation. Seller has all requisite power and authority to own and operate its property (including its interests in the Assets) and to carry on its business as now conducted. Seller is duly licensed or qualified to do business and in is good standing in all jurisdictions in which it carries on business or owns assets and such qualification is required by Law, except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect.

5.2 Authority, Approval and Enforceability . Seller has full power and authority to enter into and perform this Agreement and the Transaction Documents to which it is a party and the transactions contemplated herein and therein. The execution, delivery and performance by Seller of this Agreement have been, and the Transaction Documents to which Seller is a party when executed and delivered by Seller shall be, duly and validly authorized and approved by all necessary company or limited partnership (as applicable) action on the part of Seller. This Agreement is, and the Transaction Documents to which Seller is a party when executed and delivered by Seller shall be, the valid and binding obligation of Seller and enforceable against Seller in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting the rights of creditors generally, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

5.3 No Conflicts . Assuming the receipt of all applicable consents and approvals in connection with the transactions contemplated hereby and the waiver of, or compliance with, any Preferential Purchase Rights and any maintenance of uniform interest provision under any joint operating agreements constituting an Applicable Contract, in each case, applicable to the transactions contemplated hereby, the execution, delivery and performance by Seller of this Agreement and the Transaction Documents and the consummation of the transactions contemplated herein shall not (a) conflict with or result in a breach of any provisions of the governing documents of Seller, (b) result in a default or the creation of any Encumbrance or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any Lease, Applicable Contract, note, bond, mortgage, indenture, license or other agreement to which Seller is a party or by which Seller or the Assets may be bound or (c) violate any Law applicable to Seller or any of the Assets, except in the case of clauses (b) and (c) where such default, Encumbrance, termination, cancellation, acceleration or violation would not reasonably be expected to have a Material Adverse Effect.

5.4 Foreign Person . Seller is disregarded as separate from EXCO Resources Inc. EXCO Resources Inc. is neither (a) a “foreign person” within the meaning of Section 1445 of the Code nor (b) a “disregarded entity” within the meaning of Treasury Regulation Section 301.7701-3(a).

5.5 Litigation . Except as set forth in Schedule 5.5 , there is no (a) suit, action or litigation by any Person by or before any Governmental Authority or (b) arbitration proceeding, (in each case) pending, or to Seller’s Knowledge, threatened in writing, against Seller (i) with respect to the Assets or (ii) as of the Execution Date, with respect to the transactions contemplated by this Agreement.

5.6 Material Contracts .

(a) Schedule 5.6(a) sets forth all Applicable Contracts of the type described below as of the Execution Date (the Contracts of such type contained on such Schedule 5.6(a) together with the Raider Contracts, collectively, the “ Material Contracts ”):

(i) any Applicable Contract that can reasonably be expected to result in aggregate payments of more than $150,000 during the current or any subsequent fiscal year or $300,000 in the aggregate over the term of such Applicable Contract (based solely on the terms thereof);

(ii) any Applicable Contract that can reasonably be expected to result in aggregate revenues of more than $150,000 during the current or any subsequent fiscal year or $300,000 in the aggregate over the term of such Applicable Contract (based solely on the terms thereof);

(iii) any Applicable Contract that is a Hydrocarbon purchase and sale, gathering, transportation, gas balancing, marketing, processing, disposal or injection or similar Applicable Contract and that is not terminable without penalty upon 90 days’ or less notice;

(iv) any contract that dedicates production of Hydrocarbons from any part of the Assets for purposes of gathering, transportation, marketing or processing;

(v) any indenture, mortgage, loan, credit or similar Applicable Contract;

(vi) any Applicable Contract that constitutes a lease under which Seller is the lessor or the lessee of real or personal property which lease (A) cannot be terminated by Seller without penalty upon 30 days’ or less notice and (B) involves an annual base rental of more than $150,000;

(vii) any Applicable Contract that is a farmout agreement, participation agreement, exploration agreement, development agreement, joint operating agreement, unit agreement or similar Applicable Contract;

(viii) any Applicable Contract that is a drilling contract;

(ix) any Applicable Contract that contains a call on, or option to purchase, production of Hydrocarbons;

(x) any Applicable Contract where the primary purpose thereof is to indemnify another Person;

(xi) any Applicable Contract that is a seismic or other geophysical acquisition agreement or license;

(xii) any Applicable Contract between Seller and any Affiliate of Seller that is in effect from and after the Effective Time or shall not be terminated prior to Closing;

(xiii) any Applicable Contract that (A) contains or constitutes an existing area of mutual interest agreement or (B) includes non-competition restrictions or other similar restrictions on doing business; and

(xiv) any Applicable Contract that (A) is a surface use agreement and (B) materially restricts Seller’s ability to use the surface of any Asset as such Asset is currently owned, operated and used.

(b) Except as set forth in Schedule 5.6(b) , there exists no material default under any Material Contract by Seller or, to Seller’s Knowledge, by any other Person that is a party to such Material Contract. To Seller’s Knowledge, all Material Contracts are in full force and effect in accordance with their respective terms (except any Material Contract which (i) terminates in accordance with its terms following the Execution Date or (ii) is terminated prior to Closing in accordance with this Agreement).

(c) There are no Hedge Contracts pursuant to which any production of Hydrocarbons from any of the Assets is dedicated or committed from and after the Effective Time.

5.7 No Violation of Laws . Except as set forth in Schedule 5.7 , during the period Seller or its Affiliates have operated any Assets, Seller has not been in material violation of any applicable Laws with respect to its ownership or operation of the Assets, except for prior

instances of non-compliance that have been fully and finally resolved. To Seller’s Knowledge, except as set forth on Schedule 5.7 , there is no uncured material violation by any other Third Party operator of any applicable Laws with regard to the operation of the Assets. This Section 5.7 does not include any matters with respect to Tax Laws, Environmental Laws or any other Tax or environmental matter, such matters being addressed exclusively in Section 5.13 and Sections 5.5 and 5.17 and Article X , respectively.

5.8 Consents . Except (a) for compliance with the HSR Act, (b) as set forth in Schedule 5.8(a) or Schedule 5.8(b) , (c) under Contracts that are terminable upon 30 days’ or less notice without payment of any fee, (d) for consents or waivers required under any applicable maintenance of uniform interest provision under any joint operating agreements constituting an Applicable Contract, and (e) for Customary Post-Closing Consents, there are no requirements for consents from Persons to any assignment in connection with the transfer of the Assets by Seller to Buyer or the consummation of the transactions contemplated by this Agreement by Seller that Seller is required to obtain.

5.9 Preferential Purchase Rights . There are no Preferential Purchase Rights or similar rights that are applicable to the transfer of the Assets by Seller to Buyer.

5.10 Burdens . To Seller’s Knowledge, except (a) for the Suspense Funds and (b) as set forth in Schedule 5.10 , Seller has paid, or caused to be paid, in all material respects, all Burdens due by Seller with respect to the Assets.

5.11 Imbalances . To Seller’s Knowledge, except as set forth in Schedule 5.11 , there are no material Imbalances associated with the Assets as of the Effective Time.

5.12 Current Commitments . Schedule 5.12 sets forth, as of the Execution Date, all authorities for expenditures (“ AFEs ”) proposed or received by Seller that (a) relate to the Assets and are in excess of $200,000, net to Seller’s interest in the Assets, and (b) for which all of the activities anticipated in such AFEs have not been completed by the Effective Time or which will be binding on Buyer or the Assets on or after the Effective Time.

5.13 Asset Taxes . Except as set forth in Schedule 5.13 :

(a) all Asset Taxes that have become due and payable have been properly paid;

(b) all Tax Returns with respect to Asset Taxes that are required to be filed have been duly and timely filed, and all such Tax Returns are correct and complete in all material respects;

(c) there are no Encumbrances for Taxes (including any interest, fine, penalty or additions to Tax imposed by a Taxing Authority in connection with such Taxes) on the Assets, other than Permitted Encumbrances;

(d) Seller has not received any written notice of any pending claim (which remains outstanding) from any applicable Taxing Authority for assessment of Asset Taxes and, to Seller’s Knowledge, no such claim has been made or threatened except as it relates to pending severance tax refund claims made by Seller as set forth in Schedule 5.13 ;

(e) no audit, administrative, judicial or other proceeding with respect to Asset Taxes has been commenced or is presently pending except as it relates to pending severance tax refund claims made by Seller as set forth in Schedule 5.13 ; and

(f) none of the Assets are subject to any arrangement requiring a partnership income Tax Return to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code.

5.14 Brokers ’ Fees . Seller has incurred no liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Buyer or any Affiliate of Buyer shall have any responsibility.

5.15 Suspense Funds . To Seller’s Knowledge, Schedule 5.15 lists all material Suspense Funds held in suspense by Seller as of the Execution Date.

5.16 Advance Payments . To Seller’s Knowledge, except for any Imbalances, Seller is not obligated by virtue of any take or pay payment, advance payment or other similar payment (other than Burdens), to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Assets at some future time without receiving full payment therefor at or after the time of delivery.

5.17 Environmental . Except as set forth in Schedule 5.17 :

(a) Other than any Permits, Seller has not entered into any agreements or consents with any environmental Governmental Authority and is not subject to, any order, decree or judgment issued against Seller or its Affiliates by an environmental Governmental Authority, in each case, in existence as of the Execution Date and based on any Environmental Laws that relate to the future use of any of the Assets or that require any Remediation;

(b) as of the Execution Date, (i) to Seller’s Knowledge, with respect to the Assets, Seller has not disposed of (or arranged for disposal of) any Hazardous Substances to any location not on the Assets, and (ii) Seller has not received written notice from any Person of any release, event, condition or disposal of any Hazardous Substance (for which Remediation has not already been completed) concerning any of the Assets in each case of (i) or (ii) that would (A) materially interfere with or prevent material compliance by Seller with any Environmental Law or the terms of any Permits issued pursuant thereto or (B) result in any material liability of Seller to any Person under applicable Law; and

(c) all material final reports, studies and written notices from environmental Governmental Authorities, to the extent specifically addressing environmental matters related to Seller’s operation of the Assets that are in Seller’s possession have been made available to Buyer.

5.18 Employees .

(a) Prior to the Execution Date, Seller has provided Buyer with a list (the “ Employee List ”) of those employees of Seller and its Affiliates who primarily provide services related to the Assets and who Seller is making available to Buyer (the “ Business Employees ”). The Employee List shall include, for each Business Employee, his or her current job title, base salary or wage rate (as applicable), target bonus (if applicable), start date, and work location.

(b) Neither Seller nor any of its Affiliates is, with respect to any Business Employee, party to or bound by any collective bargaining, trade union, works council or similar agreement. Neither any Seller nor any of its Affiliates has recognized any trade union or other employee representative body with respect to the Business Employees. To Seller’s Knowledge, there are no, and within the past three years have been no, union organizing activities involving the Business Employees. There are no, and within the past three years have been no, strikes, work stoppages, walkouts, lockouts, or other material labor disputes involving the Business Employees.

(c) Schedule 5.18(c) contains a complete list of each material Employee Benefit Plan. Seller has heretofore made available to Buyer a summary of each such material Employee Benefit Plan (or, in the case of any material unwritten Employee Benefit Plan, a written description thereof).

(d) None of the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement (alone or in conjunction with any other event, including any termination of employment) will (i) entitle any Business Employee to any compensation or benefit or (ii) accelerate the time of payment or vesting or trigger any funding, of any compensation or benefits to any Business Employee, other than, in each case, severance payments owed to a Business Employee to the extent such Business Employee is not extended an offer to become a Transferred Employee and is terminated by Seller.

(e) No Employee Benefit Plan is a (i) “multiemployer plan” within the meaning of Section 3(37) of ERISA or (ii) “defined benefit plan” as defined in Section 3(35) of ERISA or any other pension plan subject to the funding requirements of Section 412 of the Code or Section 302 of Title IV of ERISA. None of the Assets are subject to any lien under ERISA or the Code associated with any “employee benefit plan” that is subject to Title IV of ERISA.

5.19 Wells; Plug and Abandon Notice . As of the Execution Date, except as set forth on Schedule 5.19 , there are no Wells (a) in respect of which Seller has received an order from any Governmental Authority or a written demand from any Third Party (in each case) requiring that such Wells be plugged and abandoned, or (b) in use for purposes of production or injection or suspended or temporarily abandoned in accordance with applicable Laws that (i) are required to be plugged and abandoned in accordance with applicable Laws or any Lease and (ii) have not been or are not in the process of being plugged and abandoned.

5.20 Non-Consent Operations . As of the Execution Date, Seller has not declined to participate in any operation or activity proposed with respect to the Assets on Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) , Exhibit A-1(d) , or Exhibit A-2 that could result in Seller’s interest in any Assets becoming subject to a penalty, non-payment or forfeiture as a result of

such election not to participate in such operation or activity, except to the extent reflected in the Net Revenue Interest and Working Interest set forth on Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) , Exhibit A-1(d) , or Exhibit A-2 .

5.21 Permits . As of the Execution Date, except as disclosed in Schedule 5.21 , Seller has all Permits necessary to own and operate the Assets (as currently owned and operated), except where the absence of which, individually or in the aggregate, would not be material. Seller has not received any written notice of material violations of any of such Permits.

5.22 Payouts . To Seller’s Knowledge, Schedule 5.22 contains a complete and accurate list of the status of any “payout” balance, as of the Effective Time, for the Wells that are subject to a reversion or other adjustment at some level of cost recovery or payout (or passage of time or other event other than termination of a Lease by its terms).

5.23 Bankruptcy ; Solvency . There are no bankruptcy, reorganization or receivership proceedings pending or, to Seller’s Knowledge, threatened against Seller or its Affiliates. Seller is not now insolvent and will not be rendered insolvent by any of the transactions contemplated by this Agreement. As used in this Section 5.23 , “insolvent” means that the sum of Seller’s debts and other probable liabilities exceeds the present fair saleable value of Seller’s assets. Immediately after giving effect to the consummation of the transactions contemplated by this Agreement, Seller will not have unreasonably small capital with which to conduct its present or proposed business and will have assets (calculated at fair market value) that exceed its liabilities. This Agreement has been proposed, negotiated and entered into by Seller in good faith and on an arm’s length basis. This Agreement and the transfer and sale of the Assets contemplated hereunder have been negotiated and consummated with procedural and substantive fairness as to all decision making processes and requirements, as well as the value obtained by Seller under this Agreement as evidenced by the Purchase Price. Buyer was selected by Seller to purchase the Assets after Seller conducted an arms-length marketing process designed to obtain the fair market value for the Assets. The marketing process included a competitive auction process with offers received from multiple bidders. Seller believes in good faith that the offer of Buyer to Seller was the highest and best offer obtained through such marketing process. Based upon the marketing process, Seller believes that the Purchase Price is a fair market value for the Assets.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller the following:

6.1 Organization, Existence and Qualification . Buyer is a limited partnership duly formed and validly existing under the Laws of the jurisdiction of its formation and Buyer has all requisite power and authority to own and operate its property and to carry on its business as now conducted. Buyer is duly licensed or qualified to do business as a foreign limited partnership in all jurisdictions in which it carries on business or owns assets and such qualification is required by Law except where the failure to be so qualified would not have a material adverse effect upon the ability of Buyer to consummate the transactions contemplated by this Agreement. Buyer is duly licensed or qualified to do business in Texas.

6.2 Authority, Approval and Enforceability . Buyer has full power and authority to enter into and perform this Agreement and the Transaction Documents to which it is a party and the transactions contemplated herein and therein. The execution, delivery and performance by Buyer of this Agreement have been duly and validly authorized and approved by all necessary limited partnership action on the part of Buyer. This Agreement is, and the Transaction Documents to which Buyer is a party when executed and delivered by Buyer shall be, the valid and binding obligation of Buyer and enforceable against Buyer in accordance with their respective terms, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting the rights of creditors generally, as well as to principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

6.3 No Conflicts . Assuming receipt of all consents and approvals from Third Parties in connection with the transactions contemplated by this Agreement and the Transaction Documents to which it is a Party, the execution, delivery and performance by Buyer of this Agreement and the consummation of the transactions contemplated herein shall not (a) conflict with or result in a breach of any provisions of the organizational or other governing documents of Buyer, (b) result in a default or the creation of any Encumbrance or give rise to any right of termination, cancellation or acceleration under any of the terms, conditions or provisions of any note, bond, mortgage, indenture, license or other agreement to which Buyer is a party or by which Buyer or any of its property may be bound or (c) violate any Law applicable to Buyer or any of its property, except in the case of clauses (b) and (c) where such default, Encumbrance, termination, cancellation, acceleration or violation would not have a material adverse effect upon the ability of Buyer to consummate the transactions contemplated by this Agreement or perform its obligations hereunder.

6.4 Consents . Subject to the satisfaction of the Parties’ obligations under Section 9.4 , there are no requirements for Consents from Persons to the consummation of the transactions contemplated by this Agreement by Buyer that Buyer is required to obtain, except any Customary Post-Closing Consents.

6.5 Litigation . There is (a) no suit, action or litigation by any Person by or before any Governmental Authority, or (b) arbitration proceedings, (in each case) pending, or to Buyer’s knowledge, threatened in writing, against Buyer, that would have a material effect upon the ability of Buyer to consummate the transactions contemplated by this Agreement or perform its obligations hereunder.

6.6 Financing . As of the Scheduled Closing Date and the Closing, Buyer will have sufficient cash in immediately available funds with which to pay the Purchase Price, consummate the transactions contemplated by this Agreement and perform its obligations under this Agreement and the Transaction Documents as such amounts become due and payable. Buyer understands and acknowledges that under the terms of this Agreement, Buyer’s obligation to consummate the purchase of the Assets and the other transactions contemplated by this Agreement and the Transaction Documents is not in any way contingent upon or otherwise subject to Buyer’s consummation of any financing arrangements, including the Financing, Buyer’s obtaining of any financing or the availability, grant, provision or extension of any financing to Buyer.

6.7 Regulatory . As of the Scheduled Closing Date and the Closing, Buyer or its designated operating Affiliate will be qualified to own and assume operatorship of oil, gas and mineral leases in all jurisdictions where the Assets are located, and the consummation of the transactions contemplated by this Agreement shall not cause Buyer (or its designated operating Affiliate) to be disqualified as such an owner or operator. To the extent required by any applicable Laws, Buyer or its designated operating Affiliate shall, as of the Scheduled Closing Date and the Closing, (a) hold all lease bonds and any other surety or similar bonds as may be required by, and in accordance with, all applicable Laws governing the ownership and operation of the Assets and (b) have filed any and all required reports necessary for such ownership and operation with all Governmental Authorities having jurisdiction over such ownership and operation.

6.8 Independent Evaluation . Buyer is sophisticated in the evaluation, purchase, ownership and operation of oil and gas properties and related facilities. In making its decision to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer has (a) relied on the representations and warranties of Seller set forth in Article V and (b) relied on its own independent investigation and evaluation of the Assets and the advice of its own legal, Tax, economic, environmental, engineering, geological and geophysical advisors and not on any comments, statements, projections or other material made or given by any representative, consultant or advisor of Seller. Buyer acknowledges and affirms that on or prior to Closing, Buyer shall have completed its independent investigation, verification, analysis, and evaluation of the Assets and made all such reviews and inspections of the Assets as it has deemed necessary or appropriate to consummate the transaction contemplated hereunder.

6.9 Brokers’ Fees . Buyer has incurred no liability, contingent or otherwise, for brokers’ or finders’ fees relating to the transactions contemplated by this Agreement for which Seller or Seller’s Affiliates shall have any responsibility.

6.10 Accredited Investor . Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act of 1933 (as amended, the “ Securities Act ”), and shall acquire the Assets for its own account and not with a view to a sale or distribution thereof in violation of the Securities Act, and the rules and regulations thereunder, any applicable state blue sky Laws or any other applicable securities Laws.

ARTICLE VII

COVENANTS

7.1 Conduct of Business .

(a) Except (w) as set forth in Schedule 7.1 , (x) for the operations covered by the AFEs as set forth in Schedule 5.12 , (y) as required in Seller’s reasonable judgment in the event of an emergency to protect life, property or the environment and/or (z) as expressly consented to in writing by Buyer, Seller shall, from and after the Execution Date until Closing:

(i) subject to interruptions resulting from force majeure, mechanical breakdown and planned maintenance, in each case, operate and manage or, in the case of those Assets not operated by Seller, use its commercially reasonable efforts to cause the Assets to be operated and managed; in each case, in the usual, regular and ordinary manner consistent with past practice;

(ii) maintain all material Permits affecting the Assets;

(iii) maintain insurance coverage on the Assets in the amounts and types currently in force;

(iv) give prompt notice to Buyer of any emergency requiring immediate action, or any emergency action taken, in the event of serious risk to life, property or the environment (including prevention of environmental contamination);

(v) except for those operations set forth on Schedule 7.1 , notify Buyer of any operation proposed by a Third Party that is reasonably estimated to cost Seller in excess of $200,000;

(vi) use good faith efforts to assist Buyer in connection with the renewal or replacement of the Crude Purchase Agreements; and

(vii) maintain, or cause to be maintained, the books of account and Records relating to the Assets in the usual, regular and ordinary manner and in accordance with the usual accounting practices of Seller.

(b) Except (w) as set forth in Schedule 7.1 , (x) for the operations covered by the AFEs as set forth in Schedule 5.12 , (y) as required in Seller’s reasonable judgment in the event of an emergency to protect life, property or the environment, and/or (z) as expressly contemplated by this Agreement or as expressly consented to in writing by Buyer, Seller shall not, from and after the Execution Date until Closing:

(i) other than any replacement or renewal of the Crude Purchase Agreements in accordance with Section 7.1(a)(vi) , (A) enter into any Applicable Contract that, if entered into on or prior to the Execution Date, would have been required to be listed in Schedule 5.6(a) or (B) terminate (unless the term thereof expires pursuant to the provisions existing therein) or materially amend the terms of any Material Contract, except, in each case, Contracts terminable by Seller with notice of 30 days or less without penalty;

(ii) terminate (unless the term thereof expires pursuant to the provisions existing therein) or materially amend any Lease or Easement;

(iii) subject to Section 7.1(e) , approve any individual AFE or similar request under any Applicable Contract (other than those required under the terms of any Applicable Contract) which would reasonably be estimated to require expenditures in excess of $200,000 or elect not to participate in any such AFE or similar request;

(iv) transfer or sell any portion of the Assets other than the (A) sale and/or disposal of Hydrocarbons in the ordinary course of business and (B) sales of equipment that is no longer necessary in the operation of the Assets or for which replacement equipment has been obtained;

(v) except where necessary to prevent the termination of any portion of a Lease, propose the (A) drilling of any additional wells, (B) deepening, sidetracking, plugging back or reworking of any existing wells or (C) abandonment of any Wells;

(vi) except to the extent required by applicable Law or the existing terms of any Employee Benefit Plan: (A) materially increase the annual base salary or hourly wages of any Business Employee (other than increases made in the ordinary course of business consistent with past practice) or (B) hire, promote or terminate any Business Employee (other than the termination of Business Employees in the ordinary course of business consistent with past practice and the hiring of new Business Employees to replace Business Employees whose employment terminates);

(vii) except to the extent required by applicable Law, enter into, amend or terminate any collective bargaining agreement covering any Business Employees; or

(viii) commit to do any of the foregoing.

(c) Without expanding any obligations which Seller may have to Buyer, it is expressly agreed that Seller shall never have any liability to Buyer with respect to any breach or failure of Section 7.1(a)(i) for any operations greater than that which it might have as the operator to a non-operator under the applicable operating agreement (or, in the absence of such an agreement, under the AAPL 610 (1989 Revision) form Operating Agreement), IT BEING RECOGNIZED THAT, UNDER SUCH AGREEMENTS AND SUCH FORM, THE OPERATOR IS NOT RESPONSIBLE FOR ITS OWN NEGLIGENCE WITH RESPECT TO OPERATIONS CONDUCTED THEREUNDER, AND HAS NO RESPONSIBILITY FOR SUCH OPERATIONS OTHER THAN FOR GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.

(d) Buyer acknowledges Seller owns undivided interests in certain of the properties comprising the Assets that it is not the operator thereof, and Buyer agrees that the acts or omissions of the other Working Interest owners (including the operators) who are not Seller or any Affiliates of Seller shall not constitute a breach of the provisions of this Section 7.1 , nor shall any action required by a vote of Working Interest owners constitute such a breach so long as Seller has voted its interest in a manner that complies with the provisions of this Section 7.1 .

(e) With respect to any AFE received by Seller that is estimated to cost in excess of $200,000, Seller shall forward such AFE to Buyer as soon as is reasonably practicable and thereafter the Parties shall consult with each other regarding whether or not Seller should elect to participate in such operation. Buyer agrees that it shall timely respond to any written request for consent pursuant to this Section 7.1(e) and Section 7.1(b)(iii) . In the event Buyer does not respond within 5 Business Days (unless a shorter time, not to be less than 48 hours, is reasonably required by the circumstances and the applicable joint operating agreement and such shorter time is specified in Seller’s request for consent) of Buyer’s receipt of any consent request as to whether or not Seller should elect to participate in such operation, Seller’s decision shall control and such operation shall be deemed to have been consented to by Buyer.

7.2 HSR Act . If applicable, within 10 Business Days following the execution by Buyer and Seller of this Agreement, Buyer and Seller shall each prepare and simultaneously file with the DOJ and the FTC the notification and report form required for the transactions contemplated by this Agreement by the HSR Act and request early termination of the waiting period thereunder. Buyer and Seller agree to respond promptly to any inquiries from the DOJ or the FTC concerning such filings and to comply in all material respects with the filing requirements of the HSR Act. Buyer and Seller shall cooperate with each other and, subject to the terms of the Confidentiality Agreement, shall promptly furnish all information to the other Party that is necessary in connection with Buyer’s and Seller’s compliance with the HSR Act. Buyer and Seller shall keep each other fully advised with respect to any requests from or communications with the DOJ or FTC concerning such filings and shall consult with each other with respect to all responses thereto. Each of Seller and Buyer shall use its reasonable efforts to take all actions reasonably necessary and appropriate in connection with any HSR Act filing to consummate the transactions consummated hereby.

7.3 Governmental Bonds . Buyer acknowledges that none of the bonds, letters of credit and guarantees, if any, posted by Seller or its Affiliates with Governmental Authorities and relating to the Assets are transferable to Buyer. Prior to the Scheduled Closing Date, Buyer shall obtain replacements for those bonds, letters of credit and guarantees set forth in Schedule 7.3 , to the extent such replacements are necessary for Buyer’s ownership of the Assets. On or before the Scheduled Closing Date, Buyer shall use its reasonable efforts to cause the cancellation of the bonds, letters of credit and guarantees posted by Seller and/or its Affiliates with respect to the Assets. In addition, on or before the Scheduled Closing Date, Buyer or its designated operating Affiliate shall deliver to Seller evidence of the posting of such bonds or other security set forth in Schedule 7.3 with all applicable Governmental Authorities meeting the requirements of such authorities to own and, where appropriate, operate, the Assets.

7.4 Record Retention . Buyer, for a period of seven years following Closing, shall (a) retain the Records, (b) provide Seller, its Affiliates and its and their officers, employees and representatives with access to the Records (to the extent that Seller has not retained the original or a copy) during normal business hours for review and copying at Seller’s expense, and (c) provide Seller, its Affiliates and its and their officers, employees and representatives with access, during normal business hours, to materials received or produced after Closing relating to any indemnity claim made under Section 12.2 for review and copying at Seller’s expense.

7.5 Amendment of Schedules . Buyer agrees that, with respect to the representations and warranties of Seller contained in this Agreement, Seller shall have the continuing right until Closing to add, supplement or amend the Schedules to its representations and warranties with respect to any matter hereafter arising or discovered which, if existing or known at the Execution Date or thereafter, would have been required to be set forth or described in such Schedules. For purposes of determining whether the conditions set forth in Section 4.2(a) have been fulfilled, the Schedules to Seller’s representations and warranties contained in this Agreement shall be deemed to include only that information contained therein on the Execution Date and shall be deemed to exclude all information contained in any addition, supplement or amendment thereto; provided , however , that if Closing shall occur, then all matters disclosed pursuant to any such addition, supplement or amendment at or prior to Closing shall be waived and Buyer shall not be entitled to make a claim with respect thereto pursuant to the terms of this Agreement or otherwise.

7.6 Non-Solicitation; No-Hire . Prior to the first anniversary of the Closing Date, neither Buyer nor any of its Affiliates shall hire, retain or attempt to hire or retain any employee of Seller other than the Business Employees that Buyer offers employment to pursuant to Section 7.7(b) or in any way interfere with the relationship between Seller and any of its employees other than the Business Employees that Buyer offers employment to pursuant to Section 7.7(b) ; provided that the non-solicitation restriction in this Section 7.6 shall not apply (a) in the event an employee of Seller contacts Buyer (or any of its Affiliates) regarding employment in response to an advertisement identifying employment opportunities published by Buyer (or any of its Affiliates) in a newspaper of general circulation or on its web site, (b) if an employee of Seller contacts Buyer (or any of its Affiliates) without having been directly solicited, or (c) if an employee of Seller who responds to a solicitation from a Third Party recruiter ( provided that such solicitation is not specifically targeted at employees of Seller). Buyer shall be permitted to contact any of Seller’s independent contractors whose services relate to the Assets to discuss post-Closing services.

7.7 Employee Matters .

(a) Offers of Employment . Notwithstanding the Confidentiality Agreement, Seller shall use commercially reasonable efforts to make the Business Employees available to Buyer for the purpose of having Buyer (or its Affiliate) offer employment to such employees in accordance with this Section 7.7(a) . No less than 10 Business Days prior to the Scheduled Closing Date, Buyer may offer employment with Buyer or its Affiliates to each Business Employee identified by Buyer in its sole discretion on terms and conditions determined by Buyer in its sole discretion. Buyer is responsible for scheduling any meetings or interviews and Seller shall reasonably assist Buyer with respect to such scheduling. Any meetings or interviews between Buyer and the Business Employees shall be scheduled at times and places that are not unreasonably inconvenient or disruptive to Seller or its Affiliates, with reasonable advance notice being provided to Seller. It is understood that Buyer or its Affiliates shall have no obligation to interview or make an offer of employment to any of the Business Employees (including any Business Employee who is not actively at work) pursuant to this Agreement or for any other reason. Each offer of employment by Buyer pursuant to this Section 7.7 shall be in writing, shall offer employment effective as of the Closing in a position that is substantially similar (or more senior) to the position occupied by such Business Employee immediately prior to the Closing, at a location within 15 miles of the Business Employee’s primary work location as of immediately prior to the Closing. Each Business Employee who accepts an offer of employment with Buyer and commences employment with Buyer or an Affiliate thereof immediately following the Closing is referred to herein as a “ Transferred Employee .” Buyer and Seller intend that the transactions contemplated by this Agreement shall not result in a severance-qualifying termination of employment of any Transferred Employee prior to or upon the consummation of the transactions contemplated by this Agreement and that the Transferred Employees will have continuous and uninterrupted employment immediately before and immediately after the Closing Date, and Buyer and Seller shall make commercially reasonable efforts to ensure the same; provided , however , that Seller shall be responsible for any severance payable to any Business Employee that is triggered under any Employee Benefit Plan.

(b) COBRA . Seller and its selling group (as defined in Treasury Regulation Section 54.4980B-9, Q&A-2(b)) shall be solely responsible for providing continuation coverage to the extent required by Section 4980B of the Code to those individuals who are “M&A qualified beneficiaries” as defined in Treasury Regulation Section 54.4980B-9, Q&A-4(b) with respect to the transactions contemplated by this Agreement (other than the Transferred Employees). Buyer shall be responsible for COBRA continuation coverage for any Transferred Employee who incurs a “qualifying event” (as such term is defined in Section 4980B(f)(3) of the Code) on or following the Closing Date.

(c) No Third Party Beneficiaries . The provisions of this Section 7.7 are solely for the benefit of the respective Parties to this Agreement and nothing in this Section 7.7 , express or implied, shall confer upon any other Person, including any employee (or any dependent or beneficiary thereof), any Third Party beneficiary rights or other rights or remedies, including any right to continuance of employment or any other service relationship with Buyer, Seller or any of their Affiliates, or any right to compensation or benefits or any term of condition of employment or service of any nature or kind whatsoever under this Agreement or otherwise. Nothing in this Section 7.7 , express or implied, shall: (i) interfere with the right of Buyer or any of its Affiliates to terminate the employment or other service relationship of any Transferred Employee at any time, (ii) obligate Buyer or its Affiliates to adopt, enter into or maintain any benefit or compensation plan, program or arrangement at any time, (iii) be construed as the establishment of or an amendment to any benefit or compensation plan, program, policy, agreement, arrangement or contract, or (iv) limit the ability of Buyer or any of its Affiliates to amend, modify or terminate any benefit or compensation plan, program, policy, agreement, arrangement or contract.

7.8 Successor Operator . While Buyer acknowledges that it desires to succeed Seller as operator of those Assets or portions thereof that Seller may presently operate, Buyer acknowledges and agrees that Seller cannot and does not covenant or warrant that Buyer shall become successor operator of same since the Assets or portions thereof may be subject to operating or other agreements that control the appointment of a successor operator. Seller agrees, however, that as to the Assets it operates, it shall use commercially reasonable efforts to support Buyer’s efforts to become successor operator (to the extent permitted under any applicable joint operating agreement) effective as of the Closing.

7.9 Records. (a) As soon as reasonably practicable (and in no event later than 20 days following Closing), Seller shall make available to Buyer electronic copies of the Records. No later than 15 days following the termination of the Transition Services Agreement, Seller shall make available to Buyer the Records at Seller’s offices during normal business hours.

7.10 Confidentiality . Buyer acknowledges that, pursuant to its right of access to the Records and the Assets, Buyer shall become privy to confidential and other information of Seller and that such confidential information shall be held confidential by Buyer and Buyer’s Representatives in accordance with the terms of the Confidentiality Agreement (as if Buyer were a party to the Confidentiality Agreement). Prior to Closing, except as otherwise provided in Section 13.6 and the Confidentiality Agreement, the terms of this Agreement and its entry and existence shall be held confidential by Buyer and shall not be divulged in any way to any Third Party by Buyer without the prior written approval of Sellers, except Buyer may disclose the

terms of this Agreement to any of the following Persons; provided that, with respect to the Persons described in the following clauses (a) through (d), (g) and (h), such Persons are subject to confidentiality obligations at least as restrictive as those set forth in this Section 7.10 and Buyer shall be responsible for any breach of such Person’s confidentiality obligations (except to the extent any such Person has executed a joinder to the Confidentiality Agreement): (a) any Affiliate of such Party; (b) any legal, accounting, tax or other professional advisers of such Party; (c) any bank or financial institution or other financing sources; (d) service companies or contract operators; (e) to any Governmental Authority in accordance with the applicable Laws, rules and regulations of such Governmental Authority applicable to such Party or the Assets; (f) to any court of competent jurisdiction acting in pursuance of its powers; (g) to the Accounting Arbitrator in accordance with Section 3.6 ; and (h) to the Title Arbitrator in accordance with Section 9.2(d) . If Closing should occur, the foregoing confidentiality restriction on Buyer, including the Confidentiality Agreement, shall terminate (except as to (a) such portion of the Assets that are not conveyed to Buyer pursuant to the provisions of this Agreement, (b) the Excluded Assets and (c) information related to assets other than the Assets).

7.11 Marketing Process Records . Seller shall retain from the Closing until the fourth anniversary of the Closing Date all of the Seller’s and its Affiliates’ records relating to the marketing process of the Assets and shall not destroy any such records without Buyer’s prior written consent (which consent may be withheld, conditioned or delayed in Buyer’s sole discretion).

7.12 Release of Escrow Amount. The Escrow Holdback shall be held in the Escrow Account after Closing as and to the extent provided in this Section 7.12 to satisfy Seller’s indemnification obligations under Section 12.2 . The Parties agree that the Escrow Agent shall disburse, after the release to Seller at Closing pursuant to Section 3.2 , the balance of the Escrow Account in accordance with the following procedures:

(a) Buyer shall deliver to the Escrow Agent a copy of any Claim Notice delivered to Seller (each an “ Escrow Claim Notice ”). No disbursement, however, shall be made by the Escrow Agent based upon said Escrow Claim Notice except as hereinafter set forth.

(b) If the Escrow Agent receives a joint instruction letter in the form attached to the Escrow Agreement (an “ Instruction Letter ”) executed by authorized representatives of Buyer and Seller instructing the Escrow Agent to disburse all or any portion of the Escrow Account balance to a Person (such amount, an “ Escrow Disbursement ”), then the Escrow Agent shall disburse the Escrow Disbursement to the recipient(s) identified in such letter in accordance with the Escrow Agreement.

(c) If the Escrow Agent has not been provided with an Escrow Claim Notice prior to 5:00 p.m. (Prevailing Central Time) on the date that is 12 months following the Closing (the “ Escrow Release Time ”), or if all such Escrow Claim Notices delivered prior to such time have been resolved by payment pursuant to Instruction Letters or final court orders prior to the Escrow Release Time, then within three Business Days, Seller and Buyer shall provide an Instruction Letter instructing the Escrow Agent to disburse to Seller an amount equal to the Escrow Account balance.

(d) If the Escrow Agent has received prior to the Escrow Release Time one or more Escrow Claim Notices that have not been resolved, and if the aggregate amount of said Escrow Claim Notices that remain in dispute equals or exceeds the Escrow Account balance, then in that event, the Escrow Agent shall not make any disbursement of the Escrow Account balance pursuant to Section 7.12(c) , in which event any further Escrow Disbursement with respect to Seller shall be governed by Section 7.12(e) .

(e) If the Escrow Agent has received one or more Escrow Claim Notices prior to the Escrow Release Time that have not been resolved, but the aggregate amount of outstanding Escrow Claim Notices that remains in dispute is less than the Escrow Account balance, then within three Business Days, Seller and Buyer shall provide an Instruction Letter instructing the Escrow Agent to disburse to Seller an amount equal to (i) the Escrow Account balance, less (ii) the aggregate amount of said unresolved Escrow Claim Notices that remain in dispute.

(f) With respect to the Escrow Account balance held by the Escrow Agent following the Escrow Release Time, if, following final resolution (and payment, if applicable, to the Indemnified Party(ies) pursuant to Instruction Letters or a final court order, as applicable) of all outstanding Escrow Claim Notices received by the Escrow Agent prior to the Escrow Release Time, any Escrow Account balance remains, then within three Business Days, Seller and Buyer shall provide an Instruction Letter instructing the Escrow Agent to disburse to Seller the Escrow Account balance.

7.13 Financing Cooperation . For the period beginning on the Execution Date and ending on the Closing Date, Seller agrees to: (a) promptly following a written request from Buyer, furnish Buyer with the financial and operational information regarding the Assets that is set forth on Schedule 7.13 to the extent reasonably requested by Buyer; (b) provide Buyer, at least three Business Days prior to the Closing Date, all documentation and other information required by regulatory authorities and as reasonably requested by Buyer on behalf of the Financing Sources with respect to the Assets, in each case, in connection with the applicable “know your customer” and anti-money laundering rules and regulations, including the USA PATRIOT Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001), as amended, to the extent reasonably requested by Buyer; provided that such request is made at least 10 Business Days prior to the Closing Date; and (c) promptly following a written request from Buyer, provide Buyer with customary lien release documentation reasonably requested by Buyer and/or contemplated under this Agreement; provided that, notwithstanding anything to the contrary, in no event shall Seller be in breach of this Agreement because of the failure by Seller to deliver any financial or other information that is not currently readily available in Seller’s possession on the Execution Date or is not otherwise prepared by Seller in the ordinary course of its business at the time requested by Buyer. Notwithstanding anything contained herein to the contrary, (i) no such request by Buyer will be permitted to the extent that it would require Seller to disclose information subject to attorney-client privilege or attorney work-product privilege, conflict with any Third Party confidentiality obligations to which Seller is bound ( provided that Seller shall use commercially reasonable efforts, without the obligation to make any payments, to seek the waiver of any such confidentiality obligations or permit Buyer to execute a joinder agreement) or violate any applicable Law and (ii) solely for purposes of determining whether Buyer’s condition to Closing in Section 4.2(b) has been satisfied, Seller shall not be deemed to

be in breach of any of the covenants set forth in this Section 7.13 , so long as it has acted in good faith to comply with its obligations set forth in this Section 7.13 . It is understood and agreed by the Parties that this Section 7.13 shall not obligate Seller to take any actions that adversely interfere with its ongoing business and operations. All non-public or otherwise confidential information regarding Seller obtained by Buyer or their representative shall be kept confidential in accordance with the Confidentiality Agreement. In addition to the foregoing, (A) none of Seller nor any of its Affiliates shall be required to incur any direct liability in connection with the Financing, (B) nothing in this Section 7.13 shall require cooperation to the extent that it would require Seller or any of its Affiliates to take any action that would reasonably be expected to conflict with or violate the its respective organization documents or any applicable Law, or result in the contravention of, or result in a violation or breach of, or default under, any contractual obligation and (C) Buyer shall indemnify, defend and hold harmless Seller from and against any liability incurred in connection with Seller’s obligations under this Section 7.13 , except to the extent suffered or incurred as a result of the gross negligence or willful misconduct of Seller or any Seller Indemnified Party. If the Closing does not occur, Buyer shall promptly reimburse Seller for all reasonable, documented out-of-pocket costs incurred by Seller in connection with cooperation with requests made under this Section 7.13 .

7.14 Financing Statements and Cooperation .

(a) Seller acknowledges that Buyer or its Affiliates may be required to include statements of revenues and direct operating expenses and other financial information relating to the Assets in documents filed by Buyer or its Affiliates or assignee with the SEC pursuant to the Securities Act, or in other materials (including offering materials for securities offered and sold as eligible for resale under Rule 144A of the Securities Act), and that such financial statements may be required to be independently audited (together with any supplementary oil and gas information required by ASC 932-235, the “ Requisite Financial Statement Information ”). At Buyer’s reasonable request, from and after the Execution Date and for up to two years (or such longer period as may be required by applicable Laws, rules or regulations not to exceed three years) after the date of the Closing, Seller shall, at Buyer’s sole cost and expense, use commercially reasonable efforts to (i) deliver to Buyer such audited and unaudited balance sheets, statements of income and cash flow and other financial information regarding the Assets as Buyer may reasonably request relating to periods beginning prior to the Closing and necessary for Buyer to comply with its obligations under the Securities Act and (ii) upon written request from Buyer, cooperate, and cause its accountants to cooperate, with Buyer and its accountants in connection with the preparation of the Requisite Financial Statement Information. Notwithstanding anything to the contrary, (A) Seller shall in no event be required to create new records relating to the Assets or financial statements, (B) the access to be provided to Buyer shall not interfere with Seller’s ability to prepare its own financial statements or its regular conduct of business and shall be made available during Seller’s normal business hours and (C) such assistance shall not include any actions that Seller reasonably believes would result in a violation of any material agreement or any confidentiality arrangement or the loss of any legal or other applicable privilege. All non-public or otherwise confidential information regarding Seller obtained by Buyer or their representative shall be kept confidential for a period of one year from such disclosure in accordance with the terms of the Confidentiality Agreement as if the Confidentiality Agreement were still in effect.

(b) All of the information provided by Seller pursuant to this Section 7.14 is given without any representation or warranty, express or implied, and no member of Seller Indemnified Parties or Seller’s accountants shall have any liability or responsibility with respect thereto. Buyer shall (i) reimburse Seller for all reasonable and documented out-of-pocket costs and expenses incurred by Seller and (ii) pay to Seller an hourly rate of $200.00 for all work performed by employees of Seller or its Affiliates to the extent such work exceeds 30 hours, in the aggregate, in each case, in complying with this Section 7.14 .

7.15 Transition Services Agreement . The Parties shall use commercially reasonable and good faith efforts to negotiate a customary Transition Services Agreement (the “ Transition Services Agreement ”) on or prior to the Closing Date that includes land administration, accounting, marketing, operations, EHS management and information technology services for a period of 90 days following the Closing Date. The Transition Services Agreement shall (a) include a fee for all services thereunder that is limited to cost reimbursement for Seller and its Affiliates providing such services and (b) require that Seller use commercially reasonable efforts (which, for the avoidance of doubt, shall not require Seller to increase any compensation and/or benefits) to make those field level employees employed by Seller or its Affiliates immediately prior to Closing and dedicated to the Assets available during the term of the Transition Services Agreement to provide services under the Transition Services Agreement.

7.16 NAESB . Buyer agrees to use commercially reasonable efforts to negotiate and execute a Base Contract for Sale and Purchase of Natural Gas with Chesapeake Energy Marketing, LLC (f/k/a Chesapeake Energy Marketing, Inc) (“ CEMI ”) on or before the Closing Date in a form substantially similar to the CHK NAESB (such Contract, the “ Replacement NAESB ”). If Buyer and CEMI have not executed the Replacement NAESB on or before the Closing Date, (a) subject to Section 9.4 , Seller shall partially assign (to the extent covering the Assets) the CHK NAESB to Buyer or its Affiliates on the Closing Date (the CHK NAESB to the extent partially assigned to Buyer, the “ Assigned CHK NAESB ”) and (b) Buyer shall continue to use commercially reasonable efforts to negotiate and execute the Replacement NAESB and the termination of the Assigned CHK NAESB.

ARTICLE VIII

ACCESS; DISCLAIMERS

8.1 Access.

(a) From and after the Execution Date and up to and including the Closing Date (or earlier termination of this Agreement), but subject to the other provisions of this Section 8.1 and obtaining any required consents of Third Parties, including Third Party operators of the Assets (which consents Seller shall use its commercially reasonable efforts to obtain), Seller shall afford to Buyer and its officers, employees, agents, accountants, attorneys, investment bankers and other authorized representatives (“ Buyer ’ s Representatives ”) reasonable access, during normal business hours, to (i) Seller’s and its Affiliates’ employees (following prior notice to Blair Mathews at bmathews@EXCOResources.com), (ii) the Assets and (iii) all Records in Seller’s or any of its Affiliates’ possession (including for the avoidance of doubt, digital copies of such Records to the extent such Records are already in digital form). All investigations and due diligence conducted by Buyer or any Buyer’s Representative shall be conducted at Buyer’s sole cost, risk and expense and any conclusions made from any examination done by Buyer or any of Buyer’s Representatives shall result from Buyer’s own independent review and judgment.

(b) Buyer shall be entitled to conduct a non-invasive environmental assessment, including a visual inspection, record review, interviews with applicable Persons, a regulatory compliance review and a Phase I environmental property assessment with respect to the Assets. Seller or its designee shall have the right to accompany Buyer and Buyer’s Representatives whenever they are on site on the Assets. Notwithstanding anything herein to the contrary, Buyer shall not have access to, and shall not be permitted to conduct, any environmental due diligence (including any Phase I environmental property assessments) with respect to any Assets where Seller does not have the authority to grant access for such due diligence ( provided , however , that Seller shall use its commercially reasonable efforts to obtain permission from any Third Party to allow Buyer and Buyer’s Representatives such access). If following the conduct of the Phase I or other visual environmental property assessment, Buyer reasonably believes that it is necessary to conduct any sampling, boring, drilling or other invasive investigation activities on or with respect to any of the Assets to determine the existence or magnitude of an Environmental Defect, Buyer shall furnish to Seller for its review a proposed scope of such sampling, boring, drilling or other invasive investigation activities, including a reasonable description of such activity and a description of the approximate locations of any sampling to be conducted. Following the receipt and review of such proposal by Seller, Seller shall elect, in its reasonable discretion, to permit or refuse to permit the conduct of any such activities by Buyer; provided , however , that if Seller refuses to permit the conduct of such activities (or Seller does not have the authority to grant access for such due diligence), then the Assets with respect to which Buyer requested permission to conduct such activities may, at Buyer’s option, be excluded from the Assets to be conveyed to Buyer at Closing and the Purchase Price shall be adjusted downward by the Allocated Value of such Assets.

(c) Buyer shall coordinate its environmental property assessments and physical inspections of the Assets with Seller and all Third Party operators to minimize any inconvenience to or unreasonable interruption of the conduct of business by Seller or such Third Party operators. Buyer shall abide by Seller’s, and any Third Party operator’s, written safety rules, regulations and operating policies while conducting its due diligence evaluation of the Assets, including any environmental or other inspection or assessment of the Assets; provided that Buyer is provided a copy of any such rules or regulations prior to conducting its due diligence on the applicable Assets. Buyer hereby defends, indemnifies and holds harmless each of the operators of the Assets and the Seller Indemnified Parties from and against any and all Liabilities arising out of, resulting from or relating to any field visit, environmental property assessment, or other due diligence activity conducted by Buyer or any Buyer’s Representative with respect to the Assets, EVEN IF SUCH LIABILITIES ARISE OUT OF OR RESULT FROM, SOLELY OR IN PART, THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY A MEMBER OF THE SELLER INDEMNIFIED PARTIES, EXCEPTING ONLY IN THE CASE OF THIS SECTION 8.1 (c) (I) LIABILITIES ACTUALLY RESULTING ON THE ACCOUNT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF A MEMBER OF THE SELLER INDEMNIFIED PARTIES AND (II) ENVIRONMENTAL CONDITIONS THAT WERE (BUT ONLY TO THE EXTENT) EXISTING PRIOR TO SUCH INSPECTIONS.

(d) Buyer agrees to promptly provide Seller, but in no event less than five Business Days after Buyer’s or any of Buyer’s Representative’s receipt or creation, copies of all final environmental reports and final environmental test results prepared by Buyer and/or any of Buyer’s Representatives which contain environmental data collected or generated from Buyer’s environmental due diligence with respect to the Assets, in each case, to the extent related to any Environmental Defect that Buyer reasonably expects to assert. None of Buyer, any of Buyer’s Representatives or Seller shall be deemed by Seller’s receipt of said documents, or otherwise, to have made any representation or warranty, expressed, implied or statutory, as to the condition of the Assets or to the accuracy of said documents or the information contained therein.

(e) Upon completion of Buyer’s due diligence, Buyer shall at its sole cost and expense and without any cost or expense to Seller or its Affiliates, (i) repair all damage done to the Assets in connection with Buyer’s due diligence, (ii) restore the Assets to at least the approximate same condition than they were prior to the commencement of Buyer’s due diligence and (iii) remove all equipment, tools or other property brought onto the Assets in connection with Buyer’s due diligence. Any disturbances to the Assets (including the leasehold associated therewith) that impacts the operation of any of the Assets resulting from Buyer’s due diligence shall be promptly corrected by Buyer.

(f) During all periods that Buyer and/or any of Buyer’s Representatives are on the Assets, Buyer or Buyer’s Representatives shall maintain, at their sole expense, policies of insurance of the types and in the amounts customary for such a review and that includes a waiver of subrogation against Seller Indemnified Parties. Upon request by Seller, Buyer shall provide evidence of such insurance to Seller prior to entering the Assets.

8.2 Disclaimers.

(a) EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY SET FORTH IN ARTICLE V , THE SELLER CERTIFICATE AND/OR SECTION 3.1 OF THE ASSIGNMENT, (I) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS, STATUTORY OR IMPLIED, AND (II) SELLER EXPRESSLY DISCLAIMS ALL LIABILITY AND RESPONSIBILITY FOR ANY REPRESENTATION, WARRANTY, STATEMENT OR INFORMATION MADE OR COMMUNICATED (ORALLY OR IN WRITING) TO BUYER OR ANY OF ITS AFFILIATES, EMPLOYEES, AGENTS, CONSULTANTS OR REPRESENTATIVES (INCLUDING, ANY OPINION, INFORMATION, PROJECTION OR ADVICE THAT MAY HAVE BEEN PROVIDED TO BUYER BY ANY OFFICER, DIRECTOR, EMPLOYEE, AGENT, CONSULTANT, REPRESENTATIVE OR ADVISOR OF SELLER OR ANY OF ITS AFFILIATES).

(b) EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE V , THE SELLER CERTIFICATE AND/OR SECTION 3.1 OF THE ASSIGNMENT, AND WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, SELLER EXPRESSLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, AS TO (I) TITLE TO ANY OF THE ASSETS, (II) THE CONTENTS, CHARACTER OR NATURE OF ANY REPORT OF ANY PETROLEUM ENGINEERING CONSULTANT OR ANY ENGINEERING, GEOLOGICAL OR SEISMIC DATA OR INTERPRETATION, RELATING TO THE ASSETS, (III) THE

QUANTITY, QUALITY OR RECOVERABILITY OF HYDROCARBONS IN OR FROM THE ASSETS, (IV) ANY ESTIMATES OF THE VALUE OF THE ASSETS OR FUTURE REVENUES GENERATED BY THE ASSETS, (V) THE PRODUCTION OF HYDROCARBONS FROM THE ASSETS, (VI) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITY OF THE ASSETS, (VII) THE CONTENT, CHARACTER OR NATURE OF ANY INFORMATION MEMORANDUM, REPORTS, BROCHURES, CHARTS OR STATEMENTS PREPARED BY SELLER OR THIRD PARTIES WITH RESPECT TO THE ASSETS, (VIII) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE TO BUYER OR ITS AFFILIATES OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS, REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY DISCUSSION OR PRESENTATION RELATING THERETO AND (IX) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT OR TRADEMARK INFRINGEMENT. EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED OTHERWISE IN ARTICLE V , THE SELLER CERTIFICATE AND/OR SECTION 3.1 OF THE ASSIGNMENT, SELLER FURTHER DISCLAIMS ANY REPRESENTATION OR WARRANTY, EXPRESS, STATUTORY OR IMPLIED, OF MERCHANTABILITY, FREEDOM FROM LATENT VICES OR DEFECTS, FITNESS FOR A PARTICULAR PURPOSE OR CONFORMITY TO MODELS OR SAMPLES OF MATERIALS OF ANY OF THE ASSETS, RIGHTS OF A PURCHASER UNDER APPROPRIATE STATUTES TO CLAIM DIMINUTION OF CONSIDERATION OR RETURN OF THE PURCHASE PRICE, IT BEING EXPRESSLY UNDERSTOOD AND AGREED BY THE PARTIES THAT BUYER SHALL BE DEEMED TO BE OBTAINING THE ASSETS IN THEIR PRESENT STATUS, CONDITION AND STATE OF REPAIR, “AS IS” AND “WHERE IS” WITH ALL FAULTS OR DEFECTS (KNOWN OR UNKNOWN, LATENT, DISCOVERABLE OR UNDISCOVERABLE), AND THAT BUYER WILL MAKE OR CAUSE TO BE MADE SUCH INSPECTIONS OF THE ASSETS AS BUYER DEEMS APPROPRIATE.

(c) EXCEPT AS AND TO THE LIMITED EXTENT EXPRESSLY REPRESENTED OTHERWISE IN SECTIONS 5.5 AND 5.17 , SELLER HAS NOT AND SHALL NOT MAKE ANY REPRESENTATION OR WARRANTY REGARDING ANY MATTER OR CIRCUMSTANCE RELATING TO ENVIRONMENTAL LAWS, THE RELEASE OF HAZARDOUS SUBSTANCES INTO THE ENVIRONMENT OR THE PROTECTION OF HUMAN HEALTH, SAFETY, NATURAL RESOURCES OR THE ENVIRONMENT, OR ANY OTHER ENVIRONMENTAL CONDITION OF THE ASSETS, AND NOTHING IN THIS AGREEMENT OR OTHERWISE SHALL BE CONSTRUED AS SUCH A REPRESENTATION OR WARRANTY, AND, SUBJECT TO BUYER’S RIGHTS UNDER SECTION 12.2(D) TO THE EXTENT RELATING TO THE MATTERS SET FORTH IN SUBSECTIONS (I), (X) OR (XI) OF THE DEFINITION OF RETAINED OBLIGATIONS, BUYER SHALL BE DEEMED TO BE OBTAINING THE ASSETS “AS IS” AND “WHERE IS” WITH ALL FAULTS FOR PURPOSES OF THEIR ENVIRONMENTAL CONDITION AND THAT BUYER HAS MADE OR CAUSED TO BE MADE SUCH ENVIRONMENTAL INSPECTIONS OF THE ASSETS AS BUYER DEEMS APPROPRIATE.

(d) SELLER AND BUYER AGREE THAT, TO THE EXTENT REQUIRED BY APPLICABLE LAW TO BE EFFECTIVE, THE DISCLAIMERS OF CERTAIN REPRESENTATIONS AND WARRANTIES CONTAINED IN THIS SECTION 8.2 ARE “ CONSPICUOUS ” DISCLAIMERS FOR THE PURPOSE OF ANY APPLICABLE LAW.

ARTICLE IX

TITLE MATTERS; CASUALTY; TRANSFER RESTRICTIONS

9.1 Seller’s Title.

(a) General Disclaimer of Title Warranties and Representations . Without limiting Buyer’s remedies for Title Defects set forth in this Article IX and subject to Section 9.1(b) , Seller makes no warranty or representation, express, implied, statutory or otherwise, with respect to title to any of the Assets and, Buyer acknowledges and agrees that Buyer’s sole remedy for any defect of title, including any Title Defect, with respect to any of the Assets (i) before Closing, shall be as set forth in Section 9.2 and (ii) after Closing, shall be pursuant to the Special Warranty and subject to the provisions of Section 9.1(c) and Section 9.2(d)(ii) .

(b) Special Warranty of Title . Effective as of the Closing, in the Assignment Seller shall warrant Defensible Title in and to each of the Leases, Fee Minerals and Wells, in each case, with respect to the Target Formation applicable thereto unto Buyer against every Person whomsoever lawfully claiming or to claim the same or any part thereof by, through or under Seller or its Affiliates, but not otherwise, subject to the Permitted Encumbrances (such special warranty in the Assignment, the “ Special Warranty ”). The Special Warranty is subject to the further limitations and provisions of Section 9.1(c) .

(i) Buyer’s Assertion of Special Warranty Breaches . Buyer shall furnish Seller a notice setting forth any matters which Buyer intends to assert as a breach of the Special Warranty and containing the information required to be included in a Title Defect Notice. Until the date that is 60 days following receipt of a notice of a breach of the Special Warranty, Seller shall have the opportunity, but not the obligation, to cure any breach of the Special Warranty asserted by Buyer pursuant to this Section 9.1(c)(i) . Buyer agrees to reasonably cooperate with any attempt by Seller to cure any such breach of the Special Warranty.

(ii) Limitations on Special Warranty . For purposes of the Special Warranty, the value of the Assets as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) , Exhibit A-1(d) or Exhibit A-2 , as applicable, shall be deemed to be the Allocated Value thereof, as adjusted pursuant to this Agreement. Recovery on the Special Warranty shall be limited to the Allocated Value of the applicable Asset.

9.2 Notice of Title Defects; Defect Adjustments.

(a) Buyer Title Defect Notices and Title Benefit Notices . Buyer must deliver, on or before 5:00 p.m. (Prevailing Central Time) on the Defect Claim Date, claim notices to Seller meeting the requirements of this Section 9.2(a) (collectively the “ Title Defect Notices ” and individually a “ Title Defect Notice ”) setting forth any matters which, in Buyer’s reasonable opinion, constitute Title Defects and which Buyer intends to assert as Title Defects pursuant to this Section 9.2 . For all purposes of this Agreement and notwithstanding anything herein to the

contrary (except for the Special Warranty as limited by Section 9.1(c) ), Buyer shall be deemed to have waived, and Seller shall have no liability for, any Title Defect that Buyer fails to assert as a Title Defect by a Title Defect Notice received by Seller on or before the Defect Claim Date. To be effective, each Title Defect Notice shall be in writing and shall include (i) a description of the alleged Title Defect and including the Well or Fee Mineral or Lease, or portion thereof, affected by such Title Defect (each such Asset or portion thereof a “ Title Defect Property ”), (ii) the Allocated Value of each Title Defect Property, (iii) supporting documents reasonably necessary for Seller to identify the existence of such Title Defect, and (iv) the amount by which Buyer reasonably believes the Allocated Value of each Title Defect Property is reduced by such Title Defect and the computations upon which Buyer’s belief is based. To give Seller an opportunity to commence reviewing and curing Title Defects, Buyer agrees to use reasonable efforts to give Seller, on or before the end of each two-week period prior to the Defect Claim Date, written notice of all Title Defects discovered by Buyer during the preceding two-week period, which notice may be preliminary in nature and supplemented prior to the Defect Claim Date; provided that in no event shall the failure of Buyer to provide any such preliminary notice of any Title Defects be deemed or construed to waive or otherwise prejudice Buyer’s right to assert a Title Defect on or before the Defect Claim Date. Buyer shall use commercially reasonable efforts to, prior to the Defect Claim Date, furnish Seller with written notice of any Title Benefit which is discovered by any of Buyer’s or any of its Affiliate’s employees, title attorneys, landmen or other title examiners while conducting Buyer’s due diligence with respect to the Assets prior to the Defect Claim Date.

(b) Seller Title Benefit Notices . Seller shall have the right, but not the obligation, to deliver to Buyer on or before the Defect Claim Date with respect to each Title Benefit a notice (a “ Title Benefit Notice ”) including (i) a description of the Title Benefit and the Assets affected by the Title Benefit, (ii) supporting documents reasonably necessary for Buyer to identify the existence of such Title Benefit and (iii) the amount by which Seller reasonably believes the Allocated Value of such Assets is increased by the Title Benefit and the computations upon which Seller’s belief is based. Seller shall be deemed to have waived any Title Benefits that Seller fails to provide a Title Benefit Notice therefor on or before the Defect Claim Date.

(c) Seller’s Right to Cure . Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure any Title Defects of which it has been advised by Buyer. The following shall apply with respect to each Title Defect that Seller attempts to cure pursuant to this Section 9.2(c) :

(i) Notwithstanding anything herein to the contrary, if Seller and Buyer do not agree, in their reasonable and good faith opinion, that a Title Defect has been cured prior to Closing, Seller shall have the option, by notice in writing to Buyer on or before Closing, to attempt to cure at its sole cost and expense such Title Defect (any such Title Defect a “ Subject Title Defect ”) during the 90-Day period after the Closing (the “ Cure Period ”). In such event, (A) the Title Defect Property to which such Subject Title Defect pertains shall be excluded from the Assets to be assigned and transferred to Buyer at Closing, (B) the unadjusted Purchase Price shall be reduced by an amount equal to the Allocated Value of such Title Defect Property, (C) an amount equal to the Allocated Value of such Title Defect Property shall be paid into an escrow account (the “ Defects Escrow ”) established with the Escrow Agent pursuant to the terms of the

Defects Escrow Agreement and (D) the Parties shall deliver to the Escrow Agent an executed and acknowledged Assignment covering such Title Defect Property (the “ Escrowed Assignment ”). The amount deposited into the Defects Escrow and the Escrowed Assignment with respect to a Subject Title Defect will remain therein until released as provided in Section 9.2(c)(ii) , and any such Title Defect Property shall be referred to as an “ Escrowed Title Defect Property ”.

(ii) Buyer will act in good faith and reasonably cooperate with Seller after the Closing in order for Seller to cure a Subject Title Defect.

(A) During the Cure Period, if Seller and Buyer mutually agree, in their reasonable and good faith opinion, that a Subject Title Defect with respect to an Escrowed Title Defect Property has been completely cured, then Seller and Buyer shall jointly instruct the Escrow Agent to (1) pay to Seller from the Defects Escrow an amount equal to the Allocated Value of such Escrowed Title Defect Property (together with any interest earned thereon) and (2) deliver to Buyer the Escrowed Assignment attributable to such Escrowed Title Defect Property; in each case, in accordance with the terms of the Defects Escrow Agreement.

(B) During the Cure Period, if Seller and Buyer mutually agree, in their reasonable and good faith opinion, that a Subject Title Defect with respect to an Escrowed Title Defect Property has been partially cured, then Seller and Buyer shall jointly instruct the Escrow Agent to (1) pay to Buyer from the Defects Escrow the portion of the Title Defect Amount attributable to such Escrowed Title Defect Property attributable to the uncured portion of such Subject Title Defect (together with interest earned thereon), (2) to pay to Seller the Allocated Value of such Escrowed Title Defect Property less such Title Defect Amount distributed to Buyer (together with any interest earned thereon) and (3) deliver to Buyer the Escrowed Assignment attributable to such Escrowed Title Defect Property; in each case, in accordance with the terms of the Defects Escrow Agreement.

(C) If, at the end of the Cure Period, Buyer and Seller mutually agree, in their reasonable and good faith opinion, that Seller has been unable to cure a Subject Title Defect with respect to an Escrowed Title Defect Property, then Seller and Buyer shall jointly instruct the Escrow Agent to (1) pay to Buyer from the Defects Escrow an amount equal to the Title Defect Amount attributable to such Escrowed Title Defect Property (together with any interest earned thereon), (2) pay to Seller from the Defect Escrow an amount equal to the Allocated Value of such Escrowed Title Defect Property less the Title Defect Amount distributed to Buyer and (3) deliver to Buyer the Escrowed Assignment attributable to such Escrowed Title Defect Property; in each case, in accordance with the terms of the Defects Escrow Agreement.

(D) If at the end of the Cure Period Buyer and Seller, in their reasonable and good faith opinion, have not agreed whether there has been, or the extent to which there has been, a cure of a Subject Title Defect with respect to an Escrowed Title Defect Property or the extent to which any Party is entitled to any disbursement from the Defects Escrow pursuant to this Section 9.2(c)(ii) , then such disagreement shall

be resolved as provided in Section 9.2(j) and following such determination by the Title Arbitrator, Seller and Buyer shall jointly instruct the Escrow Agent to (1) pay the amount owed to Buyer and/or Seller from the Defects Escrow to the applicable Parties (together with any interest earned thereon) and (2) deliver to Buyer the Escrowed Assignment attributable to such Escrowed Title Defect Property; in each case, in accordance with the terms of the Defects Escrow Agreement.

(E) Notwithstanding anything to the contrary herein, if the Parties have mutually agree, in their reasonable and good faith opinion, or the Title Arbitrator has determined pursuant to Section 9.2(j) that, following Seller’s attempts to cure, a Subject Title Defect with respect to an Escrowed Title Defect Property equals or exceeds 75% of the Allocated Value of such Escrowed Title Defect Property and Seller has elected the remedy set forth in Section 9.2(d)(iii) , then Seller and Buyer shall jointly instruct the Escrow Agent to (1) pay to Buyer from the Defects Escrow an amount equal to the Allocated Value of such Escrowed Title Defect Property (together with any interest earned thereon) and (2) deliver to Seller the Escrowed Assignment attributable to such Escrowed Title Defect Property; in each case, in accordance with the terms of the Defects Escrow Agreement.

(d) Remedies for Title Defects . Subject to (x) Seller’s continuing right to dispute the existence of a Title Defect and/or the Title Defect Amount asserted with respect thereto and/or to cure the Title Defect in accordance with Section 9.2(c) and (y) the rights of the Parties to terminate this Agreement pursuant to Section 11.1(d) , in the event that any Title Defect timely asserted by Buyer in accordance with Section 9.2(a) is not waived in writing by Buyer or cured (or deemed cured by the Title Arbitrator) during the Cure Period, then, subject to the Individual Title Defect Threshold and the Defect Deductible, Seller shall, at its sole option, (1) prior to Closing, with respect to any Title Defects Seller has not elected prior to Closing to attempt to cure, or (2) with respect to such Title Defects Seller has elected prior to Closing to attempt to cure, following the Parties’ agreement (or deemed agreement pursuant to Section 9.2(j) ) regarding Seller’s cure of such Title Defects, elect to:

(i) reduce the Purchase Price by the Title Defect Amount determined pursuant to Section 9.2(g) or Section 9.2(j) ;

(ii) to the extent Buyer consents in writing to be bound by and subject to such option (such consent may be withheld in Buyer’s sole discretion), indemnify Buyer against all Liability resulting from such Title Defect with respect to the Assets pursuant to an indemnity agreement in form and substance acceptable to Buyer, in its sole discretion (each, a “ Title Indemnity Agreement ”); or

(iii) if, and only if, the aggregate Title Defect Amount(s) with respect to any Title Defect Properties equals or exceeds 75% of the Allocated Value thereof, retain the entirety of the Title Defect Property that is subject to such Title Defect, together with all associated Assets, in which event the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Title Defect Property and such associated Assets and such Title Defect Property and such associated Assets should be deemed to be Excluded Assets.

(e) Remedies for Title Benefits . With respect to each Lease, Fee Mineral and/or Well, or portion thereof, affected by a Title Benefit (each such Asset or portion thereof a “ Title Benefit Property ”) reported under Section 9.2(b) , as Seller’s sole and exclusive remedies for any Title Benefits, the amount (the “ Title Benefit Amount ”) equal to the increase in the Allocated Value for such Asset caused by such Title Benefits, as determined pursuant to Section 9.2(h) , shall be applied as to offset the aggregate Title Defect Amounts attributable to Title Defects and the aggregate Remediation Amounts attributable to Environmental Defects. For the avoidance of doubt, Title Benefit Amounts shall in no event increase the Purchase Price and shall, instead, solely offset Title Defect Amounts.

(f) Exclusive Remedy . Except for Buyer’s (i) rights under the Special Warranty, (ii) rights under Section 12.2(a) with respect to a breach of Section 5.5 , Section 5.19 , Section 5.20 or Section 5.22 or Section 12.2(b) with respect to a breach of Section 7.1(b)(iv) , and (iii) rights to terminate this Agreement pursuant to Section 11.1(d), the provisions set forth in Section 9.2(d) shall be the sole and exclusive right and remedy of Buyer with respect to Seller’s failure to have Defensible Title or any other title matter with respect to any Asset.

(g) Title Defect Amount . The amount by which the Allocated Value of the affected Title Defect Property is reduced as a result of the existence of a Title Defect shall be the “ Title Defect Amount ” and shall be determined in accordance with the following terms and conditions:

(i) if Buyer and Seller agree on the Title Defect Amount, then that amount shall be the Title Defect Amount;

(ii) if the Title Defect is an Encumbrance that is undisputed and liquidated in amount, then the Title Defect Amount shall be the amount necessary to be paid to remove the Title Defect from the Title Defect Property;

(iii) if (A) the Title Defect represents a discrepancy between (1) Seller’s Net Revenue Interest for any Well and (2) Seller’s Net Revenue Interest for such Well as set forth in Exhibit A-2 and (B) Seller’s Working Interest in such Well is less than Seller’s Working Interest for such Well as set forth in Exhibit A-2 in the same proportion to such Net Revenue Interest decrease, then the Title Defect Amount shall be the product of (x) the Allocated Value of such Title Defect Property multiplied by (y) a fraction, the numerator of which is the Net Revenue Interest decrease in such Well, and the denominator of which is the Net Revenue Interest for such Well as set forth in Exhibit A-2 ;

(iv) if the Title Defect represents an increase in the aggregate Burdens for any Title Defect Property from the aggregate Burdens as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, for such Title Defect Property, and the Working Interest is not reduced proportionately, then the Title Defect Amount shall be the product of the Allocated Value of such Title Defect Property, multiplied by a fraction, (A) the numerator of which is the amount of the increase in the aggregate Burdens and (B) the denominator of which is the aggregate Burdens set forth for such Title Defect Property as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable; provided that if the Title Defect does not affect the Title Defect Property throughout the entire life of such Title Defect Property, then the Title Defect Amount determined under this Section 9.2(g)(iv) shall be reduced to take into account the applicable time period only;

(v) if the Title Defect with respect to a Title Defect Property that is a Lease or Fee Mineral represents a discrepancy where (A) the actual Net Acres for such Title Defect Property is less than (B) the Net Acres as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, for such Title Defect Property, then the Title Defect Amount shall be the product of (x) the Allocated Value of such Lease or Fee Mineral multiplied by a fraction, the numerator of which is the Net Acres decrease for such Lease or Fee Mineral, and the denominator of which is the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1 (a), Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable;

(vi) if the Title Defect represents an obligation, Encumbrance upon or other defect in title to the Title Defect Property of a type not described above, then the Title Defect Amount shall be determined by taking into account the Allocated Value of the Title Defect Property, the portion of the Title Defect Property affected by the Title Defect, the legal effect of the Title Defect, the potential economic effect of the Title Defect over the life of the Title Defect Property, the values placed upon the Title Defect by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation;

(vii) the Title Defect Amount with respect to a Title Defect Property shall be determined without duplication of any costs or losses included in another Title Defect Amount hereunder;

(viii) if a Title Defect does not affect a Title Defect Property throughout the entire remaining productive life of such Title Defect Property, such fact shall be taken into account in determining the Title Defect Amount; and

(ix) notwithstanding anything to the contrary in this Article IX , the aggregate Title Defect Amounts attributable to the effects of all Title Defects upon any single Title Defect Property shall not exceed the Allocated Value of such Title Defect Property.

(h) Title Benefit Amount . The Title Benefit Amount resulting from a Title Benefit shall be determined in accordance with the following methodology, terms and conditions:

(i) if Buyer and Seller agree on the Title Benefit Amount, then that amount shall be the Title Benefit Amount;

(ii) if (A) the Title Benefit represents a discrepancy between (1) Seller’s Net Revenue Interest for any Well and (2) Seller’s Net Revenue Interest for such Well as set forth in Exhibit A-2 and (B) Seller’s Working Interest in such Well is greater than Seller’s Working Interest for such Well as set forth in Exhibit A-2 in the same proportion to such Net Revenue Interest increase, then the Title Benefit Amount shall be the product of (x) the Allocated Value of the affected Well multiplied by (y) a fraction, the numerator of which is the Net Revenue Interest increase in such Well and the denominator of which is the Net Revenue Interest for such Well as set forth in Exhibit A-2 ;

(iii) if the Title Benefit represents a decrease in the aggregate Burdens for any Title Benefit Property such that the actual aggregate Burdens for any Title Benefit Property is less than the aggregate Burdens as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, for such Title Benefit Property, and the Working Interest is not increased proportionately, then the Title Benefit Amount shall be the product of the Allocated Value of such Title Benefit Property, multiplied by a fraction, (A) the numerator of which is the amount of such aggregate Burdens decrease and (B) the denominator of which is the aggregate Burdens set forth for such Title Benefit Property as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable; provided that if the Title Benefit does not affect the Title Benefit Property throughout the entire life of such Title Benefit Property, then the Title Benefit Amount determined under this Section 9.2(h)(iii) shall be reduced to take into account the applicable time period only;

(iv) if the Title Benefit with respect to a Title Benefit Property that is a Lease or Fee Mineral represents a discrepancy where (A) the actual Net Acres for such Title Benefit Property is greater than (B) the Net Acres as set forth in Exhibit A-1(a) , Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable, for such Title Benefit Property, then the Title Benefit Amount shall be the product of (x) the Allocated Value of such Lease or Fee Mineral multiplied by a fraction, the numerator of which is the Net Acres increase for such Lease or Fee Mineral, and the denominator which is the Net Acres for such Lease or Fee Mineral as set forth in Exhibit A-1 (a), Exhibit A-1(b) , Exhibit A-1(c) or Exhibit A-1(d) , as applicable; and

(v) if the Title Benefit is of a type not described above, then the Title Benefit Amounts shall be determined by taking into account the Allocated Value of the Asset affected by such Title Benefit, the portion of such Asset affected by such Title Benefit, the legal effect of the Title Benefit, the potential economic effect of the Title Benefit over the life of such Asset, the values placed upon the Title Benefit by Buyer and Seller and such other reasonable factors as are necessary to make a proper evaluation.

(i) Title Deductibles . Notwithstanding anything to the contrary, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Title Defect for which the Title Defect Amount does not exceed $100,000 (“ Individual Title Defect Threshold ”); and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Title Defect that exceeds the Individual Title Defect Threshold unless (A) the sum of (1) the Title Defect Amounts of all such Title Defects that exceed the Individual Title Defect Threshold (excluding any Title Defects cured by Seller), plus (2) all Remediation Amounts of all Environmental Defects that exceed the Individual Environmental Defect Threshold (excluding any Environmental Defects cured by Seller), minus (3) all Title Benefit Amounts, exceeds (B) the Defect Deductible, after which point Buyer shall be entitled to adjustments to the Purchase Price or other remedies only with respect to such Title Defects in excess of such Defect Deductible. For the avoidance of doubt, if Seller elects to exclude a Title Defect Property affected by a Title Defect from the transactions contemplated hereby pursuant to the remedy set forth in Section 9.2(d)(iii) , then, after such election, the Title Defect Amount and related Purchase Price adjustment relating to such excluded Assets shall not be counted towards the Defect Deductible or for purposes of Section 4.1(b).

(j) Title Dispute Resolution . Seller and Buyer shall attempt to agree on all Title Defects, Title Benefits, Title Defect Amounts, Title Benefit Amounts and if Seller has cured any Title Defects prior to Closing. Seller and Buyer shall attempt to agree on the extent to which Seller has cured any Title Defects during the Cure Period. If Seller and Buyer are unable to agree by Closing or the end of the Cure Period, as applicable, the Title Defect Amounts and Title Benefit Amounts in dispute shall be exclusively and finally resolved pursuant to this Section 9.2(j) .

(i) There shall be a single arbitrator, who shall be a title attorney with at least 10 years’ experience in oil and gas titles involving properties in the regional area in which the Title Defect Property are located, as selected by mutual agreement of Buyer and Seller within 15 days after the end of the Cure Period (the “ Title Arbitrator ”). In the event the Parties are unable to mutually agree upon the Title Arbitrator within such time period, then each Party shall nominate a candidate to be the Title Arbitrator, and such candidates so nominated by the Parties shall together determine the Title Arbitrator. All communications between any Party and the Title Arbitrator shall be conducted in writing, with copies sent simultaneously to the other Party in the same manner, or at a meeting to which all Parties have been invited and of which such Parties have been provided at least five Business Days’ notice. The arbitration proceeding shall be held in Dallas, Texas. The Parties shall instruct the Title Arbitrator to render, within 20 Business Days after submission of the matters in dispute, a decision choosing either Seller’s position or Buyer’s position with respect to each matter in dispute. Any decision rendered by the Title Arbitrator pursuant hereto shall be final and binding upon the Parties, without right of appeal. In making his determination, the Title Arbitrator shall be bound by the rules set forth in Section 9.2(g) and Section 9.2(h) and, subject to the foregoing, may consider such other matters as in the opinion of the Title Arbitrator are necessary to make a proper determination. The Title Arbitrator, however, may not award the Buyer a greater Title Defect Amount than the Title Defect Amount claimed by Buyer in its applicable Title Defect Notice. The Title Arbitrator, once appointed, shall have no ex parte communications with the Parties concerning the expert determination or the underlying dispute. The Title Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Title Defect, Title Benefit, Title Defect Amounts and/or Title Benefit Amounts submitted by either Party and may not award damages, interest or penalties to either Party with respect to any matter. Seller and Buyer shall each bear its own legal fees and other costs of presenting its case. The costs of such Title Arbitrator shall be borne one-half by Seller and one-half by Buyer.

(ii) Nothing herein shall operate to cause the Closing to be delayed on account of any arbitration hereunder. To the extent any adjustments with respect to disputed Title Benefits are not agreed upon by the Parties as of the Closing, the adjustments to the Closing Adjusted Purchase Price with respect to Title Defects shall be offset by an amount equal to the Title Benefit Amount applicable for such Title Benefit Property as determined in good faith by Buyer. To the extent (A) any adjustments with respect to disputed Title Defects are not agreed upon by the Parties as of the Closing, (B) Seller has not elected to attempt to cure such Title Defects and (C) Seller has elected the remedy set forth in Section 9.2(d)(i) with respect to such Title Defect, such Title Defect Property to which such disputed Title Defect pertains shall remain a part of the Assets to be assigned and transferred to Buyer at Closing, the Closing Adjusted Purchase Price shall be reduced by an amount equal to the Title Defect Amount applicable for such Title Defect Property as determined in good faith by Buyer, and such amount shall be paid

into the Defects Escrow pursuant to the terms of the Defects Escrow Agreement. The amount deposited into the Defects Escrow with respect to a disputed Title Defect will remain therein until such dispute is resolved pursuant to this Section 9.2(j) , at which time the amount owed to Buyer and/or Seller shall be released from the Defects Escrow to the applicable Party (together with any interest earned thereon).

9.3 Casualty Loss.

(a) Notwithstanding anything herein to the contrary from and after the Effective Time, if Closing occurs, Buyer shall assume all risk of loss with respect to production of Hydrocarbons through normal depletion (including watering out of any Well, collapsed casing or sand infiltration of any Well) and the depreciation of the Wells and all Personal Property due to ordinary wear and tear, in each case, with respect to the Assets.

(b) If, after the Execution Date but prior to the Closing Date, any portion of the Assets is destroyed by fire or other casualty (each, a “ Casualty Loss ”), Buyer shall nevertheless be required to close and, with respect to any one or more Assets that suffer Casualty Loss in an amount that equals or exceeds $500,000, the Purchase Price will be reduced by the aggregate amount necessary to repair or restore the affected Asset(s) to its condition prior to such Casualty Loss; provided that if such amount is in dispute as of Closing, then the amount determined in good faith by Seller after consultation with its insurers shall be used to adjust the Closing Adjusted Purchase Price. Notwithstanding the foregoing, with respect to any Asset that suffers Casualty Loss in an amount less than $500,000, Seller, at Closing, shall pay to Buyer all sums paid to Seller by Third Parties by reason of such Casualty Loss insofar as relating to the Assets and shall assign, transfer and set over to Buyer or subrogate Buyer to all of Seller’s or its Affiliates right, title and interest (if any) in insurance claims, unpaid awards, and other rights (in each case) against Third Parties arising out of such Casualty Loss; provided , however , that Seller shall reserve and retain (and Buyer shall assign to Seller) all rights, title, interests and claims against Third Parties for the recovery of Seller’s costs and expenses incurred prior to Closing in pursuing or asserting any such insurance claims or other rights against Third Parties with respect to any such Casualty Loss insofar as with respect to the Assets.

9.4 Consents to Assign; Preferential Purchase Rights.

(a) Seller, promptly after the Execution Date and in any event within five Business Days of the Execution Date, shall send to each holder of a right to consent to assignment pertaining to the Assets and the transactions contemplated hereby as set forth in Schedule 5.8(a) (and, with respect to any right to consent that is not set forth on Schedule 5.8(a) but is discovered by either Party after the Execution Date and before the Closing Date, within five Business Days of the discovery thereof), a notice in substantially the form of Exhibit I (the “ Consent Form ”), seeking such holder’s consent to the transactions contemplated hereby. Buyer shall cooperate in good faith with Seller’s efforts to obtain any consent required to assign the Assets to Buyer. Seller will be deemed to have obtained any consent that has been executed by a consent holder in the Consent Form or with such modifications requested by a consent holder with the consent of Buyer (such consent not to be unreasonably withheld; provided that, for the avoidance of doubt, Buyer’s withholding of consent with respect to modifications (i) that remove the holder’s consent to transfers to and/or among Affiliates or (ii) that adversely amend the terms of the burdened Lease shall be deemed to be reasonable).

(b) If Seller fails to obtain a Hard Consent then, in each such case, the affected Asset(s) shall be excluded from the Assets to be acquired by Buyer at Closing hereunder and the Purchase Price shall be reduced by the Allocated Value of the Asset(s) so excluded. In the event that a Hard Consent (with respect to any applicable Asset(s) excluded pursuant to this Section 9.4(b) ) that was not obtained prior to Closing is obtained within 180 days following Closing, then Buyer shall purchase, within 10 days after such Hard Consent is obtained, such Asset(s) so excluded from Seller under the terms of this Agreement for the amount (if any) by which the Purchase Price was reduced at Closing due to the exclusion of such Asset(s) (as such amount is appropriately adjusted in accordance to Section 3.3 with respect to such Asset(s)), and Seller shall assign to Buyer such Asset(s) pursuant to an assignment in form substantially similar to the Assignment.

(c) If Seller fails to obtain a consent as set forth in Schedule 5.8(a) prior to Closing and such consent is not a Hard Consent, then (x) the Asset(s) subject to such un-obtained consent shall be acquired by Buyer at Closing as part of the Assets, (y) Buyer shall have no claim against, and hereby releases and indemnifies the Seller Indemnified Parties from any Liability for, the failure to obtain such consent and (z) Buyer shall be solely responsible from and after Closing for any and all Liabilities arising from the failure to obtain such consent.

(d) Notwithstanding anything contained herein to the contrary, in cases where a Hard Consent has not been obtained as of the Closing with respect to a Contract and Buyer is assigned the Assets to which the Contract relates but the Contract is not transferred to Buyer, then the following shall apply: (a) Seller shall continue after Closing to use commercially reasonable efforts to obtain the Hard Consent so that such Contract can be transferred to Buyer upon receipt of the Hard Consent; (b) the Contract shall be held by Seller for the benefit of Buyer; (c) Buyer shall pay all amounts due thereunder; and (d) Buyer shall be responsible for all Liabilities under such Contract and for the performance of any obligations under such Contract to the extent that Buyer has been transferred the Assets necessary to perform under such Contract until such Hard Consent is obtained. With respect to any Contract for which the applicable Hard Consent for the assignment or transfer to the Buyer is obtained following the Closing, Seller shall transfer such Contract to Buyer by execution and delivery of an instrument of conveyance in the form of the Assignment.

(e) Seller, promptly (but in any event within five Business Days) after the discovery by either Party after the Execution Date and before the Closing Date of a Preferential Purchase Right, shall send to the holder of such Preferential Purchase Right a notice in material compliance with the contractual provisions applicable to such Preferential Purchase Right, requesting a waiver of such Preferential Purchase Right. Any Preferential Purchase Right triggered by the transactions contemplated by this Agreement must be exercised subject to all terms and conditions set forth in this Agreement, including the successful Closing of this Agreement pursuant to Section 2.4 on the dates set forth herein. The consideration payable under this Agreement for any particular Asset for purposes of Preferential Purchase Right notices shall be the Allocated Value for such Asset, adjusted as set forth herein. If (i) any Preferential Purchase Right is validly and timely exercised prior to Closing or (ii) any Preferential Purchase

Right is not exercised or waived prior to the Closing but the time for exercise or waiver of such Preferential Purchase Right has not yet expired, then in each case, at the Closing, (A) the Purchase Price shall be reduced by the Allocated Value of such Asset and (B) such Asset shall be deemed to be an Excluded Asset for all purposes hereunder; provided , however , in the event (x) the holder of any Preferential Purchase Right validly exercises such Preferential Purchase Right prior to Closing but refuses or fails to consummate the purchase of such Asset as of the date 180 days after the Closing Date or (y) the time for exercise or waiver of a Preferential Purchase Right expires after the Closing without exercise thereof, Buyer shall purchase, within 30 days thereafter, such Assets so excluded from Seller under the terms of this Agreement for the amount by which the Purchase Price was reduced at Closing due to the exclusion of such Assets (as such amount is appropriately adjusted in accordance with Section 3.3 with respect to such Assets). Seller shall assign to Buyer such Assets pursuant to assignments in form substantially similar to the Assignment.

ARTICLE X

ENVIRONMENTAL MATTERS

10.1 Notice of Environmental Defects.

(a) Environmental Defect Notices . If Buyer discovers any Environmental Condition which, in its reasonable opinion, Buyer determines constitutes an Environmental Defect, Buyer shall notify Seller on or before 5:00 p.m. (Prevailing Central Time) on the Defect Claim Date. To be effective, notice of an Environmental Defect (an “ Environmental Defect Notice ”) shall be in writing and shall include (i) a description of the Environmental Condition constituting the asserted Environmental Defect(s), (ii) the Asset(s) (or portions thereof) affected by the asserted Environmental Defect (each, an “ Environmental Defect Property ”), (iii) documentation, including where available any physical measurements or, to the extent available and permitted by Seller under Section 8.1 , lab analyses or photographs, reasonably sufficient for Seller to identify the existence of the asserted Environmental Defect(s), (iv) to the extent applicable, the Allocated Value of each Environmental Defect Property and the Remediation Amount that Buyer asserts is attributable to such Environmental Defect and the information upon which Buyer’s belief is based, and (v) the specific Environmental Law or relevant standard that is applicable to the Environmental Defect. Buyer’s calculation of the Remediation Amount included in the Environmental Defect Notice must describe in reasonable detail the Remediation proposed for the Environmental Condition that gives rise to the asserted Environmental Defect, including the requirements or standards that Buyer asserts must be met to cure such Environmental Defect. For all purposes of this Agreement but subject to Buyer’s remedies pursuant to Section 12.2(a) with respect to a breach of Sections 5.5 and 5.17 , Buyer shall be deemed to have waived, and Seller shall have no liability for, any Environmental Defect which Buyer fails to assert as an Environmental Defect by an Environmental Defect Notice received by Seller on or before the Defect Claim Date.

(b) Seller’s Right to Cure . Seller shall have the right, but not the obligation, to attempt, at its sole cost, to cure to Buyer’s reasonable satisfaction at any time prior to the Closing any Environmental Defects of which it has been advised by Buyer.

(c) Remedies for Environmental Defects . Subject to Seller’s continuing right to dispute the existence of an Environmental Defect and/or the Remediation Amount asserted with respect thereto, and subject to the rights of the Parties pursuant to Section 11.1(d) , in the event that any Environmental Defect timely asserted by Buyer in accordance with Section 10.1(a) is not waived in writing by Buyer or cured to Buyer’s reasonable satisfaction on or before Closing, then, subject to the Individual Environmental Defect Threshold and the Defect Deductible, Seller shall, subject to Section 10.1(c)(iii) , elect to:

(i) reduce the Purchase Price by the Remediation Amount, in which case Buyer shall be deemed to have assumed responsibility for all of the costs and expense attributable to the Remediation of the Environmental Condition attributable to such Environmental Defect and such responsibility of Buyer shall be deemed to constitute part of the Assumed Obligations hereunder;

(ii) in the event that the Remediation Amount equals or exceeds (A) the Allocated Value for such Environmental Defect Property or (B) solely with respect to any Environmental Defect Property that does not have an Allocated Value, in the event that the Remediation Amount for such Environmental Defect Property equals or exceeds $1,000,000, retain the entirety of the Environmental Defect Property that is subject to such Environmental Defect, together with all associated Assets, in which event the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Environmental Defect Property and such associated Assets (or, solely with respect to any Environmental Defect Property that does not have an Allocated Value as described in (B) above, by an amount equal to to the Allocated Value of related or associated Assets to the extent applicable or relating to, used in connection with, servicing or burdening the Environmental Defect Property); or

(iii) if and only if Buyer agrees to this remedy (such consent may be withheld in Buyer’s sole discretion), indemnify Buyer against all Liability resulting from such Environmental Defect with respect to the Environmental Defect Property pursuant to an indemnity agreement in form and substance reasonably satisfactory to the Parties (each, an “ Environmental Indemnity Agreement ”).

Notwithstanding the foregoing, in the event that (A) the Remediation Amount equals or exceeds the entire Allocated Value for such Environmental Defect Property or (B) solely with respect to any Environmental Defect Property that does not have an Allocated Value, in the event that the Remediation Amount for such Environmental Defect Property equals or exceeds $1,000,000, Buyer may cause Seller to retain the entirety of the Environmental Defect Property (together with all associated Assets) that is subject to such Environmental Defect in which event the Purchase Price shall be reduced by an amount equal to the Allocated Value of such Environmental Defect Property and such associated Assets (or, solely with respect to any Environmental Defect Property that does not have an Allocated Value as described in (B) above, by an amount equal to to the Allocated Value of related or associated Assets to the extent applicable or relating to, used in connection with, servicing or burdening the Environmental Defect Property).

(d) Exclusive Remedy . Except with respect to Buyer’s rights to terminate this Agreement pursuant to Section 11.1(d) , and subject to Buyer’s remedy for a breach of Seller’s

representations contained in Section 5.17 , the provisions set forth in Section 10.1(c) shall be the exclusive right and remedy of Buyer with respect to any Environmental Defect with respect to any Asset.

(e) Environmental Deductibles . Notwithstanding anything to the contrary, (i) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any individual Environmental Defect for which the Remediation Amount does not exceed $100,000 (“ Individual Environmental Defect Threshold ”); and (ii) in no event shall there be any adjustments to the Purchase Price or other remedies provided by Seller for any Environmental Defect for which the Remediation Amount exceeds the Individual Environmental Defect Threshold unless (A) the sum of (1) the Remediation Amounts of all such Environmental Defects that exceed the Individual Environmental Defect Threshold (excluding any Environmental Defects cured by Seller), plus (2) the Title Defect Amounts of all such Title Defects that exceed the Individual Title Defect Threshold (excluding any Title Defects cured by Seller), minus (3) all Title Benefit Amounts, exceeds (B) the Defect Deductible, after which point Buyer shall be entitled to adjustments to the Purchase Price or other remedies only with respect to such Environmental Defects in excess of the Defect Deductible For the avoidance of doubt, if Seller elects to exclude an Environmental Defect Property affected by an Environmental Defect from the transactions contemplated hereby pursuant to the remedy set forth in Section 10.1(c)(iii) , then, after such election, the Remediation Amount and the related Purchase Price adjustment relating to such excluded Assets shall not be counted towards the Defect Deductible or for purposes of Section 4.1(b).

(f) Environmental Dispute Resolution . Seller and Buyer shall attempt to agree on all Environmental Defects and Remediation Amounts prior to Closing. If Seller and Buyer are unable to agree by Closing, the Environmental Defects and/or Remediation Amounts in dispute shall be exclusively and finally resolved by arbitration pursuant to this Sect ion 10.1(f) .

(i) There shall be a single arbitrator, who shall be a suitably qualified environmental expert with at least 10 years’ experience in environmental matters involving oil and gas producing properties in the regional area in which the affected Assets are located, as selected by mutual agreement of Buyer and Seller within 15 days after the Closing Date (the “ Environmental Arbitrator ”). In the event the Parties are unable to mutually agree upon the Environmental Arbitrator within such time period, then each Party shall nominate a candidate to be the Environmental Arbitrator, and such candidates so nominated by the Parties shall together determine the Environmental Arbitrator. The Environmental Arbitrator, once appointed, shall have no ex parte communications with the Parties concerning the expert determination or the underlying dispute. All communications between any Party and the Environmental Arbitrator shall be conducted in writing, with copies sent simultaneously to the other Party in the same manner, or at a meeting to which all Parties have been invited and of which such Parties have been provided at least five Business Days’ notice. The arbitration proceeding shall be held in Dallas, Texas. The Parties shall instruct the Environmental Arbitrator to render, within 20 Business Days after submission of the matters in dispute, a decision choosing either Seller’s position or Buyer’s position with respect to each matter in dispute. Any decision rendered by the Environmental Arbitrator pursuant hereto shall be final and binding upon the Parties, without right of appeal. In making his determination, the Environmental Arbitrator shall be bound by the rules set forth in this Section 10.1 and, subject to the foregoing, may consider such other matters

as in the opinion of the Environmental Arbitrator are necessary or helpful to make a proper determination. The Environmental Arbitrator, however, may not award Buyer its share of any greater Remediation Amount than the Remediation Amount claimed by Buyer in its applicable Environmental Defect Notice. The Environmental Arbitrator shall act as an expert for the limited purpose of determining the specific disputed Environmental Defects and/or Remediation Amounts submitted by either Party and may not award damages, interest or penalties to either Party with respect to any matter. Seller and Buyer shall each bear its own legal fees and other costs of presenting its case. The costs of such Environmental Arbitrator shall be paid one-half by Seller and one-half by Buyer.

(ii) Nothing herein shall operate to cause the Closing to be delayed on account of any arbitration hereunder. To the extent any adjustments with respect to disputed Remediation Amounts are not agreed upon by the Parties as of the Closing, the Closing Adjusted Purchase Price shall be reduced by an amount equal to the Remediation Amount determined in good faith by Seller applicable for such Environmental Defect Property.

10.2 NORM . Buyer acknowledges that the Assets have been used for exploration, development, production, gathering and transportation of oil and gas and there may be NORM located in, on or under the Assets or associated with the Assets. Equipment and sites included in the Assets may contain NORM. NORM may affix or attach itself to the inside of wells, pipelines, materials and equipment as scale, or in other forms. The wells, materials and equipment located on the Assets or included in the Assets may contain NORM. NORM containing material may have come in contact with various environmental media, including, water, soils or sediment. Special procedures may be required for the assessment, remediation, removal, transportation or disposal of NORM. For the avoidance of doubt, no Environmental Condition involving NORM shall constitute the basis of an Environmental Defect (except to the extent constituting a violation of Environmental Law as of the Closing Date).

ARTICLE XI

TERMINATION; DEFAULT AND REMEDIES

11.1 Right of Termination . This Agreement and the transactions contemplated herein may be terminated at any time prior to Closing:

(a) by the mutual written agreement of the Parties;

(b) by Buyer, at Buyer’s option, if any of the conditions set forth in Section 4.2 have not been satisfied on or before the Scheduled Closing Date and, following written notice thereof from Buyer to Seller specifying the reason such condition is unsatisfied (including any breach by Seller of this Agreement), and only to the extent such unsatisfied condition may be cured by Seller, such condition remains unsatisfied for a period of 10 Business Days after Seller’s receipt of written notice thereof from Buyer;

(c) by Seller, at Seller’s option, if any of the conditions set forth in Section 4.3 have not been satisfied on or before the Scheduled Closing Date and, following written notice thereof from Seller to Buyer specifying the reason such condition is unsatisfied (including any breach by Buyer of this Agreement), and only to the extent such unsatisfied condition may be cured by Buyer, such condition remains unsatisfied for a period of 10 Business Days after Buyer’s receipt of written notice thereof from Seller; and

(d) by either Party delivering written notice to the other Party if any of the conditions set forth in Section 4.1 are not satisfied or waived in writing by the applicable Party on or before the Outside Date;

provided , however , that no Party shall have the right to terminate this Agreement pursuant to clause (b), (c), or (d) above if such Party or its Affiliates are at such time in material breach of any provision of this Agreement.

11.2 Effect of Termination . If this Agreement is terminated pursuant to any provision of Section 11.1 , then, except as provided in this Section 11.2 and except for the provisions of Section 1.1 , Section 1.2 , Section 7.10 , Section 8.1(b) through (f) , Section 8.2, Section 11.3 , Section 12.11 and Article XIII (other than Section 13.3 , Section 13.8 and Section 13.9 ), this Agreement shall forthwith become void and of no further force or effect and the Parties shall have no liability or obligation hereunder.

(a) If Seller has the right to terminate this Agreement pursuant to Section 11.1(c) because of the failure of Buyer to close the transactions contemplated by this Agreement in the instance where, as of the Termination Date, (A) all of the conditions in Section 4.1 and Section 4.2 (in each case, excluding conditions that, by their terms, cannot be satisfied until Closing) have been satisfied (or waived in writing by Buyer), (B) Seller is ready, willing and able to perform its obligations under Section 2.6 , and (C) Buyer nevertheless elects not to close the transactions contemplated by this Agreement, then Seller shall have the right, as Seller’s sole and exclusive remedy against Buyer, to terminate this Agreement pursuant to Section 11.1(c) and receive the Deposit as liquidated damages, and not as a penalty, for such termination, free and clear of any claims thereon by Buyer, in which case the Parties shall, within three Business Days following Seller’s termination of this Agreement, execute and deliver joint written instructions to the Escrow Agent directing the Escrow Agent to deliver the Deposit to Seller. For the avoidance of doubt, retention of the Deposit shall constitute full and complete satisfaction of any and all damages that Seller may have against Buyer, and Seller shall have no right to seek any other remedies available at Law or in equity against Buyer, including specific performance. The provision for payment of the Deposit as liquidated damages in this Section 11.2(a) has been included because, in the event of a termination of this Agreement permitting Seller to retain the Deposit, the actual damages to be incurred by Seller can reasonably be expected to approximate the amount of liquidated damages called for herein and because the actual amount of such damages would be difficult, if not impossible, to measure accurately.

(b) If Buyer has the right to terminate this Agreement pursuant to Section 11.1(b) because of the failure of Seller to close the transactions contemplated by this Agreement in the instance where, as of the Termination Date, (A) all of the conditions in Section 4.1 and Section 4.3 (in each case, excluding conditions that, by their terms, cannot be satisfied until Closing) have been satisfied (or waived in writing by Seller), (B) Buyer is ready, willing and able to perform its obligations under Section 2.6, and (C) Seller nevertheless elects not to close the transactions contemplated by this Agreement, then, in either such event, Buyer shall be entitled to (1) terminate this Agreement pursuant to Section 11.1(b) and receive the Deposit, in

which case the Parties shall, within three Business Days following Buyer’s termination of this Agreement, execute and deliver joint written instructions to the Escrow Agent directing the Escrow Agent to deliver the Deposit to Buyer and seek to recover damages from Seller up to but not exceeding the amount of the Deposit or (2) seek the specific performance of Seller hereunder. For the avoidance of doubt, in the event that Buyer elects to seek, but is unable to obtain, the specific performance of Seller pursuant to subclause (2), above, Buyer shall nevertheless be entitled to terminate this Agreement pursuant to Section 11.1(b) and receive the Deposit pursuant to subclause (1) above and seek to recover damages from Seller in an amount up to, but not exceeding, the amount of the Deposit.

(c) If this Agreement is terminated for any reason other than as set forth in Section 11.2(a) or Section 11.2(b) , then the Parties shall have no liability or obligation hereunder as a result of such termination, and the Parties shall, within three Business Days following such termination of this Agreement, execute and deliver joint written instructions to the Escrow Agent directing the Escrow Agent to deliver the Deposit to Buyer.

(d) It is understood for the avoidance of doubt that under no circumstances shall any Financing Source have any liability to Seller or any of its Affiliates in respect of the Deposit or any other liability to Seller or any of its Affiliates arising hereunder or in connection herewith.

11.3 Return of Documentation and Confidentiality . In addition to any obligations under the Confidentiality Agreement, upon termination of this Agreement, Buyer shall promptly return or destroy in accordance with the Confidentiality Agreement (and provide written certification of such destruction) to Seller all title, engineering, geological and geophysical data, environmental assessments and/or reports, maps, documents and other information furnished by Seller to Buyer or prepared by or on behalf of Buyer in connection with its due diligence investigation of the Assets and Buyer shall not retain any copies, extracts or other reproductions in whole or in part of such documents and information. An officer of Buyer shall certify Buyer’s compliance with this Section 11.3 to Seller in writing.

ARTICLE XII

ASSUMPTION; INDEMNIFICATION; SURVIVAL

12.1 Assumption by Buyer.

(a) Without limiting Buyer’s rights to indemnity under this Article XII and Buyer’s rights under any Title Indemnity Agreement or Environmental Indemnity Agreement, from and after Closing, Buyer assumes and hereby agrees to fulfill, perform, pay and discharge (or cause to be fulfilled, performed, paid and discharged) all obligations and Liabilities, known or unknown, with respect to the Assets, regardless of whether such obligations or Liabilities arose prior to, on or after the Effective Time, including obligations and Liabilities relating in any manner to the use, ownership or operation of the Assets, including obligations to (i) furnish makeup gas and/or settle Imbalances according to the terms of applicable gas sales, processing, gathering or transportation Contracts included in the Assets, (ii) pay Working Interests, Burdens, owners’ revenues or proceeds attributable to sales of Hydrocarbons, including those held in suspense (including the Suspense Funds) to the extent attributable to the Assets, (iii) properly

plug and abandon any and all wells and pipelines, including future wells, inactive Wells or temporarily abandoned Wells, drilled on the Assets, (iv) re-plug any wellbore or previously plugged Well on the Assets to the extent required or necessary under applicable Laws or under Applicable Contracts, (v) dismantle or decommission and remove any Personal Property and other property of whatever kind located on the Assets related to or associated with operations and activities conducted by whomever on the Assets, (vi) clean up and/or remediate the Assets in accordance with any Applicable Contracts and applicable Laws, including all Environmental Laws, and (vii) perform all obligations applicable to or imposed on the lessee, owner, or operator under the Leases and the Applicable Contracts, or as required by Laws; provided, however , that the Assumed Obligations shall not include any Retained Obligations or any other obligations or Liabilities for which Seller is obligated to indemnify any Buyer Indemnified Party under Section 12.2 , in each case, during the period in which Seller is obligated to indemnify Buyer under Section 12.2 (subject to such exclusion, all of said obligations and Liabilities herein being referred to as the “ Assumed Obligations ”).

(b) For purposes of this Agreement, “ Retained Obligations ” means those obligations and Liabilities that constitute, are attributable to or arise out of: (i) the disposal or transportation by or on behalf Seller or its Affiliates prior to the Closing Date of any Hazardous Substances generated or used upon and taken from the Assets to any location not on the Assets; (ii) personal injury, illness and wrongful death claims or claims based on Seller’s and/or its Affiliates’ gross negligence or willful misconduct, in each case, arising out of Seller’s and/or its Affiliates’ ownership or operation of the Assets prior to the Closing Date; (iii) the failure to properly and timely pay, in accordance with the terms of any Lease, Applicable Contract and applicable Laws, all Burdens that are due by Seller and/or any of its Affiliates and attributable to Seller’s and/or any of its Affiliates’ ownership or operation of the Assets prior to the Effective Time, other than Suspense Funds; (iv) the employment or termination of employment of any person (including any Business Employees) by Seller or its Affiliates on or prior to the Closing Date; (v) any Employee Benefit Plan or any other benefit or compensation plan, program, agreement, contract, policy or arrangement at any time maintained, sponsored, or contributed or required to be contributed to by Seller and/or any of its Affiliates or with respect to which Seller and/or any of its Affiliates has any current or contingent liability or obligation; (vi) the matters set forth on Schedule 5.5 other than item 3 on Schedule 5.5 ; (vii) failure to properly and timely pay, in accordance with the terms of any Lease, compensatory royalties arising out of any offset drilling obligations, which compensatory royalties are due by Seller and/or any of its Affiliates prior to the Closing Date and attributable to the Assets (net to Seller’s interest); (viii) any obligations and/or liabilities under the Raider Services Agreement that are attributable to the Assets; (ix) any costs or fees incurred by or allocated to Seller or any Affiliate of Seller in connection with the assignment of the Paradigm Contract to Buyer; (x) the matters disclosed on Schedule 1.1(b) ; and/or (xi) civil fines or penalties or criminal sanctions attributable to Seller’s and/or any of its Affiliates’ period of ownership or operation of the Assets prior to the Closing Date.

12.2 Indemnities of Seller . Effective as of Closing, subject to the limitations set forth in Section 12.4 , Section 12.8 and Section 12.11 or otherwise in this Agreement, Seller shall be responsible for, shall pay on a current basis and hereby agrees to defend, indemnify and hold harmless Buyer and its Affiliates, and all of its and their respective partners, members, directors, officers, managers, employees, agents and representatives (collectively, “ Buyer Indemnified

Parties ”) from and against any and all Liabilities, arising from, based upon, related to or associated with:

(a) any breach by Seller of (i) any of its representations or warranties contained in Article V or (ii) the certificate delivered by Seller pursuant to Section 4.2(c) (without regard to the Material Adverse Effect qualifier contained in such certificate, but subject to those materiality and/or Material Adverse Effect qualifiers contained with the representations and warranties themselves, if any);

(b) any breach by Seller of any of its covenants or agreements under this Agreement (other than Section 12.2 );

(d) any of the Retained Obligations.

12.3 Indemnities of Buyer . Effective as of Closing, Buyer and its successors and assigns shall assume, be responsible for, shall pay on a current basis and hereby agrees to defend, indemnify, hold harmless and forever release Seller and its Affiliates, and all of its and their respective partners, members, directors, officers, managers, employees, agents and representatives (collectively, “ Seller Indemnified Parties ”) from and against any and all Liabilities arising from, based upon, related to or associated with:

(a) any breach by Buyer of any of its representations or warranties contained in Article VI or in the certificate delivered by Buyer pursuant to Section 4.3(c) ;

(b) any breach by Buyer of any of its covenants or agreements under this Agreement; and/or

(c) (i) any of the Assumed Obligations and/or (ii) the Assigned CHK NAESB from and after the assignment of the Assigned CHK NAESB.

12.4 Limitation on Liability.

(a) Seller shall not have any liability for any indemnification under Section 12.2 (other than with respect to any Indemnity Limitation Exclusions) (i) for any individual Liability unless the amount of such Liability exceeds $100,000, and (ii) until and unless the aggregate amount of all Liabilities for which Claim Notices are delivered by Buyer exceeds the Indemnity Deductible and then only to the extent such Liabilities exceed the Indemnity Deductible; provided that the adjustments to the Purchase Price under Section 3.3 and Section 3.5 and any payments in respect thereof shall not be limited by this Section 12.4(a) .

(b) Notwithstanding anything to the contrary contained in this Agreement, Seller shall not be required to indemnify the Buyer Indemnified Parties (i) under Section 12.2 (other than with respect to any Indemnity Limitation Exclusions) for aggregate Liabilities in excess of 15% of the unadjusted Purchase Price and (ii) under the terms of this Agreement for aggregate Liabilities in excess 100% of the Adjusted Purchase Price.

12.5 Express Negligence . THE DEFENSE, INDEMNIFICATION, HOLD HARMLESS AND RELEASE PROVISIONS AND THE ASSUMPTION OF THE ASSUMED OBLIGATIONS PROVISIONS (IN EACH CASE) PROVIDED FOR IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LIABILITIES, LOSSES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE OR RESULTED SOLELY OR IN PART FROM THE SOLE, ACTIVE, PASSIVE, CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER FAULT OR VIOLATION OF LAW OF OR BY ANY INDEMNIFIED PARTY, EXCEPT TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY SUCH INDEMNIFIED PARTY. BUYER AND SELLER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

12.6 Exclusive Remedy.

(a) Notwithstanding anything to the contrary contained in this Agreement, from and after Closing, Section 12.2 , Section 12.3 , Section 8.1(c) , Section 9.1 and Section 9.4(c) contain the Parties’ exclusive remedy against each other with respect to the transactions contemplated hereby and the sale of the Assets, including breaches of the representations, warranties, covenants and agreements of the Parties contained in this Agreement or in any Transaction Document.

(b) Except for the remedies specified in Section 12.2 , effective as of Closing, Buyer, on its own behalf and on behalf of its Affiliates, hereby releases, remises and forever discharges Seller and its Affiliates and all such Parties’ equity holders, partners, members, directors, officers, employees, agents and representatives from any and all suits, legal or administrative proceedings, or Liabilities, whatsoever, in Law or in equity, known or unknown, which Buyer or its Affiliates might now or subsequently may have, based on, relating to or arising out of the ownership, use or operation of any of the Assets prior to Closing or the condition, quality, status or nature of any of the Assets prior to Closing, including rights to contribution under the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, breaches of statutory or implied warranties, nuisance or other tort actions, rights to punitive damages, common Law rights of contribution and rights under insurance maintained by Seller or any of its Affiliates.

12.7 Indemnification Procedures . All claims for indemnification under Section 12.2 , Section 12.3 , Section 8.1(c) , and Section 9.4(c) shall be asserted and resolved as follows:

(a) For purposes of this Article XII, Section 8.1(c) and Section 9.4(c) , the term “ Indemnifying Party ” when used in connection with particular Liabilities shall mean the Party or Parties having an obligation to indemnify another Party or Parties with respect to such Liabilities pursuant to this Article XII , Section 8.1(c) or Section 9.4(c) , and the term “ Indemnified Party ” when used in connection with particular Liabilities shall mean the Party or Parties having the right to be indemnified with respect to such Liabilities by another Party or Parties pursuant to this Article XII , Section 8.1(c) or Section 9.4(c) .

(b) To make claim for indemnification under Section 12.2 , Section 12.3 , Section 8.1(c) or Section 9.4(c) , an Indemnified Party shall notify the Indemnifying Party of its

claim under this Section 12.7 , including the specific details of and specific basis under this Agreement for its claim (the “ Claim Notice ”). In the event that the claim for indemnification is based upon a claim by a Third Party against the Indemnified Party (a “ Claim ”), the Indemnified Party shall provide its Claim Notice promptly after the Indemnified Party has actual knowledge of the Claim and shall enclose a copy of all papers (if any) served with respect to the Claim; provided that the failure of any Indemnified Party to give notice of a Claim as provided in this Section 12.7 shall not relieve the Indemnifying Party of its obligations under Section 12.2 , Section 12.3 and Section 8.1(c) (as applicable) except to the extent (and then only to the extent) such failure materially prejudices the Indemnifying Party’s ability to defend against the Claim. In the event that the claim for indemnification is based upon an inaccuracy or breach of a representation, warranty, covenant or agreement, the Claim Notice shall specify the representation, warranty, covenant or agreement that was inaccurate or breached.

(c) In the case of a claim for indemnification based upon a Claim, the Indemnifying Party shall have 30 days from its receipt of the Claim Notice to notify the Indemnified Party whether it admits or denies its liability to defend the Indemnified Party against such Claim at the sole cost and expense of the Indemnifying Party. The Indemnified Party is authorized, prior to and during such 30-day period, to file any motion, answer or other pleading that it shall deem necessary to protect its interests or those of the Indemnifying Party and that is not prejudicial to the Indemnifying Party.

(d) If the Indemnifying Party admits its liability, it shall have the right and obligation to diligently defend, at its sole cost and expense, the Claim. Subject to the remaining provisions of this Section 12.7(d) , the Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof unless the compromise or settlement includes the payment of any amount by (because of the Indemnity Deductible or otherwise), the performance of any obligation by or the limitation of any right or benefit of, or affects any title held by, the Indemnified Party, in which event such settlement or compromise shall not be effective without the consent of the Indemnified Party, which shall not be unreasonably withheld or delayed. If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate in contesting any Claim which the Indemnifying Party elects to contest; provided that the Indemnified Party shall not be required to pursue and cross-claim or counter-claim. The Indemnified Party may participate in, but not control, any defense or settlement of any Claim controlled by the Indemnifying Party pursuant to this Section 12.7(d) , unless the Indemnifying Party is subject to a valid conflict of interest, in the good faith belief of the Indemnified Party’s counsel. An Indemnifying Party shall not, without the written consent of the Indemnified Party, (i) settle any Claim or consent to the entry of any judgment with respect thereto which does not include an unconditional written release of the Indemnified Party from all liability in respect of such Claim or (ii) settle any Claim or consent to the entry of any judgment with respect thereto in any manner that may materially and adversely affect the Indemnified Party (other than as a result of money damages covered by the indemnity).

(e) If the Indemnifying Party does not admit its liability or admits its liability but fails to diligently prosecute or settle the Claim, then the Indemnified Party shall have the right to defend against the Claim at the sole cost and expense of the Indemnifying Party, with counsel of the Indemnified Party’s choosing, subject to the right of the Indemnifying Party to admit its liability and assume the defense of the Claim at any time prior to settlement or final

determination thereof. Any settlement of the Claim by the Indemnified Party shall require the consent of the Indemnifying Party (which shall not be unreasonably withheld, conditioned or delayed), unless the settlement is solely for money damages and results in a final resolution.

(f) In the case of a claim for indemnification not based upon a Claim, the Indemnifying Party shall have 30 days from its receipt of the Claim Notice to (i) cure the Liabilities complained of, (ii) admit its liability for such Liability or (iii) dispute the claim for such Liabilities. If the Indemnifying Party does not notify the Indemnified Party within such 30 day period that it has cured the Liabilities or that it disputes the claim for such Liabilities, then the Indemnifying Party shall be deemed to be disputing the claim for such Liabilities.

(g) Notwithstanding anything herein to the contrary, the Parties’ respective rights and obligations pursuant to this Article XII shall be subject to the terms of Schedule 12.7(g) .

12.8 Survival .

(a) The (i) representations and warranties of Seller in Article V and in the Seller Certificate (in each case, other than the Fundamental Representations and the representations and warranties of Seller in Section 5.4 and Section 5.13 ) and (ii) the covenants contained in Section 7.1 , shall, in each case, survive Closing for a period of 12 months after the Closing Date. The representations and warranties of Seller in Section 5.4 and Section 5.13 and the covenants contained in Section 3.7 , Section 3.8 and Section 13.3 shall survive the Closing until 60 days after the applicable statute of limitations has expired. The (A) Fundamental Representations and (B) the covenants and agreements of the Parties other than the covenants contained in Section 3.7 , Section 3.8 , Section 7.1 and Section 13.3 shall, in each case, survive Closing without time limit.

(b) Subject to Section 12.8(a) and except as set forth in Section 12.8(c) , the remainder of this Agreement shall survive Closing without time limit. Representations, warranties, covenants and agreements shall be of no further force and effect after the date of their expiration; provided that there shall be no termination of any bona fide claim asserted pursuant to this Agreement with respect to such a representation, warranty, covenant or agreement prior to its expiration date.

(c) The indemnities in Section 12.2(a) , Section 12.2(b) , Section 12.3(a) and Section 12.3(b) shall terminate as of the termination date of each respective representation, warranty, covenant or agreement that is subject to indemnification, except, in each case, as to matters for which a specific written claim for indemnity has been delivered to the Indemnifying Party on or before such termination date. The indemnity in Section 12.2(c) shall survive Closing until 30 days after the applicable statute of limitations period. The indemnities in Section 12.2(d) , (i) with respect to the matters set forth in subsections (i) and (ii) of the definition of Retained Obligations shall survive Closing for a period of 18 months after the Closing Date, (ii) with respect to the matters set forth in subsection (iii) of the definition of Retained Obligations shall survive Closing for a period of 24 months after the Closing Date, (iii) with respect to the matters set forth in subsection (vii) of the definition of Retained Obligations shall survive Closing for a period of 60 months after the Closing Date and (iv) with respect to the matters set forth in

subsections (viii) and (x) of the definition of Retained Obligations shall survive Closing without time limit. The indemnities in Section 12.2(d) with respect to the matters set forth in the subsections of the definition of Retained Obligations other than the matters set forth in subsections (i), (ii), (iii), (vii), (viii) and (x) shall survive Closing for the applicable statute of limitations period. The indemnities in Section 12.3(c) shall survive Closing without time limit.

12.9 Waiver of Right to Rescission . Seller and Buyer acknowledge that, following Closing, the payment of money, as limited by the terms of this Agreement, shall be adequate compensation for breach of any representation, warranty, covenant or agreement contained herein or for any other claim arising in connection with or with respect to the transactions contemplated by this Agreement. As the payment of money shall be adequate compensation, following Closing, Buyer and Seller waive any right to rescind this Agreement or any of the transactions contemplated hereby.

12.10 Insurance . The amount of any Liabilities for which any of the Buyer Indemnified Parties or Seller Indemnified Parties is entitled to indemnification under this Agreement or in connection with or with respect to the transactions contemplated by this Agreement shall be reduced by any corresponding insurance proceeds actually received by any such indemnified Party under any insurance arrangements.

12.11 Non-Compensatory Damages . NONE OF THE BUYER INDEMNIFIED PARTIES NOR SELLER INDEMNIFIED PARTIES SHALL BE ENTITLED TO RECOVER FROM SELLER OR BUYER, OR THEIR RESPECTIVE AFFILIATES, ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, REMOTE OR SPECULATIVE DAMAGES, OR DAMAGES FOR LOST PROFITS (SOLELY TO THE EXTENT CONSTITUTING CONSEQUENTIAL DAMAGES) ARISING UNDER OR IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, EXCEPT TO THE EXTENT ANY SUCH PARTY SUFFERS SUCH DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEY’S FEES INCURRED IN CONNECTION WITH DEFENDING OF SUCH DAMAGES) TO A THIRD PARTY, WHICH DAMAGES (INCLUDING COSTS OF DEFENSE AND REASONABLE ATTORNEY’S FEES INCURRED IN CONNECTION WITH DEFENDING AGAINST SUCH DAMAGES) SHALL NOT BE EXCLUDED BY THIS PROVISION AS TO RECOVERY HEREUNDER. SUBJECT TO THE PRECEDING SENTENCE, BUYER, ON BEHALF OF EACH OF THE BUYER INDEMNIFIED PARTIES, AND SELLER, ON BEHALF OF EACH OF THE SELLER INDEMNIFIED PARTIES, WAIVE ANY RIGHT TO RECOVER ANY SPECIAL, INDIRECT, CONSEQUENTIAL, PUNITIVE, EXEMPLARY, REMOTE OR SPECULATIVE DAMAGES, OR DAMAGES FOR LOST PROFITS (SOLELY TO THE EXTENT CONSTITUTING CONSEQUENTIAL DAMAGES), ARISING IN CONNECTION WITH OR WITH RESPECT TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. NOTWITHSTANDING THE FOREGOING, LOST PROFITS SHALL NOT BE EXCLUDED BY THIS PROVISION AS TO RECOVERY HEREUNDER TO THE EXTENT CONSTITUTING DIRECT DAMAGES.

ARTICLE XIII

MISCELLANEOUS

13.1 Exhibits and Schedules . All of the Exhibits and Schedules referred to in this Agreement constitute a part of this Agreement. Seller or Buyer and their respective counsel have received a complete set of Exhibits and Schedules prior to and as of the execution of this Agreement.

13.2 Expenses .

(a) Except as otherwise specifically provided, all fees, costs and expenses incurred by Seller or Buyer in negotiating this Agreement or in consummating the transactions contemplated by this Agreement shall be paid by the Person incurring the same, including legal and accounting fees, costs and expenses.

(b) All required documentary, filing and recording fees and expenses in connection with the filing and recording of the assignments (including the Assignment), conveyances or other instruments required to convey title to the Assets to Buyer shall be borne by Buyer.

13.3 Taxes .

(a) Buyer shall assume responsibility for, and shall bear and pay, all state sales and use taxes and transfer and similar Taxes (including any applicable interest or penalties) incurred or imposed with respect to the transactions described in this Agreement (the “ Transfer Taxes ”).

(b) Seller shall assume responsibility for, and shall bear and pay, all Asset Taxes assessed with respect to the ownership and operation of the Assets for (i) any period ending prior to the Effective Time, and (ii) the portion of any Straddle Period ending immediately prior to the Effective Time. All Asset Taxes with respect to the ownership or operation of the Assets arising on or after the Effective Time (including all Straddle Period Asset Taxes not apportioned to Seller) shall be allocated to and borne by Buyer. For purposes of allocation between the Parties of Asset Taxes that are payable with respect to Straddle Periods, the portion of any such Asset Taxes that are attributable to the portion of the Straddle Period that ends immediately prior to the Effective Time shall (A) in the case of Asset Taxes that are attributable to the severance or production of Hydrocarbons, be allocated between the period immediately prior to the Effective Time and the period beginning on the Effective Time based on the period in which the severance or production giving rise to such Asset Taxes occurred; (B) in the case of Asset Taxes (other than such Asset Taxes described in clause (A)) that are based upon or related to income or receipts or imposed on a transactional basis, be deemed equal to the amount that would be payable if the Tax year or period ended immediately prior to the Effective Time; and (C) in the case of other Asset Taxes, be allocated pro rata per day between the period immediately prior to the Effective Time and the period beginning on the Effective Time. For purposes of clause (B) of the preceding sentence, any exemption, deduction, credit or other item that is calculated on an annual basis shall be allocated pro rata per day between the period ending immediately prior to the Effective Time and the period beginning on the Effective Time.

(c) To the extent the actual amount of an Asset Tax is not known at the time an adjustment is to be made with respect to such Asset Tax pursuant to Section 3.3 , Section 3.4 or Section 3.5 , as applicable, the Parties shall utilize the most recent information available in estimating the amount of such Asset Tax for purposes of such adjustment. To the extent the actual amount of an Asset Tax (or the amount thereof paid or economically borne by a Party) is ultimately determined to be different than the amount (if any) that was taken into account in the Final Settlement Statement as finally determined pursuant to Section 3.5 , timely payments will be made from one Party to the other to the extent necessary to cause each Party to bear the amount of such Asset Tax that is allocable to such Party under Section 13.3(b) .

(d) Seller shall timely file any Tax Return with respect to Asset Taxes due on or before the Closing Date or that otherwise relates solely to periods before the Closing Date (a “ Pre-Closing Tax Return ”) and shall pay any Asset Taxes shown due and owing on such Pre-Closing Tax Return. From and after the Closing Date, Buyer shall timely file any Tax Returns with respect to Asset Taxes required to be filed after the Closing Date for any Straddle Period (a “ Post-Closing Tax Return ”), and shall pay any Asset Taxes shown due and owing on such Post-Closing Tax Return. Buyer shall file any Post-Closing Tax Return in a manner consistent with past practice except as otherwise required by Law. Within 15 days prior to filing, Seller shall deliver to Buyer a draft of any such Pre-Closing Tax Return for Buyer’s review and approval (which approval will not be unreasonably withheld or delayed). Within 15 days prior to filing, Buyer shall deliver to Seller a draft of any such Post-Closing Tax Return for Seller’s review and approval (which approval will not be unreasonably withheld or delayed). The Parties agree that (i) this Section 13.3(d) is intended to solely address the timing and manner in which certain Tax Returns relating to Asset Taxes are filed and the Asset Taxes shown thereon are paid to the applicable Taxing Authority, and (ii) nothing in this Section 13.3(d) shall be interpreted as altering the manner in which Asset Taxes are allocated to and economically borne by the Parties.

(e) Any payments made to any Party pursuant to Article XII or this Section 13.3 shall constitute an adjustment of the Purchase Price for Tax purposes and shall be treated as such by Buyer and Seller on their Tax Returns to the extent permitted by applicable Law.

(f) The Parties shall cooperate fully, as and to the extent reasonably requested in connection with the filing of any Tax Returns, State and Federal regulatory reports, royalty payments including related deduction and any audit, litigation or other proceeding with respect to these matters for the Assets. Such cooperation shall include the retention of records and information which are reasonably relevant to any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional information and explanation of any material provided hereunder. Buyer agrees to allow access (upon request) to the Assets by Seller, Seller representatives, auditors and State or Federal representatives relevant to any such audit, litigation or other proceeding.

13.4 Assignment . Prior to Closing, this Agreement may not be assigned by Buyer or Seller without the prior written consent of each Party; provided that Buyer shall be permitted to assign this Agreement and the Transaction Documents to any Affiliate of Buyer following the receipt of all Hard Consents; provided , further , that in the event Buyer transfers this Agreement or any Transaction Documents to any Affiliate of Buyer, such assignment (a) shall not relieve Buyer of any obligations and responsibilities hereunder, whether arising prior to, on, or after such assignment and (b) shall not increase any of Seller’s obligations with respect to obtaining any consents to assign.

13.5 Preparation of Agreement . Seller, Buyer and their respective counsel participated in the preparation of this Agreement. In the event of any ambiguity in this Agreement, no presumption shall arise based on the identity of the draftsman of this Agreement.

13.6 Publicity .

(a) Subject to the last sentence of this Section 13.6(a) , neither Party shall make or issue any press release or other public announcements concerning the transactions contemplated by this Agreement without the prior consent of the other Party, which consent shall not be unreasonably withheld. If either Party desires to make a public announcement, it shall first give the other Party 48 hours’ written notification of its desire to make such a public announcement. The written notification shall include (i) a request for consent to make the announcement, and (ii) a written draft of the text of such public announcement. Notwithstanding anything to the contrary in this Section 13.6 , (A) a Party may make any public announcement where such release or statement is deemed in good faith by the releasing Party to be required by Law or under the rules and regulations of a recognized stock exchange on which shares of such Party or any of its Affiliates are listed; and (B) any Party or Affiliate of a Party may disclose information regarding the Assets in investor presentations, industry conference presentations or similar disclosures to the extent such information has previously been publicly released.

(b) If either Party desires to make a public announcement, it shall give the other Party prior notification of its intention to make such a public announcement and, upon request, provide such other Party a draft of any such announcement.

13.7 Notices . All notices and communications required or permitted to be given hereunder shall be in writing and shall be delivered personally, or sent via facsimile, or sent by bonded overnight courier, or mailed by U.S. Express Mail or by certified or registered United States Mail with all postage fully prepaid, or sent by electronic mail transmission ( provided that within one Business Day, the notifying Party shall deliver a notice to the receiving Party by any other approved method of notification contemplated in this Section 13.7 ) addressed to Seller or Buyer, as appropriate, at the address for such Person shown below or at such other address as Seller or Buyer shall have theretofore designated by written notice delivered to the other Parties:

If to Seller:

EXCO Operating Company, LP

12377 Merit Drive

Dallas, Texas 75251

Attention: General Counsel

Fax: 214-706-3409

Email: hlamparter@EXCOResources.com

With a copy to:

Latham & Watkins LLP

555 Eleventh Street, NW

Suite 1000

Washington, D.C. 20004

Attention: Elizabeth More

Fax: 202-637-2201

Email: elizabeth.more@lw.com

If to Buyer:

VOG Palo Verde LP

c/o Venado Oil & Gas LLC

13501 Galleria Circle, Suite 350

Austin, Texas 78738

Attention: James F. Murchison

Fax: 512-518-2910

Email: jmurchison@vogllc.com

With a copy to:

Kirkland & Ellis LLP

600 Travis Street, Suite 3300

Houston, Texas 77002

Attn: David Castro Jr.

Fax: 713-835-3601

Email: david.castro@kirkland.com

Any notice given in accordance herewith shall be deemed to have been given only when delivered to the addressee in person, or by courier, during normal business hours on a Business Day (or if delivered or transmitted after normal business hours on a Business Day or on a day other than a Business Day, then on the next Business Day), or upon actual receipt by the addressee during normal business hours on a Business Day after such notice has either been delivered to an overnight courier or deposited in the United States Mail, as the case may be (or if delivered after normal business hours on a Business Day or on a day other than a Business Day, then on the next Business Day). Seller or Buyer may change the address to which such communications are to be addressed by giving written notice to the other Parties in the manner provided in this Section 13.7 . If a date specified herein for giving any notice or taking any action is not a Business Day (or if the period during which any notice is required to be given or any action taken expires on a date which is not a Business Day), then the date for giving such notice or taking such action (and the expiration date of such period during which notice is required to be given or action taken) shall be the next day which is a Business Day.

13.8 Further Cooperation . From and after Closing, Seller and Buyer shall execute and deliver, or shall cause to be executed and delivered, from time to time such further instruments of conveyance and transfer, and shall take such other actions as Seller or Buyer may reasonably request, to convey and deliver the Assets to Buyer, to perfect Buyer’s title thereto and to accomplish the orderly transfer of the Assets to Buyer in the manner contemplated by this Agreement.

13.9 Filings, Notices and Certain Governmental Approvals . Promptly after Closing, Buyer shall (a) record all assignments of state Leases executed at Closing in the records of the applicable Governmental Authority, (b) if applicable, send notices to vendors supplying goods and services for the Assets and to the operator of such Assets of the assignment of such Assets to Buyer, (c) actively pursue the unconditional approval of all applicable Governmental Authorities of the assignment of the Assets to Buyer and (d) actively pursue all other consents and approvals that may be required in connection with the assignment of the Assets to Buyer and the assumption of the Liabilities assumed by Buyer hereunder, that, in each case, shall not have been obtained prior to Closing; provided that Seller shall reasonably cooperate with Buyer in satisfying clauses (a) through (d) of this Section 13.9 as may be reasonably necessary; provided , further , that neither Party shall be required to incur any liability or pay any money in order to be in compliance with clause (c). Buyer obligates itself to take any and all action required by any Governmental Authority in order to obtain such unconditional approval, including the posting of any and all bonds or other security that may be required in excess of its existing lease, pipeline or area-wide bond.

13.10 Entire Agreement; Conflicts .

(a) THIS AGREEMENT, THE EXHIBITS AND SCHEDULES HERETO, THE TRANSACTION DOCUMENTS AND THE CONFIDENTIALITY AGREEMENT COLLECTIVELY CONSTITUTE THE ENTIRE AGREEMENT AMONG SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, WHETHER ORAL OR WRITTEN, OF SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF.

(b) THE TERMS AND PROVISIONS OF THIS AGREEMENT ARE INTENDED SOLELY FOR THE BENEFIT OF THE PARTIES, THEIR RESPECTIVE SUCCESSORS OR PERMITTED ASSIGNS, AND IT IS NOT THE INTENTION OF THE PARTIES TO CONFER THIRD PARTY BENEFICIARY RIGHTS UPON ANY OTHER PERSON; PROVIDED, HOWEVER , THAT NOTWITHSTANDING THE FOREGOING, THE FINANCING SOURCES, THE FINANCE RELATED PARTIES AND THEIR RESPECTIVE REPRESENTATIVES SHALL BE EXPRESS THIRD PARTY BENEFICIARIES OF, AND SHALL BE ENTITLED TO ENFORCE (AND ENTITLED TO RELY ON), SECTION 11.1(a), SECTION 12.6, THIS SECTION 13.10(b), SECTION 13.14, SECTION 13.19 AND SECTION 13.20 .

(c) The Parties expressly acknowledge and agree that, in the event that Closing occurs, the Confidentiality Agreement shall be terminated in its entirety effective as of the Closing Date.

13.11 Parties in Interest . The terms and provisions of this Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns. Notwithstanding anything contained in this Agreement to the contrary, nothing in this

Agreement, expressed or implied, is intended to confer on any Person other than Seller and Buyer and their respective successors and permitted assigns, or the Parties’ respective related Indemnified Parties hereunder, any rights, remedies, obligations or liabilities under or by reason of this Agreement; provided that only a Party and its respective successors and permitted assigns shall have the right to enforce the provisions of this Agreement on its own behalf or on behalf of any of its related Indemnified Parties (but shall not be obligated to do so).

13.12 Amendment . This Agreement may be amended only by an instrument in writing executed by the Party against whom enforcement is sought.

13.13 Waiver; Rights Cumulative . Any of the terms, covenants, representations, warranties or conditions hereof may be waived only by a written instrument executed by or on behalf of the Party waiving compliance. No course of dealing on the part of Seller or Buyer, or their respective officers, employees, agents or representatives or any failure by Seller or Buyer to exercise any of its rights under this Agreement shall operate as a waiver thereof or affect in any way the right of such Person at a later time to enforce the performance of such provision. No waiver by Seller or Buyer of any condition or any breach of any term, covenant, representation or warranty contained in this Agreement, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of any such condition or breach or a waiver of any other condition or of any breach of any other term, covenant, representation or warranty. The rights of Seller and Buyer under this Agreement shall be cumulative, and the exercise or partial exercise of any such right shall not preclude the exercise of any other right.

13.14 Conflict of Law Jurisdiction, Venue; Jury Waiver .

(A) THIS AGREEMENT AND THE LEGAL RELATIONS AMONG SELLER AND BUYER SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT WOULD REQUIRE THE APPLICATION OF ANY OTHER LAW. EACH OF SELLER AND BUYER CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE COURTS OF THE STATE OF TEXAS FOR ANY ACTION ARISING OUT OF THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS SHALL BE EXCLUSIVELY LITIGATED IN COURTS HAVING SITES IN DALLAS COUNTY, TEXAS; PROVIDED THAT (WITHOUT LIMITING THE PROVISIONS OF SECTION 13.20 ) ANY CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) IN CONNECTION WITH THIS AGREEMENT AGAINST THE FINANCING SOURCES, OR THE FINANCE RELATED PARTIES IN ANY WAY RELATING TO THE DEBT FINANCING AND THE TRANSACTIONS CONTEMPLATED THEREBY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK. EACH OF SELLER AND BUYER WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT.

(B) EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY DISPUTE. INCLUDING ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION THAT MAY BE BASED UPON, ARISE OUT OF OR RELATE TO THE FINANCING SOURCES OR ANY FINANCE RELATED PARTIES OR THE FINANCING.

13.15 Severability . If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any of Seller or Buyer. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

13.16 Removal of Name; Utilities . As promptly as practicable, but in any case within 30 days after the termination of the Transition Services Agreement, Buyer shall eliminate the names EXCO Operating Company, LP, EXCO Resources, Inc., EXCO and any variants thereof from the Assets acquired pursuant to this Agreement and, except with respect to such grace period for eliminating existing usage, shall have no right to use any logos, trademarks or trade names belonging to Seller or any of its Affiliates. The Parties acknowledge that Buyer is responsible for all utility expenses related to the Assets for the periods on or after the Effective Time. As promptly as practicable, but in any case within five Business Days after the termination of the Transition Services Agreement, Buyer must transfer to itself or its Affiliate all utility accounts related to the Assets.

13.17 Counterparts . This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by facsimile transmission shall be deemed an original signature hereto.

13.18 Time is of the Essence . With respect to all dates and time periods in this Agreement, time is of the essence.

13.19 No Recourse . Notwithstanding anything that may be expressed or implied in this Agreement or any document, agreement, or instrument delivered contemporaneously herewith, and notwithstanding the fact that Buyer may be a partnership or limited liability company, Seller, by its acceptance of the benefits of this Agreement, covenants, agrees and acknowledges that no Persons other than Buyer (and their respective successors and assigns, collectively, the “ Recourse Parties ”) shall have any obligation hereunder and that Seller has no rights of recovery hereunder against, and no recourse hereunder or under any documents, agreements, or instruments delivered contemporaneously herewith or in respect of any oral representations made or alleged to be made in connection herewith with respect to the transactions contemplated hereby or therewith against (a) any former, current or future general or limited partner, owner, member, director, officer, agent, Affiliate, incorporator, controlling Person, fiduciary, representative or employee of Buyer or an Affiliate of Buyer (or any of the foregoing Persons

successors or permitted assignees) or (b) any former, current or future director, owner, officer of a financing source (including the Financing Sources), agent, employee, Affiliate, incorporator, controlling Person, fiduciary, representative, general or limited partner, stockholder or member of any of the foregoing, but in each case not including Buyer (each, but excluding for the avoidance of doubt, the Recourse Parties, a “ Party Affiliate ”), whether by or through attempted piercing of the corporate veil, by or through a claim (whether in tort, contract or otherwise) by or on behalf of Buyer against the Party Affiliates, by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute, regulation or other Law, or otherwise; it being expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on, or otherwise be incurred by any Party Affiliate, as such, for any obligations of Buyer under this Agreement or the transactions contemplated hereby, under any documents or instruments delivered contemporaneously herewith, in respect of any oral representations made or alleged to be made in connection herewith or therewith, or for any claim (whether in tort, contract or otherwise) based on, in respect of, or by reason of, such obligations or their creation. For the avoidance of doubt, nothing in this Section 13.19 shall be deemed a waiver by Seller under its current credit facilities.

13.20 Waiver of Claims Against Debt Financing Sources . Notwithstanding anything in this Agreement to the contrary, Seller agrees, on behalf of itself and its Affiliates, that none of the Financing Sources or any of their respective general or limited partners, stockholders, managers, members, agents, representatives, Affiliates, successors or assigns (collectively, “ Finance Related Parties ”) shall have any Liability to Seller or its Affiliates relating to or arising out of this Agreement, including the financing of the transactions contemplated by this Agreement, whether at Law or equity, in contract, in tort or otherwise, and that neither Seller nor any of its Affiliates will have any rights or claims against any Finance Related Parties under this Agreement or any other agreement contemplated by, or entered into in connection with, the transactions contemplated by this Agreement, including any commitments by the Finance Related Parties in respect of financing the transactions contemplated by this Agreement. For the avoidance of doubt, nothing in this Section 13.20 shall be deemed a waiver by Seller under its current credit facilities.

[ Signature pages follow. ]

IN WITNESS WHEREOF, Sellers and Buyer have executed this Agreement as of the date first written above.


SELLERS :

EXCO OPERATING COMPANY, LP

By: EXCO Partners OLP GP, LLC, its general partner

By:		/s/ Harold L. Hickey
Name:		Harold L. Hickey
Title:		Chief Executive Officer and President

EXCO LAND COMPANY, LLC

By:		/s/ Harold L. Hickey
Name:		Harold L. Hickey
Title:		Chief Executive Officer and President

[ Signature Page to Purchase and Sale Agreement ]


BUYER :

VOG PALO VERDE LP

By: VOG Palo Verde GP LLC, its general partner

By:		/s/ R. Scott Garrick
Name:		R. Scott Garrick
Title:		Chief Executive Officer

[ Signature Page to Purchase and Sale Agreement ]

Exhibit 2.2

FIRST AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This First Amendment to Purchase and Sale Agreement (this “ Amendment ”), dated as of May 31, 2017, is made and entered into by and among EXCO Operating Company, LP, a Delaware limited partnership, and EXCO Land Company, LLC, a Delaware limited liability company (collectively, “ Seller ”) and VOG Palo Verde LP, a Delaware limited partnership (“ Buyer ”). Seller and Buyer are each referred to as a “ Party ” and collectively referred to as the “ Parties .” Capitalized terms used but not defined in this Agreement shall have the meanings given to such terms in the PSA (as hereinafter defined).

WHEREAS , Seller and Buyer are parties to that certain Purchase and Sale Agreement, dated as of April 7, 2017 (as amended by this Amendment and as further amended from time to time, the “ PSA ”); and

WHEREAS , the Parties desire to amend the PSA as more specifically set forth in this Amendment.

NOW, THEREFORE , in consideration of the closing of the transactions contemplated under the PSA, the mutual promises and covenants set forth herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

1. Amendments to the PSA . Pursuant to Section 13.12 of the PSA and notwithstanding anything to the contrary in the PSA, the Parties agree that the following amendments to the PSA are made effective as of the Execution Date:

(a) The definition of “Outside Date” in Section 1.1 to the PSA is hereby deleted in its entirety and replaced with the following language:

““ Outside Date ” shall mean August 15, 2017.”

(b) The first sentence of Section 2.4 to the PSA is hereby deleted in its entirety and replaced with the following language:

2. Confirmation . Except as otherwise provided herein, the provisions of the PSA shall remain in full force and effect in accordance with their respective terms following the execution of this Amendment.

3. Entire Agreement . THIS AMENDMENT, THE PSA, THE ANNEXES, THE EXHIBITS AND THE SCHEDULES TO THE PSA, THE TRANSACTION DOCUMENTS AND THE CONFIDENTIALITY AGREEMENT COLLECTIVELY CONSTITUTE THE ENTIRE AGREEMENT AMONG SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, WHETHER ORAL OR WRITTEN, OF SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF.

4. Counterparts. This Amendment may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by facsimile transmission shall be deemed an original signature hereto.

5. Severability. If any term or other provision of this Amendment is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Amendment shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any of the Parties. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Amendment so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

6. Amendment. This Amendment may be amended only by an instrument in writing executed by the Party against whom enforcement is sought.

7. Governing Law. THIS AMENDMENT AND THE LEGAL RELATIONS AMONG THE PARTIES SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT WOULD REQUIRE THE APPLICATION OF ANY OTHER LAW. EACH OF THE PARTIES CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE COURTS OF THE STATE OF TEXAS FOR ANY ACTION ARISING OUT OF THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS AMENDMENT SHALL BE EXCLUSIVELY LITIGATED IN COURTS HAVING SITES IN DALLAS COUNTY, TEXAS. EACH OF THE PARTIES WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AMENDMENT.

[ Signature pages follow .]

IN WITNESS WHEREOF, the Parties have executed and delivered this Amendment as of the date first written above.


SELLER:

EXCO OPERATING COMPANY, LP

By: EXCO Partners OLP GP, LLC, its general partner

By:		/s/ Harold L. Hickey
Name:		Harold L. Hickey
Title:		Chief Executive Officer and President

EXCO LAND COMPANY, LLC

By:		/s/ Harold L. Hickey
Name:		Harold L. Hickey
Title:		Chief Executive Officer and President

[ Signature Page to First Amendment to Purchase and Sale Agreement ]


BUYER:

VOG PALO VERDE LP

By: VOG Palo Verde GP LLC, its general partner

By:		/s/ R. Scott Garrick
Name:		R. Scott Garrick
Title:		Chief Executive Officer

[ Signature Page to First Amendment to Purchase and Sale Agreement ]

Exhibit 2.3

Execution Version

SECOND AMENDMENT TO

PURCHASE AND SALE AGREEMENT

This Second Amendment to Purchase and Sale Agreement (this “ Second Amendment ”), dated as of June 20, 2017 (the “ Second Amendment Execution Date ”), is made and entered into by and among EXCO Operating Company, LP, a Delaware limited partnership, and EXCO Land Company, LLC, a Delaware limited liability company (collectively, “ Seller ”) and VOG Palo Verde LP, a Delaware limited partnership (“ Buyer ”). Seller and Buyer are each referred to as a “ Party ” and collectively referred to as the “ Parties .” Capitalized terms used but not defined in this Second Amendment shall have the meanings given to such terms in the PSA (as hereinafter defined).

WHEREAS , Seller and Buyer are parties to that certain Purchase and Sale Agreement, dated as of April 7, 2017 (as amended by the First Amendment, this Second Amendment and as further amended from time to time, the “ PSA ”);

WHEREAS , Seller and Buyer have entered into that certain First Amendment to Purchase and Sale Agreement, dated as of May 31, 2017 (the “ First Amendment ”), pursuant to which the Parties agreed, among other things, to extend the Scheduled Closing Date and the Outside Date, as more specifically set forth in the First Amendment; and

WHEREAS , Seller and Buyer desire to further amend the PSA as more specifically set forth in this Second Amendment.

1. Amendments to the PSA . Pursuant to Section 13.12 of the PSA and notwithstanding anything to the contrary in the PSA or the First Amendment, the Parties agree that the following amendments to the PSA are made effective as of the Execution Date:

(a) The attached Exhibit J (Applicable Lease) is hereby added as a new Exhibit J to the PSA.

(b) The following defined term is hereby added to Section 1.1 of the PSA immediately following the defined term “Applicable Contracts” and immediately preceding the defined term “Applicable Lease Amendment”:

““ Applicable Lease ” shall have the meaning set forth in Section 7.17 .”

(c) The following defined term is hereby added to Section 1.1 of the PSA immediately following the defined term “Applicable Lease” and immediately preceding the defined term “Arbitration Notice”:

““ Applicable Lease Amendment ” shall have the meaning set forth in Section 7.17 .”

(d) The definition of “Deposit” in Section 1.1 of the PSA is hereby deleted in its entirety and replaced with the following language:

““ Deposit ” shall mean an amount equal to the Initial Deposit Amount, less the Released Amount, together with any interest earned thereon.”

(e) The following defined term is hereby added to Section 1.1 of the PSA immediately following the defined term “Individual Title Defect Threshold” and immediately preceding the defined term “Instruction Letter”:

““ Initial Deposit Amount ” shall have the meaning set forth in Section 3.2 .”

(f) The definition of “Outside Date” in Section 1.1 of the PSA is hereby deleted in its entirety and replaced with the following language:

““ Outside Date ” shall mean July 21, 2017; provided that, if Seller elects to extend the Scheduled Closing Date pursuant to Section 2.4 , then the “Outside Date” shall mean August 15, 2017.”

(g) The following defined term is hereby added to Section 1.1 of the PSA immediately following the defined term “Recourse Parties” and immediately preceding the defined term “Remediation”:

““ Released Amount ” shall mean $20,000,000.”

(h) The first sentence of Section 2.4 of the PSA is hereby deleted in its entirety and replaced with the following language:

“Subject to the conditions set forth in this Agreement, the sale by Seller and the purchase by Buyer of the Assets pursuant to this Agreement (the “ Closing ”) shall occur on or before 9:00 a.m. (Prevailing Central Time) on July 21, 2017 (the “ Scheduled Closing Date ”) or such other date as Buyer and Seller may agree upon in writing; provided that, if as of July 18, 2017, Seller reasonably expects that one or more of the conditions to Closing in Section 4.2 cannot be satisfied on or before July 21, 2017 (and such conditions have not been waived by Buyer), Seller shall have a one-time option to extend the Scheduled Closing Date to August 15, 2017, by delivering written notice to Buyer of such election on or before 5:00 p.m. (Prevailing Central Time) on July 21, 2017. If Seller exercises such option, the Scheduled Closing Date shall be deemed to be August 15, 2017. Notwithstanding the foregoing, to the extent all of the conditions to Closing in Article IV have been satisfied or waived prior to the Scheduled Closing Date (as the same may be extended pursuant to this Section 2.4 ), then Closing shall occur 10 Business Days after such conditions have been satisfied or waived.”

(i) The first sentence of Section 3.2 of the PSA is hereby deleted in its entirety and replaced with the following language:

“Concurrently with the execution of this Agreement, Buyer has deposited by wire transfer in same day funds into the Escrow Account an amount equal to 10% of the Purchase Price (the “ Initial Deposit Amount ”).”

(j) The following is hereby added as a new Section 7.17 of the PSA:

“ 7.17 Applicable Lease Amendment. Seller agrees to use commercially reasonable efforts (at Seller’s sole cost and expense) to negotiate and execute an extension of the Lease set forth on Exhibit J (the “ Applicable Lease ”) on or before the Closing Date extending the primary term of such Applicable Lease as to all acreage covered by the Applicable Lease until no earlier than February 1, 2018, but otherwise preserving the terms and conditions of the Applicable Lease (the “ Applicable Lease Amendment ”); provided that, in the event Seller is unable to negotiate and execute such Applicable Lease Amendment on or before the Closing Date, then (i) the Applicable Lease shall be excluded from the Assets to be conveyed to Buyer at Closing, (ii) the Purchase Price shall be adjusted downward by the Allocated Value thereof and (iii) such Applicable Lease shall be deemed to be an Excluded Asset for all purposes hereunder. Seller also agrees to use commercially reasonable efforts (at Seller’s sole cost and expense) to negotiate and execute an amendment of the Applicable Lease on or before the Closing Date tolling any and all offset drilling obligations (including any obligation to pay compensatory royalties for failure to drill any offset well) during such extended primary term provided for in the Applicable Lease Amendment; provided that, if following the Closing Date but prior to December 1, 2017, Buyer incurs an obligation to pay the lessor of the Applicable Lease any compensatory royalties, then Seller shall promptly reimburse Buyer for one hundred percent (100%) of the amount of any such compensatory royalties paid by Buyer.”

2. Agreement with Respect to Certain Closing Conditions. Notwithstanding anything in the PSA to contrary, and without prejudice to any other rights or obligations of the Parties under the PSA (including, for the avoidance of doubt, any of the Parties’ respective rights and obligations under Section 11.1 of the PSA or Article XII of the PSA), the Parties acknowledge and agree to the following, effective as of the Second Amendment Execution Date:

(a) The failure to satisfy Buyer’s conditions to Closing (i) under Section 4.2(b) of the PSA as a result of the breach of Section 7.1(b)(i) of the PSA and (ii) under Section 4.2(a)(ii) of the PSA as a result of the breach of Section 5.6(b) of the PSA, in each case, solely to the extent described in that certain Notice of Termination for Failure of Conditions to Closing under the PSA from Buyer to Seller, dated as of June 7, 2017 (the “ Termination Notice ”) shall be deemed satisfied upon the earlier to occur of (A) full, final and non-appealable reinstatement of Transaction Confirmation #7 (as defined in the Termination Notice) or (B) implementation of a final, binding commercial

arrangement replacing or modifying Transaction Confirmation #7, which commercial arrangement shall be in a form and subject to terms and conditions acceptable to Buyer in its sole discretion.

(b) The failure to satisfy Buyer’s condition to Closing under Section 4.2(b) of the PSA as a result of the breach of Section 7.1(a)(i) of the PSA, solely to the extent described in the Termination Notice, shall be deemed satisfied upon the occurrence of the following: (i) each of the wells that were shut in as a result of the facts and circumstances described in the Termination Notice, together with any additional wells included in the Assets (as defined in the PSA) that are subsequently shut in as a result of the facts and circumstances described in the Termination Notice (collectively, the “ Shut-in Wells ”) shall have been brought back online and continuously producing oil and (ii) the sum of the Average Daily Production from all of the Shut-in Wells is equal to or greater than 93% of the May 2017 Average Daily Production. For the purposes of this Section 2(b) :

(i) “ Average Daily Production ” with respect to each individual Shut-in Well, shall mean the aggregate oil production (measured in gross Bopd) produced from such Shut-in Well during all Production Days occurring during the Production Period for such Shut-in Well, divided by the total number of Production Days occurring during the Production Period for such Shut-in Well, as represented at the end of the Production Period for such Shut-in Well on an Excel spreadsheet in a form substantially similar to Annex II attached hereto, which spreadsheet shall indicate for each Downtime Day for each Shut-in Well the Non-CHK Issue(s) giving rise to such Downtime Day.

(ii) “ Baseline Rate ” with respect to each individual Shut-in Well, shall mean the production rate specified for such Shut-in Well in the column titled “Baseline Rate” in Annex II .

(iii) “ Downtime Day ” with respect to each individual Shut-in Well, shall mean any calendar day during which such Shut-in Well is not online and continuously producing oil at a rate equal to or above 25% of the Baseline Rate for such Shut-in Well during such calendar day as a result of any Non-CHK Issue.

(iv) “ May 2017 Average Daily Production ” means 6,247 gross Bopd.

(v) “ Non-CHK Issues ” means impediments to oil production other than as a result of the facts and circumstances described in the Termination Notice that arise in the ordinary course of operations, including weather impacts, gas pipeline or downstream capacity, other Third Party constraints and/or temporary shut-in of wells (such as in the event of a Third Party operator’s operations).

(vi) “ Production Day ” with respect to a Shut-in Well, shall mean any calendar day during which such Shut-in Well is online and continuously producing oil, but excluding any Downtime Day.

(vii) “ Production Period ” with respect to each individual Shut-in Well, shall mean the first 30-day period beginning on the date such Shut-in Well is brought back online and is continuously and primarily producing oil (and not water).

3. Released Amount . Concurrently with the execution of this Second Amendment, the Parties have executed and delivered an Instruction Letter in the form attached hereto as Annex I instructing the Escrow Agent to release to Buyer an amount equal to the Released Amount. This Second Amendment is conditioned upon and subject in all respects to satisfaction by the Parties of the obligations in this Section 3 .

4. Confirmation; No Waiver. Except as otherwise provided herein, the provisions of the PSA shall remain in full force and effect in accordance with their respective terms following the execution of this Second Amendment. All references to the PSA shall be considered to be references to the PSA as modified by this Second Amendment. Nothing in this Second Amendment shall be deemed or shall constitute a waiver of any provision of the PSA or of any rights or obligations of the Parties with respect to facts and circumstances arising on or before the date hereof, including, for the avoidance of doubt, any of the Parties’ respective conditions, rights and obligations under Section 4.2, Section 11.1 and Article XII of the PSA.

5. Entire Agreement . THIS SECOND AMENDMENT, THE PSA, THE ANNEXES, THE EXHIBITS AND THE SCHEDULES TO THE PSA, THE TRANSACTION DOCUMENTS AND THE CONFIDENTIALITY AGREEMENT COLLECTIVELY CONSTITUTE THE ENTIRE AGREEMENT AMONG SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR AGREEMENTS, UNDERSTANDINGS, NEGOTIATIONS AND DISCUSSIONS, WHETHER ORAL OR WRITTEN, OF SELLER AND BUYER PERTAINING TO THE SUBJECT MATTER HEREOF.

6. Counterparts. This Second Amendment may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all of such counterparts shall constitute for all purposes one agreement. Any signature hereto delivered by a Party by facsimile transmission shall be deemed an original signature hereto.

7. Severability. If any term or other provision of this Second Amendment is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Second Amendment shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any adverse manner to any of the Parties. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Second Amendment so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible.

8. Amendment. This Second Amendment may be amended only by an instrument in writing executed by the Party against whom enforcement is sought.

9. Governing Law. THIS SECOND AMENDMENT AND THE LEGAL RELATIONS AMONG THE PARTIES SHALL BE GOVERNED AND CONSTRUED IN

ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, EXCLUDING ANY CONFLICTS OF LAW RULE OR PRINCIPLE THAT WOULD REQUIRE THE APPLICATION OF ANY OTHER LAW. EACH OF THE PARTIES CONSENT TO THE EXERCISE OF JURISDICTION IN PERSONAM BY THE COURTS OF THE STATE OF TEXAS FOR ANY ACTION ARISING OUT OF THIS SECOND AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS SECOND AMENDMENT SHALL BE EXCLUSIVELY LITIGATED IN COURTS HAVING SITES IN DALLAS COUNTY, TEXAS. EACH OF THE PARTIES WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS SECOND AMENDMENT.

[ Signature pages follow .]

IN WITNESS WHEREOF, the Parties have executed and delivered this Second Amendment as of the date first written above.


SELLER :

EXCO OPERATING COMPANY, LP

By: EXCO Partners OLP GP, LLC, its general partner

By:		/s/ Harold H. Jameson
Name:		Harold H. Jameson
Title:		Chief Operating Officer

EXCO LAND COMPANY, LLC

By:		/s/ Harold H. Jameson
Name:		Harold H. Jameson
Title:		Chief Operating Officer

[ Signature Page to Second Amendment to Purchase and Sale Agreement ]


BUYER :

VOG PALO VERDE LP

By: VOG Palo Verde GP LLC, its general partner

By:		/s/ R. Scott Garrick
Name:		R. Scott Garrick
Title:		Chief Executive Office

[ Signature Page to Second Amendment to Purchase and Sale Agreement ]

Exhibit 4.1

AMENDED AND RESTATED

CERTIFICATE OF FORMATION

EXCO RESOURCES, INC.

As Amended Through

June 2, 2017

ARTICLE I

NAME

The name of the Corporation is EXCO Resources, Inc. The Corporation is a for-profit Corporation.

ARTICLE II

DURATION

The period of the Corporation’s duration is perpetual.

ARTICLE III

PURPOSE

The purpose for which the Corporation is organized is to conduct any and all lawful business for which a corporation may be organized under the Texas Business Organizations Code, as it may be amended from time to time (the “ TBOC ”), or any successor law that replaces the TBOC.

ARTICLE IV

CAPITALIZATION

The aggregate number of shares of capital stock that the Corporation will have authority to issue is 270,000,000 shares, which shall consist of 260,000,000 shares of Common Stock, par value $0.001 per share (the “Common Stock”), and 10,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”).

Authority is hereby expressly vested in the Board of Directors of the Corporation, subject to any limitations prescribed by the TBOC, to establish one or more series of shares of Preferred Stock from time to time by adoption of a resolution or resolutions setting forth the designation of the series and fixing and determining the designations, preferences, limitations, and relative rights, including voting rights, of the shares of any such series to the same extent that such designations, preferences, limitations, and relative rights could be stated if fully set forth in this Certificate of Formation.

The Board of Directors of the Corporation may increase or decrease the number of shares within each established series of the Preferred Stock through the adoption of a resolution fixing and determining the new number of shares of each series in which the number of shares is increased or decreased; provided, however, that the Board of Directors of the Corporation may not decrease the number of shares within a series to less than the number of shares within such series that are then issued. In case the number of shares of a series of Preferred Stock shall be so decreased, the shares by which the series is decreased shall resume the status of authorized but unissued shares of the class of shares from which the series was established.

Effective at 5:00 p.m., Central Time, on June 12, 2017 (the “Split Effective Time”), every fifteen shares of Common Stock issued and outstanding or held by the Corporation as treasury shares as of the Split Effective Time shall automatically, and without action on the part of the shareholders, convert and combine into one validly issued, fully paid and non-assessable share of Common Stock, without effecting a change to the par value per share of Common Stock (the “2017 Reverse Split”). In the case of a holder of shares not evenly divisible by fifteen, in lieu of a fractional share of Common Stock, such holder shall receive an additional share of Common Stock. As of the Split Effective Time and thereafter, a certificate(s) representing shares of Common Stock prior to the 2017 Reverse Split is deemed to represent the number of post-2017 Reverse Split shares into which the pre-2017 Reverse Split shares were converted.

ARTICLE V

NON-CUMULATIVE VOTING

Cumulative voting is expressly prohibited.

ARTICLE VI

DENIAL OF PREEMPTIVE RIGHTS

The statutory right of any shareholder of the Corporation to exercise preemptive rights to acquire additional, unissued or treasury shares of the Corporation or securities of the Corporation convertible into or carrying a right to subscribe to or acquire shares of the Corporation is hereby denied.

ARTICLE VII

REGISTERED OFFICE

The street address of the Corporation’s registered office is as follows:

1999 Bryan St., Suite 900

Dallas, Texas 75201-3136

ARTICLE VIII

REGISTERED AGENT

The name of the Corporation’s registered agent at the Corporation’s registered office is C T Corporation System.

ARTICLE IX

DIRECTORS

The names and addresses of the current directors of the Corporation are as follows:


Name		Address
Jeffrey D. Benjamin		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

B. James Ford		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Samuel A. Mitchell		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Wilbur L. Ross, Jr.		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Jeffrey S. Serota		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Robert L. Stillwell		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

ARTICLE X

BYLAWS

The power to amend or repeal the Bylaws or to adopt new Bylaws shall be vested in either the shareholders or the Board of Directors of the Corporation, subject to the shareholders providing in amending, repealing or adopting a particular Bylaw that it may not be amended or repealed by the Board of Directors of the Corporation.

ARTICLE XI

ELECTION OF DIRECTORS

11.1 Number of Directors. The number of the Directors of the Corporation shall be fixed from time to time by or pursuant to the Bylaws of the Corporation.

11.2 Shareholder Nomination of Director Candidates and Introduction of Business. Advance notice of shareholder nominations for the election of Directors and advance notice of business to be brought by shareholders before an annual meeting shall be given in the manner provided in the Bylaws of the Corporation.

11.3 Decrease in Number of Directors. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of an incumbent Director.

11.4 No Requirement of Written Ballot. The election of the Directors may be conducted in any form adopted by the Board of Directors, and need not be by written ballot. In the event, however, that a majority of the shareholders vote to require written ballots, written ballots shall be used.

ARTICLE XII

SPECIAL MEETINGS OF SHAREHOLDERS

Special meetings of the shareholders, unless otherwise prescribed by statute, may be called by the Chairman of the Board of Directors of the Corporation and shall be called by the Secretary of the Corporation upon the written request, stating the purpose or purposes therefore, of either (i) not less than a majority of the whole Board of Directors of the Corporation or (ii) the holder or holders of shares having not less than 25% of the voting power at a meeting at which the holders of all shares entitled to vote on the action or actions, as set forth in the proposed purpose or purposes of the meeting, were present and voted. Business conducted at any special meeting shall be confined to the purpose or purposes described in the notice thereof.

ARTICLE XIII

INDEMNIFICATION

Each person who is or was a Director or officer of the Corporation, or while a Director or officer of the Corporation is or was serving at the request of the Corporation as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, employee benefit plan, other enterprise or other entity, shall be indemnified by the Corporation to the fullest extent that a corporation is required or permitted to grant indemnification to such person under the TBOC, as the same exist 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 said law permitted the Corporation to provide prior to such amendment) or any other applicable laws as presently or hereafter in effect. The right to indemnification under this Article XIII shall extend to the heirs, executors, administrators and estate of any such Director or officer. The right to indemnification provided in this Article XIII (a) will not be exclusive of any other rights to which any person seeking indemnification may otherwise be entitled, including without limitation, pursuant to any bylaw, agreement, vote of shareholders or disinterested Directors, or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office; and (b) will be applicable to matters otherwise within its scope whether or not such matters arose or arise before or after the adoption of this Article XIII. Without limiting the generality or the effect of the foregoing, the Corporation may adopt bylaws or enter into one or more agreements with any person which provide for indemnification greater or different than that provided in this Article XIII to the extent provided by applicable laws. Any amendment or repeal of this Article XIII shall not adversely affect any right or protection existing hereunder immediately prior to such amendment or repeal.

ARTICLE XIV

NO MONETARY LIABILITY OF DIRECTORS TO SHAREHOLDERS

a Director of the Corporation. If the TBOC is hereafter amended to authorize further elimination of the liability of a corporation’s directors for or with respect to any acts or omissions in the performance of their duties as directors of a corporation, then a Director of the Corporation shall not be liable for any such acts or omissions to the fullest extent permitted by the TBOC, as so amended. Any repeal or modification of this Article XIV shall not adversely affect any right or protection of a Director of the Corporation existing immediately prior to such repeal or modification.

ARTICLE XV

BUSINESS COMBINATION LAW

Pursuant to Section 21.607 of the TBOC, the Corporation expressly elects not to be governed by Section 21.606 of the TBOC (the Business Combination Law).

ARTICLE XVI

AMENDMENT

The Corporation reserves the right at any time and from time to time to amend, alter, change or repeal any provision contained in this Certificate of Formation, and any other provisions authorized by the laws of the State of Texas at the time in force may be added or inserted, in the manner now or hereafter prescribed herein or by applicable law, and all rights, preferences and privileges of whatsoever nature conferred upon shareholders, Directors or any other persons whomsoever by and pursuant to this Certificate of Formation in their present form or as hereafter amended are granted subject to the right reserved in this Article XVI; provided , however , that any amendment or repeal of Article XIII or Article XIV of this Certificate of Formation shall not adversely affect any right or protection existing hereunder immediately prior to such amendment or repeal.

ARTICLE XVII

SHAREHOLDER ACTION BY WRITTEN CONSENT

Any action required by the TBOC, as amended, to be taken at any annual or special meeting of shareholders, or any action that may be taken at any annual or special meeting of shareholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holder or holders of shares having not less than the minimum number of votes that would be necessary to take such action at a meeting at which the holders of all shares entitled to vote on the action were present and voted.

ARTICLE XVIII

CORPORATE OPPORTUNITIES

C. John Wilder, his respective affiliates who are not also employees of the Corporation and any investment funds or companies that he may now own or manage or may hereafter form or acquire (collectively, the “ Specified Persons ”) may own, currently or in the future, equity and other interests in other entities (existing and future) that participate in the energy business or industry (“ Industry Companies ”) and may enter into agreements from time to time with Industry Companies. The Specified Persons may also serve as employees, partners, officers, directors, members, managers, or principals of, or advisors to, Industry Companies and, at any given time, the Specified Persons may be in direct or indirect competition with the Corporation or its subsidiaries.

The Corporation, on behalf of itself and its subsidiaries, to the maximum extent permitted by law, renounces any interest or expectancy of the Corporation and its subsidiaries in, or any interest or expectancy of the Corporation and its subsidiaries in being offered an opportunity to participate in, any business opportunities that involve any aspect of the energy business or industry that are presented to or become known to any Specified Person and waives the application of the doctrine of corporate opportunity, or any other analogous doctrine, with respect to the Corporation and its subsidiaries, to the Specified Persons. The Specified Persons shall have no duty or obligation to communicate or offer any such business opportunity to the Corporation or its subsidiaries and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries or any stockholder or creditor of the Corporation, including for breach of any fiduciary or other duty, by reason of the fact that such Specified Person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries.

Without limiting the foregoing, none of the Specified Persons shall have any obligation to refrain from (i) purchasing, selling, exploring, developing or exploiting any oil, gas or other hydrocarbon or mineral asset or any other asset relating to or used in the energy business or industry, (ii) engaging in or managing the same or similar activities or lines of business as the Corporation or its subsidiaries or developing or marketing any products or services that compete, directly or indirectly, with those of the Corporation or its subsidiaries, (iii) investing or owning any interest publicly or privately in, or developing a business relationship with, any Industry Company or any other person engaged in the same or similar activities or lines of business as, or otherwise in competition with, the Corporation or its subsidiaries (each, a “ Competing Person ”), (iv) doing business with any client or customer or supplier of the Corporation or its subsidiaries, or (v) entering into any agreement to provide any services to any Competing Person or acting as an employee, partner, officer, director, member, manager, or principal of, or advisor to, any Competing Person or Industry Company, regardless (in the case of each of (i) — (v)) whether such activities are in direct or indirect competition with the business or activities of the Corporation or any of its subsidiaries (each of the activities referred to in clauses (i) — (v), a “ Specified Activity ”). To the maximum extent permitted by law, the Corporation renounces on behalf of itself and its subsidiaries any interest or expectancy in any Specified Activity, or in being offered an opportunity to participate in any Specified Activity, that may be presented to or become known to any Specified Person.

Any proposed amendment to this Article XVIII shall require the approval of at least 67% of the outstanding voting stock of the Corporation entitled to vote generally in the election of directors. Neither the amendment or repeal of this Article XVIII, nor the adoption of any provision of the Bylaws of the Corporation, nor, to the fullest extent permitted by applicable law, any modification of law, shall eliminate, reduce or otherwise adversely affect any right or protection of any Specified Person granted pursuant hereto existing at, or arising out of or related to any event, act or omission that occurred prior to, the time of such amendment, repeal, adoption or modification (regardless of when any proceeding (or part thereof) relating to such event, act or omission arises or is first threatened, commenced or completed).

If any provision or provisions of this Article XVIII shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (a) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Article XVIII (including, without limitation, each portion of any paragraph of this Article XVIII containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (b) to the fullest extent possible, the provisions of this Article XVIII (including, without limitation, each such portion of any paragraph of this Article XVIII containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect the Specified Persons from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

This Article XVIII shall not limit any protections or defenses available to, or indemnification or advancement rights of, any Specified Person under this Certificate of Formation or Bylaws of the Corporation, applicable law or contract.

If any code of conduct or other policy of the Corporation or its subsidiaries is inconsistent with this Article XVIII, this Article XVIII shall control and any conduct permitted by this Article XVIII shall not be a violation of such code or policy.

AMENDED AND RESTATED

CERTIFICATE OF FORMATION

EXCO RESOURCES, INC.

Marked to Show Amendments Effected by the Certificate of Amendment to Amended and Restated

Certificate of Formation, Effective as of June 2, 2017

ARTICLE I

NAME

The name of the Corporation is EXCO Resources, Inc. The Corporation is a for-profit Corporation.

ARTICLE II

DURATION

The period of the Corporation’s duration is perpetual.

ARTICLE III

PURPOSE

ARTICLE IV

CAPITALIZATION

The aggregate number of shares of capital stock that the Corporation will have authority to issue is ~~790,000,000~~ 270,000,000 shares, which shall consist of ~~780,000,000~~ 260,000,000 shares of Common Stock, par value $0.001 per share (the “Common Stock”), and 10,000,000 shares of preferred stock, par value $0.001 per share (“Preferred Stock”).

ARTICLE V

NON-CUMULATIVE VOTING

Cumulative voting is expressly prohibited.

ARTICLE VI

DENIAL OF PREEMPTIVE RIGHTS

ARTICLE VII

REGISTERED OFFICE

The street address of the Corporation’s registered office is as follows:

1999 Bryan St., Suite 900

Dallas, Texas 75201-3136

ARTICLE VIII

REGISTERED AGENT

The name of the Corporation’s registered agent at the Corporation’s registered office is C T Corporation System.

ARTICLE IX

DIRECTORS

The names and addresses of the current directors of the Corporation are as follows:


Name		Address
Jeffrey D. Benjamin		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

B. James Ford		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Samuel A. Mitchell		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Wilbur L. Ross, Jr.		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Jeffrey S. Serota		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

Robert L. Stillwell		12377 Merit Drive, Suite 1700, LB 82 Dallas, TX 75251

ARTICLE X

BYLAWS

ARTICLE XI

ELECTION OF DIRECTORS

11.1 Number of Directors. The number of the Directors of the Corporation shall be fixed from time to time by or pursuant to the Bylaws of the Corporation.

11.3 Decrease in Number of Directors. No decrease in the number of Directors constituting the Board of Directors shall shorten the term of an incumbent Director.

ARTICLE XII

SPECIAL MEETINGS OF SHAREHOLDERS

ARTICLE XIII

INDEMNIFICATION

ARTICLE XIV

NO MONETARY LIABILITY OF DIRECTORS TO SHAREHOLDERS

To the fullest extent permitted by the TBOC, as the same may be amended from time to time, or any other applicable laws presently or hereafter in effect, no Director of the Corporation shall be personally liable to the Corporation or its shareholders for or with respect to any acts or omissions in the performance of his or her duties as a Director of the Corporation. If the TBOC is hereafter amended to authorize further elimination of the liability of a corporation’s directors for or with respect to any acts or omissions in the performance of their duties as directors of a corporation, then a Director of the Corporation shall not be liable for any such acts or omissions to the fullest extent permitted by the TBOC, as so amended. Any repeal or modification of this Article XIV shall not adversely affect any right or protection of a Director of the Corporation existing immediately prior to such repeal or modification.

ARTICLE XV

BUSINESS COMBINATION LAW

Pursuant to Section 21.607 of the TBOC, the Corporation expressly elects not to be governed by Section 21.606 of the TBOC (the Business Combination Law).

ARTICLE XVI

AMENDMENT

ARTICLE XVII

SHAREHOLDER ACTION BY WRITTEN CONSENT

ARTICLE XVIII

CORPORATE OPPORTUNITIES

and waives the application of the doctrine of corporate opportunity, or any other analogous doctrine, with respect to the Corporation and its subsidiaries, to the Specified Persons. The Specified Persons shall have no duty or obligation to communicate or offer any such business opportunity to the Corporation or its subsidiaries and, to the fullest extent permitted by applicable law, shall not be liable to the Corporation or any of its subsidiaries or any stockholder or creditor of the Corporation, including for breach of any fiduciary or other duty, by reason of the fact that such Specified Person pursues or acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the Corporation or its subsidiaries.

Without limiting the foregoing, none of the Specified Persons shall have any obligation to refrain from (i) purchasing, selling, exploring, developing or exploiting any oil, gas or other hydrocarbon or mineral asset or any other asset relating to or used in the energy business or industry, (ii) engaging in or managing the same or similar activities or lines of business as the Corporation or its subsidiaries or developing or marketing any products or services that compete, directly or indirectly, with those of the Corporation or its subsidiaries, (iii) investing or owning any interest publicly or privately in, or developing a business relationship with, any Industry Company or any other person engaged in the same or similar activities or lines of business as, or otherwise in competition with, the Corporation or its subsidiaries (each, a “ Competing Person ”), (iv) doing business with any client or customer or supplier of the Corporation or its subsidiaries, or (v) entering into any agreement to provide any services to any Competing Person or acting as an employee, partner, officer, director, member, manager, or principal of, or advisor to, any Competing Person or Industry Company, regardless (in the case of each of (i) — (v)) whether such activities are in direct or indirect competition with the business or activities of the Corporation or any of its subsidiaries (each of the activities referred to in clauses (i)—(v), a “ Specified Activity ”). To the maximum extent permitted by law, the Corporation renounces on behalf of itself and its subsidiaries any interest or expectancy in any Specified Activity, or in being offered an opportunity to participate in any Specified Activity, that may be presented to or become known to any Specified Person.

Exhibit 5.1

August 2, 2017

EXCO Resources, Inc.

12377 Merit Drive, Suite 1700

Dallas, Texas 75251

Re: EXCO Resources, Inc. Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel to EXCO Resources, Inc., a Texas corporation (the “ Company ”), with respect to certain legal matters in connection with the preparation and filing by the Company with the Securities and Exchange Commission (the “ Commission ”) of a Registration Statement on Form S-3 (the “ Registration Statement ”) under the Securities Act of 1933, as amended (the “ Securities Act ”). The Registration Statement relates to the resale by the selling shareholders, as set forth in the Registration Statement and from time to time as may be set forth in a prospectus supplement to the Registration Statement, as necessary, of (i) 2,745,754 (the “ Issued PIK Shares ”) shares of the Company’s common stock, par value $0.001 per share (the “ Common Stock ”), that have been issued to the selling shareholders as a payment-in-kind interest payment on the Company’s 1.75 Lien Term Loans due October 26, 2020 (the “ 1.75 Lien Term Loans ”), (ii) up to 46,686,177 shares of Common Stock (the “ Future PIK Shares ”) that may be issued to the selling shareholders as payment-in-kind interest payments on the Company’s outstanding 8.0% / 11.0% 1.5 Lien Senior Secured PIK Toggle Notes due 2022 (the “ 1.5 Lien Notes ”) and 1.75 Lien Term Loans and (iii) up to 23,262,362 shares of Common Stock (the “ Warrant Shares ”) that may be issued to the selling shareholders upon the exercise of warrants held by the selling shareholders.

This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act. This opinion expressed herein is limited to the laws of the State of Texas, including the statutory provisions and reported judicial decisions interpreting the laws of the State of Texas.

In our capacity as your counsel, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement and all exhibits thereto, (ii) the Amended and Restated Certificate of Formation of the Company and any amendments thereto to date (the “ Charter ”), (iii) the Third Amended and Restated Bylaws of the Company as amended to date, (iv) the Written Consent of the Sole Member of the Special Committee of the Company (the “ Special Committee” ) related to the filing of the Registration Statement and the approval of the Indenture (as defined below), Credit Agreement (as defined below), Registration Rights Agreement (as defined below) and Warrant Agreements (as defined below), and other related matters, (v) the Unanimous Written Consent of the Board of Directors of the Company (the “ Board ”) related to the filing of the Registration Statement and the approval of the Indenture, Credit Agreement, Registration Rights Agreement and Warrant Agreements, (vi) a specimen of the Company’s Common Stock certificate, (vii) a certificate executed by an officer of the Company, dated as of the date hereof, (viii) the Indenture, dated as of March 15, 2017, by and among the Company, as issuer, certain of its subsidiaries, as guarantors, and Wilmington Trust, National Association, as trustee and collateral trustee, governing the 1.5 Lien Notes (the “ Indenture ”), (ix) the 1.75 Lien Term Loan Credit Agreement, dated as of March 15, 2017, by and among the Company, as borrower, certain subsidiaries of borrower, as guarantors, the lenders party thereto, and Wilmington Trust, National Association, as administrative agent and collateral trustee, governing the 1.75 Lien Term Loans (the “ Credit Agreement ”), (x) the Registration Rights Agreement, dated as of March 15, 2017, by and among the Company and the investors specified on the signatures thereto (the “ Registration Rights Agreement ”), (xi) the Form of 1.5 Lien Note Warrant Agreement, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “ 1.5 Lien Note Warrant ”), (xii) the Form of Commitment Fee Warrant Agreement, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “ Commitment Fee Warrant ”), (xiii) the Form of Amendment Fee Warrant Agreement, by and between the Company and Continental Stock Transfer & Trust Company, as warrant agent (the “ Amendment Fee Warrant ” and, collectively with the 1.5 Lien Note Warrant and the Commitment Fee Warrant, the “ Warrant Agreements ”), (xiv) records of the corporate proceedings with respect to the approval of the Indenture, Credit Agreement, Registration Rights Agreement and Warrant Agreements and (xv) such other records, documents and instruments of the Company as we have deemed necessary for the purpose of this opinion.

In making the foregoing examinations, we have assumed (i) the genuineness of all signatures, (ii) the authenticity of all documents submitted to us as originals, (iii) the conformity to original documents of all documents submitted to us as

certified or photostatic copies, (iv) that all agreements or instruments we have examined are the valid, binding and enforceable obligations of the parties thereto and (v) that all factual information on which we have relied was accurate and complete. As to all questions of fact material to the opinion stated herein, we have, without independent third party verification of their accuracy, relied in part, to the extent we deemed reasonably necessary or appropriate, upon the representations and warranties of the Company contained in such documents, records, certificates or instruments or representations furnished or made available to us by the Company.

In connection with this opinion, we have assumed that (i) the Company will continue to be incorporated and in existence and good standing in its jurisdiction of organization; (ii) the Registration Statement and any amendments thereto will have become and remained effective and any post-effective amendments will have become effective; (iii) if necessary, a Prospectus Supplement (the “ Prospectus Supplement ”) under the Securities Act will have been prepared and filed with the Commission properly describing any underwritten offering of the Issued PIK Shares, Future PIK Shares and/or Warrant Shares; (iv) no stop order of the Commission preventing or suspending the use of the prospectus contained in the Registration Statement or any Prospectus Supplement will have been issued; (v) the prospectus contained in the Registration Statement and any required Prospectus Supplement will have been delivered (or deemed to be delivered) to the purchaser of the Issued PIK Shares, Future PIK Shares and/or Warrant Shares as required in accordance with applicable law; (vi) the Future PIK Shares and Warrant Shares will be issued and delivered in accordance with the Indenture, Credit Agreement or Warrant Agreements, as applicable, against payment of the agreed-upon consideration therefor (in excess of the par value thereof) and (vii) all Future PIK Shares and Warrant Shares will be offered, issued and sold in compliance with applicable federal and state securities laws.

Based on the foregoing, and subject to assumptions, qualifications, limitations and exceptions set forth herein, we are of the opinion that (i) the Issued PIK Shares are duly authorized, validly issued, fully paid and nonassessable and (ii) the Future PIK Shares and Warrant Shares are duly authorized and, when acquired by the selling shareholders in accordance with and for the consideration specified in the Indenture, Credit Agreement or Warrant Agreements, as applicable, will be validly issued, fully paid and nonassessable.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the Registration Statement and to the reference to us under the heading “Legal Matters” in the Registration Statement. In giving such consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder promulgated by the Commission.

Very truly yours,

/s/ Haynes and Boone, LLP

HAYNES AND BOONE, LLP

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

The Board of Directors

EXCO Resources, Inc.:

We consent to the use of our report with respect to the consolidated financial statements and the effectiveness of internal control over financial reporting incorporated by reference herein and to the reference to our firm under the heading “Experts” in the prospectus.

Our report on the consolidated financial statements dated March 16, 2017, contains an explanatory paragraph that states the consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the consolidated financial statements, probable failure to comply with a financial covenant in its credit facility as well as significant liquidity needs, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of that uncertainty.

/s/ KPMG LLP

Dallas, Texas

August 2, 2017

Exhibit 23.2

L EE K EELING AND A SSOCIATES , I NC .

I NTERNATIONAL P ETROLEUM C ONSULTANTS

115 West 3 ^rd Street, Suite 700

Tulsa, Oklahoma 74103-3410

(918) 587-5521

(918) 587-2881 (Fax)

www.lkaengineers.com

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS

As independent petroleum engineers, Lee Keeling and Associates, Inc. hereby consents to the incorporation by reference in this Registration Statement on Form S-3 and any amendments thereto of information from its reserve report dated January 8, 2016, on the estimated proved oil and natural gas reserve quantities of EXCO Resources, Inc. and its consolidated subsidiaries presented as of December 31, 2015, included in or made a part of the Annual Report on Form 10-K of EXCO Resources, Inc. for the year ended December 31, 2016, filed with the Securities and Exchange Commission on March 16, 2017.

/s/ Lee Keeling and Associates, Inc.

LEE KEELING AND ASSOCIATES, INC.

Tulsa, Oklahoma

July 20, 2017

Exhibit 23.3

LOGO

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS

We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 and any amendments thereto of EXCO Resources, Inc. (the “Company”) of the reference to Netherland, Sewell & Associates, Inc. and the inclusion of the information in our report dated January 10, 2017 in the Registration Statement on Form S-3 of the Company, filed with the U.S. Securities and Exchange Commission.


NETHERLAND, SEWELL & ASSOCIATES, INC.

By:		/s/ C.H. (Scott) Rees III
		C.H. (Scott) Rees III, P.E.
		Chairman and Chief Executive Officer

Dallas, Texas

July 20, 2017

Please be advised that the digital document you are viewing is provided by Netherland, Sewell & Associates, Inc. (NSAI) as a convenience to our clients. The digital document is intended to be substantively the same as the original signed document maintained by NSAI. The digital document is subject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document and the original document, the original document shall control and supersede the digital document.

LOGO LOGO


TBPE REGISTERED ENGINEERING FIRM F-1580			FAX (713) 651-0849
1100 LOUISIANA	SUITE 4600	HOUSTON, TEXAS 77002-5294	TELEPHONE (713) 651-9191

EXHIBIT 23.4

CONSENT OF RYDER SCOTT COMPANY, L.P.

As independent oil and gas consultants, Ryder Scott Company, L.P. hereby consents to the incorporation by reference in this Registration Statement on Form S-3 of EXCO Resources, Inc. to be filed with the Commission on or about August 2, 2017, of all references to our firm and information from our reserve report dated January 6, 2017 which appears as Exhibit 99.2 in the Annual Report on Form 10-K of EXCO Resources, Inc. for the year ended December 31, 2016.

/s/ Ryder Scott Company, L.P.

RYDER SCOTT COMPANY, L.P.

TBPE Firm Registration No. F-1580

Houston, Texas

July 20, 2017


SUITE 600, 1015 4TH STREET, S.W.	CALGARY, ALBERTA T2R 1J4	TEL (403) 262-2799	FAX (403) 262-2790
621 17TH STREET, SUITE 1550	DENVER, COLORADO 80293-1501	TEL (303) 623-9147	FAX (303) 623-4258