A s oil prices started to tum ble, w e reacted sw iftly .  In early N ovem ber 20 14, w e began 
term inating short-term  service contracts (w e had no long-term  agreem ents), pushing 
service providers to offer low er rates, extending drilling obligations w ith land ow ners, 
and m oderating  forw ard capital deploym ent for drilling, leasing and acquisitions. These 
actions are consistent w ith our core strategy of being a low  cost operator and m aintaining 
a strong balance sheet as they have increased our flexibility in seeking w ays to preserve 
and ultim ately grow  shareholder value.  
B ecause of our position as a low  cost operator w ith a clean balance sheet, the C om pany 
rem ains in a strong position to not only survive, but also to add both short and long-term 
shareholder value during the pendency of this dow nturn in m arket prices. 
Forw ard Strategy 
A s dire as the oil m arkets m ay appear today , they do rem ain very efficient in reacting 
sw iftly to changing prices. Logic w ould dictate that the highest cost barrel w ould be the 
first off the m arket, but m any of these high cost barrels com e from  long lead tim e projects 
that have significant sunk costs so are com paratively slow  to react. U S shale plays, for 
the m ost part, are not the m arginal cost barrel but, because of the short lead tim es, are 
often the quickest to react.  
This has resulted in an extraordinarily fast reduction in active drilling rigs in the U S 
slow ing  the pace of grow th w hich w ill ultim ately and unavoidably  lead to supply 
restrictions from  the U S.  W hile the rig count reduction is encouraging, som e of the 
w ells drilled prior to the reduction are still w aiting upon com pletion and the rem aining 
active rigs continue to drill aw ay m eaning new  w ells w ill continue to com e online w ith 
high flush production so w e are unlikely to see a flattening and ultim ate reduction in U S 
supply until late this year.  The good new s is that high initial production rates fade fast 
so, as long as prices stay relatively low , there is likely to be a m aterial decline in U .S. 
production (say 8-9%) over the course of 20 16.  
W hile the supply reaction is w ell under w ay , dem and continues to grow  w ith the econom y 
(net of efficiency im provem ents) m eaning that, like often in history , m arket fundam entals 
w ill ultim ately com e back into balance and beyond, resulting in a period of under-supply 
and, therefore, higher than norm al prices. W hile this scenario seem s likely as a historical 
m atter, it is also virtually im possible to predict tim ing w ith any degree of accuracy. 
F ortunately , since U S shale is not the m arginal cost barrel in the long term , it w ill survive, 
becom e m ore efficient, and outperform  in w hen prices ultim ately recover.  
O ur shareholders w ill benefit from  our exposure to som e of the highest quality U S shale 
acreage and production in the E agle F ord along w ith our leading cost structure and 
strong balance sheet. W hile prices are dow n, w e intend to invest capital in developm ent 
opportunities w ith reasonable returns and to m aintain leases and sustain production 
levels w hile protecting our balance sheet  and patiently increasing the size and quality of 
our drilling inventory . 
To im plem ent this strategy , w e w ill continue to drive dow n developm ent costs by 
capitalizing on w eak service dem and and im proving efficiency to create a sustainable 
cost advantage, leasing expired m ineral rights in our core areas relinquished by peers 
w ith w eaker balance sheets, and striving to acquire additional E agle F ord assets w ith 
current production w ithin our current, conservative balance sheet param eters. B y creating 
a sustainable cost advantage and grow ing drilling inventory w hile prices are low , w e 
anticipate generating strong shareholder returns through this cycle.