As oil prices started to tumble, we reacted swiftly. In early November 2014, we began terminating short-term service contracts (we had no long-term agreements), pushing service providers to offer lower rates, extending drilling obligations with land owners, and moderating forward capital deployment for drilling, leasing and acquisitions. These actions are consistent with our core strategy of being a low cost operator and maintaining a strong balance sheet as they have increased our flexibility in seeking ways to preserve and ultimately grow shareholder value. Because of our position as a low cost operator with a clean balance sheet, the Company remains in a strong position to not only survive, but also to add both short and long-term shareholder value during the pendency of this downturn in market prices. Forward Strategy As dire as the oil markets may appear today, they do remain very efficient in reacting swiftly to changing prices. Logic would dictate that the highest cost barrel would be the first off the market, but many of these high cost barrels come from long lead time projects that have significant sunk costs so are comparatively slow to react. US shale plays, for the most part, are not the marginal cost barrel but, because of the short lead times, are often the quickest to react. This has resulted in an extraordinarily fast reduction in active drilling rigs in the US slowing the pace of growth which will ultimately and unavoidably lead to supply  restrictions from the US. While the rig count reduction is encouraging, some of the wells drilled prior to the reduction are still waiting upon completion and the remaining active rigs continue to drill away meaning new wells will continue to come online with high flush production so we are unlikely to see a flattening and ultimate reduction in US supply until late this year. The good news is that high initial production rates fade fast so, as long as prices stay relatively low, there is likely to be a material decline in U.S.  production (say 8-9%) over the course of 2016. While the supply reaction is well under way, demand continues to grow with the economy (net of efficiency improvements) meaning that, like often in history, market fundamentals will ultimately come back into balance and beyond, resulting in a period of under-supply and, therefore, higher than normal prices. While this scenario seems likely as a historical matter, it is also virtually impossible to predict timing with any degree of accuracy.  Fortunately, since US shale is not the marginal cost barrel in the long term, it will survive, become more efficient, and outperform in when prices ultimately recover. Our shareholders will benefit from our exposure to some of the highest quality US shale acreage and production in the Eagle Ford along with our leading cost structure and strong balance sheet. While prices are down, we intend to invest capital in development opportunities with reasonable returns and to maintain leases and sustain production  levels while protecting our balance sheet and patiently increasing the size and quality of our drilling inventory. To implement this strategy, we will continue to drive down development costs by  capitalizing on weak service demand and improving efficiency to create a sustainable cost advantage, leasing expired mineral rights in our core areas relinquished by peers with weaker balance sheets, and striving to acquire additional Eagle Ford assets with  current production within our current, conservative balance sheet parameters. By creating a sustainable cost advantage and growing drilling inventory while prices are low, we  anticipate generating strong shareholder returns through this cycle. Finally, our Company remains well positioned because of the hard and creative work put forth by our employees, board of directors, partners, contractors, and consultants. With prices low we have a new set of circumstances we can capitalize on to strengthen our business. Thanks to each and every one of you for your continued focus and passion to take the calculated risks needed for generating superior shareholder returns and building a stable, flourishing enterprise.  Sincerely, E RIC MCCRADY Managing Director & CEO Our shareholders will benefit from our exposure to some of the highest quality US shale acreage and production in the Eagle Ford along with our leading cost structure and strong balance sheet. 5