Energy Prospectus

Third-Quarter 2017 Highlights

Delivered quarterly production of 193.2 MBoepd, exceeding the high end of the Company’s guidance range.
Increased crude oil production by 31% year-over-year and 6% quarter-over-quarter to 119.6 MBopd.
Advanced multi-zone delineation in the Delaware Basin.
Achieved investment grade credit ratings.
Prudently managed the balance sheet, resulting in approximately $580 million in debt reduction since June 30, 2016, and significant annual interest expense savings.
Executed a disciplined capital program with year-to-date cash flows from operations approximating capital expenditures, excluding acquisitions.
Full-year 2017 production expected to exceed the high end of annual growth guidance range of 24% to 26%; targeting crude oil production growth of more than 27% over 2016.
Reported a net loss of $113 million, or $0.77 per diluted share. Adjusted net income totaled $67 million, or $0.45 per diluted share (non-GAAP).
Generated $458 million of EBITDAX (non-GAAP).

Most important: Cash flow from operations beat my forecast.

Updating my forecast model now and will post it to the EPG website this afternoon.

I have updated my CXO forecast/valuation model. My valuation increases to $164.00/share.

Reminder: I update the Sweet 16 forecasts as soon as I can after they release Q3 results. When we update their profiles, I go back and double check all of my assumptions in the model. So, the valuations often change slightly when we send out the profiles. I have been following all of the current Sweet 16 companies for many years, so I have a very high level of confidence in my forecast models.

For all future periods, I am still assuming $50/bbl for WTI and $3.00/mcf for Henry Hub natural gas. The best news so far has been that Q3 NGL prices are much better than I thought they would be. For example, Concho's realized natural gas prices for Q3 came in at $3.22/mcf, which compared to my forecast of $2.75/mcf because they got very good pricing on their NGLs. Concho combines natural gas and NGLs in their reported gas volumes. Most companies break out NGLs.