Permian (Midland, Delaware)

US Oil & Gas Shale Play Map

Major O&G Shale Plays

GEOLOGIC RECORD - WESTERN INTERIOR SEAWAY

4.5”

• 4.5” liner•

•

4.5” liner

• 4.5” liner••

TYPICAL HORIZONTAL TIGHT SHALE WELL DESIGN

TARGET FORMATION

IMPERVIOUS UPPER BOUNDING ZONE

IMPERVIOUS LOWER LAYER

GROUND LEVEL

DEPT

H FR

OM G

ROUN

D LE

VEL

TO T

ARGE

T FO

RMAT

ION

T

YPIC

ALLY

RAN

GES

FROM

5,00

0 TO

13,00

0 FT

DEP

ENDI

NG O

N TH

E SH

ALE

BASI

N

Surface Casing protects groundwater, cemented in place to surface

Frac Stimulations executed in multiple stages starting mid-2000's, single stage hz fracs started in 2000

Hydraulic Fracturing (Fracing)

– 13,100 wells producing, 11,050 Bakken / Three Forks horizontals (85%)

MT Elm Coulee Field 1st Hz Mid- Bakken in 2000

Pre-2004 North Dakota = Conventional Era, NO horizontal wells fracture stimulated

WILLISTON BASIN

Williston Mountrail Co.

Dunn Co.

McKenzie Co.

Williams Co.

Watford City

Stanley

Orig Bkkn Hz play 1989/90 (Meridian Oil)

15,000 sq-mi in ND 11,050 Bakken / Three Forks Hz Wells Drilled Since 2004

1,000 BOPD inital 30-day well rates = high water mark in unconventional oil shale plays today, typically yield 600MBO to 1MMBO EUR's

<----

NES

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ANTI

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—North Dakota April 2016 Production: Oil 1.04 MMBOPD, 15% off peak 1.23 MMBOPD (Dec-14), Natural Gas 1.6 BCF/D (9% flared), peak 1.7 BCF/D in Mar-16

95% of ND production is from tight, unconventional Bakken / Three Forks Fm's

– –– –

NYMEX OIL GAS PRICES ($/BBL) ($/MMBtu) Jul-14 102.39 4.40 Aug-14 96.08 3.81 Sep-14 93.03 3.96 Oct-14 84.34 3.98 Nov-14 75.81 3.73 Dec-14 59.29 4.28

Hi Count: 218 Rigs Active May 2012

- Red Polygons Show NDIC Bakken / 3Forks Field Outlines, - Drilling Derricks Indicate Active Drilling Rig Locations

Conventional Red River Formation Production (conventional = NOT tight shale)

– –– –

NYMEX OIL GAS PRICES ($/BBL) ($/MMBtu) Dec-14 59.29 4.28 Jan-15 47.33 3.19 Feb-15 50.72 2.87 Mar-15 47.85 2.89

–– Drilling Contraction with Declining Oil Price Tier 2 Lower Class Areas Become Uneconomic

– –– –––

NYMEX OIL GAS PRICES ($/BBL) ($/MMBtu) Jan-16 31.78 2.37 Feb-16 30.62 2.19 Mar-16 37.96 1.71

Low Count: 27 rigs May 2016, currently 28 on 6/21/16

Retrenchment to Tier 1 High Quality Area in Low Price Environment

•••

Wellsite Pads for Drilling, Frac'ing & Production Phases

4.5”

• 4.5” liner•

•

4.5” liner

• 4.5” liner••

640-acre (1 mi.) spacing = ~4500' lateral length 1280-acre (2 mi.) spacing = 9000' - 10000' lateral

c. 2008

This schematic indicates a 7-stage frac design (8 yr old technology), 2016 frac designs for 10000' laterals use 30-60 stages w/ 2x-4x proppant as 2008 fracs

TYPICAL BAKKEN HORIZONTAL WELL

DUNN COUNTY, ND Well Spacing Example for Middle Bakken Zone

1280-acre spacing unit (2 govermental 640-ac sections)

Marathon hz well: Lazy De 34-7H

PDC

Ener

gy ea

rlier

64

0-ac

late

ral

BBLS OIL BBLS WATER MCF GAS

Page 1 of 16/18/2016

BAILEY-BAKKENMARATHON OIL COMPANYLAZY DE 34-7H#18382 33-025-00988-00-00 SWSE 7-T146N-R93W

CUM GAS = 130192CUM WATER = 108831

CUM OIL = 200660

0

10

20

30

10000

1000

100

10

100000

10000

1000

100

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

BB

LS P

ER M

ON

THD

AY

SM

CF PER

MO

NTH

MARATHON OIL COMPANY

#18382 3

Oil, bbls

NatGas, Mcf

Water, bbls

BAILEY-BAKKEN

2015: Installed 4-1/2" liner in 8800-ft lateral, re-frac'd 30-stages w/ported sleeves, enhanced production to 400+ BOPD, 3x initial peak rate

2010: Open-hole lateral, single-stage completed "hail-mary" frac job, 130 BOPD IP30 day av

LAZY DE 34-7H

Re-Frac Example - Production Curve

Six Wells on a Single Pad Multi-Well Pad Development Phase Occurs After Areal Delineation and De-Risking is Completed

Hess Corp. 6 hz well pad develops 2 separate and adjacent 1280-acre spacing units

MOUNTRAIL COUNTY Field-Wide Drillout Example Parshall & Sanish Fields

WHITING PETROLEUM

EOG RESOURCES

MCKENZIE COUNTY Delineation, DeRisking Phases Completed, Awaiting Price Recovery for Field Drillout

Continental Resources Wahpeton Spacing Unit 660' Density Pilot

Continental testing optimum well density patterns to screen for interference betw wells

Williston Basin Tier 1 Area Horizontal Target Formations

Bernstein _0516-24

Brushy Canyon

Leonard A

Leonard B

1st Bone Spring

2nd Bone Spring

3rd Bone Spring

Upper Wolfcamp

Middle Wolfcamp

Lower Wolfcamp

4,80

0’

One WorldTrade Center

1,792’

Battery Park to Wall Street to City Hall 4,800’ Middle Bakken

Lower EagleFord

40’ 150’

Battery Park

Wall Street

City Hall

Horizontal Target Formations

Understanding the Opportunities

3rd Bone Spring

L. Avalon

800’

Most current unconventional plays target one or two zones across a trend area.

The Delaware Basin has over a dozen unique targets between the top of the Brushy Canyon and the Woodford.

All logs plotted at same scale

Delaware Basin

Wolfcamp A

Wolfcamp B

Wolfcamp C

Wolfcamp D

Strawn

Atoka

Barnett

Miss LimeWoodford

U. Avalon

1st Bone Spring

2nd Bone Spring

22

Brushy Cyn.

Ove

rpre

ssur

e

Tested by MTDR

Tested by others

Objective: To drill and complete better wells for less money

Challenge: To identify the best targets within multiple prospective intervals across a geologically complex basin

Matador’s geoscience staff is committed to bringing the best targets forward!

5000 FEET

6400 FEET

5800 FEET

800 ft

800 ft

2nd Bone Spring

3rd Bone Spring

Wolfcamp A

Wolfcamp B

Wolfcamp D

Brushy Cyn.

U. Avalon

1st Bone Spring

DELAWARE - MULTI-STACKED PLAY

Single Wolfcamp B Well at Rustler Breaks Holds Up To 15 Potential Locations

27

Brushy Canyon

Avalon

1st Bone Spring

2nd Bone Spring

3rd Bone Spring

Wolfcamp B

Wolfcamp A-XY

One producing Wolfcamp B well holds 320 surface acres and up to 15 additional potential locations for future development

1/2 mile

1 mile

320 - Acre Development Spacing Pattern (Cross-Section View)

1 mile

320grossacres

1/2 mile

320 - Acre Development Spacing Pattern (Aerial View)

AdditionalLocations Held

WithWolfcamp B well

2

2

2

23

15

2

2

Delaware Basin - Eddy County Density Example

Does Rig Count Matter ?

Active Rig Count, Peak 218 in 5/2012

ND Oil Price $/bbl

# of Wells Spudded per Mth per Rig

1) New Generation Drlg Rig Efficiencies, 2) Multi-Well Pad Development, and 3) Improved Frac Stimulation Designs & Effectiveness in Increasing Well EUR's Must be Taken Into Consideration

Bernstein _0516-12

32.8

18.7

8.8

2014 2015 Record

Delaware Basin Wolfcamp Oil Play South Texas Eagle Ford Bakken

* Normalized to 5,300’ lateral. * Normalized to 8,400’ lateral.* Normalized to 4,500’ lateral.

14.2

10.9

8.97.8

3.7

2012 2013 2014 2015 Record

20.8

14.712.4

8.5

5.4

2012 2013 2014 2015 Record

43

3235

26

1815

17.313.8

0

5

10

15

20

25

30

35

40

45

50

Loving County Wolfcamp Eddy County Wolfcamp

DrillingDa

ys

2014 Average

2015 Planned

2015 Best Well

2016 Record Well

Improving Wolfcamp Drilling Times Significantly in 2015 and 2016

24

Note: Best wells are Dorothy White 82-TTT-B33 WF #203H in Loving County (Wolfcamp) and Paul 25-24S-27E RB #221H in Eddy County (Wolfcamp).

DELAWARE BASIN - OPERATOR PERFORMANCE SINCE BASIN ENTRY IN 2014

$0.0

$2.0

$4.0

$6.0

$8.0

$10.0

$12.0

H2 2014 YE 2015 YE 2016E

25%

2016 Anticipated Wolf Area Total Drilling and Completion Cost Improvements

25

$12.0

$6.0

$4.8

Dril

ling

and

Com

plet

ion

Cos

ts, m

illio

ns

$100,000 Cost Reduction ROR Increase ~2%

More to come?

Service Costs

Service CostsEfficiencies

Efficiencies

56%

44%

63%

37%

50% Savings 20% Savings

Note: Does not include production and facilities costs.

DELAWARE BASIN - LOVING CO., TX EXAMPLE

NYSE: WLL

Williams County Enhanced Completions Increase 60-Day Average Rates Over 100%

9

452

1,501

404

904

0

200

400

600

800

1,000

1,200

1,400

1,600

60-Day Rate

BOE/

d

452 404

Average of Four Direct Offset Wells P Earl Rennerfeldt 154-99-2-3-27-2H

Average of Six Direct Offset Wells P Earl Rennerfeldt 154-99-2-3-10-15H3

WILLIAMS CO., ND ENHANCED FRAC COMPLETIONS

NYSE: WLL

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 180.0 200.0

Barr

el o

f Oil

Equi

vale

nt

700 MBOE 900 MBOE Enhanced Completion Average

Enhanced Completions Tracking 900 MBOE EUR Type Curve(1)

8

(1) Data set includes all enhanced completion wells (over 5 million pounds sand per well) since January 1, 2015 with 120 days of production. These 47 wells span Billings, Dunn, McKenzie, Mountrail, Stark and Williams counties.(1) Data set includes all enhanced completion wells (over 5 million pounds sand per well) since January 1, 2015 with 120 days of production. These 47 wells span( ) p (Billings, Dunn, McKenzie, Mountrail, Stark and Williams counties.

Williston Basin

Bernstein _0516-4

Focus on Premium Locations

Precision Targeting

Advanced Completions

Lower Costs

* Domestic completions, gross oil production.

10.713.6

20.9

2014 2015 2016 Est

120-Day Cumulative Oil Production* (Bbl Per Foot of Treated Lateral)

EOG DOMESTIC COMPLETIONS

- Increased Proppant Loading - Slickwater Fluid Systems - Cemented Liners - Increased Number of Stages - Plug and Perf Frac Method

Indu

stry

Pra

ctice

Advanced Completions

U. S. Shale Basins

Bernstein _0516-31

2015 Completions4,030 Events /1,000 ft

540 Events /1,000 ft

2010 Completions

Contain Events Closerto Wellbore

Enhance Complexity to Contact More Surface Area

Note: Microseismic dots represent well stimulation events during completions. Note: Microseismic dots represent well stimulation events during completions.

26

7,500 bbl

8,400 bbl

500 Mlbs

210 ft.

35 ft.

Gen 1 Gen 2 Testing

2,000 lbs/ft 2,000 lbs/ft 3,000 lbs/ft

40 Bbl/ft 30 Bbl/ft 40 Bbl/ft

35’ clusterspacing

50’ cluster spacing

35’ cluster Spacing

10 wells 13 wells 1 well

Gen 1 Testing

2,000 lbs/ft 3,000 lbs/ft

40 Bbl/ft 40 Bbl/ft

35’ cluster spacing

35’ cluster Spacing

1 well 1 well

Bone Spring

Upper Wolfcamp

Lower Wolfcamp

Cou

pled

Mic

ro-C

oupl

edSo

urce

Roc

k

630 Mlbs

630 Mlbs

210 ft.

35 ft.

8,400 bbl

Evolution of Delaware Basin Frac Design – Reservoir Specific

350 ft.

50 ft.Gen 1 Gen 2 Testing

2,000 lbs/ft 1,333 lbs/ft 2,100 lbs/ft

40 Bbl/ft 20 Bbl/ft 40 Bbl/ft

50’ clusterspacing

75’ cluster spacing

50’ cluster Spacing

4 wells 6 wells 2 wells

10

100

1,000

10,000

0 50 100 150 200 250 300 350 400 450 500 550 600 650 700 750 800

Prod

uctio

n R

ate,

BO

E/d

Time, Days

Dorothy White #1H

Norton Schaub #1H

Billy Burt #203H

Johnson #204H

Barnett #201H

Dorothy White #1H has produced 515 MBOE (68% oil) in 28 monthsNorton Schaub 84 TTT B33 WF #201H has produced 425 MBOE (67% oil) in 21 monthsBilly Burt 90 TTT B33 WF #203H has produced 195 MBOE (73% oil) in 12 monthsJohnson 44 02S B53 WF #204H has produced 300 MBOE (66% oil) in 19 monthsBarnett 90 TTT B01 WF #201H has produced 230 MBOE (64% oil) in 14 months

ESP installed

Wolf Area Wolfcamp A-XY Wells Continue Strong Performance Across Acreage

29

600 MBOE Type Curve

1,200 MBOE Type Curve 900 MBOE Type Curve

Note: Production from selected Wolfcamp A-XY wells in Wolf prospect area as of April 2016.

Delaware Basin - Current Type Curve Examples

ESP installed

Bernstein _0516-6

* Source: Sanford C. Bernstein & Co. Thousand Club includes wells with 30-day rate over 1,000 Boed in 2015.Represents 3,600 wells out of 40,000 drilled.Companies: BHP, CHK, CLR, COG, COP, CXO, DVN, EPE, EQT, HES, MRO, NBL, PXD, RRC, RICE, SM, SWN, TOU, XEC.

0%

20%

40%

60%

80%

100%

0

50

100

150

200

250

300

EOG A B C D E F G H I J K L M N O P Q R S

Well CountPercent Oil

Well Count Percent Oil

pCompanies: BHP, CHK, CLR, COG, COP, CXO, DVN, EPE, EQT, HES, MRO, NBL, PXD, RRC, RICE, SM, SWN, TOU, XEC.

Bernstein _0516-11

* CWC = Drilling, Completion, Well-Site Facilities and Flowback.

11.5

7.56.7

2014 2015 Target

Delaware Basin Wolfcamp Oil Play South Texas Eagle Ford Bakken

* Normalized to 5,300’ lateral. * Normalized to 8,400’ lateral.* Normalized to 4,500’ lateral.

6.15.7

5.2

2014 2015 Target

8.8

7.26.2

2014 2015 Target

Bernstein _0516-13

2014 1Q15 2Q15 3Q15 4Q15 1Q16

G&P G&A Taxes Other Than Income Transportation LOE

$12.84*$13.72$14.49

$15.39$17.02

* Excludes one-time expenses of $18.7 million in 4Q15 related to early leasehold termination and $22.4 million in 1Q16 related to voluntary retirement program. Includes stock compensation expense and other non-cash items. See reconciliation schedules.

$11.96*

Typical Oil Industry Cash Operating Cost Reduction Since 2014

Bernstein _0516-15

Middle East

Venezuela

Brazil

Russia

Nigeria

Angola

US L48 Conv

Mexico

GOM

$0$10$20$30$40$50$60$70$80$90

$100

MiddleEast/Russia

Medium CostConventional

USTight Oil

DeepWater

High CostNon-OPEC

Arctic / RussianUnconventional

* Price required to achieve 10% Direct ATROR (see reconciliation schedules).Source: PIRA.

Brent ($/BBL)

50% 22% 5% 16% 7% -% World Supply

Oil Sands

New Marginal Cost of Oil

( $65 - $75)North Sea

U.S. Tight OilFar East

Russia EOG ($30)*

EOG Competitive Globally

US Crude Oil, NGL, and Refined Products Pipelines

0

1

2

3

4

5

6

7

8

0

20

40

60

80

100

120

140

160

1/1/2014 4/1/2014 7/1/2014 10/1/2014 1/1/2015 4/1/2015 7/1/2015 10/1/2015 1/1/2016 4/1/2016

Gas

Pric

e, $

/MM

Btu

Oil

Pric

e $/

Bbl,

Oil/

Gas

Pric

e Ra

tio

_

Oil Price

Oil/Gas Price Ratio

Gas Price

34

Commodity Prices Volatile, but Have Rallied from Q1 2016 Lows

Prices begin declining in July 2014

Oil prices up sharply from $26.21 per Bbl on Feb 11 –about $51 per Bbl in early June (up ~95%)

Gas prices also up from $1.64 per MMBtu on March 3 –almost $2.50 per MMBtu in early June (up ~50%)

Bernstein _0516-28

7,998 8,087

8,244

8,568

8,577 8,678

8,754 8,835

8,9599,129

9,198

9,423

9,341

9,451

9,6489,694

9,479

9,315

9,433

9,407

9,4539,379

9,329

9,246 9,1809,129

9,037 8,948

8,799

8,629

8,508

8,253

8,1128,178

8,2288,222

8,1898,152

8,150

8,1418,075

8,006

8,002

7,8607,792

7,9518,082

8,115

Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov

* EIA STEO Model Released April 2016

2014+1,252

2015+726

2016-829

2017-558

(MBod)

Fcst

2014 2015 2016 2017

Bernstein _0516-5

Eagle Ford Delaware Basin Wolfcamp - Oil and ComboDelaware Basin 2nd Bone Spring SandDelaware Basin LeonardBakken/Three Forks – Core

Bakken/Three Forks – Non-Core

* Direct ATROR at Flat Oil Prices. See reconciliation schedules. Oil price at the wellhead, natural gas price $2.50 per MMBtu.

40%15%Powder River BasinWyoming DJ Basin

5% 10% $50

Oil

Excludes Indirect Capital:- Gathering, Processing and Other Midstream- Land, Seismic, Geological and Geophysical

Direct ATROR*Based on cash flow and time value of money:- Estimated Future Commodity Prices and Operating Costs - Costs Incurred to Drill, Complete and Equip a Well

$40

Oil

60%30%Premium Inventory

Shale Play Profitability Rank List

 U.S. Tight Shale Plays by Basin RAB 6/21/16

Region / Basin StateHz Target Formations

Major Phase

General Comments

‐  Permian    Midland    Delaware

    TX (West)    TX, NM

Multiple Prolific Stacked Pays

 Oil Oil, Liq Rich

World Class Basin Since 1950's and for Decades to Come with Newer Hz Frac Designs, Multiple Pay Zones Will Require High Well Densities per 640‐ac section, Early Delineation Phase

‐  Eagle Ford     TX (South)Lower Eagle Ford,

Upper EF Pot'l, Austin Chalk POSS

 Oil / GasOil Area Downspacing Continues, Look for Re‐Frac Pot'l, 

LEF Gassier Areas Remain to be Tapped, Upper EF Delineation = Future Potential 

‐  Barnett     TX (North Central) Barnett  Gas, Minor Oil

Mature Basin since early 2000's ‐ Initial proving ground for Hz frac'ing technology, Re‐Fracs next phase of Barnett dvlpmnt 

with any gas price recovery

‐  Williston      ND, MT Mid‐Bakken, Three Forks Oil

World Class Basin, Frac Improvements Increasing EURs & Reducing Breakeven Prices, Pressured Areas Generate Best Wells, DUC Inventory in Play at $50/bbl, Re‐Fracs Coming

‐   DJ (Denver‐Julesburg)     CO, WY  Niobrara A/B/C, Codell  Gas (Liq Rich)

Significant Wattenberg Downspacing Remains with Frac Improvements, Longer Laterals, along with Expansion 

Opportunities into Underexploited Areas

‐  Powder River      WY Turner, Parkman, Sussex Oil

Early Delineation/Derisking Phase, Deeper Formations @ 12,000'+ Require Higher Capex, Pressured Targets Yielding 

Impressive Well Results, Devon $600MM Acqn

‐  Woodford    SCOOP/STACK

    OK Woodford, Meramec

 Oil / Gas,Oil

Up and Coming play since 2012 with Attractive Reservoir Properties, Pressured Formations, strong flow rates >1000 

BOE/d, note recent Devon acqn of CHK position

‐  Mississipppi Lime     OK, KS Mississippi Oil Higher cost basin ‐ high associated water production, normally pressured yielding uneconomic rates

‐  Marcellus      PA, WV, OH Marcellus, Upper Devonian Gas

Developing Play since 2008, Prolific hz Well Performance (2‐3 Bcf / 1000' hz), sweet spot 200‐300 Bcf in place/640‐ac sec, will supply East Coast markets for decades, NY State frac ban

‐  Utica     OH, WV, PAUtica, 

Point Pleasant(below Marcellus)

 Dry Gas, Liq Rich

Up and Coming play, Significant Upside (PROB/POSS), Multiple Operators Testing New Areas and Well Designs & 

Lateral Lengths, Takeaway Capacity Limiting Factor 

‐  Louisiana    Haynesville    Tuscaloosa Marine (TMS)

   LA (North)   LA (Central), MS (SW)

Haynesville,HZ Cotton Valley

TMS Gas Oil

Haynesville a Higher Cost Target due to Deeper Depth, Pricier Fracs (ceramic proppant), abnormally pressured ‐ Still Some Activity plus HZ Cotton Valley Play (Range/MRD Merger)TMS Deep Depths @ 13,000'+ = High Breakeven Cost

‐  Fayetteville    AR Fayetteville GasMature Dry Gas Shale Play, 10+ years of development dominated by Southwestern Energy, 1st hz well in 2004

‐  Michigan (Antrim)    MI Antrim Gas Mature Dry Gas Shale Play, shallow <2200 ft, developed with >9000 vertical wells since 1990's, cumulative 2.5 Tcf gas prod.

‐  Illinois (New Albany)    IN, IL, KY New Albany  Oil / Gas Early stage of potential developing play in 100+ yr old Illinois Basin  

US Horizontal DUC Inventory

Figure 1 summarizes the monthly evolution of horizontal DUC wells for major US liquid basins. Each data point shows how many wells were spudded but not completed as of the end of each month. Back in 2011-2014 an average time from spud to completion was 4-5 months across the US Shale. During this period, the DUC wells increased rapidly, together with increased drilling and completion activity. As of the end of 2014, the DUC inventory contained more than 4,500 horizontal oil wells.

In early 2015, drilling activity showed a faster response to the oil price decline than completion did. This is due to a significant number of rig contracts being terminated before expiration. Thus, despite the completion delays, DUC inventory decreased by 500 wells over the first months of 2015. In the second half of 2015, the decline in completion activity caught up with the decline in drilling and DUC inventory stabilized at the level of 4,000 wells. However, less mature shale areas such as the Permian Basin has shown a different trend from the rest of liquid plays with DUC inventory increasing by 25% from the end of 2014 to the end of 2015, while in other plays inventory contracted by 20-25%. Exit-2015 inventory is equivalent to more than 7 months of drilling activity at the current pace that is a 50% increase from the average in 2011-2014.