1 Drilling Down on Strategic Alternatives in the Current Energy CrisisWEBINAR SERIES Part I: The CFO's Dilemma - Proactive Next Steps April 1, 2015

2 Today’s Speakers Trent Rosenthal (moderator) Restructuring & Bankruptcy Partner – Burleson LLP ● Board Certified in Business Bankruptcy Law by the Texas Board of Legal Specialization ● Over 3 decades experience in restructuring and bankruptcy law ● Handled numerous oil & gas restructurings and workouts James (“Jim”) C. Row, CFA Managing Director & Founder – OFSCap, LLC ● Background in energy investment banking (international/domestic) ● Securities and valuation expert ● Former E&P operator and CFO Allen Parks Managing Director – OFSCap, LLC ● 18 years experience in contract drilling industry ● 18 years experience in oilfield services investment banking TRENT (2 MINUTES TOTAL) Douglas Draper Restructuring & Bankruptcy Attorney – Heller, Draper, Patrick, Horn & Dabney ● Fellow American College of Bankruptcy Lawyers ● Listed on Best Lawyers in America for the past 25 years ● Ranked Tier 1 Bankruptcy Counsel in Chambers USA The CFO's Dilemma - Proactive Next Steps

3 Housekeeping Items This Webinar is Being Recorded We Welcome QuestionsA recording of today’s webinar will be ed to attendees after the webinar We Welcome Questions Enter questions into the Questions Pane and we will respond in the Q&A session at the end Think of Something Later? TRENT (1 MINUTE TOTAL) DISCLAIMER: The viewing of online seminars and the use of the Internet for communications with Burleson LLP, Heller, Draper, Patrick Horn & Dabney, and OFSCap will not establish an attorney-client relationship and messages containing confidential or time-sensitive information should not be sent. In order to protect past, present or potential clients, we cannot treat unsolicited s as confidences or secrets. The CFO's Dilemma - Proactive Next Steps

4 Today’s Agenda/ToolboxDealing with Loan Covenants Waivers and Extensions Debt to Equity Conversion New Capital M&A and Consolidations Q&A Session TRENT (1 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

5 Today’s Goals Provide a Toolbox of Practical Points for a CFOHighlight Action Items to Select Set of Tasks or CFO Responsibilities Provide Thoughts and Draw Attention to Many Critical Issues Focus on “Lessons Learned” From Previous Downturns Briefly Address Various Financial Restructuring Alternatives If A Company Can’t Avoid A Filing TRENT (1 MINUTE TOTAL) The CFO's Dilemma - Proactive Next Steps

6 Dealing with Loan/Bond CovenantsProactive Communication Be the “Good Actor” Function as Early Warning Sign to Lender Financial, Informational, Ownership, Affirmative, Negative or Positive in Nature Violation May Result in Default on Loan or Bond, Penalties Applied, or Loan Being “Called” Hire Turn-Around Consultants and Counsel Who Know Work-Out Concepts DOUG DRAPER (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

7 Covenants – CFO StrategiesDefault Approvals/Best Practice Steps Reserve Ratio (Valuation) Leverage Ratios Banks – Loan Committee, Audit Committee, and Regulatory Approval Cash Flow Covenants Soft Technical Defaults Companies – Board Approval for Loan Modifications Penalties Seek Advice of Consultants and Counsel Acceleration Protection for Management Exercise of Remedies MSA’s as Leverage Effect on Other Financing Arrangements Called Prevention Renegotiation / Withdrawn Bank Bondholder Hesitancy to Call – Ramifications JIM ROW (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

8 Loan vs. Bond StrategiesCovenants Maintenance vs. Financial Negotiable vs. Not Negotiable Lenders Known Group vs. Unknown Group Information Sharing Restricted vs. Non-Restricted Credibility Under Scrutiny Accurate Granular Forecast Critical ALLEN PARKS (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

9 Covenants – Bank or Bond Committee PositionPerspective Position Systematic Pressures Internal Pressures Approvals Regulatory Hurdles Equity Players Purchasing Bonds at a Discount (i.e. Loan to Own) Know Who You Are Dealing With and What They Want – Money, Stock, Assets, All of the Above? DOUG DRAPER (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

10 Waivers & Extensions Why – Waiving of RightsLegal Effect/Ramifications Prevents Creditor From Taking Any Legal Action Gives Company Breathing Room Don’t Over Commit in Exchange For Waiver Make Reasonable Offers For Waiver, Such As Bargain for Cooling-Off Period - Buy Time! Form and Substance Sell the “Plan” and Benefits to Creditor Look At It From Both Perspectives Adviser and Legal Counsel Involvement in “Pitch” to Bondholders/Lenders TRENT (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

11 Waivers & Extensions Loan vs. Bond DifferencesBonds Usually Have Indenture Trustees Looking Out For Bondholders Lenders have Loan and Credit Committees. Work-out Officer (Advisors and Counsel) Must be Able to “Sell” Company’s Request to Bank Management TRENT (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

12 Debt to Equity ConversionsLender Agrees to Process Converting All or a Portion of their Loan into Some Form of Equity to Restore Liquidity Strategies Manageable Debt Level Lender Sells Debt to Someone that Wants Equity in the Company or Lender (non-bank) wants Equity ALLEN PARKS (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

13 New Capital Challenging Acquisition Capital for the WeakIs it Debt or Equity, or maybe “Debtequity” Mezzanine with Substantial Equity Components 2nd Lien? Available Unpledged Assets, ORRI’s, Production Payments, Royalties New Capital through Chapter 11 Process is Attractive Option, such as Debtor-in-Possession Lending JIM ROW (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

14 M&A and ConsolidationsOilfield Services Will See Little New Capital Until Knife Hits the Floor or Bankruptcy More Prone to Distressed Outright Purchase or Combination Great Opportunities to Buy Valuable Assets from Distressed Companies New Capital Sources for E&P Hedge Funds E&P Advantage Funds Created to Make Money In This Market DOUG DRAPER (3 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

15 Wrap-Up and Call to ActionBe Proactive and Responsive Under-promise and Over-perform Sell Your Capabilities and Plan Give Creditors the Opportunity to Increase Recovery By Working With You Over-Communicate Hire Counsel and Financial Advisors Familiar With Work-outs and Restructuring to Guide You Through Process Involve Energy Lawyers that Know the Industry Fresh Face and Lightning Rod TRENT (2 MINUTES TOTAL) The CFO's Dilemma - Proactive Next Steps

16 Q&A Please Submit Questions via Questions Pane on Your ScreenPlease Be Patient As We Try to Answer All Questions Thank You For Attending! TRENT TO FACILITATE PLANTED QUESTIONS AND QUESTIONS FROM AUDIENCE (10 MINUTES) The CFO's Dilemma - Proactive Next Steps

17 Join Us for Part II of Our Webinar SeriesPart II: Public Company Boards of Directors and Corporate Governance Wednesday, April 22, 2015 12:00-1:00 p.m. Central Time Registration Link: https://attendee.gotowebinar.com/register/ TRENT (1 MINUTE TOTAL) The CFO's Dilemma - Proactive Next Steps

18 Contact Information Trent Rosenthal [Online Bio] Restructuring & Bankruptcy Partner – Burleson LLP Phone: James (“Jim”) C. Row, CFA [Online Bio] Managing Director & Founder – OFSCap, LLC Phone: Allen Parks [Online Bio] Managing Director – OFSCap, LLC Phone: Douglas Draper [Online Bio] Restructuring & Bankruptcy Attorney – Heller Draper, Patrick, Horn & Dabney, LLC Phone: The CFO's Dilemma - Proactive Next Steps