Lilis Energy
Annual Report 2018

Plain-text annual report

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2018 or ¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________to_________ Commission file number: 001-35330 Lilis Energy, Inc.(Name of registrant as specified in its charter)Nevada 74-3231613(State or other jurisdiction ofincorporation or organization) (I.R.S. EmployerIdentification No.) 1800 Bering Drive, Suite 510, Houston, Texas 77057(Address of principal executive offices, including zip code) Registrant’s telephone number including area code: (817) 585-9001 Securities registered under Section 12(b) of the Act: Common Stock, $0.0001 par value NYSE AmericanTitle of class Name of exchange on which registered Securities registered under Section 12(g) of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ý Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes ¨ No ý Indicate by check mark if the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or forsuch shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ý No ¨Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’sknowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as defined in Rule 12b-2 of theAct):Large accelerated filer¨ Accelerated filerý Non-accelerated filer ¨ Smaller reporting companyý Emerging growth company¨ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No ýAs of June 30, 2018, the aggregate market value of the voting and non-voting shares of common stock of the registrant issued and outstanding on such date, excluding shares heldby affiliates of the registrant as a group was $211,811,267 based on the closing sales price of $5.20 per share of the registrant’s common stock on June 30, 2018 on the NYSEAmerican. As of March 5, 2019, 71,496,979 shares of the registrant’s common stock were issued and outstanding.  DOCUMENTS INCORPORATED BY REFERENCEPortions of the definitive Proxy Statement of Lilis Energy, Inc. (to be filed no later than 120 days after December 31, 2018) relating to the Company’s 2019 Annual Meeting ofStockholders are incorporated into Part III of this Form 10-K. TABLE OF CONTENTS PagePART I Special Note regarding Forward Looking StatementsItems 1 and 2.Business and Properties5Item 1A.Risk Factors20Item 1B.Unresolved Staff Comments32Item 3.Legal Proceedings33Item 4.Mine Safety Disclosures33 PART II Item 5.Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities34Item 6.Selected Financial Data35Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations35Item 7A.Quantitative and Qualitative Disclosures About Market Risk51Item 8.Financial Statements and Supplementary Data51Item 9.Changes in and disagreements with Accountants on Accounting and Financial Disclosure51Item 9A.Controls and Procedures51Item 9B.Other Information52 PART III Item 10.Directors, Executive Officers and Corporate Governance52Item 11.Executive Compensation52Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters52Item 13.Certain Relationships and Related Transactions, and Director Independence53Item 14.Principal Accounting Fees and Services53 PART IV Item 15.Exhibits, Financial Statement Schedules57Item 16. Form 10-K Summary613SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this “Annual Report”) contains “forward-looking statements” within the meaning of Section 27A of theSecurities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Thesestatements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materiallydifferent from any future results, performance or achievements expressed or implied by the forward-looking statements. Forward-looking statements mayinclude the words “may,” “should,” “could,” “estimate,” “intend,” “plan,” “project,” “continue,” “believe,” “predict,” “expect,” “anticipate,” “goal,”“forecast,” “target” or other similar words. All statements, other than statements of historical fact, that are included in this Annual Report that address activities, events or developments that weexpect or anticipate will or may occur in the future are forward-looking statements, including, but not limited to, any projections of earnings, revenue or otherfinancial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning future production,reserves or other resource development opportunities; any projected well performance or economics, or potential joint ventures or strategic partnerships; anystatements regarding future economic conditions or performance; any statements regarding future capital-raising activities; any statements of belief;commodity price risk management activities and the impact on our average realized price; and any statements of assumptions underlying any of theforegoing. Although we believe that the expectations, plans, and intentions reflected in or suggested by our forward-looking statements are reasonable, we cangive no assurance that these plans, intentions, or expectations will be achieved, and our actual results could differ materially from those projected or assumedin any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risks and uncertainties,many of which are beyond our control. Some of the factors, which could affect our future results and could cause results to differ materially from thoseexpressed in our forward-looking statements include but are not limited to, the Risk Factors set forth in this Annual Report in Part I, “Item 1A. Risk Factors.”Should one or more of the risks or uncertainties described in this Annual Report Form occur, or should underlying assumptions prove incorrect, our actualresults and plans could differ materially from those in any forward-looking statements. The forward-looking statements in this Annual Report present our estimates and assumptions only as of the date of this Annual Report. Except asrequired by law, we specifically disclaim all responsibility to publicly update any information contained in any forward-looking statement and, therefore,disclaim any resulting liability for potentially related damages. All forward-looking statements attributable to us or persons acting on our behalf are expresslyqualified in their entirety by this cautionary statement. For a detailed description of factors that could cause actual results to differ materially from those expressed in any forward-looking statement, weurge you to carefully review and consider the disclosures made in the “Risk Factors” sections of our SEC filings, available free of charge at the website of theU.S. Securities Exchange Commission (the “SEC”) - www.sec.gov.Unless the context otherwise requires, all references in this report to “Lilis,” “we,” “us,” “our,” “ours,” or “the Company” are to Lilis Energy, Inc.and its subsidiaries.4PART I Items 1 and 2. Business and PropertiesOverviewLilis is an independent oil and gas company focused on the exploration, development, production, and acquisition of oil, natural gas and natural gasliquids, or NGLs, from properties in the Permian Basin. Our operations are focused in the Delaware Basin of the Permian in Winkler, Loving, and ReevesCounties, Texas and Lea County, New Mexico, where the production is approximately 74% crude oil and NGLs, or Liquids, a relatively high liquidproduction ratio compared to many of our peers. Over 90% our of revenues are generated from the sale of Liquids.The Company is managed by a focused and experienced management team that is dedicated to rapidly increasing the Company’s production,reserves, and acreage position.Our HistoryThe Company was incorporated in the State of Nevada in 2007. The name of the corporation was changed to “Lilis Energy, Inc.” in December 2013,and at such time, the Company was primarily focused on the exploration, development and production of oil and natural gas properties in the Denver-Julesburg (DJ) Basin.In June 2016, we completed a transformative merger transaction with Brushy Resources, Inc. (“Brushy Resources” or “Brushy”), which resulted inthe acquisition of a substantial portion of the Company’s current assets in the Permian Basin. Given the stacked-pay opportunities and high rates of return inthe Permian Basin, the Company determined that it would focus exclusively on expanding and developing its core Permian Basin assets and completed thedivestiture of all of its oil and gas properties located in the DJ Basin in March 2017.Our BusinessWe are a pure play Permian Basin company focused on realizing the highest returns and delineating our acreage position to increase the value of ourstock for our stockholders.Our Business StrategyOur goal is to grow our Company and increase stockholder value by generating cash flow primarily from new production of Liquids, as well asthrough delineation drilling on our existing acreage.We continue to focus on developing our existing acreage position, growing our production and reserves, and expanding our core assets in theDelaware Basin through strategic acquisitions, acreage exchanges, and organic leasing. We plan to achieve our objectives by implementing a businessstrategy focused on the following:Leverage our Extensive Operational Expertise to Reduce Costs and Plan for Cash Flow Neutrality. We actively manage the level of ourdevelopment, leasing and acquisition activity in response to commodity prices, access to capital, and the performance of our wells. We recently announcedour recapitalization, which allows us to better manage our assets (See "2019 Second Lien Term Loan Conversion and Borrowing Base Redetermination" and"Subsequent Events" for further information regarding our recapitalization).As of December 31, 2018, we operated approximately 99% of our acreage position, giving us significant control over the pace of our developmentand allowing us to increase value through operational and cost efficiencies. We intend to obtain the highest possible returns on the capital we expend on ourdevelopment projects using results from the wells we have completed and the operational expertise of our management team. We will continue to focus onoperational efficiencies, including midstream costs, salt water disposal, and capital costs of our development wells in order to maximize returns to ourstockholders. We have increased our operational efficiency by entering into various infrastructure transactions, and we have structured our balance sheet withthe intent to achieve cash flow neutrality in 2019 and significantly reduce our leverage profile over time. Additionally, we have an active hedging programto provide certainty regarding our cash flow and protect returns from our development activity in the event of decreases in the prices received for ourproduction.5Realizing Highest Returns and Delineating Acreage. We plan to drill and develop our existing acreage base of approximately 28,500 gross (20,400net) acres in the Delaware Basin, which we believe will maximize our resource potential and increase value to our stockholders. Our drilling activity during2018 was predominantly focused on the horizontal development and delineation of our core acreage position in the Delaware Basin. We increased our netsales production volumes by 215% to 4,965 BOE/d in 2018, as compared to 2017. We averaged 8,081 net BOE/d from December 25 through December 31,2018, achieving our 2018 year-end exit rate target of 8,000 BOE/d. Additionally, as a result of our development efforts, acreage exchanges and acquisitions,our proved reserves increased 273% from December 31, 2017, to approximately 42,707 MBOE (thousand barrels of oil equivalent) as of December 31, 2018.Our proved reserves were Liquids rich, being comprised of approximately 69% Liquids (50% oil and 19% NGLs) and 31% natural gas.Through the continued development of our properties, we plan to de-risk our acreage position and substantially increase our Liquids production andcash flow, thereby increasing the value of our properties. Our current leasehold position in the Delaware Basin has significant stacked-pay potential, whichwe believe includes at least five to seven productive zones in the Wolfcamp and Bone Springs formations. We estimate that all productive zones within ourproperties may support approximately 1,175 future drilling locations.Increasing our Inventory and Improving Delineation. We plan to expand our inventory through delineation drilling of zones on our existingacreage and through acquisitions, acreage exchanges, and organic leasing. Since entering the Delaware Basin in June 2016, we have extensively grown ouracreage position by over 500% from 7,200 gross (3,400 net) acres to approximately 28,500 gross (20,400 net) acres and increased our average operatedworking interest to approximately 76% at December 31, 2018, through various strategic acquisitions, acreage exchanges, and organic leasing, and we operateapproximately 99% of our acreage. Our acquisitions to date have added over 17,000 acres which represent a multi-year inventory of approximately 1,175identified, potential drilling locations across at least five to seven productive pay zones.We plan to continue evaluating opportunities for strategic acquisitions, acreage exchanges, and organic leasing in our core areas of operation. Wealso expect that our drilling activity will grow our inventory and the identified resource potential of our Delaware Basin properties. Throughout 2018, wesuccessfully drilled and announced our average 24-hour, 30-day initial production data on 12 wells targeting the Wolfcamp A, Wolfcamp B, Wolfcamp XY,2nd Bone Spring, and 3rd Bone Spring formations. We believe that our current reserves represent only a small portion of the resource potential within ouracreage. Our development plan for 2019 contemplates the continued delineation of our acreage both geographically and geologically and by drilling andcompleting wells within additional prospective benches.Utilizing our Cost-Efficient Infrastructure Solutions. To support our operations and sales of our production, we have entered into variousinfrastructure and sales agreements that we believe secures cost-effective movement of our Liquids and natural gas in Texas and New Mexico.•We entered into several agreements with Salt Creek Midstream ("SCM") and its affiliates to provide crude gathering and transportation and watergathering and disposal infrastructure and services, including a crude oil transportation and sales agreement to secure pipeline capacity on a long-haul crude oil pipeline to the Gulf Coast, pursuant to which all volumes will have Gulf Coast pricing based on Magellan East Houston pricingthroughout the 5-year term. We anticipate significantly lower crude transportation costs from approximately $5.15 per Bbl at December 31, 2018, toapproximately $0.75 per Bbl commencing in March 2019, as a result of increased pipeline transportation of our crude oil under the gatheringagreement with SCM. As a result of our infrastructure agreements, our salt water disposal costs decreased from approximately $2.50 per barrel in2018 to approximately $0.49 per barrel in 2019.•In 2017, we entered into a long-term gas gathering and processing agreement with an affiliate of Lucid Energy Group (“Lucid”) to support our activedrilling program in the Delaware Basin. Pursuant to our agreement with Lucid, there are no minimum volume commitments and all gas transportedvia Lucid is sent to Lucid’s 310 million cubic feet per day Red Hills Natural Gas Process Complex located in Lea County, New Mexico, where it istreated and processed then transported pursuant to transportation contracts through various long-haul pipelines with access to west coast markets,gulf coast markets, Permian markets and MidCon markets. Lucid is responsible for all capital costs in New Mexico and Texas, other than gatheringlines from the wellhead to various Lucid receipt points.We believe that our infrastructure and sales agreements will further our operational efficiency, as well as provide us significant cost savings,advantaged crude pricing in the Gulf Coast markets, and more consistent production flowing to sales in 2019 and future years.6Our StrengthsEstablished Acreage Position in the Core of the Delaware Basin. We believe we have assembled a substantial portfolio of Delaware Basinproperties that offers high rate of return exploration and development opportunities. As of December 31, 2018, we held over 28,500 gross (20,400 net) acresin the core of the Delaware Basin, where we had an average operated working interest of approximately 76%. As of December 31, 2018, we operatedapproximately 99% of such acreage. Our acreage is geographically concentrated and highly contiguous, allowing us to capitalize on economies of scale withrespect to drilling and production costs. We believe those efficiencies provide us with an advantage in competing for acquisitions, acreage exchanges, andorganic leasing opportunities on and around our acreage.Multi-year Portfolio of Drilling and Development Opportunities. We have a significant inventory of drilling and development locations in Winkler,Loving and Reeves Counties, Texas and Lea County, New Mexico. We believe our properties form part of the core of the Delaware Basin. Based on ourdrilling to date and results from nearby wells, we have identified approximately 1,175 potential horizontal well locations on our acreage, includingapproximately 700 longer lateral locations. Our leasehold position has significant stacked-pay potential, which we believe includes at least five to sevenproductive zones. We believe that our inventory of drilling locations will allow us to grow our reserves and production at attractive rates of return based oncurrent expectations for commodity prices.High Degree of Operational Control. We operate approximately 99% of our acreage, which gives us significant control over the pace of ourdevelopment and the ability to design a more efficient and profitable drilling program to maximize recovery of oil and natural gas. Based on our drilling andproduction results to date and well-established offset operator activity in and around our project areas, we believe there are relatively low geologic risks andample repeatable drilling opportunities across our core acreage.Strengthening Financial Position and Flexibility. We believe our financial position is strong and sufficient to fund our drilling and completionoperations currently planned for 2019. In October 2018, we announced our entry into a new five-year $500 million senior secured reserve based revolvingcredit facility (“Revolving Credit Agreement”) with an initial borrowing base of $95 million, that refinanced our first-lien term loan with Riverstone CreditPartners, LLC. As of December 7, 2018, the borrowing base of our Revolving Credit Agreement had increased to $108 million. The Company enhancedliquidity through the Revolving Credit Agreement and through a tack-on to the outstanding Series C Preferred Stock (as hereinafter defined). Additionally,the Company converted a portion of its Second Lien Term Loan (as hereinafter defined) to a combination of preferred and common equity, which resulted ina significant paid-in-kind interest expense savings. We have a solid relationship with Värde Partners, Inc. and its affiliates, who have partnered with us sincethe time of the Brushy Resources transaction and provided us with access to significant capital resources and financing opportunities. The Company hadincreased its liquidity to $54.1 million as of year-end 2018, including $33 million in availability under its Revolving Credit Agreement and $21.1 million incash. Additionally, we recently announced our recapitalization, which allows us to better manage our assets (See "2019 Second Lien Term Loan Conversionand Borrowing Base Redetermination" and "Subsequent Events" for further information regarding our recapitalization).We believe our financial liquidity position provides us operational flexibility and a path toward continued growth in our oil and natural gasproduction, proved reserves, and cash flows.Experienced Management Team. We have an experienced and skilled management team with a long track record of driving growth through assetdevelopment and strategic acquisitions. We believe that our team’s operational expertise and extensive experience through various commodity price cyclesposition us to operate effectively and efficiently and, in turn, will help increase returns and value to our stockholders.Oil and Natural Gas PropertiesAs of December 31, 2018, we owned leasehold acreage in approximately 28,500 gross (20,400 net) acres in the Delaware Basin, comprised ofapproximately 16,300 net acres in Winkler, Loving, and Reeves Counties, Texas and approximately 4,100 net acres in Lea County, New Mexico. Averagenet sales production volumes from our properties increased approximately 215% to 4,965 BOE/d in 2018 from 1,576 BOE/d in 2017. We averaged 8,081 netBOE/d from December 25 through December 31, 2018, achieving our 2018 year-end exit rate target of 8,000 BOE/d.We currently estimate our properties include at least five to seven productive zones and hold approximately 1,175 future drilling locations across allof the productive zones within this position. Our reserve estimates include 37 horizontal PUD wells, as well as the capital costs required to develop thesewells.7Reserve DataProved ReservesThe following table presents our estimated net proved oil and natural gas reserves as of December 31, 2018, 2017 and 2016, based on the reservereports prepared by Cawley, Gillespie & Associates, Inc. Each reserve report has been prepared in accordance with the rules and regulations of the SEC. All ofour proved reserves included in the reserve reports are located in the Delaware Basin of the Permian Basin:Summary of Oil and Gas Reserves For the Year Ended December 31, 2018 2017 2016Proved Developed Reserves Oil (MBbls)6,278 2,531 551NGLs (MBbls)2,654 645 3Total Liquids (MBbls)8,932 3,176 554Natural Gas (MMcf)27,046 6,594 3,872Total MBOE13,440 4,275 1,199 Proved Undeveloped Reserves Oil (MBbls)14,927 4,640 —NGLs (MBbls)5,723 960 —Total Liquids (MBbls)20,650 5,600 —Natural Gas (MMcf)51,703 9,466 —Total MBOE29,267 7,178 — Total Proved Reserves Oil (MBbls)21,205 7,171 551NGLs (MBbls)8,377 1,605 3Total Liquids (MBbls)29,582 8,776 554Natural Gas (MMcf)78,749 16,060 3,872Total MBOE42,707 11,453 1,199Proved Undeveloped ReservesAs of December 31, 2018, we had a total of 29,267 MBOE proved undeveloped reserves. During 2018, we added 22,088 MBOE of provedundeveloped (“PUD”) reserves through the extension of proved acreage, primarily as a result of successful drilling on properties in the core of the DelawareBasin in Winkler, Loving, and Reeves Counties, Texas and Lea County, New Mexico.The increase in our PUDs was partially offset by the reclassification of 2,470 MBOE, previously included in the year-end 2017 PUDs, to PDPs as aresult of our horizontal development of our properties. Costs incurred relating to the development of PUDs were approximately $68.3 million during 2018.Estimated future development costs relating to the development of PUDs are projected to be approximately $34.3 million in 2019, $128.0 million in2020, $104.0 million in 2021 and $72.1 million in 2022.Our estimates of proved undeveloped reserve quantities are limited by development drilling activity that we intend to undertake during the 2019 to2022 timeframe. At December 31, 2018, we had no reserves that remained undeveloped for five or more years, and all PUD drilling locations are currentlyscheduled to be drilled within five years of their initial recording. For8additional information regarding the changes in our proved reserves, see our “Supplementary Information on Oil and Natural Gas Exploration, Developmentand Production Activities” to our consolidated financial statements in Item 15 of this Annual ReportControl over Reserve EstimatesOur reserve data and estimates were compiled and prepared internally and audited by our third-party independent consultants, Cawley, Gillespie &Associates, Inc. (“CG&A”), as described in more detail herein, in compliance with SEC definitions and guidance and in accordance with generally acceptedpetroleum engineering principles.Internal Controls over Reserves EstimateOur policy regarding internal controls over the recording of reserves is structured to objectively and accurately estimate our oil and gas reservequantities and values in compliance with the regulations of the SEC. Responsibility for compliance in reserve bookings is delegated to our Chief FinancialOfficer with assistance from our senior geologist and a senior reservoir engineer.Technical reviews are performed throughout the year by our senior reservoir engineer and our senior geologist and other consultants who evaluateall available geological and engineering data, under the guidance of our Chief Financial Officer. This data, in conjunction with economic data and ownershipinformation, is used in making a determination of estimated proved reserve quantities. Chris Cantrell, our senior reservoir engineer, has overseen our reserveprocesses since 2016. Mr. Cantrell received a Bachelor of Science degree in Petroleum Engineering from Texas A&M University in 1995. He is a registeredprofessional engineer licensed in the State of Texas. He has been continuously involved in evaluating oil and gas properties since 1997 and is a member ofthe Society of Petroleum Engineers and the American Petroleum Institute.Our Reserves Committee, a committee of our Board of Directors, assists management and the Board with their oversight of our reserves estimationand certification process and the work of our independent reserve engineer. The members of the Reserves Committee currently consist of R. Glenn Dawson,John Johanning, and Nicholas Steinsberger. Mr. Dawson serves as the Chairman of the Reserves Committee. The Committee’s charter specifies the oversightresponsibilities of the Reserves Committee, which include, without limitation, oversight of the Company’s reserve estimates and related disclosures of sameby the Company; oversight of the qualifications, training, and independence of the independent reservoir petroleum engineers and other geoscientistsproposed to be engaged to audit or report on the reserves of the Company; oversight of the evaluation of oil and gas producing activities and operations andacquisition opportunities; and oversight of hydrocarbon reserve and resource matters as deemed necessary or appropriate in the interest of the Company andits stockholders.Our reserves estimates and the corresponding report from CG&A, along with the process for developing such estimates, are also reviewed by ourgeologist and the Audit Committee of our Board of Directors to ensure compliance with SEC disclosure and internal control requirements and to verify theindependence of our third-party consultants. The Audit Committee of our Board of Directors reviews the final reserves estimate in conjunction with CG&A’saudit letter.Third-Party Reserves StudyOur controls over reserve estimates include retaining an independent third-party consultant, CG&A, as our independent petroleum engineeringconsulting firm to perform a reserves audit of our reserves estimates. We provided to CG&A information about our oil and gas properties, includingproduction information, prices and costs, and CG&A performed reserve studies using its own engineering assumptions and the economic data provided by us.All of our total calculated proved reserve value was audited by CG&A, and all of the information regarding our 2018, 2017, and 2016 reserves in this AnnualReport is derived from CG&A’s reports.CG&A is an independent petroleum engineering consulting firm that has been providing petroleum engineering consulting services for over 20years. The individual at CG&A primarily responsible for overseeing our reserve audit is Todd Brooker, President of CG&A, who received a Bachelor ofScience degree in Petroleum Engineering from the University of Texas and is a registered Professional Engineer in the State of Texas. He is also a member ofthe Society of Petroleum Engineers. Mr. Brooker and the other technical persons employed by CG&A engaged in the reserve study met the requirementsregarding qualifications, independence, objectivity and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil andNatural Gas Reserves Information promulgated by the Society of Petroleum Engineer.Oil and natural gas reserves and the estimates of the present value of future net cash flows therefrom were determined based on prices and costs asprescribed by the SEC and Financial Accounting Standards Board (“FASB”) guidelines. Reserve calculations involve the estimate of future net recoverablereserves of oil and natural gas and the timing and amount of future net9cash flows to be received therefrom. Such estimates are not precise and are based on assumptions regarding a variety of factors, many of which are variableand uncertain. Proved reserves were estimated in accordance with guidelines established by the SEC and the FASB, which require that reserve estimates beprepared under existing economic and operating conditions with no provision for price and cost escalations except by contractual arrangements. For theyears ended December 31, 2018, 2017, and 2016, we based the estimated discounted future net cash flows from proved reserves on the 12-month average oiland natural gas index prices, calculated as the un-weighted arithmetic average for the first-day-of-the-month price for each month and costs in effect on thedate of the estimate, holding the prices and costs constant throughout the life of the properties.Oil and Gas Production, Production Prices, and Production CostsProduction Volumes and Sales PricesThe following table summarizes the average volumes and realized prices of oil and natural gas produced from our properties during the periodsindicated: For the Years Ended December 31, 2018 2017 2016Production Oil (Bbls)-net production1,089,724 371,993 61,088Oil (per Bbl)-average realized price$53.26 $47.92 $39.59Natural gas liquids (Bbls)-net production246,425 73,875 11,355Natural gas liquids (per Bbl)-average realized price$28.11 $22.49 $15.22Natural Gas (Mcf)-production2,855,739 776,164 332,643Natural Gas (per Mcf)-average realized price$1.84 $2.74 $2.54Barrels of oil equivalent (BOE)1,812,106 575,229 127,863Average daily net production (BOE)4,965 1,576 350Average Sales Price per BOE$38.75 $37.57 $26.87Oil and Natural Gas Production Costs, Production Taxes, Depreciation, Depletion, and AmortizationThe following table sets forth certain information regarding oil and natural gas production costs, production taxes, and depreciation, depletion andamortization: For the Years Ended December 31, 2018 2017 2016Production costs per BOE$9.51 $12.21 $12.43Production taxes per BOE2.05 2.06 (1.30)Depreciation, depletion, and amortization per BOE14.00 12.21 12.25Total operating costs per BOE$25.56 $26.48 $23.38The average oil and NGL sales prices above are calculated by dividing revenue from oil sales by volume of oil sold, in barrels “Bbls.” The averagenatural gas sales prices above are calculated by dividing revenue from natural gas sales by the volume of natural gas sold, in thousand cubic feet “Mcf.” Thetotal average sales price amounts are calculated by dividing total revenues by total volume sold, in BOE. The average production costs above are calculatedby dividing production costs by total production in BOE.AcreageThe following table sets forth our approximate gross and net developed and undeveloped leasehold acreage as of December 31, 2018:10 Undeveloped Acreage Developed Acreage Total Gross Net Gross Net Gross NetDelaware Basin14,200 9,000 14,300 11,400 28,500 20,400Undeveloped Acreage ExpirationsMany of the leases comprising the undeveloped acreage set forth in the table above will expire at the end of their respective primary terms unlessproduction from the leasehold acreage has been established prior to such date, in which event the lease will remain in effect until the cessation of production.The following table sets forth the net undeveloped acreage, as of December 31, 2018, that will expire over the next three years unless production isestablished within the spacing units covering the acreage or the lease is renewed or extended under continuous drilling provisions prior to the primary termexpiration dates: 2019 2020 2021Delaware Basin1,840 6,197 1,350We plan to maintain our undeveloped acreage by establishing production within the spacing units covering the acreage or extending orrenewing the leases prior to their expiration.Productive WellsAs of December 31, 2018, we have had 27.0 gross (24.9 net) oil wells and 11.0 gross (8.1 net) natural gas wells. A net well is our percentageownership interest in a gross well.Productive wells are either wells producing in commercial quantities or wells capable of commercial production, including natural gas wellsawaiting pipeline connections to commence deliveries and oil wells awaiting connection to production facilities. Multiple completions in the same wellboreare counted as one well. A well is categorized under state reporting regulations as an oil well or a natural gas well based on the ratio of natural gas to oilproduced when it first commenced production, and such designation may not be indicative of current production.Drilling ActivityFor the year ended December 31, 2018, we drilled 16.0 gross (13.5 net) horizontal wells in the Delaware Basin. We completed and placed onproduction 15.0 gross (14.3 net) horizontal wells. As of December 31, 2018, 6.0 gross (3.8 net) wells were drilled but not yet completed. All of these wellswere successful, and none were a dry hole.The following table sets forth information with respect to the number of wells completed during the periods indicated. Each of these wells wasdrilled in the Delaware Basin in the Permian Basin. Year Ended December 31, 2018 20172016 Gross Net Gross NetGross NetExploratory: Productive9.00 8.7 5.0 4.2— —Dry— — — —— —Development: Productive6.0 5.6 — —— —Dry— — — —— —Total: Productive15.0 14.3 5.0 4.2— —Dry— — —— —Present Activities11As of December 31, 2018, we had 6.0 gross (3.8 net) wells in the process of drilling, completing, dewatering or shut-in awaiting infrastructure.12Title to PropertiesWe generally conduct a preliminary title examination prior to the acquisition of properties or leasehold interests. Prior to commencement ofoperations on such acreage, a thorough title examination will usually be conducted and any significant defects will be remedied before proceeding withoperations. We believe the title to our leasehold properties is good, defensible and customary with practices in the oil and natural gas industry, subject tosuch exceptions that we believe do not materially detract from the use of such properties. Our properties are potentially subject to customary royalty andother interests, liens for current taxes, and other burdens which we be do not materially interfere with the use of or affect our carrying value of the properties.The majority of our Delaware Basin leasehold position is also subject to mortgages securing indebtedness under our credit and guarantee agreement.With respect to our properties of which we are not the record owner, we rely on contracts with the owner or operator of the property or assignment ofleases, pursuant to which, among other things, we generally have the right to have our interest placed on record.Competitive Business ConditionsThe oil and gas industry is intensely competitive, particularly with respect to acquiring prospective oil and natural gas properties. We face intensecompetition from a substantial number of major and independent oil and gas companies, many of which have larger technical staffs and greater financial andoperational resources. These companies may be able to pay more for productive oil and natural gas properties and exploratory prospects. We also competewith other oil and gas companies to secure drilling rigs and other equipment and services necessary for the drilling, completion, production, processing andmaintenance of our wells, and we could face shortages or delays in securing these services from time to time if availability is limited. In addition, we competeto hire and retain professionals, including experienced geologists, geophysicists, engineers, and other professionals and consultants. We believe the locationof our acreage, our technical expertise, available technologies, our financial resources, and the experience and knowledge of our management enables us tocompete effectively in our core operating areas, but we recognize that many of our competitors have greater financial and operational resources.The oil and gas industry also faces competition from alternative fuel sources, including other fossil fuels such as coal and imported liquefied naturalgas. Competitive conditions may also be affected by future new energy, climate-related, financial, and other policies, legislation, and regulations.Marketing and PricingWe derive our revenue and cash flow principally from the sale of oil, natural gas and NGLs. As a result, our revenues are determined, to a largedegree, by prevailing prices for crude oil, natural gas and NGLs. We sell our oil and natural gas on the open market at prevailing market prices or throughforward delivery contracts. Because some of our operations are located outside major markets, we are directly impacted by regional prices regardless of HenryHub, WTI or other major market pricing. The market price for oil, natural gas and NGLs is dictated by supply and demand; consequently, we cannotaccurately predict or control the price we may receive for our oil, natural gas and NGLs.We have an active hedging program to provide certainty regarding our cash flow and to protect returns from our development activity in the event ofdecreases in the prices received for our production; however, hedging arrangements may expose us to risk of significant financial loss in some circumstancesand may limit the benefit we would receive from increases in the prices for oil, natural gas and NGLs.Major CustomersWe sell our production to a small number of customers which is common in the oil and gas industry. The following table outlines our majorcustomers and their percentage contribution to our total revenues for the years ended December 31, 2018 and 2017:13 Year Ended December 31, 2018 2017 Texican Crude & Hydrocarbons 87% 85% ETC Field Services 2% 14% Lucid Energy 10% —% Others below 10% 1% 1% 100% 100%Delivery CommitmentsAs of December 31, 2018, we were not committed to providing a fixed quantity of oil or natural gas under any existing contracts.Regulation of the Oil and Natural Gas IndustryGeneralOur oil and natural gas exploration, production, and related operations are subject to extensive federal, state and local laws and regulations. Theselaws and regulations, which are under continued review for amendment, include matters relating to drilling and production practices; the disposal of waterfrom operations and the processing, handling and disposal of hazardous materials; bonding, permitting and licensing, and reporting requirements; taxation;and marketing, transportation and pricing practices.The failure to comply with these laws and regulations could result in substantial penalties, including administrative, civil, or criminal penalties.These laws and regulations increase our cost of doing business and can potentially affect our profitability.Regulation of Production of Oil and Natural GasThe production of oil and natural gas is subject to regulation under a wide range of federal, state and local laws, orders and regulations. Thesestatutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. The states in which we own and operateproperties have regulations governing conservation matters, including provisions for the unitization or pooling of oil and natural gas properties, theestablishment of maximum allowable rates of production from oil and natural gas wells, the regulation of well spacing or density, and plugging andabandonment of wells. The effect of these regulations is to limit the amount of oil and natural gas that we can produce from our wells and to limit the numberof wells or the locations at which we can drill, although we can apply for exceptions to such regulations or to have reductions in well spacing or density. Webelieve we are in substantial compliance with these laws and regulations; however, should we fail to comply with these laws and regulations, we could facesubstantial penalties.Environmental, Health, and Safety RegulationsOur operations are subject to stringent federal, state, and local laws and regulations relating to the protection of the environment and human healthand safety (“EHS”). There are various governmental agencies, including the U.S. Environmental Protection Agency (“EPA”), the U.S. Occupational Safetyand Health Administration (“OSHA”) and analogous state agencies that have the authority to enforce compliance with these laws and regulations.Environmental laws and regulations may require that permits be obtained before drilling commences or facilities are commissioned; restrict the types,quantities, and concentration of various substances that can be released into the environment in connection with drilling and production activities; governthe handling and disposal of waste material; and limit or prohibit drilling and exploitation activities on certain lands lying within wilderness, wetlands, andother protected areas, including areas containing threatened or endangered animal species.We do not believe that our environmental risks are materially different from those of comparable companies in the oil and gas industry. We believeour present activities substantially comply, in all material respects, with existing environmental laws and regulations. Nevertheless, environmental laws mayresult in a curtailment of production or material increases in the cost of production, development or exploration, and may otherwise adversely affect ourfinancial condition and results of operations. Although we maintain liability insurance coverage for liabilities from pollution, environmental risks aregenerally not fully insurable. We are committed to strict compliance with these regulations. During the years ended December 31, 2018 and 2017, weincurred approximately $38,000 and approximately $32,000, respectively, related to compliance with environmental laws for our oil and natural gasproperties.14The following is a summary of the more significant existing and proposed environmental and occupational health and safety laws and regulations towhich our business operations are or may be subject and for which compliance may have a material adverse impact on our capital expenditures, results ofoperations or financial position:The Resource Conservation and Recovery Act. The Resource Conservation and Recovery Act, as amended (“RCRA”), and the comparable statestatutes, regulate the generation, transportation, treatment, storage, disposal and cleanup of hazardous and non-hazardous wastes. The RCRA imposesstringent operating requirements, and liability for failure to meet such requirements, on a person who is either a “generator” or “transporter” of hazardouswaste or an “owner” or “operator” of a hazardous waste treatment, storage or disposal facility. The RCRA includes an exemption that allows certain oil andnatural gas exploration and production waste to be classified as nonhazardous waste. A similar exemption is contained in many of the state counterparts toRCRA. As a result, we are not required to comply with a substantial portion of RCRA’s hazardous waste requirements. At various times in the past, proposalshave been made to amend the RCRA to rescind the exemption that excludes oil and natural gas exploration and production wastes from regulation ashazardous waste. In 2016, the EPA agreed in a consent decree to review its regulation of oil and gas waste and has until March 2019 to determine whetherrevisions are necessary.In the event that we fail to comply with requirements for the handling of hazardous waste, administrative, civil and criminal penalties can beimposed. We believe that we are in substantial compliance with applicable requirements related to hazardous waste handling. Repeal or modification of theRCRA oil and gas exemption, or modification of similar exemptions in applicable state statutes, would increase the volume of hazardous waste we arerequired to manage and dispose of and would cause us to incur potentially significant increased operating expenses.Water Discharges. The Federal Water Pollution Control Act (also known as the Clean Water Act), the Safe Drinking Water Act, the Oil Pollution Actand analogous state laws and regulations impose restrictions and controls on the discharge of produced waters and other oil and natural gas wastes intonavigable waters of the United States, as well as state waters. Permits must be obtained to discharge pollutants into state and federal waters and to dischargepollutants into regulated waters and wetlands. Spill Prevention, Control, and Countermeasure requirements of the Clean Water Act require appropriatesecondary containment loadout controls, piping controls, berms and other measures to help prevent the contamination of navigable waters in the event of apetroleum hydrocarbon spill, rupture or leak. In June 2015, the EPA and the U.S. Army Corps of Engineers jointly promulgated rules redefining the scope ofwaters protected under the Clean Water Act, and in October 2015, the U.S. Court of Appeals for the Sixth Circuit stayed them nationwide. The EPA and U.S.Army Corps of Engineers have resumed nationwide use of the agencies’ prior regulations defining the term “waters of the United States.” On February 28,2017, President Trump directed the EPA to review the rules and “publish for notice and comment a proposed rule rescinding or revising the rules, asappropriate and consistent with law.” The Clean Water Act and comparable state statutes provide for civil, criminal and administrative penalties forunauthorized discharges of crude oil and other pollutants and impose liability on parties responsible for those discharges for the costs of cleaning up anyenvironmental damage caused by the release and for natural resource damages resulting from the release.The Oil Pollution Act of 1990 (“Oil Pollution Act”) and regulations thereunder are the primary federal law for oil spill liability. The Oil PollutionAct contains numerous requirements relating to the prevention of and response to petroleum releases into waters in the United States and imposes a variety ofregulations on “responsible parties” related to the prevention of oil spills and liability for damages resulting from such spills in United States waters. The OilPollution Act subjects each responsible party to strict liability for oil removal costs and a variety of public and private damages, including, all containmentand cleanup costs and certain other damages arising from a release, including, but not limited to, the costs of responding to a release of oil to surface watersand natural resource damages.The Safe Drinking Water Act, as amended, establishes a regulatory framework for the underground injection of a variety of wastes, including brineproduced and separated from crude oil and natural gas production, with the main goal being the protection of usable aquifers. The primary objective ofinjection well operating permits and requirements is to ensure the mechanical integrity of the wellbore and to prevent migration of fluids from the injectionzone into underground sources of drinking water.In response to recent seismic events near underground injection wells used for the disposal of oil and gas-related wastewaters, federal and stateagencies have been investigating whether such wells have caused increased seismic activity, and some states have shut down or imposed moratoria on the useof such injection wells. In Texas, the Texas Railroad Commission (“RRC”) regulates the disposal of produced water by injection well. The RRC requiresoperators to obtain a permit for the operation of saltwater disposal wells and establishes minimum standards for injection well operations. The RRC hasadopted permit rules for injection wells to address these seismic activity concerns within the state. These rules could impact the availability of injection wellsfor disposal of wastewater from our operations. Increased costs associated with the transportation and disposal of produced water, including the cost ofcomplying with regulations concerning produced water disposal, may reduce our profitability; however, we do not believe that the costs associated with thedisposal of produced water will have a material adverse effect on our operations.15Failure to comply with these regulations may result in substantial administrative, civil and criminal penalties, as well as injunctive obligations. Webelieve we are in material compliance with the requirements of each of these laws.Air Pollutant Emissions. The federal Clean Air Act (the “Clean Air Act”), and comparable state and local air pollution laws, provide a framework fornational, state and local efforts to protect air quality. Our operations utilize equipment that emits air pollutants which may be subject to federal and state airpollution control laws. These laws generally require utilization of air emissions control equipment to achieve prescribed emissions limitations and ambientair quality standards, as well as operating permits for existing equipment and construction permits for new and modified equipment. In May 2016, the EPAissued a final rule regarding the criteria for aggregating multiple small surface sites into a single source for air-quality permitting purposes applicable to theoil and gas industry. This rule could cause small facilities, on an aggregate basis, to be deemed a major source, which would subject operators to morestringent air permitting processes and requirements. These laws and regulations may increase our costs of compliance, and we may face administrative, civiland criminal penalties if we fail to comply with the requirements of the federal Clean Air Act and associated state laws and regulations. We believe that weare in compliance in all material respects with the requirements of applicable federal and state air pollution control laws.Regulation of “Greenhouse Gas” Emissions. The EPA has adopted regulations that, among other things, establish Prevention of SignificantDeterioration (“PSD”), construction, and Title V operating permit requirements for certain new and modified large stationary sources to address findings thatemissions of carbon dioxide, methane and other greenhouse gases (“GHGs”) present an endangerment to public health and the environment. Facilitiesrequired to comply with PSD requirements for their GHG emissions will be required to meet “best available control technology” standards for thoseemissions, which will be established on a case-by-case basis. The EPA has also issued rules requiring the monitoring and reporting of GHG emissions, whichinclude the reporting of GHG emissions from gathering and boosting systems, completions and workovers of oil wells using hydraulic fracturing, andblowdowns of natural gas transmission pipelines.While Congress has from time to time considered legislation to reduce emissions of GHGs, there has not been significant activity in the form ofadopted federal legislation to reduce GHG emissions in recent years. In the absence of such federal climate legislation, a number of state and regional cap andtrade programs have emerged that typically require major sources of GHG emissions, such as electric power plants, to acquire and surrender emissionallowances in return for emitting GHGs. Although it is not possible at this time to predict how legislation or new regulations that may be adopted to addressGHG emissions would impact our business, any such future laws and regulations imposing reporting obligations on, or limiting emissions of GHGs from, ourequipment and operations could require us to incur costs to reduce emissions of GHGs associated with our operations.Restrictions on GHG emissions that may be imposed could adversely affect our operations and restrict or delay our ability to obtain air permits fornew or modified sources, as well as increase our costs of operations.Hydraulic Fracturing Activities. Hydraulic fracturing is a common practice that is used to stimulate production of hydrocarbons, particularly naturalgas, from tight unconventional formations. Federal and state occupational safety and health laws require us to organize and maintain information abouthazardous materials used, released, or produced in our operations. Some of this information must be provided to our employees, state and local governmentalauthorities, and local citizens. We are also subject to the requirements and reporting framework set forth in the federal workplace standards.Several states and local jurisdictions have adopted, or are considering adopting, regulations that could restrict or prohibit hydraulic fracturing incertain circumstances, impose more stringent operating standards and/or require the disclosure of the composition of hydraulic fracturing fluids. For example,the Texas Legislature adopted legislation requiring oil and gas operators to publicly disclose the chemicals used in the hydraulic fracturing process. TheRRC adopted rules and regulations implementing this legislation that apply to all wells for which the RRC issues an initial drilling permit. The law requiresthat the well operator disclose the list of chemical ingredients subject to the requirements of OSHA for disclosure on an internet website and also file the listof chemicals with the RRC with the well completion report. The total volume of water used to hydraulically fracture a well must also be disclosed to thepublic and filed with the RRC. The RRC also adopted rules governing well casing, cementing and other standards for ensuring that hydraulic fracturingoperations do not contaminate nearby water resources. Local government also may seek to adopt ordinances within their jurisdictions regulating the time,place and manner of drilling activities in general or hydraulic fracturing activities in particular or prohibit the performance of well drilling in general orhydraulic fracturing in particular.We believe that we follow applicable standard industry practices and legal requirements for groundwater protection in our hydraulic fracturingactivities; however, if new or more stringent federal, state, or local restrictions relating to the hydraulic fracturing process are adopted in areas where weoperate, we could incur potentially significant added costs to comply with such requirements, experience delays or curtailment in the pursuit of exploration,development, or production activities, and perhaps16even be precluded from drilling wells. For additional information about hydraulic fracturing and related regulatory matters, see “Risk Factors-Risks Relatingto the Oil and Gas Industry.”Comprehensive Environmental Response, Compensation and Liability Act. The Comprehensive Environmental Response, Compensation andLiability Act (“CERCLA”), also known as the “superfund law,” imposes joint and several liabilities, regardless of fault or the legality of the original conduct,on some classes of persons that are considered to have contributed to the release of a “hazardous substance” into the environment. These persons include theowner or operator of a disposal site or sites where the release occurred and companies that transport, dispose, or arrange for disposal of the hazardoussubstance(s) released. Persons who are or were responsible for releases of hazardous substances under CERCLA may be jointly and severally liable for thecosts of cleaning up the hazardous substances and for damages to natural resources.We generate materials in the course of our operations that may be regulated as hazardous substances. Despite the “petroleum exclusion” ofCERCLA, which currently encompasses natural gas, we may handle other hazardous substances within the meaning of CERCLA, or similar state statutes, inthe course of our ordinary operations. In addition, we currently own, lease, or operate numerous properties that have been used for oil and natural gasexploration, production and processing for many years and some of our properties have been operated by third parties or by previous owners or operatorswhose treatment and disposal of hazardous substances, wastes, or hydrocarbons was not under our control. Although we believe that we have utilizedoperating and waste disposal practices that were standard in the industry at the time, hazardous substances, wastes, or hydrocarbons may have been releasedon, under or from the properties owned or leased by us, or on, under or from other locations, including off-site locations, where such substances have beentaken for disposal. These properties and the substances disposed or released on, under or from them may be subject to CERCLA, RCRA and analogous stateand local laws. Under these laws, we could be required to undertake investigatory, response, or corrective measures, which could include soil andgroundwater sampling, the removal of previously disposed substances and wastes, the cleanup of contaminated property, or performance of remedialplugging or pit closure operations to prevent future contamination, the costs of which could be substantial.Endangered Species Act and Migratory Birds. The Endangered Species Act (“ESA”) restricts activities that may affect federally identifiedendangered and threatened species or their habitats through the implementation of operating restrictions or a temporary, seasonal, or permanent ban inaffected areas. Pursuant to the ESA, if a species is listed as threatened or endangered, restrictions may be imposed on activities adversely affecting thatspecies’ habitat. We may conduct operations under oil and natural gas leases in areas where certain species that are listed as threatened or endangered areknown to exist and where other species that potentially could be listed as threatened or endangered under the ESA may exist.The U.S. Fish and Wildlife Service may designate critical habitat and suitable habitat areas that it believes are necessary for survival of a threatenedor endangered species. A critical habitat or suitable habitat designation could result in further material restrictions to land use and may materially delay orprohibit land access for oil and natural gas development. Similar protections are offered to migratory birds under the Migratory Bird Treaty Act. Theidentification or designation of previously unprotected species as threatened or endangered in areas where underlying property operations are conductedcould cause us to incur increased costs arising from species protection measures or could result in limitations on our exploration and production activitiesthat could have an adverse impact on our ability to develop and produce reserves. If we were to have a portion of our leases designated as critical or suitablehabitat, it could adversely impact the value of our leases.OSHA. We are subject to the requirements of the OSHA and comparable state statutes whose purpose is to protect the health and safety of workers. Inaddition, the OSHA hazard communication standard, the Emergency Planning and Community Right-to-Know Act and comparable state statutes andregulations require that we organize and/or disclose information about hazardous materials used or produced in our operations and that this information beprovided to employees, state and local governmental authorities and citizens. We believe that we are in substantial compliance with all applicable laws andregulations relating to worker health and safety.State Laws. There are numerous state laws and regulations in the states where we operate that relate to the environmental aspects of our business.Some of those laws and regulations are discussed above. They relate to, among other things, requirements to remediate spills of deleterious substancesassociated with oil and gas activities, the conduct of salt water disposal operations, and the methods of plugging and abandonment of oil and gas wells whichhave been unproductive. Numerous state laws and regulations also relate to air and water quality. We believe that we are in substantial compliance with allstate laws governing environmental matters and all permitting requirements; however, in the event that we fail to comply with such laws, we may facesubstantial penalties and incur significant costs.17Natural Gas Sales and TransportationHistorically, federal legislation and regulatory controls have affected the price of the natural gas we produce and the manner in which we market ourproduction. The Federal Energy Regulatory Commission, or FERC, has jurisdiction over the transportation and sale for resale of natural gas in interstatecommerce by natural gas companies.Under the Energy Policy Act of 2005, FERC has substantial enforcement authority to prohibit the manipulation of natural gas markets and enforceits rules and orders, including the ability to assess substantial civil penalties. FERC also regulates interstate natural gas transportation rates and serviceconditions and establishes the terms under which we may use interstate natural gas pipeline capacity, which affects the marketing of natural gas that weproduce, as well as the revenues we receive for sales of our natural gas and release of our natural gas pipeline capacity. FERC has also promulgated a series oforders, regulations and rules to foster competition in the business of transporting and marketing gas. Today, interstate pipeline companies are required toprovide nondiscriminatory transportation services to producers, marketers and other shippers, regardless of whether such shippers are affiliated with aninterstate pipeline company.Under FERC’s current regulatory regime, transmission services are provided on an open-access, non-discriminatory basis at cost-based rates ornegotiated rates. Gathering service, which occurs upstream of jurisdictional transmission services, is regulated by the states onshore and in state waters.Although its policy is still in flux, FERC has in the past reclassified certain jurisdictional transmission facilities as non-jurisdictional gathering facilities,which has the tendency to increase our costs of transporting natural gas to point-of-sale locations.Additionally, we are required to comply with anti-market manipulation laws and regulations promulgated by FERC and the Commodity FutureTrading Commission with regard to our physical purchases and sales of energy commodities and any related hedging activities, and if we fail to comply, wecould be subject to penalties and potential third-party damage claims.Oil Sales and TransportationSales of crude oil, condensate and NGLs are not currently regulated and are made at negotiated prices. Our crude oil sales are affected by theavailability, terms and cost of transportation.The transportation of oil in common carrier pipelines is subject to rate regulation. FERC regulates interstate oil pipeline transportation rates underthe Interstate Commerce Act and intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastateoil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state. We believe that theregulation of oil transportation rates will not affect our operations in any materially different way than such regulation will affect the operations of ourcompetitors, as effective interstate and intrastate rates are equally applicable to all comparable shippers.Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard,common carriers must offer service to all shippers requesting service on the same terms and under the same rates. When oil pipelines operate at full capacity,access is governed by pro-rationing provisions set forth in the pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportationservices generally will be available to us to the same extent as to our competitors.Federal Income Tax and State Severance TaxesFederal income tax laws significantly affect our operations. The principal provisions that affect us are those that permit us, subject to certainlimitations, to deduct as incurred, rather than to capitalize and amortize/depreciate, our domestic “intangible drilling and development costs” and to claimdepletion on a portion of our domestic oil and natural gas properties based on 15% of our oil and natural gas gross income from such properties (up to anaggregate of 1,000 barrels per day of domestic crude oil and/or equivalent units of domestic natural gas).Additionally, each state generally imposes a production or severance tax with respect to the production and sale of oil, natural gas and NGLs withinits jurisdiction. Texas and New Mexico currently impose a severance tax on oil production of 4.60% and 8.39%, respectively, and a severance tax on naturalgas production of 7.50% and 9.24%, respectively.18Federal LeasesOperations on federal oil and natural gas leases must comply with certain regulatory restrictions, including various non-discrimination statutes, andcertain of such operations must be conducted pursuant to certain on-site security regulations and other permits issued by federal agencies. In addition, onfederal lands in the United States, the Office of Natural Resources Revenue (“ONRR”) prescribes, and in some cases limits, the types of costs that aredeductible transportation costs for purposes of royalty valuation of production sold off the lease, including the deduction of costs associated with marketerfees, cash out and other pipeline imbalance penalties, or long-term storage fees. The ONRR has also been engaged in a process of promulgating new rules andprocedures for determining the value of crude oil produced from federal lands for purposes of calculating royalties owed to the government. We cannotpredict what, if any, effect any new rule will have on our operations.Some of our operations are conducted on federal lands pursuant to oil and gas leases administered by the Bureau of Land Management, or BLM.These leases contain relatively standardized terms and require compliance with detailed regulations and orders, which are subject to change. In addition topermits required from other regulatory agencies, lessees must obtain a permit from the BLM before drilling and comply with regulations governing, amongother things, engineering and construction specifications for production facilities, safety procedures, the valuation of production and payment of royalties,the removal of facilities, and the posting of bonds to ensure that lessee obligations are met. Under certain circumstances, the BLM may require our operationson federal leases to be suspended or terminated.Other Laws and RegulationsVarious laws and regulations require permits for drilling wells and also cover spacing of wells, the prevention of waste of natural gas and oil, rates ofproduction and other matters. The effect of these laws and regulations, as well as other regulations that could be promulgated in the jurisdictions in which wehave production, could be to limit the number of wells that could be drilled on our properties and to limit the allowable production from the successful wellscompleted on our properties, thereby limiting our revenues.Seasonal Nature of BusinessGenerally, the demand for oil and natural gas fluctuates depending on the time of year. Generally, demand for oil increases during the summermonths and decreases during the winter months while natural gas decreases during the summer months and increases during the winter months. Seasonalanomalies such as mild winters or hot summers may sometimes lessen this fluctuation. Further, pipelines, utilities, local distribution companies, andindustrial end users utilize oil and natural gas storage facilities and purchase some of their anticipated winter requirements during the summer, which can alsolessen seasonal demand.Operational Hazards and InsuranceThe oil and natural gas business involves a variety of operating risks, including the risk of fire, explosions, blow outs, hydrogen sulfide emissions orreleases, pipe failures and, in some cases, abnormally high pressure formations which could lead to environmental hazards such as oil spills, natural gas leaksand the discharge of toxic gases. If any of these should occur, we could be required to pay amounts due to injury; loss of life; damage or destruction toproperty, natural resources and equipment; pollution or environmental damage; regulatory investigation; and penalties and suspension of operations.In accordance with industry practice, we maintain insurance against some, but not all, of the operating risks to which our business is exposed. Weevaluate the purchase of insurance, coverage limits and deductibles on an annual basis.Current EmployeesAs of December 31, 2018, we had 39 employees, all of whom were full-time employees, and we intend to continue to add personnel as ouroperational requirements grow. Our employees are not represented by any labor union or covered by any collective bargaining agreements.We also retain certain independent consultants and contractors to provide various professional services, including additional land, legal,engineering, geology, environmental and tax services on a contract or fee basis as necessary for our operations.19Principal Executive Office and Corporate OfficesOur principal executive offices are in leased office space located at 1800 Bering Drive, Suite 510, Houston, Texas 77057, and our telephone numberis (817) 585-9001. We also maintain offices in leased office space in Fort Worth, Texas and San Antonio, Texas.Availability of Company ReportsOur annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnishedpursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 will be available through our Internet website at https://www.lilisenergy.com as soon asreasonably practical after we electronically file such material with, or furnish it to, the SEC. The information on, or that can be accessed through, our websiteis not incorporated by reference into this Annual Report and should not be considered part of this Annual Report.Item 1A. Risk FactorsInvesting in our shares of common stock involves significant risks, including the potential loss of all or part of your investment. These risks couldmaterially affect our business, financial condition and results of operations and cause a decline in the market price of our common stock. You shouldcarefully consider all of the risks described in this Annual Report, in addition to the other information contained in this Annual Report, before you make aninvestment in our common stock. Additional risks not presently known to us or that we currently deem immaterial may also adversely affect our business. Inaddition to other matters identified or described by us from time to time in filings with the SEC, there are several important factors that could cause ourfuture results to differ materially from historical results or trends, results anticipated or planned by us, or results that are reflected from time to time in anyforward-looking statement. Some of these important factors, but not necessarily all important factors include the following:Risks Relating to Our BusinessIf we are unable to access additional capital, it could negatively impact our production, our income and ultimately our ability to retain our leases.Our principal sources of liquidity historically have been equity contributions, borrowings under our credit facilities, net cash provided by operatingactivities, and net proceeds from the issuance of preferred stock. Our capital program may require additional financing above the level of cash generated byour operations to fund our growth. If our expected cash flow from operations decreases as a result of lower commodity prices or otherwise, our ability toexpend the capital necessary to replace our proved reserves, maintain our leasehold acreage or maintain production may be limited, resulting in decreasedproduction and proved reserves over time.We plan to finance our capital expenditures with cash on hand, cash flow from operations and future issuances of debt and/or equity securities. Ourcash flow from operations and access to capital is subject to a number of factors, including:•our estimated proved oil and natural gas reserves;•the amount of oil and natural gas we produce from existing wells;•the prices at which we sell our production;•the costs of developing and producing our oil and natural gas reserves;•our ability to acquire, locate and produce new reserves;•the ability and willingness of banks to lend to us; and•our ability to access the equity and debt capital markets.Our operations and capital resources may not provide cash in sufficient funds to maintain planned or future levels of capital expenditures. Further,our actual capital expenditures in 2019 could exceed our capital expenditure budget. In the event our capital expenditure requirements at any time aregreater than the amount of capital we have available, we could be required to seek additional sources of capital, which may include refinancing existing debt,joint venture partnerships, production payment financings, offerings of debt or equity securities or other means.Oil, natural gas and NGL prices are highly volatile. If commodity prices experience substantial decline, our operations, financial condition, and level ofexpenditures for the development of our oil, natural gas and NGL reserves may be materially and adversely affected.20The prices we receive for our oil, natural gas, and NGL production heavily influence our revenue, operating results, profitability, access to capital,future rate of growth and carrying value of our properties. Oil, natural gas, and NGLs are commodities, and, therefore, their prices are subject to widefluctuations in response to relatively minor changes in supply and demand.Historically, the commodities markets have been volatile, and these markets will likely continue to be volatile in the future. If the prices of oil,natural gas and NGLs experience a substantial decline, our operations, financial condition and level of expenditures for the development of our oil, naturalgas and NGL reserves may be materially and adversely affected. The prices we receive for our production, and the levels of our production, depend onnumerous factors beyond our control, including:•changes in global supply and demand for oil and natural gas;•the actions of the Organization of Petroleum Exporting Countries, or OPEC;•the price and quantity of imports of foreign oil and natural gas;•political conditions, including embargoes, affecting oil-producing activity;•the level of global oil and natural gas exploration and production activity;•the level of global oil and natural gas inventories;•weather conditions;•technological advances affecting energy consumption; and•the price and availability of alternative fuels.Our revenues, operating results, profitability and future rate of growth depend primarily upon the prices we receive for oil and, to a lesser extent,natural gas that we sell. Prices also affect the amount of cash flow available for capital expenditures and our ability to borrow money or raise additionalcapital. In addition, we may be required to record asset carrying value write-downs if prices fall. A significant decline in the prices of natural gas or oil couldadversely affect our financial position, financial results, cash flows, access to capital and ability to grow.Our level of indebtedness could adversely affect our ability to raise additional capital to fund our operations, limit our ability to react to changes in theeconomy or our industry and prevent us from meeting our obligations under our indebtedness.We entered into the Second Lien Credit Agreement in 2017 and the Revolving Credit Agreement in 2018 (hereinafter defined and described in moredetail). As of December 31, 2018, $75.0 million was outstanding under our Revolving Credit Agreement and $111.6 million was outstanding under ourSecond Lien Credit Agreement.We may incur additional debt, including secured indebtedness, or issue preferred stock in order to maintain adequate liquidity and develop andacquire properties to the extent desired. If we further utilize our credit facilities in the future or obtain additional financing, our level of indebtedness couldaffect our operations, including limiting our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt servicerequirements, acquisitions and general corporate or other purposes. Additionally, if we increase our indebtedness, the debt service requirements of theadditional indebtedness could make it more difficult for us to satisfy our financial obligations; and a substantial portion of our cash flows from operationswould be dedicated to the payment of principal and interest on our indebtedness and would not be available for other purposes, including our operations,capital expenditures and future business opportunities. A higher level of indebtedness and/or preferred stock also increases the risk that we may default onour obligations.The UK’s Financial Conduct Authority, or FCA, which regulates LIBOR, stated on July 27, 2017, that following 2021 it will no longer encouragepanel banks to contribute to LIBOR, as it has done to date. Borrowings under our Revolving Credit Agreement bear interest at a floating rate of either LIBORor a specified base rate plus a margin determined based upon the usage of the borrowing base. In the event LIBOR becomes unavailable prior to the maturityof our Revolving Credit Agreement, the rate of interest payable on our Revolving Credit Agreement may change. Uncertainty regarding the future of orchanges to LIBOR or the unavailability of LIBOR could adversely affect our financial condition.The Revolving Credit Agreement and Second Lien Credit Agreement, guaranteed and further secured by substantially all our assets, contain restrictivecovenants that may limit our ability to respond to changes in market conditions or pursue business opportunities.Our Revolving Credit Agreement and Second Lien Credit Agreement contain restrictive covenants that limit our ability to, among other things:•incur additional indebtedness;•create additional liens;21•incur fundamental changes;•sell certain of our assets;•merge or consolidate with another entity;•pay dividends or make other distributions;•engage in transactions with affiliates; and•enter into certain swap agreements.The requirement that we comply with these provisions may have a material adverse effect on our ability to react to changes in market conditions,take advantage of business opportunities we believe to be desirable, obtain future financing, fund needed capital expenditures or withstand a continuing orfuture downturn in our business.We may from time to time enter into alternative or additional debt agreements that contain restrictive covenants that may prevent us from takingactions that we believe would be in the best interest of our business, require us to sell assets or take other actions to reduce indebtedness to meet suchcovenants, or make it difficult for us to successfully execute our business strategy or effectively compete with companies that are not similarly restricted.In addition, our Revolving Credit Agreement requires us to maintain certain financial ratios. We may from time to time be out ofcompliance with covenants under our debt agreements, which will require us to seek waivers from our lenders. In connection with the preparation of this Form10-K and the associated financial statements, the Company became aware, and promptly informed its Lenders, that it did not satisfy the leverage ratiocovenant in the Revolving Credit Agreement, as of the fiscal quarter ended December 31, 2018. Accordingly, the Company requested that the Lendersconsent to a waiver with respect to such provision. On March 1, 2019, the Company entered into that certain First Amendment and Waiver to SecondAmended and Restated Credit Agreement, whereby the Lenders granted a waiver with respect to the breach of the leverage ratio covenant. If we fail to complywith these provisions or other financial and operating covenants in the Revolving Credit Agreement, we could be in default under the terms of the agreement.In the event of such default, our lenders could elect to declare all the funds borrowed thereunder to be due and payable, together with the accrued and unpaidinterest, and the lenders under or Revolving Credit Agreement could elect to terminate their commitments thereunder.Värde Partners, Inc., its portfolio companies, and its affiliates (collectively, “Värde”) beneficially own a significant portion of our common stock. Värde isnot limited in their ability to compete with us, and the waiver of the corporate opportunity provisions in the certificates of designation relating to ourSeries C Preferred Stock and Series D Preferred Stock may allow Värde to benefit from corporate opportunities that might otherwise be available to us. Asa result, conflicts of interest could arise in the future between us and Värde concerning conflicts over our operations or business opportunities.Värde is a family of private investment funds that beneficially owns a significant portion of our common stock as a result of the conversion rightsavailable to them under the Second Lien Credit Agreement, the Series C Preferred Stock (as hereinafter defined and described) and the Series D PreferredStock (as hereinafter defined and described). Värde also has investments in other companies in the energy industry. The certificates of designation governingthe preferences, rights and limitations of the Series C Preferred Stock and the Series D Preferred Stock provide that Värde is not restricted from owning assetsor engaging in businesses that compete directly or indirectly with us. In particular, subject to the limitations of applicable law, if Värde, or any agent,shareholder, member, partner, director, officer, employee, investment manager or investment advisor of Värde who is also one of our directors or officers,becomes aware of a potential business opportunity, transaction or other matter, they will have no duty to communicate or offer that opportunity to us.As such, Värde may become aware, from time to time, of certain business opportunities (such as acquisition opportunities) and may direct suchopportunities to other businesses in which they have invested, in which case those opportunities may not be available to us or may be more expensive for usto pursue. Additionally, any actual or perceived conflicts of interest with respect to the foregoing could have an adverse impact on the trading price of ourcommon stock. As of March 5, 2019, we converted our outstanding Second Lien Loans under our Second Lien Credit Agreement to a combination of twonewly created series of preferred stock, Series E convertible preferred stock ("Series E Preferred Stock") and Series F non-convertible preferred stock ("Series FPreferred Stock"), and common stock and eliminated the conversion featuresand voting rights on our existing Series C Preferred Stock and Series D Preferred Stock, reducing potential dilution of our common stockholders. Our Series EPreferred Stock is convertible and, if converted, could result in dilution to our common stockholders.Our disclosure controls and procedures and internal controls over financial reporting may not detect errors or potential acts of fraud.Our disclosure controls and procedures and internal controls may not prevent all possible errors and fraud. A control system, no matter how wellconceived and operated, can provide only reasonable assurance that the objectives of the control22system are being met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls areevaluated relative to their costs. Because of the inherent limitations in all control systems, no evaluation of our controls can provide absolute assurance thatall control issues and instances of fraud, if any, have been detected. Because of inherent limitations in a cost-effective control system, misstatements due toerror or fraud may occur without detection, which could have a material adverse effect on our business.Failure to maintain an effective system of internal control over financial reporting may have an adverse effect on our stock price.Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, and the rules and regulations promulgated by the SEC to implement Section 404, ourmanagement is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our financial statements for externalpurposes in accordance with generally accepted accounting principles. Under the supervision and with the participation of our management, including ourChief Executive Officer and our Chief Financial Officer, we are required to conduct an evaluation of the effectiveness of our internal control over financialreporting based on framework of internal control issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Because ofits inherent limitations, internal controls over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluationeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies and procedures may deteriorate.Effective internal controls are necessary for us to provide reasonable assurance with respect to our financial reports and to effectively prevent fraud.If we cannot provide reasonable assurance with respect to our financial reports and effectively prevent fraud, our reputation and operating results could beharmed. Further, the complexities of our quarter-end and year-end closing processes increase the risk that a weakness in internal controls over financialreporting may go undetected. Therefore, even effective internal controls can provide only reasonable assurance with respect to the preparation and fairpresentation of financial statements.A material weakness in our internal control over financial reporting could adversely impact our ability to provide timely and accurate financialinformation. If we are unable to report financial information timely and accurately or to maintain effective disclosure controls and procedures, we could besubject to, among other things, regulatory or enforcement actions by the SEC and the NYSE American, including a delisting from the NYSE American,securities litigation, debt rating agency downgrades or rating withdrawals, any one of which could adversely affect the valuation of our common stock andcould adversely affect our business prospects.Decreases in oil and natural gas prices may require us to take write-downs of the carrying values of our oil and natural gas properties, potentiallyrequiring earlier than anticipated debt repayment and negatively impacting the trading value of our securities.Accounting rules require that we periodically review the carrying value of our oil and natural gas properties for possible impairment through theperformance of a ceiling test. Based on specific market factors and circumstances at the time of prospective impairment reviews, and the continuingevaluation of development plans, production data, economics and other factors, we may be required to write down the carrying value of our oil and naturalgas properties.We perform the ceiling test at least quarterly and, in the event capitalized costs of the full cost pool exceed this ceiling, we would recognize animpairment expense. We did not incur an impairment expense for the year ended December 31, 2018. We recognized an impairment expense ofapproximately $10.5 million for the year ended December 31, 2017.Future write-downs could occur for numerous reasons, including, but not limited to, continued reductions in oil and natural gas prices that lower theestimate of future net revenues from proved oil and natural gas reserves, revisions to reserve estimates, or from the addition of non-productive capitalizedcosts to the full cost pool that do not result in a corresponding increase in oil and natural gas reserves. Impairments of plugging and abandonment of wells inprogress are other areas where costs may be capitalized into the full cost pool, without any corresponding increase in reserve values. As such, these situationscould result in additional impairment expenses in the future. Impairment charges would not affect cash flow from operating activities but could have amaterial adverse effect on our net income and stockholders’ equity. 23Our estimated reserves are based on many assumptions that may prove inaccurate. Any significant inaccuracies in our reserve estimates or underlyingassumptions will materially affect the quantities and present value of our reserves.Oil and natural gas reserve engineering requires subjective estimates of underground accumulations of oil and natural gas and assumptionsconcerning future oil and natural gas prices, production levels, and operating and development costs. As a result, estimated quantities of proved reserves andprojections of future production rates and the timing of development expenditures may prove to be inaccurate. Any material inaccuracies in these reserveestimates or underlying assumptions could materially affect the quantities and present value of our reserves which could adversely affect our business, resultsof operations, and financial condition.In order to prepare estimates, we must project production rates and the timing of development expenditures and analyze available geological,geophysical, production and engineering data. The extent, quality and reliability of this data can vary. The process also requires economic assumptionsabout matters such as oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. Although the reserveinformation contained herein is reviewed by independent reserve engineers, estimates of oil and natural gas reserves are inherently imprecise.Further, the present value of future net cash flows from proved reserves may not be the current market value of estimated oil and natural gas reserves.If our reserve estimates or the underlying assumptions prove inaccurate, it could have a negative impact on our earnings and net income, as well as thetrading price of our securities.Hedging transactions may limit our potential gains or result in losses.In order to comply with the requirements of our Revolving Credit Agreement and to manage our exposure to price risks in the marketing of our oiland natural gas, we have entered into derivative contracts that economically hedge our oil and gas price on a portion of our production. These contracts maylimit our potential gains if oil and natural gas prices were to rise substantially over the price established by the contract. In addition, such transactions mayexpose us to the risk of financial loss in certain circumstances, including instances in which there is a change in the expected differential between theunderlying price in the hedging agreement and actual prices received; our production and/or sales of oil or natural gas are less than expected; payments owedunder derivative hedging contracts come due prior to receipt of the hedged month’s production revenue; or the other party to the hedging contract defaultson its contract obligations.Hedging transactions that we have entered into, or may enter into in the future, may not adequately protect us from declines in the prices of oil andnatural gas. In addition, the counterparties under our current or future derivatives contracts may fail to fulfill their contractual obligations to us.Our identified drilling locations are scheduled to be drilled over a period of several years, making them susceptible to uncertainties that could materiallyalter the occurrence or timing of our drilling.Our management has specifically identified and scheduled drilling locations as an estimation of future multi-year drilling activities on our existingacreage. These scheduled drilling locations represent a significant component of our growth strategy. Our ability to drill and develop these locations dependson a number of uncertainties, including oil and natural gas prices, the availability of capital, costs, drilling results, and regulatory approvals. Because of theseuncertainties, we do not know if the potential drilling locations previously identified will ever be drilled or if we will be able to produce oil or natural gasfrom our potential drilling locations. As such, actual drilling activities may materially differ from those presently identified, which could adversely affect ourbusiness.Drilling for and producing oil and natural gas is a speculative activity and involves numerous risks and substantial and uncertain costs that couldadversely affect us.Our success will depend on the success of our drilling program. There is no way to predict in advance of drilling and testing whether any particularprospect will yield oil or natural gas in sufficient quantities to recover drilling or completion costs or to be economically viable. The use of seismic data andother technologies and the study of producing fields in the same area will not enable us to know conclusively prior to drilling whether oil or natural gas willbe present or, if present, whether oil or natural gas will be present in commercial quantities as such studies are merely an interpretive tool.Drilling for oil and natural gas involves numerous risks, including the risk that no commercially productive natural gas or oil reservoirs will bediscovered. The cost of drilling, completing, and operating wells is substantial and uncertain, and drilling operations may be curtailed, delayed, or canceledas a result of a variety of factors beyond our control, including:24•unexpected or adverse drilling conditions;•elevated pressure or irregularities in geologic formations;•equipment failures or accidents;•adverse weather conditions;•compliance with governmental requirements; and•shortages or delays in the availability of drilling rigs, crews, and equipment.Additionally, the budgeted costs of planning, drilling, completing and operating wells are often exceeded and such costs can increase significantlydue to various complications that may arise during the drilling and operating processes. If actual drilling and development costs are significantly more thanthe current estimated costs, we may not be able to continue operations as proposed and could be forced to modify our drilling plans. A productive well maybecome uneconomical if water or other deleterious substances are encountered which impair or prevent the production of oil and/or natural gas from the well.Unsuccessful drilling activities could result in a significant decline in production and revenues and materially affect our operations and financial conditionby reducing available cash and resources.Financial difficulties encountered by our oil and natural gas purchasers, third-party operators or other third parties could decrease cash flow fromoperations and adversely affect our exploration and development activities.We derive essentially all of our revenues from the sale of our oil, natural gas and NGLs to unaffiliated third-party purchasers, independent marketingcompanies and midstream companies. Any delays in payments from such purchasers caused by their financial problems will have an immediate negativeeffect on our results of operations and cash flows.Additionally, liquidity and cash flow problems encountered by our working interest co-owners or the third-party operators of our non-operatedproperties may prevent or delay the drilling of a well or the development of a project. Our working interest co-owners may be unwilling or unable to pay theirshare of the costs of projects as they become due. In the case of a working interest owner, we could be required to pay the working interest owner’s share ofthe project costs.Our industry is highly competitive, which may adversely affect our operations and performance.We operate in a highly competitive environment. In addition to capital, the principle resources necessary for the exploration and production of oiland natural gas include: leasehold prospects under which oil and natural gas reserves may be discovered; drilling rigs and related equipment to explore forsuch reserves; and knowledgeable personnel to conduct all phases of oil and natural gas operations. We must compete for such resources with both major oiland natural gas companies and independent operators.Many of our competitors have financial and other resources substantially greater than ours. The capital, materials and resources needed for ouroperations may not be available when needed. If we are unable to access capital, material and resources when needed, we may face various consequences,including the breach of our obligations under our oil and natural gas leases and the potential loss of those leasehold interests; damage to our reputation in theoil and gas community; inability to retain personnel or attract capital; a slowdown in our operations and decline in revenue; and a decline in the market priceof our common stock. Properties that we acquire may not produce oil or natural gas as projected, and we may be unable to determine reserve potential, identify liabilitiesassociated with the properties or obtain protection from sellers against them, which could cause us to incur losses.One of our growth strategies is to pursue selective acquisitions of undeveloped acreage potentially containing oil and natural gas reserves. If wechoose to pursue an acquisition, we will perform a review of the target properties. However, these reviews are inherently incomplete as they are based on thequality, availability and interpretation of the reviewed data and the acumen and the assumptions of the evaluation personnel. Generally, it is not feasible toreview in depth every individual property, well, facility and/or file involved in an acquisition. Even a detailed review of records and properties may notreveal existing or potential problems, nor will it permit a buyer to become sufficiently familiar with the properties to assess fully their deficiencies andpotential. We may not perform an inspection on every well, and environmental problems, such as groundwater contamination, are not necessarily observableeven when an inspection is undertaken. Even when problems are identified, we may not be able to obtain effective contractual protection against all or part ofthose problems, and we may assume environmental and other risks and liabilities in connection with the acquired properties. If we acquire properties withrisks or liabilities that were unknown or not assessed correctly, our financial condition, results of operations and cash flows could be adversely affected asclaims are settled and cleanup costs related to the liabilities are incurred.25We may incur losses or costs as a result of title deficiencies in the properties in which we invest.Prior to the drilling of an oil and natural gas well, it is customary practice in the oil and natural gas industry for the operator of the well to obtain apreliminary title review of the spacing unit within which the proposed oil and natural gas well is to be drilled to ensure there are no obvious deficiencies intitle to the well. Frequently, as a result of such examinations, certain curative work must be done to correct deficiencies in the marketability of the title, andsuch curative work entails expense. Failure to cure any title defects may adversely impact our ability in the future to increase production and reserves. In thefuture, we may suffer a monetary loss from title defects or title failure. Additionally, unproved and unevaluated acreage has greater risk of title defects thandeveloped acreage. If there are any title defects or defects in assignment of leasehold rights in properties in which we hold an interest or acquire, we will suffera financial loss which could adversely affect our financial condition, results of operations and cash flows.Our producing properties are all located in the Delaware Basin, making us vulnerable to risks associated with operating in one major geographic area.As of December 31, 2018, all of our estimated proved reserves were located in the Delaware Basin in Winkler, Loving, and Reeves Counties, Texasand Lea County, New Mexico. As a result of this concentration, we may be disproportionately exposed to the impact of delays or interruptions of productionfrom these wells caused by transportation capacity constraints, curtailment of production, availability of equipment, facilities, personnel or services,governmental regulation, natural disasters, adverse weather conditions, plant closures for scheduled maintenance or interruption of transportation of oil ornatural gas produced from the wells in this area.In addition, the effect of fluctuations on supply and demand may become more pronounced within specific geographic oil and natural gas producingareas, which may cause these conditions to occur with greater frequency or magnify the effect of these conditions. Due to the concentrated nature of ourportfolio of properties, a number of our properties could experience any of the same conditions at the same time, resulting in a relatively greater impact onour results of operations than they might have on other companies that have a more diversified portfolio of properties. Such delays or interruptions couldhave a material adverse effect on our financial condition and results of operations.We may not be the operator on all of our drilling locations, and, therefore, we will not be able to control the timing of exploration or development efforts,associated costs, or the rate of production of any non-operated assets.Currently, we are the operator of approximately 99% of our acreage. As we carry out our exploration and development programs, we may enter intoarrangements with respect to existing or future drilling locations that result in wells being operated by others. As a result, we may have limited ability toexercise influence over the operations of the drilling locations operated by our partners. Dependence on the operator could prevent us from realizing targetreturns for those locations. The success and timing of exploration and development activities operated by our partners will depend on a number of factors thatwill be largely outside of our control and may adversely affect our financial condition and results of operation.The marketability of our production is dependent upon transportation and processing facilities and third parties over which or whom we may have nocontrol.The marketability of our production depends in part upon the availability, proximity and capacity of pipelines, natural gas gathering systems, railservice, and processing facilities in addition to competing oil and natural gas production available to third-party purchasers. We deliver our produced crudeoil and natural gas through trucking, gathering systems and pipelines. The lack of availability of capacity on third-party systems and facilities could reducethe price offered for our production or result in the shut-in of producing wells or the delay or discontinuance of our development plans.Although we have contractual control over the transportation of our production through firm transportation arrangements, third-party systems andfacilities may be temporarily unavailable due to market conditions, mechanical issues, adverse weather conditions, work-loads, or other reasons outside ofour control. Additionally, if our natural gas contains levels of hydrogen sulfide that require treatment prior to transportation, it could cause delays in thetransportation and marketing of our production. Any significant changes affecting these infrastructure systems and facilities, as well as any delays inconstructing new infrastructure systems and facilities, could delay our production, which could negatively impact our results of operations, cash flows, andfinancial condition.26The shut-in of our wells could negatively impact our production, liquidity, and, ultimately, our operations, results, and performance. Our production depends, in part, upon our wells that are capable of commercial production not being shut-in (i.e., suspended from production). Thelack of availability of capacity on third-party systems and facilities or the shut-in of an oil field’s production could result in the shut-in of our wells. As ofDecember 31, 2018, we had 3 gross (2.60 net) wells shut-in.The producing wells in which we have an interest occasionally experience reduced or terminated production. These curtailments can result frommechanical failures, contract terms, pipeline and processing plant interruptions, market conditions, operator priorities, and weather conditions. Thesecurtailments can last from a few days to many months, any of which could have an adverse effect on our results of operations.If we experience low oil production volumes due to the shut-in of our wells or other mechanical failures or interruptions, it would impact our abilityto generate cash flows from operations and we could experience a reduction in our available liquidity. A decrease in our liquidity could adversely affect ourability to meet our anticipated working capital, debt service, and other liquidity needs.Unless we find new oil and natural gas reserves to replace our actual production, our reserves and production will decline, which would materially andadversely affect our business, financial condition, and results of operations.Producing oil and natural gas reservoirs generally are characterized by declining production rates and depletion that vary depending upon variousfactors, including reservoir characteristics and subsurface and surface pressures. Our future oil and natural gas reserves and production and, therefore, our cashflow and revenue are highly dependent on our success in efficiently obtaining additional reserves. We may not be able to develop, find or acquire reserves toreplace our current and future production at costs or other terms acceptable to us, or at all, in which case our business, financial condition and results ofoperations would be materially and adversely affected.The results of our planned exploratory and development drilling are subject to drilling and completion execution risks, and drilling results may not meetour economic expectations for reserves or production.Unconventional operations involve utilizing drilling and completion techniques as developed by us and our service providers. Risks that we facewhile drilling include, but are not limited to, not reaching the desired objective due to drilling problems, not landing our wellbore in the desired drillingzone or specific target, not staying in the desired drilling zone while drilling horizontally through the formation, not running our casing the entire length ofthe wellbore and not being able to run tools and other equipment consistently through the horizontal wellbore. Risks that we face while completing our wellsinclude, but are not limited to, insufficient mechanical integrity, not being able to hydraulic fracture stimulate the planned number of stages, not being ableto run tools the entire length of the wellbore, improper design and engineering for the reservoir parameters, and unsuccessfully cleaning out the wellbore aftercompletion of the final fracture stimulation stage.The success of our drilling and completion techniques can only be developed over time as more wells are drilled and production profiles areestablished. If our drilling results are less than anticipated or we are unable to execute our drilling program because of capital constraints, lease expirations,access to gathering systems or otherwise, the return on our investment in these areas may not be as attractive as we anticipate and we could incur materialwrite-downs of undeveloped properties and the value of our undeveloped acreage could decline in the future.The unavailability or high cost of drilling rigs, equipment supplies, or personnel could adversely affect our ability to execute our exploration anddevelopment plans.The oil and gas industry is cyclical and, from time to time, there are shortages of drilling rigs, equipment, supplies or qualified personnel. Duringthese periods, the costs of and demand for rigs, equipment and supplies may increase substantially and their availability may be limited. In addition, thedemand for, and wage rates of, qualified personnel, including drilling rig crews, may rise as the number of rigs in service increases. If drilling rigs, equipment,supplies or qualified personnel are unavailable to us due to excessive costs or demand or otherwise, our ability to execute our exploration and developmentplans could be materially and adversely affected and, as a result, our financial condition and results of operations could be materially and adversely affected.27Terrorist attacks aimed at energy operations could adversely affect our business.The continued threat of terrorism and the impact of military and other government action have led and may lead to further increased volatility inprices for oil and natural gas and could affect these commodity markets or the financial markets used by us. In addition, the U.S. government has issuedwarnings that energy assets may be a future target of terrorist organizations. These developments have subjected oil and natural gas operations to increasedrisks. Any future terrorist attack on our facilities, customer facilities, the infrastructure depended upon for transportation of products, and, in some cases, thoseof other energy companies, could have a material adverse effect on our business.We are exposed to operating hazards and uninsured risks.Our oil and natural gas exploration and production activities are subject to the operating risks and hazards associated with drilling for andproducing oil and natural gas, including fires, explosions and blowouts; negligence of personnel; inclement weather; equipment or pipeline failure;abnormally pressured formations; and environmental pollution. These events may result in substantial losses or costs to our Company, including losses andcosts resulting from injury or loss of life; severe damage to or destruction of property, natural resources or equipment; pollution or environmental damage;clean-up responsibilities; regulatory investigations; penalties and/or suspension of operations; or fees and other expenses incurred in the prosecution ordefense of litigation relating to such events.In accordance with customary industry practices, we maintain insurance against some, but not all, of these risks. Our insurance may not be adequateto cover all losses or liabilities. We do not carry business interruption insurance, and we cannot fully insure against pollution and environmental risks. Wemay elect not to carry certain types of insurance if our management believes that the cost of available insurance is excessive relative to the risks presented.The occurrence of an event not fully covered by insurance could have a material adverse effect on our financial condition and results of operations. Theimpact of natural disasters or weather events in the areas where we operate has resulted in escalating insurance costs and less favorable coverage terms. Lossesand liabilities arising from uninsured or underinsured events may have a material adverse effect on our financial condition and operations, including the lossof our total investment in a particular prospect.A failure of technology systems, data breach or cyberattack could materially affect our operations.Our information technology systems may be vulnerable to security breaches, including those involving cyberattacks using viruses, worms or otherdestructive software, process breakdowns, phishing or other malicious activities, or any combination of the foregoing. Such breaches could result inunauthorized access to information, including customer, employee, or other confidential data. We do not carry insurance against these risks, although we doinvest in security technology, perform penetration tests, and design our business processes to attempt to mitigate the risk of such breaches. However, therecan be no assurance that security breaches will not occur. Moreover, the development and maintenance of these measures requires continuous monitoring astechnologies change and security measures evolve. We have experienced, and expect to continue to experience, cyber security threats and incidents, none ofwhich has been material to us to date. However, a successful breach or attack could have a material negative impact on our operations or business reputationand subject us to consequences such as litigation and direct costs associated with incident response.Information technology solution failures, network disruptions, breaches of data security and cyberattacks could disrupt our operations by causingdelays, impeding processing of transactions and reporting financial results, resulting in the unintentional disclosure of customer, employee or ourinformation, or damage to our reputation. A system failure, data security breach or cyberattack could have a material adverse effect on our financialcondition, results of operations or cash flows. In the past, we have experienced data security breaches resulting from unauthorized access to our e-mailsystems, which to date have not had amaterial impact on our business; however, there is no assurance that such impacts will not be material in the future.We may not be able to keep pace with technological developments in the industry.The oil and natural gas industry is characterized by rapid and significant technological advancements and introductions of new products andservices using new technologies. As others use or develop new technologies, we may be placed at a competitive disadvantage or competitive pressures mayforce us to implement those new technologies at substantial costs. In addition, other oil and natural gas companies may have greater financial, technical, andpersonnel resources that allow them to enjoy technological advantages and, in the future, may allow them to implement new technologies before we are in aposition to do so. We may not be able to respond to these competitive pressures and implement new technologies on a timely basis or at an acceptable cost. Ifone or more of the technologies used now or in the future were to become obsolete or if we are unable to use the most advanced commercially availabletechnology, the business, financial condition, and results of operations could be materially adversely affected.28We have limited management and staff and may be dependent upon partnering arrangements.As of December 31, 2018, we had 39 full-time employees. We leverage the services of independent consultants and contractors to perform variousprofessional services, including engineering, oil and natural gas well planning and supervision, and land, legal, environmental, accounting and tax services.We also pursue alliances with partners in the areas of geological and geophysical services and prospect generation, evaluation and prospect leasing.Our dependence on third-party consultants and service providers creates a number of risks, including but not limited to, the possibility that suchthird parties may not be available to us as and when needed and the possibility that we may not be able to properly control the timing and quality of workconducted with respect to our projects. If we experience significant delays in obtaining the services of such third parties or poor performance by such parties,our results of operations and stock price could be materially adversely affected.Our business may suffer with the loss of key personnel or changes to our Board of Directors.We depend to a large extent on the services of certain key management personnel and other executive officers and key employees. These individualshave extensive experience and expertise in evaluating and analyzing producing oil and natural gas properties and drilling prospects, maximizing productionfrom oil and natural gas properties, marketing oil and natural gas production and developing and executing financing and hedging strategies. The loss of anyof these individuals could have a material adverse effect on operations. We do not maintain key-man life insurance with respect to any of our employees. Oursuccess will be dependent on our ability to continue to employ and retain skilled technical personnel.We have an active board of directors that meets several times throughout the year and is intimately involved in the business and the determinationof various operational strategies. Members of our board of directors work closely with management to identify potential prospects, acquisitions and areas forfurther development. If any directors resign or become unable to continue in their present role, it may be difficult to find replacements with the sameknowledge and experience and as a result, operations may be adversely affected.We may be subject to risks in connection with acquisitions, and the integration of significant acquisitions may be difficult. Our business strategy is based on our ability to acquire additional reserves, oil and natural gas properties, prospects and leaseholds. Significantacquisitions and other strategic transactions may involve risks, including:•diversion of our management’s attention to evaluating, negotiating and integrating significant acquisitions and strategic transactions;•challenge and cost of integrating acquired operations, information management and other technology systems and business cultures with those ofours while carrying on our ongoing business;•difficulty associated with coordinating geographically separate organizations;•challenge of attracting and retaining capable personnel associated with acquired operations; and•failure to realize the full benefit that we expect in estimated proved reserves, production volume, cost savings from operating synergies or otherbenefits anticipated from an acquisition, or to realize these benefits within the expected time frame.The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business. Members of our seniormanagement and other staff may be required to devote considerable amounts of time to the integration process, which will decrease the time they will have tomanage our business. If our senior management and staff are not able to effectively manage the integration process, or if any significant business activitiesare interrupted as a result of the integration process, our business could suffer.We may face difficulties in securing and operating under authorizations and permits to drill, complete or operate our wells.The continued growth in oil and natural gas exploration in the United States has drawn intense scrutiny from environmental and community interestgroups, regulatory agencies and other governmental entities. As a result, we may face significant opposition to, or increased regulation of, our operations, thatmay make it difficult or impossible to obtain permits and other needed authorizations to drill, complete or operate, which could result in operational delaysor otherwise make oil and natural gas exploration more costly or difficult.29Our operations are substantially dependent on the availability of water. Restrictions on our ability to obtain water may have an adverse effect on ourfinancial condition, results of operations and cash flows.Water is an essential component of deep shale oil and natural gas production during both the drilling and hydraulic fracturing processes.Historically, we have been able to purchase water from local land owners for use in our operations. However, Texas has endured severe drought conditionsover the past several years. These drought conditions have led governmental authorities to restrict the use of water subject to their jurisdiction for hydraulicfracturing to protect local water supplies. If we are unable to obtain water to use in our operations from local sources, we may be unable to produce oil andnatural gas economically, which could have an adverse effect on our financial condition, results of operations and cash flows. Legislative and regulatory initiatives related to global warming and climate change could have an adverse effect on our operations and the demand for oiland natural gas.The EPA has determined that emissions of carbon dioxide, methane and other “greenhouse gases,” or “GHGs,” endanger public health and theenvironment because emissions of such gases are, according to the EPA, contributing to climatic changes. Based on these findings, the EPA, under the CleanAir Act, has adopted and implemented regulations to restrict emissions of greenhouse gases.In addition, the U.S. Congress has from time to time considered adopting legislation to reduce GHG emissions and almost one-half of the states havealready taken legal measures to reduce GHG emissions, primarily through the planned development of GHG emission inventories and/or regional GHG capand trade programs. Most of these GHG cap and trade programs work by requiring major sources of emissions, such as electric power plants, or majorproducers of fuels, such as refineries and natural gas processing plants, to acquire and surrender emission allowances. The number of allowances available forpurchase is reduced each year in an effort to achieve the overall GHG emission reduction goal.The adoption of legislation or regulatory programs to reduce GHG emissions could require us to incur increased operating costs, such as costs topurchase and operate emissions control systems, to acquire emissions allowances or comply with new regulatory or reporting requirements. Any suchlegislation or regulatory programs could also increase the cost of consuming, and thereby reduce demand for, the oil, natural gas and NGLs we produce.Consequently, legislation and regulatory programs to reduce GHG emissions could have an adverse effect on our business.Legislative and regulatory initiatives relating to hydraulic fracturing could result in increased costs and additional operating restrictions or delays in thecompletion of oil and natural gas wells.Hydraulic fracturing is an important and common practice that is used to stimulate production of natural gas and/or oil from dense subsurface rockformations, and we routinely implement hydraulic fracturing techniques in many of our drilling and completion programs. The process is typically regulatedby state oil and natural gas commissions, but the EPA, under the federal Safe Drinking Water Act (“SDWA”), has asserted federal regulatory authority overcertain hydraulic fracturing activities involving diesel fuel.At the state level, several states have adopted or are considering legal requirements that could impose more stringent permitting, disclosure and wellconstruction requirements on hydraulic fracturing activities. Additionally, local government may seek to adopt ordinances within their jurisdictionsregulating the time, place and manner of drilling activities in general or hydraulic fracturing activities in particular or prohibit the performance of welldrilling in general or hydraulic fracturing in particular. If new or more stringent federal, state, or local legal restrictions relating to the hydraulic fracturingprocess are adopted in areas where we operate, we could incur potentially significant added costs to comply with such requirements, experience delays orcurtailment in our exploration, development, or production activities, and perhaps even be precluded from drilling wells.In addition, a number of federal agencies are analyzing, or have been requested to review, environmental issues associated with hydraulic fracturing.These types of studies, depending on their degree of pursuit and any meaningful results obtained, could spur initiatives to further regulate hydraulicfracturing under the SDWA or other regulatory mechanisms.Current water regulation relating to hydraulic fracturing, particularly water source and groundwater regulation, could result in increased operationalcosts, operating restrictions and delays.Hydraulic fracturing can require between three to five million gallons of water per horizontal well. We may face regulatory concerns in both thesourcing and the discharge of water used in hydraulic fracturing.30In order to source water from the local water supply for hydraulic fracturing we may need to pay premium rates and be subject to a lower priority ifthe local area becomes subject to water restrictions. We may also seek water from alternative providers supporting the hydraulic fracturing industry. If wehave an insufficient water supply, we will be unable to engage in hydraulic fracturing until such supply is located.In addition, hydraulic fracturing results in water discharges that must be treated and disposed of in accordance with applicable regulatoryrequirements. Environmental regulations governing the withdrawal, storage and use of surface water or groundwater necessary for hydraulic fracturing mayincrease operating costs and cause delays, interruptions or termination of operations, the extent of which cannot be predicted, and all of which could have anadverse effect on operations and financial performance. Our ability to remove and dispose of water will affect production, and the cost of water treatment anddisposal may affect profitability. The imposition of new environmental initiatives and regulations could also include restrictions on our ability to conducthydraulic fracturing or disposal of produced water, drilling fluids and other substances associated with the exploration, development and production of oiland natural gas.We are subject to numerous federal, state, local and other laws and regulations that can adversely affect the cost, manner or feasibility of doing business.Our operations are subject to extensive federal, state and local laws and regulations relating to the exploration, production and sale of oil and naturalgas. Future laws or regulations, any adverse change in the interpretation of existing laws and regulations or our failure to comply with existing legalrequirements may result in substantial penalties and harm to our business and could affect our results of operations and financial condition. We may berequired to make large and unanticipated capital expenditures to comply with applicable laws and governmental regulations, including regulationsgoverning land use restrictions; lease permit restrictions; drilling bonds and other financial responsibility in connection with operations, such as pluggingand abandonment bonds; well spacing; unitization and pooling of properties; safety precautions; operational reporting; eminent domain and governmenttakings; and taxation.Our operations could be significantly delayed or curtailed and our cost of operations could significantly increase as a result of future changes infederal, state or local laws, regulatory requirements or restrictions.We may incur substantial expenses, and potentially resulting liabilities, to ensure our operations are in compliance with environmental laws andregulations.Our oil and natural gas operations are subject to stringent federal, state and local laws and regulations relating to environmental protection,including laws and regulations relating to the release and disposal of materials into the environment. These laws and regulations, among other things, requirea permit to be obtained before drilling or facility mobilization and commissioning, or injection or disposal commences; limit or prohibit drilling activities oncertain lands lying within wilderness, wetlands and other protected areas; and impose substantial liabilities for pollution resulting from our operations.Changes in environmental laws and regulations occur frequently and any changes that result in more stringent or costly waste handling, storage,transport, disposal or cleanup requirements could require us to make significant expenditures to reach and maintain compliance and may otherwise have amaterial adverse effect on our industry in general and on our own results of operations, competitive position or financial condition. Under theseenvironmental laws and regulations, we could be held strictly liable for the removal or remediation of previously released materials or propertycontamination regardless of whether we were responsible for the release or contamination or if our operations met previous standards in the industry at thetime they were performed.Risks Relating to Our SecuritiesThe market price of our common stock may be volatile, which may depress the market price of our securities and result in substantial losses to investors ifthey are unable to sell their securities at or above their purchase price.The market price of our securities may fluctuate substantially for the foreseeable future, primarily due to a number of factors, including:•our status as a company with a limited operating history and limited revenues to date, which may make risk-averse investors more inclined to selltheir shares on the market more quickly and at greater discounts than would be the case with the shares of a seasoned issuer in the event of negativenews or lack of progress;•announcements of technological innovations or new products by us or our existing or future competitors;31•the timing and development of our products;•general and industry-specific economic conditions;•actual or anticipated fluctuations in our operating results;•liquidity;•actions by our stockholders;•changes in our cash flow from operations or earnings estimates;•changes in market valuations of similar companies;•our capital commitments;•the sale or attempted sale or a large amount of common stock into the market; and•the loss of any of our key management personnel.Many of these factors are beyond our control and may decrease the market price of our common stock, regardless of our operating performance.We may issue shares of our preferred stock with greater rights than our common stock.Our articles of incorporation authorize our board of directors to issue one or more series of preferred stock and set the terms of the preferred stockwithout seeking any further approval from our stockholders. Any preferred stock that is issued may rank ahead of our common stock, in terms of dividends,liquidation rights and voting rights. We currently have two series of preferred stock issued and outstanding, which ranks senior to our common stock withrespect to dividends and rights on the liquidation, dissolution or winding up of the Company, amongst other preferences and rights.There may be future dilution of our common stock.We have a significant amount of derivative securities outstanding, which upon exercise or conversion, would result in substantial dilution of ourcommon stock. To the extent outstanding restricted stock units, warrants or options to purchase our common stock under our 2016 Omnibus Incentive Plan orour 2012 Equity Incentive Plan are exercised, the price vesting triggers under the performance shares granted to our executive officers are satisfied, oradditional shares of restricted stock are issued to our employees, holders of our common stock will experience dilution. Furthermore, the sale of additionalequity or convertible debt securities could result in further dilution to our existing stockholders and cause the price of our outstanding securities to decline.We do not expect to pay dividends on our common stock.We have never paid dividends with respect to our common stock, and we do not expect to pay any dividends, in cash or otherwise, in the foreseeablefuture. We intend to retain any earnings for use in our business. In addition, our credit facilities and preferred stock prohibit us from paying any dividends. Inthe future, we may agree to further restrictions. Any return to stockholders will therefore be limited to the appreciation of their stock. Securities analysts may not initiate coverage of our shares or may issue negative reports, which may adversely affect the trading price of the shares.Securities analysts may not provide research reports on our Company. If securities analysts do not cover our Company, the lack of coverage mayadversely affect the trading price of our shares. The trading market for our shares will rely in part on the research and reports that securities analysts publishabout us and our business. If one or more of the analysts who cover our Company downgrades our shares, the trading price of our shares may decline. If one ormore of these analysts ceases to cover our Company, we could lose visibility in the market, which, in turn, could also cause the trading price of our shares todecline. Further, because of our small market capitalization, it may be difficult for us to attract securities analysts to cover our Company, which couldsignificantly and adversely affect the trading price of our shares.Anti-takeover effects of certain provisions of Nevada state law hinder a potential takeover of our Company.The existence of certain provisions under Nevada law could delay or prevent a change in control of the Company, which could adversely affect theprice of our common stock. Additionally, Nevada law imposes certain restrictions on mergers and other business combinations between us and any holder of10% or more of our outstanding common stock.Item 1B. Unresolved Staff Comments32As a smaller reporting company, we are not required to provide disclosure pursuant to this Item.Item 3. Legal ProceedingsWe may from time to time be involved in various legal actions arising in the normal course of business. However, we do not believe there is anycurrently pending litigation that could have, individually or in the aggregate, a material adverse effect on our results of operations or financial condition.Item 4. Mine Safety DisclosuresNot applicable.33PART IIItem 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity SecuritiesMarket InformationOur common stock trades on the NYSE American under the symbol “LLEX.”HoldersAs of March 5, 2019, there were 147 holders of record of our common stock.Dividend PolicyHolders of shares of preferred stock are entitled to receive cumulative preferential dividends, payable and compounded quarterly in arrears.Dividends on our preferred stock are payable, at the Company’s option, (i) in cash, (ii) in kind, or (iii) in a combination thereof. In 2018, we did not pay cashdividends on our outstanding preferred stock. As of December 31, 2018, the Company accrued a cumulative balance of $10.7 million of paid-in-kindsdividends. See Note 13 to our Consolidated Financial Statements.We have never paid cash dividends on our common stock and do not anticipate paying dividends in the foreseeable future. Our current businessplan is to retain any future earnings to finance the expansion and development of our business. Any future determination to pay cash dividends will be at thediscretion of our Board of Directors, and will be dependent upon our financial condition, results of operations, capital requirements and other factors as ourBoard of Directors may deem relevant at that time.We are currently restricted from declaring dividends pursuant to the terms of our Second Lien Credit Agreement and outstanding preferred stock. OurRevolving Credit Agreement also includes customary limitations on our ability to pay dividends. See Item 7. Management’s Discussion and Analysis ofFinancial Condition and Results of Operations - “Liquidity and Capital Resources” for further information.Recent Sales of Unregistered SecuritiesNoneEquity Compensation Plan InformationThe following table summarizes information regarding the number of shares of our common stock that are available for issuance under all of ourexisting equity compensation plans as of December 31, 2018:Plan Category Number of Securitiesto be Issued UponExercise ofOutstanding Options,Warrants and Rights(a) Weighted-AverageExercise Price ofOutstanding Options,Warrants and Rights(b) Number of SecuritiesRemaining Availablefor Future IssuanceUnder EquityCompensation Plans(excluding securitiesreflected in column (a))(c)Equity compensation plans approved by security holders 5,031,578 $2.67 6,692,285Equity compensation plans not approved by security holders — — —Total 5,031,578 $2.67 6,692,285For additional information regarding the Company’s benefit plans and share-based compensation expense, see Note 15 in Notes to ConsolidatedFinancial Statements.34Item 6. Selected Financial DataAs a smaller reporting company, we are not required to provide the information required by this Item 6.Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes includedelsewhere in this Annual Report. The following discussion includes forward-looking statements, including, without limitation, statements relating to ourplans, strategies, objectives, expectations, intentions and resources. Our actual results could differ materially from those discussed in these forward-lookingstatements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this Annual Report.Our CompanyWe are a focused Permian Basin company engaged in the exploration, production, development, and acquisition of oil, natural gas, and NGLs, withall of our properties and operations in the Delaware Basin, with a focus on Liquids. In each of the past two years, over 90% of our revenues have beengenerated from the sale of Liquids (crude oil and NGLs). We have a highly contiguous acreage position with significant stacked-pay potential, which webelieve includes at least five to seven productive zones and approximately 1,175 future drilling locations.Our focus is growing our Company and increasing value to our stockholders by generating cash flow from our existing acreage base, as well asthrough delineation drilling on our acreage and future acquisitions, acreage exchanges and organic leasing.2018 Operational and Financial Highlights•Increased our net sales production volumes by 215% to 4,965 BOE/d, as compared to 2017;•Increased our proved reserves by 273% to 42,707 MBOE (69% Liquids), as compared to 2017;•Averaged 8,081 net BOE/d from December 25 through December 31, 2018, achieving our 2018 year-end exit rate target of 8,000 BOE/d;•Increased our net acreage in the Delaware Basin to 28,500 gross (20,400 net) acres, where we have increased our average operated working interest to76% and our operatorship to approximately 99% through acquisitions, acreage exchanges, and organic leasing;•Entered into several significant infrastructure and sales agreements, including agreements providing for crude gathering and transportation andwater gathering and water disposal infrastructure, which we believe will provide us significant cost savings in 2019, advantaged crude pricing in theGulf Coast markets, and more consistent production flowing to sales;•Reducing our crude transportation costs from approximately $5.15 per Bbl at December 31, 2018, to approximately $0.75 per Bbl in March 2019through our infrastructure and sales agreements;•Reducing our salt water disposal costs from approximately $2.50 per Bbl to approximately $0.49 as of December 2018 through our infrastructureand sales agreements;•Entered into a new $500 million senior secured revolving credit facility with an initial borrowing base of $95 million (which was subsequentlyincreased to $108 million in December 2018 as a result of our scheduled borrowing base redetermination), that re-financed our first-lien term loanwith Riverstone Credit Partners, LLC and lowered our cost of capital and enhanced our liquidity;•Improved our capital structure through the conversion of approximately $68.0 million of our Second Lien Loans under our Second Lien CreditAgreement to a combination of preferred stock and common stock, of which 57.5% was converted into a new class of Series D Preferred Stock and42.5% was converted into common stock based on a $5.00 per share conversion price, resulting in approximately $2.4 million in annualized PIKinterest expense savings as a result of the conversion and also through the issuance of 25,000 shares of Series C-2 9.75% Convertible ParticipatingPreferred Stock for $25.0 million; and •Decreased our general and administrative expense by 33% to $33.3 million in 2018 from $49.9 million in 2017.352019 Updates•Improved our capital structure through the exchange and conversion of our outstanding Second Lien Loans under our Second Lien CreditAgreement to a combination of two newly created series of preferred stock (Series E Preferred Stock and Series F Preferred Stock) and common stock;•Eliminated the conversion features and voting rights on our existing Series C Preferred Stock and Series D Preferred Stock and reduced theredemption premium for the Series C Preferred Stock;•Increased the number of directors constituting our Board of Directors by two directors (to total eleven), which such vacancies created by the increasewill be filled by the person designated by the holders of the Series E Preferred Stock and the person designated by the holders of the Series FPreferred Stock; and•Realized a 16% increase our borrowing base from $108 million to $125 million on March 1, 2019, as a result of our accelerated borrowing baseredetermination.Production GrowthOur producing properties are all located in the Delaware Basin of the Permian Basin in Winkler, Loving and Reeves Counties, Texas and LeaCounty, New Mexico. As a result of our horizontal development efforts, in 2018, we increased our net sales production volumes by 215% to 4,965 BOE/d in2018 from 1,576 BOE/d in 2017.Reserves GrowthAs a result of our development efforts, acreage exchanges and acquisitions, our proved reserves increased 273% to approximately 42,707 MBOE asof December 31, 2018. Our reserves are Liquids rich, being comprised of approximately 69% Liquids (50% oil and 19% NGLs) and 31% natural gas. Webelieve that our current reserves represent only a small portion of the resource potential within our acreage, and we plan to further expand our inventorythrough continued delineation of our acreage both geographically and geologically and by drilling and completing additional prospective benches withinour acreage position.2018 Acreage TransactionsIn 2018, we completed several acquisitions and acreage exchanges which increased our gross and net acreage position and proved reserves. As aresult of our acquisitions, acreage exchanges and organic leasing, we increased our acreage position by 29% to 28,500 gross (20,400 net) acres and increasedour operated working interest to an average of 76% and operated properties to approximately 99% of our acreage.Below is a summary of some of the key transactions we completed in 2018:•In February 2018, we completed the acquisition of certain leasehold interests and other oil and gas assets in Loving and Winkler Counties, Texasfrom VPD Texas, L.P., for total cash consideration of approximately $10.7 million;•In March 2018, we closed the purchase of certain oil and natural gas properties and related assets in the Delaware Basin in Lea County, New Mexico,from OneEnergy Partners Operating, LLC, for stock and cash consideration valued at approximately $64.9 million, before acquisition costs andcustomary purchase price adjustments;•In May 2018, we completed the acquisition of certain leasehold interests and other oil and gas assets, including unproved leaseholds and non-consent proved producing oil and natural gas properties in Loving and Winkler Counties, Texas, from Anadarko for cash consideration of $7.1million;•In June 2018, we closed a Leasehold Exchange Agreement with Felix Energy Holdings II, LLC (“Felix”) to exchange certain leasehold interestlocated in Loving and Winkler Counties, Texas, owned by us for certain leasehold interest located in the same counties owned by Felix andacquired certain working interests in two wells operated by us in Winkler County, Texas;•In August 2018, we closed an acre-for-acre trade of approximately 750 net acres in the Delaware Basin in Lea County, New Mexico, and assumed theworking interests in four wells, pursuant to a Leasehold Exchange Agreement with Ameredev II, LLC. This exchange agreement increased our grossworking interest in our Delaware Basin acreage in New Mexico up to 100% in core areas of our operations; and•In October 2018, we acquired the position of Southwest Royalties, Inc., our largest non-operating working interest partner in our core area ofoperations, which included approximately 570 net acres and 349 BOE/d production, for total cash consideration of $17.0 million.36Access to InfrastructureWe entered into several significant infrastructure agreements to support the sales of our production of Liquids and natural gas, includingtransportation and sales agreements and salt water gathering and disposal agreements. We believe these agreements secure us cost effective movement of ourLiquids and natural production in Texas and Mexico.In May 2018, we entered into a crude oil gathering agreement and option agreement with Salt Creek Midstream, LLC (“SCM”). The crude oilgathering agreement (the “Gathering Agreement”) enables SCM to (i) design, engineer, and construct a gathering system which will provide gatheringservices for our crude oil and (ii) gather our crude oil on the gathering system in certain production areas located in Winkler and Loving Counties, Texas andLea County, New Mexico. The Gathering Agreement has a term of 12 years that automatically renews on a year to year basis until terminated by either party.In the Option Agreement, we granted an option to SCM to provide certain midstream services related to natural gas in Winkler and Loving Counties, Texasand Lea County, New Mexico, subject to expiration and terms of our existing gas agreement. The Option Agreement has a term commencing May 21, 2018and terminating on January 1, 2027, pursuant to its one-time option. As consideration for this option, we received a one-time of payment $35 million fromSCM.In July 2018, the Company entered into a water gathering and disposal agreement and various ancillary agreements with SCM Water, LLC (“SCMWater”), an affiliate of SCM. The agreements support our strategic efforts to secure long-term infrastructure solutions for our operations in the DelawareBasin. The water gathering project will complement our existing water disposal infrastructure, and we have reserved the right to recycle our produced water.SCM Water will commence, upon receipt of regulatory approval, to build out new gathering and disposal infrastructure to our current and future welllocations in Lea County, New Mexico, and Winkler County, Texas. All future capital expenditures will be funded by SCM Water and will be designed toaccommodate the water produced by our operations. We will act as contract operator of SCM Water’s salt water disposal wells (SWD). We have sold to SCMWater for cash consideration of up to $20 million, with $15 million upfront, an option to acquire our existing water infrastructure, a system which iscomprised of approximately 14 miles of pipeline and one SWD. We anticipate that the majority of our water will be disposed through the future SCM Watersystem at a competitive gathering rate under the agreement.In August 2018, we secured pricing into a crude oil transportation and sales agreement with SCM Crude, LLC, an affiliate of SCM, to secure firmpipeline capacity on a long-haul crude oil pipeline to the Gulf Coast. Under the terms of the agreement, 6,000 Bbl/d of firm capacity will be delivered to theGulf Coast for one year, beginning on July 1, 2019. During the next four years, from July 1, 2020 through June 30, 2024, firm capacity will adjust to 5,000Bbl/d. All volumes will have Gulf Coast pricing based on Magellan East Houston pricing throughout the 5-year term. We also have the ability to expand ourcapacity during the term of the agreement as we believe having flexibility with barrels in the future is desirable.In 2017, we entered into our long-term gas gathering and processing agreement with an affiliate of Lucid Energy Group (“Lucid”) to support ourdrilling program. Lucid has commenced receiving, gathering, and processing our gas production for certain areas in Winkler and Loving Counties, Texas andLea County, New Mexico. Our agreement with Lucid secures sufficient term and capacity in the production areas committed to the agreement. Pursuant to ouragreements with Lucid, there are no minimum volume commitments and all gas transported via Lucid is sent to Lucid’s 310 million cubic feet per day RedHills Natural Gas Process Complex located in Lea County, New Mexico, where it is treated and processed then transported pursuant to transportationcontracts through various long-haul pipelines with access to west coast markets, gulf coast markets, Permian markets and MidCon markets. Lucid isresponsible for all capital costs in New Mexico and Texas, other than gathering lines from wellhead to various Lucid receipt points.We believe these infrastructure and sales agreements will significantly reduce our operational costs in 2019 and future years, as well as moreefficiently move our production to market.Financial ResourcesWe have increased our liquidity position through several transactions in 2018, which we believe puts us in a financial position to fund our drillingand completion operations for 2019. On October 10, 2018, we announced our entry into the Revolving Credit Agreement, a new five-year senior securedreserve based revolving credit facility with an initial borrowing base of $95 million, that refinanced our first-lien term loan with Riverstone Credit Partners,LLC. The Company enhanced liquidity by $60 million, including $35 million in initial capacity under the Revolving Credit Agreement and $25 millionraised through a tack-on to the outstanding Series C preferred stock. The Company reduced interest expense associated with the Riverstone First Lien Loansby 4.00%, from LIBOR plus 6.75% to LIBOR plus 2.75%. On December 7, 2018, the Company’s borrowing base under the Revolving Credit Agreement wasincreased to $108 million as a result of its regularly scheduled fall redetermination process.37Additionally, the Company converted approximately $68 million of the loans under its Second Lien Credit Agreement (as defined below) to acombination of preferred stock and common stock, of which 57.5% was converted into a new class of Series D preferred stock and 42.5% was converted intocommon stock based on a $5.00 per share conversion price. The Company realized approximately $2.4 million in annualized PIK interest expense savings asa result of the conversion.The Company had $54.1 million in liquidity as of year-end 2018, including $33 million in availability under the Revolving Credit Agreement and$21.1 million in cash. We believe that our existing liquidity, Revolving Credit Agreement, and cash flow from operations will provide sufficient capital toexecute our business plan for 2019, and we are currently targeting cash flow neutrality in 2019.2019 Second Lien Term Loan Conversion and Borrowing Base RedeterminationOn March 5, 2019, the Company agreed to convert the remaining Second Lien Loans with a face value of approximately $133.6 million for acombination of preferred stock and common stock, of which $60.0 million was converted into a new class of convertible preferred stock (Series E PreferredStock), $55.0 million was converted into a new class of non-convertible preferred stock (Series F Preferred Stock), and $18.6 million was converted intocommon stock based on a $1.88 per share issuance price. The conversion of the Second Lien Loans in their entirety substantially improves our capitalstructure, resulting in the elimination of debt repayments and quarterly interest obligations on the Second Lien Loans. Subsequent to the conversion, ourlong-term debt consists solely of our Revolving Credit Agreement with no scheduled principle requirements until maturity in 2021.Additionally, the conversion features and voting rights on the existing Series C Preferred Stock and Series D Preferred Stock were eliminated inexchange for the issuance of approximately 7.8 million shares of our common stock. The potential dilution of our common stockholders resulting from theconversion of the Second Lien Loans, the Series C Preferred Stock and Series D Preferred Stock was reduced from approximately 53.5 million shares ofcommon stock to approximately 41.6 million shares of common stock, including the issuance of approximately 17.6 million shares of common stock and theeffect of the possible conversion of the Series E Preferred Stock. The newly created Series E Preferred Stock is the only potentially dilutive instrumentoutstanding.Concurrently, we accelerated our May Revolving Credit borrowing base redetermination resulting in an increase in our borrowing base to $125.0million as of March 1, 2019. We added an additional borrowing base redetermination in July that will include results of our 2019 drilling activity.Subsequent redeterminations are scheduled in November and May of each year. See "Subsequent Events" below for further information regarding our 2019 recapitalization transactions. Market Conditions and Commodity PricingOur financial results depend on many factors, including the price of oil, natural gas and NGLs and our ability to market our production oneconomically attractive terms. We generate the majority of our revenues from sales of Liquids and, to a lesser extent, the sale of natural gas. The prices ofthese products are critical factors to our success and volatility in these prices could impact our results of operations. In addition, our business requiressubstantial capital to acquire properties and develop our non-producing properties. Declines in the prices of oil, natural gas and NGLs would reduce ourrevenues and result in lower cash inflow which would make it more difficult for us to pursue our plans to acquire new properties and develop our existingproperties. Declines in oil, natural gas, and NGL prices may also adversely affect our ability to obtain additional funding on favorable terms.We believe that we are well-positioned to manage the challenges presented in a lower pricing environment, and we can execute our planned 2019development program and capital expenditures with our current cash on hand, proceeds from operations and draws from the existing revolving credit facilityas required.Results of OperationsDuring the year ended December 31, 2018, we worked actively to increase our natural gas transportation, processing, and sales capacity for ourexpanding production. We successfully brought online our fourth Wolfcamp horizontal well. This well is our most geologically eastern well and is theclosest well to the Central Basin Platform in our current acreage position. As of December 31, 2018, we have production flowing from our 24 horizontal wellsand 14 legacy vertical wells.Year Ended December 31, 2018 Compared to Year Ended December 31, 201738The following sets forth selected revenue and sales data for the years ended December 31, 2018 and 2017: For the Year EndedDecember 31, 2018 2017 Change %ChangeNet sales volumes: Oil (Bbls)1,089,724 371,993 717,731 193 %Natural gas (Mcf)2,855,739 776,164 2,079,575 268 %NGL (Bbls)246,425 73,875 172,550 234 %Total (BOE)1,812,106 575,229 1,236,877 215 %Average daily sales volume (BOE/d)4,965 1,576 3,389 215 %Average realized sales price: Oil (per Bbl)$53.26 $47.92 $5.34 11 %Natural gas (per Mcf)1.84 2.74 (0.90) (33)%NGL (per Bbl)28.11 22.49 5.62 25 %Total (per BOE)$38.75 $37.57 $1.18 3 %Oil, natural gas and NGL revenues (in thousands): Oil revenue$58,042 $17,826 $40,216 226 %Natural gas revenue5,246 2,125 3,121 147 %NGL revenue6,928 1,661 5,267 317 %Total$70,216 $21,612 $48,604 225 %RevenuesTotal revenue increased $48.6 million to $70.2 million for the year ended December 31, 2018, as compared to $21.6 million for the year endedDecember 31, 2017, representing a 225% increase. Our significant increase in total revenue in 2018 is primarily attributable to an additional 15 wells beingplaced on production in the Delaware Basin during 2018. Total sales volume climbed 215% to 1,812,106 BOE during 2018, compared to 575,229 BOE in2017, an increase of 1,236,877 BOE.The Company’s increase in revenues in 2018 was partially offset by increased crude transportation costs, which are deducted from the Company’sgross revenue for crude oil sales. For the year ended December 31, 2018, transportation costs related to crude oil sales increased by $3.7 million to $4.7million, compared to $1.0 million for the same period in 2017. The Company expects to lower its crude transportation and gathering costs in 2019 as a resultof increased pipeline transportation of the Company’s crude oil under the Gathering Agreement with SCM. The Company anticipates savings ofapproximately $4.50 per Bbl, equal to a decrease of approximately 87.4% in transportation costs utilizing pipe gathering as opposed to trucking.Oil and Natural Gas Production Costs, Production Taxes, Depreciation, Depletion, and AmortizationOur production during the year ended December 31, 2018, increased from 575,229 BOE in 2017 to 1,812,106 BOE in 2018, an increase of 215%.This increase in production was primarily attributable to 15 additional wells being completed and placed on production.The following table shows a comparison of production costs for the years ended December 31, 2018 and 2017:39 For the Year EndedDecember 31, 2018 2017 Change %ChangeOperating Expenses per BOE: Production costs (1)$7.64 $10.14 $(2.50) (25)%Gathering, processing and transportation1.87 2.07 (0.20) (10)%Production taxes2.05 2.06 (0.01) (1)%General and administrative18.35 86.66 (68.31) (79)%Depreciation, depletion, amortization and accretion14.00 12.21 1.79 15 %Impairment of evaluated oil and natural gas properties— 18.27 (18.27) (100)%Total (BOE)$43.91 $131.41 $(87.50) (67)%Operating Expenses Production costs$13,843 $5,832 $8,011 137 %Gathering, processing and transportation3,392 1,191 2,201 185 %Production taxes3,709 1,187 2,522 212 %General and administrative33,251 49,851 (16,600) (33)%Depreciation, depletion, amortization and accretion25,367 7,025 18,342 261 %Impairment of evaluated oil and natural gas properties— 10,505 (10,505) (100)%Total Operating Expenses$79,562 $75,591 $3,971 5 %(1) Production costs include ad valorem taxes.Production CostsProduction costs increased by $8.0 million, or 137%, to $13.8 million for the year ended December 31, 2018 compared to $5.8 million for the yearended December 31, 2017, primarily due to an increase in production volumes. Our production costs on a per BOE basis decreased by $2.50, or 25%, from$10.14 per BOE for the year ended December 31, 2017 to $7.64 for the year ended December 31, 2018. The decreased production costs per BOE are reflectiveof higher product sales relative to saltwater disposal costs. Product sales were also higher relative to various other costs, particularly workovers and repairs,rentals, and testing.Gathering, Processing and Transportation Gathering, processing and transportation costs related to natural gas sales increased by $2.2 million to $3.4 million for the year ended December 31,2018, compared to $1.2 million during the same period in 2017. This cost increase was primarily the result of higher natural gas sales volumes. The costdecrease on a per BOE basis was due to lower gathering and treating rates during the year ended December 31, 2018.Production Taxes Production taxes increased by $2.5 million, or 212%, to $3.7 million for the year ended December 31, 2018, compared to $1.2 million for the yearended December 31, 2017, due to the increase in sales volumes. Our production taxes of $2.05 per BOE for the year ended December 31, 2018, had nomaterial variance from the $2.06 per BOE for the year ended December 31, 2017, which is a reflection of stable taxation rates in our areas of operation.General and Administrative ExpensesGeneral and administrative expenses (“G&A”) were $33.3 million during the year ended December 31, 2018, compared to $49.9 million during theyear ended December 31, 2017, a decrease of $16.6 million or 33%. The decrease in G&A was primarily due to a decrease of $8.3 million in bonuses paid in2018 offset by an increase of $4.1 million in professional and legal fees plus a significant decrease of $12.4 million in stock based compensation expense.The decrease of $12.4 million in stock based compensation was primarily attributed to $2.8 million in restricted stock bonuses granted to executive officersthat vested at grant date, $6.2 million in restricted stock granted to employees and non-employee directors in October 2017, $1.6 million in incrementalexpense associated with the modification of stock options awarded to former Chief Executive Officer in 2017 and $1.8 million in restricted stock and stockoptions granted to three new executive officers hired during the year ended December 31, 2017.40During the year ended December 31, 2018, the $9.0 million of stock based compensation includes primarily $5.4 million of amortized expense recognized onstock awards granted in prior years and $3.6 million of expense recognized on vested stock awards granted in 2018.Depreciation, Depletion, and AmortizationDepreciation, depletion, and amortization (“DD&A”) was $25.3 million during the year ended December 31, 2018, compared to $7.0 million duringthe year ended December 31, 2017, an increase of $18.3 million, or 261%. Our DD&A rate increased to $14.00 per BOE during the year ended December 31,2018, from $12.21 per BOE during the year ended December 31, 2017. DD&A expense increased due to a sales volume increase of 1,236,877 BOE or 215%from 575,229 BOE during the year ended December 31, 2017, to 1,812,106 BOE during the year ended December 31, 2018.Impairment of Evaluated Oil and Natural Gas PropertiesThere were no impairment charges for the year ended December 31, 2018. We recorded impairment charges of $10.5 million during the year endedDecember 31, 2017. Under the full cost method of accounting, we are required on a quarterly basis to determine whether the book value of our oil and naturalgas properties is less than or equal to the “ceiling,” based upon the expected after-tax present value of the future net cash flows discounted at 10% from ourproved reserves. Any excess of the net book value of our oil and natural gas properties over the ceiling must be recognized as a non-cash impairment expense.For the year ended December 31, 2017, higher capital expenditures with slower than expected development of proved reserves contributed to the excess ofnet book value of our oil and natural gas properties over the ceiling resulting in the recognition of an impairment charge of $10.5 million.Other Income and ExpenseThe following table shows a comparison of other income and expenses for the years ended December 31, 2018 and December 31, 2017: Years Ended December 31, 2018 2017 Variance % (In Thousands) Other income (expense): Other income$2 $18 $(16) (89)%Loss on early extinguishment of debt(20,370) — (20,370) (100)%Gain (loss) from commodity derivatives55 (1,063) 1,118 (105)%Gain (loss) from embedded derivatives58,343 (6,260) 64,603 (1,032)%Loss from conditionally redeemable preferred stock— (41) 41 (100)%Interest expense(32,827) (18,757) (14,070) 75 %Total other income (expense)$5,203 $(26,103) $31,306 (120)%Loss on Early Extinguishment of DebtOn October 10, 2018, we converted approximately $68.3 million of our Second Lien Credit Agreement into a combination of 39,254 shares of SeriesD Preferred Stock, stated value of $1,000 per share, and 5,952,763 shares of common stock. As a result of such transactions, we recorded a loss ofapproximately $12.3 million on early extinguishment of debt.Concurrently, we executed the Revolving Credit Agreement, from which we received proceeds of $60.0 million that were used to pay off theoutstanding balance of the Riverstone First Lien Credit Agreement totaling $57.0 million, including accrued interest and prepayment penalties. As a result ofthe prepayment of the Riverstone First Lien Credit Agreement, we recorded a loss of approximately $8.1 on early extinguishment of debt.Gain (Loss) from Commodity DerivativesGain on our commodity derivatives increased by $1.1 million or 105% during the year ended December 31, 2018, which primarily resulted from thefunction of fluctuations in the underlying commodity prices versus fixed hedge prices and the monthly41settlement of the hedged instruments. During the year ended December 31, 2018, we had unrealized net gains of $1.9 million on mark-to-market adjustmentson unsettled positions, which were partially offset by net losses of $1.9 million on cash settlement and resulted in a net gain of $55,000. During the yearended 2017, our net loss from commodity derivatives consisted primarily of net losses of $0.2 million on cash settlements and $0.9 million on mark-to-market adjustments on unsettled position.Gain (Loss) from Fair Value Changes of Debt Conversion and Warrant DerivativesThe change in fair values of derivative instruments consisted of a gain of $58.3 million during the year ended December 31, 2018, as compared to aloss of $6.3 million during the year ended December 31, 2017. The $58.3 million gain was primarily attributed to the change in fair value of embeddedderivatives resulting from the decrease of the Company’s stock price to $1.37 per share at December 31, 2018, as compared to $5.11 per share at December31, 2017, net of the embedded derivatives associated with the partial conversion of the Second Lien Loans on October 10, 2018.Interest ExpenseInterest expense was $32.8 million for the year ended December 31, 2018, compared to $18.8 million for the year ended December 31, 2017. For theyear ended December 31, 2018, we incurred interest expense of $3.0 million for quarterly interest payments and amortized debt issuance costs on theRiverstone First Lien Loans and the incremental bridge loans under the First Lien Credit Agreement, $12.2 million of paid-in-kind (“PIK”) interest, $14.4million related to amortized debt discount on our Second Lien Term Loan and $3.2 million of amortized debt issuance costs. During the year endedDecember 31, 2017, we incurred $18.8 million of interest expense relating to amortized debt issuance costs on debentures, convertible notes and non-convertible notes.Liquidity and Capital Resources We establish a capital budget at the beginning of each calendar year and review it throughout the course of the year. Our capital budgets are basedupon our estimate of internally generated sources of cash, as well as cash on hand and the available borrowing capacity of our Revolving Credit Agreement.We ended the year with $54.1 million of liquidity consisting of $33 million of availability under our Revolving Credit Agreement and $21.1million of cash and cash equivalents on hand. Accounts payable, which were $47.1 million as of December 31, 2018, have been reduced to $38.8 million asof March 4, 2019. We are focused on reducing payables in 2019 using cash flows from operation while continuing to execute its one rig drilling program andbringing more wells into production.As operator of over 99% of our properties, we have the ability to structure our capital budget to align with our existing and projected liquidity andcash flows. Our 2019 capital budget of approximately $40 million to $60 million includes a one rig drilling and completion program that we expect to fundwith cash on hand, cash flows from operations and current and future availability under our Revolving Credit Agreement. We will continually re-evaluate ourliquidity and projected cash flows and we may add additional drilling rigs, temporarily suspend drilling operations, or consider additional financing optionsas circumstance change.Our 2019 capital budget does not include acquisitions and leasing activities as we are unable to anticipate the acquisition or leasing opportunitiesthat will be available to us in the future.Actual capital expenditure levels may vary significantly due to many factors, including drilling results; oil, natural gas and NGL prices; industryconditions; the prices and availability of goods and services; and the extent to which properties are acquired or non-strategic assets are sold. We continue toscreen for attractive acquisition, leasing and acreage trade opportunities; however, the timing and size of such transactions are unpredictable. We believe wehave the operational flexibility to react quickly with our capital expenditures to changes in circumstances or fluctuations in our cash flows.We continuously monitor our liquidity needs, coordinate our capital expenditure program with our expected cash flows and projected debt-repayment schedule, and evaluate our available alternative sources of liquidity, including accessing debt and equity capital markets in light of current andexpected economic conditions. We believe that our liquidity position and ability to generate cash flows from our operations will be adequate to fund 2019operations and continue to meet our other obligations.42Our cash flows for the years ended December 31, 2018 and 2017, are presented in the following table: Year ended December 31, 2018 2017 (in thousands)Operating activities$92,132 $(7,243)Investing activities(242,935) (147,502)Financing activities154,478 160,469Net change in cash$3,675 $5,724Operating Activities. For the year ended December 31, 2018, net cash provided by operating activities was $92.1 million, compared to net cash usedin operating of $7.2 million for the year ended December 31, 2017. The increase of $99.4 million in cash used in operating activities was primarilyattributable to $35.0 million received from SCM and its affiliates for upfront fees associated with option to provide future gas midstream services. Theincrease is also the result of a significant increase in revenue production and cash received upon net settlement of commodity derivative instruments.Investing Activities. For the year ended December 31, 2018, net cash used in investing activities was $242.9 million compared to $147.5 million forthe year ended December 31, 2017. The $242.9 million in cash used in investing activities was primarily attributable to the following:•$167.4 million incurred for drilling and completion costs, including drilling and completion costs for 2018 and costs accrued in 2017 which were paidin 2018;•$40.9 million cash consideration paid for the acquisition of leasehold acreage in the Delaware Basin in Lea County, New Mexico from OneEnergyPartners Operating, LLC;•$10.7 million cash consideration paid for the acquisition of proved and unproved oil and gas properties in Loving and Winkler Counties, Texas fromVPD Texas, L.P.;•$7.1 million incurred to acquire additional leasehold interests from Anadarko;•$12.8 million incurred to pay for lease bonuses for leases primarily located in Winkler County, Texas and Lea County, New Mexico;•$17.0 million paid to Southwest Royalties for leasehold interests in Winkler County, Texas;•$3.9 million paid in connection with other leasehold exchange transactions and for other leasehold costs; and•$0.6 million paid for other property and equipment.The costs incurred in investing activities were offset by the $17.5 million of upfront option fees associated with the option to acquire our salt waterdisposal infrastructure.Financing Activities. For the year ended December 31, 2018, net cash provided by financing activities was $154.5 million compared to cashprovided by financing activities of $160.5 million during the year ended December 31, 2017. The $154.5 million in net cash provided by financing activitiesincluded the following:•$75.0 million proceeds from the Revolving Credit Agreement;•$50.0 million proceeds from the Riverstone First Lien Credit Agreement;•$100.0 million and $25.0 million proceeds from the issuance of Series C-1 and C-2 Preferred Stock, respectively; and•$3.7 million in proceeds received from the exercise of stock warrants and stock options.These increases in proceeds were offset by the following:•$57.0 million for the repayment of Riverstone First Lien Credit Agreement;•$31.8 million for the repayment of the First Lien Term Loan;•$2.2 million relating to payment of taxes withheld on stock based compensation;•$7.2 million of payments in connection with debt and equity issuance costs; and•$1.0 million paid to repurchase 253,598 shares of our common stock. Summary of Existing Capital StructureBelow is a summary of our capital structure as of December 31, 2018 and 2017:43Debt and Equity Financing(1)2018 2017Debt(in thousands)Revolving Credit Agreement$75,000 $—Second Lien Credit Agreement82,804 96,431Bridge Loans associated with amended First Lien Term Loan— 30,363Other notes payable— 1,011Total debt157,804 127,805Mezzanine Equity Series C-1 Preferred Stock106,774 —Series C-2 Preferred Stock25,522 —Series D Preferred Stock40,729 —Total mezzanine equity173,025 —Stockholders' Equity Common stock7 5Additional paid-in capital321,753 272,335Treasury stock(997) —Accumulative deficit(307,431) (303,288)Total stockholders' equity (deficit)13,332 (30,948)Total$344,161 $96,857(1)See Notes 9, 13 and 14 in the Notes to Consolidated Financial Statements for additional information about the Company’s outstanding debt andequity.Revolving Credit AgreementOn October 10, 2018, we entered into a five-year, $500 million senior secured revolving credit agreement by and among the Company, as borrower,certain subsidiaries of the Company, as guarantors (the “Guarantors”), BMO Harris Bank, N.A., as administrative agent, and the lenders party thereto. TheRevolving Credit Agreement provides for a senior secured reserve based revolving credit facility with an initial borrowing base of $95 million. Theborrowing base is subject to semiannual redetermination in May and November of each year. On December 7, 2018, the Company’s borrowing base under theRevolving Credit Agreement was increased to $108 million as a result of its regularly scheduled fall redetermination process. We accelerated our MayRevolving Credit borrowing base redetermination resulting in an increase in our borrowing base to $125 million as of March 1, 2019. We added anadditional borrowing base redetermination in July that will include results of our 2019 drilling activity. Subsequent redeterminations are scheduled inNovember and May of each year.Borrowings under the Revolving Credit Agreement bear interest at a floating rate of either LIBOR or a specified base rate plus a margin determinedbased upon the usage of the borrowing base. The Company is required to pay a commitment fee of 0.5% per annum on any unused portion of the borrowingbase. The Company’s obligations under the Revolving Credit Agreement are secured by first priority liens on substantially all of the Company’s and theGuarantors’ assets and are unconditionally guaranteed by each of the Guarantors.The Company borrowed $60 million under the Revolving Credit Agreement at closing to repay in full and retire the Company’s previously existing$50 million Riverstone First Lien Credit Agreement, including accrued interest and a prepayment premium, and to pay transaction expenses. (See Note 9 foradditional information regarding the Riverstone First Lien Credit Agreement). Future borrowings under the Revolving Credit Agreement may be used to fundworking capital requirements, including for the acquisition, exploration and development of oil and gas properties, and for general corporate purposes. TheRevolving Credit Agreement also provides for issuance of letters of credit in an aggregate amount up to $5 million.The Revolving Credit Agreement matures on the earlier of the fifth anniversary of the closing date and the date that is 180 days prior to the maturitydate of the Second Lien Credit Agreement (as defined below). Borrowings under the Revolving Credit Agreement are subject to mandatory repayment withthe net proceeds of certain asset sales and debt incurrences or if a borrowing base deficiency occurs. The Company also may voluntarily repay borrowingsfrom time to time and, subject to the borrowing base limitation and other customary conditions, may re-borrow amounts that are voluntarily repaid.Mandatory and voluntary repayments generally will be made without premium or penalty.44The Revolving Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants, includingcovenants relating to: maintenance of books and records, financial reporting and notification, compliance with laws, maintenance of properties andinsurance; and limitations on incurrence of indebtedness, liens, fundamental changes, international operations, asset sales, certain debt payments andamendments, restrictive agreements, investments, dividends and other restricted payments and hedging. It also requires the Company to maintain a ratio ofTotal Debt to EBITDAX of not more than 4.00 to 1.00 and a ratio of current assets to current liabilities of not less than 1.00 to 1.00 (each as defined in theRevolving Credit Agreement). Second Lien Credit AgreementOn April 26, 2017, the Company entered into a second lien credit agreement, dated as of April 26, 2017, by and among the Company, certainsubsidiaries of the Company, as guarantors (the “Guarantors”), Wilmington Trust, National Association, as administrative agent (the “Agent”), and thelenders party thereto (the “Lenders”), including Värde, as amended (the “Second Lien Credit Agreement”) comprised of convertible loans in an aggregateinitial principal amount of up to $125 million in two tranches. The first tranche consisted of an $80 million term loan (the “Second Lien Term Loan”), whichwas fully drawn and funded on April 26, 2017. The second tranche consisted of up to $45 million in delayed-draw term loans (the “Delayed Draw TermLoan” and, together with the Second Lien Term Loan, the “Second Lien Loans”). Each tranche of the Second Lien Loans bears interest at a rate per annum of8.25%, compounded quarterly in arrears and payable only in-kind by increasing the principal amount of the loan by the amount of the interest due on eachinterest payment date.The Second Lien Loans matures on April 26, 2021. The Second Lien Loans are subject to mandatory prepayment with the net proceeds of certainasset sales, casualty events and debt incurrences, subject to the right of the Company to reinvest the net proceeds of asset sales and casualty events within180 days. The Company may not voluntarily prepay the Second Lien Loans prior to March 31, 2019, except (a) in connection with a Change of Control (asdefined in the Second Lien Credit Agreement) or (b) if the closing price of our common stock on the principal exchange on which it is traded has been equalto or greater than 110% of the Conversion Price (as defined below) for at least 20 of the 30 trading days immediately preceding the prepayment. TheCompany is required to pay a make-whole premium in connection with any mandatory or voluntary prepayment of the Second Lien Loans.Each tranche of the Second Lien Loans is separately convertible at any time, in full and not in part, at the option of the Lead Lender, as follows:•70% of the principal amount of each tranche of the Second Lien Loans, together with accrued and unpaid interest and the make-whole premium onsuch principal amount (the “Conversion Sum”), will convert into a number of newly issued shares of common stock determined by dividing the totalof such principal amount, accrued and unpaid interest and make-whole premium by $5.50 (subject to certain customary adjustments, the“Conversion Price”); and•30% of the principal amount of the Conversion Sum will convert on a dollar for dollar basis into a new term loan (the “Take Back Loans”).The terms of the Take Back Loans will be substantially the same as the terms of the Second Lien Loans, except that the Take Back Loans will not beconvertible and will bear interest payable in cash at a rate of LIBOR plus 9% (subject to a 1% LIBOR floor).Additionally, the Company has the option to convert the Second Lien Loans, in whole or in part, into shares of common stock at any time or fromtime to time if, at the time of exercise of the Company’s conversion option, the closing price of the common stock on the principal exchange on which it istraded has been at least 150% of the Conversion Price then in effect for at least 20 of the 30 immediately preceding trading days. Conversion at theCompany’s option will occur on the same terms as conversion at the Lender’s option.On January 31, 2018, the Company entered into a fourth amendment to the Second Lien Credit Agreement (“Amendment No. 4 to the Second LienCredit Agreement”). The purpose of Amendment No. 4 to the Second Lien Credit Agreement was to, among other matters: permit us to enter the RiverstoneFirst Lien Credit Agreement and incur the Riverstone First Lien Loans and related liens; permit us to issue the Series C Preferred Stock; and after the issuanceof the Series C Preferred Stock pursuant to the Securities Purchase Agreement, reduce from two to one the maximum number of members of the Board thelenders under the Second Lien Credit Agreement will have the right to appoint following the conversion of the convertible loans under the Second LienCredit Agreement.45On February 20, 2018, the Company entered into a fifth amendment to the Second Lien Credit Agreement (“Amendment No. 5 to the Second LienCredit Agreement”), together with Amendment No. 1 to the Riverstone First Lien Credit Agreement. Pursuant to such amendments and a consent letterreceived from the Purchasers (as defined in Note 9 of the Notes to Consolidated Financial Statements), in their capacity as the holders of all of the issued andoutstanding shares of Series C Preferred Stock, the Company was granted the right to repurchase shares of its common stock for an aggregate purchase priceup to $10 million (subject to certain exceptions and conditions).On October 10, 2018, the Company entered into a sixth amendment to the Second Lien Amendment (“Amendment No. 6 to the Second Lien CreditAgreement”), by and among the Company, the Guarantors, Wilmington Trust, National Association, as administrative agent, and the lenders party thereto,including Värde Partners, Inc., as lead lender. Among other matters, Amendment No. 6 to the Second Lien Credit Agreement amended the Second Lien CreditAgreement to permit the Company to enter into and incur indebtedness under the Revolving Credit Agreement (as defined and described above) and toprovide for the reduction in the principal amount of the Second Lien Term Loan under the Second Lien Credit Agreement pursuant to the TransactionAgreement (as defined and described below).See Note 9 in the Notes to Consolidated Financial Statements for additional information about the Company’s Second Lien Credit Agreement.Preferred Stock IssuanceOn January 30, 2018, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with certain private funds affiliatedwith Värde Partners, Inc. (the “Purchasers”), pursuant to which we agreed to issue and sell to the Purchasers, and the Purchasers agreed to purchase from us,100,000 shares of a newly created series of preferred stock of the Company, designated as “Series C 9.75% Convertible Participating Preferred Stock” (the“Series C Preferred Stock”), for a purchase price of $1,000 per share, or an aggregate of $100 million.On October 10, 2018, the Company entered into a Transaction Agreement (the “Transaction Agreement”) by and among the Company and certainprivate funds affiliated with Värde Partners, Inc. (the “Värde Parties”), pursuant to which the Company agreed to:•issue to the Värde Parties (i) an aggregate of 5,952,763 shares of the Company’s common stock, par value $0.0001 per share, which includes5,802,763 shares of common stock at an exchange price of $5.00 per share of common stock plus an additional 150,000 shares of common stock,and (ii) 39,254 shares of a newly created series of preferred stock of the Company, designated as “Series D 8.25% Convertible Participating PreferredStock” (the “Series D Preferred Stock”), as consideration for the reduction by approximately $56.3 million of the outstanding principal amount ofthe Second Lien Term Loan under the Second Lien Credit Agreement, together with accrued and unpaid interest and the make-whole amountthereon totaling approximately $11.9 million;•issue and sell to the Värde Parties 25,000 shares of a newly created subseries of the Company’s Series C 9.75% Convertible Participating PreferredStock, designated as “Series C-2 9.75% Convertible Participating Preferred Stock” (the “Series C-2 Preferred Stock”), for a purchase price of $1,000per share, or an aggregate of $25 million.Pursuant to an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-1 9.75% ConvertibleParticipating Preferred Stock and Series C-2 9.75% Convertible Participating Preferred Stock (the “Series C Certificate of Designation”), filed by theCompany with the Secretary of State of Nevada on October 10, 2018, the outstanding 100,000 shares of the Company’s Series C 9.75% ConvertibleParticipating Preferred Stock were re-designated as “Series C-1 9.75% Convertible Participating Preferred Stock” (the “Series C-1 Preferred Stock” and,together with the Series C-2 Preferred Stock, the “Series C Preferred Stock”). The Series C Preferred Stock and the Series D Preferred Stock are referred tocollectively as the “Preferred Stock.”Closing of the issuance of the shares of common stock and Series D Preferred Stock and the issuance and sale of the shares of Series C-2 PreferredStock pursuant to the Transaction Agreement occurred on October 10, 2018. The Company intends to use the net proceeds from the sale of the shares ofSeries C-2 Preferred Stock for general corporate purposes, including the acquisition, exploration and development of oil and gas properties. The Series DPreferred Stock and the Series C-2 Preferred Stock are recorded at fair value of $40.0 million and $25.0 million, respectively, as mezzanine equity as ofDecember 31, 2018.See Note 13 in the Notes to Consolidated Financial Statements for additional information about the Company’s Preferred Stock.46SOS NoteOn June 30, 2016, pursuant to the merger agreement with Brushy and as a condition of the fourth amendment to such merger agreement, theCompany was required to make a cash payment of $500,000 to SOS Investment LLC (“SOS”), and also executed a subordinated promissory note with SOS,for $1 million, at an interest rate of 6% per annum which matures on June 30, 2019. In conjunction with the cash payment and the note, the Company alsoissued 200,000 warrants at an exercise price of $25.00. The Company accounted for the cost of warrants of $0.2 million as part of the Brushy mergertransaction costs during the year ended December 31, 2017. The SOS note was fully paid on January 22, 2018.See Note 9 in the Notes to Consolidated Financial Statements for additional information regarding the SOS Note.Common Stock RepurchaseIn March 2018, we entered into a share-repurchase agreement (the “SRA”) with an investment brokerage company (“Broker”) to repurchase $1.0million of the Company’s common stock as part of the Share Repurchase Plan (the “Plan”). Under the terms of the SRA, the Company paid cash directly tothe Broker and received delivery of shares of the Company’s common stock. All of the shares acquired by the Company under the SRA are recorded astreasury stock. For the year ended December 31, 2018 the Company purchased 253,598 shares of the Company’s common stock for approximately $1.0million.Related Party TransactionsVPD AcquisitionOn February 28, 2018, the Company completed the acquisition of certain leasehold interests and other oil and gas assets in Loving and WinklerCounties, Texas from VPD Texas, L.P. (“VPD”) for cash consideration of $10.6 million including $0.5 million of related acquisition costs (the “VPDAcquisition”). The VPD Acquisition was recorded at fair value which was the total cash consideration and related acquisition costs of approximately $10.7million. VPD is an affiliate of Värde Partners, Inc. (“Värde”). Värde participated as lead lender in the Company’s Second Lien Term Loan transaction in 2017and as investor of the Company’s Series C Preferred Stock transaction in January 2018. As a result, the VPD Acquisition is considered a related partytransaction. See Note 11 - Related Party Transactions in the Notes to Consolidated Financial Statements.Subsequent EventsAmendment to Revolving Credit Agreement On March 1, 2019, the Company entered into a first amendment and waiver (the “First Amendment and Waiver to Second Amended and Restated CreditAgreement”) to its existing Revolving Credit Agreement. Among other matters, in the First Amendment and Waiver to Second Amended and Restated CreditAgreement, the Company requested, and the Administrative Agent and the Majority Lenders (as defined in the First Amendment and Waiver to SecondAmended and Restated Credit Agreement) consented to, a waiver of the requirement to comply with the leverage ratio covenant in Section 9.01(a) of theRevolving Credit Agreement as of the fiscal quarter ended December 31, 2018.Additionally, the Company agreed upon a borrowing base redetermination under the Company’s First Amendment and Waiver to theSecond Amended and Restated Credit Agreement, whereby the Borrowing Base (as defined therein) was increased from $108.0 million to $125.0 million,resulting in a $17.0 million increase in revolver capacity. This redetermination will be in effect until the next scheduled redetermination on or about July 1,2019, and thereafter, the Borrowing Base will generally be redetermined semi-annually on May 1 and November 1 of each year, beginning on November 1,2019. The Company may use borrowings to fund capital expenditures, working capital requirements and other general corporate purposes.Transaction AgreementOn March 5, 2019, the Company entered into a Transaction Agreement (the “2019 Transaction Agreement”) by and among the Company and theVärde Parties), pursuant to which the Company agreed to:•issue to the Värde Parties an aggregate of (i) 9,891,638 shares of the Company’s common stock, par value $0.0001 per share (the “Term LoanExchanged Common Stock”), (ii) 60,000 shares of a newly created series of preferred stock of the Company, designated as “Series E 8.25%Convertible Participating Preferred Stock” (the “Series E Preferred Stock” or the “Exchanged Series E Shares”), and (iii) 55,000 shares of a newlycreated series of preferred stock of the Company, designated as “Series F 9.00% Participating Preferred Stock” (the “Series F Preferred Stock” or the“Exchanged Series F Shares” and, together with the Exchanged Series E Shares, the “Exchanged Preferred Shares”), as consideration for47the termination of the Second Lien Credit Agreement (as defined in the 2019 Transaction Agreement) and the satisfaction in full, in lieu ofrepayment in full in cash, of $133.6 million (the “Term Loan Exchange Amount”) pursuant to the Payoff Letter (as defined in the 2019 TransactionAgreement);•issue to the Värde Parties, as consideration for the amendment and restatement of the Second Amended and Restated Series C Certificate ofDesignation (as defined below) and the Amended and Restated Series D Certificate of Designation (as defined below), 7,750,000 shares of theCommon Stock.Closing of the issuance of the shares of Common Stock, Series E Preferred Stock and Series F Preferred Stock pursuant to the 2019Transaction Agreement occurred on March 5, 2019.The terms of the Series F Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of Series FParticipating Preferred Stock (the “Series F Certificate of Designation”) and the terms of the Series E Preferred Stock are set forth in a Certificate ofDesignation of Preferences, Rights and Limitations of Series E Convertible Participating Preferred Stock (the “Series E Certificate of Designation”), each ofwhich was filed by the Company with the Secretary of State of the State of Nevada on March 5, 2019. The terms of the Series C Preferred Stock are set forth ina Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-1 9.75% Participating Preferred Stock andSeries C-2 9.75% Participating Preferred Stock (the “Second Amended and Restated Series C Certificate of Designation”), and the terms of the Series DPreferred Stock are set forth in an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D 8.25% ParticipatingPreferred Stock (the “Amended and Restated Series D Certificate of Designation”). See Note 20 to the Financial Statements for additional information regarding the material terms of the Series F Preferred Stock, the Series EPreferred Stock, the amended terms of the Series C Preferred Stock, the amended terms of the Series D Preferred Stock and the 2019 Transaction Agreement.Amended and Restated Registration Rights AgreementOn March 5, 2019, in connection with the closing of the issuance of shares of Common Stock, Series E Preferred Stock and Series FPreferred Stock pursuant to the 2019 Transaction Agreement, the Company entered into an Amended and Restated Registration Rights Agreement (the“Amended and Restated Registration Rights Agreement”) to amend its existing registration rights agreement, dated October 10, 2018 (the “OctoberRegistration Rights Agreement”), by and between the Company and the Värde Parties. Among other matters, the Amended and Restated Registration RightsAgreement amended the October Registration Rights agreement to require the Company to file with the SEC a registration statement under the Securities Actregistering for resale the shares of Common Stock issued pursuant to the 2019 Transaction Agreement and the shares of Common Stock issuable uponconversion of the shares of Series E Preferred Stock issued pursuant to the Transaction Agreement. The Amended and Restated Registration RightsAgreement also provides that the Company may satisfy its obligation to file a registration statement by filing an amendment to the October ShelfRegistration Statement (as defined in the Amended and Restated Registration Rights Agreement).Effects of Inflation and PricingThe oil and gas industry is very cyclical and the demand for goods and services of oil field companies, suppliers and others associated with theindustry puts pressure on the economic stability and pricing structure within the industry. Typically, as prices for oil and natural gas increase, so do allassociated costs. Material changes in prices impact the current revenue stream, estimates of future reserves, borrowing base calculations of bank loans and thevalue of properties in purchase and sale transactions. Material changes in prices can impact the value of oil and natural gas companies and their ability toraise capital, borrow money and retain personnel. We anticipate business costs will vary in accordance with commodity prices for oil and natural gas, and theassociated increase or decrease in demand for services related to production and exploration.Off-Balance Sheet ArrangementsAs of December 31, 2018, we did not have any off-balance sheet arrangements, and it is not anticipated that we will enter into any off-balance sheetarrangements.Critical Accounting Policies and Estimates48The preparation of our consolidated financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”)requires our management to make assumptions and estimates that affect the reported amounts of assets, liabilities, revenues and expenses, as well as thedisclosure of contingent assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reportingperiod. The following is a summary of the significant accounting policies and related estimates that affect our financial disclosures.Critical accounting policies are defined as those significant accounting policies that are most critical to an understanding of a company’s financialcondition and results of operation. We consider an accounting estimate or judgment to be critical if (i) it requires assumptions to be made that were uncertainat the time the estimate was made, and (ii) changes in the estimate or different estimates that could have been selected could have a material impact on ourresults of operations or financial condition.Use of Estimates The preparation of financial statements in conformity with GAAP requires us to make a number of estimates and assumptions relating to the reportedamounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts ofrevenues and expenses during the reporting period. Actual results could differ significantly from those estimates. Management evaluates estimates andassumptions on an ongoing basis using historical experience and other factors, including the current economic and commodity price environment.Our most significant financial estimates are associated with our estimated proved oil and natural gas reserves, assessments of impairment in thecarrying value of undeveloped acreage and proven properties. There are also significant financial estimates associated with the valuation of our options andwarrants, inducement transactions, and estimated derivative liabilities.Oil and Natural Gas ReservesWe follow the full cost method of accounting. All of our oil and natural gas properties are located within the United States and, therefore, all costsrelated to the acquisition and development of oil and natural gas properties are capitalized into a single cost center referred to as a full cost pool. Depletion ofexploration and development costs and depreciation of production equipment is computed using the units-of-production method based upon estimatedproved oil and natural gas reserves. Under the full cost method of accounting, capitalized oil and natural gas property costs less accumulated depletion andnet of deferred income taxes may not exceed an amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil andnatural gas reserves less the future cash outflows associated with the asset retirement obligations that have been accrued on the balance sheet plus the cost, orestimated fair value if lower, of unproved properties. Should capitalized costs exceed this ceiling, impairment would be recognized. Under the SEC rules, weprepared our oil and natural gas reserve estimates as of December 31, 2018, using the average, first-day-of-the-month price during the 12-month period endedDecember 31, 2018.Estimating accumulations of oil and natural gas is complex and is not exact because of the numerous uncertainties inherent in the process. Theprocess relies on interpretations of available geological, geophysical, engineering and production data. The extent, quality and reliability of this technicaldata can vary. The process also requires certain economic assumptions, some of which are mandated by the SEC, such as oil and natural gas prices, drillingand operating expenses, capital expenditures, taxes and availability of funds. The accuracy of a reserve estimate is a function of the quality and quantity ofavailable data; the interpretation of that data; the accuracy of various mandated economic assumptions; and the judgment of the persons preparing theestimate.We believe estimated reserve quantities and the related estimates of future net cash flows are among the most important estimates made by anexploration and production company such as ours because they affect the perceived value of our Company, are used in comparative financial analysis ratios,and are used as the basis for the most significant accounting estimates in our financial statements, including the quarterly calculation of depletion,depreciation and impairment of our proved oil and natural gas properties. Proved oil and natural gas reserves are the estimated quantities of crude oil, naturalgas, and NGLs that geological and engineering data demonstrate with reasonable certainty to be recoverable in future periods from known reservoirs underexisting economic and operating conditions. We determine anticipated future cash inflows and future production and development costs by applyingbenchmark prices and costs, including transportation, quality and basis differentials, in effect at the end of each quarter to the estimated quantities of oil andnatural gas remaining to be produced as of the end of that quarter. We reduce expected cash flows to present value using a discount rate that depends uponthe purpose for which the reserve estimates will be used. For example, the standardized measure calculation requires us to apply a 10% discount rate.Although reserve estimates are inherently imprecise and estimates of new discoveries and undeveloped locations are more imprecise than those of establishedproved producing oil and natural gas properties, we make considerable effort to estimate our reserves, including through the use of independent reservesengineering consultants. We expect that quarterly reserve estimates will change in the future as additional information becomes available or as oil andnatural gas prices and operating and capital costs change. We evaluate and estimate49our oil and natural gas reserves as of December 31, and quarterly throughout the year. For purposes of depletion, depreciation, and impairment, we adjustreserve quantities at all quarterly periods for the estimated impact of acquisitions and dispositions. Changes in depletion, depreciation or impairmentcalculations caused by changes in reserve quantities or net cash flows are recorded in the period in which the reserves or net cash flow estimate changes.Oil and Natural Gas Properties-Full Cost Method of AccountingWe use the full cost method of accounting whereby all costs related to the acquisition and development of oil and natural gas properties arecapitalized into a single cost center referred to as a full cost pool. These costs include land acquisition costs, geological and geophysical expenses, carryingcharges on non-producing properties, costs of drilling, and overhead charges directly related to acquisition and exploration activities.Capitalized costs, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on theestimated gross proved reserves as determined by independent petroleum engineers. For this purpose, we convert our petroleum products and reserves to acommon unit of measurement.Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. This undeveloped acreage is assessedquarterly to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of theproperty or the amount of the impairment is added to the amortization base and becomes subject to the depletion calculation.Proceeds from the sale of oil and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless the sale wouldalter the rate of depletion by more than 25%. Royalties paid, net of any tax credits received, are netted against oil and natural gas sales.Under the full cost method of accounting, capitalized oil and natural gas property costs, less accumulated depletion and net of deferred incometaxes, may not exceed an amount equal to the present value, discounted at 10%, of estimated future net revenues from proved oil and natural gas reserves,plus the cost, or estimated fair value if lower, of unproved properties. Should capitalized costs exceed this ceiling, we would recognize impairment.Derivative InstrumentsAll derivative instruments are recorded on the consolidated balance sheet at fair value as either an asset or a liability with changes in fair valuerecognized currently in earnings. Although commodity based derivative instruments are used by the Company to manage the price risk attributable to itsexpected oil and natural gas production, those derivative instruments have not been designated as accounting hedges under the accounting guidance. All ofour derivatives are accounted for as mark-to-market activities. Under ASC Topic 815, “Derivatives and Hedging,” these instruments are recorded on theconsolidated balance sheets at fair value as either short term or long-term assets or liabilities based on their anticipated settlement date. The Company netsderivative assets and liabilities by commodity for counterparties where a legal right to such offset exists. Changes in the derivatives’ fair values arerecognized in current earnings since the Company has elected not to designate its current derivative contracts as cash flow hedges for accounting purposes.The Company has recognized certain conversion features within its Second Lien Term Loan as embedded derivatives that have been bifurcated fromthe Second Lien Term Loan, as defined in Note 9 to our consolidated financial statements in Item 16 of this Annual Report on Form 10-K and accounted forseparately from the debt.Revenue RecognitionRevenue is recognized when control passes to the purchaser which generally occurs when production is transferred to the purchaser. The Companymeasures revenue as the amount of consideration it expects to receive in exchange for the commodities transferred. All of the Company’s revenues fromcontracts with customers represent products transferred at a point in time as control is transferred to the customer. The Company records revenue based on consideration specified in its contracts with its customers. The amounts collected on behalf of third partiesare recorded in revenue payable. The Company recognizes revenue in the amount that reflects the consideration it expects to receive in exchange fortransferring control of those goods to the customer. The contract consideration in the Company’s variable price contracts is typically allocated to specificperformance obligations in the contract according to the price stated in the contract. Payment is generally received one or two months after the sale hasoccurred.50Recently Issued Accounting PronouncementsFor a discussion of recently adopted accounting standards and recent accounting standards not yet adopted, see “Note 2 - Summary of SignificantAccounting Policies” to our Consolidated Financial Statements in Item 16 of this Annual Report.Item 7A. Quantitative and Qualitative Disclosures About Market RiskAs a smaller reporting company, we are not required to provide the information required by this Item 7A.Item 8. Financial Statements and Supplementary DataOur financial statements appear immediately after the signature page of this Annual Report and are incorporated herein by reference. See “Index toFinancial Statements” included in this Annual Report.Item 9. Changes in and Disagreements with Accountants on Accounting and Financial DisclosureNone.Item 9A. Controls and ProceduresEvaluation of Disclosure Controls and ProceduresOur management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosurecontrols and procedures pursuant to Rule 13a-15 under the Exchange Act. Internal control over financial reporting is an integral component of theCompany’s disclosure controls and procedures. Our disclosure controls and procedures are designed to provide reasonable assurance that the informationrequired to be disclosed by us in reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including ourChief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure and is recorded, processed,summarized and reported within the time periods specified in the rules and forms of the SEC. Based upon their evaluation, our Chief Executive Officer andChief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2018.We identified a material weakness in the Company’s internal controls over financial reporting relating to our full cost ceiling test calculation duringthe year ended December 31, 2017. The Company has worked diligently to remediate the material weakness, including implementing measures to remediatethe underlying causes that gave rise to the material weaknesses through implementation of processes and controls ensuring compliance with GAAP. TheCompany has specifically enhanced review procedures and provided additional documentation, analysis and governance over the ceiling test calculation toensure that these procedures are performed and recorded in accordance with Company’s policies and GAAP. We took the following actions with respect toour full cost ceiling test calculation to address the material weakness:(i) implemented procedures to perform enhanced detailed reviews and analytical analysis on our current and projected tax position with respect tothe impact of projected income taxes on the ceiling test; and(ii) implemented procedures for additional reviews on the ceiling test calculation, including treatment of wells-in-process, future income taxeffects, and future development cost along with procedures to validate the ceiling test calculation with the reserve report. Management believes that the measures described above have remediated the material weakness identified at December 31, 2017.Management’s Annual Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)and 15d-15(f) promulgated under the Exchange Act). Our internal control structure is designed to provide reasonable assurance to our management and boardof directors regarding the reliability of our financial reporting and the preparation and fairness of our financial statement preparation in accordance with U.S.generally accepted accounting principles.Our management, with the participation of our Chief Executive Officer and Chief Financial Officer assessed the effectiveness of our internal controlover financial reporting, as of December 31, 2018, based on the criteria for effective internal51control over financial reporting established in “Internal Control - Integrated Framework (2013)” which is issued by the Committee of SponsoringOrganizations of the Treadway Commission. Based on the assessment and those criteria, our management determined that our internal control over financialreporting was effective as of December 31, 2018.BDO USA, LLP, the Company’s independent registered public accounting firm, has audited our internal control over financial reporting as ofDecember 31, 2018, and issued an attestation report set forth under the caption “Report of Independent Registered Public Accounting Firm on InternalControl over Financial Reporting.”Changes in Internal Control Over Financial Reporting There was no change in our internal control over financial reporting during the year ended December 31, 2018, except as mentioned above related toremediation of the material weakness, that materially affected or is reasonably likely to materially affect our internal control over financial reporting.Item 9B. Other InformationThe registrant elects to disclose under this Item 9B information otherwise disclosable in a report on Form 8-K.On October 10, 2018, the Company entered into the Revolving Credit Agreement pursuant to which BMO Harris Bank N.A., SunTrust Bank, CapitalOne, N.A., and Credit Suisse AG, Cayman Islands Branch, (collectively, the “Lenders”) have made certain credit available to and on behalf of the Company.In connection with the preparation of this Form 10-K and the associated financial statements, the Company informed its Lenders, that it did not satisfy theleverage ratio covenant in Section 9.01(a) of the Revolving Credit Agreement, as of the fiscal quarter ended December 31, 2018. Accordingly, the Companyrequested that the Lenders consent to a waiver with respect to such provision.On March 1, 2019, the Company entered into that certain First Amendment and Waiver to Second Amended and Restated Credit Agreement(“Waiver”) whereby the Lenders granted a waiver with respect to the breach of the leverage ratio covenant contained in Section 9.01(a) of the RevolvingCredit Agreement. Among other things, the Waiver amended the terms of the Revolving Credit Agreement to increase the borrowing base to $125,000,000.The foregoing summaries of the terms of the Revolving Credit Agreement and Waiver do not purport to be complete and are subject to, and qualifiedin their entirety by, the full text of the Revolving Credit Agreement and Waiver, copies of which are filed as Exhibits 10.37 and Exhibit 10.41, respectively,to this Annual Report and incorporated herein by reference.PART IIIItem 10. Directors, Executive Officers and Corporate GovernanceFor information concerning Item 10, see the definitive Proxy Statement of Lilis Energy, Inc., relating to the Company’s 2019 Annual Meeting ofStockholders, which will be filed with the Securities and Exchange Commission and is incorporated herein by reference.The Company has adopted a code of ethics, our Code of Business Conduct, that applies to the Company’s chief executive officer, chief financialofficer and chief accounting officer. The full text of such code of ethics has been posted on the Company’s website at www.lilisenergy.com and is availablefree of charge in print to any stockholder who requests it. Request for copies should be addressed to the Vice President of Human Resources at mailingaddress, 1800 Bering Drive, Suite 510, Houston, Texas 77057.Item 11. Executive CompensationFor information concerning Item 11, see the definitive Proxy Statement of Lilis Energy, Inc., relating to the Company’s 2019 Annual Meeting ofStockholders, which will be filed with the Securities and Exchange Commission and is incorporated herein by reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 52For information concerning Item 12, see the definitive Proxy Statement of Lilis Energy, Inc., relating to the Company’s 2019 Annual Meeting ofStockholders, which will be filed with the Securities and Exchange Commission and is incorporated herein by reference. Item 13. Certain Relationships and Related Transactions, and Director IndependenceFor information concerning Item 13, see the definitive Proxy Statement of Lilis Energy, Inc., relating to the Company’s 2019 Annual Meeting ofStockholders, which will be filed with the Securities and Exchange Commission and is incorporated herein by reference.Item 14. Principal Accounting Fees and ServicesFor information concerning Item 14, see the definitive Proxy Statement of Lilis Energy, Inc., relating to the Company’s 2019 Annual Meeting ofStockholders, which will be filed with the Securities and Exchange Commission and is incorporated herein by reference.53GLOSSARY In this Annual Report, the following abbreviation and terms are used:Bbl. Stock tank barrel, or 42 U.S. gallons liquid volume, used in this report in reference to crude, condensate or natural gas liquids.Bcf. Billion cubic feet of natural gas.Bcfe. Billion cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one barrel of crude oil or condensate.BLM. The Bureau of Land Management of the United States Department of the Interior.BOE. One barrel of crude oil equivalent, determined using the ratio of six Mcf of natural gas to one barrel of crude oil, condensate or natural gas liquids.BOE/d. Barrels of oil equivalent per day.BO/d. Barrel of oil per day.BTU or British Thermal Unit. The quantity of heat required to raise the temperature of one pound mass of water by 28.5 to 59.5 degrees Fahrenheit.Completion. Installation of permanent equipment for production of oil or natural gas.Condensate. A mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure but that, when produced, is in theliquid phase at surface pressure and temperature.Development well. A well drilled within the proved area of a natural gas or oil reservoir to the depth of a stratigraphic horizon known to be productive.Drilling locations. Total gross locations specifically quantified by management to be included in our multi-year drilling activities on existing acreage. Ouractual drilling activities may change depending on the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs,drilling results and other factors.Dry well or dry hole. A well found to be incapable of producing either oil or gas in sufficient quantities to justify completion as an oil or gas well.Exploratory well. A well drilled to find a new field or to find a new reservoir. Generally, an exploratory well in any well that is not a development well, anextension well, a service well or a stratigraphic well.FERC. The Federal Energy Regulatory Commission.Field. An area consisting of either a single reservoir or multiple reservoirs all grouped on or related to the same geological structural feature and/orstratigraphic condition.Formation. An identifiable layer of subsurface rocks named after its geographical location and dominant rock type.Gross acres, gross wells, or gross reserves. A well, acre or reserve in which we own a working interest, reported at the 100% or 8/8ths level. For example, thenumber of gross wells is the total number of wells in which we own a working interest.Lease. A legal contract that specifies the terms of the business relationship between an energy company and a landowner or mineral rights holder on aparticular tract of land.Leasehold. Mineral rights leased in a certain area to form a project area.Liquids. Crude oil and natural gas liquids, or NGLs.MBBLs. One thousand barrels of crude oil or other liquid hydrocarbons.54MBOE. One thousand barrels of crude oil equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gasliquids.Mcf. One thousand cubic feet of natural gas.Mcfe. One thousand cubic feet equivalent, determined using the ratio of six Mcf of natural gas to one Bbl of crude oil, condensate or natural gas liquids.MMbtu. One million British Thermal Units.MMcf. One million cubic feet of natural gas.Net acres or net wells. The sum of fractional ownership working interests in gross acres or gross wells. The number of net acres or wells is the sum of thefractional working interests owned in gross acres or wells expressed as whole numbers and fractions of whole numbers.NGL. Natural gas liquids, or liquid hydrocarbons found as a by-product of natural gas.Overriding royalty interest. Is similar to a basic royalty interest except that it is created out of the working interest. For example, an operator possesses astandard lease providing for a basic royalty to the lessor or mineral rights owner of 1/8 of 8/8. This then entitles the operator to retain 7/8 of the total oil andnatural gas produced. The 7/8 in this case is the 100% working interest the operator owns. This operator may assign his working interest to another operatorsubject to a retained 1/8 overriding royalty. This would then result in a basic royalty of 1/8, an overriding royalty of 1/8 and a working interest of 3/4.Overriding royalty interest owners have no financial or other obligation or responsibility for developing and operating the property. The only expenses borneby the overriding royalty owner are a share of the production or severance taxes and sometimes costs incurred to make the oil or gas salable.Plugging and abandonment. Refers to the sealing off of fluids in the strata penetrated by a well so that the fluids from one stratum will not escape intoanother or to the surface. Regulations of all states require plugging of abandoned wells.Production. Natural resources, such as oil or gas, flowed or pumped out of the ground.Productive well. A producing well or a well that is mechanically capable of production.Proved developed oil and natural gas reserves. Proved developed oil and natural gas reserves are proved reserves that can be expected to be recovered (i)through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to thecost of a new well; and (ii) through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is bymeans not involving a well.Proved reserves. Those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty tobe economically producible - from a given date forward, from known reservoirs, under existing economic conditions, operating methods, and governmentregulations - prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardlessof whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operatormust be reasonably certain that it will commence the project within a reasonable time.Proved undeveloped reserves. Proved undeveloped oil and natural gas reserves are proved reserves that are expected to be recovered from new wells onundrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.Project. A targeted development area where it is probable that commercial oil and/or natural gas can be produced from new wells.Prospect. A specific geographic area which, based on supporting geological, geophysical or other data and also preliminary economic analysis usingreasonably anticipated prices and costs, is deemed to have potential for the discovery of commercial hydrocarbons.Recompletion. The process of re-entering an existing well bore that is either producing or not producing and modifying the existing completion and/orcompleting new reservoirs in an attempt to establish new production or increase or re-activate existing production.55Reserves. Estimated remaining quantities of oil, natural gas and natural gas liquids anticipated to be economically producible, as of a given date, byapplication of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, thelegal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits andfinancing required to implement the project.Reservoir. A subsurface formation containing a natural accumulation of producible natural gas and/or oil that is naturally trapped by impermeable rock orother geologic structures or water barriers and is individual and separate from other reservoirs.Secondary Recovery. A recovery process that uses mechanisms other than the natural pressure or fluid drive of the reservoir, such as gas injection or waterflooding, to produce residual oil and natural gas remaining after the primary recovery phase.Shut-in. A well suspended from production or injection but not abandoned.Standardized measure. The present value of estimated future cash flows from proved oil and natural gas reserves, less future development, abandonment,production and income tax expenses, discounted at 10% per annum to reflect timing of future cash flows and using the same pricing assumptions as wereused to calculate PV-10. Standardized measure differs from PV-10 because standardized measure includes the effect of future income taxes.Successful. A well is determined to be successful if it is producing oil or natural gas in paying quantities.Undeveloped acreage. Leased acreage on which wells have not been drilled or completed to a point that would permit the production of economic quantitiesof oil or natural gas regardless of whether such acreage contains proved reserves.Water-flood. A method of secondary recovery in which water is injected into the reservoir formation to maintain or increase reservoir pressure and displaceresidual oil and enhance hydrocarbon recovery.Working interest. The operating interest that gives the lessees/owners the right to drill, produce and conduct operating activities on the property, and toreceive a share of the production revenue, subject to all royalties, overriding royalties and other burdens, all development costs, and all risks in connectiontherewith.56PART IV Item 15. Exhibits, Financial Statement Schedulesa.The following documents are filed as part of this Annual Report on Form 10-K or incorporated by reference:(i)The consolidated financial statements of Lilis Energy, Inc. are listed on the Index to this Form 10-K, page 58.b.The following exhibits are filed or furnished with this Annual Report on Form 10-K or incorporated by reference:b) Exhibits2.1Agreement and Plan of Merger, dated as of December 29, 2015, among Lilis Energy, Inc., Lilis Merger Sub, Inc. and Brushy Resources, Inc.(incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 5, 2016).2.2First Amendment to Agreement and Plan of Merger, dated as of January 20, 2016, among Lilis Energy, Inc., Lilis Merger Sub, Inc. andBrushy Resources, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on January 20,2016).2.3Second Amendment to Agreement and Plan of Merger, dated as of March 24, 2016, among Lilis Energy, Inc., Lilis Merger Sub, Inc. andBrushy Resources, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on March 24,2016).2.4Third Amendment to Agreement and Plan of Merger, dated as of June 22, 2016, among Lilis Energy, Inc., Lilis Merger Sub, Inc. and BrushyResources, Inc. (incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on June 28, 2016).3.1Amended and Restated Articles of Incorporation of Recovery Energy, Inc., dated as of October 10, 2011 (incorporated herein by referenceto Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on October 20, 2011).3.2Certificate of Amendment to the Amended and Restated Articles of Incorporation of Recovery Energy, Inc., dated as of November 18, 2013(incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on November 19, 2013).3.3Certificate of Change of Lilis Energy, Inc., dated as of June 21, 2016 (incorporated herein by reference to Exhibit 3.1 to the Company’sCurrent Report on Form 8-K filed on June 28, 2016).3.4Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed onJune 18, 2010).3.5Amended and Restated Certificate of Designations of Preferences, Rights and Limitations of Series B 6% Convertible Preferred Stock,dated April 25, 2017 (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on April 27,2017).3.6Certificate of Designation of Preferences, Rights and Limitations of Series C 9.75% Convertible Participating Preferred Stock, datedJanuary 31, 2018 (incorporated herein by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 1,2018).3.7Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-1 9.75% Convertible ParticipatingPreferred Stock and Series C-2 9.75% Convertible Participating Preferred Stock, dated October 10, 2018 (incorporated herein by referenceto Exhibit 3.1 of the Company’s Current Report on Form 8-K filed on October 16, 2018).3.8Certificate of Designation of Preferences, Rights and Limitations of Series D 8.25% Convertible Participating Preferred Stock, datedOctober 10, 2018 (incorporated herein by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed on October 16,2018).3.9*Certificate of Designation of Preferences, Rights and Limitations of Series E 8.25% Convertible Participating PreferredStock, dated March 5, 20193.10*Certificate of Designation of Preferences, Rights and Limitations of Series F 9.00% Participating Preferred Stock, datedMarch 5, 20193.11*Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-1 9.75%Participating Preferred Stock and Series C-2 9.75% Participating Preferred Stock, dated March 5,20193.12*Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series D 8.25% ParticipatingPreferred Stock, dated March 5, 2019.574.1Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on January 28, 2014).4.2Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 6, 2014).4.3Five Year Warrant to David Castaneda dated January 17, 2014 (incorporated herein by reference to Exhibit 4.1 to the Company’s QuarterlyReport on Form 10-Q for the period ended March 31, 2014, filed on June 17, 2014).4.4Five Year Warrant (Anniversary Warrant) to David Castaneda dated January 17, 2014 (incorporated herein by reference to Exhibit 4.2 tothe Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2014, filed on June 17, 2014).4.5Form of Warrant dated May 30, 2014 (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filedon June 4, 2014).4.6Warrant to Purchase Common Stock issued to Heartland Bank (incorporated herein by reference to Exhibit 4.3 to the Company’s QuarterlyReport on Form 10-Q, filed on February 26, 2015).4.7Form of Warrant (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 5, 2016).4.8Form of Common Stock Purchase Warrant (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-Kfiled on June 16, 2016).4.9Form of Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Company’s Registration Statement on Form S-1filed on September 16, 2016).4.10Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on March 2, 2017).4.11†Lilis Energy, Inc. 2016 Omnibus Incentive Plan and forms of agreement thereunder (incorporated herein by reference to Exhibit 4.1 to theCompany’s Registration Statement on Form S-8 filed on June 28, 2016).4.12†First Amendment to the Lilis Energy, Inc. 2016 Omnibus Incentive Plan, approved on November 3, 2016 (incorporated herein by referenceto Annex C to the Company’s Definitive Proxy filed on September 30, 2016).4.13†Second Amendment to the Company’s 2016 Omnibus Incentive Plan, dated July 13, 2017 (incorporated herein by reference to Annex A ofthe Company’s Definitive Proxy Statement on Schedule 14A, filed on June 19, 2017).4.14Third Amendment to Lilis Energy, Inc. 2016 Omnibus Incentive Plan, approved on June 28, 2018 (incorporated herein by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 5, 2018).10.1†Employment Agreement with Ariella Fuchs, dated as of March 16, 2015 (incorporated herein by reference to Exhibit 10.84 to theCompany’s Annual Report on Form 10-K for the year ended December 31, 2014, filed on April 15, 2015).10.2Recovery Energy, Inc. 2012 Equity Incentive Plan dated August 31, 2012, as amended (incorporated herein by reference to Appendix B tothe Company’s definitive proxy filed on December 15, 2015).10.3Form of Convertible Note Purchase Agreement (incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form8-K filed on January 5, 2016).10.4Form of Note Exchange Agreement (incorporated herein by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filedon January 5, 2016).10.5Form of Securities Purchase Agreement (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-Kfiled on June 16, 2016).10.6Form of Registration Rights Agreement (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-Kfiled on June 16, 2016).10.7†Employment Agreement with Ariella Fuchs, dated as of July 5, 2016 (incorporated herein by reference to Exhibit 10.5 to the Company’sCurrent Report on Form 8-K filed on July 8, 2016).10.8†Employment Agreement with Ronald Ormand, dated as of July 5, 2016 (incorporated herein by reference to Exhibit 10.6 to the Company’sCurrent Report on Form 8-K filed on July 8, 2016).10.9Texican Crude & Hydrocarbon LLC Purchase Contract, dated as of February 3, 2016, between Texican Crude & Hydrocarbon, LLC andImpetro Operating LLC (incorporated herein by reference to Exhibit 10.65 to Brushy Resources, Inc.’s Registration Statement on Form S-1filed on September 16, 2016).10.10DCP Midstream, LP Gas Purchase Agreement (incorporated herein by reference to Exhibit 10.8 to Brushy Resources, Inc.’s Form 10/A filedon July 26, 2013, which became effective August 6, 2013).10.11Credit and Guarantee Agreement, dated as of September 29, 2016 by and among Lilis Energy, Inc., Brushy Resources, Inc., ImPetroOperating, LLC, ImPetro Resources, LLC, the Lenders party thereto and T.R. Winston & Company, LLC acting as collateral agent(incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on October 26, 2016).10.12Employment Agreement with Joseph C. Daches, dated as of January 23, 2017 (incorporated herein by reference to Exhibit 10.1 to theCompany’s Current Report on Form 8-K filed on January 25, 2017).5810.13Securities Subscription Agreement, dated February 28, 2017, by and among the Company and the Purchasers thereto (incorporated hereinby reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on March 2, 2017).10.14Registration Rights Agreement, dated February 28, 2017, by and among the Company and the Purchasers thereto (incorporated herein byreference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 2, 2017).10.15†First Amendment to Employment Agreement with Ronald D. Ormand, dated as of March 9, 2017 (incorporated herein by reference toExhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 10, 2017).10.16†First Amendment to Employment Agreement with Ariella Fuchs, dated as of March 9, 2017 (incorporated herein by reference to Exhibit10.3 to the Company’s Current Report on Form 8-K filed on March 10, 2017).10.17Credit Agreement, dated April 26, 2017 by and among Lilis Energy, Inc., the Guarantors party thereto, the Lenders party thereto andWilmington Trust, National Association acting as administrative agent (incorporated herein by reference to Exhibit 10.3 to the Company’sCurrent Report on Form 8-K filed April 27, 2017).10.18Registration Rights Agreement, dated April 26, 2017 by and among the Lender party thereto (incorporated herein by reference to Exhibit10.4 to the Company’s Current Report on Form 8-K filed April 27, 2017).10.19Series B 6.0% Convertible Preferred Stock Conversion Agreement, dated April 25, 2017, by and among the Holders party thereto(incorporated herein by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed April 27, 2017).10.20†First Amendment to Employment Agreement with Joseph Daches, dated as of May 5, 2017 (incorporated herein by reference to Exhibit10.2 to the Company’s Current Report on Form 8-K filed on May 8, 2017)10.21†Second Amendment to Employment Agreement with Ariella Fuchs, dated as of May 5, 2017 (incorporated herein by reference to Exhibit10.3 to the Company’s Current Report on Form 8-K filed on May 8, 2017)10.22†Employment Agreement with James Linville, dated as of June 26, 2017 (incorporated herein by reference to Exhibit 10.1 to the Company’sCurrent Report on Form 8-K filed on June 26, 2017).10.23†First Amendment of Executive Employment Agreement, dated August 4, 2017, by and between Lilis Energy, Inc. and Jim Linville(incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on August 4, 2017).10.24Letter Agreement dated August 12, 2017 between the Company and Värde Partners, Inc. (incorporated herein by reference to Exhibit 10.14on the Company’s Quarterly Report on Form 10-Q filed on August 14, 2017).10.25Gas Gathering, Processing and Purchase Agreement, dated August 10, 2017 by and among the Company and Lucid Energy Delaware(incorporated herein by reference to Exhibit 10.5 to the Company’s quarterly report on Form 10-Q filed on November 14, 2017). Specificitems in this exhibit have been redacted, as marked by two asterisks (**), because confidential treatment for those items has granted. Theredacted material has been separately filed with the SEC.10.26*Amendment No. 1 to the Gas Gathering, Processing and Purchase Agreement, dated October 1, 2017 by and among the Company and LucidEnergy Delaware.10.27Amendment No. 1 to Second Lien Credit Agreement, dated October 3, 2017 by and among Lilis Energy, Inc., the Guarantors party thereto,the Lenders party thereto and Wilmington Trust, National Association, as administrative agent (incorporated herein by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K filed on October 10, 2017).10.28Amendment No. 2 to Second Lien Credit Agreement, dated October 19, 2017 by and among Lilis Energy, Inc., the Guarantors party thereto,the Lenders party thereto and Wilmington Trust, National Association, as administrative agent (incorporated herein by reference to Exhibit10.2 to the Company’s Current Report on Form 8-K filed on October 24, 2017).10.29Amendment No. 3 to Second Lien Credit Agreement, dated November 10, 2017 by and among Lilis Energy, Inc., the Guarantors partythereto, the Lenders party thereto and Wilmington Trust, National Association, as administrative agent (incorporated herein by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 14, 2017).10.30Purchase and Sale Agreement, dated as of January 30, 2018, by and between Lilis Energy, Inc. and OneEnergy Partners Operating, LLC(incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on February 1, 2018).10.31Securities Purchase Agreement, dated as of January 30, 2018, by and among Lilis Energy, Inc. and the Purchasers party thereto(incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on February 1, 2018).10.32Registration Rights Agreement, dated as of January 31, 2018, by and among Lilis Energy, Inc. and the Purchasers party thereto(incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on February 1, 2018).5910.33Amended and Restated Senior Secured Term Loan Credit Agreement, dated as of January 30, 2018, by and among Lilis Energy, Inc., thesubsidiaries of the Company party thereto as guarantors, Riverstone Credit Management LLC, as administrative agent and collateral agent,and the lenders party thereto (incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed onFebruary 1, 2018).10.34Amendment No. 4 to Second Lien Credit Agreement, dated as of January 31, 2018, by and among Lilis Energy, Inc., the guarantors partythereto, the lenders party thereto and Wilmington Trust, National Association, as administrative agent (incorporated herein by reference toExhibit 10.4 to the Company’s Current Report on Form 8-K filed on February 1, 2018).10.35*Amendment No. 5 to Second Lien Credit Agreement, dated as of February 20, 2018, by and among Lilis Energy, Inc., the guarantors partythereto, the lenders party thereto and Wilmington Trust, National Association, as administrative agent.10.36*Amendment No. 1 to the Amended and Restated Senior Secured Term Loan Credit Agreement, dated as of February 20, 2018, by andamong Lilis Energy, Inc., the subsidiaries of the Company party thereto as guarantors, Riverstone Credit Management LLC, asadministrative agent and collateral agent, and the lenders party thereto.10.37Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of October 10, 2018, among Lilis Energy, Inc., thesubsidiaries of Lilis Energy, Inc. party thereto as guarantors, BMO Harris Bank, N.A., as administrative agent, and the lenders party thereto(incorporated herein by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed on October 16, 2018).10.38Amendment No. 6 to Credit Agreement and Amendment No. 1 to Pledge and Security Agreement dated as of October 10, 2018, among LilisEnergy, Inc., the subsidiaries of Lilis Energy, Inc., party thereto as guarantors, Wilmington Trust, National Association, as administrativeagent, Varde Partners, Inc., as lead lender, and the other lenders party thereto (incorporated herein by reference to Exhibit 10.2 of theCompany’s Current Report on Form 8-K filed on October 16, 2018).10.39Transaction Agreement, dated as of October 10, 2018, by and among Lilis Energy, Inc. and the Varde Parties party thereto (incorporatedherein by reference to Exhibit 10.3 of the Company’s Current Report on Form 8-K filed on October 16, 2018).10.40Registration Rights Agreement, dated as of October 10, 2018, by and among Lilis Energy, Inc. and the Varde Parties party thereto(incorporated herein by reference to Exhibit 10.4 of the Company’s Current Report on Form 8-K filed on October 16, 2018).10.41*First Amendment and Waiver to Second Amended and Restated Credit Agreement dated as of March 1, 2019, amongLilis Energy, Inc., the subsidiaries of Lilis Energy, Inc. party thereto as guarantors, Wilmington Trust, NationalAssociation, as administrative agent, Värde Partners, Inc., as lead lender, and the other lenders party thereto.10.42*Transaction Agreement, dated as of March 5, 2019, by and among Lilis Energy, Inc., the Värde Fund Vi-A, L.P., VärdeInvestment Partners, L.P., the Värde Fund Xi (Master), L.P., Värde Investment Partners (Offshore) Master, L.P., theVärde Skyway Fund, L.P., the Värde Skyway Mini-Master Fund, L.P. and the Värde Fund Xii (Master), L.P.10.43*Amended and Restated Registration Rights Agreement, dated as of March 5, 2019, by and among Lilis Energy, Inc. andthe Värde Parties party thereto.21.1*List of Subsidiaries of the Company.23.1*Consent of BDO USA, LLP for the Company.23.2*Consent of Cawley, Gillespie & Associates, Inc., independent petroleum engineers for the Company.31.1*Certifications Pursuant to Section 302 of Sarbanes Oxley Act of 2002.31.2*Certifications Pursuant to Section 302 of Sarbanes Oxley Act of 2002.32.1*Certifications Pursuant to Section 906 of Sarbanes Oxley Act of 2002.32.2*Certifications Pursuant to Section 906 of Sarbanes Oxley Act of 2002.99.1*Report of Cawley, Gillespie & Associates, Inc., dated January 17, 2019, for the Company.101.INS*XBRL Instance Document101.SCH*XBRL Taxonomy Extension Schema Document101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document101.DEF*XBRL Taxonomy Extension Definition Linkbase Document101.LAB*XBRL Taxonomy Extension Label Linkbase Document101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document60*Filed herewith.†Indicates management contract or compensatory plan.+To be filed by amendment.c) Financial Statement SchedulesNot applicable.Item 16. Form 10-K SummaryNone.61SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed onits behalf by the undersigned, thereunto duly authorized. LILIS ENERGY, INC. Date: March 7, 2019By:/s/Ronald D. Ormand Ronald D. Ormand Chief Executive Officer(Authorized Signatory) Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of theregistrant in the capacities and on the dates indicated.Signature Title Date /s/Ronald D. Ormand Executive Chairman of the Board & Chief Executive Officer March 7, 2019Ronald D. Ormand (Principal Executive Officer) /s/ Joseph C. Daches President and Chief Financial Officer March 7, 2019Joseph C. Daches (Principal Financial and Accounting Officer) /s/ Mark Christensen Director March 7, 2019Mark Christensen /s/ Nuno Brandolini Director March 7, 2019Nuno Brandolini /s/ R. Glenn Dawson Director March 7, 2019R. Glenn Dawson /s/ John Johanning Director March 7, 2019John Johanning /s/ Markus Specks Director March 7, 2019Markus Specks /s/ Michael G. Long Director March 7, 2019Michael G. Long /s/ David M. Wood Director March 7, 2019David M. Wood /s/ Nicholas Steinsberger Director March 7, 2019Nicholas Steinsberger 62Index to Financial StatementsReports of Independent Registered Public Accounting Firms64Consolidated Balance Sheets as of December 31, 2018 and 201766Consolidated Statements of Operations for the years ended December 31, 2018 and 201767Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2018 and 201768Consolidated Statements of Cash Flows for the years ended December 31, 2018 and 201769Notes to Consolidated Financial Statements71Supplementary Information on Oil and Natural Gas Exploration, Development and Production Activities (unaudited)11563Report of Independent Registered Public Accounting Firm Shareholders and Board of DirectorsLilis Energy, Inc.Houston, TexasOpinion on the Consolidated Financial StatementsWe have audited the accompanying consolidated balance sheets of Lilis Energy, Inc. (the “Company”) and subsidiaries as of December 31, 2018 and 2017,the related consolidated statements of operations, changes in stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes(collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all materialrespects, the financial position of the Company and subsidiaries at December 31, 2018 and 2017, and the results of their operations and their cash flows forthe years then ended, in conformity with accounting principles generally accepted in the United States of America.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company'sinternal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued bythe Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) and our report dated March 7, 2019 expressed an unqualified opinionthereon.Basis for OpinionThese consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’sconsolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent withrespect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and ExchangeCommission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonableassurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud,and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosuresin the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ BDO USA, LLPWe have served as the Company's auditor since 2017.Dallas, TexasMarch 7, 201964Report of Independent Registered Public Accounting Firm Shareholders and Board of DirectorsLilis Energy, Inc.Houston, TexasOpinion on Internal Control over Financial ReportingWe have audited Lilis Energy, Inc.’s (the “Company’s”) internal control over financial reporting as of December 31, 2018, based on criteria established inInternal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”).In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on theCOSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidatedbalance sheets of the Company and subsidiaries as of December 31, 2018 and 2017, the related consolidated statements of operations, changes instockholders’ equity (deficit), and cash flows for the years then ended, and the related notes and our report dated March 7, 2019 expressed an unqualifiedopinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness ofinternal control over financial reporting, included in the accompanying Item 9A, Management’s Annual Report on Internal Control over Financial Reporting.Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firmregistered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicablerules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Ouraudit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing andevaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures aswe considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal controlover financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairlyreflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are beingmade only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention ortimely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation ofeffectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliancewith the policies or procedures may deteriorate./s/ BDO USA, LLPDallas, TexasMarch 7, 201965Lilis Energy, Inc. and SubsidiariesConsolidated Balance Sheets(In thousands, except share and per share data) December 31, 2018 2017ASSETS Current assets: Cash and cash equivalents$21,137 $17,462Accounts receivable, net of allowance of $25 and $39, respectively20,546 7,426Derivative assets2,551 —Prepaid expenses and other current assets1,851 584Total current assets46,085 25,472Property and equipment: Oil and natural gas properties, full cost method of accounting, net430,379 170,305Other property and equipment, net524 76Total property and equipment, net430,903 170,381Other assets3,785 91Total assets$480,773 $195,944LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accounts payable$47,112 $10,488Accrued liabilities14,794 7,634Revenue payable14,546 6,460Derivative instruments515 853Total current liabilities76,967 25,435Asset retirement obligations2,433 726Long-term debt157,804 127,794Derivative instruments4,699 72,937Long-term deferred revenue and other liabilities52,513 —Total liabilities294,416 226,892Commitments and contingencies (Note 19) Mezzanine Equity: Series C-1 9.75% Convertible Participating Preferred Stock, 10,000,000 shares authorized, 100,000 shares issued and outstanding with aliquidation preference of $24.3 million as of December 31, 2018.106,774 —Series C-2 9.75% Convertible Participating Preferred Stock, 10,000,000 shares authorized, 25,000 of shares issued and outstanding with aliquidation preference of $5.7 million as of December 31, 2018.25,522 —Series D $8.25% Convertible Participating Preferred Stock, 10,000,000 shares authorized, 39,254 shares, issued and outstanding with aliquidation preference of $10.0 million as of December 31, 2018.40,729 —Stockholders’ equity (deficit): Common stock, $0.0001 par value per share; 150,000,000 shares authorized, 71,182,016 and 53,368,331 shares issued and outstanding asof December 31, 2018 and 2017, respectively.7 5Additional paid-in capital321,753 272,335Treasury stock, 253,598 shares as of December 31, 2018(997) —Accumulated deficit(307,431) (303,288)Total stockholders’ equity (deficit)13,332 (30,948)Total liabilities, mezzanine equity and stockholders’ equity (deficit)$480,773 $195,944The accompanying notes are an integral part of these consolidated financial statements.66Lilis Energy, Inc. and SubsidiariesConsolidated Statements of Operations(In thousands, except share and per share data) Year Ended December 31, 2018 2017Revenues: Oil sales$58,042 $17,826Natural gas sales5,246 2,125Natural gas liquid sales6,928 1,661 Total revenues70,216 21,612Operating expenses: Production costs13,843 5,832Gathering, processing and transportation3,392 1,191Production taxes3,709 1,187General and administrative33,251 49,851Depreciation, depletion, accretion and amortization25,367 7,025Impairment of evaluated oil and natural gas properties— 10,505Total operating expenses79,562 75,591Loss from operations(9,346) (53,979)Other income (expense): Loss on early extinguishment of debt(20,370) —Gain (loss) from commodity derivatives, net55 (1,063)Gain (loss) from embedded derivatives58,343 (6,260)Loss from conditionally redeemable preferred stock— (41)Interest expense(32,827) (18,757)Other income2 18Total other income (expense)5,203 (26,103)Net loss before income taxes(4,143) (80,082)Income tax expense— —Net loss(4,143) (80,082)Dividends on Series C-1, C-2 and D convertible preferred stock(10,687) —Dividends on redeemable preferred stock— (122)Dividend and deemed dividends on Series B convertible preferred stock— (4,635)Net loss attributable to common stockholders$(14,830) $(84,839) Net loss per common share: Basic$(0.24) $(2.00)Diluted$(0.47) $(2.00) Weighted average common shares outstanding: Basic62,854,214 42,428,148Diluted78,451,341 42,428,148The accompanying notes are an integral part of these consolidated financial statements.67Lilis Energy, Inc. and SubsidiariesConsolidated Statements of Changes in Stockholders’ Equity (Deficit)(In thousands, except share and per share data) Series B PreferredShares Common Shares AdditionalPaid In Treasury Shares Accumulated Shares Amount Shares Amount Capital Shares Amount Deficit TotalBalance, December 31, 2016 16,828 $13,432 20,918,901 $2 $219,837 — $— $(223,206) $10,065Stock based compensation — — — — 21,538 — — — 21,538Common stock for restricted stockand stock options — — 5,859,383 — 524 — — — 524Common stock withheld for taxes onstock based compensation — — (786,081) — (3,709) — — — (3,709)Exercise of warrants — — 5,580,281 1 592 — — — 593Conversion of Series B PreferredStock and dividends (16,828) (13,432) 16,601,026 2 14,863 — — — 1,433Sale of common stock in privateplacement, net — — 5,194,821 — 18,649 — — — 18,649Warrants repriced for term loan — — — — 1,031 — — — 1,031Dividends and deemed dividends onpreferred stock — — — — (990) — — — (990)Net loss — — — — — — — (80,082) (80,082)Balance, December 31, 2017 — — 53,368,331 5 272,335 — — (303,288) (30,948)Stock based compensation — — — — 9,000 — — — 9,000Common stock for restricted stock — — 404,093 — — — — — —Common stock withheld for taxes onstock based compensation — — (484,727) — (2,230) — — — (2,230)Exercise of warrants and stockoptions — — 5,000,834 — 3,751 — — — 3,751Common stock issued for acquisitionof oil and gas properties — — 6,940,722 1 24,777 — — — 24,778Common stock issued for conversionof debt — — 5,952,763 1 24,584 — — — 24,585Reclassification of warrantderivatives — — — — 223 — — — 223Purchase of treasury stock — — — — — (253,598) (997) — (997)Dividends on preferred stock — — — — (10,687) — — — (10,687)Net loss — — — — — — — (4,143) (4,143)Balance, December 31, 2018 — $— 71,182,016 $7 $321,753 (253,598) $(997) $(307,431) $13,332The accompanying notes are an integral part of these consolidated financial statements.68Lilis Energy, Inc. and SubsidiariesConsolidated Statements of Cash Flows(In thousands) Year Ended December 31, 2018 2017Cash flows from operating activities: Net loss$(4,143) $(80,082)Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Stock based compensation9,000 21,538Bad debt expense106 22Amortization of debt issuance cost and debt discount15,656 10,371Paid-in-kind interest12,213 6,559Loss on early extinguishment of debt20,370 —(Gain) loss on commodity derivatives(55) 1,063Net settlements on commodity derivatives(2,742) (96)Gain (loss) on embedded derivatives(58,343) 6,301Depreciation, depletion, amortization and accretion25,367 7,025Impairment of evaluated oil and natural gas properties— 10,505Changes in operating assets and liabilities: Accounts receivable(13,226) (5,204)Prepaid and other assets(473) 309Accounts payable, accrued expenses and other liabilities53,402 14,446Proceeds from options associated with future midstream services35,000 —Net cash provided by (used in) operating activities92,132 (7,243)Cash flows from investing activities: Proceeds from options associated with salt water disposal infrastructure17,500 —Acquisitions of Southwest Royalties LLC(17,039) —Acquisitions of oil and natural gas properties(75,371) —Net proceeds from sale of DJ Basin and non-operated properties— 1,282Capital expenditures(168,025) (148,784)Net cash used in investing activities(242,935) (147,502)Cash flows from financing activities: Proceeds from term loans, net of financing costs47,806 185,428Proceeds from the revolving credit agreement75,000 —Debt issuance costs(2,434) —Repayment of term loans and notes payable(88,836) (40,394)Proceeds from the issuance of Series C Preferred Stock125,000 —Equity financing costs(2,582) —Proceeds from private placement, net of financing costs— 18,399Proceeds from exercise of stock options and warrants3,751 745Payment for tax withholding on stock-based compensation(2,230) (3,709)Payment for common stock repurchased(997) —Net cash provided by financing activities154,478 160,469Increase in cash and cash equivalents3,675 5,724Cash and cash equivalents at beginning of period17,462 11,73869Cash and cash equivalents at end of period$21,137 $17,462Supplemental disclosure - See Note 16 Cash paid for interest$4,958 $2,292 The accompanying notes are an integral part of these consolidated financial statements.70Lilis Energy, Inc. and SubsidiariesNotes to Consolidated Financial StatementsNOTE 1 – Organization and BusinessLilis Energy, Inc. (“Lilis”, “Lilis Energy” or the “Company”) was incorporated in the State of Nevada and is listed and traded on the American NewYork Stock Exchange. The Company is an independent oil and natural gas company focused on the acquisition, development, and production ofconventional and unconventional oil and natural gas properties in the core of the Delaware Basin in Winkler, Loving, and Reeves Counties, Texas and LeaCounty, New Mexico.NOTE 2 – Basis of Presentation and Summary of Significant Accounting PoliciesPrinciples of ConsolidationThe consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries which includes Brushy Resources,ImPetro Operating, LLC (“ImPetro Operating”), ImPetro Resources, LLC (“ImPetro”), Lilis Operating Company, LLC (“Lilis Operating”), and HurricaneResources LLC (“Hurricane”). All significant intercompany accounts and transactions have been eliminated in consolidation.Use of EstimatesThe accompanying consolidated financial statements are prepared in conformity with GAAP which requires the Company to make a number ofestimates and assumptions relating to the reported amounts of assets and liabilities; disclosure of contingent assets and liabilities at the date of the financialstatements, the reported amounts of revenues and expenses during the reporting period; and the quantities and values of proved oil, natural gas and naturalgas liquid (“NGL”) reserves used in calculating depletion and assessing impairment of its oil and natural gas properties. The most significant estimatespertain to the evaluation of unproved properties for impairment, proved oil and natural gas reserves and related cash flow estimates used in the depletion andimpairment of oil and natural gas properties; the timing and amount of transfers of our unevaluated properties into our amortizable full cost pool; the fairvalue of embedded derivatives and commodity derivative contracts, accrued oil and natural gas revenues and expenses, valuation of options and warrants,and the allocation of general administrative expenses. Actual results could differ significantly from these estimates.ReclassificationsCertain reclassifications have been made to the prior year financial statements to conform to the 2018 presentation. These reclassifications have noeffect on the Company’s previously reported results of operations, shareholders’ equity or cash flows.In the preparation of the year-end consolidated financial statements, the Company identified an error in the classification of $15.0 million of cashreceived under the SCM agreement discussed in Note 10. Such receipts should have been reflected in investing activities instead of operating activities forthe nine months ended September 30, 2018. The classification has been corrected in the consolidated statement of cash flows for the year ended December31, 2018. Cash and Cash EquivalentsCash and cash equivalents include highly liquid instruments with an original maturity of three months or less are stated at cost, which approximatesfair value. Accounts ReceivableThe Company has accounts receivable from joint interest owners of properties operated by the Company. The Company typically has the right towithhold future revenue disbursements to recover any non-payment of related joint interest billings. Management routinely assesses accounts receivableamounts to determine their collectability and accrues an allowance for uncollectible receivables when, based on the judgment of management, it is probablethat a receivable will not be collected. The Company records actual and estimated oil and natural gas revenue receivable from third parties at its net revenueinterest. In addition, the Company has receivables derived from sales of certain oil and natural gas production which are collateral under the Company’scredit agreements.Fair Value of Financial Instruments71As of December 31, 2018 and 2017, the carrying value of cash and cash equivalents, accounts receivable, accounts payable, accrued liabilities,revenue payable and advances from joint interest partners approximates fair value due to the short-term nature of such items. The carrying value of theCompany’s secured debt is carried at cost which approximates the fair value of the debt as the related interest rates approximates interest rates currentlyavailable to the Company.Oil and Natural Gas PropertiesThe Company uses the full cost method of accounting for oil and natural gas operations. Under this method, costs related to the exploration, non-production related development and acquisition of oil and natural gas reserves are capitalized. Such costs include land acquisition costs, geological andgeophysical expenses, carrying charges on non-producing properties, costs of drilling, developing and completing productive wells, and any other costsdirectly related to acquisition and exploration activities. Proceeds from property sales are generally applied as a credit against capitalized exploration anddevelopment costs, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the provedreserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of proved reserves.Depletion of exploration and development costs and depreciation of wells and tangible production assets is computed using the units-of-productionmethod based upon estimated proved oil and natural gas reserves. Costs included in the depletion base to be amortized include (a) all proved capitalizedcosts including capitalized asset retirement costs net of estimated salvage values, less accumulated depletion, and (b) estimated future development cost to beincurred in developing proved reserves, that are not otherwise included in capitalized costs.Under the full cost method of accounting, capitalized oil and natural gas property costs less accumulated depletion (net of deferred income taxes)may not exceed an amount equal to the sum of the present value, discounted at 10%, of estimated future net revenues from proved oil and natural gas reservesand the cost of unproved properties not subject to amortization (without regard to estimates of fair value), or estimated fair value, if lower, of unprovedproperties that are not subject to amortization. Should capitalized costs exceed this ceiling, an impairment expense is recognized. The present value ofestimated future net cash flows was computed by applying a flat oil price to forecast revenues from estimated future production of proved oil and natural gasreserves as of period-end, less estimated future expenditures to be incurred in developing and producing the proved reserves (assuming the continuation ofexisting economic conditions), less any applicable future taxes. For the year ended December 31, 2018, the ceiling value of the Company’s reserves wascalculated based upon SEC pricing of $65.56 per barrel for oil and $3.10 per MMBtu for natural gas.The costs of unproved oil and gas properties are excluded from amortization until the properties are evaluated. Costs are transferred into theamortization base on an ongoing basis as the properties are evaluated and proved oil and natural gas reserves are established or if impairment is determined.Unproved oil and gas properties are assessed periodically, at least annually, to determine whether impairment had occurred. The assessment considers thefollowing factors, among others: intent to drill, remaining lease term, geological and geophysical evaluations, drilling results and activity, the assignment ofproved reserves, the economic viability of development if proved reserves were assigned and other current market conditions. During any period in whichthese factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs aretransferred to the full cost pool and were then subject to amortization.Wells in Progress Wells in progress connotes wells that are currently in the process of being drilled or completed or otherwise under evaluation as to their potential toproduce oil and natural gas reserves in commercial quantities. Such wells continue to be classified as wells in progress and withheld from the depletioncalculation and the ceiling test until such time as either proved reserves can be assigned, or the wells are otherwise abandoned. Upon either the assignment ofproved reserves or abandonment, the costs for these wells are then transferred to the full cost pool and become subject to both depletion and the ceiling testcalculations in accordance with full cost accounting under Rule 4-10 of Regulation S-X of the Securities Exchange Act of 1934, as amended.Capitalized InterestFor significant oil and natural gas investments in unproved properties, and significant exploration and development projects that have notcommenced production, interest is capitalized as part of the historical cost of developing and constructing assets. Capitalized interest is determined bymultiplying the Company’s weighted-average borrowing cost on debt by the average amount of qualifying costs incurred. Once an asset subject to interestcapitalization is completed and placed in service, the associated capitalized interest is expensed through depreciation or impairment. As of December 31,2018, there were no significant exploratory72projects on unproved properties and none of the development projects exceeded the interest capitalization qualifying asset limit. As a result, no interest wascapitalized as of December 31, 2018 and 2017. Other Property and EquipmentProperty and equipment include vehicles, office equipment and furniture which are stated at cost. Depreciation is calculated using the straight-linemethod over the estimated useful lives of the assets. The estimated useful lives of property and equipment range from three to seven years. The Companyrecorded approximately $0.01 million and $0.04 million of depreciation for the years ended December 31, 2018 and 2017, respectively.Accrued LiabilitiesAs of December 31, 2018 and 2017, the Company’s accrued liabilities consisted of the following: December 31, 2018 2017 (in thousands)Accrued bonuses$2,300 $3,000Accrued drilling costs7,850 3,615Accrued production expenses2,926 182Other accrued liabilities1,718 837Total accrued liabilities$14,794 $7,634Asset Retirement ObligationsThe Company incurs retirement obligations for certain assets at the time they are placed in service. The fair values of these obligations are recordedas liabilities on a discounted basis. The costs associated with these liabilities are capitalized as part of the related assets and depreciated. Over time, theliabilities are accreted for the change in their present value. For purposes of depletion, the Company includes estimated dismantlement and abandonmentcost, net of salvage values, associated with future development activities that have not yet been capitalized as asset retirement obligations. Asset retirementobligations incurred are classified as Level 3 (unobservable inputs) fair value measurements.Revenue RecognitionRevenue is recognized when control passes to the purchaser which generally occurs when production is transferred to the purchaser. The Companymeasures revenue as the amount of consideration it expects to receive in exchange for the commodities transferred. All of the Company’s revenues fromcontracts with customers represent products transferred at a point in time as control is transferred to the customer. The Company records revenue based on consideration specified in its contracts with its customers. The amounts collected on behalf of third partiesare recorded in revenue payable. The Company recognizes revenue in the amount that reflects the consideration it expects to receive in exchange fortransferring control of those goods to the customer. The contract consideration in the Company’s variable price contracts is typically allocated to specificperformance obligations in the contract according to the price stated in the contract. Payment is generally received one or two months after the sale hasoccurred.Stock based Compensation The Company applies a fair value method of accounting for stock based compensation, which requires recognition in the financial statements of thecost of services received in exchange for equity awards. For equity awards, compensation expense is based on the fair value on the grant date or modificationdate and is recognized in the Company’s financial statements over the vesting period. The Company utilizes the Black-Scholes Merton option-pricing modelto measure the fair value of stock options based on several criteria, including but not limited to, the valuation model used and associated input factors, suchas expected term of the award, stock price volatility, risk free interest rate, dividend rate. These inputs are subjective and are determined using management’sjudgment. If differences arise between the assumptions used in determining stock based compensation expense and the actual factors, which become knownover time, the Company may change the input factors used in determining future stock based compensation expense. The Company recognizes forfeitures asand when the stock awards are forfeited.73The Company accounts for warrant grants to nonemployees whereby the fair values of such warrants are determined using the option pricing modelat the earlier of the date at which the nonemployee’s performance is complete or a performance commitment is reached.Income TaxesThe Company uses the asset and liability method in accounting for income taxes. Deferred tax assets and liabilities are recognized for temporarydifferences between financial statement carrying amounts and the tax bases of assets and liabilities and are measured using the tax rates expected to be ineffect when the differences reverse. Deferred tax assets are also recognized for operating loss and tax credit carry forwards. The effect on deferred tax assetsand liabilities of a change in tax rates is recognized in the results of operations in the period that includes the enactment date. A valuation allowance is usedto reduce deferred tax assets when uncertainty exists regarding their realization.The Company recognizes its tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities.The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely to be realized upon settlement. A liability for“unrecognized tax benefits” is recorded for any tax benefits claimed that do not meet these recognition and measurement standards. As of December 31, 2018and 2017, the Company has determined that no liability is required to be recognized.The Company’s policy is to recognize any interest and penalties related to unrecognized tax benefits in income tax expense. No interest or penaltieswere required to be accrued at December 31, 2018 and 2017. Further, the Company does not expect that the total amount of unrecognized tax benefits willsignificantly increase or decrease during the next 12 months.Concentration of Credit RiskThe Company operates a substantial portion of its oil and natural gas properties. As the operator of a property, the Company makes full payment forcosts associated with the property and seeks reimbursement from the other joint interest owners in the property for their portion of those costs. Whenwarranted, prepayments are required from joint interest owners for drilling and completion projects. Joint interest owners consist primarily of independent oiland natural gas producers whose ability to reimburse the Company could be negatively impacted by adverse market conditions.The purchasers of the Company’s oil, natural gas and NGL production consist primarily of independent marketers, major oil and gas companies,refiners and gas pipeline companies. Credit evaluations are performed on the Company’s purchasers of its production and their financial condition ismonitored on an ongoing basis. Based on those evaluations and monitoring, the Company may obtain letters of credit or parental guarantees from somepurchasers.All of the Company’s oil and natural gas derivative transactions are carried out in the over-the-counter market and are not typically subject to margin-deposit requirements. The use of derivative transactions involves the risk that the counterparties will be unable to meet the financial terms of suchtransactions. The Company monitors the credit ratings of its derivative counterparties on an ongoing basis. If a counterparty were to default on its obligationsto the Company under the derivative contracts or seek bankruptcy protection, it could have a material adverse effect on its ability to fund planned activitiesand could result in a larger percentage of our future production being subject to commodity price volatility. In addition, in poor economic environments andtight financial markets, the risk of a counterparty default is heightened and fewer counterparties may participate in derivative transactions, which could resultin greater concentration of exposure to any one counterparty or a larger percentage of the Company’s future production being subject to commodity pricechanges.Major CustomersDuring the years ended December 31, 2018 and 2017, the Company’s major customers relative to total revenue consisted of the following:74 Year Ended December 31, 2018 2017Texican Crude & Hydrocarbon, LLC87% 85%ETC Field Services LLC2% 14%Lucid Energy10% —%All others1% 1% 100% 100%Due to availability of other purchasers, we do not believe the loss of any single oil or natural gas customer would have a material adverse effect onour results of operations.Derivative InstrumentsAll derivative instruments are recorded on the consolidated balance sheet at fair value as either an asset or a liability with changes in fair valuerecognized currently in earnings. Although derivative instruments are used by the Company to manage the price risk attributable to its expected oil andnatural gas production, those derivative instruments have not been designated as accounting hedges under the accounting guidance. All of our derivativesare accounted for as mark-to-market activities. Under ASC Topic 815, “Derivatives and Hedging,” these instruments are recorded on the consolidated balancesheets at fair value as either short term or long-term assets or liabilities based on their anticipated settlement date. The Company nets derivative assets andliabilities by commodity for counterparties where a legal right to such offset exists. Changes in the derivatives’ fair values are recognized in current earningssince the Company has elected not to designate its current derivative contracts as cash flow hedges for accounting purposes.The Company has recognized certain conversion features within its Second Lien Term Loan as embedded derivatives that have been bifurcated fromthe Second Lien Term Loan, as defined in Note 8, and accounted for separately from the debt.Recently Adopted Accounting StandardsThe Company adopted Accounting Standard Update (ASU) No. 2016-02, Leases (Topic 842) on January 1, 2019. This ASU establishes significantchanges to accounting for leases which include recognizing a lease liability and a right-of-use (ROU) asset for all leases, with terms exceeding 12 months onthe Company’s Consolidated Balance Sheet. Expenses related to operating leases will continue to be recognized in the Company’s Consolidated Statementsof Operations that are similar to current lease accounting guidance. The Company adopted this ASU using the modified retrospective approach and elected apackage of practical expedients which allows the Company to avoid reassessing contracts that commenced prior to adoption and were correctly classifiedunder existing lease accounting guidance. The Company will apply the transition requirements at the January 1, 2019 effective date. This approach allowsfor a cumulative effect adjustment in the period of adoption and prior periods will not be restated.Policy elections permitted under this ASU that have been made by the Company include (a) not recognizing on the balance sheet leases with termsthat are less than twelve months, (b) for agreements that contain both lease and non-lease components, combining these components together and accountingfor them as a single lease, (c) the package of practical expedients, which allows the Company to avoid reassessing contracts that commenced prior toadoption and were correctly classified under ASC 840. In January 2018, the FASB issued ASU 2018-01, Leases (Topic 842) Land Easement Practical Expedient for Transition to Topic 842. This ASUprovides an optional transition practical expedient to not evaluate under Topic 842 (discussed above) existing or expired land easements that were notpreviously accounted for as leases under the current lease guidance in Topic 840. An entity that elects this practical expedient should evaluate new ormodified land easements under Topic 842 beginning at the date that the entity adopts Topic 842. Under the full cost method of accounting, we capitalize tooil and gas properties all property acquisition, exploration, and development costs, which include the costs of land easements. We plan to elect this practicalexpedient and continue to apply our current accounting policy to account for land easements that existed before our adoption of Topic 842 and will evaluatenew or modified land easements under Topic 842 upon our adoption of Topic 842. The Company has also made changes to its accounting systems, business and control processes to facilitate compliance with accounting andreporting requirements. Based on leases assessed and identified at January 1, 2019, the Company estimates the impact to its Consolidated Balance Sheetwould be approximately between the range of $6.7 million and $8.2 million and does not expect a material impact on its Consolidated Statements ofOperations or Consolidated Statement of Cash Flows.75On January 1, 2018, the Company adopted the new accounting standard, Accounting Standards Codification, ASC 606, Revenue from Contractswith Customers and all the related amendments (the “New Revenue Standard”) using the modified retrospective method. In accordance with the modifiedretrospective method, comparative information is not restated and continues to be reported under the accounting standards in effect for those periods. Thecumulative effect of initially adopting the New Revenue Standard, if any, is recorded as an adjustment to the opening balance of retained earnings. TheCompany’s revenue from customers is derived from production and sales of crude oil, natural gas and NGLs and recognized when control is transferred to thecustomer. As operator, the Company may market production on behalf of joint interest partners and various royalty owners. Under the terms of our jointoperating agreements, the Company does not take control of the production attributable to our joint interest partners and the various royalty owners.Consequently, the Company recognizes revenues only for its share of the production, see Note 6. In accordance with the New Revenue Standardrequirements, the impact of adoption on the Company’s consolidated statements of operations and consolidated balance sheets was as follows: As Reported Balances without Adoption ofASC 606 Increase (Decrease)Year Ended December 31, 2018(in thousands)Consolidated Statements of Operations: Revenues$70,216 $70,321 $(105)Operating expenses(3,392) (3,497) 105 As of December 31, 2018 Consolidated Balance Sheets: Accounts receivable$17,363 $17,468 $(105)Accrued liabilities14,793 14,898 (105)As shown in this comparison table, there is no impact on the net loss from the New Revenue Standard adoption and, therefore, no adjustment to theopening balance of accumulated deficit. Prior to the adoption of the New Revenue Standard, the revenue line included the value of our natural gas gatherer’scontractual volume retainage fee, with an offsetting cost included in the gathering, processing and marketing costs line. In accordance with the New RevenueStandard, the Company will only recognize revenues for its share of the production, resulting in the removal of the retainage fee approximating $105,000from both revenues and operating expenses during the year ended December 31, 2018.On July 13, 2017, the Financial Accounting Standards Board (“FASB”) issued a two-part ASU, ASU 2017-11, (Part I) Accounting for CertainFinancial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments ofCertain Nonpublic Entities and Certain Redeemable Noncontrolling Interests with a Scope Exception (ASU 2017-11). Part I of ASU 2017-11 simplifies theaccounting for certain financial instruments with down round features by requiring companies to disregard the down round feature when assessing whetherthe instrument is indexed to its own stock, for purposes of determining liability or equity classification. Companies that provide earnings per share (EPS) datawill adjust their basic EPS calculation for the effect of the feature when triggered (that is, when the exercise price of the related equity-linked financialinstrument is adjusted downward because of the down round feature) and will also recognize the effect of the trigger within equity. Part II of ASU 2017-11 isnot applicable to the Company since it addresses concerns relating to an indefinite deferral available to private companies with mandatorily redeemablefinancial instruments and certain noncontrolling interests. The provisions of ASU 2017-11 related to down rounds are effective for public business entities forfiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted for all organizations. The Companyelected to adopt ASU 2017-11 on January 1, 2018. The Company’s SOS Warrant Liability (as described in Note 7) was accounted for as a derivativeinstrument solely because of its down round feature. The outstanding SOS Warrants of $0.2 million as of the date of adoption were reclassified to equity andthe Company no longer recognize any gain or loss based on the fair value of the SOS Warrants. The cumulative effect of the adoption was not material. TheSOS Warrants expired on June 23, 2018. No other derivatives instruments were affected by the adoption of ASU 2017-11.On June 20, 2018, the FASB issued ASU 2018-07, Improvements to Nonemployee Share-Based Payment Accounting, which supersedes most of theprior accounting guidance on nonemployee share-based payments, and instead aligns it with existing guidance on employee share-based payments in Topic718. As a result, nonemployee share-based payment transactions will be measured by estimating the fair value of the equity instruments that an entity isobligated to issue and the measurement date will be consistent with the measurement date for employee share-based payment awards (i.e., grant date forequity-classified awards).76Probability is to be considered on nonemployee awards with performance conditions. The classification will continue to be subject to the requirements ofTopic 718, Compensation - Stock Compensation, although cost recognition of nonemployee awards will remain unchanged. The amendments becomeeffective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year. Early adoption ispermitted, but no earlier than an entity’s adoption date of Topic 606. The Company elected to early adopt the ASC 2018-07 during the quarter endedSeptember 30, 2018. As a result, during the year ended December 31, 2018, there was no material impact on non-employee share-based compensation. On January 5, 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business (ASU 2017-01),which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assetsor businesses. ASU 2017-01 introduces a screen for determining when assets acquired are not a business and clarifies that a business must include, at aminimum, an input and a substantive process that contribute to an output to be considered a business. This standard is effective for fiscal years beginningafter December 15, 2017, including interim periods within that reporting period. The Company adopted ASU 2017-01 on January 1, 2018. During year endedDecember 31, 2018, the Company completed multiple acquisitions which were assessed in accordance with the new standard (see Note 4).On January 1, 2018, the Company retroactively adopted ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus ofthe FASB Emerging Issues Task Force). This ASU requires the statements of cash flows to present the change during the period in the total of cash, cashequivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash andrestricted cash equivalents are now included with cash and cash equivalents when reconciling the beginning of period and end of period amounts presentedon the statements of cash flows. The retrospective application of this new accounting guidance did not have a material impact in the Company’saccompanying consolidated statement of cash flows for the year ended December 31, 2017. For the year ended December 31, 2018, there was no restrictedcash.NOTE 3 - OIL AND NATURAL GAS PROPERTIESThe following table set forth a summary of oil and natural gas property costs (net of divestitures) at December 31, 2018 and 2017: 2018 2017Oil and natural gas properties:(In thousands)Proved$358,858 $141,717Unproved169,863 101,771Total oil and natural gas properties528,721 243,488Accumulated depletion, depreciation and amortization(98,342) (73,183)Oil and natural gas properties, net$430,379 $170,305The following table set forth a summary of costs withheld from amortization as of December 31, 2018: Year of Acquisition Total 2018 2017 2016Unamortized costs:(in thousands)Unproved leasehold costs$168,302 $92,505 $52,744 $23,053Exploratory costs1,561 1,561 — —Total$169,863 $94,066 $52,744 $23,053For the year ended December 31, 2018, $11.1 million of unproved property costs were transferred to proved properties due to defective titles incertain leases. There were no such transfers of unproved properties to proved properties for the year ended December 31, 2017.77Depreciation, depletion and amortization expense related to full cost pool was approximately $25.4 million and $7.0 million for the years endedDecember 31, 2018, and 2017, respectively.NOTE 4 - ACQUISITIONS AND DIVESTITURESSouthwest Royalties AcquisitionOn October 16, 2018, Lilis completed an acquisition of approximately 568.5 net acres in Winkler county in Texas from Southwest Royalties LLC(the “Southwest Royalties Acquisition”) for total consideration of approximately $17.0 million. The Company recorded $12.6 million of the totalconsideration to the full cost pool associated with acquired working interests in proved properties and $4.5 million to unproved acreage cost. The SouthwestRoyalties Acquisition was accounted for as a business combination. Therefore, the purchase price was allocated to the assets acquired and liabilities assumedbased on their estimated acquisition date fair values available at closing. Transaction costs associated for this acquisition were immaterial and were expensedin the Consolidated Statements for Operations during the year ended December 31, 2018. Revenues and operating expenses associated with the provedproperties were insignificant to the December 31, 2018 Consolidated Statements of Operations.The following table presents the final allocation of the purchase price to the assets acquired and liabilities assumed as of the acquisition date: As of October 16, 2018 (In thousands)Fair value of net assets: Proved oil and natural gas properties$12,562Unproved oil and natural gas properties4,542Total assets acquired17,104Asset retirement obligations assumed(65)Fair value of net assets acquired$17,039Ameredev Leasehold Acreage Exchange TransactionOn August 1, 2018, the Company entered into a Leasehold Exchange Agreement (the “Ameredev Exchange Agreement”) with Ameredev II, LLC(“Ameredev”) to exchange certain leasehold interests located in Lea County, New Mexico owned by the Company for certain leasehold interests owned byAmeredev also located in Lea County, New Mexico. The Ameredev Exchange Agreement closed on September 14, 2018, and required the Company payAmeredev $12,500 for each net mineral acre received in excess of the Company’s net mineral acres traded to Ameredev. The Company’s payment for excessnet mineral acres was $0.7 million. In connection with the Ameredev Exchange Agreement, the Company assumed the working interests in four wellspursuant to which Ameredev advanced the Company $6.5 million for the estimated costs of the four wells. At the closing of the exchange transaction, theCompany refunded the $6.5 million to Ameredev. The four wells are located in Lea County, New Mexico and operated by the Company. Total proceeds paidto Ameredev was approximately $7.2 million. Substantially, all the assets acquired were unproved oil and natural gas properties. As a result, the acquisitionwas accounted for as an asset acquisition and was recorded as an adjustment to the full cost pool. Transaction costs associated for this acquisition wereimmaterial.Felix Holdings Leasehold Acreage Exchange TransactionOn June 4, 2018, the Company entered into a Leasehold Exchange Agreement (the “Felix Exchange Agreement”) with Felix Energy Holdings II,LLC (“Felix”) to exchange certain leasehold interest located in Loving and Winkler Counties in Texas owned by the Company for certain leasehold interestlocated in the same counties owned by Felix. The Agreement closed on August 14, 2018, with an effective date of May 1, 2018. In addition to the Felixleasehold interests, the Company acquired certain working interests in two wells operated by the Company in Winkler County, Texas. The Company paidFelix for the well costs incurred by Felix to drill and complete the two wells, less any revenues paid to Felix. The final settlement was a payment of $0.4million which was recorded as an adjustment to the full cost pool. Transaction costs associated for this acquisition were immaterial.Anadarko AcquisitionOn May 3, 2018, the Company completed the acquisition of certain leasehold interests and other oil and natural gas assets in Loving and WinklerCounties, Texas from Anadarko for cash consideration of $7.1 million. The acquisition includes substantially all unproved leaseholds and an insignificantamount of non-consent proved producing oil and natural gas properties. As a result,78the transaction is accounted for as an asset acquisition using the fair value of $7.1 million. Transaction costs associated for this acquisition were immaterial.VPD AcquisitionOn February 28, 2018, the Company completed the acquisition of certain leasehold interests and other oil and natural gas assets in Loving andWinkler Counties, Texas from VPD Texas, L.P. (“VPD”) for cash consideration of $10.7 million (the “VPD Acquisition”). Substantially all of the assetsacquired were unproved oil and natural gas properties, thus the acquisition was accounted for as an asset acquisition. Total cash consideration recorded forthe VPD acquisition was approximately $11.1 million including $0.5 million of related acquisition costs. VPD is an affiliate of Värde Partners, Inc. (“Värde”).Värde participated as lead lender in the Company’s Second Lien Term Loan (as defined below in Note 9) transaction in 2017 and as investor of theCompany’s Series C Preferred Stock transaction in January 2018. As a result, the VPD Acquisition is considered a related party transaction. See Note 11 -Related Party Transactions.In connection with the above VPD Acquisition and pursuant to Article XVI.3(b) of the Joint Operating Agreement dated February 28, 2018 (the“JOA”) entered into between VPD and ImPetro Operating, LLC (“Operator”), a subsidiary of the Company, the Company has committed to the followingdrilling commitments:•drill and complete two horizontal wells (“Initial Commitment Wells”) no later than December 31, 2018; and•drill and complete at least two additional horizontal wells (“Subsequent Commitment Wells”) that target the Wolfcamp A/B Formation no later thanDecember 31, 2019.The Company has a one-time option to extend the deadline by an additional 75 days by providing written notice to VPD of such election on orbefore August 31, 2018, in the case of the Initial Commitment Wells, and August 31, 2019, in the case of the Subsequent Commitment Wells.As of December 31, 2018, the Company has spud the first two Initial Commitment Wells and executed an Amendment to the JOA to extend thedrilling and completion deadline of the two Initial Commitment Wells to May 1, 2019.OEP AcquisitionOn January 30, 2018, the Company entered into a Purchase and Sale Agreement (the “Purchase and Sale Agreement”) by and between the Companyand OneEnergy Partners Operating, LLC (“OEP”), pursuant to which the Company agreed to purchase from OEP, and OEP agreed to sell to the Company,certain oil and natural gas properties and related assets for a purchase price of $70 million, subject to customary purchase price adjustments (the “OEPAcquisition”). The properties acquired by the Company pursuant to the Purchase and Sale Agreement consist of leasehold acreage in the Delaware Basin inLea County, New Mexico. On March 15, 2018, the Company completed the OEP Acquisition whereby the Company paid $40 million in cash and issued6,940,722 shares of the Company’s common stock valued at approximately $24.9 million for a total purchase price of approximately $64.9 million, beforeacquisition costs and customary purchase price adjustments. The value of the shares issued was determined using the closing price of the Company’s stock onthe date of closing. Transaction costs associated for this acquisition were $1.1 million.Substantially, all the assets acquired in the OEP Acquisition were unproved oil and natural gas property. As a result the OEP acquisition wasaccounted for as an asset purchase of proved properties and unproved properties using relative fair value of the assets acquired. The proved producingproperties were valued based on internal estimates of future production using strip pricing and the present value discounted at 10%. Unproved propertiesacquired were valued using a market approach.KEW AcquisitionAs of December 31, 2017, the Company completed the acquisition of unproved acreage in Winkler County, Texas from KEW Drilling, a Delawarelimited partnership (“KEW”), for cash consideration of $48.9 million plus $0.8 million of related acquisition costs. Substantially, all the assets acquired inthe KEW acquisition were unproved oil and natural gas properties. As a result, the acquisition was accounted for as an asset acquisition using the relative fairvalue, which was the total cash consideration of approximately $49.7 million.DJ Basin Properties DivestitureOn March 31, 2017, the Company entered into a purchase and sale agreement with Nanke Energy LLC for the divestiture of all of its oil and naturalgas properties located in the Denver-Julesburg Basin (the “DJ Basin”) for consideration of $2 million,79subject to customary post-closing purchase price adjustments. The sale of the Company’s DJ Basin assets did not significantly alter the relationship betweencapitalized costs and proved reserves, and as such, all proceeds were recorded as adjustments to the Company’s full cost pool with no gain or loss recognized.The DJ Basin assets were sold to an entity owned by the Company’s former chief financial officer and therefore the divestiture is considered a related partytransaction. See Note 11 - Related Party Transactions. The net proceeds of $1.08 million received on March 31, 2017 included an offset against $0.7 millionof severance pay and $0.22 million of net sales adjustments due to the purchaser. In addition, the Company received $0.2 million in proceeds from the sale ofnon-operated properties sold in 2017.NOTE 5 - ASSET RETIREMENT OBLIGATIONS (ARO)The Company’s ARO represent the present value of the estimated cash flows expected to be incurred to plug, abandon and remediate producingproperties, excluding salvage values, at the end of their productive lives in accordance with applicable laws. Revisions in estimated liabilities during theperiod relate primarily to changes in estimates of asset retirement costs. Revisions in estimated liabilities can also include, but are not limited to, revisions ofestimated inflation rates, changes in property lives and expected timing of settlement.The following table summarizes the changes in the Company’s ARO: Year Ended December 31, 2018 2017 (In thousands)ARO, beginning of period$952 $1,257Additional liabilities incurred374 20Accretion expense85 82Liabilities settled(87) (288)Revision in estimates (1)1,120 (119)ARO, end of period2,444 952Less: current portion of ARO (2)(11) (226)ARO, non-current$2,433 $726(1)The significant increase in revision of estimates of $1.1 million for the year ended December 31, 2018 was primarily attributed to increases in pluggingand abandonment cost estimates by approximately $50,000 per well.(2) The current portion of ARO is included in accrued liabilities in the consolidated balance sheets.NOTE 6 - REVENUERevenue is recognized when control passes to the purchaser which generally occurs when production is transferred to the purchaser. The Companymeasures revenue as the amount of consideration it expects to receive in exchange for the commodities transferred. All of the Company’s revenues fromcontracts with customers represent products transferred at a point in time as control is transferred to the customer.The Company records revenue based on consideration specified in its contracts with its customers. The amounts collected on behalf of third partiesare recorded in revenue payable. The Company recognizes revenue in the amount that reflects the consideration it expects to receive in exchange fortransferring control of those goods to the customer. The contract consideration in the Company’s variable price contracts is typically allocated to specificperformance obligations in the contract according to the price stated in the contract. Payment is generally received one or two months after the sale hasoccurred.Crude oil revenuesCrude oil from our operated properties is produced and stored in field tanks. The Company recognizes crude oil revenue when control passes to thepurchaser. The Company’s crude oil is currently sold under a single short-term contract. The purchaser’s commitment includes all quantities of crude oil fromthe leases that are covered by the contract, with no quantity-based restrictions or variable terms. Pricing is based on posted indexes for crude oil of similarquality, less a fees deduction that is subject to80negotiation. As of the most recent contract amendments, the negotiable fees deduction was $5.25 per barrel from June 1, 2018 through July 31, 2018, then$5.15 per barrel from August 1, 2018 through February 28, 2019, continuing on a month-to-month basis thereafter unless renegotiated or canceled upon 30days’ notice. The posted index prices change monthly based on the average of daily index price points for each sales month.Natural gas and NGL revenuesNatural gas is produced and transported via pipelines to gas processing facilities. NGLs are extracted from the natural gas at the processing facilitiesand processed natural gas and NGLs are marketed and sold separately on the Company’s behalf after processing. All of our operated natural gas production issold under one of three natural gas contracts which are long-term in nature; however, one of these natural gas contracts includes 30-day cancellationprovisions, and the Company therefore classifies such contract as short-term. The processor’s commitment to sell on the Company’s behalf includes allquantities of natural gas and NGL produced from specific wellbores or dedicated acreage as defined in the contract, with no quantity-based restrictions orvariable terms. The gas contracts are generally market based pricing less adjustments for transportation and processing fees. A portion of natural gas deliveredto the processing plants is used as fuel at the processing plant without reimbursement. The Company recognizes revenue for natural gas and NGLs whencontrol passes at the tailgate of the processing plant.Gathering, processing and transportationNatural gas must be transported to a gas processing plant facility for treatment and to extract NGLs, then the final residue gas and liquid products aremarketed for sale to end users at the tailgate of the plant. As a result of these activities, the Company incurs costs that are contractually passed to it from thegatherer per customary industry practice. Such costs include fees for gathering the gas and moving it from wellhead to plant inlet, plant electricity usage,inlet compression, carbon dioxide and hydrogen sulfide treatments, processing tax, fuel usage, and marketing at the tailgate. Gathering, processing andtransportation costs are presented as operating expenses in the Company’s condensed consolidated statement of operations.ImbalancesNatural gas imbalances occur when the Company sells more or less than its entitled ownership percentage of total natural gas production. Anyamount received in excess of its share is treated as a liability. If the Company receives less than its entitled share, the underproduction is recorded as areceivable. The Company did not have any significant natural gas imbalance positions as of December 31, 2018 and December 31, 2017.Contract balances and prior period performance obligationsThe Company is entitled to payment from purchasers once its performance obligations have been satisfied upon delivery of the product, at whichpoint payment is unconditional, and the Company records these invoiced amounts as accounts receivablein its condensed consolidated balance sheets. To the extent actual volumes and prices of oil and natural gas are unavailable for a given reporting periodbecause of timing or information not received from third parties, the expected sales volumes and prices for those properties are estimated and also recorded asaccounts receivable in the accompanying condensed consolidated balance sheets. In this scenario, payment is unconditional, as the Company has satisfied itsperformance obligations through delivery of the relevant product. As a result, the Company has concluded that its product sales do not give rise to contractassets or liabilities under the New Revenue Standard.The Company records revenue in the month production is delivered to the purchaser. However, settlement statements for certain oil, natural gas andNGL sales may not be received for 30 to 60 days after the date production is delivered, and as a result, the Company is required to estimate the amount ofproduction that was delivered to the customer and the price that will be received for the sale of the product. Additionally, to the extent actual volumes andprices of oil, natural gas and NGLs are unavailable for a given reporting period because of timing or information not received from third-party purchasers, theexpected sales volumes and prices for those barrels of oil, cubic feet of gas and gallons of NGL are also estimated. The Company records the differencesbetween its estimates and the actual amounts received for product sales in the month that payment is received from the purchaser. The Company has existinginternal controls in place for its estimation process, and any identified differences between its revenue estimates and actual revenue received historically havenot been significant.Significant judgmentsThe Company engages in various types of transactions in which midstream entities process its gas and subsequently market resulting NGLs andresidue gas to third-party customers on the Company’s behalf per gas purchase contracts. These types of transactions require judgment to determine whetherthe Company is the principal or the agent in the contract and, as a result,81whether revenues are recorded gross or net. The Company maintains control of the natural gas and NGLs during processing and consider itself the principal inthese arrangements.Practical expedientsA significant number of the Company’s product sales are short-term in nature with contract term of one year or less. For those contracts, theCompany has utilized the practical expedient in the New Revenue Standard that exempts the Company from disclosure of the transaction price allocated toremaining performance obligations if the performance obligation is part of a Contract that has an original expected duration of one year or less. For theCompany’s product sales that have contract terms less than one year, the Company has utilized the practical expedient in the New Revenue Standard thatstates that it is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirelyto a wholly unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore,future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required. The followingtable disaggregates the Company’s revenue by contract type (in thousands): Short-term contracts Long-term contracts TotalYear Ended December 31, 2018(in thousands)Crude Oil$58,042 $— $58,042Natural Gas1,045 4,201 5,246NGLs1,381 5,547 6,928Gathering, processing and transportation(676) (2,716) (3,392)Customer Credit RiskOur principal exposure to credit risk is through receivables from the sale of our oil and natural gas production of approximately $8.2 million atDecember 31, 2018, and through actual and accrued receivables from our joint interest partners of approximately $11.4 million at December 31, 2018. We aresubject to credit risk due to the concentration of our oil and natural gas receivables with our most significant customers. We do not require our customers topost collateral, and the inability of our significant customers to meet their obligations to us or their insolvency or liquidation may adversely affect ourfinancial results.NOTE 7 - FAIR VALUE OF FINANCIAL INSTRUMENTSThe Company measures fair value of its financial assets on a three-tier value hierarchy, which prioritizes the inputs, used in the valuationmethodologies in measuring fair value:●Level 1 - Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.●Level 2 - Other inputs that are directly or indirectly observable in the marketplace.●Level 3 - Unobservable inputs which are supported by little or no market activity.The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs whenmeasuring fair value.The determination of the fair values of our derivative contracts incorporates various factors, which include not only the impact of our non-performance risk on our liabilities but also the credit standing of the counterparties involved. We utilize counterparty rate of default values to assess theimpact of non- performance risk when evaluating both our liabilities to, and receivables from, counterparties.Recurring Fair Value MeasurementsThe financial instruments measured at fair value on a recurring basis consist of the following: December 31, 2018 2017Derivative assets (liabilities): Derivative assets - current$2,551 $—Derivative assets - non-current (1)1,822 —Derivative liabilities - current(515) (853)Derivative liabilities - non-current (2)(4,699) (72,937)Total derivative liabilities, net$(841) $(73,790)(1) The non-current derivative assets are included in other assets in the consolidated balance sheets.82(2) Includes $2.0 million of embedded derivatives associated with Second Lien Loans and $2.7 million associated with commodity derivatives. Fair Value Measurement Classification Quoted Prices inActive Markets forIdentical Assets orLiabilities(Level 1) Significant OtherObservable Inputs(Level 2) SignificantUnobservableInputs(Level 3) Total (in thousands)As of December 31, 2018 Oil and natural gas derivative instruments: Oil and natural gas derivative swap contracts$— $(2,923) $— $(2,923)Oil and natural gas derivative collar contracts— 4,047 — 4,047Embedded derivative instruments: Second Lien Term Loan conversion features— — (1,965) (1,965)Total$— $1,124 $(1,965) $(841) As of December 31, 2017 Oil and natural gas derivative instruments: Oil and natural gas derivative swap contracts$— $(706) $— $(706)Oil and natural gas derivative collar contracts— (147) — (147)Equity instruments: Warrant liabilities— — (223) (223)Embedded derivative instruments: Second Lien Term Loan conversion features— — (72,714) (72,714)Total$— $(853) $(72,937) $(73,790)Derivative assets and liabilities include unsettled amounts related to commodity derivative positions, including swaps and collars as of December31, 2018 and 2017. The fair values of the Company’s derivatives are based on third-party pricing models which utilize inputs that are either readily in thepublic market which can be corroborated from active markets of broker quotes. Swaps and collars generally have observable inputs and these instruments areclassified as Level 2.The Company’s derivative liabilities also include embedded derivatives associated with the Second Lien Term Loan (as defined below) and warrantsassociated with notes payable. These instruments have fewer observable inputs from objective sources and are therefore measured using Level 3 inputs asfollows: Second Lien Term Loan Conversion Features: Under the terms of the Company’s second lien credit agreement, dated as of April 26, 2017, by andamong the Company, certain subsidiaries of the Company, as guarantors (the “Guarantors”), Wilmington Trust, National Association, as administrative agent(the “Agent”), and the lenders party thereto (the “Lenders”), including Värde as lead lender (the “Lead Lender”), as amended (the “Second Lien CreditAgreement”), the Lead Lender has the option to convert8370% of the principal amount of each tranche of the Second Lien Term Loan (the “Second Lien Term Loan”) under the Second Lien Credit Agreement,together with accrued paid-in-kind interest and the make-whole premium on such principal amount (together the “Conversion Sum”) into shares of commonstock. The make-whole premium is the cash amount representing the excess of (a) the present value at such repayment, prepayment or acceleration date or thedate the obligations otherwise become due and payable in full of (1) the sum of the principal amount repaid, prepaid or accelerated plus (2) the interestaccruing on such principal amount from the date of such repayment, prepayment or acceleration through the maturity date (excluding accrued but unpaidpaid-in-kind interest to the date of such repayment, prepayment or acceleration), such present value to be computed using a discount rate equal to theTreasury Rate plus 50 basis points discounted to the repayment, prepayment or acceleration date on a semi-annual basis (assuming a 360-day year consistingof twelve 30-day months), over (b) the principal amount of the Second Lien Term Loan repaid, prepaid or accelerated. The number of shares of common stockissued will be based on the division of 70% of the Conversion Sum by the conversion price then in effect.The Company also has the option to cause the Second Lien Term Loan to convert if, at the time of exercise of the Company’s conversion option, theclosing price of the Company’s common stock has been at least 150% of the Conversion Price (as defined in Note 9) then in effect for at least 20 of the 30immediately preceding trading days. The features of the make-whole premium in the Second Lien Term Loan require the conversion features to be recordedas embedded derivatives and bifurcated from its host contracts, the Second Lien Term Loan, and accounted for separately from the debt. The conversionfeatures contained in the Second Lien Term Loan are recorded as a derivative liability at fair value each reporting period based upon values determinedthrough the use of discounted lattice models of the Second Lien Term Loan under the Second Lien Credit Agreement. Change in fair value is accounted for inthe consolidated statement operations. On October 10, 2018, the Company executed Amendment No. 6 to the Second Lien Credit Agreement for an exchangetransaction of approximately $68.3 million claim amount of its Second Lien Term Loan for a combination of 5,952,763 shares of the Company’s commonstock representing a claim value of $29.0 million and issuance of 100,000 shares of Series D Preferred Stock representing a claim value of $39.3 million. As aresult of the exchange transaction, the fair value of the remaining embedded derivative liability decreased by $12.4 million as of October 10, 2018. TheCompany recorded an unrealized gain of $58.3 million and an unrealized loss of $7.1 million on the change in fair value of derivative liabilities associatedwith the Second Lien Term Loan conversion features for the years ended December 31, 2018 and 2017, respectively.The fair value of the holder conversion features was determined using a binomial lattice model based on certain assumptions including (i) theCompany’s stock price, (ii) risk-free rate, (iii) expected volatility, (iv) the Company’s implied credit rating, and (v) the implied credit yield of the Loan.The following table sets forth a reconciliation of changes in the fair value of the Company’s financial assets and liabilities classified as Level 3 inthe fair value hierarchy, except for the commodity derivatives classified as Level 2 as disclosed in Note 8, as of December 31, 2018 and 2017: Second Lien TermLoan ConversionFeatures WarrantLiabilities Total (in thousands)Balance at January 1, 2018$(72,714) $(223) $(72,937)Transferred to equity— 223 223Fair value of the converted portion of the embedded derivatives associatedwith the Second Lien Term Loan12,406 — 12,406Change in fair value of derivative liabilities58,343 — 58,343Balance at December 31, 2018$(1,965) $— $(1,965)84 Second Lien TermLoan ConversionFeatures WarrantLiabilities Total (in thousands)Balance at January 1, 2017$— $(1,400) $(1,400)Issuance(65,647) — (65,647)Cashless exercise of warrants— 370 370Change in fair value of derivative liabilities(7,067) 807 (6,260)Balance at December 31, 2017$(72,714) $(223) $(72,937)NOTE 8 - DERIVATIVE INSTRUMENTSAs discussed in Notes 7 and 9, the Second Lien Term Loan contains conversion features that are exercisable at the option of the Lead Lender or theCompany. The conversion features have been identified as embedded derivatives which (i) contain economic characteristics that are not clearly and closelyrelated to the host contract, the Second Lien Term Loan, and (ii) separate, stand-alone instruments with similar terms would qualify as derivative instruments.As such, the conversion features were bifurcated and accounted for separately from the Second Lien Term Loan. The conversion features are recorded at fairvalue for each reporting period with changes in fair value included in the consolidated statement of operations for the years ended December 31, 2018 and2017. The Company recorded derivative liabilities associated with the Second Lien Term Loan at an original fair value of approximately $65.6 million atissuance. On October 10, 2018, the Company executed Amendment No. 6 to the Second Lien Credit Agreement for an exchange transaction of approximately$68.3 million claim amount of its Second Lien Term Loan for a combination of 5,952,763 shares of the Company’s common stock representing a claim valueof approximately $29.0 million and issuance of 100,000 shares of Series D Preferred Stock representing a claim value of approximately $39.3 million. As aresult of the exchange transaction, the fair value of the embedded derivative liability decreased by $12.4 million as of October 10, 2018. The Companyrecorded an unrealized gain of $58.3 million and an unrealized loss of $7.1 million on the change in fair value of derivative liabilities associated with theSecond Lien Term Loan conversion features for the years ended December 31, 2018 and 2017, respectively. As of December 31, 2018 and 2017, thederivative liabilities associated with the Second Lien Term Loan were approximately $2.0 million and approximately $72.7 million, respectively.To reduce the impact of fluctuations in oil and natural gas prices on the Company’s revenues, or to protect the economics of property acquisitions,the Company periodically enters into derivative contracts with respect to a portion of its projected oil and natural gas production through varioustransactions that fix or modify the future prices to be realized. The derivative contracts may include fixed-for-floating price swaps (whereby, on the settlementdate, the Company will receive or pay an amount based on the difference between a pre-determined fixed price and a variable market price for a notionalquantity of production), put options (whereby the Company pays a cash premium in order to establish a fixed floor price for a notional quantity of production85and, on the settlement date, receives the excess, if any, of the fixed price floor over a variable market price), and costless collars (whereby, on the settlementdate, the Company receives the excess, if any, of a variable market price over a fixed floor price up to a fixed ceiling price for a notional quantity ofproduction).These hedging activities, which are governed by the terms of our Second Lien Credit Agreement, are intended to support oil and natural gas prices attargeted levels and manage exposure to oil and natural gas price fluctuations. It is our policy to enter into derivative contracts only with counterparties thatare creditworthy and competitive market makers. All of our derivatives are with non-lender counterparties and are designated as unsecured. Certain of ourderivative counterparties may require the posting of cash collateral under certain conditions. It is never the Company’s intention to enter into derivativecontracts for speculative trading purposes.All of our derivatives are accounted for as mark-to-market activities. Under ASC Topic 815, “Derivatives and Hedging,” these instruments arerecorded on the consolidated balance sheets at fair value as either short term or long-term assets or liabilities based on their anticipated settlement date. TheCompany nets derivative assets and liabilities by commodity for counterparties where a legal right to such offset exists. Changes in the derivatives’ fairvalues are recognized in current earnings since the Company has elected not to designate its current derivative contracts as cash flow hedges for accountingpurposes.The following table presents the Company’s derivative positions as of December 31, 2018 with respect to future production:86 2019 2020Oil positions: Oil swaps (NYMEX WTI): Hedged Volume (Bbls)— 277,685Average price ($ per Bbl)$— $56.21 Basis swaps (NYMEX WTI): Hedged Volume (Bbls)909,500 547,500Average price ($ per Bbl)$(6.85) $(5.62) Put Options (NYMEX WTI): Hedged Volume (Bbls)1,095,000 —Average price ($ per Bbl)$50.41 $— Call Options (NYMEX WTI): Hedged Volume (Bbls)638,000 —Average price ($ per Bbl)$69.76 $— Natural gas positions: Gas swaps (NYMEX Henry Hub): Hedged Volume (MMBtu)906,238 714,134Average price ($ per MMBtu)$2.75 $2.54 Put Options (NYMEX Henry Hub): Hedged Volume (MMBtu)392,481 144,130Average price ($ per MMBtu)$3.05 $2.80 Call Options (NYMEX Henry Hub): Hedged Volume (MMBtu)392,481 144,130Average price ($ per MMBtu)$3.58 $3.06 For the years ended December 31, 2018 and 2017, the effect of the commodity derivative activity on the Company’s Consolidated Statements ofOperations was as follows: Year Ended December 31, 2018 2017 (In thousands)Unrealized gain (loss) on unsettled derivatives$1,977 $(853)Net settlement paid on derivative contracts(2,742) (96)Net settlement receivable (payable) on derivative contracts820 (114)Net gain (loss) on commodity derivatives$55 $(1,063)The Company’s derivatives are presented on a net basis under fair value of derivative instruments on the consolidated balance sheets. The followinginformation summarizes the gross fair values of derivative instruments, presenting the impact of offsetting the derivative assets and liabilities on theCompany’s consolidated balance sheets:87 December 31, 2018 Gross Amount ofRecognized Assetsand Liabilities Gross AmountsOffset in theConsolidatedBalance Sheets (1) Net AmountsPresented in theConsolidatedBalance Sheets (in thousands)Offsetting Derivative Assets: Current assets$4,122 $(1,571) $2,551Long-term assets1,854 (32) 1,822Total assets$5,976 $(1,603) $4,373Offsetting Derivative Liabilities: Current liabilities$(2,086) $1,571 $(515)Long-term commodity derivative liabilities(2,766) 32 (2,734)Long-term embedded derivative liabilities(1,965) — (1,965)Total liabilities$(6,817) $1,603 $(5,214) December 31, 2017 Gross Amount ofRecognized Assetsand Liabilities Gross AmountsOffset in theConsolidatedBalance Sheets (1) Net AmountsPresented in theConsolidatedBalance Sheets (in thousands)Offsetting Derivative Assets: Current asset$— $— $—Long-term asset— — —Total asset$— $— $—Offsetting Derivative Liabilities: Current liabilities$(853) $— $(853)Long-term commodity derivative liabilities— — —Long-term embedded derivative liabilities(72,937) — (72,937)Total liabilities$(73,790) $— $(73,790)(1) This column represents the impact of offsetting commodity derivative assets and liabilities with all counterparties where the Company has the contractualrights and intends to net settle.88NOTE 9 - LONG-TERM DEBT As of December 31, 2018 2017 (In thousands)6% bridge loans associated with the amended First Lien Term Loan, due 2019, net of debt issuance costs$— $30,3638.25% Second Lien Term Loan, due 2021, net of debt issuance costs and debt discount82,804 96,431Revolving Credit Agreement, due April 202175,000 —Other notes payable, due 2018 and 2019— 1,011Total long-term debt$157,804 $127,805Less: current portion— (11)Total long-term debt, net of current portion$157,804 $127,794Total principal amount of debt maturities related to borrowings for the five years ending December 31, 2023 include$175.0 million in 2021. Therewill be no minimum payments due in 2019, 2020, 2022 and 2023.As of December 31, 2018 and 2017, the carrying amounts of the Second Lien Term Loan were as follows: PrincipalAmount Paid-in-kindInterest UnamortizedDebtIssuanceCosts & DebtDiscount CarryingAmount (in thousands)As of December 31, 2018 Revolving Credit Agreement, due April 2021$75,000 $— $— $75,000Second Lien Term Loan, due April 2021100,000 11,641 (28,837) 82,804Total:$175,000 $11,641 $(28,837) $157,804 As of December 31, 2017 Bridge loans associated with the amended First Lien Term Loan, dueSeptember 2019$30,000 $807 $(444) $30,363Second Lien Term Loan, due April 2021150,000 5,752 (59,321) 96,431Total:$180,000 $6,559 $(59,765) $126,794Revolving Credit AgreementOn October 10, 2018, Lilis entered into a five-year, $500.0 million senior secured revolving credit agreement by and among the Company, asborrower, certain subsidiaries of the Company, as guarantors (the “Guarantors”), BMO Harris Bank, N.A., as administrative agent, and the lenders partythereto. The Revolving Credit Agreement provides for a senior secured reserve based revolving credit facility with an initial borrowing base of $95.0 million.The borrowing base is subject to semiannual re-determinations in May and November of each year. On December 7, 2018, the Company’s borrowing baseunder the Revolving Credit Agreement was increased to $108 million as a result of its regularly scheduled fall redetermination process.Borrowings under the Revolving Credit Agreement bear interest at a floating rate of either LIBOR or a specified base rate plus a margin determinedbased upon the usage of the borrowing base. The Company is required to pay a commitment fee of890.5% per annum on any unused portion of the borrowing base. The Company’s obligations under the Revolving Credit Agreement are secured by firstpriority liens on substantially all of the Company’s and the Guarantors’ assets and are unconditionally guaranteed by each of the Guarantors.The Company borrowed $60.0 million under the Revolving Credit Agreement at closing, leaving $35.0 million initially available for futureborrowing. The Company used the initial borrowings to repay in full and retire the Company’s previously existing $50.0 million Riverstone First Lien CreditAgreement (the credit agreement for which was amended and restated by the Revolving Credit Agreement), including accrued interest and a prepaymentpremium, and to pay transaction expenses. Future borrowings may be used to fund working capital requirements, including for the acquisition, explorationand development of oil and gas properties, and for general corporate purposes. The Revolving Credit Agreement also provides for issuance of letters of creditin an aggregate amount up to $5.0 million. As of December 31, 2018, the outstanding balance under the Revolving Credit Agreement was $75.0 million.The Company capitalizes certain direct costs associated with the issuance of the Revolving Credit Agreement and amortizes such costs over the termof the debt instrument. The deferred financing costs related to the Revolving Credit Agreement are classified in assets. For the year ended December 31, 2018,the Company amortized debt issuance costs associated with revolving credit agreements of $2.2 million. For the year ended December 31, 2017, theCompany had no revolving credit agreements. As of December 31, 2018, the Company has $0.5 million and $1.7 million of unamortized deferred financingcosts in other current assets and non-current assets, respectively.The Revolving Credit Agreement matures on the earlier of the fifth anniversary of the closing date and the date that is 180 days prior to the maturitydate of the Company’s Second Lien Credit Agreement (as defined below). Borrowings under the Revolving Credit Agreement are subject to mandatoryrepayment with the net proceeds of certain asset sales and debt incurrences or if a borrowing base deficiency occurs. The Company also may voluntarilyrepay borrowings from time to time and, subject to the borrowing base limitation and other customary conditions, may reborrow amounts that are voluntarilyrepaid. Mandatory and voluntary repayments generally will be made without premium or penalty.The Revolving Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants, includingcovenants relating to: maintenance of books and records, financial reporting and notification, compliance with laws, maintenance of properties andinsurance; and limitations on incurrence of indebtedness, liens, fundamental changes, international operations, asset sales, certain debt payments andamendments, restrictive agreements, investments, dividends and other restricted payments and hedging. It also requires the Company to maintain a ratio ofTotal Debt to EBITDAX of not more than 4.00 to 1.00 and a ratio of current assets to current liabilities of not less than 1.00 to 1.00 (each as defined in theRevolving Credit Agreement). On October 10, 2018, the Company entered into the Revolving Credit Agreement pursuant to which BMO Harris Bank N.A.,SunTrust Bank, Capital One, N.A., and Credit Suisse AG, Cayman Islands Branch, (collectively, the “Lenders”) have made certain credit available to and onbehalf of the Company. In connection with the preparation of these financial statements, the Company informed its Lenders, that it did not satisfy theleverage ratio covenant in Section 9.01(a) of the Revolving Credit Agreement, as of the fiscal quarter ended December 31, 2018. Accordingly, the Companyrecevied the Lenders consent to a waiver with respect to such provision on March 1, 2019.The Revolving Credit Agreement also provides for events of default, including failure to pay any principal, interest or other amounts when due,failure to perform or observe covenants, cross-default on certain outstanding debt obligations, inaccuracy of representations and warranties, certain ERISAevents, change of control, the security documents or guaranty ceasing to be effective, and bankruptcy or insolvency events, subject to customary cureperiods. Amounts owed by the Company under the Revolving Credit Agreement could be accelerated and become immediately due and payable followingthe occurrence an event of default.The Revolving Credit Agreement also provides for the Company to have and maintain Swap Agreements in respect of crude oil and natural gas, onnot less than 50% of the projected production from the Proved Reserves classified as "Developed Producing Reserves" attributable to the oil and natural gasproperties of the Company as reflected in the most recently delivered reserve report for a period through at least 24 months after the end of each applicablequarter.First Amendment and Waiver to Second Amended and Restated Credit AgreementOn March 1, 2019, the Company executed the First Amendment and Waiver (the "First Amendment") to Second Amended and Restated CreditAgreement whereby the Majority Lenders consent to waiver of the December 31, 2018 Leverage Ratio of Total Debt to EBITDAX of not more than 4.00 to1.00. The First Amendment has become effective as the following terms have been met:90•The Effective Date, March 5, 2019, shall have occurred.•The Second Lien Term Loan discharge transaction shall have occurred, or shall occur, substantially contemporaneously with theoccurrence of the Borrowing Base and Amendment Effective Date. See Note 20 Subsequent Events.•As of the Borrowing Base and Amendment Effective Date, after giving effect to this Agreement, (a) the representations and warranties ofeach Loan Party set forth in the Credit Agreement and in each other Loan Document shall be true and correct in all material respects (unless alreadyqualified by materiality in which case such applicable representation and warranty shall be true and correct), except to the extent suchrepresentations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all material respects (unless alreadyqualified by materiality in which case such applicable representation and warranty shall be true and correct) as of such earlier date, (b) no Default,Event of Default or Borrowing Base Deficiency has occurred and is continuing. The Administrative Agent shall have received a certificate from aResponsible Officer of the Company certifying as to the matters set forth in this provision.Second Lien Credit AgreementOn April 26, 2017, the Company entered into the Second Lien Credit Agreement comprised of convertible loans in an aggregate initial principalamount of up to $125.0 million in two tranches. The first tranche consists of an $80.0 million term loan (the “Second Lien Term Loan”), which was fullydrawn and funded on April 26, 2017. The second tranche consists of up to $45.0 million in delayed-draw term loans (the “Delayed Draw Term Loan” and,together with the Second Lien Term Loan, the “Second Lien Loans”) was funded. Each tranche of the Second Lien Loans will bear interest at a rate per annumof 8.25%, compounded quarterly in arrears and payable only in-kind by increasing the principal amount of the loan by the amount of the interest due on eachinterest payment date.On October 3, 2017, the Company, certain subsidiaries of the Company, as guarantors (the “Guarantors”), Wilmington Trust, National Association,as administrative agent and the lenders party thereto, entered into the first amendment to the Second Lien Credit Agreement (“Amendment No. 1 to theSecond Lien Credit Agreement”). The purpose of Amendment No. 1 to the Second Lien Credit Agreement is to waive certain conditions precedent to thedrawing of the Delayed Draw Term Loan under the Second Lien Credit Agreement and to provide for the funding of such Delayed Draw Term Loan upon thesigning of the lease acquisition agreement with KEW Drilling, a Delaware limited partnership. The Company borrowed the full $45.0 million of theavailability under the Delayed Draw Term Loan on October 4, 2017.On October 19, 2017, the Company entered into a second amendment to the Second Lien Credit Agreement (“Amendment No. 2 to the Second LienCredit Agreement”), by and among the Company, the Guarantors, the Agent and the Lenders, including the Lead Lender. Amendment No. 2 to the SecondLien Credit Agreement permitted the Company to incur the Incremental Bridge Loan under the First Lien Credit Agreement.On November 10, 2017, the Company entered into a third amendment to the Second Lien Credit Agreement (“Amendment No. 3 to the Second LienCredit Agreement”), by and among the Company, the Guarantors, the Agent and the Lenders, including the Lead Lender. Amendment No. 3 to the SecondLien Credit Agreement increased by $25.0 million the amount of delayed draw term loans available for borrowing under the Second Lien Credit Agreement.The additional $25.0 million of Delayed Draw Term Loan was drawn on November 10, 2017. The $25.0 million of proceeds from these loans may be used tofund oil and natural gas property acquisitions, subject to certain limitations, to fund drilling and completion costs or for other general corporate purposes.The Second Lien Loans are secured by second priority liens on substantially all of the Company’s and the Guarantors’ assets, including their oil andnatural gas properties located in the Delaware Basin, and all of the obligations thereunder are unconditionally guaranteed by each of the Guarantors. TheSecond Lien Loans matures on April 26, 2021. The Second Lien Loans are subject to mandatory prepayment with the net proceeds of certain asset sales,casualty events and debt incurrences, subject to the right of the Company to reinvest the net proceeds of asset sales and casualty events within 180 days and,in the case of asset sales and casualty events, prepayment of the Incremental Bridge Loan. The Company may not voluntarily prepay the Second Lien Loansprior to March 31, 2019 except (a) in connection with a Change of Control (as defined in the Second Lien Credit Agreement) or (b) if the closing price of ourcommon stock on the principal exchange on which it is traded has been equal to or greater than 110% of the Conversion Price (as defined below) for at least20 of the 30 trading days immediately preceding the prepayment.91The Company will be required to pay a make-whole premium in connection with any mandatory or voluntary prepayment of the Second Lien Loans.Each tranche of the Second Lien Loans are separately convertible at any time, in full and not in part, at the option of the Lead Lender, as follows:•70% of the principal amount of each tranche of Second Lien Loans, together with accrued and unpaid interest and the make-whole premium on suchprincipal amount (the “Conversion Sum”), will convert into a number of newly issued shares of common stock determined by dividing the total ofsuch principal amount, accrued and unpaid interest and make-whole premium by $5.50 (subject to certain customary adjustments, the “ConversionPrice”); and•30% of the principal amount of the Conversion Sum will convert on a dollar for dollar basis into a new term loan (the “Take Back Loans”).The terms of the Take Back Loans will be substantially the same as the terms of the Second Lien Loans, except that the Take Back Loans will not beconvertible and will bear interest payable in cash at a rate of LIBOR plus 9% (subject to a 1% LIBOR floor).Additionally, the Company will have the option to convert the Second Lien Loans, in whole or in part, into shares of common stock at any time orfrom time to time if, at the time of exercise of the Company’s conversion option, the closing price of the common stock on the principal exchange on which itis traded has been at least 150% of the Conversion Price then in effect for at least 20 of the 30 immediately preceding trading days. Conversion at theCompany’s option will occur on the same terms as conversion at the Lender’s option.Second Lien AmendmentOn October 10, 2018, the Company entered into a sixth amendment to the Second Lien Credit Agreement (“Amendment No. 6 to the Second LienCredit Agreement”), dated April 26, 2017, by and among the Company, the Guarantors, Wilmington Trust, National Association, as administrative agent, andthe lenders party thereto, including Värde Partners, Inc., as lead lender. Among other matters, the Amendment No. 6 to the Second Lien Credit Agreementamended the Second Lien Credit Agreement to permit the Company to enter into and incur indebtedness under the Revolving Credit Agreement and toprovide for the reduction in the principal amount of the Second Lien Term Loans under the Second Lien Credit Agreement pursuant to the TransactionAgreement (as defined and described below).Transaction AgreementOn October 10, 2018, the Company entered into a Transaction Agreement (the “Transaction Agreement”) by and among the Company and the VärdeParties, pursuant to which the Company agreed to:•issue to the Värde Parties (i) an aggregate of 5,952,763 shares of the Company’s common stock, par value $0.0001 per share, which includes5,802,763 shares of common stock at an exchange price of $5.00 per share of common stock plus an additional 150,000 shares of common stock,and (ii) 39,254 shares of a newly created series of preferred stock of the Company, designated as “Series D 8.25% Convertible Participating PreferredStock” (the “Series D Preferred Stock”), as consideration for the reduction by approximately $56.3 million of the outstanding principal amount ofthe Second Lien Term Loan under the Second Lien Credit Agreement, together with accrued and unpaid interest and the make-whole amountthereon totaling approximately $11.9 million;•issue and sell to the Värde Parties 25,000 shares of a newly created subseries of the Company’s Series C 9.75% Convertible Participating PreferredStock, designated as “Series C-2 9.75% Convertible Participating Preferred Stock” (the “Series C-2 Preferred Stock”), for a purchase price of $1,000per share, or an aggregate of $25.0 million.The reduction of the $56.3 million of the outstanding principal amount of the Second Lien Term Loan including the accrued and unpaid interest and themake-whole amount totaling approximately $11.9 million resulted in the recognition of a loss of $12.3 million on early extinguishment of debt in theCompany's Consolidated Statement of Operations during the year ended December 31, 2018.Closing of the issuance of the shares of common stock and Series D Preferred Stock and the issuance and sale of the shares of Series C-2 Preferred Stockpursuant to the Transaction Agreement occurred on October 10, 2018. The Series D Preferred Stock and the Series C-2 Preferred Stock are recorded at fairvalue of $39.9 million and $25.0 million, respectively, as mezzanine equity as of December 31, 2018.92As discussed in Note 7, Fair Value of Financial Instruments, above and Note 8, Derivatives, above, the Company separately accounts for theembedded conversion features as a derivative instrument in accordance with accounting guidance relating to recording embedded derivatives at fair value.The initial fair value of the embedded derivatives is recorded as a debt discount to the Second Lien Term Loan. The debt discount is amortized over the termof the Second Lien Term Loan using the effective interest method.Riverstone First Lien Credit AgreementOn January 30, 2018, the Company entered into an Amended and Restated Senior Secured Term Loan Credit Agreement (the “Riverstone First LienCredit Agreement”), by and among the Company, the subsidiaries of the Company party thereto as guarantors, Riverstone Credit Management LLC, asadministrative agent and collateral agent, and the lenders party thereto. Effective at closing under the Riverstone First Lien Credit Agreement, whichoccurred on January 31, 2018, the Riverstone First Lien Credit Agreement amended and restated the Company’s First Lien Credit Agreement, which wasentered into by the Company on September 29, 2016, and subsequently amended on April 26, 2017, July 25, 2017, and October 19, 2017 (the “First LienCredit Agreement”).Pursuant to the Riverstone First Lien Credit Agreement, the lenders thereunder agreed to make term loans to the Company in the aggregate principalamount of $50.0 million (Riverstone First Lien Loans”), all of which were funded in full at closing at an original issue discount of 1.0% of the principalamount. The Riverstone First Lien Credit Agreement provides the potential for additional term loans of up to $30 million, as requested by the Company andsubject to certain conditions, which additional loans were uncommitted at closing. The Company used approximately $31.5 million of the proceeds of theRiverstone First Lien Loans to repay in full its obligations under and retire the First Lien Credit Agreement during the first quarter of 2018. The RiverstoneFirst Lien Credit Agreement was subsequently paid and settled on October 10, 2018 for a total of $57.0 million which included principal, accrued PIKinterest and prepayment penalties. The repayment of the Riverstone First Lien Credit Agreement resulted in a write-off of $1.9 million of unamortized debtissuance costs and the recognition of an $8.1 million loss in early extinguishment of debt, due primarily to prepayment penalties and write off of unamortizeddebt issuance costs, in the Company's Consolidated Statement of Operations during the year ended December 31, 2018.SOS NoteOn June 30, 2016, pursuant to the merger agreement with Brushy and as a condition of the fourth amendment to such merger agreement, theCompany was required to make a cash payment of $500,000 to SOS, and also executed a subordinated promissory note with SOS, for $1.0 million, at aninterest rate of 6% per annum which matures on June 30, 2019. In conjunction with the cash payment and the note, the Company also issued 200,000warrants at an exercise price of $25.00. The Company accounted for the cost of warrants of $0.2 million as part of the Brushy merger transaction costs duringthe year ended December 31, 2016. The SOS note was fully paid on January 22, 2018.Interest ExpenseThe components of interest expense are as follows: Year Ended December 31, 2018 2017 (in thousands)Interest on bridge loans associated with First Lien Term Loan$728 $1,774Interest on Revolving Credit Agreements2,242 —Interest on Notes Payable5 53Paid-in-kind interest on First Lien Term Loan and Second Lien Term Loan12,213 6,559Amortization of debt financing costs on Second Lien Term Loan and Revolving Credit Agreement3,241 1,886Amortization of discount on Second Lien Term Loan14,398 8,485Total:$32,827 $18,75793NOTE 10 - LONG-TERM DEFERRED REVENUE AND OTHER LIABILITIESSCM Water LLC’s Option to Exercise Purchase of Salt Water Disposal AssetsIn July 2018, the Company entered into a water gathering and disposal agreement with SCM Water, LLC (“SCM Water”). The water gatheringproject will complement the Company’s existing water disposal infrastructure, and the Company has reserved the right to recycle its produced water. SCMWater will commence, upon receipt of regulatory approval, to build out new gathering and disposal infrastructure to all of the Company’s current and futurewell locations in Lea County, New Mexico, and Winkler County, Texas. All future capital expenditures will be fully funded by SCM Water and will bedesigned to accommodate all water produced by the Company’s operations. The Company will act as contract operator of SCM Water’s salt water disposal(“SWD Wells”). The Company has sold to SCM Water an option to acquire the Company’s existing water infrastructure, a system which is comprised ofapproximately 14 miles of pipeline and one SWD well for cash consideration upon closing, with additional payments based on reaching certain milestones.The Company is actively working on permitting additional SWD locations to facilitate the exercise of the option. The Company anticipates that themajority of its water will eventually be disposed through the future SCM Water system at a competitive gathering rate under the agreement. Total cashconsideration for the water gathering and disposal infrastructure is $20.0 million. On July 25, 2018, the Company received an upfront non-refundablepayment of $10.0 million for the option to acquire its existing water infrastructure for the firm transportation and pricing for crude oil and $5.0 million for aprefunded drilling bonus. Additionally, the Company received $2.5 million on October 1, 2018 for the right-of-way/easement bonus and would receive anadditional $2.5 million upon hitting the target of 40,000 barrels per day of produced water. As of December 31, 2018, the Company recorded the $17.5million as deferred revenue until such time as SCM Water exercises its option to acquire the Company’s salt water disposal infrastructure.Crude Oil Gathering Agreement and Option AgreementOn May 21, 2018, the Company entered into a crude oil gathering agreement and option agreement with Salt Creek Midstream, LLC (“SCM”). Thecrude oil gathering agreement (the “Gathering Agreement”) enables SCM to (i) design, engineer, and construct a gathering system which will providegathering services for the Company’s crude oil and (ii) gather the Company’s crude oil on the gathering system in certain production areas located in Winklerand Loving Counties, Texas and Lea County, New Mexico. Construction of the gathering system has commenced and is expected to be completed inNovember 2018. The Gathering Agreement has a term of 12 years that automatically renews on a year to year basis until terminated by either party. SCM andthe Company also entered into an option agreement (the “Option Agreement”) whereby the Company granted an option to SCM to provide certain midstreamservices related to natural gas in Winkler and Loving Counties, Texas and Lea County, New Mexico, subject to the expiration and terms of the Company’sexisting gas agreement. The Option Agreement has a term commencing May 21, 2018 and terminating January 1, 2027, pursuant to its one-time option. Asconsideration for this option, the Company received a one-time of payment $35.0 million which was recorded in long-term deferred revenue.94NOTE 11 - RELATED PARTY TRANSACTIONSDuring the years ended December 31, 2018 and 2017, the Company has engaged in the following transactions with related parties: Year Ended December 31,Related Party Transactions 2018 2017 ($ in thousands)Brennan Short (former ChiefOperating Officer) Consulting fees paid to MMZ Consulting, Inc. (“MMZ”) which is owned byMr. Short. Mr. Short is the sole member of MMZ. $— $204 Total: $— $204Kevin Nanke (former ChiefFinancial Officer) Purchased the DJ Basin properties from the Company through NankeEnergy, LLC $— $2,000 Total: $— $2,000Värde Partners, Inc. (“Värde”) (1) The Company acquired oil and natural gas interests from VPD, an affiliate ofVärde $10,705 $— ImPetro Operating, LLC, a wholly-owned subsidiary of the Company is theoperator for two of VPD's producing wells and VPD reimbursed theCompany for operating overhead charges. 44 — Receivable balance outstanding as of December 31, 2018 for operating costsassociated with the VPD's producing wells 1,843 — Total: $12,592 $—(1) Värde is the lead lender in the Company’s Second Lien Loans (see Note 9 – Long-term Debt) and also participated in the issuances of the PreferredStock in January and October 2018 (see Note 13 – Mezzanine Preferred Stock).NOTE 12 - INCOME TAXESThe income tax provision (benefit) for the years ended December 31, 2018 and 2017 consisted of the following: December 31, 2018 2017 (in thousands)U.S. Federal: Current$— $—Deferred(7,496) 32,579State and local: Current— —Deferred509 1,059 (6,987) 33,638Change in valuation allowance6,987 (33,638)Income tax provision$— $—The tax effects of temporary differences that give rise to the Company’s deferred tax asset as of December 31, 2018 and 2017 consisted of thefollowing:95 December 31, 2018 2017 (In thousands)Deferred tax assets: Net operating loss carry-forward$27,568 $15,653Share based compensation808 784Abandonment obligation541 212Derivative instruments— 191Deferred revenue11,630 —Interest expense3,804 —Accrued liabilities and other85 52Total deferred tax asset44,436 16,892Valuation allowance(23,611) (16,624)Deferred tax asset, net of valuation allowance$20,825 $268 Deferred tax liabilities: Derivative instruments249 —Oil and natural gas properties and equipment20,576 268Total deferred tax liability20,825 268Net deferred tax asset (liability)$— $—Reconciliation of the Company’s effective tax rate to the expected U.S. federal tax rate is: Year Ended December 31, 2018 2017Effective federal tax rate21.00 % 34.00 %State tax rate, net of federal benefit2.06 % 1.11 %Effect of the Tax Cuts and Jobs Act— % -11.22 %Change in fair value derivative liability295.70 % -2.59 %Debt discount amortization-72.97 % -3.51 %Share based compensation differences and forfeitures— % 0.91 %Change in rate-6.40 % -0.05 %Other permanent differences-5.69 % -4.61 %NOL true-up - §382 limitation-5.51 % -47.22 %Loss from early debt extinguishment-59.01 % — %Other-0.56 % -6.47 %Valuation allowance-168.62 % 39.65 %Net— % — %As of December 31, 2018 and 2017, the Company had net operating loss carry-forwards for federal income tax purposes of approximately $127.5million and $70.1 million respectively, available to offset future taxable income. To the extent not utilized, federal net operating loss carry-forwards incurredprior to January, 1 2018 of $67.4 million will expire beginning in 2028 through 2038. Federal net operating loss carryforwards incurred after December 31,2017 of $70.1 million have no expiration and can only be used to offset 80% of taxable income when utilized. A Section 382 analysis resulted in a true-up ofthe Company’s net operating losses subject to limitation under Section 382 due to a change in ownership from $118.6 million to $9.1 million as ofDecember, 31 2016 on the basis the net operating losses could never be utliized under the limitation. The net operating loss of $127.5 million is subject toSection 382 limitations of utilization due to ownership changes of more than 50% which occurred in the current and prior tax years. The Company iscurrently in the process of determining the effect of the current change in ownership on the net operating loss carryforwards, including the analysis of netunrealized built-in-gains that will ultimately effect the overall limitation. The conclusion of the additional analysis under Section 382 will have no effect onthe Company’s effective income tax rate or the amount of the present valuation allowance position. 96In assessing the need for a valuation allowance on the Company’s deferred tax assets, management considers whether it is more likely than not thatsome portion or all of the deferred tax assets will be realized. The ultimate realization of deferred tax assets is dependent upon whether future book income issufficient to reverse existing temporary differences that give rise to deferred tax assets, as well as whether future taxable income is sufficient to utilize netoperating loss and credit carryforwards. Assessing the need for, or the sufficiency of, a valuation allowance requires the evaluation of all available evidence,both positive and negative. Negative evidence considered by management includes cumulative book and tax losses in recent years, no taxable income inavailable carryback years, and no tax planning strategies contemplated to realize the valued deferred tax assets.As of December 31, 2018, and 2017, management assessed the available positive and negative evidence to estimate if sufficient future taxable incomewould be generated to use the Company’s deferred tax assets and determined that it is not more-likely-than-not that the deferred tax assets would be realizedin the near future. Therefore, the Company recorded a full valuation allowance of approximately $23.6 million and $16.6 million on its deferred tax assets asof December 31, 2018 and 2017, respectively.The New Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. The Act makes broad and complex changes to the U.S. taxcode applicable to certain items in 2017 as well as those applicable to 2018 and subsequent years.ASC 740 Income Taxes ("ASC 740") requires the recognition of the tax effects of the Act for annual periods that include December 22, 2017. AtDecember 31, 2017, the Company made reasonable estimates of the effects on its existing deferred tax balances. The Company remeasured certain federaldeferred tax assets and liabilities based on the rates at which they are expected to reverse in the future, which is generally twenty one percent. The amountrecognized related to the remeasurement of its federal deferred tax balance was $9.5 million, which was subject to a valuation allowance at December 31,2017.The Company will continue to analyze the Act and future IRS regulations, refine its calculations, gain a more thorough understanding of howindividual states are implementing this new law and evaluate other provisions of the tax reform. This further analysis could potentially affect themeasurement of deferred tax balances or potentially give rise to new deferred tax amounts.NOTE 13 - MEZZANINE PREFERRED STOCKSeries C Preferred StockOn January 30, 2018, the Company entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) by and among the Companyand certain private funds affiliated with Värde (the “Purchasers”), pursuant to which the Company agreed to issue and sell to the Purchasers, and thePurchasers agreed to purchase from the Company, 100,000 shares of a newly created series of preferred stock of the Company, designated as “Series C 9.75%Convertible Participating Preferred Stock” (the “Series C Preferred Stock”), for a purchase price of $1,000 per share, or an aggregate of $100.0 million. Theterms of the Series C Preferred Stock were set forth in the Certificate of Designation for the Series C Preferred Stock (the “Amended and Restated Certificate ofDesignation”) filed by the Company with the Secretary of State of the State of Nevada on January 31, 2018. Closing of the issuance and sale of the shares ofSeries C Preferred Stock pursuant to the Securities Purchase Agreement occurred on January 31, 2018.Series C Preferred Stock Tack-On and Series D Preferred StockOn April 26, 2017, the Company entered into the Second Lien Credit Agreement (as defined above in Note 9 - Long Term Debt) under which Värdeis the lead lender, and certain private funds affiliated with Värde are lenders). On October 10, 2018, the Company entered into a Transaction Agreement (the“Transaction Agreement”), by and among the Company and certain private funds affiliated with Värde Partners, Inc. (the “Värde Parties”), pursuant to whichthe Company (i) exchanged approximately $68.3 million of the loans under its Second Lien Credit Agreement for a combination of a Series D Preferred Stockand Common Stock (as such terms are hereinafter defined) and (ii) agreed to a tack-on issuance and sale to Värde Parties of a new subseries of Series CPreferred Stock. Specifically, pursuant to the Transaction Agreement, the Company agreed to:•issue to the Värde Parties (i) an aggregate of 5,952,763 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”),which includes 5,802,763 shares of Common Stock at an exchange price of $5.00 per share of Common Stock plus an additional 150,000 shares ofCommon Stock, and (ii) 39,254 shares of a newly created series of preferred stock of the Company, designated as “Series D 8.25% ConvertibleParticipating Preferred Stock” (the “Series D Preferred Stock”), as consideration for the reduction by approximately $56.3 million of the outstandingprincipal amount of the Second Lien Term Loan under the Second Lien Credit Agreement, together with accrued and unpaid interest and the make-whole amount thereon totaling approximately $11.9 million;97•issue and sell to the Värde Parties 25,000 shares of a newly created subseries of the Company’s Series C 9.75% Convertible Participating PreferredStock, designated as “Series C-2 9.75% Convertible Participating Preferred Stock” (the “Series C-2 Preferred Stock”), for a purchase price of $1,000per share, or an aggregate of $25 million.Pursuant to an Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-1 9.75% ConvertibleParticipating Preferred Stock and Series C-2 9.75% Convertible Participating Preferred Stock (the “Series C Certificate of Designation”), filed by theCompany with the Secretary of State of Nevada on October 10, 2018, the outstanding 100,000 shares of the Company’s Series C 9.75% ConvertibleParticipating Preferred Stock were re-designated as “Series C-1 9.75% Convertible Participating Preferred Stock” (the “Series C-1 Preferred Stock” and,together with the Series C-2 Preferred Stock, the “Series C Preferred Stock”). The Series C Preferred Stock and the Series D Preferred Stock are referred tocollectively as the “Preferred Stock.” No other terms or conditions of the Series C Preferred Stock were modified.The terms of the Series D Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of Series D ConvertibleParticipating Preferred Stock (the “Series D Certificate of Designation” and, together with the Series C Certificate of Designation, the “Certificates ofDesignation”) filed by the Company with the Secretary of State of the State of Nevada on October 10, 2018.Closing of the issuance of the shares of Common Stock and Series D Preferred Stock and the issuance and sale of the shares of Series C-2 PreferredStock pursuant to the Transaction Agreement occurred on October 10, 2018. The Company intends to use the net proceeds from the sale of the shares ofSeries C-2 Preferred Stock for general corporate purposes, including the acquisition, exploration and development of oil and natural gas properties.As of December 31, 2018, the Company accounted the Series C-1 Preferred Stock, Series C-2 Preferred Stock and the Series D Preferred Stock at its fairvalue plus cumulative PIK dividends, net of transaction costs under mezzanine equity in the consolidated balance sheet - see components of the Series C-1Preferred Stock, Series C-2 Preferred Stock and Series D Preferred Stock summarized in the table below. Number ofSeries C-1PreferredShares Series C-1PreferredStock Number ofSeries C-2PreferredShares Series C-2PreferredStock Number ofSeries DPreferredShares Series DPreferredStock Total (In thousands, except shares)Balance, January 1, 2018— $— — $— — $— $—Issuance of Preferred Stock100,000 100,000 25,000 25,000 39,254 39,919 164,919Transaction costs (1)— (2,494) — (87) — — (2,581)Net Proceeds100,000 97,506 25,000 24,913 39,254 39,919 162,338Paid-in-kind dividends— 9,268 — 609 — 810 10,687Balance, December 31, 2018100,000 $106,774 25,000 $25,522 39,254 $40,729 $173,025 Stated value per share $1,093 $256 $407 (1) Transaction costs incurred for the issuance of Series D Preferred Shares are included in the accounting for loss on the early extinguishment of debtassociated with the Transaction Agreement dated October 10, 2018 on the reduction of the Second Lien Term Loan as disclosed in Note 9 Long-TermDebt.There was no mezzanine equity as of December 31, 2017.Material Terms of the Series C Preferred Stock and Series D Preferred StockThe following is a description of the material terms of the Preferred Stock in the Securities Purchase Agreement. Ranking. The Series D Preferred Stock ranks senior to the Series C Preferred Stock, and the Series C Preferred Stock ranks senior to the CommonStock with respect to dividends and rights on the liquidation, dissolution or winding up of the Company.Stated Value. Each series of the Preferred Stock has a per share stated value of $1,000, subject to increase in connection with the payment ofdividends in kind (the “Stated Value”).98Dividends. Holders of shares of Preferred Stock are entitled to receive cumulative preferential dividends, payable and compounded quarterly inarrears on January 1, April 1, July 1 and October 1 of each year, commencing April 1, 2018, at an annual rate of 9.75% of the Stated Value for the Series CPreferred Stock and 8.25% of the Stated Value for the Series D Preferred stock until April 26, 2021, after which the annual dividend rate will increase to12.00% if paid in full in cash or 15.00% if not paid in full in cash. Dividends are payable, at the Company’s option, (i) in cash, (ii) in kind by increasing theStated Value by the amount per share of the dividend, or (iii) in a combination thereof. In addition to these preferential dividends, holders of the PreferredStock will be entitled to participate in any dividends paid on the Common Stock on an as-converted basis. As of December 31, 2018, the Company accrued acumulative balance of $10.7 million of PIK dividends for the Preferred Stock as presented in the above table.Optional Redemption. The Company has the right to redeem the Series C Preferred Stock, in whole or in part, at any time (subject to certainlimitations on partial redemptions), at a price per share equal to (i) the Stated Value then in effect multiplied by (a) 120% if redeemed during 2018, (b) 125%if redeemed during 2019 or (c) 130% if redeemed after 2019, plus (ii) accrued and unpaid dividends thereon and any other amounts payable by the Companyin respect thereof (the “Series C Optional Redemption Amount”). The Company has the right to redeem the Series D Preferred Stock, in whole or in part at anytime (subject to certain limitations on partial redemptions), at a price per share equal to (i) the Stated Value then in effect multiplied by 117.5%, plus (ii)accrued and unpaid dividends thereon and any other amounts payable by the Company in respect thereof (the “Series D optional Redemption Amount”).Each Series of the Preferred Stock is perpetual and is not mandatorily redeemable at the option of the holders, except upon the occurrence of a Change ofControl (as defined in the Certificates of Designation) as described below.Conversion. Each share of Series C Preferred Stock is convertible at any time at the option of the holder into a number of shares of Common Stockequal to (i) the applicable Series C Optional Redemption Amount divided by (ii) a conversion price of $6.15, subject to adjustment (the “Series C ConversionPrice”). Each share of Series D Preferred Stock is convertible at any time at the option of the holder into a number of shares of Common Stock equal to (i) theSeries D Optional Redemption Amount divided by (ii) a conversion price of $5.50, subject to adjustment (the "Series D Conversion Price" and, together withthe Series C Conversion Price, the “Conversion Prices”). The Conversion Prices will be subject to proportionate adjustment in connection with stock splitsand combinations, dividends paid in stock and similar events affecting the outstanding Common Stock. Additionally, the Conversion Prices will be adjusted,based on a broad-based weighted average formula, if the Company issues, or is deemed to issue, additional shares of Common Stock for consideration pershare that is less than the lesser of (i) $5.25 and (ii) the applicable Conversion Price then in effect, subject to certain exceptions and to the applicable ShareCap (as defined below). The Company has the right to force the conversion of any or all of the outstanding shares of Preferred Stock if (i) the volume-weighted average price pershare of the Common Stock on the principal exchange on which it is then traded has been at least 140% of the applicable Conversion Price then in effect forat least 20 of the 30 consecutive trading days immediately preceding the exercise by the Company of the forced conversion right and (ii) certain trading andother conditions are satisfied.To comply with rules of the NYSE American (on which the Common Stock is traded), the Certificates of Designation provide that the number ofshares of Common Stock issuable on conversion of a share of Preferred Stock may not exceed (i) in the case of the Series C-1 Preferred Stock (a) the StatedValue divided by (b) $4.42 (which was the closing price of the Common Stock on the NYSE American on January 30, 2018) (the “C-1 Share Cap”) or (ii) inthe case of the Series C-2 Preferred Stock and the Series D Preferred Stock (a) the Stated Value divided by (b) $4.41 (which was the closing price of theCommon Stock on the NYSE American on October 9, 2018) (together with the C-1 Share Cap, the “Share Caps”), in each case prior to the receipt ofshareholder approval of the issuance of shares of Common Stock. Change of Control. Upon the occurrence of a Change of Control (as defined in the Certificates of Designation), each holder of shares of Preferred Stockwill have the option to:•cause the Company to redeem all of such holder’s shares of Preferred Stock for cash in an amount per share equal to (i) the applicable OptionalRedemption Amount plus (ii) 2.5% of the Stated Value, in each case as in effect immediately prior to the Change of Control;•convert all of such holder’s shares of Preferred Stock into the number of shares of Common Stock into which such shares are convertible immediatelyprior to the Change of Control; or•continue to hold such holder’s shares of Preferred Stock, subject to any adjustments to the applicable Conversion Price or the number and kind ofsecurities or other property issuable upon conversion resulting from the Change of Control and to the Company’s or its successor’s optionalredemption rights described above.Liquidation Preference. Upon any liquidation, dissolution or winding up of the Company:•holders of shares of Series D Preferred Stock will be entitled to receive, prior to any distributions on the Series C Preferred Stock, the Common Stockor other capital stock of the Company ranking junior to the Series D Preferred Stock, an amount per share of Series D Preferred Stock equal to thegreater of (i) the Series D Optional Redemption Amount then in effect99and (ii) the amount such holder would receive in respect of the number of shares of Common Stock into which such shares of Series D PreferredStock is then convertible; and•holders of shares of Series C Preferred Stock will be entitled to receive, prior to any distributions on the Common Stock or other capital stock of theCompany ranking junior to the Series C Preferred Stock, an amount per share of Series C Preferred Stock equal to the greater of (i) the applicableSeries C Optional Redemption Amount then in effect and (ii) the amount such holder would receive in respect to the number of shares of commonstock into which a share of Series C Preferred Stock is then convertible. Voting Rights. In addition to the Board designation rights described in the Certificate of Designation, holders of shares of Preferred Stock will beentitled to vote with the holders of shares of Common Stock, as a single class, on all matters submitted for a vote of holders of shares of Common Stock.When voting together with the Common Stock, each share of Preferred Stock will entitle the holder to a number of votes equal to (i) the applicable StatedValue as of the applicable record date or other determination date divided by (ii) (a) in the case of Series C-1 Preferred Stock, $4.42 (the closing price of theCommon Stock on the NYSE American on January 30, 2018), and (b) in the case of Series C-2 Preferred Stock and Series D Preferred Stock, $4.41 (the closingprice of the Common Stock on the NYSE American on October 9, 2018).NOTE 14 - STOCKHOLDERS’ EQUITYIssuance of Common StockOn October 10, 2018, in conjunction with the consideration for the reduction of the outstanding principal amount of the term loan under the SecondCredit Agreement as disclosed in Note 9 - Long-term Debts, the Company issued an aggregate of 5,952,763 shares of the Company’s common stock, parvalue $0.0001 per share which includes 5,802,763 shares of common stock at an exchange price of $5.00 per share of common stock plus an additional150,000 shares of common stock.Common Stock RepurchaseIn March 2018, the Company entered into a share-repurchase agreement (the “SRA”) with an investment brokerage company (“Broker”) torepurchase $1.0 million of the Company’s common stock as part of the Share Repurchase Plan (the “Plan”). Under the terms of the SRA, the Company paidcash directly to the Broker and received delivery of shares of the Company’s common stock. All of the shares acquired by the Company under the SRA arerecorded as treasury stock. For the nine months ended December 31, 2018 the Company purchased 253,598 shares of the Company’s common stock forapproximately $1.0 million.Authorized Shares of Common StockOn May 2, 2017, the Board of Directors authorized the amendment of the Company’s certificate of incorporation to increase the number ofauthorized shares of common stock by 50 million from the prior level of 100 million. This amendment was also approved by the Company’s stockholders onJuly 13, 2017. There was no change in the stated par value of the shares as a result of this amendment.Private PlacementOn February 28, 2017, the Company entered into a Securities Subscription Agreement (the “Subscription Agreement”) with certain institutional andaccredited investors in connection with a private placement (the “March 2017 Private Placement”) to sell 5.2 million units, consisting of approximately 5.2million shares of common stock and warrants to purchase approximately an additional 2.6 million shares of common stock. Each unit consisted of one shareof common stock and a warrant to purchase 0.50 shares of common stock, at a price per unit of $3.85. Each warrant has an exercise price of $4.50 and may besubject to redemption by the Company, upon prior written notice, if the price of the Company’s common stock closes at or above $6.30 for twenty tradingdays during a consecutive thirty trading day period. As of December 31, 2017, the Company received aggregate gross proceeds of $20.0 million and issued5,194,821 shares of common stock and warrants to purchase 2,597,420 shares of common stock.100WarrantsThe following table provides a summary of warrant activity as of December 31, 2018 and 2017: Warrants Weighted-AverageExercisePriceOutstanding at January 1, 201715,915,511 $3.34Warrants issued in connection with private placement2,597,420 4.50Warrants issued to Heartland160,714 3.50Exercised(6,144,176) (0.30)Forfeited or expired(646,669) (25.70)Outstanding at December 31, 201711,882,800 $3.34Exercised(3,975,957) 2.21Forfeited or expired(2,889,514) 3.35Outstanding at December 31, 20185,017,329 $3.83The outstanding warrants at December 31, 2018 will expire as follows: Year Warrants2019 2,263,2672020 174,6422021 —2022 2,579,420 5,017,329 NOTE 15 - STOCK BASED AND OTHER COMPENSATIONOn April 20, 2016, the Company’s Board and the Compensation Committee of the Board approved the Company’s 2016 Omnibus Incentive Plan(the “2016 Plan”). On November 3, 2016 the Company’s stockholders voted to increase number of shares of common stock authorized for issuance under the2016 Plan to 10 million. At the 2017 Annual Meeting of Stockholders of the Company held on July 13, 2017, the Company’s stockholders approved thesecond amendment to its 2016 Plan to increase the number of shares of common stock available for grant under the 2016 Plan from 10 million to 13 millionshares. As of December 31, 2018, 6.7 million shares of the 13 million shares of the Company’s common stock authorized for awards under the 2016 Planremained available for future issuances. The Company generally issues new shares to satisfy awards under employee stock based payment plans.The following table sets forth the stock based compensation expense recognized during the years ended December 31, 2018 and 2017 and theunamortized portion of the stock based compensation expense and weighted average amortization period of the remaining vesting period at December 31,2018 and 2017:101 2018 2017(in thousands)StockOptions RestrictedStock Total StockOptions RestrictedStock TotalStock based compensation expense$2,158 $6,842 $9,000 $7,255 $14,283 $21,538Unamortized stock based compensation costs$487 $3,501 $3,988 $4,267 $8,669 $12,936Weighted average amortization period remaining(years)0.3 0.5 0.7 0.8 Summary of non-cash compensation in the Statement of Changes in Stockholders’ Equity: December 31, 2018 2017 (In thousands)Common stock issued for directors’ fees$1,182 $959Stock based compensation for issuance of stock options1,933 7,255Stock based compensation for issuance of restricted stock4,372 13,227Common stock issued for professional services1,513 97Total non-cash compensation in the Statement of Changes in Stockholders’ Equity$9,000 $21,538Restricted StockEmployees may be granted restricted stock in the form of restricted stock awards or restricted stock units. Restricted stock is subject to forfeiturerestrictions and cannot be sold, transferred, or disposed of during the restriction period. The holders of restricted stock awards have the same rights as astockholder of the Company with respect to such shares, including the right to vote and receive dividends or other distributions paid with respect to theshares. A restricted stock unit is equivalent to a restricted stock award except that unit holders do not have the right to vote. Restricted stock vests overservice periods ranging from the date of grant generally up to two or three years.A summary of restricted stock grant activity pursuant to the 2016 Plan for the years ended December 31, 2018 and 2017 is presented below: Number ofShares Weighted Average GrantDate PriceOutstanding at January 1, 20171,068,305 $—Granted4,266,345 1.54Vested and issued(2,162,915) (1.75)Forfeited or canceled(696,469) —Outstanding at December 31, 20172,475,266 $4.22Granted1,194,944 4.59Vested and issued(1,436,146) (2.38)Forfeited or canceled(1,280,480) (4.44)Outstanding at December 31, 2018953,584 $4.85A summary of restricted stock unit grant activity pursuant to the 2012 Plan for the years ended December 31, 2018 and 2017 is presented below. TheCompany no longer grants any awards under the 2012 Plan.102 Number ofShares WeightedAverage GrantDate PriceOutstanding at January 1, 2017186,900 $12.29Granted— —Vested and issued(150,419) (18.75)Forfeited(26,482) (16.15)Outstanding at December 31, 20179,999 6.57Granted— —Vested and issued(9,999) (6.57)Forfeited— —Outstanding at December 31, 2018$— $—Stock OptionsEmployees may be granted incentive stock options to purchase shares of the Company’s common stock with an exercise price equal to, or greaterthan, the fair market value of the Company’s common stock on the date of grant. These stock options generally vest over two years from the date of grant andterminate at the earlier of the date of exercise or ten years from the date of grant. During the years ended December 31, 2018 and 2017, the Company receivedcash proceeds of approximately $2.6 million and approximately $0.5 million, respectively, from the exercise of vested stock options.The fair value of stock option awards is determined using the Black-Sholes-Merton option-pricing model based on several assumptions. Theseassumptions are based on management’s best estimate at the time of grant. The Company used the following weighted average of each assumption based onthe grants in each fiscal year: 2018 2017Expected Term in Years6 2Expected Volatility66% 101%Expected Dividends—% —%Risk-Free Interest Rate2.67% 1.38%The Company estimates expected volatility based on an analysis of its historical stock prices since the initial public offering date in 2007. TheCompany estimates the expected term of its option awards based on the vesting period. The Company uses this method to provide a reasonable basis forestimating its expected term due to the lack of sufficient historical employee exercise data on stock option awards.A summary of stock option activity for the years ended December 31, 2018 and 2017 is presented below:103 Stock Options Outstanding and Exercisable Numberof Options WeightedAverageExercisePrice Numberof OptionsVested/Exercisable WeightedAverageRemainingContractual Life(Years)Outstanding at December 31, 20165,956,833 $2.04 2,208,757 9.6Granted3,260,000 4.74 Exercised(304,896) (2.01) Forfeited or canceled(1,606,937) (3.06) Outstanding at December 31, 20177,305,000 3.74 3,534,484 8.9Granted352,500 4.07 Exercised(1,024,877) (2.67) Forfeited or canceled(1,601,045) (4.20) Outstanding at December 31, 20185,031,578 $3.81 5,035,317 7.9During the year ended December 31, 2018, options to purchase 352,500 shares of the Company’s common stock were granted under the 2016 Plan.The weighted average fair value of these options was $4.07. During the year ended December 31, 2018, the Company received $2.6 million from the exerciseof vested stock options.The outstanding options had no intrinsic value at December 31, 2018. The outstanding options had an intrinsic value of approximately $10.1million at December 31, 2017.NOTE 16 - SUPPLEMENTAL CASH FLOW INFORMATIONThe following table summarizes information on non-cash investing and financing activities for the years ended December 31, 2018 and 2017: 2018 2017 (in thousands)Non-cash investing and financing activities excluded from the statement of cash flows: Conversion of Series B Preferred Stock and accrued dividends to common stock$— $14,865Fair value of warrants issued for financing costs and debt discount— 1,031Common stock issued for acquisition of oil and natural gas properties24,778 —Common stock issued for commitment fees associated with Private Placement— 250Cashless exercise of warrants and stock options359 370Accrued drilling costs7,850 3,615Change in asset retirement obligation1,495 99Issuance of common stock for drilling services— 97Issuance of common stock and preferred stock for debt conversion64,504 —Reduction of fair value for converted embedded derivatives12,406 —Accrued PIK dividends on Series C-1, C-2 and D Preferred Stock10,687 —Transfer of warrant derivative instruments to equity223 —104NOTE 17 - LOSS PER COMMON SHAREThe following table shows the computation of basic and diluted net loss per share for the years ended December 31, 2018 and 2017: Year Ended December 31, 2018 2017 (in thousands)Net loss$(4,143) $(80,082)Dividends on Series C-1, C-2 and D convertible preferred stock(10,687) —Dividends on redeemable preferred stock— (122)Dividend and deemed dividends on Series B convertible preferred stock— (4,635)Net loss attributable to common stockholders$(14,830) $(84,839) Weighted average common shares outstanding - basic62,854,214 42,428,148 Net loss per common share - basic$(0.24) $(2.00) Numerator for diluted loss per share: Net loss attributable to common stockholders$(14,830) $(84,839)Add: interest expense on convertible Second Lien Loans13,429 —Less: fair value change of embedded derivatives associated with Second Lien Loans(35,471) —Net loss attributable to common stockholders$(36,872) $(84,839) Denominator for diluted net loss per share: Weighted average number of common shares outstanding - basic62,854,214 42,428,148Dilution effect of if-converted Second Lien Loans (1)15,597,127 —Weighted average number of common shares outstanding - diluted78,451,341 42,428,148 Net loss per share - diluted: Net loss per common shares (diluted)$(0.47) $(2.00)(1)The Company excluded the following shares from the diluted loss per share calculations because they are anti-dilutive at December 31, 2018 and2017: December 31, 2018 2017Stock Options 5,031,578 7,305,000Restricted Stock Units — 9,999Stock Purchase Warrants 5,017,329 11,882,800If-converted Second Lien Term Loans — 24,202,016If-converted Series C-1 9.75% Convertible Participating Preferred Stock 21,309,234 —If-converted Series C-2 9.75% Convertible Participating Preferred Stock 4,986,382 —If-converted Series D 8.25% Convertible Participating Preferred Stock 8,543,670 —Total 44,888,193 43,399,815105106NOTE 18 - SEGMENT INFORMATIONOperating segments are defined as components of an entity that engage in activities from which it may earn revenues and incur expenses for whichseparate operational financial information is available and are regularly evaluated by the chief operating decision maker for the purposes of allocatingresources and assessing performance. The Company currently has only one reportable operating segment, which is oil and natural gas development,exploration and production for which the Company has a single management team that allocates capital resources to maximize profitability and measuresfinancial performance as a single entity.NOTE 19 - COMMITMENTS AND CONTINGENCIESFirm Oil Takeaway and Pricing AgreementOn July 25, 2018, the Company executed a five-year agreement to secure firm takeaway pipeline capacity and pricing on a long-haul pipeline to theGulf Coast commencing July 1, 2019. The agreement guarantees 6,000 Bbl/d of firm capacity on a long-haul pipeline to Corpus Christi at a specified price,beginning July 1, 2019 through June 30, 2020, and 5,000 Bbl/d from July 1, 2020 through June 30, 2024. We will have firm takeaway and firm pricingcommencing July 1, 2019, and the ability to increase capacity subject to availability by SCM. Further, SCM has agreed to purchase the crude from us at aspecified Magellan East Houston price with a fixed “differential basis,” providing price relief versus current market conditions.Environmental and Governmental RegulationAt December 31, 2018, there were no known environmental or regulatory matters which are reasonably expected to result in a material liability tothe Company. Many aspects of the oil and natural gas industry are extensively regulated by federal, state, and local governments in all areas in which theCompany has operations. Regulations govern such things as drilling permits, environmental protection and air emissions/pollution control, spacing of wells,the unitization and pooling of properties, reports concerning operations, land use, and various other matters including taxation. Oil and natural gas industrylegislation and administrative regulations are periodically changed for a variety of political, economic, and other reasons. As of December 31, 2018, theCompany had not been fined or cited for any violations of governmental regulations that would have a material adverse effect upon the financial conditionof the Company.Legal ProceedingsThe Company may from time to time be involved in various legal actions arising in the normal course of business. In the opinion of management,the Company’s liability, if any, in these pending actions would not have a material adverse effect on the financial position of the Company. The Company’sgeneral and administrative expenses would include amounts incurred to resolve claims made against the Company.The Company believes there is no litigation pending that could have, individually or in the aggregate, a material adverse effect on its results ofoperations or financial condition.Operating LeasesThe Company has only the office spaces in both Houston, Texas, and Fort Worth, Texas, with minimum lease payments with commitments that haveinitial or remaining lease terms in excess of one year as of December 31, 2018, comprising $0.2 million in 2019, $0.1 million in 2020 and less than $0.1million in 2021. The Company recognizes rent expense on a straight-line basis over the noncancelable lease term. The leases for office space in Houston,Texas, and Fort Worth, Texas, expire in August 2021 and January 2020, respectively. There were no other noncancelable leases during the year endedDecember 31, 2018. For the years ended December 31, 2018 and 2017, the Company recognized rent expense of $0.6 million, respectively.NOTE 20 - SUBSEQUENT EVENTSFirst Amendment and Waiver to Revolving Credit Agreement107On March 1, 2019, the Company entered into a First Amendment and Waiver (the “First Amendment”) to the Revolving Credit Agreement. Amongother matters, the First Amendment provided for an acceleration of the scheduled May 2019 redetermination of the borrowing base under the RevolvingCredit Agreement. The redetermination became effective on March 5, 2019 upon closing of the transactions contemplated by the 2019 TransactionAgreement (as defined below), including the satisfaction in full, as described below, of the Second Lien Loans under the Second Lien Credit Agreement. Asso redetermined, the borrowing base is $125 million until the next redetermination date, reflecting an increase of $17 million from the previously in effectborrowing base of $108 million. As amended by the First Amendment, the Revolving Credit Agreement provides that the next scheduled borrowing baseredetermination will occur on or about July 1, 2019. Thereafter, scheduled redeterminations of the borrowing base will occur semi-annually on or about May1 and November 1 of each year, beginning November 1, 2019.In connection with the satisfaction in full of the Second Lien Loans and the termination of the Second Lien Credit Agreement, the First Amendmentalso amended the maturity date provisions of the Revolving Credit Agreement to eliminate any springing maturity under the Revolving Credit Agreementtied to the maturity of the Second Lien Credit Agreement, resulting in a fixed maturity date under the Revolving Credit Agreement of October 10, 2023.As disclosed in Note 9 - Long-Term Debt, the First Amendment also included a limited waiver of compliance by the Company with the leverageratio covenant in the Revolving Credit Agreement as of December 31, 2018. The First Amendment also effected certain other ministerial and conformingamendments to the Revolving Credit Agreement related to the transactions contemplated by the 2019 Transaction Agreement and required payment by theCompany to lenders of customary fees.2019 Transaction AgreementOn March 5, 2019, the Company entered into a Transaction Agreement (the “2019 Transaction Agreement”) by and among the Company and theVärde Parties. Pursuant to the Transaction Agreement and a related payoff letter, the Company agreed to issue to the Värde Parties shares of two new series ofits preferred stock and shares of its Common Stock, as consideration for the termination of the Second Lien Credit Agreement and the satisfaction in full, inlieu of repayment in cash, of all the Second Lien Loans under the Second Lien Credit Agreement. Specifically, in exchange for satisfaction of the outstandingprincipal amount of the Second Lien Loans, accrued and unpaid interest thereon and the make-whole amount totaling approximately $133.6 million (the“Second Lien Exchange Amount”), the Company agreed to issue to the Värde Parties an aggregate of:•55,000 shares of a newly created series of preferred stock of the Company, designated as “Series F 9.00% Participating Preferred Stock” (the“Series F Preferred Stock”), corresponding to $55 million of the Second Lien Exchange Amount based on the aggregate initial Stated Valueof the shares of Series F Preferred Stock;•60,000 shares of a newly created series of preferred stock of the Company, designated as “Series E 8.25% Convertible ParticipatingPreferred Stock” (the “Series E Preferred Stock”), corresponding to $60 million of the Second Lien Exchange Amount based on theaggregate initial Stated Value (as defined below) of the shares of Series E Preferred Stock; and•9,891,638 shares of Common Stock, corresponding to approximately $18.6 million of the Second Lien Exchange Amount, based on theclosing price of the Common Stock on the NYSE American on March 4, 2019 of $1.88.In addition, pursuant to the Transaction Agreement, the Company agreed to issue to the Värde Parties an aggregate of 7,750,000 shares of CommonStock, as consideration for the Värde Parties’ consent to the amendment of the terms of the Series D Preferred Stock and the Series C Preferred Stock (each asdefined in Note 13) to, as more fully described below:•eliminate the convertibility of the Series D Preferred Stock and the Series C Preferred Stock into shares of Common Stock;•eliminate the right of holders of the Series D Preferred Stock and the Series C Preferred Stock to vote together with holders of CommonStock;•modify the rights of holders of the Series D Preferred Stock and the Series C Preferred Stock to participate with holders of Common Stock individends and distributions on liquidation;•cap the redemption premium on the Series C Preferred Stock at the current level of 25%, instead of increasing to 30% after December 31,2019;•modify in some respects the rights of holders of the Series D Preferred Stock and the Series C Preferred Stock to appoint members of theCompany’s board of directors; and•conform certain negative covenants to those applicable to the Series F Preferred Stock and Series E Preferred Stock.Closing of the transactions contemplated by the 2019 Transaction Agreement, including the issuance of the shares of Series F Preferred Stock, SeriesE Preferred Stock and Common Stock, the satisfaction and termination of the Second Lien Credit Agreement and the amendment of the terms of the Series DPreferred Stock and Series C Preferred Stock occurred on March 5,1082019. References to the Series D Preferred Stock and the Series C Preferred Stock below in this Note 20 are to those series of preferred stock as so amended.The terms of the Series F Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of Series F 9.00%Participating Preferred Stock filed by the Company with the Secretary of State of the State of Nevada on March 5, 2019 (the “Series F Certificate ofDesignation”). The terms of the Series E Preferred Stock are set forth in a Certificate of Designation of Preferences, Rights and Limitations of Series E 8.25%Convertible Participating Preferred Stock filed by the Company with the Secretary of State of the State of Nevada on March 5, 2019 (the “Series E Certificateof Designation”). The terms of the Series D Preferred Stock are set forth in an Amended and Restated Certificate of Designation of Preferences, Rights andLimitations of Series D 8.25% Participating Preferred Stock filed by the Company with the Secretary of State of the State of Nevada on March 5, 2019 (the“Amended and Restated Series D Certificate of Designation”). The terms of the Series C Preferred Stock are set forth in a Second Amended and RestatedCertificate of Designation of Preferences, Rights and Limitations of Series C-1 9.75% Participating Preferred Stock and Series C-2 9.75% ParticipatingPreferred Stock filed by the Company with the Secretary of State of the State of Nevada on March 5, 2019 (the “Second Amended and Restated Series CCertificate of Designation”) The Series F Certificate of Designation, the Series E Certificate of Designation, the Amended and Restated Series D Certificate ofDesignation and the Second Amended and Restated Series C Certificate of Designation are referred to collectively in this Note 20 as the “Certificates ofDesignation”.The following is a description of the material terms of the Series F Preferred Stock and the Series E Preferred Stock, the material amended terms of theSeries D Preferred Stock and the Series C Preferred Stock and the material terms of the 2019 Transaction Agreement. Except as otherwise noted in this Note20, the material terms of the Series D Preferred Stock and the Series C Preferred Stock remain as in effect prior to the closing of the transactions contemplatedby the 2019 Transaction Agreement as disclosed in Note 13 - Mezzanine Preferred Stock. The Series F Preferred Stock, the Series E Preferred Stock, the SeriesD Preferred Stock and the Series C Preferred Stock are referred to collectively in this Note 20 as the “Preferred Stock.”Ranking. The Series F Preferred Stock ranks senior to all of the other series of Preferred Stock, and the Series E Preferred Stock ranks senior to theSeries D Preferred Stock and the Series C Preferred Stock, in each case with respect to dividends and rights on the liquidation, dissolution or winding up ofthe Company.Stated Value. The Series F Preferred Stock and the Series E Preferred Stock have an initial per share stated value of $1,000, subject to increase inconnection with the payment of dividends in kind as described below (the “Stated Value”).Dividends. Holders of the Series F Preferred Stock and the Series E Preferred Stock are entitled to receive cumulative preferential dividends, payableand compounded quarterly in arrears on January 1, April 1, July 1 and October 1 of each year, commencing April 1, 2019, at an annual rate of 9.00% of theStated Value for the Series F Preferred Stock and 8.25% of the Stated Value for the Series E Preferred Stock. However, if, on any dividend payment dateoccurring after April 26, 2021, dividends due on such dividend payment date on the Series F Preferred Stock or the Series E Preferred Stock are not paid infull in cash, the annual dividend rate for the dividends due on such dividend payment date (but not for any future dividend payment date on which dividendsare paid in full in cash) will be 10.00% on the Series F Preferred Stock and 9.25% on the Series E Preferred Stock. Dividends are payable, at the Company’soption, (i) in cash, (ii) in kind by increasing the Stated Value by the amount per share of the dividend or (iii) in a combination thereof. The Company expectsto pay dividends in kind for the foreseeable future.In addition to these preferential dividends, holders of each series of Preferred Stock are entitled to participate in dividends paid on the CommonStock. For holders of the Series F Preferred Stock, the Series D Preferred Stock and the Series C Preferred Stock, such participation will be based on thedividends such holders would have received if, immediately prior to the applicable record date, each outstanding share of such series of Preferred Stock hadbeen converted into a number of shares of Common Stock equal to the applicable Optional Redemption Price (as defined below) divided by $7.00, subject toproportionate adjustment in connection with stock splits and combinations, dividends paid in stock and similar events affecting the outstanding CommonStock (such price, as so adjusted, the “Participation Price”) (regardless of the fact that shares of such series of Preferred Stock are not convertible intoCommon Stock). For holders of the Series E Preferred Stock, such participation will be based on the number of shares of Common Stock such holders wouldhave owned if all shares of Series E Preferred Stock had been converted to Common Stock at the Conversion Rate (as defined below) then in effect.Optional Redemption.The Company has the right to redeem the Series F Preferred Stock, in whole or in part at any time (subject to certain limitations on partialredemptions), at a price per share equal to (i) the Stated Value then in effect, multiplied by 115.0%, plus (ii) accrued and unpaid dividends thereon and anyother amounts payable by the Company in respect thereof (the “Series F Optional Redemption Price”).109The Series F Preferred Stock is not redeemable at the option of the holders except in connection with a Change of Control as described below and isperpetual unless redeemed in accordance with the Series F Certificate of Designation.Subject to the limitations described below and certain additional limitations on partial redemptions, the Company has the right to redeem the SeriesE Preferred Stock, in whole or in part at any time, at a price per share equal to (i) the Stated Value then in effect multiplied by (A) 110% if the optionalredemption date occurs on or prior to March 5, 2020, (B) 105% if the optional redemption date occurs after March 5, 2020 and on or prior to March 5, 2021and (C) 100% if the optional redemption date occurs after March 5, 2021, plus (ii) accrued and unpaid dividends thereon and any other amounts payable bythe Company in respect thereof (the “Series E Optional Redemption Price”). However, for any optional redemption effected in connection with or following aChange of Control (as defined in the Series E Certificate of Designation) or any mandatory redemption in connection with a Change of Control as describedbelow, the Series E Optional Redemption Price will be calculated under clause (C) above, regardless of when the redemption or Change of Control occurs.The Company may not effect an optional redemption of the Series E Preferred Stock unless:•either (i) as of the optional redemption date, there are no shares of the Series F Preferred Stock outstanding or (ii) all outstanding shares ofthe Series F Preferred Stock are redeemed on such optional redemption date concurrently with such optional redemption of the Series EPreferred Stock in accordance with the terms of the Series F Certificate of Designation;•the aggregate Series E Optional Redemption Price for all shares of the Series E Preferred Stock to be redeemed pursuant to such optionalredemption shall not exceed the aggregate amount of net cash proceeds received by the Company from a contemporaneous issuance ofCommon Stock issued for the purpose of redeeming such shares of Series E Preferred Stock; and•if the optional redemption date occurs prior to March 5, 2022, then (i) the VWAP for at least 20 trading days during the 30 trading dayperiod immediately preceding the notice of the optional redemption has been at least 150% of the Conversion Price (as defined below) thenin effect, and (ii) such optional redemption shall be for all (but not less than all) then-outstanding shares of Series E Preferred Stock.The Series E Preferred Stock is not redeemable at the option of the holders except in connection with a Change of Control as described below and isperpetual unless converted or redeemed in accordance with the Series E Certificate of Designation.As amended, the redemption price payable by the Company in connection with a redemption of the Series C Preferred Stock will be a price per shareequal to (i) the Stated Value (as defined in the Series C Certificate of Designation) multiplied by 125.0% plus (ii) accrued and unpaid dividends thereon andany other amounts payable by the Company in respect thereof (the “Series C Optional Redemption Price” and, together with the Series E OptionalRedemption Price, the Series F Optional Redemption Price and the Series D Optional Redemption Amount (as defined in Note 13), the respective “OptionalRedemption Prices”). Prior to the amendments effected in connection with the closing under the 2019 Transaction Agreement, the percentage specified inclause (i) above would have increased to 130.0% for a redemption of the Series C Preferred Stock effected after December 31, 2019.Conversion. Each share of the Series E Preferred Stock is convertible at any time at the option of the holder into a number of shares of CommonStock equal to (i) the applicable Series E Optional Redemption Price divided by (ii) the Conversion Price (as defined below) (the “Conversion Rate”).However, for purposes of determining the Conversion Rate, the Series E Optional Redemption Price will calculated on the basis applicable to an optionalredemption occurring after March 5, 2021 (i.e., multiplying the Stated Value by 100.0%), regardless of the timing or circumstances of the conversion. The“Conversion Price” for the Series E Preferred Stock is $2.50, subject to adjustment as described below. The Conversion Price will be subject to proportionateadjustment in connection with stock splits and combinations, dividends paid in stock and similar events affecting the outstanding Common Stock.Additionally, the Conversion Price will be adjusted, based on a broad-based weighted average formula, if the Company issues, or is deemed to issue,additional shares of Common Stock for consideration per share that is less than the Conversion Price then in effect, subject to certain exceptions and to theShare Cap (as defined below).To comply with rules of the NYSE American, the Series E Certificate of Designation provides that the number of shares of Common Stock issuableon conversion of a share of Series E Preferred Stock may not exceed (the “Share Cap”) the Stated Value divided by $1.88 (which was the closing price of theCommon Stock on the NYSE American on March 4, 2019), subject to proportionate adjustment in connection with stock splits and combinations, dividendspaid in stock and similar events affecting the outstanding Common Stock (such price, as so adjusted, the “Initial Market Price”), prior to the receipt ofshareholder approval of the issuance of shares of Common Stock in excess of the Share Cap upon conversion of shares of Series E Preferred Stock. The 2019Transaction Agreement requires the Company to seek such shareholder approval at its next annual meeting of shareholders. Accordingly, the Companyintends to seek such shareholder approval at its 2019 annual meeting of shareholders.110The Company does not have the right to force the conversion of shares of the Series E Preferred Stock based on the trading price of the CommonStock or otherwise.The Series F Preferred Stock and, as amended, the Series D Preferred Stock and the Series C Preferred Stock are not convertible into Common Stock.Change of Control. Upon the occurrence of a Change of Control (as defined in the Certificates of Designation), each holder of shares of the Series EPreferred Stock and the Series F Preferred Stock will have the option to:•cause the Company to redeem all of such holder’s shares of Series E Preferred Stock or Series F Preferred Stock for cash in an amount pershare equal to the applicable Optional Redemption Price;•in the case of the Series E Preferred Stock, convert all of such holder’s shares of Series E Preferred Stock into Common Stock at theConversion Rate; or•continue to hold such holder’s shares of Series E Preferred Stock or Series F Preferred Stock, subject to the Company’s or its successor’soptional redemption rights described above and, in the case of the Series E Preferred Stock, subject to any adjustments to the ConversionPrice or the number and kind of securities or other property issuable upon conversion resulting from the Change of Control.Because of the elimination of the convertibility of the Series D Preferred Stock and the Series C Preferred Stock, holders of the Series D PreferredStock and the Series C Preferred Stock no longer have the option to convert their shares of Series D Preferred Stock or Series C Preferred Stock to CommonStock in connection with a Change of Control.Liquidation Preference. Upon any liquidation, dissolution or winding up of the Company:•holders of shares of Series F Preferred Stock, Series D Preferred Stock or Series C Preferred will be entitled to receive, after any distributionson the Preferred Stock ranking senior to such series of Preferred Stock (as applicable) and prior to any distributions on the Preferred Stockranking junior to such series of Preferred Stock (as applicable), the Common Stock or other capital stock of the Company ranking junior tosuch series of Preferred Stock, an amount per share equal to the greater of (i) the applicable Optional Redemption Price then in effect and (ii)the proceeds the holders of Preferred Stock of such series would be entitled to receive if, immediately prior to the payment of such amount,each then-outstanding share of such series of Preferred Stock had been converted into a number of shares of Common Stock equal to theapplicable Optional Redemption Price divided by the Participation Price (regardless of the fact that shares of such series of Preferred Stockare not convertible into Common Stock); and•holders of shares of Series E Preferred Stock will be entitled to receive, after any distributions on the Series F Preferred Stock and prior toany distributions on the Series D Preferred Stock, the Series C Preferred Stock, the Common Stock or other capital stock of the Companyranking junior to the Series E Preferred Stock, an amount per share of Series E Preferred Stock equal to the greater of (i) the Series EOptional Redemption Price then in effect and (ii) the amount such holder would receive in respect of the number of shares of CommonStock into which such share of Series E Preferred Stock is then convertible.Board Designation Rights. The Series F Certificate of Designation provides that holders of the Series F Preferred Stock have the right, votingseparately as a class, to designate one member of the Company’s board of directors (the “Board”) for as long as the aggregate Stated Value of all outstandingshares of the Series F Preferred Stock is at least equal to $13,750,000.The Series E Certificate of Designation provides that holders of the Series E Preferred Stock have the right, voting separately as a class, to designateone member of the Board for as long as the shares of Common Stock issuable on conversion of the outstanding shares of Series E Preferred Stock represent atleast 5% of the outstanding shares of Common Stock (giving effect to conversion of all outstanding shares of the Series E Preferred Stock).The Amended and Restated Series D Certificate of Designation provides that holders of the Series D Preferred Stock will the right, voting separatelyas a class, to designate one member of the Board for as long as the aggregate Stated Value (as defined in the Amended and Restated Series D Certificate ofDesignation) of all outstanding shares of the Series D Preferred Stock is at least equal to $9,813,500.The Second Amended and Restated Series C Certificate of Designation provides that holders of the Series C Preferred Stock have the right, votingseparately as a class, to designate two members of the Board for so long as the aggregate Stated Value (as defined in the Second Amended and Restated SeriesC Certificate of Designation) of all outstanding shares of the Series C Preferred Stock is at least equal to $31,250,000.111The 2019 Transaction Agreement required that the Board take, and the Board has taken, all actions necessary to increase the number of directorsconstituting the entire Board by two directors (to total eleven), which vacancies created by the increase, are required to be filled by (i) the person designatedby the holders of the Series F Preferred Stock and (ii) the person designated by the holders of the Series E Preferred, in each case, as and when required underthe Series F Certificate of Designation or the Series E Certificate of Designation, as applicable. The 2019 Transaction Agreement provides that, effective atthe closing thereunder, the three directors previously designated by the Värde Parties pursuant to their previously existing rights under the Series C PreferredStock and the Second Lien Credit Agreement, became the directors entitled to be appointed by the holders of the Series C Preferred Stock and the holders ofthe Series D Preferred Stock pursuant to the Second Amended and Restated Series C Certificate of Designation and the Amended and Restated Series DCertificate of Designation.The Transaction Agreement separately grants to the Värde Parties, for so long as the Värde Parties and their affiliates continue to beneficially own (asdefined in Rule 13d-3 under the Exchange Act) shares of Common Stock (including the Common Shares) representing at least the applicable percentage ofthe outstanding shares of Common Stock specified in the bullet points below, the right (but not the obligation) to designate to the Board the followingnumbers of directors:•five directors, for as long as the Värde Parties and their affiliates beneficially own shares of Common Stock representing at least 40.0% ofthe outstanding shares of Common Stock;•four directors, for as long as the Värde Parties and their affiliates beneficially own shares of Common Stock representing at least 33.3% ofthe outstanding shares of Common Stock;•three directors, for as long as the Värde Parties and their affiliates beneficially own shares of Common Stock representing at least 25.0% ofthe outstanding shares of Common Stock;•two directors, for as long as the Värde Parties and their affiliates beneficially own shares of Common Stock representing at least 10.0% ofthe outstanding shares of Common Stock; and•one director, for as long as the Värde Parties and their affiliates beneficially own shares of Common Stock representing at least 5.0% of theoutstanding shares of Common Stock.The 2019 Transaction Agreement provides that, during the time that the holders of Preferred Stock of any series are entitled to appoint one or moredirectors to the Board pursuant to one or more of the Certificates of Designation, the number of directors the Värde Parties are entitled to designate pursuantto the provisions of the 2019 Transaction Agreement described above will be reduced by the total number of directors the holders of the Preferred Stock of allseries are then entitled to appoint pursuant to the Certificates of Designation. Additionally, the number of directors that may be appointed or designatedunder each of the Certificates of Designation and the 2019 Transaction Agreement is subject to reduction if necessary to comply with the rules of the NYSEAmerican or any other exchange on which the Common Stock is listed.The Board members appointed or designated by holders of the Preferred Stock pursuant to the Certificates of Designation or by the Värde Partiespursuant to the 2019 Transaction Agreement must be reasonably acceptable to the Board and its Nominating and Corporate Governance Committee, actingin good faith, but any investment professional of Värde Partners, Inc. or its affiliates will be deemed to be reasonably acceptable. In addition, such Boarddesignees must satisfy applicable SEC and stock exchange requirements and comply with the Company’s corporate governance guidelines.The 2019 Transaction Agreement provides that the board designation rights provisions of the 2019 Transaction Agreement supersede and replacethe similar provisions of the 2018 Transaction Agreement and the Securities Purchase Agreement (each as defined in Note 13).Voting Rights; Negative Covenants. In addition to the Board designation rights described above, holders of Series E Preferred Stock are entitled tovote with the holders of the Common Stock, as a single class, on all matters submitted for a vote of holders of the Common Stock. When voting together withthe Common Stock, each share of Series E Preferred Stock will entitle the holder to a number of votes equal to the applicable Stated Value as of theapplicable record date or other determination date divided by the greater of (i) the then-applicable Conversion Price and (ii) the then-applicable InitialMarket Price.Holders of shares of Series F Preferred Stock, Series D Preferred Stock and Series C Preferred Stock are not be entitled to vote with the holders of theCommon Stock as a single class on any matter.Each of the Certificates of Designation provides that, as long as any shares of Preferred Stock of the applicable series are outstanding, the Companymay not, without the prior affirmative vote or prior written consent of the holders of a majority of the outstanding shares of Preferred Stock of each suchseries, as applicable:•amend the Company’s articles of incorporation or bylaws in any manner that materially and adversely affects any rights, preferences, privileges orvoting powers of the applicable series of Preferred Stock or holders of shares of such series of Preferred Stock;112•issue, authorize or create, or increase the issued or authorized amount of, the applicable series of Preferred Stock, any class or series of capital stockranking senior to or in parity with such series of Preferred Stock, or any security convertible into or evidencing the right to purchase any shares ofsuch series of Preferred Stock or any such senior or parity securities, other than equity, the proceeds of which, are used to immediately redeem all ofthe outstanding shares of Preferred Stock of the applicable series pursuant to the Company’s optional redemption rights described above;•subject to certain exceptions, declare or pay any dividends or distributions on, or redeem or repurchase, or permit any of its controlled subsidiaries toredeem or repurchase, shares of Common Stock or any other shares of capital stock of the Company ranking junior to the applicable series PreferredStock, subject to certain exceptions;•authorize, issue or transfer, or permit any of its controlled subsidiaries to authorize, issue or transfer, any equity in any subsidiary of the Companyother than (i) equity issued or transferred to the Company or another wholly-owned subsidiary of the Company or (ii) equity, the proceeds of which,are used to immediately redeem all of the outstanding shares of the applicable series of Preferred Stock pursuant to the Company’s optionalredemption rights described above; or•subject to certain exceptions, modify the number of directors constituting the entire the Board at any time when holders of shares of the applicableseries Preferred Stock have the right to designate a member of the Board.The Certificates of Designation further provide that, (i) in the case of the Series F Preferred Stock, as long shares of the Series F Preferred Stockhaving an aggregate Series F Optional Redemption Price of at least $27.5 million are outstanding, (ii) in the case of the Series E Preferred Stock, as long asshares of Series E Preferred Stock having an aggregate Series E Optional Redemption Price of at least $30 million are outstanding, (iii) in the case of theSeries D Preferred Stock, as long as shares of Series D Preferred Stock having an aggregate Series D Optional Redemption Amount of at least $19.627 millionare outstanding, and (iv) in the case of the Series C Preferred Stock, as long as shares of Series C Preferred Stock having an aggregate Series C OptionalRedemption Price of at least $50 million are outstanding, the Company may not, and may not permit any of its controlled subsidiaries to, without the prioraffirmative vote or prior written consent of the holders of a majority of the outstanding shares of the applicable series of Preferred Stock:•subject to certain exceptions, incur indebtedness or permit to exist any liens on the assets or properties of the Company or its subsidiaries;•enter into, adopt or agree to any “restricted payment” or similar provision that restricts or limits the payment of dividends on, or theredemption of, shares of the applicable series of Preferred Stock under any credit facility, indenture or other similar instrument of theCompany that would be more restrictive on the payment of dividends on, or redemption of, shares of the applicable series of Preferred Stockthan those existing as of the date on which shares of the applicable series of Preferred Stock were first issued;•liquidate or dissolve the company;•enter into any material new line of business or fundamentally change the nature of the Company’s business, including any acquisition ofoil and gas properties outside the Permian Basin;•enter into certain transactions with affiliates of the Company unless made on an arm’s-length basis and approved by a majority of thedisinterested members of the Board;•subject to certain exceptions, make dispositions of assets or property of the Company or its subsidiaries;•subject to certain exceptions, make loans or investments; or•voluntarily commence any bankruptcy or similar proceeding or take other similar actions.Transfer Restrictions. Under the 2019 Transaction Agreement, the Series F Certificate of Designation and the Series E Certificate of Designation,shares of Series F Preferred Stock and Series E Preferred Stock and shares of Common Stock issued on conversion of shares of Series E Preferred Stock may notbe transferred by the holder of such shares, other than to an affiliate of such holder, prior to September 5, 2019. After September 5, 2019, such shares will befreely transferable, subject to applicable securities laws.Standstill. The 2019 Transaction Agreement includes a customary standstill provision pursuant to which the Värde Parties agreed that they will not,directly or indirectly, take certain actions with respect to the Company or its securities generally until the applicable Standstill Termination Date (as definedin the 2019 Transaction Agreement). The 2019 Transaction Agreement provides that the standstill provisions of the 2019 Transaction Agreement supersedeand replace the similar provisions of the Securities Purchase Agreement.Other Terms. The 2019 Transaction Agreement contains other customary terms, including representations, warranties and covenants.Amended and Restated Registration Rights Agreement113On March 5, 2019, in connection with the closing under the 2019 Transaction Agreement, the Company entered into an Amended and RestatedRegistration Rights Agreement (the “Amended and Restated Registration Rights Agreement”) with the Värde Parties. Among other matters, the Amended andRestated Registration Rights Agreement requires the Company to file with the SEC a shelf registration statement under the Securities Act registering forresale the shares of Common Stock issued pursuant to the 2019 Transaction Agreement, the shares of Common Stock issuable upon conversion of the sharesof Series E Preferred Stock issued pursuant to the 2019 Transaction Agreement and the shares of Common Stock issued to the Värde Parties pursuant to the2018 Transaction Agreement. The Amended and Restated Registration Rights Agreement also grants to the Värde Parties demand and piggyback rights withrespect to certain underwritten offerings of Common Stock and contains customary covenants and indemnification and contribution provisions. TheAmended and Restated Registration Rights Agreement amended and restated the registration rights agreement, dated as of October 10, 2018, by and betweenthe Company and the Värde Parties, and terminated certain prior registration rights agreements related to shares of Common Stock that previously wereissuable upon conversion of the Second Lien Loans and the Series C Preferred Stock.114Lilis Energy, Inc. and SubsidiariesSupplementary Information on Oil and Natural Gas Exploration,Development and Production Activities(Unaudited) The Company’s oil and natural gas reserves are attributable solely to properties within the United States, which constitutes one cost center. Costs Incurred for Oil and Natural Gas Producing ActivitiesThe following table sets forth the costs incurred in the Company’s oil and natural gas acquisition, exploration and development activities and includescosts whether capitalized or expensed as well as revisions and additions to the estimated future asset retirement obligations: December 31, 2018 2017 (In thousands)Acquisition costs: Unproved properties$93,926 $78,111Proved properties22,356 2,245Exploration costs89,351 42,033Development costs78,103 28,113Total$283,736 $150,502Results of Operations for Oil and Natural Gas Producing ActivitiesThe following table sets forth the results of operations for oil and natural gas producing activities for the following periods: December 31, 2018 2017 (In thousands)Revenues$70,216 $21,612Production costs(13,843) (6,199)Production taxes(3,709) (1,187)Accretion of asset retirement obligation(85) (82)Depletion, depreciation and amortization(25,159) (6,906)Full cost ceiling impairment— (10,505)Total$27,420 $(3,267)Reserve Quantity Information The following table provides a roll forward of the total proved reserves for the years ended December 31, 2018 and 2017, as well as proveddeveloped and proved undeveloped reserves at the beginning and end of each respective year: 115 Crude Oil(Bbls) Natural Gas(Mcf) NGLs(Bbls)January 1, 2017550,705 3,871,506 3,211Extensions and discoveries6,791,945 14,438,471 1,455,620Purchase of reserves— — —Sale of reserves(92,293) (364,712) (3,211)Revisions of previous estimates292,975 (1,109,174) 222,825Production(371,993) (776,165) (73,875)December 31, 20177,171,339 16,059,926 1,604,570Extensions and discoveries15,881,727 38,957,588 4,565,994Purchase of reserves1,883,047 8,897,115 682,964Sale of reserves— — —Revisions of previous estimates(2,641,353) 17,690,723 1,769,448Production(1,089,724) (2,855,739) (246,425)December 31, 201821,205,036 78,749,613 8,376,551 Proved Developed Reserves, included above: Balance, January 1, 2017550,705 3,871,506 3,211Balance, December 31, 20172,531,397 6,594,446 644,102Balance, December 31, 20186,278,035 27,046,195 2,653,908Proved Undeveloped Reserves, included above: Balance, January 1, 2017— — —Balance, December 31, 20174,639,942 9,465,480 960,468Balance, December 31, 201814,927,001 51,703,418 5,722,643Extensions and discoveries of 26.9 MBOE during the year ended December 31, 2018, resulted primarily from the drilling of new wells during theyear and from new proved undeveloped locations added during the year.Revisions of previous reserve estimates increased 2018 proved reserves to 2,076 MBOE. Increased SEC pricing for 2018 as compared to 2017increased reserves by approximately 401 MBOE. The remaining revisions of 1,675 MBOE were the result of operational factors, including most notably:availability of additional natural gas transportation and processing infrastructure, and improvements in operations because of additional experience gainedfrom wells drilled and completed in 2017 and 2018.Standardized Measure of Discounted Future Net Cash Flows The standardized measure of discounted future net cash flows does not purport to be, nor should it be interpreted to present, the fair value of the oiland natural gas reserves of the properties. An estimate of fair value would take into account, among other things, the recovery of reserves not presentlyclassified as proved, the value of unproved properties and consideration of expected future economic and operating conditions. The estimates of future cash flows and future production and development costs as of December 31, 2018 and 2017 are based on the unweightedarithmetic average first-day-of-the-month price for the preceding 12-month period. Estimated future production of proved reserves and estimated futureproduction and development costs of proved reserves are based on current costs and economic conditions which are held constant throughout the life of theproperties. All wellhead prices are held flat over the forecast period for all reserve categories. The estimated future net cash flows are then discounted at a rateof 10%. 116The standardized measure of discounted future net cash flows relating to proved oil, natural gas and NGL reserves is as follows: December 31, 2018 2017 (In thousands)Future cash inflows$1,500,263 $397,531Future production costs(414,117) (151,456)Future development costs(346,225) (113,727)Future income tax expense(62,842) —Future net cash flows677,079 132,34810% discount to reflect timing of cash flows(384,345) (63,536)Total$292,734 $68,812 In the foregoing determination of future cash inflows, sales prices used for oil, natural gas and NGLs for December 31, 2018 and 2017, wereestimated using the average price during the 12-month period, determined as the unweighted arithmetic average of the first-day-of-the-month price for eachmonth. Prices were adjusted by lease for quality, transportation fees and regional price differentials. Future costs of developing and producing the provednatural gas and oil reserves reported at the end of each year shown were based on costs determined at each such year-end, assuming the continuation ofexisting economic conditions. The Company cautions that the disclosures shown are based on estimates of proved reserve quantities and future production schedules which areinherently imprecise and subject to revision and the 10% discount rate is arbitrary. In addition, costs and prices as of the measurement date are used in thedeterminations and no value may be assigned to probable or possible reserves. Changes in the standardized measure of discounted future net cash flows relating to proved oil, natural gas and NGL reserves are as follows: Year Ended December 31, 2018 2017 (In thousands)Balance at beginning of period$68,812 $6,656Net changes in prices and production costs24,261 (13,402)Sales of oil and gas produced during the year, net(49,271) 57,163Changes in estimated future development costs(39,938) —Net change due to extensions and discoveries161,785 (1,296)Net change due to purchases of minerals in place55,278 8,311Net change due to sales of minerals in place— 4,968Previously estimated development costs incurred during the year68,349 (1,580)Net changes due to revision of previous quantity estimates28,350 1,683Accretion of discount6,881 666Other - unspecified3,252 5,643Net change in income taxes(35,025) —Balance at end of period$292,734 $68,812117Exhibit 3.9LILIS ENERGY, INC.CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES E 8.25% CONVERTIBLE PARTICIPATING PREFERRED STOCKPURSUANT TO SECTION 78.1955 OF THE NEVADA REVISED STATUTESThe undersigned, Ronald D. Ormand and Joseph C. Daches, do hereby certify that:1. They are the Executive Chairman and Executive Vice President, Chief Financial Officer and Treasurer, respectively, ofLilis Energy, Inc., a Nevada corporation (the “Corporation”).2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, of which, after giving effect to (i) thisCertificate of Designation (as defined below), (ii) that certain Second Amended and Restated Certificate of Designation of Preferences,Rights and Limitations of Series C-1 9.75% Participating Preferred Stock and Series C-2 9.75% Participating Preferred Stock, dated asof March 5, 2019 (the “Series C Certificate of Designation”), (iii) that certain Amended and Restated Certificate of Designation ofPreferences, Rights and Limitations of Series D 8.25% Participating Preferred Stock, dated as of as of March 5, 2019 (the “Series DCertificate of Designation”) and (iv) that certain Certificate of Designation of Preferences, Rights and Limitations of Series F 9.00%Participating Preferred Stock, dated as of March 5, 2019 (the “Series F Certificate of Designation”), (a) 100,000 shares are designatedas “Series C-1 9.75% Participating Preferred Stock” (the “Series C-1 Preferred Stock”), (b) 25,000 shares are designated as “Series C-2 9.75% Participating Preferred Stock” (the “Series C-2 Preferred Stock” and, together with the Series C-1 Preferred Stock, the “SeriesC Preferred Stock”), (c) 39,254 shares are designated as “Series D 8.25% Participating Preferred Stock” (the “Series D PreferredStock”), (d) 60,000 shares are designated as “Series E 8.25% Convertible Participating Preferred Stock” and (e) 55,000 shares aredesignated as “Series F 9.00% Participating Preferred Stock” (the “Series F Preferred Stock”).3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”) onMarch 4, 2019 in accordance with the provisions of the Articles of Incorporation, the bylaws of the Corporation and applicable law,providing for the issuance of a series of preferred stock of the Corporation designated as “Series E 8.25% Convertible ParticipatingPreferred Stock”:WHEREAS, the Articles of Incorporation of the Corporation provide for a class of its authorized stock known as preferredstock, consisting of 10,000,000 shares, $0.0001 par value per share, issuable from time to time in one or more series; andWHEREAS, the Articles of Incorporation authorize the Board of Directors to fix the dividend rights, dividend rate, votingrights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stockand, with respect to each such series, to fix the number of shares constituting such series of Preferred Stock and the designation thereof.NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby approve and adopt this Certificate ofDesignation of Preferences, Rights and Limitations (this “Certificate of Designation”), as set forth below, and that the same shallbecome effective upon filing this Certificate of Designation with the Secretary of State of the State of Nevada:TERMS OF PREFERRED STOCKSection 1.Definitions. For the purposes hereof, the following terms shall have the following meanings:“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act; provided, that noportfolio company of a Holder or its Affiliates shall be considered or otherwise deemed an Affiliate thereof.“Articles of Incorporation” shall mean the Amended and Restated Articles of Incorporation of the Corporation, dated as ofOctober 10, 2011, as amended from time to time.“Board of Directors” shall have the meaning set forth in the Preamble.“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United Statesor any day on which banking institutions in the State of New York or Texas are authorized or required by law or other governmentalaction to close.“Change of Control” means:(a) any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of1934, as amended (the “Exchange Act”)), other than (i) any Holder, (ii) Värde or (iii) any Affiliate of any Person specified in thepreceding clauses (i) and (ii), is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, exceptthat such person or group shall be deemed to have “beneficial ownership” (within the meaning of Rule 13d-3 under the Exchange Act)of all shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passageof time), directly or indirectly, of more than 35% of the total voting power of the outstanding capital stock (excluding any debtsecurities convertible into equity) normally entitled to vote in the election of directors of the Corporation (or its successor by merger,consolidation or purchase of all or substantially all of its assets) (provided, for the avoidance of doubt, that, for purposes of theforegoing, shares of preferred stock of any series shall not be considered to be normally entitled to vote in the election2of directors by reason of any right of the holders of shares of preferred stock of such series to elect or appoint one or more directorsvoting or acting separately as a class);(b) except as permitted by Section 6.04 of the Specified Second Lien Credit Agreement, a disposition by theCorporation or a Subsidiary pursuant to which the Corporation or any Subsidiary sells, leases, licenses, transfers, assigns or otherwisedisposes, in one or a series of related transactions, all or substantially all of the properties and assets of the Corporation and itsSubsidiaries taken as a whole;(c) the Corporation’s stockholders approve any plan relating to the liquidation or dissolution of the Corporation; or(d) the occurrence of a “Change of Control” (or similar term) as such term is defined in any of (i) the RBL CreditAgreement or (ii) any other credit facility, indenture or other similar instrument of the Corporation or its Subsidiaries under whichindebtedness of the Corporation or its Subsidiaries of at least $5 million is outstanding at the time of such occurrence or at any point inthe 90 days prior thereto.“Change of Control Redemption” means (a) an Optional Redemption that is effected concurrently with or following theoccurrence of a Change of Control or (b) a redemption of shares of the Preferred Stock pursuant to Section 9(a).“Commission” means the United States Securities and Exchange Commission.“Common Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class ofsecurities into which such securities may hereafter be reclassified or changed.“Common Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holderthereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or otherinstrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,Common Stock.“Conversion Date” shall have the meaning set forth in Section 7(a).“Conversion Price” shall have the meaning set forth in Section 7(c).“Conversion Ratio” shall have the meaning set forth in Section 7(a).“Corporation” shall have the meaning set forth in the Preamble.“Dividend Payment Date” shall have the meaning set forth in Section 3(b).3“Dividend Rate” means 8.25% per annum; provided, that if, for any Dividend Payment Date after April 26, 2021, dividends onthe Preferred Stock are not paid in full in cash on such Dividend Payment Date, then the Dividend Rate for the dividends payable onsuch Dividend Payment Date (but not on any subsequent Dividend Payment Date on which such dividends are paid in full in cash)shall be 9.25% per annum.“Effective Date” means the earliest of the date on which (a) a registration statement registering all of the Underlying Shares hasbeen declared effective by the Commission, (b) all of the Underlying Shares have been sold pursuant to Rule 144 or may be soldpursuant to Rule 144 without the requirement for the Corporation to be in compliance with the current public information requiredunder Rule 144 and without volume or manner-of-sale restrictions or (c) following the first anniversary of the Original Issue Date,provided that a holder of Underlying Shares is not, and has not been for a period of at least 90 days, an Affiliate of the Corporation, allof the Underlying Shares may be sold pursuant to an exemption from registration under Section 4(a)(1) of the Securities Act withoutvolume or manner-of-sale restrictions and Corporation counsel has delivered to such holders a standing written unqualified opinion thatresales may then be made by such holders of the Underlying Shares pursuant to such exemption which opinion shall be in form andsubstance reasonably acceptable to such holders.“Equity Securities” means (a) shares of Common Stock, (b) shares of preferred stock of the Corporation or (c) warrants,options or other rights to acquire shares of Common Stock or preferred stock of the Corporation, other than convertible orexchangeable indebtedness; provided, in each case, that the issuance of such Equity Securities is not prohibited by Section 10(a)(ii).“GAAP” means United States generally accepted accounting principles.“Holder” shall have the meaning given such term in Section 3(a).“Holder Majority” means the Holders of a majority of the outstanding shares of Preferred Stock.“HSR Act” shall have the meaning set forth in Section 7(g).“Initial Market Price” means $1.88, provided that such price shall be adjusted in the same manner as the Conversion Price isadjusted upon the occurrence of any event specified in Section 7 of Schedule 7(c).“Investor Director” shall have the meaning set forth in Section 11(a).“Issuable Maximum” shall have the meaning set forth in Section 7(f).“Junior Preferred Stock PIK Dividends” means any dividends on any shares of preferred stock of the Corporation that areJunior Securities to the extent such dividends are paid solely in the form of additional shares of such preferred stock or by increase tothe stated value or liquidation4preference thereof (or other similar term or amount) in accordance with the terms of such preferred stock.“Junior Securities” means the Common Stock (and Common Stock Equivalents), the Series C Preferred Stock, the Series DPreferred Stock and all other classes of the Corporation’s common stock and each other class of capital stock or series of preferredstock, the terms of which do not expressly provide that such class or series ranks senior to or on parity with the Preferred Stock as todividend rights or rights upon the liquidation, winding-up or dissolution of the Corporation.“Liquidation” shall have the meaning set forth in Section 6.“March Transaction Agreement” means the Transaction Agreement, dated as of March 5, 2019, by and among the Corporationand the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.“Notice of Conversion” shall have the meaning set forth in Section 7(a).“Officer” shall mean the Executive Chairman, the Chief Executive Officer, the President, the Chief Financial Officer, any VicePresident, the Treasurer, the Secretary, any Assistant Secretary or any Assistant Treasurer of the Corporation.“Optional Redemption” shall have the meaning set forth in Section 8(a).“Optional Redemption Amount” shall have the meaning set forth in Section 8(b).“Optional Redemption Date” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice Date” shall have the meaning set forth in Section 8(a).“Original Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number oftransfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence suchPreferred Stock.“Parity Securities” shall mean any class of capital stock or series of preferred stock, the terms of which expressly provide thatsuch class or series will rank on a parity with the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up ordissolution of the Corporation.“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.“Preferred Stock” shall have the meaning set forth in Section 2(a).5“RBL Credit Agreement” means that certain Second Amended and Restated Senior Secured Revolving Credit Agreement,dated as of October 10, 2018, by and among the Corporation, the guarantors from time to time party thereto, the lenders party theretoand BMO Harris Bank, N.A., as administrative agent and collateral agent, as amended by the First Amendment and Waiver thereto,dated as of March 1, 2019, and as further amended from time to time (in accordance with this Certificate of Designation).“Record Date” means, with respect to any issuance, dividend or distribution declared, paid or made on or with respect to anycapital stock of the Corporation, the date fixed for the determination of the stockholders entitled to receive such issuance, dividend ordistribution.“Requisite Stockholder Approval” shall have the meaning set forth in the March Transaction Agreement.“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amendedfrom time to time, or any rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.“Securities” means the Preferred Stock and the Underlying Shares.“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgatedthereunder.“Senior Securities” shall mean the Series F Preferred Stock and each other class of capital stock or series of preferred stock, theterms of which expressly provide that such class or series will rank senior to the Preferred Stock as to dividend rights or rights upon theliquidation, winding-up or dissolution of the Corporation.“Series C Certificate of Designation” shall have the meaning set forth in the preamble.“Series C Preferred Stock” shall have the meaning set forth in the preamble.“Series C-1 Preferred Stock” shall have the meaning set forth in the preamble.“Series C-2 Preferred Stock” shall have the meaning set forth in the preamble.“Series D Certificate of Designation” shall have the meaning set forth in the preamble.“Series D Preferred Stock” shall have the meaning set forth in the preamble.“Series F Certificate of Designation” shall have the meaning set forth in the preamble.“Series F Preferred Stock” shall have the meaning set forth in the preamble.“Share Delivery Date” shall have the meaning set forth in Section 7(d)(i).6“Specified Party” shall have the meaning set forth in Section 11(h).“Specified Second Lien Credit Agreement” means that certain Credit Agreement, dated as of April 26, 2017, by and among theCorporation, the guarantors party thereto, the lenders party thereto and Wilmington Trust, National Association, as administrativeagent, as amended, supplemented or otherwise modified and as in effect as of March 4, 2019, regardless of whether or not in effect asof any date thereafter.“Stated Value” shall have the meaning set forth in Section 2(a).“Stockholder Meeting” shall have the meaning set forth in the March Transaction Agreement.“Subsidiary” means any direct or indirect subsidiary of the Corporation, including those set forth on Schedule 3.1(a) to theMarch Transaction Agreement, and any direct or indirect subsidiary of the Corporation formed or acquired after the date of the MarchTransaction Agreement.“Trading Day” means a day on which the principal Trading Market is open for business.“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global SelectMarket or the New York Stock Exchange (or any successors to any of the foregoing).“Transfer Agent” means Corporate Stock Transfer, the current transfer agent of the Corporation with a mailing address of 3200Cherry Creek South Drive, Suite 430, Denver, Colorado 80209 and a facsimile number of (303) 282-5800, and any successor transferagent of the Corporation.“Underlying Shares” means the shares of Common Stock issued and issuable upon conversion of the Preferred Stock inaccordance with the terms of this Certificate of Designation.“Värde” means (a) Värde Partners, Inc., its affiliated investment managers and funds or accounts managed by any of them(including the Värde Parties (as defined in the March Transaction Agreement) but excluding any portfolio companies that are owned inwhole or in part by any of the foregoing) and (b) any partner, member, manager, principal, director or officer of any of the foregoing.“VWAP” means, for any date, the daily volume weighted average price of the Common Stock for such date (or the nearestpreceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg L.P. (based ona Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)).7Section 2. Designation, Amount and Par Value; Ranking.(a) The series of preferred stock established pursuant to this Certificate of Designation shall be designated as “Series E8.25% Convertible Participating Preferred Stock” (the “Preferred Stock”) and the number of shares so designated and authorized shallbe 60,000 (which shall not be subject to increase without the affirmative vote or written consent of a Holder Majority). Each share ofPreferred Stock shall have an initial par value of $0.0001 per share and an initial stated value equal to $1,000.00 per share, subject toincrease as set forth in Section 3 below (the “Stated Value”).(b) The Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution ofthe Corporation, ranks: (i) senior in all respects to all Junior Securities; (ii) pari passu with all Parity Securities; and (iii) junior in allrespects to all Senior Securities, in each case, as provided more fully herein.Section 3. Dividends.(a) Participating Dividends. Without limiting Section 10 of this Certificate of Designation, for so long as any shares ofPreferred Stock are outstanding, no dividend or other distribution (other than any stock dividend or distribution subject to Section 7 ofSchedule 7(c) hereto, any distribution of rights pursuant to a stockholder rights plan contemplated by Section 9 of Schedule 7(c) heretoor any distribution upon a Liquidation) may be declared or paid on the Common Stock or to the holders thereof unless the holders ofthe Preferred Stock (each, a “Holder” and collectively, the “Holders”) receive, simultaneously with the distribution to the holders of theCommon Stock, a dividend or other distribution of such securities, cash or other property in an amount equal to the amount of suchsecurities, cash or other property as the Holders would have received if such shares of Preferred Stock or portion thereof had been fullyconverted into Common Stock on the date of such event (whether or not such Preferred Stock is then convertible).(b) Dividends in Cash or in Kind. In addition to participation in cash dividends on, or distributions to, Common Stockas set forth in Section 3(a), Holders shall be entitled to receive, and the Corporation shall pay (prior to any distributions made in respectof any Junior Securities (or contemporaneously therewith in the case of Junior Preferred Stock PIK Dividends) and prior to orcontemporaneously with any distributions made in respect of any Parity Securities, in each case in respect of the same fiscal quarter),cumulative dividends per share (as a percentage of the Stated Value per share) at the Dividend Rate, payable and compoundedquarterly in arrears on January 1, April 1, July 1 and October 1, beginning on the first such date after the Original Issue Date (eachsuch date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Business Day, the applicable payment, if paid in cash,shall be due on the next succeeding Business Day, and no interest or dividends on such payment shall accrue or accumulate in respectof such delay), in (i) cash out of funds legally available therefor, (ii) by an increase in the Stated Value of the Preferred Stock, or (iii)any combination of clause (i) and (ii), in each case, in an amount equal to the accrued but unpaid dividends due to a Holder in respectof each share of Preferred Stock on the Dividend8Payment Date. For the avoidance of doubt, any dividends paid by an increase in the Stated Value pursuant to this Section 3(b) shall bedeemed to have been paid in full for all purposes. The default method of payment shall be an increase in the Stated Value unless, atleast five Business Days prior to a Dividend Payment Date, the Corporation provides written notice to the Holders of its election to payin cash and such cash payment is actually and timely made. Dividends shall be paid pro rata for any partial quarter.(c) Dividend Calculations. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year,consisting of twelve 30 calendar day periods, shall accrue daily commencing on the Original Issue Date and shall be deemed to accruefrom such date whether or not declared and whether or not there are profits, surplus or other funds of the Corporation legally availablefor the payment of dividends.Section 4. Maturity. The Preferred Stock shall be perpetual unless converted or redeemed in accordance with this Certificateof Designation.Section 5. Voting Rights.(a) The Holders shall be entitled to vote with the holders of the Common Stock as a single class on all matterssubmitted for a vote of holders of Common Stock and to receive notice of all stockholders’ meetings in accordance with the Articles ofIncorporation and bylaws of the Corporation, and applicable law or regulation or stock exchange rule, as if the Holders of PreferredStock were holders of Common Stock. When voting with the Common Stock, the Holders shall be entitled to the number of votes pershare of Preferred Stock equal to the Stated Value as of the applicable Record Date or other determination date divided by the greaterof (i) the then-applicable Conversion Price and (ii) the then-applicable Initial Market Price.(b) Each Holder will have one vote per share of Preferred Stock on any matter on which Holders of Preferred Stockare entitled to vote separately as a class, whether at a meeting or by written consent.Section 6. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary(a “Liquidation”), the Holders shall be entitled to receive, in respect of each share of Preferred Stock, out of the assets, whether capitalor surplus, of the Corporation an amount equal to the greater of (i) the then-applicable Optional Redemption Amount and (ii) theproceeds the Holders would be entitled to receive on the number of shares of Common Stock into which such share of Preferred Stockwould then be convertible (whether or not such Preferred Stock is then convertible), after any amount shall be paid to holders of anySenior Securities, before any distribution or payment shall be made to the holders of any Junior Securities, and if the assets of theCorporation shall be insufficient to pay in full such amounts payable to Holders and the amounts payable to the holders of any ParitySecurities, then the entire assets to be distributed to the Holders and the holders of any Parity Securities shall be ratably distributedamong the Holders and the holders of any Parity Securities in accordance with the respective amounts9that would be payable on shares of Preferred Stock and any Parity Securities if all amounts payable thereon were paid in full. AChange of Control shall not be deemed a Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than45 days prior to the payment date stated therein, to each Holder.Section 7. Conversion.(a) Conversions at Option of Holder. Subject to Section 7(f) and Section 7(g), each share of Preferred Stock shall beconvertible, at any time and from time to time from and after the Original Issue Date, at the option of the Holder thereof, into thatnumber of shares of Common Stock determined by dividing the applicable Optional Redemption Amount that would have beenreceived by the applicable Holder upon the redemption of the applicable shares of Preferred Stock as of the Conversion Date by thethen-applicable Conversion Price (the “Conversion Ratio”); provided, however, that, for purposes of determining the ConversionRatio, clause (i)(3) of Section 8(b) shall apply to the calculation of the Optional Redemption Amount, regardless of when theConversion Date actually occurs or the circumstances of such conversion. Holders shall effect conversions by (i) providing theCorporation with the form of conversion notice attached hereto as Annex A (a “Notice of Conversion”) and (ii), if applicable,delivering to the Corporation any certificate(s) representing the shares of Preferred Stock to be converted. Each Notice of Conversionshall specify the number of shares of Preferred Stock to be converted, the number of shares of Preferred Stock owned prior to theconversion at issue, the number of shares of Preferred Stock owned subsequent to the conversion at issue and the date on which suchconversion is to be effected, which date may not be prior to the date the applicable Holder delivers such Notice of Conversion to theCorporation (such date, the “Conversion Date”). If no Conversion Date is specified in a Notice of Conversion, the Conversion Dateshall be the date that such Notice of Conversion to the Corporation is deemed delivered hereunder. No ink-original Notice ofConversion shall be required, nor shall any medallion guarantee (or other type of guarantee or notarization) of any Notice ofConversion form be required. The calculations and entries set forth in the Notice of Conversion shall control in the absence of manifestor mathematical error. Shares of Preferred Stock converted into Common Stock or redeemed in accordance with the terms hereof shallbe canceled and shall not be reissued. If less than all of the shares of Preferred Stock represented by any certificate are so converted,the Corporation shall promptly issue and deliver to the applicable Holder a certificate representing the balance of such shares ofPreferred Stock not so converted.(b) No Forced Conversion. The Corporation is not entitled to force the conversion of the Preferred Stock.(c) Conversion Price. The conversion price for the Preferred Stock shall equal $2.50, subject to adjustment as providedin Schedule 7(c) (the “Conversion Price”).10(d) Mechanics of Conversion.(i) Delivery of Underlying Shares Upon Conversion. Not later than three Trading Days after the applicableConversion Date (the “Share Delivery Date”), the Corporation shall deliver, or cause to be delivered, to the convertingHolder the number of shares of Common Stock being acquired upon the conversion of the Preferred Stock which, on orafter the later of (1) the date specified in Section 13(a) and (2) the Effective Date, shall be free of restrictive legends andtrading restrictions (subject to Section 5.2 of the March Transaction Agreement).(ii) Obligation Absolute. The Corporation’s obligation to issue and deliver the Underlying Shares uponconversion of Preferred Stock in accordance with the terms hereof are absolute and unconditional, irrespective of anyaction or inaction by a Holder to enforce the same, any waiver or consent with respect to any provision hereof, therecovery of any judgment against any Person or any action to enforce the same, or any setoff, counterclaim,recoupment, limitation or termination, or any breach or alleged breach by such Holder or any other Person of anyobligation to the Corporation or any violation or alleged violation of law by such Holder or any other person, andirrespective of any other circumstance which might otherwise limit such obligation of the Corporation to such Holder inconnection with the issuance of such Underlying Shares; provided, however, that such delivery shall not operate as awaiver by the Corporation of any such action that the Corporation may have against such Holder. In the event a Holdershall elect to convert any or all of its shares of Preferred Stock, the Corporation may not refuse conversion based on anyclaim that such Holder or anyone associated or affiliated with such Holder has been engaged in any violation of law,agreement or for any other reason, unless an injunction from a court, on notice to Holder, restraining and/or enjoiningconversion of all or part of the Preferred Stock of such Holder shall have been sought and obtained, and theCorporation posts a surety bond for the benefit of such Holder in the amount of 150% of the Stated Value of PreferredStock which is subject to the injunction, which bond shall remain in effect until the completion of arbitration/litigationof the underlying dispute and the proceeds of which shall be payable to such Holder to the extent it obtains judgment.In the absence of such injunction, the Corporation shall issue the Underlying Shares upon a properly noticedconversion. Nothing herein shall limit a Holder’s right to pursue actual damages for the Corporation’s failure to deliverUnderlying Shares within the period specified herein and such Holder shall have the right to pursue all remediesavailable to it hereunder, at law or in equity including, without limitation, a decree of specific performance and/orinjunctive relief. The exercise of any such rights shall not prohibit a Holder from seeking to enforce damages pursuantto any other Section hereof or under applicable law.11(iii) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of shares ofPreferred Stock. In lieu of any fractional shares to which a Holder would otherwise be entitled, the Corporation shall, atits election, either (1) pay cash equal to such fraction multiplied by the VWAP of the Common Stock for the TradingDay immediately preceding the applicable Conversion Date or (2) round up to the next whole share. Whether or notfractional shares would be issuable to any Holder upon such conversion shall be determined on the basis of the totalnumber of shares of Preferred Stock held by such Holder and then being converted.(iv) Transfer Taxes and Expenses. The issuance of Underlying Shares on conversion of this Preferred Stockshall be made without charge to any Holder for any service charge or any documentary stamp or similar taxes that maybe payable in respect of the issue or delivery of such Underlying Shares, provided that the Corporation shall not berequired to pay any tax that may be payable in respect of any transfer involved in the issuance and delivery of any suchUnderlying Shares upon conversion in a name other than that of the Holders of such shares of Preferred Stock and theCorporation shall not be required to issue or deliver such Underlying Shares unless or until the Person or Personsrequesting the issuance thereof shall have paid to the Corporation the amount of such tax or shall have established to thesatisfaction of the Corporation that such tax has been paid. The Corporation shall pay all Transfer Agent fees requiredfor same-day processing of any Notice of Conversion and all fees to the Depository Trust Company (or anotherestablished clearing corporation performing similar functions) required for same-day electronic delivery of theUnderlying Shares.(e) Reservation of Shares Issuable Upon Conversion. The Corporation covenants that it will at all times take all lawfulaction to reserve and keep available out of its authorized and unissued shares of Common Stock for the sole purpose of issuance uponconversion of the Preferred Stock, free from preemptive rights or any other actual contingent purchase rights of Persons other than theHolder (and the other holders of the Preferred Stock), not less than such aggregate number of shares of Common Stock as shall beissuable upon the conversion of the then-outstanding shares of Preferred Stock. The Corporation covenants that all shares of CommonStock that shall be issuable upon conversion of the Preferred Stock shall, upon issue, be duly authorized, validly issued, fully paid andnonassessable.(f) Issuance Limitations. Notwithstanding anything herein or in Schedule 7(c) hereto to the contrary, if the Corporationhas not obtained Requisite Stockholder Approval, then the Corporation may not issue, upon conversion of the Preferred Stock, anumber of shares of Common Stock in respect of any share of Preferred Stock that would exceed, in the aggregate, (i) the Stated Valuedivided by (ii) the Initial Market Price (the maximum number of shares issuable because of the foregoing limitation, the “IssuableMaximum”). If the Corporation has not obtained Requisite12Stockholder Approval upon conversion of any shares of Preferred Stock subject to the foregoing limitation, then the applicable Holdershall be entitled to receive upon such conversion a number of shares of Common Stock equal to the Issuable Maximum, with any shareof Preferred Stock not converted in whole remaining outstanding.(g) HSR Act. If, in connection with any exercise of any the Holder’s or the Corporation’s conversion rights pursuantto this Section 7, the Corporation or any such Holder determines, after consultation with counsel, that any filings are required to bemade pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) in connection with theacquisition of Common Stock by such Holder pursuant to such conversion, then (i) the Corporation and such Holder shall, and shallcause their respective Affiliates to, undertake commercially reasonable efforts to make or cause to be made promptly the filingsrequired of such party or its Affiliates pursuant to the HSR Act; provided, however, that all fees payable to any governmentalauthorities relating to filings required to be made pursuant to the HSR Act shall be paid and borne equally by such Holder and theCorporation and (ii) the Conversion Date for such conversion shall not occur prior to the expiration or termination of the waiting periodunder the HSR Act. In furtherance and not in limitation of the foregoing, the Corporation and such Holder shall, to the extentpermissible by law, (i) cooperate with the other party and furnish to the other party all information in such party’s possession that isreasonably necessary in connection with such other party’s filings; (ii) promptly inform the other party of, and supply to such otherparty copies of, any material communication (or other correspondence or memoranda) from or to, and any proposed understanding oragreement with, any governmental authority in respect of such filings; (iii) consult and cooperate with the other party and provide eachother with a reasonable opportunity to provide comments in connection with any analyses, appearances, presentations, memoranda,briefs, arguments, and opinions made or submitted by or on behalf of any party in connection with all meetings, actions andproceedings with any governmental authority relating to such filings; and (iv) comply, as promptly as is reasonably practicable, withany requests received by such party or any of its Affiliates under the HSR Act for additional information, documents, or othermaterials. If either party intends to participate in any material communication or meeting with any governmental authority with respectto such filings, it shall give the other party reasonable notice thereof and, to the extent permitted by the governmental authority, anopportunity to participate in any such meeting or communication. Notwithstanding anything in this Section 7(g) to the contrary, in noevent shall the Corporation or any of its Affiliates or such Holder or any of its Affiliates be required, under the HSR Act or otherwise,to (i) propose, negotiate, agree to or effect, by consent decree, hold separate order or otherwise, the sale, divestiture or disposition ofany assets or businesses of such Person, (ii) accept any condition, undertake any obligation, or take or refrain from taking any actionthat would limit such Person’s freedom of action with respect to, or its ability to own or operate, any of its businesses or assets; (iii)contest, resist or seek to have vacated, lifted, reversed or overturned any governmental order or judicial order that is in effect thatprohibits, prevents or restricts the conversion of shares of Preferred Stock; or (iv) litigate or defend against any administrative orjudicial action or proceeding (including any proceeding seeking a temporary restraining order or preliminary injunction) challengingany such conversion.13Section 8. Optional Redemption.(a) Optional Redemption at Election of Corporation. Subject to the provisions of this Section 8, Section 9 and theHolder’s conversion rights pursuant to Section 7(a), at any time after the Original Issue Date, the Corporation may deliver a notice tothe Holders (an “Optional Redemption Notice” and the date such notice is deemed delivered hereunder, the “Optional RedemptionNotice Date”) of its election (which shall be irrevocable but may be conditioned on the occurrence of any one or more events) toredeem some or all of the then-outstanding Preferred Stock, for cash in an amount equal to the Optional Redemption Amount on the20th Business Day following the Optional Redemption Notice Date (such date, the “Optional Redemption Date” and such redemption,the “Optional Redemption”); provided, however, that, except in the case of a Change of Control Redemption (to which the followingprovisions of this sentence shall not apply), the Corporation shall not have the right to effect an Optional Redemption (and no OptionalRedemption Notice delivered by the Corporation shall be effective) unless:(i) either (1) as of the applicable Optional Redemption Date, there are no shares of the Series F Preferred Stockoutstanding or (2) all outstanding shares of the Series F Preferred Stock are redeemed on such Optional RedemptionDate concurrently with such Optional Redemption in accordance with the terms of the Series F Certificate ofDesignation;(ii) the aggregate Optional Redemption Amount on the Optional Redemption Date for all shares of thePreferred Stock to be redeemed pursuant to such Optional Redemption shall not exceed the aggregate amount of netcash proceeds received by the Corporation from a contemporaneous issuance of Common Stock issued for the purposeof redeeming such shares of the Preferred Stock; and(iii) if the applicable Optional Redemption Date occurs before the third anniversary of the Original Issue Date,then (1) the VWAP for at least 20 Trading Days during the 30 Trading Day period immediately preceding theapplicable Optional Redemption Notice Date shall have been at least 150% of the Conversion Price then in effect and(2) such Optional Redemption shall be for all (but not less than all) then-outstanding shares of the Preferred Stock.The Corporation covenants and agrees that it will honor all Notices of Conversion tendered from the time of delivery of the OptionalRedemption Notice through the Business Day immediately preceding the Optional Redemption Date.(b) Optional Redemption Amount. Each share of Preferred Stock redeemed pursuant to this Section 8 shall beredeemed by paying cash in an amount equal to (i) the applicable Stated Value, multiplied by (1) 110% if both (A) the OptionalRedemption Date occurs on or prior to the first anniversary of the Original Issue Date and (B) the Optional Redemption is not aChange of Control Redemption, (2) 105% if both (A) the Optional Redemption Date occurs after the first14anniversary of the Original Issue Date and on or prior to the second anniversary of the Original Issue Date and (B) the OptionalRedemption is not a Change of Control Redemption and (3) 100% if either (A) the Optional Redemption Date occurs after the secondanniversary of the Original Issue Date or (B) the Optional Redemption is a Change of Control Redemption, plus (ii) all accrued butunpaid dividends thereon and all liquidated damages and other amounts due in respect of such Preferred Stock as of the OptionalRedemption Date (such amount, the “Optional Redemption Amount”).(c) Redemption Procedure. The payment of cash pursuant to an Optional Redemption shall be made on the OptionalRedemption Date. If any portion of the cash payment for an Optional Redemption has not been paid by the Corporation on theOptional Redemption Date, interest shall accrue thereon until such amount is paid in full at a rate equal to the lesser of 15% per annumor the maximum rate permitted by applicable law.(d) Limitations on Redemption.(i) Any Optional Redemption by the Corporation must be of Preferred Stock having a minimum aggregateStated Value of $30 million as of the Optional Redemption Notice Date (or such lesser amount if such OptionalRedemption is for all of the remaining Preferred Stock).(ii) The Corporation may consummate no more than one partial Optional Redemption within any 6-monthperiod.(iii) Any Optional Redemption shall be applied ratably to all of the Holders based on each Holder’s relativeownership of shares of Preferred Stock.(iv) The Preferred Stock shall only be redeemable as expressly set forth in this Section 8 and Section 9.Section 9. Change of Control. On or before the 20th Business Day prior to the consummation of a Change of Control (or, iflater, promptly after the Corporation discovers that a Change of Control has occurred or will occur), the Corporation shall providewritten notice thereof to the Holders, and in connection with any such Change of Control, each Holder may elect one of the followingoptions (subject to such Change of Control having actually occurred or actually occurring) by notice given to the Corporation within20 Business Days after the date the Corporation provides such written notice (it being understood that if a Holder fails to timelyprovide notice of its election to the Corporation, such Holder shall be deemed to have elected the option set forth in clause (b) below):(a) cause the Corporation to redeem all of such Holder’s shares of Preferred Stock for cash in an amount per share ofPreferred Stock equal to the applicable Optional Redemption Amount in effect immediately prior to the consummation of such Changeof Control (provided, for15the avoidance of doubt, that clause (i)(3) of Section 8(b) shall apply to the calculation of the Optional Redemption Amount forpurposes of this clause (a));(b) convert all of such Holder’s shares of Preferred Stock at the Conversion Ratio in effect immediately prior to theconsummation of such Change of Control; or(c) subject to (i) any adjustments pursuant to Schedule 7(c) and (ii) the Corporation’s (or, if the Corporation is not thesurviving entity of such Change of Control, the Corporation’s successor’s) right to redeem the Preferred Stock pursuant to Section 8,continue to hold such Holder’s shares of Preferred Stock.Section 10. Negative Covenants.(a) As long as any shares of Preferred Stock are outstanding, without the prior affirmative vote or prior written consentof a Holder Majority, the Corporation shall not, directly or indirectly (whether by way of amendment to the charter documents, merger,recapitalization, or otherwise):(i) amend, alter, modify or repeal the Articles of Incorporation or the bylaws of the Corporation, in any mannerthat materially and adversely affects any rights, preferences, privileges or voting powers of the Preferred Stock orHolders;(ii) (1) issue, authorize or create, or increase the issued or authorized amount of, Preferred Stock, any class orseries of Senior Securities or any Parity Securities or security convertible into or evidencing the right to purchase anyshares of Preferred Stock, Senior Securities or Parity Securities other than equity, the proceeds of which, are used toimmediately redeem all of the outstanding shares of Preferred Stock in accordance with Section 8 or (2) prior to theStockholder Meeting, issue Additional Shares of Common Stock (as defined in Schedule 7(c) hereto and includingAdditional Shares of Common Stock deemed to be issued pursuant to Section 2 of Schedule 7(c) hereto), withoutconsideration or for a consideration per share less than the Initial Market Price;(iii) declare or pay any dividends or distributions on, or redeem or repurchase, or permit any of its controlledSubsidiaries to redeem or repurchase, shares of Common Stock or any other shares of Junior Securities other than:(1) Junior Preferred Stock PIK Dividends;(2) any stock dividend or distribution subject to Section 7 of Schedule 7(c) hereto;(3) any distribution of rights pursuant to a stockholder rights plan contemplated by Section 9 ofSchedule 7(c) hereto;16(4) any distribution upon a Liquidation;(5) redemptions of incentive equity of the Corporation or its Subsidiaries held by employees of theCorporation or its Subsidiaries in connection with the administration of any employee benefit plan of theCorporation in the ordinary course of business;(6) after April 26, 2021, cash dividends on the Series C Preferred Stock and the Series D PreferredStock in accordance with the Series C Certification of Designation and the Series D Certificate of Designationas in effect on the Original Issue Date, provided that all dividends on the Preferred Stock payable on thecorresponding Dividend Payment Date have been, or contemporaneously are, paid in full in cash; and(7) redemptions of the Series C Preferred Stock or the Series D Preferred Stock pursuant to and inaccordance with a Change of Control redemption election by the “Holders” thereof pursuant to Section 9(a) ofthe Series C Certificate of Designation or the Series D Certificate of Designation, as applicable, in each case asin effect on the Original Issue Date, provided that all shares of Preferred Stock as to which the Holders haveelected redemption pursuant to Section 9(a) in connection with such Change in Control have been, orcontemporaneously are, redeemed in accordance with Section 9(a);(iv) authorize, issue or transfer, or permit any of its controlled Subsidiaries to authorize, issue or transfer, anyequity (including any obligation or security convertible into, exchangeable for or evidencing the right to purchase anysuch equity) in any Subsidiary other than (1) equity issued or transferred to the Corporation or another wholly-ownedSubsidiary of the Corporation or (2) equity, the proceeds of which, are used to immediately redeem all of theoutstanding shares of Preferred Stock in accordance with Section 8; or(v) subject to right of the holders of Common Stock to amend the provisions of the bylaws of the Corporationrelating to the number of directors constituting the entire Board of Directors or the manner in which such number ofdirectors is determined (but, for the sake of clarity, without limiting the Holders’ rights pursuant to Section 11), modifythe number of directors constituting the entire Board of Directors at any time when the Holders have the right todesignate an Investor Director pursuant to Section 11; provided, that the Corporation may increase the number ofdirectors constituting the entire Board of Directors without the consent of a Holder Majority if the Holders are given theright to designate one or more additional Investor Directors as necessary to cause (1) the number of Investor Director(s)the Holders have the right to designate relative to the number of directors17constituting the entire Board of Directors to be in the same proportion as (2) the number of Underlying Shares thenissuable on conversion of the outstanding shares of Preferred Stock relative to the total number of outstanding shares ofCommon Stock (without regard to the limitation set forth in Section 7(f) and giving effect to the conversion of suchshares of Preferred Stock, whether or not then convertible), rounded up or down to the nearest whole number ofdirectors.(b) For so long as shares of Preferred Stock having an aggregate Optional Redemption Amount of at least $30 millionare outstanding, without the prior affirmative vote or prior written consent of a Holder Majority, the Corporation shall not, and shall notpermit any of its controlled Subsidiaries to, directly or indirectly:(i) incur any indebtedness or permit to exist any liens on any of the Corporation’s or its Subsidiaries assets orproperties, other than (1) indebtedness expressly permitted under Section 6.02 of the Specified Second Lien CreditAgreement and (2) liens expressly permitted under Section 6.03 of the Specified Second Lien Credit Agreement, ineach case without regard to any requirements set forth in such sections of the Specified Second Credit Agreementrelated to an “Approved Intercreditor Agreement” or any subordination or pledge of intercompany indebtedness amongthe Corporation and its Subsidiaries; provided, that, the Corporation shall only be permitted to refinance, and incurcorresponding liens in connection with any refinancing of, “Revolving Debt Obligations,” “Obligations” and/or anyrefinancing debt in respect thereof, as applicable and as each such term is defined in the Specified Second Lien CreditAgreement, in each case, (A) with indebtedness (I) the principal amount of which does not exceed the sum of (x) thetotal outstanding principal amount of such debt being refinanced, plus (y) any usual and customary accrued and unpaidinterest, premium, fees and costs and expenses thereon and (II) that does not contain terms and conditions that arematerially adverse to the Preferred Stock or the interests of the Holders relative to the terms and conditions of theindebtedness being refinanced and (B) if, following the incurrence of any such indebtedness and after giving pro formaeffect to the incurrence of such indebtedness and the application of proceeds thereof and the occurrence of any materialacquisitions and/or dispositions on or prior to such date of determination, the Corporation delivers an officers’ certificatecertifying that the Proved Developed Producing Coverage Ratio (as defined in the Specified Second Lien CreditAgreement) for the most recently ended four full fiscal quarters for which internal financial statements are availableimmediately preceding the date on which such indebtedness is incurred would be greater than 1.40:1.00;(ii) enter into, adopt or agree to any “restricted payment” provisions (or other similar provisions that restrict orlimit the payment of dividends on, or the redemption of, the Preferred Stock) under any credit facility, indenture or other18similar instrument of the Corporation or its Subsidiaries (including, for the avoidance of doubt, the RBL CreditAgreement) that would be more restrictive on the payment of dividends on, or redemption of, the Preferred Stock thanthose existing as of the Original Issue Date (provided that, for the avoidance of doubt, any decrease in the amountavailable to make restricted payments under any such provisions that are the result of the Corporation utilizing capacityunder such provisions or any decrease in capacity as a result of the operation of such provisions as set forth in any suchcredit facility, indenture or other similar instrument as of the Original Issue Date shall not require the consent of theHolders pursuant to this Section 10(b)(ii)); (iii) liquidate or dissolve the Corporation;(iv) enter into any material new line of business or fundamentally change the nature of the Corporation’sbusiness (including, for the avoidance of doubt, any acquisition of oil and gas properties outside the Permian Basin);(v) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed inany public filing with the Commission, unless such transaction is made on an arm’s-length basis and expresslyapproved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise requiredfor board approval);(vi) make any dispositions of assets or property of the Corporation or its Subsidiaries other than dispositions ofthe kind that would be expressly permitted under Section 6.05 of the Specified Second Lien Credit Agreement;provided that any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majoritymutatis mutandis;(vii) make any loans or investments of the Corporation or its Subsidiaries other than loans or investments of thekind that would be expressly permitted under Section 6.07 of the Specified Second Lien Credit Agreement, providedthat any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majority mutatismutandis; or(viii) (1) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or otherrelief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect,(2) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petitiondescribed in this clause (viii), (3) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,conservator or similar official for the Corporation or any Subsidiary or for a substantial part of its assets, (4) file ananswer admitting the material allegations of a petition filed against it in19any such proceeding, (5) make a general assignment for the benefit of creditors or (6) take any action for the purpose ofeffecting any of the foregoing.Section 11. Board Representation Rights.(a) Subject to Section 11(b), without limiting other rights the Holders and their Affiliates may have (including pursuantto the March Transaction Agreement), from and after the Original Issue Date, the Holder Majority shall have the exclusive right (butnot the obligation), voting separately as a class, to designate to the Board of Directors one director (the “Investor Director”) (subject toincrease pursuant to Section 10(a)(v)) for as long as the Underlying Shares then issuable on conversion of the outstanding shares ofPreferred Stock (without regard to the limitation set forth in Section 7(f)) represent at least 5.0% of the total number of outstandingshares of Common Stock (without regard to the limitation set forth in Section 7(f) and giving effect to the conversion of such shares ofPreferred Stock, whether or not then convertible).(b) Notwithstanding anything herein to the contrary, the number of Investor Directors the Holders shall be entitled todesignate pursuant to Section 11(a) shall be reduced if, and only to the extent necessary in order to comply with applicable law orTrading Market rules (as directed in writing by the Commission or the Trading Market on which the Common Stock is then listed) sothat the percentage of the number of directors constituting the entire Board of Directors represented by the number of InvestorDirectors does not exceed the percentage of the outstanding Common Stock represented by the Underlying Shares then issuable onconversion of the outstanding shares of Preferred Stock (without regard to the limitation set forth in Section 7(f) and giving effect to theconversion of such shares of Preferred Stock, whether or not then convertible), rounded up to the nearest whole number of InvestorDirectors.(c) Within 10 Business Days after notice to the Corporation by the Holder Majority of the identity of the persondesignated to be the initial Investor Director, subject to confirmation by the Corporation that such initial Investor Director meets therequirements of Section 11(f), the Corporation shall cause such person to be appointed to the Board of Directors as the initial InvestorDirector. The Corporation shall take all actions within its power to cause all designees designated pursuant to Section 11(a) to beappointed to the Board of Directors.(d) Each Investor Director designated pursuant to Section 11(a) shall serve until his or her successor is designated orhis or her earlier death, disability, resignation or removal. Any vacancy or newly created directorship in the position of an InvestorDirector while the Holders have the right to appoint such Investor Director pursuant to Section 11(a) may be filled only by the HolderMajority, subject to the fulfillment of the requirements set forth in Section 11(f). While the Holders have the right to appoint anyInvestor Director pursuant to Section 11(a), (i) such Investor Director may, during his or her term of office, be removed at any time,with or without cause, by and only by the Holders of not less than two-thirds of the outstanding shares of Preferred Stock, and (ii) theHolders, by and only by a Holder Majority, shall have the right to, at any time, with or without cause (A) cause such Investor Directorto resign from his or her directorship, and (B) appoint a20replacement Investor Director to fill the vacancy resulting from such resignation, subject to the fulfillment of the requirements set forthin Section 11(f). Any Investor Director appointed pursuant to Section 11(a) shall be deemed to have agreed to resign from his or herdirectorship (and the Corporation shall recognize such resignation) upon exercise of the Holders’ rights set forth in clause (ii) of theimmediately preceding sentence if such Investor Director shall have previously delivered to the Corporation a written letter ofresignation stating that such Investor Director resigns his or her directorship effective upon any exercise of the Holders’ rights set forthin clause (ii) of the immediately preceding sentence.(e) At all times while an Investor Director is serving as a member or observer of the Board of Directors, and followingany such Investor Director’s death, disability, resignation or removal, such Investor Director shall be entitled to all rights toindemnification and exculpation as are then made available to any other member or observer of the Board of Directors.(f) Notwithstanding anything to the contrary, any Investor Director shall be reasonably acceptable to the Board ofDirectors and the Nominating and Corporate Governance Committee thereof acting in good faith (provided, that, for the avoidance ofdoubt, any investment professional of Värde Partners, Inc. or its Affiliates shall be deemed reasonably acceptable) and satisfy allapplicable Commission and stock exchange requirements regarding service as a regular director of the Corporation and shall comply inall material respects with the Corporation’s corporate governance guidelines as in effect from time to time.(g) The right to designate an Investor Director pursuant to Section 11(a) shall automatically terminate at such time asthe condition set forth in Section 11(a) is not satisfied, and at such time, if requested in writing by the Corporation, any InvestorDirectors then serving on the Board of Directors in excess of the entitled amount (if less than all then Investor Directors, then asselected by the Holder Majority) shall promptly resign from the Board of Directors. For the avoidance of doubt, any such InvestorDirector shall not be required to resign from the Board of Directors pursuant to this Section 11(g) if such individual has then currentlybeen appointed or designated as a director of the Corporation pursuant to a right to appoint or designate a director that is then in effectunder another agreement with the Corporation or another certificate of designation of preferred stock of the Corporation, but suchindividual will no longer be an Investor Director under this Certificate of Designation.(h) To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its Subsidiaries,renounces any interest or expectancy of the Corporation and its Subsidiaries in, or in being offered an opportunity to participate in, anybusiness opportunities that are from time to time presented to the Holders or any of their respective Affiliates or any of their respectiveagents, shareholders, members, partners, directors, officers, employees, investment manager, investment advisor, Affiliates orsubsidiaries (other than the Corporation and its Subsidiaries), including any director or officer of the Corporation who is also an agent,shareholder, member, partner, director, officer, employee, investment manager, investment advisor, Affiliate or21subsidiary of any Holder (each, a “Specified Party”), even if the business opportunity is one that the Corporation or its Subsidiariesmight reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and no SpecifiedParty shall have any duty to communicate or offer any such business opportunity to the Corporation or be liable to the Corporation orany of its Subsidiaries or any stockholder, including for breach of any fiduciary or other duty, as a director or officer or controllingstockholder or otherwise, and the Corporation shall indemnify each Specified Party against any claim that such Person is liable to theCorporation or its stockholders for breach of any fiduciary duty, by reason of the fact that such Person (i) participates in, pursues oracquires any such business opportunity, (ii) directs any such business opportunity to another Person or (iii) fails to present any suchbusiness opportunity, or information regarding any such business opportunity, to the Corporation or its Subsidiaries, unless, in the caseof a Person who is a director or officer of the Corporation, such business opportunity is expressly offered to such director or officer inwriting solely in his or her capacity as a director or officer of the Corporation.Section 12. Issuance of Shares.(a) Each book-entry notation (and, if applicable, each certificate) representing shares of Preferred Stock shall bear alegend substantially to the following effect:THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANYSTATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE AREGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLESTATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACTOR SUCH LAWS.THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN ARE SUBJECT TOTRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE CERTIFICATE OF DESIGNATION AND ATRANSACTION AGREEMENT, DATED AS OF MARCH 5, 2019, COPIES OF WHICH ARE ON FILE WITH THESECRETARY OF THE ISSUER AND WILL BE PROVIDED WITHOUT COST, UPON WRITTEN REQUEST TOTHE SECRETARY OF THE ISSUER.(b) Shares of Preferred Stock shall be in uncertificated, book-entry form as permitted by the bylaws of the Corporationand Nevada law. Within a reasonable time after the issuance or transfer of uncertificated shares and at least annually thereafter, theCorporation shall, or shall cause the Transfer Agent to, send to the registered owner thereof a written statement containing theinformation specified in Nevada Revised Statutes 78.235(5). Transfers of shares of Preferred Stock held in uncertificated, book-entryform shall be made only upon the transfer books of the Corporation kept at an office of the Transfer Agent upon receipt of propertransfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or from an individualpresenting proper evidence of succession, assignment or authority to transfer such shares. The Corporation may refuse any requestedtransfer until furnished evidence reasonably22satisfactory to it that such transfer is made in accordance with the terms of this Certificate of Designation.Section 13. Transfers.(a) Prior to September 5, 2019, without the consent of the Corporation, no Holder may transfer any Securities otherthan to an Affiliate of such Holder or in connection with a business combination transaction involving the Corporation. AfterSeptember 5, 2019, the Securities shall be unrestricted and freely transferable, subject to applicable securities law binding upon suchHolder or transfer.(b) Notwithstanding anything to the contrary in Section 13(a), Holders may make a bona fide pledge of any or all ofits Securities in connection with a bona fide loan or other extension of credit, and any foreclosure by any pledged under such loan orextension of credit on any such pledged Securities (or any sale thereof) shall not be considered a violation of Section 13(a), and thetransfer of the Securities by a pledgee who has foreclosed on such loan or extension of credit shall not be considered a violation orbreach of Section 13(a).(c) Any Person that becomes a Holder pursuant to a transfer under this Section 13 shall be subject to all of the termsand conditions of this Certificate of Designation.Section 14. Miscellaneous.(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunderincluding, without limitation, any Notice of Conversion, shall be in writing and delivered personally, by facsimile, e-mail, or sent by anationally recognized overnight courier service, addressed to the Corporation, at the address set forth above Attention: Joseph Daches,facsimile number (210) 999-5401, JDaches@lilisenergy.com or such other facsimile number, e-mail address or address as theCorporation may specify for such purposes by notice to the Holders delivered in accordance with this Section 14. Any and all noticesor other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given andeffective on the earliest of: (i) the date of transmission (if there is no receipt of notice of a failed delivery to the notice party), if suchnotice or communication is delivered via e-mail attachment as set forth on the signature pages attached hereto at or prior to 5:30 p.m.(Houston, Texas time) on a Business Day, (ii) the next Business Day after the date of transmission (if there is no receipt of notice of afailed delivery to the notice party), if such notice or communication is delivered via e-mail attachment as set forth on the signaturepages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (Houston, Texas time) on any Business Day, (iii) thesecond Business Day following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actualreceipt by the party to whom such notice is required to be given.23(b) Information; Notice. If at any time while the Preferred Stock is outstanding the Corporation is not required to filereports under Section 13(a) or 15(d) of the Exchange Act, the Corporation shall provide to the Holders:(i) quarterly unaudited financial statements prepared in accordance with GAAP within 45 days after the end ofeach fiscal quarter, in each case, in form and substance acceptable to the Holder Majority;(ii) audited annual financial statements prepared in accordance with GAAP within 90 days after the end ofeach fiscal year of the Corporation (certified by an independent accounting firm of national standing); and(iii) annually, within 90 days after the end of the fiscal year, a reserve report prepared or audited by a thirdparty engineering firm of national standing in accordance with Commission guidelines with an “as of” date ofDecember 31 of the preceding calendar year.(c) Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alteror impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends andaccrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, hereinprescribed.(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of thisCertificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State ofNevada, without regard to the principles of conflict of laws thereof. The Corporation and each Holder, by acceptance of shares ofPreferred Stock, hereby irrevocable and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the SupremeCourt of the State of New York sitting in New York County, Borough of Manhattan, and of the United States District Court for theSouthern District of New York, and any appellate court from any district thereof, in any action or proceeding arising out of or relatingto this Certificate of Designation, or for recognition or enforcement of any judgment, and each of them hereby irrevocably andunconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New YorkState or, to the extent permitted by law, in such federal court. The Corporation and each Holder, by acceptance of shares of PreferredStock, agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law. Nothing in this Certificate of Designation shall affect any right that anyHolder may otherwise have to bring any action or proceeding relating to this Certificate of Designation against the Corporation or itsproperties in the courts of any jurisdiction. The Corporation hereby irrevocably and unconditionally waives, to the fullest extent it maylegally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceedingarising out of or relating to this Certificate of Designation in any court referred to in this Section 14(d).24The Corporation and each Holder, by acceptance of shares of Preferred Stock, hereby irrevocably waives, to the fullest extentpermitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. TheCorporation and each Holder, by acceptance of shares of Preferred Stock, irrevocably consents to service of process in the mannerprovided for notices in this Certificate of Designation. Nothing in this Certificate of Designation will affect the right of the Corporationor any Holder to serve process in any other manner permitted by law. The Corporation and each Holder, by acceptance of shares ofPreferred Stock, hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any legalproceeding directly or indirectly arising out of or relating to this Certificate of Designation or the transactions contemplated hereby(whether based on contract, tort or any other theory). If any party shall commence an action or proceeding to enforce any provisions ofthis Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for itsattorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.(e) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designationshall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of thisCertificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherenceto any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or anyother Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation onany other occasion. Any waiver by the Corporation or a Holder must be in writing.(f) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance ofthis Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shallnevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemedinterest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically belowered to equal the maximum rate of interest permitted under applicable law.(g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than aBusiness Day, such payment shall be made on the next succeeding Business Day.(h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate ofDesignation and shall not be deemed to limit or affect any of the provisions hereof.(i) Status of Converted or Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to theMarch Transaction Agreement or this Certificate of Designation. If any shares of Preferred Stock shall be converted, redeemed orreacquired by the Corporation,25such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series E8.25% Convertible Participating Preferred Stock.(j) Calculations. Any calculations made by the Corporation or Board of Directors pursuant to this Certificate ofDesignation shall be undertaken and made in good faith.******26RESOLVED, FURTHER, that the Chairman, the Chief Executive Officer, the president or any vice-president, and thetreasurer, assistant treasurer, secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed toprepare and file this Certificate of Designation in accordance with the foregoing resolution and the provisions of Nevada law.IN WITNESS WHEREOF, the undersigned have executed this Certificate of Designation this 5th day of March, 2019./s/ Ronald D. Ormand/s/ Joseph C. DachesName: Ronald D. OrmandName: Joseph C. DachesTitle: Chief Executive OfficerTitle: President, Chief Financial Officer and TreasurerANNEX ANOTICE OF CONVERSION(TO BE EXECUTED BY THE REGISTERED HOLDER IN ORDER TO CONVERT SHARES OF PREFERRED STOCK)The undersigned hereby elects to convert the number of shares of Series E 8.25% Convertible Participating Preferred Stock indicatedbelow into shares of common stock, par value $0.0001 per share (the “Common Stock”), of Lilis Energy, Inc. a Nevada corporation(the “Corporation”), according to the conditions hereof, as of the date written below. If shares of Common Stock are to be issued in thename of a Person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto and is deliveringherewith such certificates and opinions as may be required by the Corporation in accordance with the March Transaction Agreement.No fee will be charged to the Holders for any conversion, except for any such transfer taxes.Conversion calculations:Date to Effect Conversion: Number of shares of Preferred Stock owned prior to Conversion: Number of shares of Preferred Stock to be Converted: Stated Value of shares of Preferred Stock to be Converted: Number of shares of Common Stock to be Issued: Applicable Conversion Price: Number of shares of Preferred Stock subsequent to Conversion: Address for Delivery: orDWAC Instructions:Broker no: Account no: [HOLDER]By: Name: Title:SCHEDULE 7(C)CONVERSION PRICE ADJUSTMENT PRINCIPLESSection 1. Special Definitions. Capitalized terms used but not otherwise defined in this Schedule 7(c) shall have the meaningascribed to such terms in this Certificate of Designation; for purposes of this Schedule 7(c), the following definitions shall apply:(a) “Option” shall mean rights, options or warrants to subscribe for, purchase or otherwise acquire Common Stock orConvertible Securities.(b) “Convertible Securities” shall mean any evidences of indebtedness, shares or other securities directly or indirectlyconvertible into or exchangeable for Common Stock.(c) “Additional Shares of Common Stock” shall mean all shares of Common Stock issued (or, pursuant to Section 2below, deemed to be issued) by the Corporation after the Original Issue Date, other than (1) the following shares of Common Stockand (2) shares of Common Stock deemed issued pursuant to the following Options and Convertible Securities (clauses (1) and (2),collectively, “Exempted Securities”):(i) shares of Common Stock, Options or Convertible Securities issued as a dividend or distribution onCommon Stock or Preferred Stock;(ii) shares of Common Stock, Options or Convertible Securities issued by reason of a dividend, stock split,split-up or other distribution on shares of Common Stock;(iii) shares of Common Stock or Options issued to employees or directors of, or consultants or advisors to, theCorporation or any of its subsidiaries pursuant to a plan, agreement or arrangement approved by the Board of Directors;(iv) shares of Common Stock or Convertible Securities actually issued upon the exercise of Options or sharesof Common Stock actually issued upon the conversion or exchange of Convertible Securities, in each case providedsuch issuance is pursuant to the terms of such Option or Convertible Security;(v) shares of Common Stock, Options or Convertible Securities issued by the Corporation in one or moreunderwritten public offerings for cash following the Original Issue Date for gross proceeds of $100,000,000;(vi) shares of Common Stock, Options or Convertible Securities issued pursuant to the acquisition by theCorporation or any of its Subsidiaries of another Person or any assets of any other Person, whether by merger, purchaseor otherwise which issuance is consented to by a Holder Majority;(vii) the 17,641,638 shares of Common Stock issued on the Original Issue Date pursuant to the MarchTransaction Agreement; or(viii) the Preferred Stock issued on the Original Issue Date (including any increase in the Stated Valueresulting from the payment of dividends thereon) and the shares of Common Stock issued on conversion thereof.Section 2. Deemed Issue of Additional Shares of Common Stock.(a) If the Corporation at any time or from time to time after the Original Issue Date shall issue any Options orConvertible Securities (excluding Options or Convertible Securities which are themselves Exempted Securities), whether or not suchOptions or Convertible Securities are then exercisable, or shall fix a record date for the determination of holders of any class ofsecurities entitled to receive any such Options or Convertible Securities, then the maximum number of shares of Common Stock (as setforth in the instrument relating thereto, assuming the satisfaction of any conditions to exercisability, convertibility or exchangeabilitybut without regard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise of suchOptions or, in the case of Convertible Securities and Options therefor, the conversion or exchange of such Convertible Securities, shallbe deemed to be Additional Shares of Common Stock issued as of the time of such issue or, in case such a record date shall have beenfixed, as of the close of business on such record date.(b) If the terms of any Option or Convertible Security, the issuance of which resulted in an adjustment to theConversion Price pursuant to the terms of Section 3 below, are revised as a result of an amendment to such terms or any otheradjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to such termspursuant to anti-dilution or similar provisions of such Option or Convertible Security triggered by the event which is the subject of theadjustment) to provide for either (1) any increase or decrease in the number (or conversion rate) of shares of Common Stock issuableupon the exercise, conversion and/or exchange of any such Option or Convertible Security or (2) any increase or decrease in theconsideration payable to the Corporation upon such exercise, conversion and/or exchange, then, effective upon such increase ordecrease becoming effective, the Conversion Price computed upon the original issue of such Option or Convertible Security (or uponthe occurrence of a record date with respect thereto) shall be readjusted to such Conversion Price as would have obtained had suchrevised terms been in effect upon the original date of issuance of such Option or Convertible Security. Notwithstanding the foregoing,no readjustment pursuant to this clause (b) shall have the effect of increasing the Conversion Price to an amount which exceeds thelower of (i) the Conversion Price in effect immediately prior to the original adjustment made as a result of the issuance of such Optionor Convertible Security, or (ii) the Conversion Price that would have resulted from any issuances of Additional Shares of CommonStock (other than deemed issuances of Additional Shares of Common Stock as a result of the issuance of such Option or ConvertibleSecurity) between the original adjustment date and such readjustment date.(c) If the terms of any Option or Convertible Security (excluding Options or Convertible Securities which arethemselves Exempted Securities), the issuance of which did not result in an adjustment to the Conversion Price pursuant to the terms ofSection 3 below (either because the consideration per share (determined pursuant to Section 4 below) of the Additional Shares ofCommon Stock subject thereto was equal to or greater than the Conversion Price then in effect, or because such Option or ConvertibleSecurity was issued before the Original Issue Date), are revised after the Original Issue Date as a result of an amendment to such termsor any other adjustment pursuant to the provisions of such Option or Convertible Security (but excluding automatic adjustments to suchterms pursuant to anti-dilution or similar provisions of such Option or Convertible Security triggered by the event which is the subjectto the adjustment) to provide for either (1) any increase in the number of shares of Common Stock issuable upon the exercise,conversion or exchange of any such Option or Convertible Security or (2) any decrease in the consideration payable to the Corporationupon such exercise, conversion or exchange, then such Option or Convertible Security, as so amended or adjusted, and the AdditionalShares of Common Stock subject thereto (determined in the manner provided in Section 2(a) above) shall be deemed to have beenissued effective upon such increase or decrease becoming effective.(d) Upon the expiration or termination of any unexercised Option or unconverted or unexchanged ConvertibleSecurity (or portion thereof) which resulted (either upon its original issuance or upon a revision of its terms) in an adjustment to theConversion Price pursuant to the terms of Section 3 below, the Conversion Price shall be readjusted to such Conversion Price as wouldhave obtained had such Option or Convertible Security (or portion thereof) never been issued.(e) If the number of shares of Common Stock issuable upon the exercise, conversion and/or exchange of any Optionor Convertible Security, or the consideration payable to the Corporation upon such exercise, conversion and/or exchange, is calculableat the time such Option or Convertible Security is issued or amended but is subject to adjustment based upon subsequent events, anyadjustment to the Conversion Price provided for in this Section 2 shall be effected at the time of such issuance or amendment based onsuch number of shares or amount of consideration without regard to any provisions for subsequent adjustments (and any subsequentadjustments shall be treated as provided in clauses (b) and (c) of this Section 2). If the number of shares of Common Stock issuableupon the exercise, conversion and/or exchange of any Option or Convertible Security, or the consideration payable to the Corporationupon such exercise, conversion and/or exchange, cannot be calculated at all at the time such Option or Convertible Security is issued oramended, any adjustment to the Conversion Price that would result under the terms of this Section 2 at the time of such issuance oramendment shall instead be effected at the time such number of shares and/or amount of consideration is first calculable (even if subjectto subsequent adjustments), assuming for purposes of calculating such adjustment to the Conversion Price that such issuance oramendment took place at the time such calculation can first be made.Section 3. Adjustment of Conversion Price Upon Issuance of Additional Shares of Common Stock. In the event theCorporation shall at any time after the Original Issue Date issue Additional Shares of Common Stock (including Additional Shares ofCommon Stock deemed to be issued pursuant to Section 2 above), without consideration or for a consideration per share less than theConversion Price in effect immediately prior to such issue, then the Conversion Price shall be reduced, concurrently with such issue, toa price (calculated to the nearest one-hundredth of a cent) determined in accordance with the following formula:CP2 = CP1 multiplied by [(A + B) ÷ (A + C)]For purposes of the foregoing formula, the following definitions shall apply:“CP2” shall mean the Conversion Price in effect immediately after such issue of Additional Shares of Common Stock“CP1” shall mean the Conversion Price in effect immediately prior to such issue of Additional Shares of Common Stock;“A” shall mean the number of shares of Common Stock outstanding immediately prior to such issue of Additional Shares ofCommon Stock (treating for this purpose as outstanding all shares of Common Stock issuable upon exercise of Options outstandingimmediately prior to such issue or upon conversion or exchange of Convertible Securities outstanding (assuming exercise of anyoutstanding Options therefor) immediately prior to such issue);“B” shall mean the number of shares of Common Stock that would have been issued if such Additional Shares of CommonStock had been issued at a price per share equal to CP1 (determined by dividing the aggregate consideration received by theCorporation in respect of such issue by CP1); and“C” shall mean the number of such Additional Shares of Common Stock issued in such transaction.For purposes of this Section 3, the number of shares of Common Stock outstanding at any given time shall not include shares owned orheld by or for the account of the Corporation or any of its wholly-owned Subsidiaries, and the disposition of any such shares (otherthan the cancellation or retirement thereof or the transfer of such shares among the Corporation and its wholly-owned Subsidiaries)shall be considered an issuance of Additional Shares of Common Stock for purposes of this Section 3 unless such shares of CommonStock are Exempted Securities.Section 4. Determination of Consideration. For purposes of this Schedule 7(c) the consideration received by the Corporationfor the issue of any Additional Shares of Common Stock shall be computed as follows:(a) Cash and Property. Such consideration shall:(i) insofar as it consists of cash, be computed at the aggregate amount of cash received by the Corporation,excluding amounts paid or payable for accrued interest, without deducting any compensation or discount in the sale,underwriting or purchase thereof by underwriters or dealers or others performing similar services or for any expensesrelating to the offering of such Additional Shares of Common Stock;(ii) insofar as it consists of property other than cash, be computed at the fair market value thereof at the time ofsuch issue, as determined in good faith jointly by the Board of Directors and the Holders, except where suchconsideration consists of marketable securities, in which case the amount of consideration received by the Corporationshall be the market price (as reflected on any securities exchange, quotation system or association or similar pricingsystem covering such security) for such securities as of the close of business on the date of receipt of such securities;(iii) in the event Additional Shares of Common Stock are issued together with other shares or securities orother assets of the Corporation for consideration which covers both, be the proportion of such consideration soreceived, computed as provided in clauses (i) and (ii) above, as determined in good faith jointly by the Board ofDirectors and the Holders; and(iv) in the event Additional Shares of Common Stock are issued to the owners of the non-surviving entity inconnection with any merger in which the Corporation is the surviving corporation, be deemed to be the fair value ofsuch portion of the net assets and business of the non-surviving entity as is attributable to such shares of CommonStock, Options or Convertible Securities, as the case may be, issued to such owners.(b) Options and Convertible Securities. The consideration per share received by the Corporation for Additional Sharesof Common Stock deemed to have been issued pursuant to Section 2 above, relating to Options and Convertible Securities, shall bedetermined by dividing(i) the total amount, if any, received or receivable by the Corporation as consideration for the issue of suchOptions or Convertible Securities, plus the minimum aggregate amount of additional consideration (as set forth in theinstruments relating thereto, without regard to any provision contained therein for a subsequent adjustment of suchconsideration) payable to the Corporation upon the exercise of such Options or the conversion or exchange of suchConvertible Securities, or in the case of Options for Convertible Securities, the exercise of such Options for ConvertibleSecurities and the conversion or exchange of such Convertible Securities, without deducting any compensation ordiscount in the sale, underwriting or purchase thereof by underwriters or dealers or others performing similar services orfor any expenses relating to the offering of such Options or Convertible Securities, by(ii) the maximum number of shares of Common Stock (as set forth in the instruments relating thereto, withoutregard to any provision contained therein for a subsequent adjustment of such number) issuable upon the exercise ofsuch Options or the conversion or exchange of such Convertible Securities, or in the case of Options for ConvertibleSecurities, the exercise of such Options for Convertible Securities and the conversion or exchange of such ConvertibleSecurities.Section 5. Multiple Closing Dates. In the event the Corporation shall issue on more than one date Additional Shares ofCommon Stock that are a part of one transaction or a series of related transactions and that would result in an adjustment to theConversion Price pursuant to the terms of Section 3 above, then, upon the final such issuance, the Conversion Price shall be readjustedto give effect to all such issuances as if they occurred on the date of the first such issuance (and without giving effect to any additionaladjustments as a result of any such subsequent issuances within such period).Section 6. Dividends and Distributions to Common Stock. If the Corporation shall, at any time or from time to time after theOriginal Issue Date, pay a dividend or make any other distribution payable in securities of the Corporation (other than a dividend ordistribution of shares of Common Stock, which shall be subject to Section 7, without duplication), cash or other property, then, and ineach such event, provision shall be made so that the Holders shall receive upon conversion, in addition to the number of CommonStock receivable thereupon, the kind and amount of securities of the Corporation, cash or other property which the Holder would havebeen entitled to receive had such Holder’s Preferred Stock or portion thereof been fully converted into Common Stock on the date ofsuch event (whether or not such Preferred Stock is then convertible) and had the Holders thereafter, during the period from the date ofsuch event to and including the Conversion Date, retained such securities, cash or other property receivable by them as aforesaidduring such period; provided, that no such provision shall be made if the Holders receive, simultaneously with the distribution to theholders of its Common Stock, a dividend or other distribution of such securities, cash or other property in an amount equal to theamount of such securities, cash or other property as the Holders would have received if such shares of Preferred Stock or portionthereof had been fully converted into Common Stock on the date of such event pursuant to Section 3(a) of this Certificate ofDesignation (whether or not such Preferred Stock is then convertible).Section 7. Adjustment to Conversion Price and Common Stock Upon Dividend, Subdivision or Combination of CommonStock. If the Corporation shall, at any time or from time to time after the Original Issue Date, (i) pay a dividend or make any otherdistribution upon the Common Stock payable in shares of Common Stock, or (ii) subdivide (by any stock split, recapitalization orotherwise) its outstanding shares of Common Stock into a greater number of shares of Common Stock, the Conversion Price in effectimmediately prior to any such dividend, distribution or subdivision shall be proportionately reduced. If the Corporation at any timecombines (by combination, reverse stock split or otherwise) its outstanding shares of Common Stock into a smaller number of shares,the Conversion Price in effect immediately prior to such combination shall be proportionately increased. Any adjustment under thisSection 7 shall become effective at the close of business on the date the dividend, subdivision or combination becomes effective.Section 8. Adjustment to Conversion Price and Common Stock Upon Reorganization, Reclassification, Consolidation orMerger. In the event of any (i) capital reorganization of the Corporation, (ii) reclassification of the stock of the Corporation (other thana change in par value or from par value to no par value or from no par value to par value or as a result of a stock dividend orsubdivision, split-up or combination of shares), (iii) consolidation or merger of the Corporation with or into another Person, (iv) sale ofall or substantially all of the Corporation’s assets to another Person or (v) other similar transaction (other than any such transactioncovered by Section 7), in each case which entitles the holders of Common Stock to receive (either directly or upon subsequentliquidation) stock, securities or assets with respect to or in exchange for Common Stock, the Preferred Stock, to the extent they remainoutstanding immediately after such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall thereafter beconvertible for the kind and number of shares of stock or other securities or assets of the Corporation or of the successor Personresulting from such transaction to which the Holders would have been entitled upon such reorganization, reclassification,consolidation, merger, sale or similar transaction if the Holders had converted the Preferred Stock in full immediately prior to the timeof such reorganization, reclassification, consolidation, merger, sale or similar transaction (whether or not such Preferred Stock is thenconvertible) and acquired the applicable number of Common Stock then issuable hereunder as a result of such conversion (withouttaking into account any limitations or restrictions on the conversion of the Preferred Stock); and, in such case, appropriate adjustment(in form and substance satisfactory to the Holder) shall be made with respect to the Holders’ rights under this Certificate of Designationto insure that the provisions of this Section 8 hereof shall thereafter be applicable, as nearly as possible, to this Certificate ofDesignation in relation to any shares of stock, securities or assets thereafter acquirable upon conversion of the Preferred Stock(including, in the case of any consolidation, merger, sale or similar transaction in which the successor or purchasing Person is otherthan the Corporation, an immediate adjustment in the Conversion Price to the value per share for the Common Stock reflected by theterms of such consolidation, merger, sale or similar transaction without regard to any limitations or restrictions on conversion, if thevalue so reflected is less than the Conversion Price in effect immediately prior to such consolidation, merger, sale or similar transaction;provided that the foregoing of this parenthetical shall not apply to any such consolidation, merger or similar transaction that constitutesa reincorporation of the Corporation, a holding company formation or a similar reorganization in which, immediately after suchtransaction, the holders of Common Stock immediately prior to such transaction own all of the common stock of the successor Personin the same proportions as their ownership of Common Stock immediately prior to such transaction). The provisions of this Section 8shall similarly apply to successive reorganizations, reclassifications, consolidations, mergers, sales or similar transactions. TheCorporation shall not effect any such reorganization, reclassification, consolidation, merger, sale or similar transaction in which thePreferred Stock will remain outstanding thereafter unless, prior to the consummation thereof, the successor Person (if other than theCorporation) resulting from such reorganization, reclassification, consolidation, merger, sale or similar transaction, shall assume, bywritten instrument substantially similar in form and substance to this Certificate of Designation and satisfactory to the Holders, theobligation to deliver to the Holders such shares of stock, securities or assets which, in accordance with the foregoing provisions, suchHolders shall be entitled to receive upon conversion of the Preferred Stock. Notwithstanding anything to the contrary contained herein(but without modification of any other terms of this Certificate of Designation), with respect to any corporate event or other transactioncontemplated by the provisions of this Section 8, the Holder shall have the right to elect prior to the consummation of such event ortransaction, to give effect to the conversion rights contained in Section 7 of this Certificate of Designation instead of giving effect to theprovisions contained in this Section 8.Section 9. Stockholder Rights Plan. If the Corporation has a stockholder rights plan in effect with respect to the CommonStock upon any conversion, each share of Common Stock issued upon such conversion shall be accompanied by the appropriatenumber of rights, if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, ifany, in each case as may be provided by the terms of any such stockholder rights plan, as the same may be amended from time to time.However, if, prior to any conversion, the rights have separated from the shares of Common Stock in accordance with the provisions ofthe applicable stockholder rights plan, the Conversion Price shall be adjusted pursuant to Section 7 above at the time of separation as ifthe Corporation distributed such rights to all holders of the Common Stock, subject to readjustment in the event of the expiration,termination or redemption of such rights.Section 10. Certain Events. If any event of the type contemplated by the provisions of this Schedule 7(c) but not expresslyprovided for by such provisions (but excluding the issuance or deemed issuance of any Exempted Securities) occurs, then theCorporation shall make an appropriate adjustment in the Conversion Price so as to protect the rights of the Holders in a mannerconsistent with the provisions of this Schedule 7(c); provided, that no such adjustment pursuant to this Section 10 shall increase theConversion Price that would otherwise be determined pursuant to this Schedule 7(c).Section 11. Certificate as to Adjustment. As promptly as reasonably practicable following any adjustment of the ConversionPrice or Initial Market Price (as applicable), but in any event not later than 10 Business Days thereafter, the Corporation shall furnish tothe Holders a certificate of an officer setting forth, in reasonable detail, the event requiring the adjustment, the method by which suchadjustment was calculated and describing the kind of any other securities issuable upon conversion of the Preferred Stock and anychange in the Conversion Price or Initial Market Price (as applicable) after giving effect to such adjustment or change. As promptly asreasonably practicable following the receipt by the Corporation of a written request by any Holder, but in any event not later than 10Business Days thereafter, the Corporation shall furnish to such Holder a certificate of an officer certifying the Conversion Price andInitial Market Price (as applicable) then in effect.27Exhibit 3.10LILIS ENERGY, INC.CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES F 9.00% PARTICIPATING PREFERRED STOCKPURSUANT TO SECTION 78.1955 OF THE NEVADA REVISED STATUTESThe undersigned, Ronald D. Ormand and Joseph C. Daches, do hereby certify that:1. They are the Executive Chairman and Executive Vice President, Chief Financial Officer and Treasurer, respectively, ofLilis Energy, Inc., a Nevada corporation (the “Corporation”).2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, of which, after giving effect to (i) thisCertificate of Designation (as defined below), (ii) that certain Second Amended and Restated Certificate of Designation of Preferences,Rights and Limitations of Series C-1 9.75% Participating Preferred Stock and Series C-2 9.75% Participating Preferred Stock, dated asof March 5, 2019 (the “Series C Certificate of Designation”), (iii) that certain Amended and Restated Certificate of Designation ofPreferences, Rights and Limitations of Series D 8.25% Participating Preferred Stock, dated as of as of March 5, 2019 (the “Series DCertificate of Designation”) and (iv) that certain Certificate of Designation of Preferences, Rights and Limitations of Series E 8.25%Convertible Participating Preferred Stock, dated as of March 5, 2019 (the “Series E Certificate of Designation”), (a) 100,000 shares aredesignated as “Series C-1 9.75% Participating Preferred Stock” (the “Series C-1 Preferred Stock”), (b) 25,000 shares are designated as“Series C-2 9.75% Participating Preferred Stock” (the “Series C-2 Preferred Stock” and, together with the Series C-1 Preferred Stock,the “Series C Preferred Stock”), (c) 39,254 shares are designated as “Series D 8.25% Participating Preferred Stock” (the “Series DPreferred Stock”), (d) 60,000 shares are designated as “Series E 8.25% Convertible Participating Preferred Stock” (the “Series EPreferred Stock”) and (e) 55,000 shares are designated as “Series F 9.00% Participating Preferred Stock.”3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”) onMarch 4, 2019 in accordance with the provisions of the Articles of Incorporation, the bylaws of the Corporation and applicable law,providing for the issuance of a series of preferred stock of the Corporation designated as “Series F 9.00% Participating PreferredStock”:WHEREAS, the Articles of Incorporation of the Corporation provide for a class of its authorized stock known as preferredstock, consisting of 10,000,000 shares, $0.0001 par value per share, issuable from time to time in one or more series; andWHEREAS, the Articles of Incorporation authorize the Board of Directors to fix the dividend rights, dividend rate, votingrights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stockand, with respect to each such series, to fix the number of shares constituting such series of Preferred Stock and the designation thereof.NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby approve and adopt this Certificate ofDesignation of Preferences, Rights and Limitations (this “Certificate of Designation”), as set forth below, and that the same shallbecome effective upon filing this Certificate of Designation with the Secretary of State of the State of Nevada:TERMS OF PREFERRED STOCKSection 1.Definitions. For the purposes hereof, the following terms shall have the following meanings:“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act; provided, that noportfolio company of a Holder or its Affiliates shall be considered or otherwise deemed an Affiliate thereof.“Articles of Incorporation” shall mean the Amended and Restated Articles of Incorporation of the Corporation, dated as ofOctober 10, 2011, as amended from time to time.“Board of Directors” shall have the meaning set forth in the Preamble.“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United Statesor any day on which banking institutions in the State of New York or Texas are authorized or required by law or other governmentalaction to close.“Change of Control” means:(a) any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of1934, as amended (the “Exchange Act”)), other than (i) any Holder, (ii) Värde, (iii) any holder of Series E Preferred Stock or (iv) anyAffiliate of any Person specified in the preceding clauses (i)-(iii), is or becomes the beneficial owner (as defined in Rules 13d-3 and13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” (within the meaningof Rule 13d-3 under the Exchange Act) of all shares that such person or group has the right to acquire, whether such right isexercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of theoutstanding capital stock (excluding any debt securities convertible into equity)2normally entitled to vote in the election of directors of the Corporation (or its successor by merger, consolidation or purchase of all orsubstantially all of its assets) (provided, for the avoidance of doubt, that, for purposes of the foregoing, shares of preferred stock of anyseries shall not be considered to be normally entitled to vote in the election of directors by reason of any right of the holders of sharesof preferred stock of such series to elect or appoint one or more directors voting or acting separately as a class);(b) except as permitted by Section 6.04 of the Specified Second Lien Credit Agreement, a disposition by theCorporation or a Subsidiary pursuant to which the Corporation or any Subsidiary sells, leases, licenses, transfers, assigns or otherwisedisposes, in one or a series of related transactions, all or substantially all of the properties and assets of the Corporation and itsSubsidiaries taken as a whole;(c) the Corporation’s stockholders approve any plan relating to the liquidation or dissolution of the Corporation; or(d) the occurrence of a “Change of Control” (or similar term) as such term is defined in any of (i) the RBL CreditAgreement or (ii) any other credit facility, indenture or other similar instrument of the Corporation or its Subsidiaries under whichindebtedness of the Corporation or its Subsidiaries of at least $5 million is outstanding at the time of such occurrence or at any point inthe 90 days prior thereto.“Commission” means the United States Securities and Exchange Commission.“Common Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class ofsecurities into which such securities may hereafter be reclassified or changed.“Common Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holderthereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or otherinstrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,Common Stock.“Corporation” shall have the meaning set forth in the Preamble.“Dividend Payment Date” shall have the meaning set forth in Section 3(b).“Dividend Rate” means 9.00% per annum; provided, that if, for any Dividend Payment Date after April 26, 2021, dividends onthe Preferred Stock are not paid in full in cash on such Dividend Payment Date, then the Dividend Rate for the dividends payable onsuch Dividend Payment Date (but not on any subsequent Dividend Payment Date on which such dividends are paid in full in cash)shall be 10.00% per annum.3“GAAP” means United States generally accepted accounting principles.“Holder” shall have the meaning given such term in Section 3(a).“Holder Majority” means the Holders of a majority of the outstanding shares of Preferred Stock.“Investor Director” shall have the meaning set forth in Section 11(a).“Junior Preferred Stock PIK Dividends” means any dividends on any shares of preferred stock of the Corporation that areJunior Securities to the extent such dividends are paid solely in the form of additional shares of such preferred stock or by increase tothe stated value or liquidation preference thereof (or other similar term or amount) in accordance with the terms of such preferred stock.“Junior Securities” means the Common Stock (and Common Stock Equivalents), the Series C Preferred Stock, the Series DPreferred Stock, the Series E Preferred Stock and all other classes of the Corporation’s common stock and each other class of capitalstock or series of preferred stock, the terms of which do not expressly provide that such class or series ranks senior to or on parity withthe Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolution of the Corporation.“Liquidation” shall have the meaning set forth in Section 6.“March Transaction Agreement” means the Transaction Agreement, dated as of March 5, 2019, by and among the Corporationand the original Holders, as amended, modified or supplemented from time to time in accordance with its terms.“Officer” shall mean the Executive Chairman, the Chief Executive Officer, the President, the Chief Financial Officer, any VicePresident, the Treasurer, the Secretary, any Assistant Secretary or any Assistant Treasurer of the Corporation.“Optional Redemption” shall have the meaning set forth in Section 8(a).“Optional Redemption Amount” shall have the meaning set forth in Section 8(b).“Optional Redemption Date” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice Date” shall have the meaning set forth in Section 8(a).“Original Issue Date” means the date of the first issuance of any shares of the Preferred Stock regardless of the number oftransfers of any particular shares of Preferred Stock and regardless of the number of certificates which may be issued to evidence suchPreferred Stock.4“Parity Securities” shall mean any class of capital stock or series of preferred stock, the terms of which expressly provide thatsuch class or series will rank on a parity with the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up ordissolution of the Corporation.“Participation Price” means $7.00; provided that (a) if the Corporation shall, at any time or from time to time after the OriginalIssue Date, (i) pay a dividend or make any other distribution upon the Common Stock payable in shares of Common Stock, or (ii)subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares ofCommon Stock, the Participation Price in effect immediately prior to any such dividend, distribution or subdivision shall beproportionately reduced; and (b) if the Corporation at any time combines (by combination, reverse stock split or otherwise) itsoutstanding shares of Common Stock into a smaller number of shares, the Participation Price in effect immediately prior to suchcombination shall be proportionately increased. Any adjustment under clause (a) or (b) of the preceding sentence of this definition shallbecome effective at the close of business on the date the dividend, subdivision or combination becomes effective.“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.“Preferred Stock” shall have the meaning set forth in Section 2(a).“RBL Credit Agreement” means that certain Second Amended and Restated Senior Secured Revolving Credit Agreement,dated as of October 10, 2018, by and among the Corporation, the guarantors from time to time party thereto, the lenders party theretoand BMO Harris Bank, N.A., as administrative agent and collateral agent, as amended by the First Amendment and Waiver thereto,dated as of March 1, 2019, and as further amended from time to time (in accordance with this Certificate of Designation).“Record Date” means, with respect to any issuance, dividend or distribution declared, paid or made on or with respect to anycapital stock of the Corporation, the date fixed for the determination of the stockholders entitled to receive such issuance, dividend ordistribution.“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgatedthereunder.“Senior Securities” shall mean each class of capital stock or series of preferred stock, the terms of which expressly provide thatsuch class or series will rank senior to the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolutionof the Corporation.“Series C Certificate of Designation” shall have the meaning set forth in the preamble.5“Series C Preferred Stock” shall have the meaning set forth in the preamble.“Series C-1 Preferred Stock” shall have the meaning set forth in the preamble.“Series C-2 Preferred Stock” shall have the meaning set forth in the preamble.“Series D Certificate of Designation” shall have the meaning set forth in the preamble.“Series D Preferred Stock” shall have the meaning set forth in the preamble.“Series E Certificate of Designation” shall have the meaning set forth in the preamble.“Series E Preferred Stock” shall have the meaning set forth in the preamble.“Specified Party” shall have the meaning set forth in Section 11(h).“Specified Second Lien Credit Agreement” means that certain Credit Agreement, dated as of April 26, 2017, by and among theCorporation, the guarantors party thereto, the lenders party thereto and Wilmington Trust, National Association, as administrativeagent, as amended, supplemented or otherwise modified and as in effect as of March 4, 2019, regardless of whether or not in effect asof any date thereafter.“Stated Value” shall have the meaning set forth in Section 2(a).“Subsidiary” means any direct or indirect subsidiary of the Corporation, including those set forth on Schedule 3.1(a) to theMarch Transaction Agreement, and any direct or indirect subsidiary of the Corporation formed or acquired after the date of the MarchTransaction Agreement.“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global SelectMarket or the New York Stock Exchange (or any successors to any of the foregoing).“Transfer Agent” means Corporate Stock Transfer, the current transfer agent of the Corporation with a mailing address of 3200Cherry Creek South Drive, Suite 430, Denver, Colorado 80209 and a facsimile number of (303) 282-5800, and any successor transferagent of the Corporation.“Värde” means (a) Värde Partners, Inc., its affiliated investment managers and funds or accounts managed by any of them(including the Värde Parties (as defined in the March Transaction Agreement) but excluding any portfolio companies that are owned inwhole or in part by any of the foregoing) and (b) any partner, member, manager, principal, director or officer of any of the foregoing.6Section 2. Designation, Amount and Par Value; Ranking.(a) The series of preferred stock established pursuant to this Certificate of Designation shall be designated as “Series F9.00% Participating Preferred Stock” (the “Preferred Stock”) and the number of shares so designated and authorized shall be 55,000(which shall not be subject to increase without the affirmative vote or written consent of a Holder Majority). Each share of PreferredStock shall have an initial par value of $0.0001 per share and an initial stated value equal to $1,000.00 per share, subject to increase asset forth in Section 3 below (the “Stated Value”).(b) The Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution ofthe Corporation, ranks: (i) senior in all respects to all Junior Securities; (ii) pari passu with all Parity Securities; and (iii) junior in allrespects to all Senior Securities, in each case, as provided more fully herein.Section 3. Dividends.(a) Participating Dividends. Without limiting Section 10 of this Certificate of Designation, for so long as any shares ofPreferred Stock are outstanding, no dividend or other distribution (other than any stock dividend or distribution on the Common Stockpayable in shares of Common Stock, any distribution of rights pursuant to a stockholder rights plan or any distribution upon aLiquidation) may be declared or paid on the Common Stock or to the holders thereof unless the holders of the Preferred Stock (each, a“Holder” and collectively, the “Holders”) receive, simultaneously with the distribution to the holders of the Common Stock, a dividendor other distribution of such securities, cash or other property in an amount equal to the amount of such securities, cash or otherproperty as the Holders would have received if, immediately prior to the Record Date for such distribution, each then-outstanding shareof the Preferred Stock had been converted into a number of shares of the Common Stock equal to (i) the then applicable OptionalRedemption Amount divided by (ii) the then-applicable Participation Price (regardless of the fact that shares of the Preferred Stock arenot convertible into Common Stock).(b) Dividends in Cash or in Kind. In addition to participation in cash dividends on, or distributions to, Common Stockas set forth in Section 3(a), Holders shall be entitled to receive, and the Corporation shall pay (prior to any distributions made in respectof any Junior Securities (or contemporaneously therewith in the case of Junior Preferred Stock PIK Dividends) and prior to orcontemporaneously with any distributions made in respect of any Parity Securities, in each case in respect of the same fiscal quarter),cumulative dividends per share (as a percentage of the Stated Value per share) at the Dividend Rate, payable and compoundedquarterly in arrears on January 1, April 1, July 1 and October 1, beginning on the first such date after the Original Issue Date (eachsuch date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Business Day, the applicable payment, if paid in cash,shall be due on the next succeeding Business Day, and no interest or dividends on such payment shall accrue or accumulate in respectof such delay), in (i) cash out of funds legally available therefor, (ii) by an increase in the Stated Value of the Preferred Stock, or (iii)any combination of clause (i) and (ii), in each case, in an amount equal to the accrued7but unpaid dividends due to a Holder in respect of each share of Preferred Stock on the Dividend Payment Date. For the avoidance ofdoubt, any dividends paid by an increase in the Stated Value pursuant to this Section 3(b) shall be deemed to have been paid in full forall purposes. The default method of payment shall be an increase in the Stated Value unless, at least five Business Days prior to aDividend Payment Date, the Corporation provides written notice to the Holders of its election to pay in cash and such cash payment isactually and timely made. Dividends shall be paid pro rata for any partial quarter.(c) Dividend Calculations. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year,consisting of twelve 30 calendar day periods, shall accrue daily commencing on the Original Issue Date and shall be deemed to accruefrom such date whether or not declared and whether or not there are profits, surplus or other funds of the Corporation legally availablefor the payment of dividends.Section 4. Maturity. The Preferred Stock shall be perpetual unless redeemed in accordance with this Certificate ofDesignation.Section 5. Voting Rights.(a) The Holders in such capacity will not have the right to vote with the holders of Common Stock as a single class onany matter.(b) Each Holder will have one vote per share of Preferred Stock on any matter on which Holders of Preferred Stockare entitled to vote separately as a class, whether at a meeting or by written consent.Section 6. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary(a “Liquidation”), the Holders shall be entitled to receive, in respect of each share of Preferred Stock, out of the assets, whether capitalor surplus, of the Corporation an amount equal to the greater of (i) the then-applicable Optional Redemption Amount and (ii) theproceeds the Holders would be entitled to receive if, immediately prior to the payment of such amount, each then-outstanding share ofthe Preferred Stock had been converted into a number of shares of the Common Stock equal to (i) the then-applicable OptionalRedemption Amount divided by (ii) the then-applicable Participation Price (regardless of the fact that shares of the Preferred Stock arenot convertible into Common Stock), after any amount shall be paid to holders of any Senior Securities, before any distribution orpayment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in fullsuch amounts payable to Holders and the amounts payable to the holders of any Parity Securities, then the entire assets to be distributedto the Holders and the holders of any Parity Securities shall be ratably distributed among the Holders and the holders of any ParitySecurities in accordance with the respective amounts that would be payable on shares of Preferred Stock and any Parity Securities if allamounts payable thereon were paid in full. A Change of Control shall not be deemed a8Liquidation. The Corporation shall mail written notice of any such Liquidation, not less than 45 days prior to the payment date statedtherein, to each Holder.Section 7. [Intentionally Omitted].Section 8. Optional Redemption.(a) Optional Redemption at Election of Corporation. Subject to the provisions of this Section 8 and Section 9, at anytime after the Original Issue Date, the Corporation may deliver a notice to the Holders (an “Optional Redemption Notice” and the datesuch notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its election (which shall be irrevocable but maybe conditioned on the occurrence of any one or more events) to redeem some or all of the then-outstanding Preferred Stock, for cash inan amount equal to the Optional Redemption Amount on the 20th Business Day following the Optional Redemption Notice Date(such date, the “Optional Redemption Date” and such redemption, the “Optional Redemption”).(b) Optional Redemption Amount. Each share of Preferred Stock redeemed pursuant to this Section 8 shall beredeemed by paying cash in an amount equal to (i)(1) the applicable Stated Value multiplied by (2) 115.0%, plus (ii) all accrued butunpaid dividends thereon and all liquidated damages and other amounts due in respect of such Preferred Stock as of the OptionalRedemption Date (such amount, the “Optional Redemption Amount”).(c) Redemption Procedure. The payment of cash pursuant to an Optional Redemption shall be made on the OptionalRedemption Date. If any portion of the cash payment for an Optional Redemption has not been paid by the Corporation on theOptional Redemption Date, interest shall accrue thereon until such amount is paid in full at a rate equal to the lesser of 15% per annumor the maximum rate permitted by applicable law.(d) Limitations on Redemption.(i) Any Optional Redemption by the Corporation must be of Preferred Stock having a minimum aggregateStated Value of $20 million as of the Optional Redemption Notice Date (or such lesser amount if such OptionalRedemption is for all of the remaining Preferred Stock).(ii) The Corporation may consummate no more than one partial Optional Redemption within any 6-monthperiod.(iii) Any Optional Redemption shall be applied ratably to all of the Holders based on each Holder’s relativeownership of shares of Preferred Stock.(iv) The Preferred Stock shall only be redeemable as expressly set forth in this Section 8 and Section 9.9Section 9. Change of Control. On or before the 20th Business Day prior to the consummation of a Change of Control (or, iflater, promptly after the Corporation discovers that a Change of Control has occurred or will occur), the Corporation shall providewritten notice thereof to the Holders, and in connection with any such Change of Control, each Holder may elect one of the followingoptions (subject to such Change of Control having actually occurred or actually occurring) by notice given to the Corporation within20 Business Days after the date the Corporation provides such written notice (it being understood that if a Holder fails to timelyprovide notice of its election to the Corporation, such Holder shall be deemed to have elected the option set forth in clause (a) below):(a) cause the Corporation to redeem all of such Holder’s shares of Preferred Stock for cash in an amount per share ofPreferred Stock equal to the applicable Optional Redemption Amount in effect immediately prior to the consummation of such Changeof Control; or(b) subject to the Corporation’s (or, if the Corporation is not the surviving entity of such Change of Control, theCorporation’s successor’s) right to redeem the Preferred Stock pursuant to Section 8, continue to hold such Holder’s shares ofPreferred Stock.Section 10. Negative Covenants.(a) As long as any shares of Preferred Stock are outstanding, without the prior affirmative vote or prior written consentof a Holder Majority, the Corporation shall not, directly or indirectly (whether by way of amendment to the charter documents, merger,recapitalization, or otherwise):(i) amend, alter, modify or repeal the Articles of Incorporation or the bylaws of the Corporation, in any mannerthat materially and adversely affects any rights, preferences, privileges or voting powers of the Preferred Stock orHolders;(ii) issue, authorize or create, or increase the issued or authorized amount of, Preferred Stock, any class orseries of Senior Securities or any Parity Securities or security convertible into or evidencing the right to purchase anyshares of Preferred Stock, Senior Securities or Parity Securities other than equity, the proceeds of which, are used toimmediately redeem all of the outstanding shares of Preferred Stock in accordance with Section 8;(iii) declare or pay any dividends or distributions on, or redeem or repurchase, or permit any of its controlledSubsidiaries to redeem or repurchase, shares of Common Stock or any other shares of Junior Securities other than:(1) Junior Preferred Stock PIK Dividends;10(2) any stock dividend or distribution on the Common Stock payable in shares of Common Stock;(3) any distribution of rights pursuant to a stockholder rights plan with respect to the Common Stock;(4) any distribution upon a Liquidation;(5) redemptions of incentive equity of the Corporation or its Subsidiaries held by employees of theCorporation or its Subsidiaries in connection with the administration of any employee benefit plan of theCorporation in the ordinary course of business;(6) after April 26, 2021, cash dividends on the Series C Preferred Stock, the Series D Preferred Stockand the Series E Preferred Stock in accordance with the Series C Certification of Designation, the Series DCertificate of Designation and the Series E Certificate of Designation as in effect on the Original Issue Date,provided that all dividends on the Preferred Stock payable on the corresponding Dividend Payment Date havebeen, or contemporaneously are, paid in full in cash; and(7) redemptions of the Series C Preferred Stock, the Series D Preferred Stock or the Series E PreferredStock pursuant to and in accordance with a Change of Control redemption election by the “Holders” thereofpursuant to Section 9(a) of the Series C Certificate of Designation, the Series D Certificate of Designation or theSeries E Certificate of Designation, as applicable, in each case as in effect on the Original Issue Date, providedthat all shares of Preferred Stock as to which the Holders have elected redemption pursuant to Section 9(a) inconnection with such Change in Control have been, or contemporaneously are, redeemed in accordance withSection 9(a);(iv) authorize, issue or transfer, or permit any of its controlled Subsidiaries to authorize, issue or transfer, anyequity (including any obligation or security convertible into, exchangeable for or evidencing the right to purchase anysuch equity) in any Subsidiary other than (1) equity issued or transferred to the Corporation or another wholly-ownedSubsidiary of the Corporation or (2) equity, the proceeds of which, are used to immediately redeem all of theoutstanding shares of Preferred Stock in accordance with Section 8; or(v) subject to right of the holders of Common Stock to amend the provisions of the bylaws of the Corporationrelating to the number of directors constituting the entire Board of Directors or the manner in which such number ofdirectors is determined (but, for the sake of clarity, without limiting the Holders’11rights pursuant to Section 11), modify the number of directors constituting the entire Board of Directors at any timewhen the Holders have the right to designate an Investor Director pursuant to Section 11; provided, that the Corporationmay increase the number of directors constituting the entire Board of Directors without the consent of a Holder Majorityif the Holders are given the right to designate one or more additional Investor Directors as necessary to cause thenumber of Investor Director(s) the Holders have the right to designate relative to the number of directors constituting theentire Board of Directors to be in the same proportion prior to such increase, rounded up or down to the nearest wholenumber of directors.(b) For so long as shares of Preferred Stock having an aggregate Optional Redemption Amount of at least $27.5million are outstanding, without the prior affirmative vote or prior written consent of a Holder Majority, the Corporation shall not, andshall not permit any of its controlled Subsidiaries to, directly or indirectly:(i) incur any indebtedness or permit to exist any liens on any of the Corporation’s or its Subsidiaries assets orproperties, other than (1) indebtedness expressly permitted under Section 6.02 of the Specified Second Lien CreditAgreement and (2) liens expressly permitted under Section 6.03 of the Specified Second Lien Credit Agreement, ineach case without regard to any requirements set forth in such sections of the Specified Second Credit Agreementrelated to an “Approved Intercreditor Agreement” or any subordination or pledge of intercompany indebtedness amongthe Corporation and its Subsidiaries; provided, that, the Corporation shall only be permitted to refinance, and incurcorresponding liens in connection with any refinancing of, “Revolving Debt Obligations,” “Obligations” and/or anyrefinancing debt in respect thereof, as applicable and as each such term is defined in the Specified Second Lien CreditAgreement, in each case, (A) with indebtedness (I) the principal amount of which does not exceed the sum of (x) thetotal outstanding principal amount of such debt being refinanced, plus (y) any usual and customary accrued and unpaidinterest, premium, fees and costs and expenses thereon and (II) that does not contain terms and conditions that arematerially adverse to the Preferred Stock or the interests of the Holders relative to the terms and conditions of theindebtedness being refinanced and (B) if, following the incurrence of any such indebtedness and after giving pro formaeffect to the incurrence of such indebtedness and the application of proceeds thereof and the occurrence of any materialacquisitions and/or dispositions on or prior to such date of determination, the Corporation delivers an officers’ certificatecertifying that the Proved Developed Producing Coverage Ratio (as defined in the Specified Second Lien CreditAgreement) for the most recently ended four full fiscal quarters for which internal financial statements are availableimmediately preceding the date on which such indebtedness is incurred would be greater than 1.40:1.00;12(ii) enter into, adopt or agree to any “restricted payment” provisions (or other similar provisions that restrict orlimit the payment of dividends on, or the redemption of, the Preferred Stock) under any credit facility, indenture or othersimilar instrument of the Corporation or its Subsidiaries (including, for the avoidance of doubt, the RBL CreditAgreement) that would be more restrictive on the payment of dividends on, or redemption of, the Preferred Stock thanthose existing as of the Original Issue Date (provided that, for the avoidance of doubt, any decrease in the amountavailable to make restricted payments under any such provisions that are the result of the Corporation utilizing capacityunder such provisions or any decrease in capacity as a result of the operation of such provisions as set forth in any suchcredit facility, indenture or other similar instrument as of the Original Issue Date shall not require the consent of theHolders pursuant to this Section 10(b)(ii)); (iii) liquidate or dissolve the Corporation;(iv) enter into any material new line of business or fundamentally change the nature of the Corporation’sbusiness (including, for the avoidance of doubt, any acquisition of oil and gas properties outside the Permian Basin);(v) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed inany public filing with the Commission, unless such transaction is made on an arm’s-length basis and expresslyapproved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise requiredfor board approval);(vi) make any dispositions of assets or property of the Corporation or its Subsidiaries other than dispositions ofthe kind that would be expressly permitted under Section 6.05 of the Specified Second Lien Credit Agreement;provided that any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majoritymutatis mutandis;(vii) make any loans or investments of the Corporation or its Subsidiaries other than loans or investments of thekind that would be expressly permitted under Section 6.07 of the Specified Second Lien Credit Agreement, providedthat any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majority mutatismutandis; or(viii) (1) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or otherrelief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect,(2) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petitiondescribed in this clause (viii), (3) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,conservator or similar13official for the Corporation or any Subsidiary or for a substantial part of its assets, (4) file an answer admitting thematerial allegations of a petition filed against it in any such proceeding, (5) make a general assignment for the benefit ofcreditors or (6) take any action for the purpose of effecting any of the foregoing.Section 11. Board Representation Rights.(a) Subject to Section 11(b), without limiting other rights the Holders and their Affiliates may have (including pursuantto the March Transaction Agreement), from and after the Original Issue Date, the Holder Majority shall have the exclusive right (butnot the obligation), voting separately as a class, to designate to the Board of Directors one director (the “Investor Director”) (subject toincrease pursuant to Section 10(a)(v)) for as long as the aggregate Stated Value of all outstanding shares of the Preferred Stock is atleast equal to $13,750,000.(b) Notwithstanding anything herein to the contrary, the number of Investor Directors the Holders shall be entitled todesignate pursuant to Section 11(a) shall be reduced if, and only to the extent necessary in order to comply with applicable law orTrading Market rules (as directed in writing by the Commission or the Trading Market on which the Common Stock is then listed) sothat the percentage of the number of directors constituting the entire Board of Directors represented by the number of InvestorDirectors does not exceed the percentage requirements of the Commission or such Trading Market.(c) Within 10 Business Days after notice to the Corporation by the Holder Majority of the identity of the persondesignated to be the initial Investor Director, subject to confirmation by the Corporation that such initial Investor Director meets therequirements of Section 11(f), the Corporation shall cause such person to be appointed to the Board of Directors as the initial InvestorDirector. The Corporation shall take all actions within its power to cause all designees designated pursuant to Section 11(a) to beappointed to the Board of Directors.(d) Each Investor Director designated pursuant to Section 11(a) shall serve until his or her successor is designated orhis or her earlier death, disability, resignation or removal. Any vacancy or newly created directorship in the position of an InvestorDirector while the Holders have the right to appoint such Investor Director pursuant to Section 11(a) may be filled only by the HolderMajority, subject to the fulfillment of the requirements set forth in Section 11(f). While the Holders have the right to appoint anyInvestor Director pursuant to Section 11(a), (i) such Investor Director may, during his or her term of office, be removed at any time,with or without cause, by and only by the Holders of not less than two-thirds of the outstanding shares of Preferred Stock, and (ii) theHolders, by and only by a Holder Majority, shall have the right to, at any time, with or without cause (A) cause such Investor Directorto resign from his or her directorship, and (B) appoint a replacement Investor Director to fill the vacancy resulting from suchresignation, subject to the fulfillment of the requirements set forth in Section 11(f). Any Investor Director appointed pursuant to Section11(a) shall be deemed to have agreed to resign from his or her directorship (and the Corporation shall recognize such resignation) uponexercise of the Holders’ rights set forth in clause14(ii) of the immediately preceding sentence if such Investor Director shall have previously delivered to the Corporation a written letter ofresignation stating that such Investor Director resigns his or her directorship effective upon any exercise of the Holders’ rights set forthin clause (ii) of the immediately preceding sentence.(e) At all times while an Investor Director is serving as a member or observer of the Board of Directors, and followingany such Investor Director’s death, disability, resignation or removal, such Investor Director shall be entitled to all rights toindemnification and exculpation as are then made available to any other member or observer of the Board of Directors.(f) Notwithstanding anything to the contrary, any Investor Director shall be reasonably acceptable to the Board ofDirectors and the Nominating and Corporate Governance Committee thereof acting in good faith (provided, that, for the avoidance ofdoubt, any investment professional of Värde Partners, Inc. or its Affiliates shall be deemed reasonably acceptable) and satisfy allapplicable Commission and stock exchange requirements regarding service as a regular director of the Corporation and shall comply inall material respects with the Corporation’s corporate governance guidelines as in effect from time to time.(g) The right to designate an Investor Director pursuant to Section 11(a) shall automatically terminate at such time asthe condition set forth in Section 11(a) is not satisfied, and at such time, if requested in writing by the Corporation, any InvestorDirectors then serving on the Board of Directors in excess of the entitled amount (if less than all then Investor Directors, then asselected by the Holder Majority) shall promptly resign from the Board of Directors. For the avoidance of doubt, any such InvestorDirector shall not be required to resign from the Board of Directors pursuant to this Section 11(g) if such individual has then currentlybeen appointed or designated as a director of the Corporation pursuant to a right to appoint or designate a director that is then in effectunder another agreement with the Corporation or another certificate of designation of preferred stock of the Corporation, but suchindividual will no longer be an Investor Director under this Certificate of Designation.(h) To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its Subsidiaries,renounces any interest or expectancy of the Corporation and its Subsidiaries in, or in being offered an opportunity to participate in, anybusiness opportunities that are from time to time presented to the Holders or any of their respective Affiliates or any of their respectiveagents, shareholders, members, partners, directors, officers, employees, investment manager, investment advisor, Affiliates orsubsidiaries (other than the Corporation and its Subsidiaries), including any director or officer of the Corporation who is also an agent,shareholder, member, partner, director, officer, employee, investment manager, investment advisor, Affiliate or subsidiary of anyHolder (each, a “Specified Party”), even if the business opportunity is one that the Corporation or its Subsidiaries might reasonably bedeemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and no Specified Party shall have anyduty to communicate or offer any such business opportunity to the Corporation or be liable to the15Corporation or any of its Subsidiaries or any stockholder, including for breach of any fiduciary or other duty, as a director or officer orcontrolling stockholder or otherwise, and the Corporation shall indemnify each Specified Party against any claim that such Person isliable to the Corporation or its stockholders for breach of any fiduciary duty, by reason of the fact that such Person (i) participates in,pursues or acquires any such business opportunity, (ii) directs any such business opportunity to another Person or (iii) fails to presentany such business opportunity, or information regarding any such business opportunity, to the Corporation or its Subsidiaries, unless,in the case of a Person who is a director or officer of the Corporation, such business opportunity is expressly offered to such director orofficer in writing solely in his or her capacity as a director or officer of the Corporation.Section 12. Issuance of Shares.(a) Each book-entry notation (and, if applicable, each certificate) representing shares of Preferred Stock shall bear alegend substantially to the following effect:THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANYSTATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE AREGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLESTATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACTOR SUCH LAWS.THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN ARE SUBJECT TOTRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE CERTIFICATE OF DESIGNATION AND ATRANSACTION AGREEMENT, DATED AS OF MARCH 5, 2019, COPIES OF WHICH ARE ON FILE WITH THESECRETARY OF THE ISSUER AND WILL BE PROVIDED WITHOUT COST, UPON WRITTEN REQUEST TOTHE SECRETARY OF THE ISSUER.(b) Shares of Preferred Stock shall be in uncertificated, book-entry form as permitted by the bylaws of the Corporationand Nevada law. Within a reasonable time after the issuance or transfer of uncertificated shares and at least annually thereafter, theCorporation shall, or shall cause the Transfer Agent to, send to the registered owner thereof a written statement containing theinformation specified in Nevada Revised Statutes 78.235(5). Transfers of shares of Preferred Stock held in uncertificated, book-entryform shall be made only upon the transfer books of the Corporation kept at an office of the Transfer Agent upon receipt of propertransfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or from an individualpresenting proper evidence of succession, assignment or authority to transfer such shares. The Corporation may refuse any requestedtransfer until furnished evidence reasonably satisfactory to it that such transfer is made in accordance with the terms of this Certificateof Designation.16Section 13. Transfers.(a) Prior to September 5, 2019, without the consent of the Corporation, no Holder may transfer any Preferred Stockother than to an Affiliate of such Holder or in connection with a business combination transaction involving the Corporation. AfterSeptember 5, 2019, the Preferred Stock shall be unrestricted and freely transferable, subject to applicable securities law binding uponsuch Holder or transfer.(b) Notwithstanding anything to the contrary in Section 13(a), Holders may make a bona fide pledge of any or all ofits Preferred Stock in connection with a bona fide loan or other extension of credit, and any foreclosure by any pledged under suchloan or extension of credit on any such pledged Preferred Stock (or any sale thereof) shall not be considered a violation of Section13(a) and the transfer of the Preferred Stock by a pledgee who has foreclosed on such loan or extension of credit shall not beconsidered a violation or breach of Section 13(a).(c) Any Person that becomes a Holder pursuant to a transfer under this Section 13 shall be subject to all of the termsand conditions of this Certificate of Designation.Section 14. Miscellaneous.(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder shallbe in writing and delivered personally, by facsimile, e-mail, or sent by a nationally recognized overnight courier service, addressed tothe Corporation, at the address set forth above Attention: Joseph Daches, facsimile number (210) 999-5401, JDaches@lilisenergy.comor such other facsimile number, e-mail address or address as the Corporation may specify for such purposes by notice to the Holdersdelivered in accordance with this Section 14. Any and all notices or other communications or deliveries required or permitted to beprovided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (i) the date of transmission (if there isno receipt of notice of a failed delivery to the notice party), if such notice or communication is delivered via e-mail attachment as setforth on the signature pages attached hereto at or prior to 5:30 p.m. (Houston, Texas time) on a Business Day, (ii) the next BusinessDay after the date of transmission (if there is no receipt of notice of a failed delivery to the notice party), if such notice orcommunication is delivered via e-mail attachment as set forth on the signature pages attached hereto on a day that is not a BusinessDay or later than 5:30 p.m. (Houston, Texas time) on any Business Day, (iii) the second Business Day following the date of mailing, ifsent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required tobe given.(b) Information; Notice. If at any time while the Preferred Stock is outstanding the Corporation is not required to filereports under Section 13(a) or 15(d) of the Exchange Act, the Corporation shall provide to the Holders:17(i) quarterly unaudited financial statements prepared in accordance with GAAP within 45 days after the end ofeach fiscal quarter, in each case, in form and substance acceptable to the Holder Majority;(ii) audited annual financial statements prepared in accordance with GAAP within 90 days after the end ofeach fiscal year of the Corporation (certified by an independent accounting firm of national standing); and(iii) annually, within 90 days after the end of the fiscal year, a reserve report prepared or audited by a thirdparty engineering firm of national standing in accordance with Commission guidelines with an “as of” date ofDecember 31 of the preceding calendar year.(c) Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alteror impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends andaccrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, hereinprescribed.(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of thisCertificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State ofNevada, without regard to the principles of conflict of laws thereof. The Corporation and each Holder, by acceptance of shares ofPreferred Stock, hereby irrevocable and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the SupremeCourt of the State of New York sitting in New York County, Borough of Manhattan, and of the United States District Court for theSouthern District of New York, and any appellate court from any district thereof, in any action or proceeding arising out of or relatingto this Certificate of Designation, or for recognition or enforcement of any judgment, and each of them hereby irrevocably andunconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New YorkState or, to the extent permitted by law, in such federal court. The Corporation and each Holder, by acceptance of shares of PreferredStock, agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law. Nothing in this Certificate of Designation shall affect any right that anyHolder may otherwise have to bring any action or proceeding relating to this Certificate of Designation against the Corporation or itsproperties in the courts of any jurisdiction. The Corporation hereby irrevocably and unconditionally waives, to the fullest extent it maylegally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceedingarising out of or relating to this Certificate of Designation in any court referred to in this Section 14(d). The Corporation and eachHolder, by acceptance of shares of Preferred Stock, hereby irrevocably waives, to the fullest extent permitted by law, the defense of aninconvenient forum to the maintenance of such action or proceeding in any such court. The Corporation and each Holder, by18acceptance of shares of Preferred Stock, irrevocably consents to service of process in the manner provided for notices in this Certificateof Designation. Nothing in this Certificate of Designation will affect the right of the Corporation or any Holder to serve process in anyother manner permitted by law. The Corporation and each Holder, by acceptance of shares of Preferred Stock, hereby waives, to thefullest extent permitted by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arisingout of or relating to this Certificate of Designation or the transactions contemplated hereby (whether based on contract, tort or any othertheory). If any party shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then theprevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expensesincurred in the investigation, preparation and prosecution of such action or proceeding.(e) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designationshall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of thisCertificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherenceto any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or anyother Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation onany other occasion. Any waiver by the Corporation or a Holder must be in writing.(f) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance ofthis Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shallnevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemedinterest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically belowered to equal the maximum rate of interest permitted under applicable law.(g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than aBusiness Day, such payment shall be made on the next succeeding Business Day.(h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate ofDesignation and shall not be deemed to limit or affect any of the provisions hereof.(i) Status of Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the MarchTransaction Agreement or this Certificate of Designation. If any shares of Preferred Stock shall be redeemed or reacquired by theCorporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall no longer be designatedas Series F 9.00% Participating Preferred Stock.19(j) Calculations. Any calculations made by the Corporation or Board of Directors pursuant to this Certificate ofDesignation shall be undertaken and made in good faith.******20RESOLVED, FURTHER, that the Chairman, the Chief Executive Officer, the president or any vice-president, and thetreasurer, assistant treasurer, secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed toprepare and file this Certificate of Designation in accordance with the foregoing resolution and the provisions of Nevada law.IN WITNESS WHEREOF, the undersigned have executed this Certificate of Designation this 5th day of March, 2019./s/ Ronald D. Ormand/s/ Joseph C. DachesName: Ronald D. OrmandName: Joseph C. DachesTitle: Chief Executive OfficerTitle: President, Chief Financial Officer and Treasurer21Exhibit 3.11LILIS ENERGY, INC.#5885678SECOND AMENDED AND RESTATEDCERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES C-1 9.75% PARTICIPATING PREFERRED STOCKandSERIES C-2 9.75% PARTICIPATING PREFERRED STOCKPURSUANT TO SECTION 78.1955 OF THE NEVADA REVISED STATUTESThe undersigned, Ronald D. Ormand and Joseph C. Daches, do hereby certify that:1. They are the Executive Chairman and Executive Vice President, Chief Financial Officer and Treasurer, respectively, ofLilis Energy, Inc., a Nevada corporation (the “Corporation”).2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, of which, after giving effect to (i) thisCertificate of Designation (as defined below), (ii) that certain Amended and Restated Certificate of Designation of Preferences, Rightsand Limitations of Series D 8.25% Participating Preferred Stock, dated as of as of March 5, 2019, (iii) that certain Certificate ofDesignation of Preferences, Rights and Limitations of Series E 8.25% Convertible Participating Preferred Stock, dated as of March 5,2019, and (iv) that certain Certificate of Designation of Preferences, Rights and Limitations of Series F 9.00% Participating PreferredStock, dated as of March 5, 2019, (a) 100,000 are designated as “Series C-1 9.75% Participating Preferred Stock”, (b) 25,000 sharesare designated as “Series C-2 9.75% Participating Preferred Stock”, (c) 39,254 are designated as “Series D 8.25% ParticipatingPreferred Stock” (the “Series D Preferred Stock”), (d) 60,000 are designated as “Series E 8.25% Convertible Participating PreferredStock” (the “Series E Preferred Stock”) and (e) 55,000 shares are designated as “Series F 9.00% Participating Preferred Stock” (the“Series F Preferred Stock”).3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”) onMarch 4, 2019 in accordance with the provisions of the Articles of Incorporation, the bylaws of the Corporation and applicable law,providing for the amendment and restatement of the Amended Certificate of Designation of Preferences, Rights and Limitations ofSeries C-1 9.75% Convertible Participating Preferred Stock and Series C-2 Convertible Participating Preferred Stock of theCorporation filed with the Secretary of State of the State of Nevada on October 10, 2018 (the “Amended Certificate of Designation”)in the form of this Second Amended and Restated Certificate of Designation of Preferences, Rights and Limitations of Series C-19.75% Participating Preferred Stock and Series C-2 9.75% Participating Preferred Stock (this “Certificate of Designation”):WHEREAS, the Articles of Incorporation of the Corporation provide for a class of its authorized stock known as preferredstock, consisting of 10,000,000 shares, $0.0001 par value per share, issuable from time to time in one or more series; andWHEREAS, the Articles of Incorporation authorize the Board of Directors to fix the dividend rights, dividend rate, votingrights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stockand, with respect to each such series, to fix the number of shares constituting such series of Preferred Stock and the designation thereof.NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby approve and adopt this Certificate ofDesignation, as set forth below, amending and restating the Amended Certificate of Designation in its entirety, and that this Certificateof Designation shall become effective upon filing this Certificate of Designation with the Secretary of State of the State of Nevada:TERMS OF PREFERRED STOCKSection 1.Definitions. For the purposes hereof, the following terms shall have the following meanings:“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act; provided, that noportfolio company of a Holder or its Affiliates shall be considered or otherwise deemed an Affiliate thereof.“Articles of Incorporation” shall mean the Amended and Restated Articles of Incorporation of the Corporation, dated as ofOctober 10, 2011, as amended from time to time.“Board of Directors” shall have the meaning set forth in the Preamble.“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United Statesor any day on which banking institutions in the State of New York or Texas are authorized or required by law or other governmentalaction to close.“C-1 Original Issue Date” means January 31, 2018.“C-2 Original Issue Date” means October 10, 2018.“Change of Control” means:(a) any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of1934, as amended (the “Exchange Act”)), other than (i) any Holder, (ii) Värde, (iii) any holder of Series E Preferred Stock or (iv) anyAffiliate of any Person specified in the preceding clauses (i)-(iii), is or becomes the beneficial owner (as defined in Rules 13d-3 and13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” (within the meaningof Rule 13d-3 under the Exchange Act) of all shares that such person or group has the right to acquire, whether such right isexercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of theoutstanding capital stock (excluding any debt securities convertible into equity) normally entitled to vote in the election of directors ofthe Corporation (or its successor by merger, consolidation or purchase of all or substantially all of its assets) (provided, for theavoidance of doubt, that, for purposes of the foregoing, shares of preferred stock of any series shall not be considered to be normallyentitled to vote in the election of directors by reason of any right of the holders of shares of preferred stock of such series to elect orappoint one or more directors voting or acting separately as a class);(b) except as permitted by Section 6.04 of the Specified Second Lien Credit Agreement, a disposition by theCorporation or a Subsidiary pursuant to which the Corporation or any Subsidiary sells, leases, licenses, transfers, assigns or otherwisedisposes, in one or a series of related transactions, all or substantially all of the properties and assets of the Corporation and itsSubsidiaries taken as a whole;(c) the Corporation’s stockholders approve any plan relating to the liquidation or dissolution of the Corporation; or(d) the occurrence of a “Change of Control” (or similar term) as such term is defined in any of (i) the RBL CreditAgreement or (ii) any other credit facility, indenture or other similar instrument of the Corporation or its Subsidiaries under whichindebtedness of the Corporation or its Subsidiaries of at least $5 million is outstanding at the time of such occurrence or at any point inthe 90 days prior thereto.“Commission” means the United States Securities and Exchange Commission.“Common Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class ofsecurities into which such securities may hereafter be reclassified or changed.“Common Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holderthereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or otherinstrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,Common Stock.“Corporation” shall have the meaning set forth in the Preamble.“Dividend Payment Date” shall have the meaning set forth in Section 3(b).“Dividend Rate” means (i) on or prior to April 26, 2021, 9.75% per annum and (ii) following April 26, 2021, 12.00% perannum; provided, that if, for any Dividend Payment Date after April 26, 2021, dividends on the Preferred Stock are not paid in full incash on such Dividend Payment Date, then the Dividend Rate for the dividends payable on such Dividend Payment Date (but not onany subsequent Dividend Payment Date on which such dividends are paid in full in cash) shall be 15.00% per annum.“GAAP” means United States generally accepted accounting principles.“Holder” shall have the meaning given such term in Section 3(a).“Holder Majority” means the Holders of a majority of the outstanding shares of Preferred Stock.“Investor Director” shall have the meaning set forth in Section 11(a).“Junior Preferred Stock PIK Dividends” means any dividends on any shares of preferred stock of the Corporation that areJunior Securities to the extent such dividends are paid solely in the form of additional shares of such preferred stock or by increase tothe stated value or liquidation preference thereof (or other similar term or amount) in accordance with the terms of such preferred stock.“Junior Securities” means the Common Stock (and Common Stock Equivalents) and all other classes of the Corporation’scommon stock and each other class of capital stock or series of preferred stock, the terms of which do not expressly provide that suchclass or series ranks senior to or on parity with the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up ordissolution of the Corporation.“Liquidation” shall have the meaning set forth in Section 6.“March Transaction Agreement” means the Transaction Agreement, dated as of March 5, 2019, by and among the Corporationand the original holders of Series E Preferred Stock and Series F Preferred Stock, as amended, modified or supplemented from time totime in accordance with its terms.“October Transaction Agreement” means the Transaction Agreement, dated as of October 10, 2018, by and among theCorporation and the original Holders of C-2 Preferred Stock, as amended, modified or supplemented from time to time in accordancewith its terms.“Officer” shall mean the Executive Chairman, the Chief Executive Officer, the President, the Chief Financial Officer, any VicePresident, the Treasurer, the Secretary, any Assistant Secretary or any Assistant Treasurer of the Corporation.“Optional Redemption” shall have the meaning set forth in Section 8(a).“Optional Redemption Amount” shall have the meaning set forth in Section 8(b).“Optional Redemption Date” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice Date” shall have the meaning set forth in Section 8(a).“Original Issue Date” means (i) the C‑1 Original Issue Date, with respect to the Series C-1 Preferred Stock, and (ii) the C‑2Original Issue Date, with respect to the Series C-2 Preferred Stock.“Parity Securities” shall mean any class of capital stock or series of preferred stock, the terms of which expressly provide thatsuch class or series will rank on a parity with the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up ordissolution of the Corporation.“Participation Price” means $7.00; provided that (a) if the Corporation shall, at any time or from time to time after the OriginalIssue Date, (i) pay a dividend or make any other distribution upon the Common Stock payable in shares of Common Stock, or (ii)subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares ofCommon Stock, the Participation Price in effect immediately prior to any such dividend, distribution or subdivision shall beproportionately reduced; and (b) if the Corporation at any time combines (by combination, reverse stock split or otherwise) itsoutstanding shares of Common Stock into a smaller number of shares, the Participation Price in effect immediately prior to suchcombination shall be proportionately increased. Any adjustment under clause (a) or (b) of the preceding sentence of this definition shallbecome effective at the close of business on the date the dividend, subdivision or combination becomes effective.“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.“Preferred Stock” shall have the meaning set forth in Section 2(a).“Purchase Agreement” means the Securities Purchase Agreement, dated as of January 30, 2018, among the Corporation andthe original Holders of C-1 Preferred Stock, as amended, modified or supplemented from time to time in accordance with its terms.“RBL Credit Agreement” means that certain Second Amended and Restated Senior Secured Revolving Credit Agreement,dated as of October 10, 2018, by and among the Corporation, the guarantors from time to time party thereto, the lenders party theretoand BMO Harris Bank, N.A., as administrative agent and collateral agent, as amended by the First Amendment and Waiver thereto,dated as of March 1, 2019, and as further amended from time to time (in accordance with this Certificate of Designation).“Record Date” means, with respect to any issuance, dividend or distribution declared, paid or made on or with respect to anycapital stock of the Corporation, the date fixed for the determination of the stockholders entitled to receive such issuance, dividend ordistribution.“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgatedthereunder.“Senior Securities” shall mean each class of capital stock or series of preferred stock, the terms of which expressly provide thatsuch class or series will rank senior to the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolutionof the Corporation, including the Series D Preferred Stock, the Series E Preferred Stock and the Series F Preferred Stock.“Series C-1 Preferred Stock” shall have the meaning set forth in Section 2(a).“Series C-2 Preferred Stock” shall shall have the meaning set forth in Section 2(a).“Series D Preferred Stock” shall have the meaning set forth in the preamble.“Series E Preferred Stock” shall have the meaning set forth in the preamble.“Series F Preferred Stock” shall have the meaning set forth in the preamble.“Specified Party” shall have the meaning set forth in Section 11(h).“Specified Second Lien Credit Agreement” means that certain Credit Agreement, dated as of April 26, 2017, by and among theCorporation, the guarantors party thereto, the lenders party thereto and Wilmington Trust, National Association, as administrativeagent, as amended, supplemented or otherwise modified and as in effect as of March 4, 2019, regardless of whether or not in effect asof any date thereafter.“Stated Value” shall have the meaning set forth in Section 2(a).“Subsidiary” means any direct or indirect subsidiary of the Corporation, including those set forth on Schedule 3.1(a) to theMarch Transaction Agreement, and any direct or indirect subsidiary of the Corporation formed or acquired after the date of the MarchTransaction Agreement.“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global SelectMarket or the New York Stock Exchange (or any successors to any of the foregoing).“Transfer Agent” means Corporate Stock Transfer, the current transfer agent of the Corporation with a mailing address of 3200Cherry Creek South Drive, Suite 430, Denver, Colorado 80209 and a facsimile number of (303) 282-5800, and any successor transferagent of the Corporation.“Värde” means (a) Värde Partners, Inc., its affiliated investment managers and funds or accounts managed by any of them(including the Värde Parties (as defined in the March Transaction Agreement) but excluding any portfolio companies that are owned inwhole or in part by any of the foregoing) and (b) any partner, member, manager, principal, director or officer of any of the foregoing.Section 2. Designation, Amount and Par Value; Ranking.(a) The series of preferred stock established pursuant to this Certificate of Designation shall be designated as “SeriesC-1 9.75% Participating Preferred Stock” (the “Series C-1 Preferred Stock”) and the number of shares so designated and authorizedshall be 100,000 (which shall not be subject to increase without the affirmative vote or written consent of a Holder Majority); and“Series C-2 9.75% Participating Preferred Stock” (the “Series C-2 Preferred Stock” and, together with the Series C-1 Preferred Stock,the “Preferred Stock”) and the number of shares so designated and authorized shall be 25,000 (which shall not be subject to increasewithout the affirmative vote or written consent of a Holder Majority). Each share of Preferred Stock shall have an initial par value of$0.0001 per share and an initial stated value equal to $1,000.00 per share, subject to increase as set forth in Section 3 below (the“Stated Value”).(b) The Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution ofthe Corporation, ranks: (i) senior in all respects to all Junior Securities; (ii) pari passu with all Parity Securities; and (iii) junior in allrespects to all Senior Securities, in each case, as provided more fully herein.Section 3. Dividends.(a) Participating Dividends. Without limiting Section 10 of this Certificate of Designation, for so long as any shares ofPreferred Stock are outstanding, no dividend or other distribution (other than any stock dividend or distribution on the Common Stockpayable in shares of Common Stock, any distribution of rights pursuant to a stockholder rights plan or any distribution upon aLiquidation) may be declared or paid on the Common Stock or to the holders thereof unless the holders of the Preferred Stock (each, a“Holder” and collectively, the “Holders”) receive, simultaneously with the distribution to the holders of the Common Stock, a dividendor other distribution of such securities, cash or other property in an amount equal to the amount of such securities, cash or otherproperty as the Holders would have received if, immediately prior to the Record Date for such distribution, each then-outstanding shareof the Preferred Stock had been converted into a number of shares of the Common Stock equal to (i) the then applicable OptionalRedemption Amount divided by (ii) the then-applicable Participation Price (regardless of the fact that shares of the Preferred Stock arenot convertible into Common Stock).(b) Dividends in Cash or in Kind. In addition to participation in cash dividends on, or distributions to, Common Stockas set forth in Section 3(a), Holders shall be entitled to receive, and the Corporation shall pay (prior to any distributions made in respectof any Junior Securities (or contemporaneously therewith in the case of Junior Preferred Stock PIK Dividends) and prior to orcontemporaneously with any distributions made in respect of any Parity Securities, in each case in respect of the same fiscal quarter),cumulative dividends per share (as a percentage of the Stated Value per share) at the Dividend Rate, payable and compoundedquarterly in arrears on January 1, April 1, July 1 and October 1, beginning on the first such date after the Original Issue Date (eachsuch date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Business Day, the applicable payment, if paid in cash,shall be due on the next succeeding Business Day, and no interest or dividends on such payment shall accrue or accumulate in respectof such delay), in (i) cash out of funds legally available therefor, (ii) by an increase in the Stated Value of the Preferred Stock, or (iii)any combination of clause (i) and (ii), in each case, in an amount equal to the accrued but unpaid dividends due to a Holder in respectof each share of Preferred Stock on the Dividend Payment Date. For the avoidance of doubt, any dividends paid by an increase in theStated Value pursuant to this Section 3(b) shall be deemed to have been paid in full for all purposes and (ii) the Series C-1 PreferredStock and the Series C-2 Preferred Stock shall be paid on a pari-passu basis, including as to the time of payment and the type andcombination of dividends paid pursuant to the immediately foregoing sentence. The default method of payment shall be an increase inthe Stated Value unless, at least five Business Days prior to a Dividend Payment Date, the Corporation provides written notice to theHolders of its election to pay in cash and such cash payment is actually and timely made. Dividends shall be paid pro rata for anypartial quarter.(c) Dividend Calculations. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year,consisting of twelve 30 calendar day periods, shall accrue daily commencing on the Original Issue Date and shall be deemed to accruefrom such date whether or not declared and whether or not there are profits, surplus or other funds of the Corporation legally availablefor the payment of dividends.Section 4. Maturity. The Preferred Stock shall be perpetual unless redeemed in accordance with this Certificate ofDesignation.Section 5. Voting Rights.(a) The Holders in such capacity will not have the right to vote with the holders of Common Stock as a single class onany matter.(b) Each Holder will have one vote per share of Preferred Stock on any matter on which Holders of Preferred Stockare entitled to vote separately as a class, whether at a meeting or by written consent.Section 6. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary(a “Liquidation”), the Holders shall be entitled to receive, in respect of each share of Preferred Stock, out of the assets, whether capitalor surplus, of the Corporation an amount equal to the greater of (i) the then-applicable Optional Redemption Amount and (ii) theproceeds the Holders would be entitled to receive if, immediately prior to the payment of such amount, each then-outstanding share ofthe Preferred Stock had been converted into a number of shares of the Common Stock equal to (i) the then-applicable OptionalRedemption Amount divided by (ii) the then-applicable Participation Price (regardless of the fact that shares of the Preferred Stock arenot convertible into Common Stock), after any amount shall be paid to holders of any Senior Securities, before any distribution orpayment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in fullsuch amounts payable to Holders and the amounts payable to the holders of any Parity Securities, then the entire assets to be distributedto the Holders and the holders of any Parity Securities shall be ratably distributed among the Holders and the holders of any ParitySecurities in accordance with the respective amounts that would be payable on shares of Preferred Stock and any Parity Securities if allamounts payable thereon were paid in full. A Change of Control shall not be deemed a Liquidation. The Corporation shall mail writtennotice of any such Liquidation, not less than 45 days prior to the payment date stated therein, to each Holder.Section 7. [Intentionally Omitted].Section 8. Optional Redemption.(a) Optional Redemption at Election of Corporation. Subject to the provisions of this Section 8 and Section 9, at anytime after the Original Issue Date, the Corporation may deliver a notice to the Holders (an “Optional Redemption Notice” and the datesuch notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its election (which shall be irrevocable but maybe conditioned on the occurrence of any one or more events) to redeem some or all of the then-outstanding Preferred Stock, for cash inan amount equal to the Optional Redemption Amount on the 20th Business Day following the Optional Redemption Notice Date(such date, the “Optional Redemption Date” and such redemption, the “Optional Redemption”).(b) Optional Redemption Amount. Each share of Preferred Stock redeemed pursuant to this Section 8 shall beredeemed by paying cash in an amount equal to (i)(1) the applicable Stated Value multiplied by (2) 125.0%, plus (ii) all accrued butunpaid dividends thereon and all liquidated damages and other amounts due in respect of such Preferred Stock as of the OptionalRedemption Date (such amount, the “Optional Redemption Amount”).(c) Redemption Procedure. The payment of cash pursuant to an Optional Redemption shall be made on the OptionalRedemption Date. If any portion of the cash payment for an Optional Redemption has not been paid by the Corporation on theOptional Redemption Date, interest shall accrue thereon until such amount is paid in full at a rate equal to the lesser of 15% per annumor the maximum rate permitted by applicable law.(d) Limitations on Redemption.(i) Any Optional Redemption by the Corporation must be of Preferred Stock having a minimum aggregateStated Value of $20 million as of the Optional Redemption Notice Date (or such lesser amount if such OptionalRedemption is for all of the remaining Preferred Stock).(ii) The Corporation may consummate no more than one partial Optional Redemption within any 6-monthperiod.(iii) Any Optional Redemption shall be applied ratably to all of the Holders based on each Holder’s relativeownership of shares of Preferred Stock.(iv) The Preferred Stock shall only be redeemable as expressly set forth in this Section 8 and Section 9.Section 9. Change of Control. On or before the 20th Business Day prior to the consummation of a Change of Control (or, iflater, promptly after the Corporation discovers that a Change of Control has occurred or will occur), the Corporation shall providewritten notice thereof to the Holders, and in connection with any such Change of Control, each Holder may elect one of the followingoptions (subject to such Change of Control having actually occurred or actually occurring) by notice given to the Corporation within20 Business Days after the date the Corporation provides such written notice (it being understood that if a Holder fails to timelyprovide notice of its election to the Corporation, such Holder shall be deemed to have elected the option set forth in clause (a) below):(a) cause the Corporation to redeem all of such Holder’s shares of Preferred Stock for cash in an amount per share ofPreferred Stock equal to (i) the applicable Optional Redemption Amount in effect immediately prior to the consummation of suchChange of Control plus (ii)(x) the applicable Stated Value in effect immediately prior to the consummation of such Change of Controlmultiplied by (y) 2.5%; or(b) subject to the Corporation’s (or, if the Corporation is not the surviving entity of such Change of Control, theCorporation’s successor’s) right to redeem the Preferred Stock pursuant to Section 8, continue to hold such Holder’s shares ofPreferred Stock.Section 10. Negative Covenants.(a) As long as any shares of Preferred Stock are outstanding, without the prior affirmative vote or prior written consentof a Holder Majority, the Corporation shall not, directly or indirectly (whether by way of amendment to the charter documents, merger,recapitalization, or otherwise):(i) amend, alter, modify or repeal the Articles of Incorporation or the bylaws of the Corporation, in any mannerthat materially and adversely affects any rights, preferences, privileges or voting powers of the Preferred Stock orHolders;(ii) issue, authorize or create, or increase the issued or authorized amount of, Preferred Stock, any class orseries of Senior Securities or any Parity Securities or security convertible into or evidencing the right to purchase anyshares of Preferred Stock, Senior Securities or Parity Securities other than equity, the proceeds of which, are used toimmediately redeem all of the outstanding shares of Preferred Stock in accordance with Section 8;(iii) declare or pay any dividends or distributions on, or redeem or repurchase, or permit any of its controlledSubsidiaries to redeem or repurchase, shares of Common Stock or any other shares of Junior Securities other than:(1) Junior Preferred Stock PIK Dividends;(2) any stock dividend or distribution on the Common Stock payable in shares of Common Stock;(3) any distribution of rights pursuant to a stockholder rights plan with respect to the Common Stock;(4) any distribution upon a Liquidation; and(5) redemptions of incentive equity of the Corporation or its Subsidiaries held by employees of theCorporation or its Subsidiaries in connection with the administration of any employee benefit plan of theCorporation in the ordinary course of business;(iv) authorize, issue or transfer, or permit any of its controlled Subsidiaries to authorize, issue or transfer, anyequity (including any obligation or security convertible into, exchangeable for or evidencing the right to purchase anysuch equity) in any Subsidiary other than (1) equity issued or transferred to the Corporation or another wholly-ownedSubsidiary of the Corporation or (2) equity, the proceeds of which, are used to immediately redeem all of theoutstanding shares of Preferred Stock in accordance with Section 8; or(v) subject to right of the holders of Common Stock to amend the provisions of the bylaws of the Corporationrelating to the number of directors constituting the entire Board of Directors or the manner in which such number ofdirectors is determined (but, for the sake of clarity, without limiting the Holders’ rights pursuant to Section 11), modifythe number of directors constituting the entire Board of Directors at any time when the Holders have the right todesignate an Investor Director pursuant to Section 11; provided, that the Corporation may increase the number ofdirectors constituting the entire Board of Directors without the consent of a Holder Majority if the Holders are given theright to designate one or more additional Investor Directors as necessary to cause the number of Investor Director(s) theHolders have the right to designate relative to the number of directors constituting the entire Board of Directors to be inthe same proportion prior to such increase, rounded up or down to the nearest whole number of directors.(b) For so long as shares of Preferred Stock having an aggregate Optional Redemption Amount of at least $50 millionare outstanding, without the prior affirmative vote or prior written consent of a Holder Majority, the Corporation shall not, and shall notpermit any of its controlled Subsidiaries to, directly or indirectly:(i) incur any indebtedness or permit to exist any liens on any of the Corporation’s or its Subsidiaries assets orproperties, other than (1) indebtedness expressly permitted under Section 6.02 of the Specified Second Lien CreditAgreement and (2) liens expressly permitted under Section 6.03 of the Specified Second Lien Credit Agreement, ineach case without regard to any requirements set forth in such sections of the Specified Second Credit Agreementrelated to an “Approved Intercreditor Agreement” or any subordination or pledge of intercompany indebtedness amongthe Corporation and its Subsidiaries; provided, that, the Corporation shall only be permitted to refinance, and incurcorresponding liens in connection with any refinancing of, “Revolving Debt Obligations,” “Obligations” and/or anyrefinancing debt in respect thereof, as applicable and as each such term is defined in the Specified Second Lien CreditAgreement, in each case, (A) with indebtedness (I) the principal amount of which does not exceed the sum of (x) thetotal outstanding principal amount of such debt being refinanced, plus (y) any usual and customary accrued and unpaidinterest, premium, fees and costs and expenses thereon and (II) that does not contain terms and conditions that arematerially adverse to the Preferred Stock or the interests of the Holders relative to the terms and conditions of theindebtedness being refinanced and (B) if, following the incurrence of any such indebtedness and after giving pro formaeffect to the incurrence of such indebtedness and the application of proceeds thereof and the occurrence of any materialacquisitions and/or dispositions on or prior to such date of determination, the Corporation delivers an officers’ certificatecertifying that the Proved Developed Producing Coverage Ratio (as defined in the Specified Second Lien CreditAgreement) for the most recently ended four full fiscal quarters for which internal financial statements are availableimmediately preceding the date on which such indebtedness is incurred would be greater than 1.40:1.00;(ii) enter into, adopt or agree to any “restricted payment” provisions (or other similar provisions that restrict orlimit the payment of dividends on, or the redemption of, the Preferred Stock) under any credit facility, indenture or othersimilar instrument of the Corporation or its Subsidiaries (including, for the avoidance of doubt, the RBL CreditAgreement) that would be more restrictive on the payment of dividends on, or redemption of, the Preferred Stock thanthose existing as of the Original Issue Date (provided that, for the avoidance of doubt, any decrease in the amountavailable to make restricted payments under any such provisions that are the result of the Corporation utilizing capacityunder such provisions or any decrease in capacity as a result of the operation of such provisions as set forth in any suchcredit facility, indenture or other similar instrument as of the Original Issue Date shall not require the consent of theHolders pursuant to this Section 10(b)(ii)); (iii) liquidate or dissolve the Corporation;(iv) enter into any material new line of business or fundamentally change the nature of the Corporation’sbusiness (including, for the avoidance of doubt, any acquisition of oil and gas properties outside the Permian Basin);(v) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed inany public filing with the Commission, unless such transaction is made on an arm’s-length basis and expresslyapproved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise requiredfor board approval);(vi) make any dispositions of assets or property of the Corporation or its Subsidiaries other than dispositions ofthe kind that would be expressly permitted under Section 6.05 of the Specified Second Lien Credit Agreement;provided that any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majoritymutatis mutandis;(vii) make any loans or investments of the Corporation or its Subsidiaries other than loans or investments of thekind that would be expressly permitted under Section 6.07 of the Specified Second Lien Credit Agreement, providedthat any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majority mutatismutandis; or(viii) (1) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or otherrelief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect,(2) consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petitiondescribed in this clause (viii), (3) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,conservator or similar official for the Corporation or any Subsidiary or for a substantial part of its assets, (4) file ananswer admitting the material allegations of a petition filed against it in any such proceeding, (5) make a generalassignment for the benefit of creditors or (6) take any action for the purpose of effecting any of the foregoing.Section 11. Board Representation Rights.(a) Subject to Section 11(b), without limiting other rights the Holders and their Affiliates may have (including pursuantto the March Transaction Agreement), from and after the Original Issue Date, the Holder Majority shall have the exclusive right (butnot the obligation), voting separately as a class, to designate to the Board of Directors two directors (the “Investor Directors”) (subjectto increase pursuant to Section 10(a)(v)) for as long as the aggregate Stated Value of all outstanding shares of the Preferred Stock is atleast equal to $31,250,000.(b) Notwithstanding anything herein to the contrary, the number of Investor Directors the Holders shall be entitled todesignate pursuant to Section 11(a) shall be reduced if, and only to the extent necessary in order to comply with applicable law orTrading Market rules (as directed in writing by the Commission or the Trading Market on which the Common Stock is then listed) sothat the percentage of the number of directors constituting the entire Board of Directors represented by the number of InvestorDirectors does not exceed the percentage requirements of the Commission or such Trading Market.(c) Within 10 Business Days after notice to the Corporation by the Holder Majority of the identity of the persondesignated to be the initial Investor Directors, subject to confirmation by the Corporation that such initial Investor Directors meet therequirements of Section 11(f), the Corporation shall cause such person to be appointed to the Board of Directors as the initial InvestorDirector. The Corporation shall take all actions within its power to cause all designees designated pursuant to Section 11(a) to beappointed to the Board of Directors.(d) Each Investor Director designated pursuant to Section 11(a) shall serve until his or her successor is designated orhis or her earlier death, disability, resignation or removal. Any vacancy or newly created directorship in the position of an InvestorDirector while the Holders have the right to appoint such Investor Directors pursuant to Section 11(a) may be filled only by the HolderMajority, subject to the fulfillment of the requirements set forth in Section 11(f). While the Holders have the right to appoint anyInvestor Director pursuant to Section 11(a), (i) such Investor Director may, during his or her term of office, be removed at any time,with or without cause, by and only by the Holders of not less than two-thirds of the outstanding shares of Preferred Stock, and (ii) theHolders, by and only by a Holder Majority, shall have the right to, at any time, with or without cause (A) cause such Investor Directorto resign from his or her directorship, and (B) appoint a replacement Investor Director to fill the vacancy resulting from suchresignation, , subject to the fulfillment of the requirements set forth in Section 11(f). Any Investor Director appointed pursuant toSection 11(a) shall be deemed to have agreed to resign from his or her directorship (and the Corporation shall recognize suchresignation) upon exercise of the Holders’ rights set forth in clause (ii) of the immediately preceding sentence if such Investor Directorshall have previously delivered to the Corporation a written letter of resignation stating that such Investor Director resigns his or herdirectorship effective upon any exercise of the Holders’ rights set forth in clause (ii) of the immediately preceding sentence.(e) At all times while an Investor Director is serving as a member or observer of the Board of Directors, and followingany such Investor Director’s death, disability, resignation or removal, such Investor Director shall be entitled to all rights toindemnification and exculpation as are then made available to any other member or observer of the Board of Directors.(f) Notwithstanding anything to the contrary, any Investor Director shall be reasonably acceptable to the Board ofDirectors and the Nominating and Corporate Governance Committee thereof acting in good faith (provided, that, for the avoidance ofdoubt, any investment professional of Värde Partners, Inc. or its Affiliates shall be deemed reasonably acceptable) and satisfy allapplicable Commission and stock exchange requirements regarding service as a regular director of the Corporation and shall comply inall material respects with the Corporation’s corporate governance guidelines as in effect from time to time.(g) The right to designate an Investor Director pursuant to Section 11(a) shall automatically terminate at such time asthe condition set forth in Section 11(a) is not satisfied, and at such time, if requested in writing by the Corporation, any InvestorDirectors then serving on the Board of Directors in excess of the entitled amount (if less than all then Investor Directors, then asselected by the Holder Majority) shall promptly resign from the Board of Directors. For the avoidance of doubt, any such InvestorDirector shall not be required to resign from the Board of Directors pursuant to this Section 11(g) if such individual has then currentlybeen appointed or designated as a director of the Corporation pursuant to a right to appoint or designate a director that is then in effectunder another agreement with the Corporation or another certificate of designation of preferred stock of the Corporation, but suchindividual will no longer be an Investor Director under this Certificate of Designation.(h) To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its Subsidiaries,renounces any interest or expectancy of the Corporation and its Subsidiaries in, or in being offered an opportunity to participate in, anybusiness opportunities that are from time to time presented to the Holders or any of their respective Affiliates or any of their respectiveagents, shareholders, members, partners, directors, officers, employees, investment manager, investment advisor, Affiliates orsubsidiaries (other than the Corporation and its Subsidiaries), including any director or officer of the Corporation who is also an agent,shareholder, member, partner, director, officer, employee, investment manager, investment advisor, Affiliate or subsidiary of anyHolder (each, a “Specified Party”), even if the business opportunity is one that the Corporation or its Subsidiaries might reasonably bedeemed to have pursued or had the ability or desire to pursue if granted the opportunity to do so, and no Specified Party shall have anyduty to communicate or offer any such business opportunity to the Corporation or be liable to the Corporation or any of its Subsidiariesor any stockholder, including for breach of any fiduciary or other duty, as a director or officer or controlling stockholder or otherwise,and the Corporation shall indemnify each Specified Party against any claim that such Person is liable to the Corporation or itsstockholders for breach of any fiduciary duty, by reason of the fact that such Person (i) participates in, pursues or acquires any suchbusiness opportunity, (ii) directs any such business opportunity to another Person or (iii) fails to present any such business opportunity,or information regarding any such business opportunity, to the Corporation or its Subsidiaries, unless, in the case of a Person who is adirector or officer of the Corporation, such business opportunity is expressly offered to such director or officer in writing solely in hisor her capacity as a director or officer of the Corporation.Section 12. Issuance of Shares.(a) Each book-entry notation (and, if applicable, each certificate) representing shares of Preferred Stock shall bear alegend substantially to the following effect:THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANYSTATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE AREGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLESTATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACTOR SUCH LAWS.THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN ARE SUBJECT TOTRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE CERTIFICATE OF DESIGNATION AND ASECURITIES PURCHASE AGREEMENT, DATED AS OF JANUARY 30, 2018 // A TRANSACTION AGREEMENT,DATED AS OF OCTOBER 10, 2018, COPIES OF WHICH ARE ON FILE WITH THE SECRETARY OF THE ISSUERAND WILL BE PROVIDED WITHOUT COST, UPON WRITTEN REQUEST TO THE SECRETARY OF THEISSUER.(b) Shares of Preferred Stock shall be in uncertificated, book-entry form as permitted by the bylaws of the Corporationand Nevada law. Within a reasonable time after the issuance or transfer of uncertificated shares and at least annually thereafter, theCorporation shall, or shall cause the Transfer Agent to, send to the registered owner thereof a written statement containing theinformation specified in Nevada Revised Statutes 78.235(5). Transfers of shares of Preferred Stock held in uncertificated, book-entryform shall be made only upon the transfer books of the Corporation kept at an office of the Transfer Agent upon receipt of propertransfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or from an individualpresenting proper evidence of succession, assignment or authority to transfer such shares. The Corporation may refuse any requestedtransfer until furnished evidence reasonably satisfactory to it that such transfer is made in accordance with the terms of this Certificateof Designation.Section 13. Transfers.(a) Prior to July 31, 2018, without the consent of the Corporation, no Holder may transfer any Series C-1 PreferredStock other than to an Affiliate of such Holder or in connection with a business combination transaction involving the Corporation.After July 31, 2018, the Series C-1 Preferred Stock shall be unrestricted and freely transferable, subject to applicable securities lawbinding upon such Holder or transfer.(b) Prior to April 10, 2019, without the consent of the Corporation, no Holder may transfer any any Series C-2Preferred Stock other than to an Affiliate of such Holder or in connection with a business combination transaction involving theCorporation. After April 10, 2019, the Series C-2 Preferred Stock shall be unrestricted and freely transferable, subject to applicablesecurities law binding upon such Holder or transfer.(c) Notwithstanding anything to the contrary in Section 13(a) or Section 13(b), Holders may make a bona fide pledgeof any or all of its Preferred Stock in connection with a bona fide loan or other extension of credit, and any foreclosure by any pledgedunder such loan or extension of credit on any such pledged Preferred Stock (or any sale thereof) shall not be considered a violation ofSection 13(a) or Section 13(b) and the transfer of the Preferred Stock by a pledgee who has foreclosed on such loan or extension ofcredit shall not be considered a violation or breach of Section 13(a) or Section 13(b).(d) Any Person that becomes a Holder pursuant to a transfer under this Section 13 shall be subject to all of the termsand conditions of this Certificate of Designation.Section 14. Miscellaneous.(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder shallbe in writing and delivered personally, by facsimile, e-mail, or sent by a nationally recognized overnight courier service, addressed tothe Corporation, at the address set forth above Attention: Joseph Daches, facsimile number (210) 999-5401, JDaches@lilisenergy.comor such other facsimile number, e-mail address or address as the Corporation may specify for such purposes by notice to the Holdersdelivered in accordance with this Section 14. Any and all notices or other communications or deliveries required or permitted to beprovided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (i) the date of transmission (if there isno receipt of notice of a failed delivery to the notice party), if such notice or communication is delivered via e-mail attachment as setforth on the signature pages attached hereto at or prior to 5:30 p.m. (Houston, Texas time) on a Business Day, (ii) the next BusinessDay after the date of transmission (if there is no receipt of notice of a failed delivery to the notice party), if such notice orcommunication is delivered via e-mail attachment as set forth on the signature pages attached hereto on a day that is not a BusinessDay or later than 5:30 p.m. (Houston, Texas time) on any Business Day, (iii) the second Business Day following the date of mailing, ifsent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required tobe given.(b) Information; Notice. If at any time while the Preferred Stock is outstanding the Corporation is not required to filereports under Section 13(a) or 15(d) of the Exchange Act, the Corporation shall provide to the Holders:(i) quarterly unaudited financial statements prepared in accordance with GAAP within 45 days after the end ofeach fiscal quarter, in each case, in form and substance acceptable to the Holder Majority;(ii) audited annual financial statements prepared in accordance with GAAP within 90 days after the end ofeach fiscal year of the Corporation (certified by an independent accounting firm of national standing); and(iii) annually, within 90 days after the end of the fiscal year, a reserve report prepared or audited by a thirdparty engineering firm of national standing in accordance with Commission guidelines with an “as of” date ofDecember 31 of the preceding calendar year.(c) Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alteror impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends andaccrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, hereinprescribed.(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of thisCertificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State ofNevada, without regard to the principles of conflict of laws thereof. The Corporation and each Holder, by acceptance of shares ofPreferred Stock, hereby irrevocable and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the SupremeCourt of the State of New York sitting in New York County, Borough of Manhattan, and of the United States District Court for theSouthern District of New York, and any appellate court from any district thereof, in any action or proceeding arising out of or relatingto this Certificate of Designation, or for recognition or enforcement of any judgment, and each of them hereby irrevocably andunconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New YorkState or, to the extent permitted by law, in such federal court. The Corporation and each Holder, by acceptance of shares of PreferredStock, agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law. Nothing in this Certificate of Designation shall affect any right that anyHolder may otherwise have to bring any action or proceeding relating to this Certificate of Designation against the Corporation or itsproperties in the courts of any jurisdiction. The Corporation hereby irrevocably and unconditionally waives, to the fullest extent it maylegally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceedingarising out of or relating to this Certificate of Designation in any court referred to in this Section 14(d). The Corporation and eachHolder, by acceptance of shares of Preferred Stock, hereby irrevocably waives, to the fullest extent permitted by law, the defense of aninconvenient forum to the maintenance of such action or proceeding in any such court. The Corporation and each Holder, byacceptance of shares of Preferred Stock, irrevocably consents to service of process in the manner provided for notices in this Certificateof Designation. Nothing in this Certificate of Designation will affect the right of the Corporation or any Holder to serve process in anyother manner permitted by law. The Corporation and each Holder, by acceptance of shares of Preferred Stock, hereby waives, to thefullest extent permitted by applicable law, any right it may have to a trial by jury in any legal proceeding directly or indirectly arisingout of or relating to this Certificate of Designation or the transactions contemplated hereby (whether based on contract, tort or any othertheory). If any party shall commence an action or proceeding to enforce any provisions of this Certificate of Designation, then theprevailing party in such action or proceeding shall be reimbursed by the other party for its attorneys’ fees and other costs and expensesincurred in the investigation, preparation and prosecution of such action or proceeding.(e) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designationshall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of thisCertificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherenceto any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or anyother Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation onany other occasion. Any waiver by the Corporation or a Holder must be in writing.(f) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance ofthis Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shallnevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemedinterest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically belowered to equal the maximum rate of interest permitted under applicable law.(g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than aBusiness Day, such payment shall be made on the next succeeding Business Day.(h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate ofDesignation and shall not be deemed to limit or affect any of the provisions hereof.(i) Status of Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the PurchaseAgreement, October Transaction Agreement or this Certificate of Designation. If any shares of Preferred Stock shall be redeemed orreacquired by the Corporation, such shares shall resume the status of authorized but unissued shares of preferred stock and shall nolonger be designated as Series C-1 9.75% Participating Preferred Stock or Series C-2 9.75% Participating Preferred Stock, asapplicable.(j) Calculations. Any calculations made by the Corporation or Board of Directors pursuant to this Certificate ofDesignation shall be undertaken and made in good faith.******RESOLVED, FURTHER, that the Chairman, the Chief Executive Officer, the president or any vice-president, and thetreasurer, assistant treasurer, secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed toprepare and file this Certificate of Designation in accordance with the foregoing resolution and the provisions of Nevada law.IN WITNESS WHEREOF, the undersigned have executed this Certificate of Designation this 5th day of March, 2019./s/ Ronald D. Ormand/s/ Joseph C. DachesName: Ronald D. OrmandName: Joseph C. DachesTitle: Chief Executive OfficerTitle: President, Chief Financial Officer and TreasurerExhibit 3.12LILIS ENERGY, INC.AMENDED AND RESTATED CERTIFICATE OF DESIGNATION OF PREFERENCES, RIGHTS AND LIMITATIONS OF SERIES D 8.25% PARTICIPATING PREFERRED STOCKPURSUANT TO SECTION 78.1955 OF THE NEVADA REVISED STATUTESThe undersigned, Ronald D. Ormand and Joseph C. Daches, do hereby certify that:1. They are the Executive Chairman and Executive Vice President, Chief Financial Officer and Treasurer, respectively, ofLilis Energy, Inc., a Nevada corporation (the “Corporation”).2. The Corporation is authorized to issue 10,000,000 shares of preferred stock, of which, after giving effect to (i) thisCertificate of Designation (as defined below), (ii) that certain Second Amended and Restated Certificate of Designation of Preferences,Rights and Limitations of Series C-1 9.75% Participating Preferred Stock and Series C-2 9.75% Participating Preferred Stock, dated asof March 5, 2019 (the “Series C Certificate of Designation”), (iii) that certain Certificate of Designation of Preferences, Rights andLimitations of Series E 8.25% Convertible Participating Preferred Stock, dated as of March 5, 2019, and (iv) that certain Certificate ofDesignation of Preferences, Rights and Limitations of Series F 9.00% Participating Preferred Stock, dated as of March 5, 2019, (a)100,000 shares are designated as “Series C-1 9.75% Participating Preferred Stock” (the “Series C-1 Preferred Stock”), (b) 25,000shares are designated as “Series C-2 9.75% Participating Preferred Stock” (the “Series C-2 Preferred Stock” and, together with theSeries C-1 Preferred Stock, the “Series C Preferred Stock”), (c) 39,254 shares are designated as “Series D 8.25% ParticipatingPreferred Stock”, (d) 60,000 shares are designated as “Series E 8.25% Convertible Participating Preferred Stock” (the “Series EPreferred Stock”) and (e) 55,000 shares are designated as “Series F 9.00% Participating Preferred Stock” (the “Series F PreferredStock”).3. The following resolutions were duly adopted by the board of directors of the Corporation (the “Board of Directors”) onMarch 4, 2019 in accordance with the provisions of the Articles of Incorporation, the bylaws of the Corporation and applicable law,providing for the amendment and restatement of the Certificate of Designation of Preferences, Rights and Limitations of Series D8.25% Convertible Participating Preferred Stock of the Corporation filed with the Secretary of State of the State of Nevada on October10, 2018 (the “Original Certificate of Designation”) in the form of this Amended and Restated Certificate of Designation ofPreferences,Rights and Limitations of Series D 8.25% Participating Preferred Stock (this “Certificate of Designation”):WHEREAS, the Articles of Incorporation of the Corporation provide for a class of its authorized stock known as preferredstock, consisting of 10,000,000 shares, $0.0001 par value per share, issuable from time to time in one or more series; andWHEREAS, the Articles of Incorporation authorize the Board of Directors to fix the dividend rights, dividend rate, votingrights, conversion rights, rights and terms of redemption and liquidation preferences of any wholly unissued series of preferred stockand, with respect to each such series, to fix the number of shares constituting such series of Preferred Stock and the designation thereof.NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors does hereby approve and adopt this Certificate ofDesignation, as set forth below, amending and restating the Original Certificate of Designation in its entirety, and that this Certificate ofDesignation shall become effective upon filing this Certificate of Designation with the Secretary of State of the State of Nevada:TERMS OF PREFERRED STOCKSection 1.Definitions. For the purposes hereof, the following terms shall have the following meanings:“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or isunder common control with a Person, as such terms are used in and construed under Rule 405 of the Securities Act; provided, that noportfolio company of a Holder or its Affiliates shall be considered or otherwise deemed an Affiliate thereof.“Articles of Incorporation” shall mean the Amended and Restated Articles of Incorporation of the Corporation, dated as ofOctober 10, 2011, as amended from time to time.“Board of Directors” shall have the meaning set forth in the Preamble.“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United Statesor any day on which banking institutions in the State of New York or Texas are authorized or required by law or other governmentalaction to close.“Change of Control” means:(a) any “person” or “group” (as such terms are used in sections 13(d) and 14(d) of the Securities Exchange Act of1934, as amended (the “Exchange Act”)), other than (i) any Holder, (ii) Värde, (iii) any holder of Series E Preferred Stock or (iv) anyAffiliate of any Person specified in the preceding clauses (i)-(iii), is or becomes the beneficial owner (as defined in Rules 13d-3 and13d-5 under the Exchange Act, except that such person or group shall be deemed to have “beneficial ownership” (within the meaningof Rule 13d-3 under the Exchange Act) of all2shares that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage oftime), directly or indirectly, of more than 35% of the total voting power of the outstanding capital stock (excluding any debt securitiesconvertible into equity) normally entitled to vote in the election of directors of the Corporation (or its successor by merger,consolidation or purchase of all or substantially all of its assets) (provided, for the avoidance of doubt, that, for purposes of theforegoing, shares of preferred stock of any series shall not be considered to be normally entitled to vote in the election of directors byreason of any right of the holders of shares of preferred stock of such series to elect or appoint one or more directors voting or actingseparately as a class);(b) except as permitted by Section 6.04 of the Specified Second Lien Credit Agreement, a disposition by theCorporation or a Subsidiary pursuant to which the Corporation or any Subsidiary sells, leases, licenses, transfers, assigns or otherwisedisposes, in one or a series of related transactions, all or substantially all of the properties and assets of the Corporation and itsSubsidiaries taken as a whole;(c) the Corporation’s stockholders approve any plan relating to the liquidation or dissolution of the Corporation; or(d) the occurrence of a “Change of Control” (or similar term) as such term is defined in any of (i) the RBL CreditAgreement or (ii) any other credit facility, indenture or other similar instrument of the Corporation or its Subsidiaries under whichindebtedness of the Corporation or its Subsidiaries of at least $5 million is outstanding at the time of such occurrence or at any point inthe 90 days prior thereto.“Commission” means the United States Securities and Exchange Commission.“Common Stock” means the Corporation’s common stock, par value $0.0001 per share, and stock of any other class ofsecurities into which such securities may hereafter be reclassified or changed.“Common Stock Equivalents” means any securities of the Corporation or the Subsidiaries which would entitle the holderthereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or otherinstrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive,Common Stock.“Corporation” shall have the meaning set forth in the Preamble.“Dividend Payment Date” shall have the meaning set forth in Section 3(b).“Dividend Rate” means (i) on or prior to April 26, 2021, 8.25% per annum and (ii) following April 26, 2021, 11.00% perannum; provided, that if, for any Dividend Payment Date after April326, 2021, dividends on the Preferred Stock are not paid in full in cash on such Dividend Payment Date, then the Dividend Rate for thedividends payable on such Dividend Payment Date (but not on any subsequent Dividend Payment Date on which such dividends arepaid in full in cash) shall be 15.00% per annum.“GAAP” means United States generally accepted accounting principles.“Holder” shall have the meaning given such term in Section 3(a).“Holder Majority” means the Holders of a majority of the outstanding shares of Preferred Stock.“Investor Director” shall have the meaning set forth in Section 11(a).“Junior Preferred Stock PIK Dividends” means any dividends on any shares of preferred stock of the Corporation that areJunior Securities to the extent such dividends are paid solely in the form of additional shares of such preferred stock or by increase tothe stated value or liquidation preference thereof (or other similar term or amount) in accordance with the terms of such preferred stock.“Junior Securities” means the Common Stock (and Common Stock Equivalents), the Series C Preferred Stock and all otherclasses of the Corporation’s common stock and each other class of capital stock or series of preferred stock, the terms of which do notexpressly provide that such class or series ranks senior to or on parity with the Preferred Stock as to dividend rights or rights upon theliquidation, winding-up or dissolution of the Corporation.“Liquidation” shall have the meaning set forth in Section 6.“March Transaction Agreement” means the Transaction Agreement, dated as of March 5, 2019, by and among the Corporationand the original holders of Series E Preferred Stock and Series F Preferred Stock, as amended, modified or supplemented from time totime in accordance with its terms.“October Transaction Agreement” means the Transaction Agreement, dated as of October 10, 2018, by and among theCorporation and the original Holders of Preferred Stock, as amended, modified or supplemented from time to time in accordance withits terms.“Officer” shall mean the Executive Chairman, the Chief Executive Officer, the President, the Chief Financial Officer, any VicePresident, the Treasurer, the Secretary, any Assistant Secretary or any Assistant Treasurer of the Corporation.“Optional Redemption” shall have the meaning set forth in Section 8(a).“Optional Redemption Amount” shall have the meaning set forth in Section 8(b).4“Optional Redemption Date” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice” shall have the meaning set forth in Section 8(a).“Optional Redemption Notice Date” shall have the meaning set forth in Section 8(a).“Original Issue Date” means October 10, 2018.“Parity Securities” shall mean any class of capital stock or series of preferred stock, the terms of which expressly provide thatsuch class or series will rank on a parity with the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up ordissolution of the Corporation.“Participation Price” means $7.00; provided that (a) if the Corporation shall, at any time or from time to time after the OriginalIssue Date, (i) pay a dividend or make any other distribution upon the Common Stock payable in shares of Common Stock, or (ii)subdivide (by any stock split, recapitalization or otherwise) its outstanding shares of Common Stock into a greater number of shares ofCommon Stock, the Participation Price in effect immediately prior to any such dividend, distribution or subdivision shall beproportionately reduced; and (b) if the Corporation at any time combines (by combination, reverse stock split or otherwise) itsoutstanding shares of Common Stock into a smaller number of shares, the Participation Price in effect immediately prior to suchcombination shall be proportionately increased. Any adjustment under clause (a) or (b) of the preceding sentence of this definition shallbecome effective at the close of business on the date the dividend, subdivision or combination becomes effective.“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture,limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.“Preferred Stock” shall have the meaning set forth in Section 2(a).“RBL Credit Agreement” means that certain Second Amended and Restated Senior Secured Revolving Credit Agreement,dated as of October 10, 2018, by and among the Corporation, the guarantors from time to time party thereto, the lenders party theretoand BMO Harris Bank, N.A., as administrative agent and collateral agent, as amended by the First Amendment and Waiver thereto,dated as of March 1, 2019, and as further amended from time to time (in accordance with this Certificate of Designation).“Record Date” means, with respect to any issuance, dividend or distribution declared, paid or made on or with respect to anycapital stock of the Corporation, the date fixed for the determination of the stockholders entitled to receive such issuance, dividend ordistribution.“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgatedthereunder.5“Senior Securities” shall mean each class of capital stock or series of preferred stock, the terms of which expressly provide thatsuch class or series will rank senior to the Preferred Stock as to dividend rights or rights upon the liquidation, winding-up or dissolutionof the Corporation, including the Series E Preferred Stock and the Series F Preferred Stock.“Series C Certificate of Designation” shall have the meaning set forth in the preamble.“Series C Preferred Stock” shall have the meaning set forth in the preamble.“Series C-1 Preferred Stock” shall have the meaning set forth in the preamble.“Series C-2 Preferred Stock” shall have the meaning set forth in the preamble.“Series E Preferred Stock” shall have the meaning set forth in the preamble.“Series F Preferred Stock” shall have the meaning set forth in the preamble.“Specified Party” shall have the meaning set forth in Section 11(h).“Specified Second Lien Credit Agreement” means that certain Credit Agreement, dated as of April 26, 2017, by and among theCorporation, the guarantors party thereto, the lenders party thereto and Wilmington Trust, National Association, as administrativeagent, as amended, supplemented or otherwise modified and as in effect as of March 4, 2019, regardless of whether or not in effect asof any date thereafter.“Stated Value” shall have the meaning set forth in Section 2(a).“Subsidiary” means any direct or indirect subsidiary of the Corporation, including those set forth on Schedule 3.1(a) to theMarch Transaction Agreement, and any direct or indirect subsidiary of the Corporation formed or acquired after the date of the MarchTransaction Agreement.“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quoted fortrading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global SelectMarket or the New York Stock Exchange (or any successors to any of the foregoing).“Transfer Agent” means Corporate Stock Transfer, the current transfer agent of the Corporation with a mailing address of 3200Cherry Creek South Drive, Suite 430, Denver, Colorado 80209 and a facsimile number of (303) 282-5800, and any successor transferagent of the Corporation.“Värde” means (a) Värde Partners, Inc., its affiliated investment managers and funds or accounts managed by any of them(including the Värde Parties (as defined in the March Transaction Agreement) but excluding any portfolio companies that are owned inwhole or in part by any of the6foregoing) and (b) any partner, member, manager, principal, director or officer of any of the foregoing.Section 2. Designation, Amount and Par Value; Ranking.(a) The series of preferred stock established pursuant to this Certificate of Designation shall be designated as “Series D8.25% Participating Preferred Stock” (the “Preferred Stock”) and the number of shares so designated and authorized shall be 39,254(which shall not be subject to increase without the affirmative vote or written consent of a Holder Majority). Each share of PreferredStock shall have an initial par value of $0.0001 per share and an initial stated value equal to $1,000.00 per share, subject to increase asset forth in Section 3 below (the “Stated Value”).(b) The Preferred Stock, with respect to dividend rights and rights upon the liquidation, winding-up or dissolution ofthe Corporation, ranks: (i) senior in all respects to all Junior Securities; (ii) pari passu with all Parity Securities; and (iii) junior in allrespects to all Senior Securities, in each case, as provided more fully herein.Section 3. Dividends.(a) Participating Dividends. Without limiting Section 10 of this Certificate of Designation, for so long as any shares ofPreferred Stock are outstanding, no dividend or other distribution (other than any stock dividend or distribution on the Common Stockpayable in shares of Common Stock, any distribution of rights pursuant to a stockholder rights plan or any distribution upon aLiquidation) may be declared or paid on the Common Stock or to the holders thereof unless the holders of the Preferred Stock (each, a“Holder” and collectively, the “Holders”) receive, simultaneously with the distribution to the holders of the Common Stock, a dividendor other distribution of such securities, cash or other property in an amount equal to the amount of such securities, cash or otherproperty as the Holders would have received if, immediately prior to the Record Date for such distribution, each then-outstanding shareof the Preferred Stock had been converted into a number of shares of the Common Stock equal to (i) the then applicable OptionalRedemption Amount divided by (ii) the then-applicable Participation Price (regardless of the fact that shares of the Preferred Stock arenot convertible into Common Stock).(b) Dividends in Cash or in Kind. In addition to participation in cash dividends on, or distributions to, Common Stockas set forth in Section 3(a), Holders shall be entitled to receive, and the Corporation shall pay (prior to any distributions made in respectof any Junior Securities (or contemporaneously therewith in the case of Junior Preferred Stock PIK Dividends) and prior to orcontemporaneously with any distributions made in respect of any Parity Securities, in each case in respect of the same fiscal quarter),cumulative dividends per share (as a percentage of the Stated Value per share) at the Dividend Rate, payable and compoundedquarterly in arrears on January 1, April 1, July 1 and October 1, beginning on the first such date after the Original Issue Date (eachsuch date, a “Dividend Payment Date”) (if any Dividend Payment Date is not a Business Day, the applicable payment, if paid in cash,shall be due on the next succeeding Business Day, and7no interest or dividends on such payment shall accrue or accumulate in respect of such delay), in (i) cash out of funds legally availabletherefor, (ii) by an increase in the Stated Value of the Preferred Stock, or (iii) any combination of clause (i) and (ii), in each case, in anamount equal to the accrued but unpaid dividends due to a Holder in respect of each share of Preferred Stock on the Dividend PaymentDate. For the avoidance of doubt, any dividends paid by an increase in the Stated Value pursuant to this Section 3(b) shall be deemedto have been paid in full for all purposes. The default method of payment shall be an increase in the Stated Value unless, at least fiveBusiness Days prior to a Dividend Payment Date, the Corporation provides written notice to the Holders of its election to pay in cashand such cash payment is actually and timely made. Dividends shall be paid pro rata for any partial quarter.(c) Dividend Calculations. Dividends on the Preferred Stock shall be calculated on the basis of a 360-day year,consisting of twelve 30 calendar day periods, shall accrue daily commencing on the Original Issue Date and shall be deemed to accruefrom such date whether or not declared and whether or not there are profits, surplus or other funds of the Corporation legally availablefor the payment of dividends.Section 4. Maturity. The Preferred Stock shall be perpetual unless redeemed in accordance with this Certificate ofDesignation.Section 5. Voting Rights.(a) The Holders in such capacity will not have the right to vote with the holders of Common Stock as a single class onany matter.(b) Each Holder will have one vote per share of Preferred Stock on any matter on which Holders of Preferred Stockare entitled to vote separately as a class, whether at a meeting or by written consent.Section 6. Liquidation. Upon any liquidation, dissolution or winding-up of the Corporation, whether voluntary or involuntary(a “Liquidation”), the Holders shall be entitled to receive, in respect of each share of Preferred Stock, out of the assets, whether capitalor surplus, of the Corporation an amount equal to the greater of (i) the then-applicable Optional Redemption Amount and (ii) theproceeds the Holders would be entitled to receive if, immediately prior to the payment of such amount, each then-outstanding share ofthe Preferred Stock had been converted into a number of shares of the Common Stock equal to (i) the then-applicable OptionalRedemption Amount divided by (ii) the then-applicable Participation Price (regardless of the fact that shares of the Preferred Stock arenot convertible into Common Stock), after any amount shall be paid to holders of any Senior Securities, before any distribution orpayment shall be made to the holders of any Junior Securities, and if the assets of the Corporation shall be insufficient to pay in fullsuch amounts payable to Holders and the amounts payable to the holders of any Parity Securities, then the entire assets to be distributedto the Holders and the holders of any Parity Securities shall be ratably distributed among the Holders and the holders of any ParitySecurities in accordance with8the respective amounts that would be payable on shares of Preferred Stock and any Parity Securities if all amounts payable thereonwere paid in full. A Change of Control shall not be deemed a Liquidation. The Corporation shall mail written notice of any suchLiquidation, not less than 45 days prior to the payment date stated therein, to each Holder.Section 7. [Intentionally Omitted].Section 8. Optional Redemption.(a) Optional Redemption at Election of Corporation. Subject to the provisions of this Section 8 and Section 9, at anytime after the Original Issue Date, the Corporation may deliver a notice to the Holders (an “Optional Redemption Notice” and the datesuch notice is deemed delivered hereunder, the “Optional Redemption Notice Date”) of its election (which shall be irrevocable but maybe conditioned on the occurrence of any one or more events) to redeem some or all of the then-outstanding Preferred Stock, for cash inan amount equal to the Optional Redemption Amount on the 20th Business Day following the Optional Redemption Notice Date(such date, the “Optional Redemption Date” and such redemption, the “Optional Redemption”).(b) Optional Redemption Amount. Each share of Preferred Stock redeemed pursuant to this Section 8 shall beredeemed by paying cash in an amount equal to (i)(1) the applicable Stated Value multiplied by (2) 117.5%, plus (ii) all accrued butunpaid dividends thereon and all liquidated damages and other amounts due in respect of such Preferred Stock as of the OptionalRedemption Date (such amount, the “Optional Redemption Amount”).(c) Redemption Procedure. The payment of cash pursuant to an Optional Redemption shall be made on the OptionalRedemption Date. If any portion of the cash payment for an Optional Redemption has not been paid by the Corporation on theOptional Redemption Date, interest shall accrue thereon until such amount is paid in full at a rate equal to the lesser of 15% per annumor the maximum rate permitted by applicable law.(d) Limitations on Redemption.(i) Any Optional Redemption by the Corporation must be of Preferred Stock having a minimum aggregateStated Value of $20 million as of the Optional Redemption Notice Date (or such lesser amount if such OptionalRedemption is for all of the remaining Preferred Stock).(ii) The Corporation may consummate no more than one partial Optional Redemption within any 6-monthperiod.(iii) Any Optional Redemption shall be applied ratably to all of the Holders based on each Holder’s relativeownership of shares of Preferred Stock.9(iv) The Preferred Stock shall only be redeemable as expressly set forth in this Section 8 and Section 9.Section 9. Change of Control. On or before the 20th Business Day prior to the consummation of a Change of Control (or, iflater, promptly after the Corporation discovers that a Change of Control has occurred or will occur), the Corporation shall providewritten notice thereof to the Holders, and in connection with any such Change of Control, each Holder may elect one of the followingoptions (subject to such Change of Control having actually occurred or actually occurring) by notice given to the Corporation within20 Business Days after the date the Corporation provides such written notice (it being understood that if a Holder fails to timelyprovide notice of its election to the Corporation, such Holder shall be deemed to have elected the option set forth in clause (a) below):(a) cause the Corporation to redeem all of such Holder’s shares of Preferred Stock for cash in an amount per share ofPreferred Stock equal to (i) the applicable Optional Redemption Amount in effect immediately prior to the consummation of suchChange of Control plus (ii)(x) the applicable Stated Value in effect immediately prior to the consummation of such Change of Controlmultiplied by (y) 2.5%; or(b) subject to the Corporation’s (or, if the Corporation is not the surviving entity of such Change of Control, theCorporation’s successor’s) right to redeem the Preferred Stock pursuant to Section 8, continue to hold such Holder’s shares ofPreferred Stock.Section 10. Negative Covenants.(a) As long as any shares of Preferred Stock are outstanding, without the prior affirmative vote or prior written consentof a Holder Majority, the Corporation shall not, directly or indirectly (whether by way of amendment to the charter documents, merger,recapitalization, or otherwise):(i) amend, alter, modify or repeal the Articles of Incorporation or the bylaws of the Corporation, in any mannerthat materially and adversely affects any rights, preferences, privileges or voting powers of the Preferred Stock orHolders;(ii) issue, authorize or create, or increase the issued or authorized amount of, Preferred Stock, any class orseries of Senior Securities or any Parity Securities or security convertible into or evidencing the right to purchase anyshares of Preferred Stock, Senior Securities or Parity Securities other than equity, the proceeds of which, are used toimmediately redeem all of the outstanding shares of Preferred Stock in accordance with Section 8;10(iii) declare or pay any dividends or distributions on, or redeem or repurchase, or permit any of its controlledSubsidiaries to redeem or repurchase, shares of Common Stock or any other shares of Junior Securities other than:(1) Junior Preferred Stock PIK Dividends;(2) any stock dividend or distribution on the Common Stock payable in shares of Common Stock;(3) any distribution of rights pursuant to a stockholder rights plan with respect to the Common Stock;(4) any distribution upon a Liquidation;(5) redemptions of incentive equity of the Corporation or its Subsidiaries held by employees of theCorporation or its Subsidiaries in connection with the administration of any employee benefit plan of theCorporation in the ordinary course of business;(6) after April 26, 2021, cash dividends on the Series C Preferred Stock in accordance with the SeriesC Certification of Designation as in effect on the Original Issue Date, provided that all dividends on thePreferred Stock payable on the corresponding Dividend Payment Date have been, or contemporaneously are,paid in full in cash; and(7) redemptions of the Series C Preferred Stock pursuant to and in accordance with a Change ofControl redemption election by the “Holders” thereof pursuant to Section 9(a) of the Series C Certificate ofDesignation as in effect on the Original Issue Date, provided that all shares of Preferred Stock as to which theHolders have elected redemption pursuant to Section 9(a) in connection with such Change in Control havebeen, or contemporaneously are, redeemed in accordance with Section 9(a);(iv) authorize, issue or transfer, or permit any of its controlled Subsidiaries to authorize, issue or transfer, anyequity (including any obligation or security convertible into, exchangeable for or evidencing the right to purchase anysuch equity) in any Subsidiary other than (1) equity issued or transferred to the Corporation or another wholly-ownedSubsidiary of the Corporation or (2) equity, the proceeds of which, are used to immediately redeem all of theoutstanding shares of Preferred Stock in accordance with Section 8; or(v) subject to right of the holders of Common Stock to amend the provisions of the bylaws of the Corporationrelating to the number of directors11constituting the entire Board of Directors or the manner in which such number of directors is determined (but, for thesake of clarity, without limiting the Holders’ rights pursuant to Section 11), modify the number of directors constitutingthe entire Board of Directors at any time when the Holders have the right to designate an Investor Director pursuant toSection 11; provided, that the Corporation may increase the number of directors constituting the entire Board ofDirectors without the consent of a Holder Majority if the Holders are given the right to designate one or more additionalInvestor Directors as necessary to cause the number of Investor Director(s) the Holders have the right to designaterelative to the number of directors constituting the entire Board of Directors to be in the same proportion prior to suchincrease, rounded up or down to the nearest whole number of directors.(b) For so long as shares of Preferred Stock having an aggregate Optional Redemption Amount of at least $19.627million are outstanding, without the prior affirmative vote or prior written consent of a Holder Majority, the Corporation shall not, andshall not permit any of its controlled Subsidiaries to, directly or indirectly:(i) incur any indebtedness or permit to exist any liens on any of the Corporation’s or its Subsidiaries assets orproperties, other than (1) indebtedness expressly permitted under Section 6.02 of the Specified Second Lien CreditAgreement and (2) liens expressly permitted under Section 6.03 of the Specified Second Lien Credit Agreement, ineach case without regard to any requirements set forth in such sections of the Specified Second Credit Agreementrelated to an “Approved Intercreditor Agreement” or any subordination or pledge of intercompany indebtedness amongthe Corporation and its Subsidiaries; provided, that, the Corporation shall only be permitted to refinance, and incurcorresponding liens in connection with any refinancing of, “Revolving Debt Obligations,” “Obligations” and/or anyrefinancing debt in respect thereof, as applicable and as each such term is defined in the Specified Second Lien CreditAgreement, in each case, (A) with indebtedness (I) the principal amount of which does not exceed the sum of (x) thetotal outstanding principal amount of such debt being refinanced, plus (y) any usual and customary accrued and unpaidinterest, premium, fees and costs and expenses thereon and (II) that does not contain terms and conditions that arematerially adverse to the Preferred Stock or the interests of the Holders relative to the terms and conditions of theindebtedness being refinanced and (B) if, following the incurrence of any such indebtedness and after giving pro formaeffect to the incurrence of such indebtedness and the application of proceeds thereof and the occurrence of any materialacquisitions and/or dispositions on or prior to such date of determination, the Corporation delivers an officers’ certificatecertifying that the Proved Developed Producing Coverage Ratio (as defined in the Specified Second Lien CreditAgreement) for the most recently ended four full fiscal quarters for which12internal financial statements are available immediately preceding the date on which such indebtedness is incurred wouldbe greater than 1.40:1.00;(ii) enter into, adopt or agree to any “restricted payment” provisions (or other similar provisions that restrict orlimit the payment of dividends on, or the redemption of, the Preferred Stock) under any credit facility, indenture or othersimilar instrument of the Corporation or its Subsidiaries (including, for the avoidance of doubt, the RBL CreditAgreement) that would be more restrictive on the payment of dividends on, or redemption of, the Preferred Stock thanthose existing as of the Original Issue Date (provided that, for the avoidance of doubt, any decrease in the amountavailable to make restricted payments under any such provisions that are the result of the Corporation utilizing capacityunder such provisions or any decrease in capacity as a result of the operation of such provisions as set forth in any suchcredit facility, indenture or other similar instrument as of the Original Issue Date shall not require the consent of theHolders pursuant to this Section 10(b)(ii)); (iii) liquidate or dissolve the Corporation;(iv) enter into any material new line of business or fundamentally change the nature of the Corporation’sbusiness (including, for the avoidance of doubt, any acquisition of oil and gas properties outside the Permian Basin);(v) enter into any transaction with any Affiliate of the Corporation which would be required to be disclosed inany public filing with the Commission, unless such transaction is made on an arm’s-length basis and expresslyapproved by a majority of the disinterested directors of the Corporation (even if less than a quorum otherwise requiredfor board approval);(vi) make any dispositions of assets or property of the Corporation or its Subsidiaries other than dispositions ofthe kind that would be expressly permitted under Section 6.05 of the Specified Second Lien Credit Agreement;provided that any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majoritymutatis mutandis;(vii) make any loans or investments of the Corporation or its Subsidiaries other than loans or investments of thekind that would be expressly permitted under Section 6.07 of the Specified Second Lien Credit Agreement, providedthat any reference to the Majority Lenders in such section shall be deemed to refer to a Holder Majority mutatismutandis; or(viii) (1) voluntarily commence any proceeding or file any petition seeking liquidation, reorganization or otherrelief under any federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in effect,(2)13consent to the institution of, or fail to contest in a timely and appropriate manner, any proceeding or petition describedin this clause (viii), (3) apply for or consent to the appointment of a receiver, trustee, custodian, sequestrator,conservator or similar official for the Corporation or any Subsidiary or for a substantial part of its assets, (4) file ananswer admitting the material allegations of a petition filed against it in any such proceeding, (5) make a generalassignment for the benefit of creditors or (6) take any action for the purpose of effecting any of the foregoing.Section 11. Board Representation Rights.(a) Subject to Section 11(b), without limiting other rights the Holders and their Affiliates may have (including pursuantto the March Transaction Agreement), from and after the Original Issue Date, the Holder Majority shall have the exclusive right (butnot the obligation), voting separately as a class, to designate to the Board of Directors one director (the “Investor Director”) (subject toincrease pursuant to Section 10(a)(v)) for as long as the aggregate Stated Value of all outstanding shares of the Preferred Stock is atleast equal to $9,813,500.(b) Notwithstanding anything herein to the contrary, the number of Investor Directors the Holders shall be entitled todesignate pursuant to Section 11(a) shall be reduced if, and only to the extent necessary in order to comply with applicable law orTrading Market rules (as directed in writing by the Commission or the Trading Market on which the Common Stock is then listed) sothat the percentage of the number of directors constituting the entire Board of Directors represented by the number of InvestorDirectors does not exceed the percentage requirements of the Commission or such Trading Market.(c) Within 10 Business Days after notice to the Corporation by the Holder Majority of the identity of the persondesignated to be the initial Investor Director, subject to confirmation by the Corporation that such initial Investor Director meets therequirements of Section 11(f), the Corporation shall cause such person to be appointed to the Board of Directors as the initial InvestorDirector. The Corporation shall take all actions within its power to cause all designees designated pursuant to Section 11(a) to beappointed to the Board of Directors.(d) Each Investor Director designated pursuant to Section 11(a) shall serve until his or her successor is designated orhis or her earlier death, disability, resignation or removal. Any vacancy or newly created directorship in the position of an InvestorDirector while the Holders have the right to appoint such Investor Director pursuant to Section 11(a) may be filled only by the HolderMajority, subject to the fulfillment of the requirements set forth in Section 11(f). While the Holders have the right to appoint anyInvestor Director pursuant to Section 11(a), (i) such Investor Director may, during his or her term of office, be removed at any time,with or without cause, by and only by the Holders of not less than two-thirds of the outstanding shares of Preferred Stock, and (ii) theHolders, by and only by a Holder Majority, shall have the right to, at any time, with or without cause (A) cause such Investor Directorto resign from his or her directorship, and (B) appoint a replacement Investor Director to fill the vacancy resulting from suchresignation, subject to the14fulfillment of the requirements set forth in Section 11(f). Any Investor Director appointed pursuant to Section 11(a) shall be deemed tohave agreed to resign from his or her directorship (and the Corporation shall recognize such resignation) upon exercise of the Holders’rights set forth in clause (ii) of the immediately preceding sentence if such Investor Director shall have previously delivered to theCorporation a written letter of resignation stating that such Investor Director resigns his or her directorship effective upon any exerciseof the Holders’ rights set forth in clause (ii) of the immediately preceding sentence.(e) At all times while an Investor Director is serving as a member or observer of the Board of Directors, and followingany such Investor Director’s death, disability, resignation or removal, such Investor Director shall be entitled to all rights toindemnification and exculpation as are then made available to any other member or observer of the Board of Directors.(f) Notwithstanding anything to the contrary, any Investor Director shall be reasonably acceptable to the Board ofDirectors and the Nominating and Corporate Governance Committee thereof acting in good faith (provided, that, for the avoidance ofdoubt, any investment professional of Värde Partners, Inc. or its Affiliates shall be deemed reasonably acceptable) and satisfy allapplicable Commission and stock exchange requirements regarding service as a regular director of the Corporation and shall comply inall material respects with the Corporation’s corporate governance guidelines as in effect from time to time.(g) The right to designate an Investor Director pursuant to Section 11(a) shall automatically terminate at such time asthe condition set forth in Section 11(a) is not satisfied, and at such time, if requested in writing by the Corporation, any InvestorDirectors then serving on the Board of Directors in excess of the entitled amount (if less than all then Investor Directors, then asselected by the Holder Majority) shall promptly resign from the Board of Directors. For the avoidance of doubt, any such InvestorDirector shall not be required to resign from the Board of Directors pursuant to this Section 11(g) if such individual has then currentlybeen appointed or designated as a director of the Corporation pursuant to a right to appoint or designate a director that is then in effectunder another agreement with the Corporation or another certificate of designation of preferred stock of the Corporation, but suchindividual will no longer be an Investor Director under this Certificate of Designation.(h) To the fullest extent permitted by applicable law, the Corporation, on behalf of itself and its Subsidiaries,renounces any interest or expectancy of the Corporation and its Subsidiaries in, or in being offered an opportunity to participate in, anybusiness opportunities that are from time to time presented to the Holders or any of their respective Affiliates or any of their respectiveagents, shareholders, members, partners, directors, officers, employees, investment manager, investment advisor, Affiliates orsubsidiaries (other than the Corporation and its Subsidiaries), including any director or officer of the Corporation who is also an agent,shareholder, member, partner, director, officer, employee, investment manager, investment advisor, Affiliate or subsidiary of anyHolder (each, a “Specified Party”), even if the business opportunity is one that15the Corporation or its Subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted theopportunity to do so, and no Specified Party shall have any duty to communicate or offer any such business opportunity to theCorporation or be liable to the Corporation or any of its Subsidiaries or any stockholder, including for breach of any fiduciary or otherduty, as a director or officer or controlling stockholder or otherwise, and the Corporation shall indemnify each Specified Party againstany claim that such Person is liable to the Corporation or its stockholders for breach of any fiduciary duty, by reason of the fact thatsuch Person (i) participates in, pursues or acquires any such business opportunity, (ii) directs any such business opportunity to anotherPerson or (iii) fails to present any such business opportunity, or information regarding any such business opportunity, to theCorporation or its Subsidiaries, unless, in the case of a Person who is a director or officer of the Corporation, such business opportunityis expressly offered to such director or officer in writing solely in his or her capacity as a director or officer of the Corporation.Section 12. Issuance of Shares.(a) Each book-entry notation (and, if applicable, each certificate) representing shares of Preferred Stock shall bear alegend substantially to the following effect:THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN HAVE NOT BEENREGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANYSTATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE AREGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLESTATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACTOR SUCH LAWS.THE SECURITIES REPRESENTED BY THIS CERTIFICATE IDENTIFIED HEREIN ARE SUBJECT TOTRANSFER AND OTHER RESTRICTIONS SET FORTH IN THE CERTIFICATE OF DESIGNATION AND ATRANSACTION AGREEMENT, DATED AS OF OCTOBER 10, 2018, COPIES OF WHICH ARE ON FILE WITHTHE SECRETARY OF THE ISSUER AND WILL BE PROVIDED WITHOUT COST, UPON WRITTEN REQUESTTO THE SECRETARY OF THE ISSUER.(b) Shares of Preferred Stock shall be in uncertificated, book-entry form as permitted by the bylaws of the Corporationand Nevada law. Within a reasonable time after the issuance or transfer of uncertificated shares and at least annually thereafter, theCorporation shall, or shall cause the Transfer Agent to, send to the registered owner thereof a written statement containing theinformation specified in Nevada Revised Statutes 78.235(5). Transfers of shares of Preferred Stock held in uncertificated, book-entryform shall be made only upon the transfer books of the Corporation kept at an office of the Transfer Agent upon receipt of propertransfer instructions from the registered owner of such uncertificated shares, or from a duly authorized attorney or from an individualpresenting proper evidence of succession, assignment or authority to transfer such shares. The Corporation may refuse any requestedtransfer until furnished evidence reasonably16satisfactory to it that such transfer is made in accordance with the terms of this Certificate of Designation.Section 13. Transfers.(a) Prior to April 10, 2019, without the consent of the Corporation, no Holder may transfer any Preferred Stock otherthan to an Affiliate of such Holder or in connection with a business combination transaction involving the Corporation. After April 10,2019, the Preferred Stock shall be unrestricted and freely transferable, subject to applicable securities law binding upon such Holder ortransfer.(b) Notwithstanding anything to the contrary in Section 13(a), Holders may make a bona fide pledge of any or all ofits Preferred Stock in connection with a bona fide loan or other extension of credit, and any foreclosure by any pledged under suchloan or extension of credit on any such pledged Preferred Stock (or any sale thereof) shall not be considered a violation of Section13(a) and the transfer of the Preferred Stock by a pledgee who has foreclosed on such loan or extension of credit shall not beconsidered a violation or breach of Section 13(a).(c) Any Person that becomes a Holder pursuant to a transfer under this Section 13 shall be subject to all of the termsand conditions of this Certificate of Designation.Section 14. Miscellaneous.(a) Notices. Any and all notices or other communications or deliveries to be provided by the Holders hereunder shallbe in writing and delivered personally, by facsimile, e-mail, or sent by a nationally recognized overnight courier service, addressed tothe Corporation, at the address set forth above Attention: Joseph Daches, facsimile number (210) 999-5401, JDaches@lilisenergy.comor such other facsimile number, e-mail address or address as the Corporation may specify for such purposes by notice to the Holdersdelivered in accordance with this Section 14. Any and all notices or other communications or deliveries required or permitted to beprovided hereunder shall be in writing and shall be deemed given and effective on the earliest of: (i) the date of transmission (if there isno receipt of notice of a failed delivery to the notice party), if such notice or communication is delivered via e-mail attachment as setforth on the signature pages attached hereto at or prior to 5:30 p.m. (Houston, Texas time) on a Business Day, (ii) the next BusinessDay after the date of transmission (if there is no receipt of notice of a failed delivery to the notice party), if such notice orcommunication is delivered via e-mail attachment as set forth on the signature pages attached hereto on a day that is not a BusinessDay or later than 5:30 p.m. (Houston, Texas time) on any Business Day, (iii) the second Business Day following the date of mailing, ifsent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the party to whom such notice is required tobe given.17(b) Information; Notice. If at any time while the Preferred Stock is outstanding the Corporation is not required to filereports under Section 13(a) or 15(d) of the Exchange Act, the Corporation shall provide to the Holders:(i) quarterly unaudited financial statements prepared in accordance with GAAP within 45 days after the end ofeach fiscal quarter, in each case, in form and substance acceptable to the Holder Majority;(ii) audited annual financial statements prepared in accordance with GAAP within 90 days after the end ofeach fiscal year of the Corporation (certified by an independent accounting firm of national standing); and(iii) annually, within 90 days after the end of the fiscal year, a reserve report prepared or audited by a thirdparty engineering firm of national standing in accordance with Commission guidelines with an “as of” date ofDecember 31 of the preceding calendar year.(c) Absolute Obligation. Except as expressly provided herein, no provision of this Certificate of Designation shall alteror impair the obligation of the Corporation, which is absolute and unconditional, to pay liquidated damages, accrued dividends andaccrued interest, as applicable, on the shares of Preferred Stock at the time, place, and rate, and in the coin or currency, hereinprescribed.(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of thisCertificate of Designation shall be governed by and construed and enforced in accordance with the internal laws of the State ofNevada, without regard to the principles of conflict of laws thereof. The Corporation and each Holder, by acceptance of shares ofPreferred Stock, hereby irrevocable and unconditionally submits, for itself and its property, to the exclusive jurisdiction of the SupremeCourt of the State of New York sitting in New York County, Borough of Manhattan, and of the United States District Court for theSouthern District of New York, and any appellate court from any district thereof, in any action or proceeding arising out of or relatingto this Certificate of Designation, or for recognition or enforcement of any judgment, and each of them hereby irrevocably andunconditionally agrees that all claims in respect of any such action or proceeding may be heard and determined in such New YorkState or, to the extent permitted by law, in such federal court. The Corporation and each Holder, by acceptance of shares of PreferredStock, agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions bysuit on the judgment or in any other manner provided by law. Nothing in this Certificate of Designation shall affect any right that anyHolder may otherwise have to bring any action or proceeding relating to this Certificate of Designation against the Corporation or itsproperties in the courts of any jurisdiction. The Corporation hereby irrevocably and unconditionally waives, to the fullest extent it maylegally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceedingarising out of or relating to this Certificate of Designation in any court referred to in this Section 14(d).18The Corporation and each Holder, by acceptance of shares of Preferred Stock, hereby irrevocably waives, to the fullest extentpermitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court. TheCorporation and each Holder, by acceptance of shares of Preferred Stock, irrevocably consents to service of process in the mannerprovided for notices in this Certificate of Designation. Nothing in this Certificate of Designation will affect the right of the Corporationor any Holder to serve process in any other manner permitted by law. The Corporation and each Holder, by acceptance of shares ofPreferred Stock, hereby waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any legalproceeding directly or indirectly arising out of or relating to this Certificate of Designation or the transactions contemplated hereby(whether based on contract, tort or any other theory). If any party shall commence an action or proceeding to enforce any provisions ofthis Certificate of Designation, then the prevailing party in such action or proceeding shall be reimbursed by the other party for itsattorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.(e) Waiver. Any waiver by the Corporation or a Holder of a breach of any provision of this Certificate of Designationshall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of thisCertificate of Designation or a waiver by any other Holders. The failure of the Corporation or a Holder to insist upon strict adherenceto any term of this Certificate of Designation on one or more occasions shall not be considered a waiver or deprive that party (or anyother Holder) of the right thereafter to insist upon strict adherence to that term or any other term of this Certificate of Designation onany other occasion. Any waiver by the Corporation or a Holder must be in writing.(f) Severability. If any provision of this Certificate of Designation is invalid, illegal or unenforceable, the balance ofthis Certificate of Designation shall remain in effect, and if any provision is inapplicable to any Person or circumstance, it shallnevertheless remain applicable to all other Persons and circumstances. If it shall be found that any interest or other amount deemedinterest due hereunder violates the applicable law governing usury, the applicable rate of interest due hereunder shall automatically belowered to equal the maximum rate of interest permitted under applicable law.(g) Next Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than aBusiness Day, such payment shall be made on the next succeeding Business Day.(h) Headings. The headings contained herein are for convenience only, do not constitute a part of this Certificate ofDesignation and shall not be deemed to limit or affect any of the provisions hereof.(i) Status of Redeemed Preferred Stock. Shares of Preferred Stock may only be issued pursuant to the OctoberTransaction Agreement or this Certificate of Designation. If any shares of Preferred Stock shall be redeemed or reacquired by theCorporation, such shares shall19resume the status of authorized but unissued shares of preferred stock and shall no longer be designated as Series D 8.25%Participating Preferred Stock.(j) Calculations. Any calculations made by the Corporation or Board of Directors pursuant to this Certificate ofDesignation shall be undertaken and made in good faith.******20RESOLVED, FURTHER, that the Chairman, the Chief Executive Officer, the president or any vice-president, and thetreasurer, assistant treasurer, secretary or any assistant secretary, of the Corporation be and they hereby are authorized and directed toprepare and file this Certificate of Designation in accordance with the foregoing resolution and the provisions of Nevada law.IN WITNESS WHEREOF, the undersigned have executed this Certificate of Designation this 5th day of March, 2019./s/ Ronald D. Ormand/s/ Joseph C. DachesName: Ronald D. OrmandName: Joseph C. DachesTitle: Chief Executive OfficerTitle: President, Chief Financial Officer and Treasurer21      Execution VersionAMENDMENT NO. 5 TO CREDIT AGREEMENTThis Amendment No. 5 to Credit Agreement (this “Amendment”) dated as of February 20, 2018 (the “Effective Date”) is amongLilis Energy, Inc. (the “Borrower”), certain subsidiaries of the Borrower party hereto (each, a “Guarantor” and collectively, the“Guarantors”), Wilmington Trust, National Association, as administrative agent (the “Administrative Agent”), Värde Partners, Inc.,(“Värde”) in its capacity as the Lead Lender (as defined in the Credit Agreement (as defined below)) and the other Lenders (as definedbelow) party hereto.INTRODUCTIONWhereas, the Borrower, the Guarantors, the Administrative Agent, Värde as the Lead Lender (as defined therein) and the otherlenders party thereto from time to time (the “Lenders”) are parties to that certain Credit Agreement dated as of April 26, 2017 (asamended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”).Whereas, the Borrower has requested that Administrative Agent and the Lenders amend the Credit Agreement in certain respectsas set forth herein, and the Administrative Agent and the Lenders have agreed to the foregoing, on the terms and conditions set forthherein.NOW THEREFORE, in consideration of the premises and the mutual covenants, representations and warranties containedherein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties heretohereby agree as follows:Section 1.Defined Terms; Other Definitional Provisions. As used in this Amendment, each of the terms definedin the opening paragraph and the Recitals above shall have the meanings assigned to such terms therein. Each term defined in theCredit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unlessexpressly provided to the contrary. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules andExhibits to this Amendment, unless otherwise specified. The words “hereof”, “herein”, and “hereunder” and words of similar importwhen used in this Amendment shall refer to this Amendment as a whole and not to any particular provision of this Amendment. Theterm “including” means “including, without limitation”. Paragraph headings have been inserted in this Amendment as a matter ofconvenience for reference only and it is agreed that such paragraph headings are not a part of this Amendment and shall not be used inthe interpretation of any provision of this Amendment.Section 2. Amendments to the Credit Agreement. Subject to the satisfaction of the conditions set forth in Section 4 below,and in reliance on the representations and warranties contained in Section 3 below, the Credit Agreement is hereby amended as follows:(a) Section 1.01 of the Credit Agreement is hereby amended by inserting the following definitions in the appropriatealphabetical order:“Amendment No. 5 Effective Date” means February 20, 2018.(b) Section 6.09 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (b), (ii)replacing “.” at the end of clause (c) with “; and”, and (iii) adding a new clause (d) as set forth below:(d) at any time on or after the Amendment No. 5 Effective Date, the Borrower may repurchase shares of its commonstock for an aggregate purchase price not to exceed $10,000,000;1provided that the Borrower may not purchase any of its common stock pursuant to this clause (d) that is owned by any (A)Affiliate of the Borrower or current employee, officer, or director of the Borrower or any Affiliate thereof and/or (B) formeremployee, former officer or former director of the Borrower or any Affiliate thereof unless such purchase made pursuant to thisclause (B) is at a market price and on arm's length terms.Section 3. Representations and Warranties. Each Credit Party hereby represents and warrants that: (a) after giving effect tothis Amendment, the representations and warranties contained in Article III of the Credit Agreement and in each other Loan Documentare true and correct in all material respects, except for any representation and warranty that is qualified by materiality or reference toMaterial Adverse Effect, which such representation and warranty shall be true and correct in all respects, on and as of the EffectiveDate, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be trueand correct in all material respects, except for any representation and warranty that is qualified by materiality or reference to MaterialAdverse Effect, which such representation and warranty shall be true and correct in all respects, as of such earlier date; (b) after givingeffect to this Amendment, no Default has occurred and is continuing; (c) the execution, delivery and performance of this Amendmentare within the corporate or limited liability company power and authority of such Credit Party and have been duly authorized byappropriate corporate or limited liability company action and proceedings; (d) this Amendment constitutes the legal, valid, and bindingobligation of such Credit Party enforceable in accordance with its terms, except as limited by applicable bankruptcy, insolvency,reorganization, moratorium, or similar laws affecting the rights of creditors generally and general principles of equity; (e) there are nogovernmental or other third party consents, licenses and approvals required in connection with the execution, delivery, performance,validity and enforceability of this Amendment; and (f) the Liens under the Loan Documents are valid and subsisting and secure theCredit Parties’ obligations under such Loan Documents.Section 4. Conditions to Effectiveness. This Amendment shall become effective on the Effective Date and enforceable againstthe parties hereto upon the satisfaction of the following conditions precedent:(a) the Administrative Agent and the Lead Lender shall have received this Amendment duly executed by the Borrower, theGuarantors, the Administrative Agent, the Lenders party hereto (which constitute all Lenders party to the Credit Agreement) and theLead Lender;(b) the Borrower shall have paid on or about the Effective Date all costs and expenses which are payable pursuant to Section10.03 of the Credit Agreement and which have been invoiced no later than one Business Days prior to the date hereof; and(c) the Lead Lender and the Administrative Agent shall have received executed copies of any amendments to the PermittedFirst Lien Credit Agreement executed on or about the date hereof.Section 5. Acknowledgments and Agreements.(a) Each Credit Party acknowledges that on the date hereof, all outstanding Obligations are payable in accordance with theirterms and each Credit Party waives any defense, offset, counterclaim or recoupment, in each case existing on the date hereof, withrespect to such Obligations. Each Credit Party does hereby adopt, ratify, and confirm the Credit Agreement and acknowledges andagrees that the Credit Agreement is and remains in full force and effect, and each Credit Party acknowledges and agrees that itsrespective liabilities and obligations under the Credit Agreement are not impaired in any respect by this Amendment.2(b) This Amendment is a Loan Document for the purposes of the provisions of the other Loan Documents. Without limiting theforegoing, any breach of representations, warranties, and covenants under this Amendment shall be a Default or Event of Default, asapplicable, under the Credit Agreement.Section 6. Reaffirmation of Guaranty. Each Guarantor hereby ratifies, confirms, and acknowledges that its obligations underthe Credit Agreement are in full force and effect and that each Guarantor continues to unconditionally and irrevocably, jointly andseverally, guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of allof the Obligations, and its execution and delivery of this Amendment does not indicate or establish an approval or consent requirementby the Guarantors in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement or any ofthe other Loan Documents.Section 7. Reaffirmation of Liens. Each Credit Party (a) is party to certain Security Documents securing and supporting theObligations under the Loan Documents, (b) represents and warrants that it has no defenses to the enforcement of the SecurityDocuments and that according to their terms the Security Documents will continue in full force and effect to secure the Obligationsunder the Loan Documents, as the same may be amended, supplemented, or otherwise modified, and (c) acknowledges, represents, andwarrants that the liens and security interests created by the Security Documents are valid and subsisting and create an acceptablesecurity interest in the collateral to secure the Obligations under the Loan Documents, as the same may be amended, supplemented, orotherwise modified.Section 8. Counterparts. This Amendment may be signed in any number of counterparts and by different parties hereto inseparate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constituteone and the same agreement. Transmission by facsimile or other electronic transmission of an executed counterpart of this Amendmentshall be deemed to constitute due and sufficient delivery of such counterpart.Section 9. Successors and Assigns. This Amendment shall be binding upon and inure to the benefit of the parties hereto andtheir respective successors and assigns permitted pursuant to the Credit Agreement.Section 10. Invalidity. In the event that any one or more of the provisions contained in this Amendment shall for any reasonbe held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisionof this Amendment.Section 11. Governing Law. This Amendment shall be governed by and construed in accordance with the laws of the State ofNew York. Section 10.09 of the Credit Agreement is hereby incorporated by reference herein mutatis mutandis.Section 12. Instruction to Administrative Agent. The Lenders hereby (i) authorize and instruct the Administrative Agent toexecute and deliver this Amendment and that certain Letter Agreement, dated as of the date hereof, by and between the AdministrativeAgent and Riverstone Credit Management LLC and (ii) acknowledge and agree that the instruction set forth in this Section 12constitutes an instruction from the Lenders under the Loan Documents, including Section 9.03 and Section 9.04 of the CreditAgreement.Section 13. RELEASE. For good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, each Credit Party hereby, for itself and its successors and assigns, fully and without reserve, releases, acquits, andforever discharges each Secured Party, its respective successors and assigns, officers, directors, employees, representatives,trustees, attorneys, agents and3affiliates (collectively the “Released Parties” and individually a “Released Party”) from any and all actions, claims, demands,causes of action, judgments, executions, suits, debts, liabilities, costs, damages, expenses or other obligations of any kind andnature whatsoever, direct and/or indirect, at law or in equity, whether now existing or hereafter asserted, whether absolute orcontingent, whether due or to become due, whether disputed or undisputed, whether known or unknown (INCLUDING,WITHOUT LIMITATION, ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITHRESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY) (collectively, the “Released Claims”), for or because of anymatters or things occurring, existing or actions done, omitted to be done, or suffered to be done by any of the Released Parties, ineach case, on or prior to the Effective Date and are in any way directly or indirectly arising out of or in any way connected to anyof this Amendment, the Credit Agreement, any other Loan Document, or any of the transactions contemplated hereby or thereby(collectively, the “Released Matters”). Each Credit Party, by execution hereof, hereby acknowledges and agrees that theagreements in this Section 13 are intended to cover and be in full satisfaction for all or any alleged injuries or damages arising inconnection with the Released Matters herein compromised and settled. Each Credit Party hereby further agrees that it will notsue any Released Party on the basis of any Released Claim released, remised and discharged by the Credit Parties pursuant to thisSection 13. In entering into this Amendment, each Credit Party consulted with, and has been represented by, legal counsel andexpressly disclaim any reliance on any representations, acts or omissions by any of the Released Parties and hereby agrees andacknowledges that the validity and effectiveness of the releases set forth herein do not depend in any way on any suchrepresentations, acts and/or omissions or the accuracy, completeness or validity hereof. The provisions of this Section 13 shallsurvive the termination of this Amendment, the Credit Agreement and the other Loan Documents and payment in full of theObligations.Section 14. Entire Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOANDOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TOTHE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITHRESPECT THERETO.THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THEPARTIES.(a) [The remainder of this page has been left blank intentionally.]4EXECUTED to be effective as of the date first above written. BORROWER:LILIS ENERGY, INC.By: Name: Joseph C. DachesTitle: EVP, Chief Financial Officer and Treasurer GUARANTORS:BRUSHY RESOURCES, INC. HURRICANE RESOURCES LLCLILIS OPERATING COMPANY, LLCIMPETRO OPERATING, LLCIMPETRO RESOURCES, LLCBy: Name: Joseph C. DachesTitle: Chief Financial Officer and TreasurerADMINISTRATIVE AGENT:WILMINGTON TRUST, NATIONAL ASSOCIATION,as Administrative AgentBy: Name: Alisha Clendaniel Title: Assistant Vice President LEAD LENDER:VÄRDE PARTNERS, INC.By: Name: Markus Specks Title: Managing Director SEVERALLY AND NOT JOINTLY FOR EACH ENTITY LISTED BELOW:By:____________________________Name: Markus SpecksTitle: Managing DirectorTHE VÄRDE FUND VI-A, L.P.By Värde Investment Partners G.P., LLC, Its General PartnerBy Värde Partners, L.P., Its Managing MemberBy Värde Partners, Inc., Its General PartnerVÄRDE INVESTMENT PARTNERS, L.P.By Värde Investment Partners G.P., LLC, Its General PartnerBy Värde Partners, L.P., Its Managing MemberBy Värde Partners, Inc., Its General PartnerTHE VÄRDE FUND XI (MASTER), L.P.By Värde Fund XI G.P., LLC, Its General PartnerBy Värde Partners, L.P., Its Managing MemberBy Värde Partners, Inc., Its General PartnerVÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER, L.P.By Värde Investment Partners G.P., LLC, Its General PartnerBy Värde Partners, L.P., Its Managing MemberBy Värde Partners, Inc., Its General PartnerTHE VÄRDE SKYWAY MASTER FUND, L.P.By The Värde Skyway Fund G.P., LLC, Its General PartnerBy Värde Partners, L.P., Its Managing MemberBy Värde Partners, Inc., Its General PartnerTHE VÄRDE FUND XII (MASTER), L.P.By The Värde Fund XII G.P., L.P., Its General PartnerBy: The Värde Fund XII UGP, LLC, its General PartnerBy Värde Partners, L.P., Its Managing MemberBy Värde Partners, Inc., Its General PartnerSignature Page to Amendment No. 5 to Credit AgreementExecution VersionAMENDMENT NO. 1 TO CREDIT AGREEMENTThis Amendment No. 1 to Credit Agreement (this “Amendment”) dated as of February 20, 2018 (the “Effective Date”) is amongLilis Energy, Inc. (the “Borrower”), certain subsidiaries of the Borrower party hereto (each, a “Guarantor” and collectively, the“Guarantors”) and Riverstone Credit Management LLC, as Administrative Agent (in such capacity, the “Administrative Agent”) and asCollateral Agent (as defined in the Credit Agreement (as defined below)) and the Lenders (as defined below) party hereto.INTRODUCTIONWhereas, the Borrower, the Guarantors, the Administrative Agent, the Collateral Agent (as defined therein) and the lenders partythereto from time to time (the “Lenders”) are parties to that certain Amended and Restated Senior Secured Term Loan Credit Agreementdated as of January 30, 2018 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the“Credit Agreement”).Whereas, the Borrower has requested that the Administrative Agent and the Lenders amend the Credit Agreement in certainrespects as set forth herein, and the Administrative Agent and the Lenders have agreed to the foregoing, on the terms and conditions setforth herein.NOW THEREFORE, in consideration of the promises and the mutual covenants, representations and warranties containedherein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties heretohereby agree as follows:Section 1.Defined Terms; Other Definitional Provisions. As used in this Amendment, each of the terms defined in theopening paragraph and the Introduction above shall have the meanings assigned to such terms therein. Each term defined in the CreditAgreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless expresslyprovided to the contrary. Article, Section, Schedule, and Exhibit references are to Articles and Sections of and Schedules and Exhibitsto this Amendment, unless otherwise specified. Section 1.2 of the Credit Agreement is hereby incorporated by reference herein mutatismutandis.Section 2. Amendments to the Credit Agreement. Subject to the satisfaction of the conditions set forth in Section 4 below,and in reliance on the representations and warranties contained in Section 3 below, the Credit Agreement is hereby amended as follows:(a) Section 1.1 of the Credit Agreement is hereby amended by inserting the following definition in the appropriate alphabeticalorder:“Amendment No. 1 Effective Date” means February 20, 2018.(b) Section 8.9(d) of the Credit Agreement is hereby amended to read as follows:(d) Restricted Payments permitted pursuant to Section 9.6(a) or Section 9.6(b);(c) Section 9.6 of the Credit Agreement is hereby amended by (i) deleting the word “and” at the end of clause (a), (ii) replacing“.” at the end of clause (b) with “; and”, and (iii) adding a new clause (c) as set forth below:(c) at any time on or after the Amendment No. 1 Effective Date, the Borrower may repurchase shares of its commonstock for an aggregate purchase price not to exceed $10,000,000; provided that the Borrower may not purchase any of itscommon stock pursuant to this clause (c) that is owned by any (A) Affiliate of the Borrower or current employee, officer, ordirector of the Borrower or any Affiliate thereof and/or (B) former employee, former officer, or former director of the Borroweror any Affiliate thereof unless such purchase made pursuant to this clause (B) is at a market price and on arm’s length terms.Section 3. Representations and Warranties. Each Credit Party hereby represents and warrants that: (a) after giving effect tothis Amendment, the representations and warranties contained in Article VII of the Credit Agreement and in each other CreditDocument are true and correct in all material respects, except for any representation and warranty that is qualified by materiality orreference to Material Adverse Effect, which such representation and warranty shall be true and correct in all respects, on and as of theEffective Date, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shallbe true and correct in all material respects, except for any representation and warranty that is qualified by materiality or reference toMaterial Adverse Effect, which such representation and warranty shall be true and correct in all respects, as of such earlier date; (b) aftergiving effect to this Amendment, no Default or Event of Default has occurred and is continuing; (c) the execution, delivery andperformance of this Amendment are within the corporate or limited liability company power and authority of such Credit Party andhave been duly authorized by appropriate corporate or limited liability company action and proceedings; (d) this Amendmentconstitutes the legal, valid, and binding obligation of such Credit Party enforceable in accordance with its terms, except as limited byapplicable bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting the rights of creditors generally and generalprinciples of equity; (e) there are no governmental or other third party consents, licenses and approvals required in connection with theexecution, delivery, performance, validity and enforceability of this Amendment; and (f) the Liens under the Credit Documents arevalid and subsisting and secure the Credit Parties’ obligations under such Credit Documents.Section 4. Conditions to Effectiveness. This Amendment shall become effective on the Effective Date and enforceable againstthe parties hereto upon the satisfaction of the following conditions precedent:(a) the Administrative Agent shall have received this Amendment duly executed by the Borrower, the Guarantors, theAdministrative Agent, and the Lenders party hereto (which constitute all Lenders party to the Credit Agreement);(b) the Borrower shall have paid on the Effective Date (i) all costs and expenses which are payable pursuant to Section 12.5 ofthe Credit Agreement and which have been invoiced no later than one Business Day prior to the date hereof and (ii) an amendment feeas provided for in that certain Fee Letter, dated as of the Effective Date, by and between Lilis and the Administrative Agent;(c) the Administrative Agent shall have received executed copies of any amendments to the Permitted Second Lien CreditAgreement executed on or about the date hereof; and(d) the Administrative Agent shall have entered into that certain Letter Agreement, dated as of the Effective Date, by andbetween the Administrative Agent, in its capacity as Priority Lien Agent (as defined in the Amended and Restated IntercreditorAgreement), and Wilmington Trust, National Association, in its capacity as Second Lien Agent (as defined in the Amended andRestated Intercreditor Agreement), and such Letter Agreement shall be in form and substance satisfactory to the Administrative Agent.Section 5. Acknowledgments and Agreements.(a) Each Credit Party acknowledges that on the date hereof, all outstanding Obligations are payable in accordance with theirterms and each Credit Party waives any defense, offset, counterclaim or recoupment, in each case existing on the date hereof, withrespect to such Obligations. Each Credit Party does hereby adopt, ratify, and confirm the Credit Agreement and acknowledges andagrees that the Credit Agreement is and remains in full force and effect, and each Credit Party acknowledges and agrees that itsrespective liabilities and obligations under the Credit Agreement are not impaired in any respect by this Amendment.(b) This Amendment is a Credit Document for the purposes of the provisions of the other Credit Documents. Without limitingthe foregoing, any breach of representations, warranties, and covenants under this Amendment shall be a Default or Event of Default,as applicable, under the Credit Agreement.Section 6. Reaffirmation of Guaranty. Each Guarantor hereby ratifies, confirms, and acknowledges that its obligations underthe Credit Agreement are in full force and effect and that each Guarantor continues to unconditionally and irrevocably, jointly andseverally, guarantee the full and punctual payment, when due, whether at stated maturity or earlier by acceleration or otherwise, of allof the Obligations, and its execution and delivery of this Amendment does not indicate or establish an approval or consent requirementby the Guarantors in connection with the execution and delivery of amendments, consents or waivers to the Credit Agreement or any ofthe other Credit Documents.Section 7. Reaffirmation of Liens. Each Credit Party (a) is party to certain Security Documents securing and supporting theObligations under the Credit Documents, (b) represents and warrants that it has no defenses to the enforcement of the SecurityDocuments and that according to their terms the Security Documents will continue in full force and effect to secure the Obligationsunder the Credit Documents, as the same may be amended, supplemented, or otherwise modified, and (c) acknowledges, represents,and warrants that the liens and security interests created by the Security Documents are valid and subsisting and create an acceptablesecurity interest in the collateral to secure the Obligations under the Credit Documents, as the same may be amended, supplemented, orotherwise modified.Section 8. Miscellaneous. Sections 12.3, 12.6, 12.9, 12.10, 12.11, 12.12, 12.13, 12.14 and 12.15 of the Credit Agreement arehereby incorporated by reference herein mutatis mutandis.Section 9. RELEASE. For good and valuable consideration, the receipt and sufficiency of which are herebyacknowledged, and without limitation or curtailment of any of the provisions of Section 12.5 of the Credit Agreement, each CreditParty hereby, for itself and its successors and assigns, fully and without reserve, releases, acquits, and forever discharges eachSecured Party, its respective successors and assigns, officers, directors, employees, representatives, trustees, attorneys, agentsand affiliates (collectively the “Released Parties” and individually a “Released Party”) from any and all actions, claims, demands,causes of action, judgments, executions, suits, debts, liabilities, costs, damages, expenses or other obligations of any kind andnature whatsoever, direct and/or indirect, at law or in equity, whether now existing or hereafter asserted, whether absolute orcontingent, whether due or to become due, whether disputed or undisputed, whether known or unknown (INCLUDING,WITHOUT LIMITATION, ANY OFFSETS, REDUCTIONS, REBATEMENT, CLAIMS OF USURY OR CLAIMS WITHRESPECT TO THE NEGLIGENCE OF ANY RELEASED PARTY) (collectively, the “Released Claims”), for or because of anymatters or things occurring, existing or actions done, omitted to be done, or suffered to be done by any of the Released Parties, ineach case, on or prior to the Effective Date and are in any way directly or indirectly arising out of or in any way connected to anyof this Amendment, the Credit Agreement, any other Credit Document, or any of the transactions contemplated hereby orthereby (collectively, the “Released Matters”). Each Credit Party, by execution hereof, hereby acknowledges and agrees that theagreements in this Section 9 are intended to cover and be in full satisfaction for all or any alleged injuries or damages arising inconnection with the Released Matters herein compromised and settled. Each Credit Party hereby further agrees that it will notsue any Released Party on the basis of any Released Claim released, remised and discharged by the Credit Parties pursuant to thisSection 9. In entering into this Amendment, each Credit Party consulted with, and has been represented by, legal counsel andexpressly disclaim any reliance on any representations, acts or omissions by any of the Released Parties and hereby agrees andacknowledges that the validity and effectiveness of the releases set forth herein do not depend in any way on any suchrepresentations, acts and/or omissions or the accuracy, completeness or validity hereof. The provisions of this Section 9 shallsurvive the termination of this Amendment, the Credit Agreement and the other Credit Documents and payment in full of theObligations.(a) [The remainder of this page has been left blank intentionally.]1EXECUTED to be effective as of the date first above written. BORROWER:LILIS ENERGY, INC.By: Name:Title: GUARANTORS:BRUSHY RESOURCES, INC. HURRICANE RESOURCES LLCLILIS OPERATING COMPANY, LLCIMPETRO OPERATING LLCIMPETRO RESOURCES, LLCBy: Name:Title: ADMINISTRATIVE AGENT:RIVERSTONE CREDIT MANAGEMENT LLC, as Administrative Agent andCollateral Agent By: Riverstone Equity Partners LP, its sole member By: Riverstone Holdings LLC, its general partner By: Name: Thomas J. Walker Title: Chief Financial Officer; Authorized Person  LENDERS:RIVERSTONE CREDIT PARTNERS – DIRECT, L.P., as Lender By: RCP F2 GP, L.P., its general partner By: RCP F1 GP, L.L.C., its general partner By: Name: Thomas J. Walker Title: Manager RIVERSTONE CREDIT PARTNERS II – DIRECT, L.P., as Lender By: RCP F2 GP, L.P., its general partner By: RCP F1 GP, L.L.C., its general partner By: Name: Thomas J. Walker Title: ManagerSignature Page to Amendment No. 1 to Credit Agreement RIVERSTONE STRATEGIC CREDIT PARTNERS A-1 AIV, L.P., as Lender By: RCP Strategic Credit Partners (A-2) GP, L.P., its general partner By: RCP Strategic Credit Partners (A) GP, L.L.C., its general partner By: Name: Thomas J. Walker Title: Manager RIVERSTONE STRATEGIC CREDIT PARTNERS A-2 AIV, L.P., as Lender By: RCP Strategic Credit Partners (A-2) GP, L.P., its general partner By: RCP Strategic Credit Partners (A) GP, L.L.C., its general partner By: Name: Thomas J. Walker Title: ManagerSignature Page to Amendment No. 1 to Credit AgreementExecution VersionExhibit 10.41FIRST AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENTThis FIRST AMENDMENT AND WAIVER TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT(this “Agreement”) dated as of March 1, 2019, is among Lilis Energy Inc., a Nevada corporation (the “Borrower”), certainSubsidiaries of the Borrower (the “Guarantors”), BMO Harris Bank, N.A. (“BMO”), as Administrative Agent for the Lenders, andthe other Lenders from time to time party hereto.RecitalsA. WHEREAS, the Borrower, the Guarantors, the Lenders party thereto and the Administrative Agent are parties to thatcertain Second Amended and Restated Senior Secured Revolving Credit Agreement dated as of October 10, 2018 (as amended,restated, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to whichthe Lenders have made certain credit available to and on behalf of the Borrower.B. WHEREAS, subject to the terms and conditions set forth herein, the Lenders have agreed to redetermine theBorrowing Base and make certain other amendments to the Credit Agreement as set forth herein.C. WHEREAS, the Borrower has informed the Administrative Agent that the Borrower may be unable to satisfy theleverage ratio covenant in Section 9.01(a) of the Credit Agreement as of the fiscal quarter ended December 31, 2018 (the“December 31, 2018 Leverage Ratio”) and the Borrower has requested that the Majority Lenders consent to a waiver of therequirement to comply with the December 31, 2018 Leverage Ratio (the “Waiver Request”).D. NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, for good andvaluable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, which include all of theLenders party to the Credit Agreement, agree as follows:Section 1Defined Terms. Each capitalized term which is defined in the Credit Agreement, but which is not defined in thisAgreement, shall have the meaning ascribed to such term in the Credit Agreement.Section 2 Waiver. Subject to the occurrence of the Effective Date, the Borrower hereby requests, and the Administrative Agentand the Majority Lenders hereby agree to the Waiver Request.Section 3 Effective Date Amendments. Subject to the occurrence of the Effective Date, the following amendments to the CreditAgreement shall be made:3.1 The definition of “EBITDAX” is hereby amended by (a) inserting “and” immediately before clause (vi) thereof and (b)replacing such clause (vi) in its entirety to read as follows:(vi) transactional costs, fees and expenses (excluding, for the avoidance of doubt, capitalization of PIK interest, payment ofaccrued interest and other similar costs and expenses) relating to this Agreement, the Transactions, the Second Lien Facility andtransactions relating to the Second Lien Discharge in an aggregate amount with respect to this clause (vi) not to exceed (A)$2,000,000 with respect to the Fiscal Quarter ended December 31, 2018, (B) $1,750,000 with respect to the Fiscal Quarter endingMarch 31, 2019, and (C) thereafter, 10.00% of EBITDAX during the period in which such costs, fees and expenses are incurred,minus (b) all noncash income to the extent included in determining Consolidated Net Income for such period (includingcancellation of indebtedness income and non-cash income resulting from the requirements of ASC 410 and 815)3.2 The definition of “Indebtedness” is hereby amended by amending and restating clause (i) of the proviso at the end thereof inits entirety to read as follows:(i) (A) from and after the Closing Date until June 1, 2019, trade and other ordinary-course payables and accrued expensesarising in the ordinary course of business and (B) from and after June 1, 2019, trade and other ordinary-course payables andaccrued expenses arising in the ordinary course of business that are not overdue by more than ninety (90) days (other than thosewhich are being contested in good faith by appropriate action and for which adequate reserves have been maintained in accordancewith GAAP),Section 4 Amendments. Subject to the occurrence of the Borrowing Base and Amendment Effective Date, the followingamendments to the Credit Agreement shall be made:4.1 Amendment to Section 1.01. The following definitions are added to the Credit Agreement in their entirety wherealphabetically appropriate, in each case, to read as follows:“Borrowing Base and Amendment Effective Date” means the Borrowing Base and Amendment Effective Date asdefined in the First Amendment.“First Amendment” means that certain First Amendment and Waiver to Second Amended and Restated CreditAgreement dated as of March 1, 2019 among the Borrower, Guarantors, Administrative Agent and the Lenders party hereto, asamended, supplemented or otherwise modified.“First Amendment Period” means the period commencing on and from the Borrowing Base and Amendment EffectiveDate through the date on which the New Borrowing Base Notice is delivered in respect of the July 1, 2019 ScheduledRedetermination pursuant to the First Amendment.“May 2019 Reserve Report” has the meaning assigned to such term in Section 8.12(a).“Series E Preferred Stock” means the Borrower’s Series E 8.25% Convertible Participating Preferred Stock.“Series F Preferred Stock” means the Borrower’s Series F 9.00% Participating Preferred Stock.4.2 Amendment to Section 1.01. Clause (d)(iii) of the definition of “Change in Control” is hereby amended by replacing“Specified Preferred Stock” with “Permitted Holders”.4.3 Amendment to Section 1.01. The following definitions in the Credit Agreement are hereby amended and restated in theirentirety, in each case, to read as follows:“Maturity Date” means the fifth (5th) anniversary of the Closing Date.“Second Lien Discharge” means the Second Lien Facility and/or the Second Lien Obligations, in each case, has beenrepaid and/or converted in full to (i) common Equity Interests, (ii) preferred Equity Interests on terms substantially similar tothose set forth in the Series C Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock or the Series FPreferred Stock and/or (iii) other preferred Equity Interests on terms reasonably acceptable to the Administrative Agent.“Second Lien Discharge Date” means the date on which the Second Lien Discharge has occurred.“Series C Preferred Stock” means the Borrower’s Series C-1 9.75% Participating Preferred Stock and Series C-2 9.75%Participating Preferred Stock.“Series D Preferred Stock” means the Borrower’s Series D 8.25% Participating Preferred Stock.“Specified Preferred Stock” shall mean (a) the Series C Preferred Stock, (b) the Series D Preferred Stock, (c) the SeriesE Preferred Stock, (d) the Series F Preferred Stock, (e) any Equity Interests issued in connection with a conversion of theSecond Lien Facility and (f) any Equity Interests of the Borrower that (i) are perpetual preferred stock, (ii) are not DisqualifiedCapital Stock, (iii) do not require the scheduled payments of dividends in cash or Cash Equivalents prior to the Maturity Date(it being understood, for the avoidance of doubt, that dividends in the form of additional Specified Preferred Stock or accrual tothe stated value or liquidation preference thereof are permitted) and (iv) are not and do not become convertible into orexchangeable for Indebtedness or any other Equity Interests that would (A) constitute Disqualified Capital Stock or (B) providefor the required scheduled payments of dividends in cash or Cash Equivalents prior to the Maturity Date.4.4 Amendment to Section 1.01. Section 1.01 of the Credit Agreement is hereby amended by deleting the definition of“September 1, 2018 Reserve Report”.4.5 Amendment to Section 2.07. Section 2.07 of the Credit Agreement is hereby amended as follows:(a) Clause (a) thereof is amended and restated in its entirety to read as follows:(a) Initial Borrowing Base. For the period from and including the Borrowing Base and Amendment Effective Date tobut excluding the first Redetermination Date thereafter, the amount of the Borrowing Base shall be $125,000,000.Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to theBorrowing Base Adjustment Provisions.(b) Clause (b) thereof is amended and restated in its entirety to read as follows:(b) Scheduled and Interim Redeterminations. The Borrowing Base shall be redetermined on or about July 1, 2019 andthereafter, semi-annually on or about May 1st and November 1st of each year, commencing on or about November 1, 2019, ineach case in accordance with this Section 2.07 (each such redetermination, a “Scheduled Redetermination”), and, subject toSection 2.07(d), such redetermined Borrowing Base shall become effective and applicable to the Borrower, the AdministrativeAgent, the Issuing Bank(s) and the Lenders on the date of such applicable redetermination. The Borrower may, by notifyingthe Administrative Agent thereof, one time between any Scheduled Redetermination, elect to cause the Borrowing Base to beredetermined in accordance with this Section 2.07. Further, the Administrative Agent may, or at the direction of the RequiredLenders shall, by notifying the Borrower thereof, one time between any Scheduled Redeterminations, elect to cause theBorrowing Base to be redetermined (collectively with the Borrower’s right set forth in the previous sentence, an “InterimRedetermination”) in accordance with this Section 2.07.(c) Clause (c)(ii)(A) thereof is amended and restated in its entirety to read as follows:(A) in the case of a Scheduled Redetermination (1) if the Administrative Agent shall have received theEngineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and Section 8.12(c) (excluding theMay 2019 Reserve Report) in a timely and complete manner, then before or on or about April 15th or October 15th, as the casemay be, of such year following the date of delivery, and (2) if (I) the Administrative Agent shall not have received theEngineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and Section 8.12(c) in a timely andcomplete manner and (II) in connection with the May 2019 Reserve Report, then promptly after the Administrative Agent hasreceived complete Engineering Reports from the Borrower and has had a reasonable opportunity to determine the ProposedBorrowing Base in accordance with Section 2.07(c)(i); and(d) Clause (d)(i) thereof is amended and restated in its entirety to read as follows:(i) in the case of a Scheduled Redetermination, (A) if the Administrative Agent shall have received theEngineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and Section 8.12(c) (excluding theMay 2019 Reserve Report) in a timely and complete manner, then on or about May 1st or November 1st of each year, asapplicable, following such notice (or as soon as possible thereafter, pursuant to the procedures set forth in Section 2.07(c)(iii)),(B) in connection with the May 2019 Reserve Report, then on or about July 1, 2019 and (C) if the Administrative Agent shallnot have received the Engineering Reports required to be delivered by the Borrower pursuant to Section 8.12(a) and Section8.12(c) in a timely and complete manner, then on the Business Day next succeeding delivery of such New Borrowing BaseNotice; and4.6 Amendment to Section 8.12. Section 8.12(a) of the Credit Agreement is hereby amended and restated in its entirety to read asfollows:(a) On or before June 1, 2019 and each October 1st and April 1st thereafter, the Borrower shall furnish to the AdministrativeAgent a Reserve Report evaluating the Oil and Gas Properties of the Borrower and its Subsidiaries as of the immediatelypreceding January 1st and July 1st, as applicable, or, with respect to the report required to be delivered on or before June 1,2019, as of no earlier than May 1, 2019 (the “May 2019 Reserve Report”). The Reserve Report as of January 1st and deliveredon or before April 1st of each year (the “January 1 Reserve Report”), shall be prepared by one or more Approved PetroleumEngineers, and the May 2019 Reserve Report and each Reserve Report as of July 1st and delivered on or before October 1st ofeach year, shall be prepared by one or more Approved Petroleum Engineers or internally under the supervision of the chiefengineer of the Borrower (in a manner reasonably acceptable to the Administrative Agent) who shall certify such ReserveReport to be true and accurate in all material respects and, except as otherwise specified therein, to have been prepared inaccordance with the procedures used in the immediately preceding January 1 Reserve Report.4.7 Amendment to Section 9.04. Section 9.04 of the Credit Agreement is hereby amended as follows:(a) Part (A) of the parenthetical in clause (a)(iv) thereof is amended by deleting “or” before “the Series D Preferred Stock”,replacing it with a comma and adding “, the Series E Preferred Stock or the Series F Preferred Stock” before “and/or otherpreferred Equity Interests”.(b) The period at the end of clause (a)(v) thereof is hereby deleted and replaced with a semicolon, and the following proviso isadded at the end thereof:provided that no Restricted Payment shall be permitted to be made pursuant to this Section 9.04(a)(v) during the FirstAmendment Period.(c) Clause (b)(i)(B)(2) thereof is amended by deleting “or” before “the Series D Preferred Stock”, replacing it with a comma andadding “, the Series E Preferred Stock or the Series F Preferred Stock” before “and/or other preferred Equity Interests”.Section 5 Conditions Precedent to Effective Date. This Agreement shall become effective on the date (such date, the “EffectiveDate”) when each of the following conditions is satisfied (or waived) in accordance with the terms herein:5.1 The Administrative Agent and the Lenders, shall have received (a) reimbursement or payment of all reasonable anddocumented out-of-pocket expenses required to be reimbursed or paid by the Borrower under Section 12.03 of the CreditAgreement in connection with this Agreement (including, the fees, charges and disbursements of Simpson Thacher & Bartlett LLP,counsel to the Administrative Agent) and (b) a consent fee payable to the Administrative Agent for the account of each Lender thatexecutes and delivers a signed counterpart of this Agreement on or prior to the Effective Date (each such Lender, a “ConsentingLender”) in an amount equal to 0.175% of each such Consenting Lender’s pro rata share of the Borrowing Base in effectimmediately prior to the Effective Date;5.2 The Administrative Agent shall have received from the Borrower, each Guarantor, and each Lender in their respectivecapacities, counterparts of this Agreement signed on behalf of such Persons.5.3 As of the Effective Date, after giving effect to this Agreement, (a) the representations and warranties of each Loan Party setforth in the Credit Agreement and in each other Loan Document are true and correct in all material respects (unless alreadyqualified by materiality in which case such applicable representation and warranty shall be true and correct), except to the extentsuch representations and warranties expressly relate to an earlier date, in which case they shall be true and correct in all materialrespects (unless already qualified by materiality in which case such applicable representation and warranty shall be true and correct)as of such earlier date and (b) no Default, Event of Default or Borrowing Base Deficiency has occurred and is continuing.Each party hereto hereby authorizes and directs the Administrative Agent to declare the this Agreement to be effective (andthe Effective Date shall occur) when it has received documents confirming or certifying, to the reasonable satisfaction of theAdministrative Agent, compliance with the conditions set forth in this Section 5. Such declaration shall be final, conclusive andbinding upon all parties to the Credit Agreement for all purposes.Section 6 Conditions Precedent to Borrowing Base and Amendment Effective Date. Section 4 of the Agreement shall becomeeffective on the date (such date, the “Borrowing Base and Amendment Effective Date”) when each of the following conditions issatisfied (or waived) in accordance with the terms herein:6.1 The Effective Date shall have occurred.6.2 The Administrative Agent and the Lenders shall have received (a), for the ratable benefit of each Lender, an upfront fee equalto 60.0 basis points on an amount equal to the increase in such Lender’s allocated share of the Borrowing Base on the BorrowingBase and Amendment Effective Date over such Lender’s allocated share of the Borrowing Base in effect immediately prior to theBorrowing Base and Amendment Effective Date (which upfront fees shall be fully earned and due and payable in full on theoccurrence of the Borrowing Base and Amendment Effective Date) and (b) reimbursement or payment of all reasonable anddocumented out-of-pocket expenses required to be reimbursed or paid by the Borrower under Section 12.03 of the CreditAgreement in connection with this Agreement (including, fees, charges and disbursements of Simpson Thacher & Bartlett LLP,counsel to the Administrative Agent).6.3 The Second Lien Discharge Date shall have occurred, or shall occur, substantially contemporaneously with the occurrence ofthe Borrowing Base and Amendment Effective Date.6.4 As of the Borrowing Base and Amendment Effective Date, after giving effect to this Agreement, (a) the representations andwarranties of each Loan Party set forth in the Credit Agreement and in each other Loan Document shall be true and correct in allmaterial respects (unless already qualified by materiality in which case such applicable representation and warranty shall be trueand correct), except to the extent such representations and warranties expressly relate to an earlier date, in which case they shall betrue and correct in all material respects (unless already qualified by materiality in which case such applicable representation andwarranty shall be true and correct) as of such earlier date and (b) no Default, Event of Default or Borrowing Base Deficiency hasoccurred and is continuing.Each party hereto hereby authorizes and directs the Administrative Agent to declare effective the Borrowing Base andAmendment Effective Date when it has received documents confirming or certifying, to the reasonable satisfaction of theAdministrative Agent, compliance with the conditions set forth in this Section 6. Such declaration shall be final, conclusive andbinding upon all parties to the Credit Agreement for all purposes.Section 7 Covenant. The Borrower covenants and agrees with the Lenders that the Second Lien Discharge Date shall occurwithin thirty (30) days of the Effective Date. The failure of the Second Lien Discharge Date to occur prior to a date that is withinthirty (30) days of the Effective Date shall result in an Event of Default under the Credit Agreement.Section 8 Miscellaneous.8.1 Preferred Stock Terms. For the avoidance of doubt, the Administrative Agent acknowledges and agrees that the terms of theSeries E Preferred Stock and the Series F Preferred Stock (in each case, as defined in Section 3 above and as in effect on theEffective Date and as amended thereafter in a manner not materially adverse to the Administrative Agent or the Lenders) arereasonably acceptable to the Administrative Agent for purposes of clause (b)(B)(iii) of the definition of “Maturity Date” in theCredit Agreement (as in effect prior to the Borrowing Base and Amendment Effective Date).8.2 Limitation of Waivers. The consent, waiver and agreement contained herein, shall not be a consent, waiver or agreement bythe Administrative Agent or the Lenders of any Defaults or Events of Default, as applicable, which may exist (other than, for theavoidance of doubt, with respect to the December 31, 2018 Leverage Ratio) or which may occur in the future under the CreditAgreement or any other Loan Document, or any future defaults of the same provision waived hereunder (collectively, “OtherViolations”). Similarly, nothing contained in this Agreement shall directly or indirectly in any way whatsoever: (a) impair,prejudice or otherwise adversely affect the Administrative Agent’s or the Lenders’ right at any time to exercise any right, privilegeor remedy in connection with the Credit Agreement or any other Loan Document, as the case may be, with respect to any OtherViolations, (b) except as set forth herein, amend or alter any provision of the Credit Agreement, the other Loan Documents, or anyother contract or instrument, or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower or anyright, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, orany other contract or instrument, as applicable. Nothing in this letter shall be construed to be a consent by the Administrative Agentor the Lenders to any Other Violations.8.3 Confirmation. The provisions of the Credit Agreement shall remain in full force and effect following the Effective Date andthe Borrowing Base and Amendment Effective Date.8.4 Ratification and Affirmation; Representations and Warranties. Each of the Guarantors and the Borrower (a) acknowledges theterms of this Agreement, (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each LoanDocument (including, without limitation, the Guaranteed Liabilities) and agrees that each Loan Document remains in full force andeffect as expressly amended hereby, (c) certifies to the Lenders, on the Effective Date or the Borrowing Base AmendmentEffective Date, as applicable, that, after giving effect to this Agreement and the amendments and transactions occurring on theEffective Date or the Borrowing Base Amendment Effective Date, (i) the representations and warranties of each Loan Party setforth in the Credit Agreement and in each other Loan Document are true and correct in all material respects (unless alreadyqualified by materiality in which case such applicable representation and warranty are true and correct), except to the extent suchrepresentations and warranties expressly relate to an earlier date, in which case they are true and correct in all material respects(unless already qualified by materiality in which case such applicable representation and warranty are true and correct) as of suchearlier date and (ii) no Default, Event of Default or Borrowing Base Deficiency has occurred and is continuing and (c)acknowledges that it is a party to certain Security Instruments securing the Secured Obligations and agrees that according to theirterms the Security Instruments to which it is a party will continue in full force and effect to secure the Secured Obligations underthe Loan Documents, as the same may be amended, supplemented or otherwise modified.8.5 Counterparts. This Agreement may be executed by one or more of the parties to this Agreement on any number of separatecounterparts, and all of said counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of anexecuted a signature page of this Agreement by facsimile or email transmission shall be effective as delivery of a manuallyexecuted counterpart of this Agreement.8.6 No Oral Agreement. This Agreement, the Credit Agreement, the other Loan Documents and any separate letter agreementwith respect to fees payable to the Administrative Agent constitute the entire contract among the parties relating to the subjectmatter hereof and thereof and supersede any and all previous agreement and understandings, oral or written, relating to the subjectmatter hereof and thereof. THIS AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTSREPRESENT THE FINAL AGREEMENT AMONG THE PARTIES HERETO AND THERETO AND MAY NOT BECONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT OFTHE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.8.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCEWITH, THE LAW OF THE STATE OF NEW YORK.8.8 Payment of Expenses. In accordance with Section 12.03 of the Credit Agreement, the Borrower agrees to pay or reimbursethe Administrative Agent for all of its reasonable and documented out-of-pocket expenses incurred in connection with thisAgreement, any other documents prepared in connection herewith and the transactions contemplated hereby, including, withoutlimitation, the reasonable fees, charges and disbursements of counsel to the Administrative Agent.8.9 Severability. Any provision of this Agreement or any other Loan Document held to be invalid, illegal or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability withoutaffecting the validity, legality and enforceability of the remaining provisions hereof or thereof, and the invalidity of a particularprovision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.8.10 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto and theirrespective successors and assigns in accordance with Section 12.04 of the Credit Agreement.8.11 Loan Documents. This Agreement is a Loan Document.[Signature Pages Follow] IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed effective as of the EffectiveDate.BORROWER:LILIS ENERGY, INC. By: /s/ Joseph C. Daches Name: Joseph C. Daches Title: President, Chief Financial Officer and TreasurerGUARANTORS:BRUSHY RESOURCES, INC. By: /s/ Joseph C. Daches Name: Joseph C. Daches Title: President, Chief Financial Officer and TreasurerHURRICANE RESOURCES LLC By: /s/ Joseph C. Daches Name: Joseph C. Daches Title: President, Chief Financial Officer and TreasurerIMPETRO OPERATING LLC By: /s/ Joseph C. Daches Name: Joseph C. Daches Title: President, Chief Financial Officer and Treasurer LILIS OPERATING COMPANY, LLC By: /s/ Joseph C. Daches Name: Joseph C. Daches Title: President, Chief Financial Officer and TreasurerPage 2 IMPETRO RESOURCES, LLC By: /s/ Joseph C. DachesName: Joseph C. DachesTitle: President, Chief Financial Officer and TreasurerPage 3 ADMINISTRATIVE AGENT:BMO HARRIS BANK N.A., as Administrative Agent, and a LenderBy: /s/ Melissa Guzmann Name: Melissa Guzmann Title: DirectorPage 4 LENDERS:SUNTRUST BANK, as a LenderBy:/s/ Benjamin L. Brown Name: Benjamin L. Brown Title: DirectorPage 5 CAPITAL ONE, NATIONAL ASSOCIATION, as a LenderBy: /s/ Christopher Kuna Name: Christopher Kuna Title: DirectorPage 6 CREDIT SUISSE AG, CAYMANISLANDS BRANCH, as a LenderBy: /s/ Nupur Kumar Name: Nupur Kumar Title: Authorized SignatoryBy: /s/ Christopher Zybrick Name: Christopher Zybrick Title: Authorized SignatoryPage 7 Execution VersionExhibit 10.42TRANSACTION AGREEMENTdated as of March 5, 2019 by and amongLILIS ENERGY, INC.THE VÄRDE FUND VI-A, L.P.VÄRDE INVESTMENT PARTNERS, L.P.THE VÄRDE FUND XI (MASTER), L.P.VÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER, L.P.THE VÄRDE SKYWAY FUND, L.P.THE VÄRDE SKYWAY MINI-MASTER FUND, L.P.andTHE VÄRDE FUND XII (MASTER), L.P.KE 59472957TABLE OF CONTENTSPageArticle I. Definitions11.1Definitions 1Article II. Issue ofexchanged shares; CLOSING112.1Issue ofExchanged Shares 112.2Deliveries 122.3Closing 132.4ClosingConditions. 14Article III.Representations and Warranties153.1Representations and Warranties of the Company 153.2Representations and Warranties of the Värde Parties 25Article IV. Consent of theseries c-1, SERIES C-2 and series d holders274.1Ownership 274.2Consent 27Article V. OtherAgreements of the Parties275.1Filings;Other Actions 275.2TransferRestrictions 285.3Furnishing of Information 305.4Integration 305.5SecuritiesLaws Disclosure; Publicity 305.6Stockholder Rights Plan 315.7Standstill 315.8Reservation and Listing of Securities 335.9CompanyStockholder Approval 345.10CertainTransactions and Confidentiality 355.11Form D;Blue Sky Filings 365.12TaxMatters 365.13BoardRepresentation Right 37Article VI.Miscellaneous416.1Fees andExpenses 416.2Survival;Limitation on Liability 416.3EntireAgreement 416.4Notices 416.5Amendments; Waivers 426.6Headings 426.7Successors and Assigns 426.8NoThird-Party Beneficiaries 426.9Governing Law 426.10Waiverof Jury Trial 436.11Execution 436.12Severability 436.13Replacement of Securities 436.14Remedies 446.15Non-Recourse 446.16Payment Set Aside 446.17Independent Nature of Värde Parties’ Obligations and Rights 456.18Liquidated Damages 456.19Saturdays, Sundays, Holidays, etc 456.20Construction and Interpretation 45Schedule I: Värde Party AllocationSchedule 3.1(a): SubsidiariesSchedule 3.1(v): Registration RightsSchedule 5.13 Director Designees/AppointeesSchedule 6.4: Address for NoticeExhibit A: Form of A&R Series C Certificate of DesignationExhibit B: Form of A&R Series D Certificate of DesignationExhibit C:Form of Payoff LetterExhibit D: Form of Registration Rights AgreementExhibit E: Form of Series E Certificate of DesignationExhibit F: Form of Series F Certificate of DesignationExhibit G: Form of Legal Opinion of Bracewell LLPExhibit H: Form of Nevada OpinionTRANSACTION AGREEMENTThis Transaction Agreement (this “Agreement”) is dated as of March 5, 2019, between Lilis Energy, Inc., a Nevadacorporation (the “Company”), and The Värde Fund VI-A, L.P., Värde Investment Partners, L.P., The Värde Fund XI (Master), L.P.,Värde Investment Partners (Offshore) Master, L.P., The Värde Skyway Fund, L.P., The Värde Skyway Mini-Master Fund, L.P. andThe Värde Fund XII (Master), L.P. (each, a “Värde Party” and collectively, the “Värde Parties”).WHEREAS, the Company, the guarantors from time to time party thereto, the lenders party thereto and Wilmington Trust,National Association, as administrative agent, are parties to the Second Lien Credit Agreement (as defined herein);WHEREAS, pursuant to the Payoff Letter (as defined herein), the Company desires to issue to the Värde Parties, asconsideration for the termination of the Second Lien Credit Agreement and the satisfaction in full of all indebtedness, liabilities andother Obligations (as defined therein) (the outstanding principal amount of the Loans thereunder, accrued and unpaid interest thereonand the Make-Whole Amount (as defined herein) totaling $133,596,279 (the “Term Loan Exchange Amount”)), (i) 9,891,638 sharesof the Common Stock (as defined herein), (ii) 60,000 shares of the Series E Preferred Stock (as defined herein), having the terms setforth in the Series E Certificate of Designation (as defined herein), and (iii) 55,000 shares of the Series F Preferred Stock (as definedherein), having the terms set forth in the Series F Certificate of Designation (as defined herein);WHEREAS, shares of the Series E Preferred Stock will be convertible into shares of the Common Stock in accordance withthe terms of the Series E Certificate of Designation;WHEREAS, the Company desires to issue to the Värde Parties, as consideration for the amendment and restatement of theSeries C Certificate of Designation (as defined herein) and the Series D Certificate of Designation (as defined herein), 7,750,000 sharesof the Common Stock; andWHEREAS, at Closing (as defined herein), the Company and the Värde Parties will enter into the Registration RightsAgreement (as defined herein).NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuableconsideration the receipt and adequacy of which are hereby acknowledged, the Company and each Värde Party agree as follows:Article I. DEFINITIONS1.1 Definitions. As used in this Agreement, the following terms have the meanings set forth in this Section 1.1:“2016 Plan” means the Lilis Energy, Inc. 2016 Omnibus Incentive Plan, as amended from time to time.“A&R Series C Certificate of Designation” means the Second Amended and Restated Certificate of Designation ofPreferences, Rights and Limitations of Series C‑1 9.75% Participating Preferred Stock and Series C‑2 9.75% ParticipatingPreferred Stock to be filed prior to the Closing by the Company with the Secretary of State of the State of Nevada, in the formof Exhibit A attached hereto.“A&R Series D Certificate of Designation” means the Amended and Restated Certificate of Designation ofPreferences, Rights and Limitations of Series D 8.25% Participating Preferred Stock to be filed prior to the Closing by theCompany with the Secretary of State of the State of Nevada, in the form of Exhibit B attached hereto.“Action” has the meaning ascribed to such term in Section 3.1(j).“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled byor is under common control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act;provided, that no portfolio company of a Värde Party or its Affiliates shall be considered or otherwise deemed an Affiliatethereof.“Agreement” has the meaning ascribed to such term in the preamble.“Articles of Incorporation” means the Amended and Restated Articles of Incorporation of the Company, dated as ofOctober 10, 2011, as amended from time to time.“Board of Directors” means the board of directors of the Company.“Business Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in theUnited States or any day on which banking institutions in the State of New York or Texas are authorized or required by law orother governmental action to close.“Capitalization Date” has the meaning ascribed to such term in Section 3.1(g).“Certificates of Designation” means each of the A&R Series C Certificate of Designation, the A&R Series D Certificateof Designation, the Series E Certificate of Designation and the Series F Certificate of Designation.“Closing” means the closing of the issuance of the Exchanged Shares pursuant to Section 2.1.“Closing Date” means the date on which the Closing actually occurs.“Code” means the Internal Revenue Code of 1986, as amended from time to time.“Commission” means the United States Securities and Exchange Commission.“Common Shares” means the Exchanged Common Shares and the Underlying Shares.“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class ofsecurities into which such securities may hereafter be reclassified or changed.“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holderthereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant orother instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereofto receive, Common Stock.“Company” has the meaning ascribed to such term in the preamble.“Company Information” has the meaning ascribed to such term in Section 5.10(b).“Company Stock Awards” has the meaning ascribed to such term in Section 3.1(g).“Company Stockholders” means the holders of shares of the Common Stock.“Effect” means any change, event, effect or circumstance.“Environmental Laws” means any Law relating in any way to protection of the environment, preservation orreclamation of natural resources, pollution, occupational or public health or safety, or the management, release or threatenedrelease of, or exposure to, any Hazardous Material.“Environmental Liability” means any liability, contingent or otherwise (including any liability for damages, costs ofenvironmental remediation, fines, penalties or indemnities), of any Värde Party directly or indirectly resulting from or basedupon (a) violation of or liability under any Environmental Law, (b) the generation, use, handling, transportation, storage,treatment or disposal (or arrangement for the disposal) of any Hazardous Materials, (c) exposure to any Hazardous Materials,(d) the release or threatened release of any Hazardous Materials into the environment or (e) any contract, agreement,proceeding or other arrangement pursuant to which liability is assumed or imposed with respect to any of the foregoing.“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.“ERISA Affiliate” means any trade or business (whether or not incorporated) that, together with the Company, istreated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 or Title IV ofERISA and Section 412 or 430 of the Code, is treated as a single employer under Section 414 of the Code.“ERISA Event” means: (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issuedthereunder with respect to a Plan (other than an event for which the 30 day notice period is waived); (b) the failure of any Planto satisfy the minimum funding standard applicable to that Plan for a plan year under Section 412 or 430 of the Code or Section302 of ERISA; (c) the filing pursuant to Section 412(c) of the Code or Section 302(c) of ERISA of an application for a waiverof the minimum funding standard with respect to any Plan; (d) the incurrence by the Company or any ERISA Affiliate of anyliability under Title IV of ERISA with respect to the termination of any Plan or Multiemployer Plan; (e) the receipt by theCompany or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate anyPlan or Multiemployer Plan or to appoint a trustee to administer any Plan; (f) the incurrence by the Company or any ERISAAffiliate of any liability with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) thereceipt by the Company or any ERISA Affiliate of any notice concerning the imposition of Withdrawal Liability or adetermination that a Multiemployer Plan is, or is expected to be, insolvent within the meaning of Title IV of ERISA.“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgatedthereunder.“Exchanged Common Shares” has the meaning ascribed to such term in Section 2.1(b).“Exchanged Preferred Shares” has the meaning ascribed to such term in Section 2.1(a).“Exchanged Series E Shares” has the meaning ascribed to such term in Section 2.1(a).“Exchanged Series F Shares” has the meaning ascribed to such term in Section 2.1(a).“Exchanged Shares” has the meaning ascribed to such term in Section 2.1(b).“FCPA” means the Foreign Corrupt Practices Act of 1977, as amended.“GAAP” has the meaning ascribed to such term in Section 3.1(h).“Governmental Entity” means any court, administrative agency or commission or other governmental or arbitral bodyor authority or instrumentality, whether federal, state, local or foreign, and any applicable industry self-regulatory organization.“Hazardous Materials” means all pollutants, contaminants, chemicals, materials, substances, wastes, mixtures,pesticides, and any other substance for which liability or standards of conduct may be imposed under any Environmental Law,including petroleum or petroleum distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,noise, odor, mold, infectious or medical wastes and all other materials, substances or wastes of any nature regulated pursuant toany Environmental Law.“Intellectual Property Rights” has the meaning ascribed to such term in Section 3.1(p).“Investor Directors” has the meaning ascribed to such term in Section 5.13(b).“Knowledge of the Company” means the actual knowledge of one or more executive officers of the Company.“Law” means any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law,resolution, ordinance, code, order, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated,implemented or otherwise put into effect by or under the authority of any Governmental Entity.“Legend Removal Date” has the meaning ascribed to such term in Section 5.2(d).“Lien” means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or otherrestriction.“Loans” has the meaning ascribed to such term in the Second Lien Credit Agreement.“Make-Whole Amount” has the meaning ascribed to such term in the Second Lien Credit Agreement.“Material Adverse Effect” means, with respect to the Company, any Effect that, individually or taken together with allother Effects that have occurred prior to the date of determination of the occurrence of the Material Adverse Effect, is or isreasonably likely to be materially adverse to the business, assets, results of operations or condition (financial or otherwise) ofthe Company and its Subsidiaries, taken as a whole; provided, that in no event shall any of the following, alone or incombination, be deemed to constitute a Material Adverse Effect or be taken into account in determining whether a MaterialAdverse Effect has occurred: (i) any change in the Company’s stock price or trading volume, (ii) any failure by the Companyto meet revenue, earnings production or other projections, (iii) any change in commodity prices or other Effect affecting the oiland gas industry generally, or the United States economy generally, or any Effect that results from changes affecting generalworldwide economic or capital market conditions, in each case except to the extent such change of Effect disproportionatelyaffects the Company and its Subsidiaries, taken as a whole, relative to other oil and gas exploration and production companiesoperating in the United States, (iv) any Effect caused by or resulting from the announcement or pendency of the transactionscontemplated by the Transaction Documents or the RBL Amendment or the identity of a Värde Party or any of its Affiliates inconnection with the transactions contemplated by this Agreement, (v) acts of war or terrorism or natural disasters, (vi) theperformance of the obligations under the Transaction Documents and the consummation of the transactions contemplatedhereby and thereby, including compliance with the covenants set forth herein and therein, or any action taken or omitted to betaken by the Company at the request or with the prior consent of the Värde Parties, (vii) in and of itself, the commencement ofany suit, action or proceeding (provided, that such exclusion shall not apply to any underlying fact, event or circumstance thatmay have caused or contributed to such action, suit or proceeding), or any liability, sanction or penalty arising from anygovernmental proceeding or investigation that was commenced prior to the date of this Agreement and disclosed by theCompany in this Agreement, in a correspondingly identified schedule attached hereto or in any SEC Report filed with orfurnished to the Commission prior to the date of this Agreement, (viii) changes in GAAP or other accounting standards (or anyinterpretation thereof) or (ix) changes in any Laws or other binding directives issued by any Governmental Entity orinterpretations or enforcement thereof; provided, that (A) the exceptions in clause (i) or (ii) shall not prevent or otherwise affecta determination that any Effect underlying such change or failure has resulted in, or contributed to, a Material Adverse Effect,(B) without limiting clause (iii), with respect to clauses (viii) and (ix), such Effects, alone or in combination, may be deemed toconstitute, or be taken into account in determining whether a Material Adverse Effect has occurred, but only to the extent thatsuch Effects disproportionately affect the Company and its Subsidiaries, taken as a whole, relative to other oil and gasexploration and production companies operating in the United States.“Money Laundering Laws” has the meaning ascribed to such term in Section 3.1(ii).“Multiemployer Plan” means a multiemployer plan as defined in Section 4001(a)(3) of ERISA to which the Companyor any ERISA Affiliate contributes or has any obligations or liabilities (current or contingent).“October Transaction Agreement” means that certain Transaction Agreement, dated as of October 10, 2018, among theCompany and the Värde Parties.“OFAC” has the meaning ascribed to such term in Section 3.1(gg).“Payoff Letter” means that certain Payoff Letter, to be dated as of the date hereof, by Wilmington Trust, NationalAssociation, as administrative agent, and Värde Partners, Inc., as lead lender, acknowledged and agreed by the Company andthe Värde Parties, in the form of Exhibit C attached hereto.“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA and any successor entityperforming similar functions.“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, jointventure, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of anykind.“Plan” means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IVof ERISA or Section 412 or 430 of the Code or Section 302 of ERISA, and in respect of which the Company or any ERISAAffiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an “employer” asdetermined under ERISA.“Preferred Stock” means each of the Series C-1 Preferred Stock, the Series C-2 Preferred Stock, the Series D PreferredStock, the Series E Preferred Stock and the Series F Preferred Stock.“Proxy Statement” has the meaning ascribed to such term in Section 5.9.“RBL Amendment” has the meaning ascribed to such term in the definition of “RBL Credit Agreement” in this Section1.1.“RBL Credit Agreement” means that certain Second Amended and Restated Senior Secured Revolving CreditAgreement, dated as of October 10, 2018, by and among the Company, the guarantors from time to time party thereto, thelenders party thereto and BMO Harris Bank, N.A., as administrative agent and collateral agent, as amended by the FirstAmendment and Waiver thereto, dated as of March 1, 2019 (the “RBL Amendment”), and as further amended from time totime (in accordance with the Certificates of Designation).“Registration Rights Agreement” means that certain Amended and Restated Registration Rights Agreement, dated as ofthe Closing Date, by and among the Company and the Värde Parties, in the form of Exhibit D attached hereto.“Registration Statement” means a registration statement meeting the requirements set forth in the Registration RightsAgreement and covering the resale of the Common Shares by each Värde Party as provided for in the Registration RightsAgreement.“Representatives” means, with respect to a specified Person, the investors, officers, directors, managers, employees,agents, advisors, counsel, accountants, investment bankers and other representatives of such Person.“Required Approvals” has the meaning ascribed to such term in Section 3.1(e).“Required Minimum” means, as of any date, the maximum aggregate number of shares of the Common Stock thenissuable upon conversion in full of all then outstanding Exchanged Series E Shares, ignoring any conversion limits set forth inthe Series E Certificate of Designation.“Requisite Stockholder Approval” has the meaning ascribed to such term in Section 5.9.“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may beamended or interpreted from time to time, or any rule or regulation hereafter adopted by the Commission having substantiallythe same purpose and effect as such Rule.“SEC Reports” has the meaning ascribed to such term in Section 3.1(h).“Second Lien Credit Agreement” means that certain Credit Agreement, dated as of April 26, 2017, by and among theCompany, the guarantors party thereto, the lenders party thereto and Wilmington Trust, National Association, as administrativeagent, as amended, supplemented or otherwise modified to the Closing Date, prior to giving effect to the TransactionDocuments.“Securities” means the Exchanged Shares and the Underlying Shares.“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commissionpromulgated thereunder.“Securities Purchase Agreement” means the Securities Purchase Agreement, dated January 30, 2018 among theCompany and the original Holders (as defined therein), as amended, modified or supplemented from time to time in accordancewith its terms.“Series C and Series D Exchanged Common Shares” has the meaning ascribed to such term in Section 2.1(b).“Series C Certificate of Designation” means the Amended and Restated Certificate of Designation of Preferences,Rights and Limitations of Series C‑1 9.75% Convertible Participating Preferred Stock and Series C‑2 9.75% ConvertibleParticipating Preferred Stock filed by the Company with the Secretary of State of the State of Nevada on October 10, 2018.“Series C-1 Preferred Stock” means (a) prior to the filing of the A&R Series C Certificate of Designation with theSecretary of State of the State of Nevada, the Company’s Series C-1 9.75% Convertible Participating Preferred Stock, parvalue $0.0001 per share, having the rights, preferences and privileges set forth in the Series C Certificate of Designation, and(b) from and after the filing of the A&R Series C Certificate of Designation with the Secretary of State of the State of Nevada,the Company’s Series C-1 9.75% Participating Preferred Stock, par value $0.0001 per share, having the rights, preferences andprivileges set forth in the A&R Series C Certificate of Designation.“Series C-2 Preferred Stock” means (a) prior to the filing of the A&R Series C Certificate of Designation with theSecretary of State of the State of Nevada, the Company’s Series C-2 9.75% Convertible Participating Preferred Stock, parvalue $0.0001 per share, having the rights, preferences and privileges set forth in the Series C Certificate of Designation, and(b) from and after the filing of the A&R Series C Certificate of Designation with the Secretary of State of the State of Nevada,the Company’s Series C-2 9.75% Participating Preferred Stock, par value $0.0001 per share, having the rights, preferences andprivileges set forth in the A&R Series C Certificate of Designation.“Series D Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations ofSeries D 8.25% Convertible Participating Preferred Stock filed by the Company with the Secretary of State of the State ofNevada on October 10, 2018.“Series D Preferred Stock” means (a) prior to the filing of the A&R Series D Certificate of Designation with theSecretary of State of the State of Nevada, the Company’s Series D 8.25% Convertible Participating Preferred Stock, par value$0.0001 per share, having the rights, preferences and privileges set forth in the Series D Certificate of Designation, and (b)from and after the filing of the A&R Series D Certificate of Designation with the Secretary of State of the State of Nevada, theCompany’s Series D 8.25% Participating Preferred Stock, par value $0.0001 per share, having the rights, preferences andprivileges set forth in the A&R Series D Certificate of Designation.“Series E Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations ofSeries E 8.25% Convertible Participating Preferred Stock to be filed prior to the Closing by the Company with the Secretary ofState of the State of Nevada, in the form of Exhibit E attached hereto.“Series E Preferred Stock” means the Company’s Series E 8.25% Convertible Participating Preferred Stock, par value$0.0001 per share, having the rights, preferences and privileges set forth in the Series E Certificate of Designation.“Series F Certificate of Designation” means the Certificate of Designation of Preferences, Rights and Limitations ofSeries F 9.00% Participating Preferred Stock to be filed prior to the Closing by the Company with the Secretary of State of theState of Nevada, in the form of Exhibit F attached hereto.“Series F Preferred Stock” means the Company’s Series F 9.00% Participating Preferred Stock, par value $0.0001 pershare, having the rights, preferences and privileges set forth in the Series F Certificate of Designation.“Specified Party” has the meaning ascribed to such term in Section 5.13(j).“Standstill Termination Date” means (a) with respect to Section 5.7(a), the date that is the earlier of (i) the date theVärde Parties and their Affiliates are no longer entitled to designate any Investor Directors pursuant to Section 5.13 or theCertificates of Designation and (ii) the date the Company fails to fully declare and pay all accrued dividends on the PreferredStock in cash on a “Dividend Payment Date” (as defined in the Certificates of Designation) occurring after April 26, 2022pursuant to the Certificates of Designation; (b) with respect to Section 5.7(b)-(h), the date that is the earlier of (i) the date theVärde Parties and their Affiliates are no longer entitled to designate any Investor Directors pursuant to Section 5.13 or theCertificates of Designation and (ii) the date the Company fails to fully declare and pay all accrued dividends on the PreferredStock in cash on a “Dividend Payment Date” (as defined in the Certificates of Designation) occurring after April 26, 2021pursuant to the Certificates of Designation; and (c) with respect to Section 5.7(i), the date the Värde Parties and their Affiliatesare no longer entitled to designate any Investor Directors pursuant to Section 5.13 or the Certificates of Designation.“Stated Value” has the meaning ascribed to such term in the Certificates of Designation, as applicable.“Stockholder Meeting” has the meaning ascribed to such term in Section 5.9.“Subsidiary” means any subsidiary of the Company as set forth on Schedule 3.1(a) and, where applicable, also includesany direct or indirect subsidiary of the Company formed or acquired after the date hereof.“Tax” means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment, excise,severance, stamp, occupation, premium, windfall profits, environmental, customs duties, capital stock, franchise, profits,withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, registration, valueadded, alternative or add-on minimum, estimated or other tax of any kind whatsoever, including any interest, penalty oraddition thereto.“Tax Return” means any return, declaration, report, claim for refund or information return or statement relating toTaxes, including any schedule or attachment thereto, and including any amendment thereof.“Term Loan Exchange Amount” has the meaning ascribed to such term in the recitals.“Term Loan Exchanged Common Shares” has the meaning ascribed to such term in Section 2.1(a).“Trading Day” means a day on which the principal Trading Market is open for trading.“Trading Market” means any of the following markets or exchanges on which the Common Stock is listed or quotedfor trading on the date in question: the NYSE American, the Nasdaq Capital Market, the Nasdaq Global Market, the NasdaqGlobal Select Market, the New York Stock Exchange or NYSE National (or any successors to any of the foregoing).“Transaction Documents” means this Agreement, the Certificates of Designation, the Registration Rights Agreementand the Payoff Letter, in each case including all exhibits and schedules thereto and hereto.“Transfer Agent” means Corporate Stock Transfer, Inc., the current transfer agent and registrar for the Common Stock,and any successor transfer agent and registrar for the Common Stock.“Underlying Shares” means the shares of Common Stock issuable upon conversion of the Exchanged Series E Shares.“Värde Party” and “Värde Parties” have the meanings ascribed to such terms in the preamble.“Värde Party Majority” has the meaning ascribed to such term in Section 5.13(b).“Värde Parties’ Transaction Expense Amount” means all reasonable and documented out-of-pocket fees and expensesincurred by the Värde Parties in connection with the transactions contemplated by the Transaction Documents.“VWAP” means, for any date, the daily volume weighted average price of the Common Stock for such date (or thenearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by BloombergL.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)).“Withdrawal Liability” means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from suchMultiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.ARTICLE II. ISSUE OF EXCHANGED SHARES; CLOSING2.1 Issue of Exchanged Shares.(a) On the Closing Date, on the terms and subject to the conditions set forth herein and as consideration for thetermination of the Second Lien Credit Agreement and the satisfaction in full, in lieu of the repayment in full in cash, of theTerm Loan Exchange Amount pursuant to the Payoff Letter, the Company will issue to the Värde Parties (i) an aggregate of9,891,638 shares of the Common Stock (the “Term Loan Exchanged Common Shares”), with each Värde Party receiving suchnumber of the Term Loan Exchanged Common Shares as set forth opposite such Värde Party’s name on Schedule I hereto, (ii)an aggregate of 60,000 shares of the Series E Preferred Stock (the “Exchanged Series E Shares”), with an aggregate StatedValue of $60,000,000, with each Värde Party receiving such number of the Exchanged Series E Shares as set forth oppositesuch Värde Party’s name on Schedule I hereto, and (iii) an aggregate of 55,000 shares of the Series F Preferred Stock (the“Exchanged Series F Shares” and, together with the Exchanged Series E Shares, the “Exchanged Preferred Shares”), with anaggregate Stated Value of $55,000,000, with each Värde Party receiving such number of the Exchanged Series F Shares as setforth opposite such Värde Party’s name on Schedule I hereto. The Term Loan Exchanged Common Shares correspond to$18,596,279 of the Term Loan Exchange Amount, based on an agreed exchange price of $1.88 per share of Common Stock;and the Exchanged Preferred Shares correspond to $115,000,000 of the Term Loan Exchange Amount, based on an agreedexchange price of $1,000 per share of each of the Series E Preferred Stock and the Series F Preferred Stock.(b) On the Closing Date, on the terms and subject to the conditions set forth herein and as consideration for theamendment and restatement of the Series C Certificate of Designation and the Series D Certificate of Designation as set forthin, respectively, the A&R Series C Certificate of Designation and the A&R Series D Certificate of Designation, the Companywill issue to the Värde Parties 7,750,000 shares of the Common Stock (the “Series C and Series D Exchanged CommonShares” and, together with the Term Loan Exchanged Common Shares, the “Exchanged Common Shares”), with each VärdeParty receiving such number of the Series C and Series D Exchanged Common Shares as set forth opposite such Värde Party’sname on Schedule I hereto. The Series C and Series D Exchanged Common Shares consist of (i) 6,250,000 shares of theCommon Stock issued as consideration for the amendment and restatement of the Series C Certificate of Designation and (ii)1,500,000 shares of the Common Stock issued as consideration for the amendment and restatement of the Series D Certificateof Designation. The Exchanged Common Shares and the Exchanged Preferred Shares shall collectively constitute the“Exchanged Shares.”2.2 Deliveries.(a) On the Closing Date, the Company shall deliver or cause to be delivered to each Värde Party the following:(i) evidence of the number of shares of the Exchanged Shares issued to such Värde Party having been issuedin book-entry form to such Värde Party;(ii) evidence that the A&R Series C Certificate of Designation has been filed with, and accepted by, theSecretary of State of the State of Nevada;(iii) evidence that the A&R Series D Certificate of Designation has been filed with, and accepted by, theSecretary of State of the State of Nevada;(iv) evidence that the Series E Certificate of Designation has been filed with, and accepted by, the Secretary ofState of the State of Nevada;(v) evidence that the Series F Certificate of Designation has been filed with, and accepted by, the Secretary ofState of the State of Nevada;(vi) the Registration Rights Agreement duly executed by the Company;(vii) the Payoff Letter duly executed by the Company and the other parties thereto (other than the VärdeParties);(viii) evidence that a number of Underlying Shares at least equal to the Required Minimum has been reservedby the Company and approved, subject to official notice of issuance, for listing on the NYSE American;(ix) evidence that the Exchanged Common Shares have been approved, subject to official notice of issuance,for listing on the NYSE American;(x) to the extent not previously delivered to the Värde Parties, the RBL Amendment duly executed by theCompany and the other parties thereto;(xi) a certificate of the Company’s Secretary or another authorized officer of the Company, dated as of theClosing Date, certifying (A) the Articles of Incorporation and bylaws, as then in effect and attached thereto, (B) theresolutions adopted by the Board of Directors authorizing the transactions contemplated hereby and (C) as to thesignatures and authority of the Persons signing the Transaction Documents and related documents on behalf of theCompany;(xii) a certificate of the Company signed on behalf of the Company by an executive officer and dated as of theClosing Date, certifying that the conditions in Section 2.4(b) (other than clause (iv) thereof) have been satisfied;(xiii) an opinion from Bracewell LLP, in substantially the form attached hereto as Exhibit G, which shall beaddressed to the Värde Parties and dated as of the Closing Date;(xiv) an opinion of Nevada counsel, in substantially the form attached hereto as Exhibit H, which shall beaddressed to the Värde Parties and dated as of the Closing Date;(xv) payment of the Värde Parties’ Transaction Expense Amount, payable by wire transfer of immediatelyavailable funds to the accounts designated by the Värde Parties prior to the Closing Date; and(xvi) evidence that the Payoff Amount (as defined in the Payoff Letter) has been received by the applicableparties to which such amount is owed.(b) On the Closing Date, each Värde Party shall deliver or cause to be delivered to the Company the following:(i) the Registration Rights Agreement duly executed by such Värde Parties;(ii) the Payoff Letter duly acknowledged by such Värde Parties and the other lenders party thereto;(iii) a certificate of such Värde Party signed on behalf of such Värde Party by a duly authorized Person anddated as of the Closing Date, certifying that the conditions in Section 2.4(c) (other than clause (iii) thereof) have beensatisfied; and(iv) a cross-receipt, duly executed by such Värde Party, acknowledging such Värde Party’s receipt of thenumber of Exchanged Shares set forth opposite such Värde Party’s name on Schedule I hereto.2.3 Closing. The Closing shall occur by the first Business Day that is on or following the satisfaction or waiver of theconditions set forth in Section 2.4 (other than those conditions that, by their terms, are to be satisfied or waived at the Closing, butsubject to the satisfaction or waiver thereof) at the offices of Kirkland & Ellis LLP, 609 Main Street, Houston, Texas 77002 or suchother location (or remotely by electronic exchange of documentation) as the parties may mutually agree.2.4 Closing Conditions.(a) Mutual Closing Conditions. The obligations of the Värde Parties, on the one hand, and the Company, on the otherhand, to effect the Closing is subject to the satisfaction or, to the extent permitted by applicable Law, waiver by Värde Partieswhose aggregate Exchanged Shares represent a majority of the aggregate Exchanged Shares of all Värde Parties and theCompany, at the Closing of the following condition:(i) no temporary restraining order, preliminary or permanent injunction or other judgment or order issued byany Governmental Entity and no Law shall be in effect restraining, enjoining, making illegal or otherwise prohibitingthe consummation of the transactions contemplated by this Agreement.(b) Värde Parties Closing Conditions. The obligations of the Värde Parties to effect the Closing are also subject to thesatisfaction or, to the extent permitted by applicable Law, waiver by Värde Parties whose aggregate Exchanged Sharesrepresent a majority of the aggregate Exchanged Shares of all Värde Parties at or prior to the Closing of the followingconditions:(i) (A) the representations and warranties of the Company set forth in Section 3.1 shall be true and correct in allmaterial respects (other than Sections 3.1(b)(i), 3.1(c), 3.1(d), 3.1(f), 3.1(g), 3.1(u) or 3.1(w) or any otherrepresentations qualified by materiality which, in each case, shall be true and correct in all respects) as of the date of thisAgreement and as of the Closing Date as though made on and as of such date (except to the extent that suchrepresentation or warranty speaks to an earlier date, in which case as of such earlier date);(ii) there shall not be pending any suit, action or proceeding by any Governmental Entity or shareholder of theCompany (other than a Värde Party or its Affiliates) seeking to restrain, enjoin or prohibit the consummation of thetransactions contemplated by this Agreement;(iii) the Company shall have performed and complied with, in all material respects, its obligations, covenantsand agreements required to be performed by it pursuant to this Agreement at or prior to the Closing;(iv) the Company shall have delivered to the Värde Parties all deliverables required to be delivered by theCompany pursuant to Section 2.2(a); and(v) no notice of delinquency or delisting from the NYSE American shall have been received by the Companywith respect to the Common Stock.(c) Company Closing Conditions. The obligation of the Company to effect the Closing is also subject to thesatisfaction or, to the extent permitted by applicable Law, waiver by the Company at or prior to the Closing of the followingconditions:(i) (A) the representations and warranties of the Värde Parties set forth in Section 3.2 shall be true and correctin all material respects (other than Sections 3.2(a), 3.2(b) or 3.2(c), which shall be true and correct in all respects) as ofthe date of this Agreement and as of the Closing Date as though made on and as of such date (except to the extent thatsuch representation or warranty speaks to an earlier date, in which case as of such earlier date);(ii) each of the Värde Parties shall have performed and complied with, in all material respects, its obligations,covenants and agreements required to be performed by it pursuant to this Agreement at or prior to the Closing; and(iii) each of the Värde Parties shall have delivered to the Company all deliverables required to be delivered bythe Värde Parties pursuant to Section 2.2(b).2.5 Termination. The Värde Parties shall be entitled to terminate this Agreement by written notice to the Company if theClosing has not occurred on or before March 8, 2019; provided, however, that the Värde Parties shall not have the right to terminatethis Agreement under this Section 2.5 if the failure of the Closing to occur on or before such date is the result of the failure of any ofthe Värde Parties to fulfill any material covenant or agreement under this Agreement.ARTICLE III. REPRESENTATIONS AND WARRANTIES3.1 Representations and Warranties of the Company. The Company hereby represents and warrants to each Värde Party, as ofthe date hereof and as of the Closing Date, that, except as disclosed in the SEC Reports filed with or furnished to the Commission andpublicly available prior to the date of this Agreement (excluding any risk factor disclosure and disclosure of risks included in any“forward-looking statements” disclaimer or other statements included in such SEC Reports to the extent that they are predictive,forward-looking or primarily cautionary in nature, in each case other than any specific factual information contained therein, andexcluding any supplement, modification or amendment thereto made after the date hereof):(a) Subsidiaries. The Company owns, directly or indirectly, all of the capital stock or other equity interests of eachSubsidiary free and clear of any Liens (except for Liens created under or expressly permitted by the RBL Credit Agreementand the Second Lien Credit Agreement), and all of the issued and outstanding shares of capital stock or other equity interests ofeach Subsidiary have been validly issued, are fully paid and nonassessable (except in the case of any Subsidiary that is a limitedliability company, as such nonassessability may be affected by the applicable limited liability company Law) and were notissued in violation of any preemptive or similar rights to subscribe for or purchase securities. None of the Company’sSubsidiaries is currently prohibited, directly or indirectly, from paying any dividends or distributions to the Company, frommaking any other distribution on such Subsidiary’s capital stock or other equity securities, from repaying to the Company anyloans or advances to such Subsidiary from the Company or from transferring any of such Subsidiary’s property or assets to theCompany or any other Subsidiary of the Company, except for (i) such prohibitions under applicable Law, applicableorganizational or charter documents, the RBL Credit Agreement or the Second Lien Credit Agreement, (ii) restrictions on thesubletting, assignment or transfer of any property, right or asset that is subject to a lease, license or similar contract, or theassignment or transfer of any such lease, license or other similar contract and (iii) other restrictions incurred in the ordinarycourse of business under agreements or instruments not relating to indebtedness of the Company or any of its Subsidiaries.(b) Organization and Qualification.(i) The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validlyexisting and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisitecorporate or other applicable entity power and authority to own and use its properties and assets and to carry on itsbusiness as currently conducted. Neither the Company nor any Subsidiary is in violation or default of any of theprovisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.(ii) Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing asa foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or propertyowned by it makes such qualification necessary, except to the extent that any failure to be so qualified or in goodstanding has not had, and would not reasonably be expected to have, a Material Adverse Effect.(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and toconsummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunderand thereunder. Except for obtaining the Requisite Stockholder Approval, the execution and delivery of the TransactionDocuments by the Company and the consummation by it of the transactions contemplated hereby and thereby have been dulyauthorized by all necessary corporate action on the part of the Company and no further approval of the Board of Directors orthe Company’s stockholders is required in connection herewith or therewith. The Transaction Documents to which theCompany is a party have been (or upon delivery or filing thereof will have been) duly executed by the Company and, whendelivered or filed with the Secretary of State of the State of Nevada, as applicable, in accordance with the terms hereof andthereof, will constitute the valid and binding obligations of the Company enforceable against the Company in accordance withtheir terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulenttransfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).(d) No Conflicts. The execution, delivery and performance by the Company of the Transaction Documents to which itis a party and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict withor violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or otherorganizational or charter documents, (ii) assuming the due execution and delivery of the Payoff Letter by the parties thereto,conflict with, or constitute a material default (or an event that with notice or lapse of time or both would become a materialdefault) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or giveto others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of,any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise and including,for the avoidance of doubt, the RBL Credit Agreement) to which the Company or any Subsidiary is a party or by which anyproperty or asset of the Company or any Subsidiary is bound or, (iii) subject to the Required Approvals, conflict with or resultin a material violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court orgovernmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws andregulations), or by which any property or asset of the Company or a Subsidiary is bound.(e) Filings, Consents and Approvals. Assuming the due execution and delivery of the Payoff Letter by the partiesthereto and giving effect to the RBL Amendment, the Company is not required to obtain any consent, waiver, authorization ororder of, give any notice to, or make any filing or registration with, any Governmental Entity or other Person in connectionwith the execution, delivery and performance by the Company of the Transaction Documents, other than: (i) as contemplatedby Sections 5.5, 5.8, 5.9 and 5.11; (ii) as contemplated by the Registration Rights Agreement; (iii) as required in connectionwith the listing of the Common Shares on the NYSE American; (iv) the filing of the Certificates of Designation with theSecretary of State of the State of Nevada; and (v) as may be required under the Hart-Scott-Rodino Antitrust Improvements Actof 1976, as amended in connection with the conversion of shares of the Preferred Stock (collectively, the “RequiredApprovals”).(f) Issuance of the Securities. The Exchanged Shares have been duly authorized. When the Certificates of Designationhave been filed with the Secretary of State of the State of Nevada and the Exchanged Shares have been issued, in accordancewith the Transaction Documents, the Exchanged Shares will be duly and validly issued, fully paid and nonassessable and freeand clear of all Liens imposed by, or arising through, the Company other than restrictions on transfer provided for in theTransaction Documents. Each of the Underlying Shares, when issued in accordance with the terms of the TransactionDocuments, will be validly issued, fully paid and nonassessable and free and clear of all Liens imposed by, or arising through,the Company other than restrictions on transfer provided for in the Transaction Documents. The Company has reserved fromits duly authorized Common Stock a number of shares of the Common Stock for issuance of the Underlying Shares at leastequal to the Required Minimum.(g) Capitalization. The authorized shares of capital stock consist of (i) 150,000,000 shares of the Common Stock and(ii) 10,000,000 shares of preferred stock, par value $0.0001 per share. As of the close of business on March 1, 2019 (the“Capitalization Date”), (i) 73,682,816 shares of the Common Stock were issued and outstanding, (ii) 100,000 shares of SeriesC-1 Preferred Stock were issued and outstanding, (iii) 25,000 shares of Series C-2 Preferred Stock were issued andoutstanding, (iv) 39,254 shares of Series D Preferred Stock were issued and outstanding, (v) 5,256,578 shares of the CommonStock were reserved for issuance upon the exercise of stock options outstanding on such date and zero shares of the CommonStock were reserved for issuance upon the exercise or payment of stock units (including deferred stock units, restricted stockand restricted stock units) or other equity-based incentive awards granted pursuant to any plans, agreements or arrangements ofthe Company and outstanding on such date (collectively, the “Company Stock Awards”), (vi) 4,422,329 shares of theCommon Stock were reserved for issuance upon the exercise of outstanding warrants, (vii) 28,874,078 shares of the CommonStock were reserved for issuance upon the conversion of outstanding Series C-1 Preferred Stock, (viii) 6,776,237 shares of theCommon Stock were reserved for issuance upon the conversion of the outstanding Series C-2 Preferred Stock, (ix) 10,353,632shares of the Common Stock were reserved for issuance upon the conversion of outstanding Series D Preferred Stock, (x)17,173,367 shares of the Common Stock were reserved for issuance upon conversion of the Loans under the Second LienCredit Agreement, and (xi) 253,598 shares of the Common Stock were held by the Company in its treasury. Since theCapitalization Date, the Company has not sold or issued or repurchased, redeemed or otherwise acquired any shares of theCompany’s capital stock or other equity securities other than shares of the Common Stock issued in respect of the exercise ofCompany Stock Awards in the ordinary course of business. Except as contemplated by the Transaction Documents and as setforth in this Section 3.1(g), there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of anycharacter whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, orgiving any Person any right to subscribe for or acquire any shares of the Common Stock, or contracts, commitments,understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional sharesof the Common Stock or Common Stock Equivalents. None of (i) the issuance of the Exchanged Shares pursuant to thisAgreement or (ii) the issuance of the Underlying Shares upon conversion of the Exchanged Series E Shares will obligate theCompany to issue shares of the Common Stock or other securities to any Person (other than the Värde Parties) or result in aright of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of suchsecurities. All of the outstanding shares of capital stock of the Company have been duly authorized and validly issued, are fullypaid and nonassessable and have been issued in compliance with all federal and state securities Laws, and none of suchoutstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.Except as provided in the Transaction Documents, the Second Lien Credit Agreement, the Series C Certificate of Designation,the Series D Certificate of Designation, the October Transaction Agreement and the Securities Purchase Agreement, there areno stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock towhich the Company is a party or, to the Knowledge of the Company, between or among any of the Company’s stockholders.(h) SEC Reports; Financial Statements.(i) The Company has filed with or furnished to the Commission all reports, schedules, forms, statements andother documents required to be filed with or furnished to the Commission by the Company under the Securities Act andthe Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, since December 31, 2015 (all such materialsfiled or furnished by the Company, whether or not required to be filed or furnished, including the exhibits thereto anddocuments incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timelybasis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expirationof any such extension. As of their respective dates, the SEC Reports complied in all material respects with therequirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed,contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein ornecessary in order to make the statements therein, in the light of the circumstances under which they were made, notmisleading. The financial statements of the Company included in the SEC Reports complied in all material respectswith applicable accounting requirements and the rules and regulations of the Commission with respect thereto as ineffect at the time of filing. Such financial statements have been prepared in accordance with United States generallyaccepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may beotherwise specified in such financial statements or the notes thereto, and fairly present in all material respects thefinancial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results ofoperations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,immaterial, year-end audit adjustments.(ii) The Company (i) has implemented and maintains disclosure controls and procedures (as defined inRule 13a-15(e) under the Exchange Act) that are reasonably designed to ensure that material information relating to theCompany, including its Subsidiaries, is made known to the individuals responsible for the preparation of theCompany’s filings with the Commission and (ii) has disclosed, based on its most recent evaluation prior to the date ofthis Agreement, to the Company’s outside auditors and the Board of Directors’ audit committee (A) any significantdeficiencies and material weaknesses in the design or operation of internal controls over financial reporting (as definedin Rule 13a-15(f) under the Exchange Act) that are reasonably likely to materially adversely affect the Company’sability to record, process, summarize and report financial information and (B) any fraud, whether or not material, thatinvolves management or other employees who have a significant role in the Company’s internal controls over financialreporting.(i) Material Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financialstatements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed or furnishedprior to the date hereof: (i) there has been no event, occurrence or development that has had or that would reasonably beexpected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) otherthan (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice,(B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP and (C) liabilities under theTransaction Documents, the RBL Credit Agreement and the Second Lien Credit Agreement and (iii) the Company has notaltered its methods of accounting.(j) Litigation. There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to theKnowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective propertiesbefore or by any Governmental Entity (collectively, an “Action”) which (i) adversely affects or challenges the legality, validityor enforceability of any of the Transaction Documents or (ii) if adversely determined, would reasonably be expected to have aMaterial Adverse Effect. Neither the Company nor any Subsidiary, nor any director or officer thereof (in his or her capacity asa director or officer of the Company), is or has been the subject of any Action involving a claim of violation of or liability underfederal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the Knowledge of theCompany, there is not pending or contemplated, any investigation by the Commission involving the Company or any currentor, to the Knowledge of the Company, former director or officer of the Company (in his or her capacity as a director or officerof the Company). The Commission has not issued any stop order or other order suspending the effectiveness of any registrationstatement filed by the Company under the Exchange Act or the Securities Act.(k) Labor Relations. No strike, concerted refusal to work or other similar material labor dispute exists or, to theKnowledge of the Company, is imminent with respect to any of the employees of the Company. None of the Company’s or itsSubsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company or suchSubsidiary, and neither the Company nor any of its Subsidiaries is a party to a collective bargaining agreement. To theKnowledge of the Company, no executive officer of the Company or any Subsidiary, is, or is now expected to be, in violationof any material term of any employment contract, confidentiality, disclosure or proprietary information agreement ornoncompetition agreement, or any other contract or agreement or any restrictive covenant in favor of any third party, and thecontinued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liabilitywith respect to any of the foregoing matters. The Company and its Subsidiaries are in material compliance with all Lawsrelating to employment and employment practices, terms and conditions of employment and wages and hours. There are nomaterial Actions against the Company pending, or to the Knowledge of the Company, threatened to be filed in connection withthe employment of any employee of the Company or any of its Subsidiaries.(l) Compliance. Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event hasoccurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or anySubsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is inviolation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which itor any of its properties is bound (except as provided in the RBL Amendment, whether or not such default or violation has beenwaived), (ii) is in violation of any judgment, decree or order of any Governmental Entity or (iii) is or has been in violation ofany Laws, except, in each case, as would not reasonably be expected to have a Material Adverse Effect.(m) Sarbanes-Oxley. The Company, the Subsidiaries and the Company’s officers and directors (in their capacity assuch) are in material compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002 that are effectiveas of the date hereof, and any and all applicable rules and regulations promulgated by the Commission thereunder that areeffective as of the date hereof.(n) Regulatory Permits. Except as would not reasonably be expected to have a Material Adverse Effect, (i) theCompany and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate GovernmentalEntity necessary to conduct their respective businesses as described in the SEC Reports and have fulfilled and performed all oftheir respective obligations with respect to such certificates, authorizations and permits and (ii) no event has occurred thatallows, or after notice or lapse of time would allow, revocation or termination thereof or result in any other impairment of therights of the holder of such certificates, authorizations and permits.(o) Title to Assets. The Company and the Subsidiaries have generally satisfactory title to all of their interests inproducing oil and gas properties and to all of their material interests in non-producing oil and gas properties, in each case freeand clear of all Liens, except for Liens created under or expressly permitted by the RBL Credit Agreement and the SecondLien Credit Agreement.(p) Intellectual Property. The Company and the Subsidiaries have, or have rights to use, all trademarks, service marks,trade names, trade secrets, information, copyrights, and other intellectual property rights and similar rights material to itsbusiness as presently conducted (collectively, the “Intellectual Property Rights”). Neither the Company nor any Subsidiary hasreceived, since the date of the latest audited financial statements included within the SEC Reports, a written notice of a claimthat the Intellectual Property Rights violate the intellectual property rights of any Person. To the Knowledge of the Company,all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of theIntellectual Property Rights.(q) Insurance. Each of the Company and its Subsidiaries carry, or are covered by, insurance from insurers ofrecognized financial responsibility in such amounts and covering such risks as is reasonably adequate for the conduct of theirrespective businesses and the value of their respective properties and as is customary for companies engaged in similarbusinesses in similar industries. All material policies of insurance of the Company and its Subsidiaries are in full force andeffect; the Company and its Subsidiaries are in compliance with the terms of such policies in all material respects; there are nomaterial claims by the Company or any of its Subsidiaries under any such policy or instrument as to which any insurancecompany is denying liability or defending under a reservation of rights clause; and none of the Company or any of itsSubsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when suchcoverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without asignificant increase in cost.(r) Related Party Transactions. Since December 31, 2015, neither the Company nor any of its Subsidiaries has enteredinto (i) any transaction required to be disclosed in SEC Reports prior to the date hereof pursuant to Item 404 of Regulation S-Kpromulgated by the Commission that has not been so disclosed or (ii) any related party transaction subject to the Company’srelated party transactions policy that has not been approved in accordance with such policy.(s) [Reserved].(t) Private Placement. Assuming the accuracy of the Värde Parties’ representations and warranties set forth in Section3.2, no registration under the Securities Act is required for the issue of the Exchanged Shares or the issue of the UnderlyingShares by the Company to the Värde Parties as contemplated hereby. The issuance of the Exchanged Shares hereunder doesnot, and the issuance of the Underlying Shares will not, contravene the rules and regulations of the NYSE American.(u) Investment Company. The Company is not, and immediately after the issuance of the Exchanged Shares will notbe, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.(v) Registration Rights. Except as set forth on Schedule 3.1(v), no Person has any right to cause the Company to effectthe registration under the Securities Act of any securities of the Company or any Subsidiary. The Company has not grantedregistration rights to any Person other than the Värde Parties that would provide such Person priority over the Värde Parties’rights with respect to any registration pursuant to the Registration Rights Agreement.(w) Registration and Transfer Requirements. The Common Stock is registered pursuant to Section 12(b) of theExchange Act and is listed on NYSE American and the Company has not taken (and, to the Knowledge of the Company, noPerson has taken) any action designed to, or which to the Knowledge of the Company, is likely to have the effect of,terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification thatthe Commission is contemplating terminating (or seeking to terminate) such registration or listing. No notice of delinquency ordelisting from the NYSE American has been received by the Company with respect to the Common Stock. The ExchangedCommon Shares and a number of Underlying Shares at least equal to the Required Minimum have been approved, subject toofficial notice of issuance, for listing on the NYSE American.(x) Application of Takeover Protections. The Company and the Board of Directors have taken all necessary action, ifany, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distributionunder a rights agreement) or other similar anti-takeover provision under the Articles of Incorporation (or similar charterdocuments) or the laws of its state of incorporation (including the “acquisition of controlling interest” statutes codified inNevada Revised Statutes 78.378 through 78.3793, inclusive, and the “combinations with interested stockholders” statutescodified in Nevada Revised Statutes 78.411 through 78.444, inclusive) that is or could become applicable to the Värde Partiesas a result of the Värde Parties and the Company fulfilling their obligations or exercising their rights under the TransactionDocuments, including, without limitation, as a result of the Company’s issuance of the Securities and the Värde Parties’ownership of the Securities.(y) No Integrated Offering. Assuming the accuracy of the Värde Parties’ representations and warranties set forth inSection 3.2, neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly orindirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that wouldcause the offering of the Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Actwhich would require the registration of any such securities under the Securities Act or (ii) any applicable stockholder approvalprovisions of the NYSE American.(z) Tax Status. The Company and its Subsidiaries each (i) has made or filed all United States federal, state and localincome and all other material Tax Returns, reports and declarations required by any jurisdiction to which it is subject and (ii)has paid all Taxes and other governmental assessments and charges that are material in amount or shown or determined to bedue on such Tax Returns, reports and declarations, except those being contested in good faith by appropriate proceedings andfor which the Company or such Subsidiary, as applicable, has set aside on its books adequate reserves in accordance withGAAP.(aa) ERISA. No ERISA Event has occurred or is reasonably expected to occur that could reasonably be expected toresult in a Material Adverse Effect.(bb) No General Solicitation. Neither the Company nor any Person acting on behalf of the Company has offered orsold any of the Securities by any form of general solicitation or general advertising (as those terms are used in Regulation Dpromulgated under the Securities Act).(cc) Foreign Corrupt Practices. Neither the Company nor any Subsidiary, nor to the Knowledge of the Company orany Subsidiary, any agent or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly,used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domesticpolitical activity; (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign ordomestic political parties or campaigns from corporate funds; (iii) failed to disclose fully any contribution made by theCompany or any Subsidiary (or made by any Person acting on its behalf of which the Company is aware) which is in violationof law; or (iv) violated in any material respect any provision of FCPA.(dd) Acknowledgment Regarding Värde Parties’ Acquisition of Securities. The Company acknowledges and agreesthat each of the Värde Parties is acting solely in the capacity of an arm’s length acquirer with respect to the Securities. TheCompany further acknowledges that no Värde Party is acting as a financial advisor or fiduciary of the Company (or in anysimilar capacity) with respect to the Transaction Documents and the transactions contemplated hereby and thereby and anyadvice given by any Värde Party or any of their respective Representatives or agents in connection with the TransactionDocuments and the transactions contemplated thereby is merely incidental to the transactions contemplated hereby and thereby.The Company further represents to each Värde Party that the Company’s decision to enter into the Transaction Documents hasbeen based solely on the independent evaluation of the transactions contemplated hereby by the Company and itsRepresentatives. The Company acknowledges and agrees that no Värde Party makes or has made any representations orwarranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.(ee) Regulation M Compliance. The Company has not, and to the Knowledge of the Company, no one acting on itsbehalf has, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of theprice of any security of the Company to facilitate the sale or resale of any of the Securities, or (ii) sold, bid for, purchased, orpaid any compensation for soliciting purchases of any of the Securities.(ff) Stock Option Plans. To the Knowledge of the Company, each stock option granted by the Company under the2016 Plan was granted (i) in accordance with the terms of the 2016 Plan and (ii) with an exercise price at least equal to the fairmarket value of the Common Stock on the date such stock option would be considered granted under GAAP and applicablelaw. To the Knowledge of the Company, no stock option granted under the 2016 Plan has been backdated. To the Knowledgeof the Company, the Company has not intentionally granted, and there is no and has been no Company policy or practice tointentionally grant, stock options under the 2016 Plan prior to, or otherwise intentionally coordinate the grant of stock optionswith, the release or other public announcement of material information regarding the Company or its Subsidiaries or theirfinancial results or prospects.(gg) Office of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Knowledge of theCompany, any director, officer, agent, employee or affiliate of the Company or any Subsidiary is currently subject to any U.S.sanctions administered by the Office of Foreign Assets Control of the U.S. Treasury Department (“OFAC”).(hh) Environmental Matters.(i) Except as would not reasonably be expected to have a Material Adverse Effect, the Company and itsSubsidiaries (i) for the last 5 years have been and are in compliance with all Environmental Laws, which complianceincludes and has included obtaining, maintaining and complying with any permit, license, authorization or otherapproval required under any Environmental Law, (ii) have not incurred, assumed, provided an indemnity with respectto, or otherwise become subject to any Environmental Liability of any other Person and (iii) have not received anynotice, report, order, directive or other information regarding any actual or alleged violation of or liability underEnvironmental Laws, and are not subject to any pending or, to the Knowledge of the Company, threatened proceedingsarising under Environmental Laws, in each case the subject matter of which is unresolved.(ii) Except as would not reasonably be expected to have a Material Adverse Effect, neither the Company norany Subsidiary has treated, stored, released, discharged, disposed of, arranged for or permitted the disposal of,transported, handled, manufactured, distributed, or exposed any Person to, or owned or operated any property or facilitywhich is or has been contaminated by, any Hazardous Materials, in each case so as to give rise to any EnvironmentalLiability of the Company or its Subsidiaries.(ii) Money Laundering. The operations of the Company and its Subsidiaries are and have been conducted at all timesin compliance with applicable financial record-keeping and reporting requirements of the Currency and Foreign TransactionsReporting Act of 1970, as amended, applicable money laundering statutes and applicable rules and regulations thereunder(collectively, the “Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmentalagency, authority or body or any arbitrator involving the Company or any Subsidiary with respect to the Money LaunderingLaws is pending or, to the Knowledge of the Company or any Subsidiary, threatened.Except for the representations and warranties made by the Company in this Section 3.1, neither the Company nor any otherPerson makes any express or implied representation or warranty with respect to the Company or any Subsidiaries or their respectivebusinesses, operations, assets liabilities, condition or prospects, and the Company hereby disclaims any such other representations orwarranties. In particular, without limiting the foregoing disclaimer, neither the Company nor any other Person makes or has made anyrepresentation or warranty to the Värde Parties, or any of their respective Affiliates or representatives with respect to (i) any financialprojection, forecast, estimate, budget or prospect information relating to the Company or any of its Subsidiaries or their respectivebusiness, or (ii) except for the representations and warranties made by the Company in this Section 3.1 and the certificate deliveredpursuant to Section 2.2(a)(xi), any oral or written information presented to the Värde Parties, or any of their respective Affiliates orrepresentatives, in the course of their due diligence investigation of the Company, the negotiation of this Agreement or in the course ofthe transactions contemplated hereby. Notwithstanding anything to the contrary herein, nothing in this Agreement shall limit the rightof the Värde Parties to rely on the representations, warranties, covenants and agreements made to the Värde Parties expressly set forthin the Transaction Documents or in any certificate delivered hereunder or thereunder.3.2 Representations and Warranties of the Värde Parties. Each Värde Party, for itself and for no other Värde Party, herebyrepresents and warrants to the Company, as of the date hereof and as of the Closing Date, that:(a) Organization; Authority. Such Värde Party is an entity duly incorporated or formed, validly existing and in goodstanding under the laws of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limitedliability company or similar power and authority to enter into and to consummate the transactions contemplated by theTransaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of theTransaction Documents and performance by such Värde Party of the transactions contemplated by the Transaction Documentshave been duly authorized by all necessary corporate, partnership, limited liability company or similar action, as applicable, onthe part of such Värde Party. The Transaction Documents to which such Värde Party is a party have been duly executed bysuch Värde Party and, when delivered by such Värde Party in accordance with the terms hereof, will constitute the valid andlegally binding obligations of such Värde Party, enforceable against it in accordance with their terms (except as enforcementmay be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws ofgeneral applicability relating to or affecting creditors’ rights or by general equity principles).(b) Own Account. Such Värde Party understands that the Securities are “restricted securities,” as defined in Section (a)(3) of Rule 144 of the Securities Act, and have not been registered under the Securities Act or any applicable state securitieslaw and such Värde Party is acquiring the Securities as principal for its own account and not with a view to or for distributingor reselling the Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has nopresent intention of distributing any of the Securities in violation of the Securities Act or any applicable state securities law andhas no direct or indirect arrangement or understandings with any other Persons to distribute or regarding the distribution of theSecurities in violation of the Securities Act or any applicable state securities law (this representation and warranty not limitingsuch Värde Party’s right to sell the shares of the Preferred Stock pursuant to a Registration Statement or otherwise incompliance with applicable federal and state securities laws). Such Värde Party is acquiring the Securities hereunder in theordinary course of its business.(c) Värde Party Status. At the time such Värde Party was offered the Securities, it was, and as of the date hereof it is,an “accredited investor” as defined in Rule 501 of Regulation D promulgated under the Securities Act.(d) Access to Information. Such Värde Party acknowledges that it has had the opportunity to review the TransactionDocuments (including all exhibits and schedules thereto) and the SEC Reports and has been afforded: (i) the opportunity to asksuch questions as it has deemed necessary of, and to receive answers from, Representatives of the Company concerning theterms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access toinformation about the Company and its financial condition, results of operations, business, properties, management andprospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that theCompany possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investmentdecision with respect to the investment.(e) Experience of Such Värde Party. Such Värde Party, either alone or together with its Representatives, has suchknowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits andrisks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such VärdeParty is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a completeloss of such investment.(f) General Solicitation. Such Värde Party is not purchasing the Securities as a result of any advertisement, article,notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcastover television or radio or presented at any seminar or any other general solicitation or general advertisement.ARTICLE IV. CONSENT OF THE SERIES C-1, SERIES C-2 AND SERIES D HOLDERS4.1 Ownership. The Värde Parties hereby represent and warrant to the Company that, as of the date hereof, they currentlyown a majority of the outstanding shares of each of the Series C-1 Preferred Stock, the Series C-2 Preferred Stock and the Series DPreferred Stock.4.2 Consent. The Värde Parties, in their capacity as holders of a majority of the outstanding shares of each of the Series C-1Preferred Stock, the Series C-2 Preferred Stock and the Series D Preferred Stock, hereby consent to (i) the issuance by the Company ofthe Exchanged Preferred Shares, (ii) the amendment and restatement of the Series C Certificate of Designation as set forth in the A&RSeries C Certificate of Designation and the filing of the A&R Series C Certificate of Designation with the Secretary of State of theState of Nevada, (iii) the amendment and restatement of the Series D Certificate of Designation as set forth in the A&R Series DCertificate of Designation and the filing of the A&R Series D Certificate of Designation with the Secretary of State of the State ofNevada, (iv) the filing of the Series E Certificate of Designation with the Secretary of State of the State of Nevada, (v) the filing of theSeries F Certificate of Designation with the Secretary of State of the State of Nevada, and (vi) the increase in the number of directorsconstituting the entire Board of Directors contemplated by Section 5.13 of this Agreement.ARTICLE V. OTHER AGREEMENTS OF THE PARTIES5.1 Filings; Other Actions. Following the execution of this Agreement, the Värde Parties, on the one hand, and the Company,on the other hand, will cooperate and consult with the other and use commercially reasonable efforts to prepare and file all necessarydocumentation, to effect all necessary applications, notices, petitions, filings and other documents, and to obtain all necessary permits,consents, orders, approvals and authorizations of, or any exemption by, all third parties and Governmental Entities, and the expirationor termination of any applicable waiting period, necessary or advisable to consummate the transactions contemplated by thisAgreement, and to perform the covenants contemplated by this Agreement. Each party shall execute and deliver such furthercertificates, agreements and other documents and take such other actions as the other parties may reasonably request to consummate orimplement such transactions or to evidence such events or matters. Each party hereto agrees to keep the other party apprised of thestatus of matters referred to in this Section 5.1. The Värde Parties shall promptly furnish the Company, and the Company shallpromptly furnish the Värde Parties, to the extent permitted by applicable Law, with copies of written communications received by it orits Subsidiaries from, or delivered by any of the foregoing to, any Governmental Entity in respect of the transactions contemplated bythis Agreement.5.2 Transfer Restrictions.(a) Prior to September 5, 2019, without the consent of the Company, no Värde Party may transfer any of theExchanged Common Shares other than to an affiliate of such Värde Party or in connection with a business combinationtransaction involving the Company. After September 5, 2019, the Exchanged Common Shares shall be unrestricted and freelytransferable, subject to applicable securities laws binding on such Värde Party or transfer. No Värde Party may transfer any ofthe Exchanged Preferred Shares or the Underlying Shares except in accordance with the terms of the Certificates ofDesignation. Any purported transfer of any shares of the Securities in violation of this Section 5.2 or the Certificates ofDesignation shall be void ab initio, neither the Company nor such Värde Party shall recognize the same and the Company shallnot record such purported transfer on its books or treat the purported transferee as the owner of any such Securities for anypurpose.(b) Subject to Section 5.2(d), certificates and book-entry notations representing shares of the Securities will bear alegend conspicuously thereon in accordance with Nevada Revised Statutes 78.242, as provided in the Certificates ofDesignation, or, with respect to the Common Shares, a substantially similar legend with appropriate modifications.(c) The Company acknowledges and agrees that a Värde Party may from time to time pledge or grant a securityinterest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) underthe Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement and,if required under the terms of such arrangement, such Värde Party may transfer pledged or secured shares of the Securities tothe pledgees or secured parties. Such a pledge or transfer will not be subject to approval of the Company and no legal opinionof legal counsel of the pledgee, secured party or pledger shall be required in connection therewith. Further, no notice shall berequired of such pledge. At the appropriate Värde Party’s expense, the Company shall reasonably cooperate with the VärdeParty in connection with such pledge or transfer and will execute and deliver such reasonable documentation as a pledgeesecured party of the Securities may reasonably request in connection with a transfer of the Securities.(d) Subject to the limitations set forth below, certificates evidencing the Common Shares shall not contain any legend(except in respect of the restrictions set forth in Section 5.2(a) or in Section 13(a) of the Series E Certificate of Designation, asrelevant): (i) while a Registration Statement covering the resale of such Common Shares is effective under the Securities Act,(ii) following any sale of such Common Shares pursuant to Rule 144 or (iii) if such Common Shares are held by a Person whois not, and has not been for the preceding 90 days, an Affiliate of the Company and such Common Shares are eligible for saleunder Rule 144 without restriction and, in the case of this clause (iii), the Company’s counsel (upon receipt of requestedcertifications from the holder of such Common Shares) has delivered an opinion of counsel in form and substance reasonablyacceptable to the Transfer Agent if so requested by the Transfer Agent. The Company agrees that at such time as such legend isno longer required under clause (i), (ii) or (iii) of the first sentence of this Section 5.2(d), it will, no later than five Trading Daysfollowing the delivery by a Värde Party to the Company or the Transfer Agent of a certificate representing Common Shares, asapplicable, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), deliver or cause to bedelivered to such Värde Party a certificate representing such shares that is free from all restrictive and other legends (except inrespect of the restrictions set forth in Section 5.2(a) or in Section 13(a) of the Series E Certificate of Designation, as relevant).(e) In connection with Section 5.2(d), each Värde Party, severally and not jointly with the other Värde Parties,understands and hereby acknowledges that in order for Rule 144 to be applicable to the sale of the Common Shares, theCompany must be current with respect to its filing obligations under the Exchange Act at the time of such sale. Each VärdeParty further understands and hereby acknowledges that any legal opinion given by the Company’s counsel in connection withSection 5.2(d) may be limited as to scope and in particular may expire or be withdrawn in the event that the requirements ofRule 144 are not satisfied, including if the Company is not in compliance with the current public information requirement ofRule 144. Finally, each Värde Party understands and hereby acknowledges that the Company and its legal counsel will rely onsuch Värde Party’s understanding and agreement in connection with the issuance of the legal opinion and removal of thelegends from the Common Shares in accordance with Section 5.2(d), and that it is each Värde Party’s sole responsibility toconfirm with the Company at the time of any sale of Common Shares that the current public information requirement set forthin Rule 144 has been met.(f) In addition to such Värde Party’s other available remedies, the Company shall pay to a Värde Party, in cash, aspartial liquidated damages and not as a penalty, for each $1,000 of Common Shares (based on the VWAP of the CommonStock on the date such Common Shares are submitted to the Transfer Agent) delivered for removal of the restrictive legend andsubject to Section 5.2(d) and (e), $5 per Trading Day for each Trading Day after the Legend Removal Date until suchcertificate is delivered without a legend (except in respect of the restrictions set forth in Section 5.2(a) or in Section 13(a) of theSeries E Certificate of Designation, as applicable). Nothing herein shall limit such Värde Party’s right to pursue actual damagesfor the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, andsuch Värde Party shall have the right to pursue all remedies available to it at law or in equity, including, without limitation, adecree of specific performance or injunctive relief.(g) Each Värde Party, severally and not jointly with the other Värde Parties, agrees with the Company that such VärdeParty shall sell any of the Securities pursuant to either the registration requirements of the Securities Act, including anyapplicable prospectus delivery requirements, or an exemption therefrom and that, if any of the Securities are sold pursuant to aRegistration Statement, such of the Securities shall be sold in compliance with the plan of distribution set forth therein, andacknowledges that the removal of the restrictive legend from certificates representing the Securities as set forth in this Section5.2 is predicated, in part, upon the Company’s reliance upon this understanding.5.3 Furnishing of Information. Without limitation of any information delivery requirements set forth in the Securities PurchaseAgreement or the Certificates of Designation, as applicable, if, at any time while the Värde Parties and their Affiliates beneficially ownat least 10% of the outstanding shares of the Common Stock, the Company is not required to file reports under Section 13(a) or 15(d)of the Exchange Act, the Company shall provide to each Värde Party who, together with its Affiliates, beneficially owns at least 10%of the outstanding shares of the Common Stock:(a) quarterly unaudited financial statements prepared in accordance with GAAP within 45 days after the end of eachfiscal quarter, in each case, in form and substance acceptable to the Värde Parties (by action of the Värde Parties who, togetherwith their Affiliates, beneficially own a majority of the Underlying Shares held by the Värde Parties);(b) audited annual financial statements prepared in accordance with GAAP within 90 days after the end of each fiscalyear of the Company (certified by an independent accounting firm of national standing); and(c) annually, within 90 days after the end of the fiscal year, a reserve report prepared or audited by a third partyengineering firm of national standing in accordance with Commission guidelines with an “as of” date of December 31 of thepreceding calendar year.5.4 Integration. The Company shall not sell, offer for sale or solicit offers to buy any security (as defined in Section 2 of theSecurities Act) that would be integrated with the offer or sale of the Exchanged Shares in a manner that would require the registrationunder the Securities Act of the sale of the Exchanged Shares or that would be integrated with the offer or sale of the Exchanged Sharesfor purposes of the rules and regulations of any Trading Market such that it would require stockholder approval prior to the closing ofsuch other transaction unless stockholder approval is obtained before the closing of such subsequent transaction.5.5 Securities Laws Disclosure; Publicity. The Company shall (a) by 9:30 a.m. (New York City time) on the date hereof,issue a press release disclosing the material terms of the transactions contemplated hereby, and (b) file a Current Report on Form 8-K,including the Transaction Documents as exhibits thereto, with the Commission within the time required by the Exchange Act. TheCompany and each Värde Party shall consult with each other in issuing any other press releases with respect to the transactionscontemplated hereby, and neither the Company nor any Värde Party shall issue any such press release nor otherwise make any suchpublic statement without the prior consent of the Company, with respect to any press release of any Värde Party, or without the priorconsent of each Värde Party, with respect to any press release of the Company, which consent shall not unreasonably be withheld ordelayed, except if such disclosure is required by Law; provided, that no party shall be required to seek the consent of any other party tothis Agreement to disclose information with respect to the transactions contemplated hereby that has previously been publicly disclosedin accordance with this Section 5.5.5.6 Stockholder Rights Plan. No claim shall be made or enforced by the Company or, with the consent of the Company, anyother Person, that any Värde Party is an “acquiring person” under any control share acquisition, business combination, poison pill(including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by theCompany, or that any Värde Party could be deemed to trigger the provisions of any such plan or arrangement, in each case, solely byvirtue of receiving Securities under the Transaction Documents.5.7 Standstill. Until the applicable Standstill Termination Date, each Värde Party agrees that such Värde Party and itsAffiliates who hold any shares of Preferred Stock, any Common Shares or any shares of Common Stock issued pursuant to theOctober Transaction Agreement will not, except as expressly approved or invited in writing by the Board of Directors, directly orindirectly, through their subsidiaries, Affiliates or any other Persons, or in concert with any Person, or as part of a group that is deemedto be a “person” under Section 13(d)(3) of the Exchange Act:acquire or offer or agree to acquire, by purchase or otherwise, anyownership, including, but not limited to, beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), of any shares ofCommon Stock or other voting securities of the Company, or any securities or other rights exercisable or exchangeable for orconvertible into shares of Common Stock or other voting securities of the Company, other than (i) the acquisition of the ExchangedShares pursuant to this Agreement, (ii) the acquisition of the Underlying Shares upon any conversion of the Exchanged Series EShares or upon payment of any dividends thereon, any increase of the liquidation preference or convertible amount with respect to thePreferred Stock or any adjustments to the conversion price or conversion ratio or (iv) receiving any shares of securities generallydistributed by the Company or an acquirer or target of the Company to holders of Common Stock or Preferred Stock;(a) make or participate in any solicitation of proxies (as such term is defined in Rule 14a-1 under the Exchange Act) orconsents, whether or not such solicitation is exempt under Rule 14a-2 under the Exchange Act, with respect to any matter fromany holder of shares of Common Stock or other voting securities of the Company, or any securities exercisable orexchangeable for or convertible into shares of Common Stock or other voting securities of the Company, or make anycommunication exempted from the definition of solicitation by Rule 14a-1(1)(2)(iv) under the Exchange Act (other thancommunications in the ordinary course of business on a confidential basis among such Värde Party and its Affiliates);(b) other than through the Company or Board of Directors, call or request any special meeting of holders of CommonStock or other voting securities of the Company or submit or propose the submission of any matter to a vote of the holders ofCommon Stock or other voting securities of the Company;(c) other than through the Company or Board of Directors, effect or agree, offer, seek or propose to effect anybusiness combination, merger, tender offer, sale or acquisition of substantially all of the assets, restructuring, recapitalization,liquidation, dissolution or other extraordinary transaction involving the Company or any of its Subsidiaries;(d) otherwise seek or propose to influence, control or change the Board of Directors, management, policies, affairs,strategy or organizational documents of the Company or any of its Subsidiaries by way of any public communication or otherbroadly disseminated communication to holders of Common Stock or other voting securities of the Company;(e) enter into any discussions, negotiations, agreements, arrangements or understandings with, or intentionally assist,advise or encourage, any other Person with respect to any matter described in the foregoing clauses (a) through (e) of thisSection 5.7;(f) intentionally take any action that would reasonably be expected to cause or require the Company or such VärdeParty or any of its Affiliates to make any public announcement or other public disclosure with respect to any of the mattersdescribed in this Section 5.7;(g) intentionally publicly disclose any intention, plan or arrangement inconsistent with any provision of this Section5.7; or(h) without limitation of Section 5.7(a), acquire or offer or agree to acquire, by purchase or otherwise, any ownership,including, but not limited to, beneficial ownership (as defined in Rule 13d-3 under the Exchange Act), of any shares ofCommon Stock or other voting securities of the Company, or any securities or other rights exercisable or exchangeable for orconvertible into shares of Common Stock or other voting securities of the Company, in each case, that would result in theVärde Parties and their Affiliates collectively owning, beneficially or otherwise, greater than 50% of the outstanding shares ofCommon Stock, other than (i) the acquisition of the Exchanged Shares pursuant to this Agreement, (ii) the acquisition of theUnderlying Shares upon any conversion of the Exchanged Series E Shares or upon payment of any dividends thereon, anyincrease of the liquidation preference or convertible amount with respect to the Preferred Stock or any adjustments to theconversion price or conversion ratio or (iv) receiving any shares of securities generally distributed by the Company or anacquirer or target of the Company to holders of Common Stock or Preferred Stock;provided, however, that nothing in this Section 5.7 will limit (i) any Värde Party’s ability to vote or, subject to the other restrictions setforth herein and in the Certificates of Designation, the October Transaction Agreement and the Securities Purchase Agreement, transferits Securities or any shares of Preferred Stock or Common Stock issued pursuant to the October Transaction Agreement or theSecurities Purchase Agreement or otherwise exercise its rights under this Agreement, the Certificates of Designation, the OctoberTransaction Agreement or the Securities Purchase Agreement, (ii) the ability of any director designated by the Värde Parties pursuantto this Agreement or the Certificates of Designation to vote, exercise his or her fiduciary duties as or otherwise fully participate as amember of the Board of Directors, (iii) the ability of the Värde Parties to assert or protect their rights as a stockholder of the Companyin the event of the commencement of any bankruptcy or similar proceeding or assignment for the benefit of creditors involving theCompany or (iv) the ability of the Värde Parties to exercise their rights to appoint, remove or cause the resignation of directors pursuantto this Agreement and the Certificates of Designation.In the event that, prior to the Standstill Termination Date applicable to Section 5.7(i), any Värde Party or its Affiliate makes anyacquisition of securities of the Company that is permitted under Section 5.7(i) (other an acquisition described in clauses (i)-(iv) ofSection 5.7(i)), such Värde Party shall give (or shall cause its Affiliate to give) notice to the Company of such acquisition, including thenumber and type of securities acquired, no later than the first Business Day after the date of such acquisition.Notwithstanding the foregoing, in the case of a Värde Party that is a multi-managed investment vehicle whereby separate portfoliomanagers manage separate portions of such Värde Party’s assets and the portfolio managers have no direct knowledge of theinvestment decisions made by the portfolio managers managing other portions of such Värde Party’s assets and barriers are in place toprevent such portfolio managers from obtaining such knowledge, the covenant set forth in Section 5.7(a) shall only apply with respectto the portion of assets managed by the portfolio manager that made the investment decision to purchase the securities covered by thisAgreement, the October Transaction Agreement or the Securities Purchase Agreement; provided, that such assets managed by othermanagers not subject to such covenant does not exceed 1% of the Common Stock then issued and outstanding.The parties agree that the covenants and other terms of Section 4.2 of the Securities Purchase Agreement are hereby superseded in theirentirety from and after the Closing by the foregoing provisions this Section 5.7.5.8 Reservation and Listing of Securities.(a) At any time that shares of the Series E Preferred Stock are outstanding, the Company shall from time to time takeall lawful action within its control to cause the authorized capital stock of the corporation to include a sufficient number ofauthorized but unissued shares of the Common Stock to satisfy the conversion requirements for all shares of the Series EPreferred Stock then outstanding, or issuable as a dividend, including by accretion to the Stated Value of, or accrued but unpaiddividends with respect to, such shares of Series E Preferred Stock (assuming for the purposes of this calculation that theRequisite Stockholder Approval has been obtained).(b) If, on any date, the number of authorized but unissued (and otherwise unreserved) shares of the Common Stock isless than the Required Minimum on such date, the Company shall take all lawful action to amend the Articles of Incorporationto increase the number of authorized but unissued (and otherwise unreserved) shares of the Common Stock to at least theRequired Minimum at such time, as soon as possible and in any event not later than the 90th day after such date; provided, thatthe Company will not be required at any time to authorize a number of additional shares of the Common Stock greater than themaximum remaining number of shares of the Common Stock that could possibly be issued after such time pursuant to theSeries E Certificate of Designation.(c) The Company hereby agrees to use reasonable best efforts to maintain the listing of the Common Stock on theNYSE American or another Trading Market. The Company shall, if applicable: (i) in the time and manner required by theprincipal Trading Market or as may be otherwise necessary to permit the conversion of all outstanding shares of the Series EPreferred Stock, prepare and file with such Trading Market an additional shares listing application covering a number of sharesof the Common Stock at least equal to the Required Minimum on the date of each such application; (ii) take all steps necessaryto cause such shares of the Common Stock to be approved for listing or quotation on such Trading Market as soon as possiblethereafter; and (iii) provide to the Värde Parties evidence of such listing or quotation. The Company agrees to use reasonablebest efforts to maintain the eligibility of the Common Stock for electronic transfer through The Depository Trust Company oranother established clearing corporation, including, without limitation, by timely payment of fees to The Depository TrustCompany or such other established clearing corporation in connection with such electronic transfer.(d) The Company agrees, if the Company applies to have the Common Stock traded on any other Trading Market, itwill then include in such application the applicable number of Underlying Shares specified in clause (i) of Section 5.8(c), andwill take such other action as is necessary to cause such Underlying Shares to be listed or quoted on such other Trading Marketas promptly as possible. The Company will then use reasonable best efforts to continue the listing or quotation and trading of itsCommon Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligationsunder the bylaws or rules of the Trading Market.(e) The Company agrees that, if any shares of the Common Stock to be provided for the purpose of the conversion ofthe Series E Preferred Stock require registration with or approval of any Governmental Entity under any Law before suchshares of the Common Stock may be validly issued upon conversion, the Company will use commercially reasonable efforts tosecure such registration or approval, as the case may be.5.9 Company Stockholder Approval. The Company agrees to use commercially reasonable efforts to obtain, at the nextannual meeting of the Company Stockholders (at which a quorum is present) (the “Stockholder Meeting”), the approval by theCompany Stockholders of the conversion of all Exchanged Series E Shares issued or issuable pursuant to this Agreement (assumingthe maximum conversion rate as set forth in the Series E Certificate of Designation and that the Company elects to pay dividends inkind or otherwise accrues to Stated Value in accordance with the terms of the Series E Certificate of Designation, as applicable) (suchapproval, the “Requisite Stockholder Approval”) in accordance with the Articles of Incorporation and the bylaws of the Company.The Company will prepare and file with the SEC a proxy statement to be sent to the Company’s stockholders in connection with theStockholder Meeting (the “Proxy Statement”). Subject to the directors’ fiduciary duties, the Proxy Statement shall include the Board ofDirectors’ recommendation that the holders of shares of the Common Stock vote in favor of the Requisite Stockholder Approval. EachVärde Party agrees to furnish to the Company information concerning such Värde Party and its Affiliates as the Company, on theadvice of outside counsel, reasonably determines is necessary for the Proxy Statement, the Stockholder Meeting or any subsequentproxy solicitation; provided, that the Värde Party shall not be obligated to provide (i) any information subject to confidentiality, non-disclosure, or similar agreements or which cannot be disclosed under applicable Law, (ii) personally identifiable information, (iii)information regarding the limited partners of such Värde Party and (iv) financial information that the Värde Party reasonably deems tobe material to its business, as determined in good faith in its sole discretion. The Company shall promptly notify the Värde Parties of (i)the receipt of the Requisite Stockholder Approval or (ii) any projected failure to obtain the Requisite Stockholder Approval.5.10 Certain Transactions and Confidentiality.(a) Each Värde Party, severally and not jointly with the other Värde Parties, covenants that neither it, nor any Affiliateacting on its behalf or pursuant to any understanding with it, shall execute any purchases or sales, including short sales, of anyof the Company’s securities during the period commencing with the execution of this Agreement and ending at such time thatthe transactions contemplated by this Agreement are first publicly announced pursuant to the initial press release as described inSection 5.5. Each Värde Party, severally and not jointly with the other Värde Parties, covenants that until such time as thetransactions contemplated by this Agreement are publicly disclosed by the Company pursuant to the initial press release asdescribed in Section 5.5, such Värde Party shall maintain the confidentiality of the existence and terms of this transaction andthe information included in the Transaction Documents and the schedules hereto. Notwithstanding the foregoing, in the case ofa Värde Party that is a multi-managed investment vehicle whereby separate portfolio managers manage separate portions ofsuch Värde Party’s assets and the portfolio managers have no direct knowledge of the investment decisions made by theportfolio managers managing other portions of such Värde Party’s assets and barriers are in place to prevent such portfoliomanagers from obtaining such knowledge, the covenant set forth above shall only apply with respect to the portion of assetsmanaged by the portfolio manager that made the investment decision to acquire the Securities covered by this Agreement.(b) Each Värde Party shall, and shall cause its respective Affiliates and its and their Representatives to, (i) hold, instrict confidence, all non-public records, books, contracts, instruments, computer data and other data and informationconcerning the Company and its Subsidiaries furnished to it by the Company or its Representatives pursuant to, or inconnection with the negotiation of, this Agreement (collectively, “Company Information”) (except to the extent that suchCompany Information was (A) previously known by such Värde Party from other sources; provided, that such source was notknown by such Värde Party to be bound by a contractual, legal or fiduciary obligation of confidentiality to the Company or anyof its Subsidiaries, (B) in the public domain through no violation of this Section 5.10(b) by such Värde Party or (C) laterlawfully acquired from other sources by such Värde Party), and (ii) not release or disclose such Company Information to anyother Person, except its Representatives and financing sources who need to know such Company Information, who are awareof the confidential nature of such Company Information and who have agreed to keep such Company Information strictlyconfidential. Notwithstanding the foregoing, each Värde Party may disclose Company Information to the extent that (i)disclosure to a regulatory authority is necessary or appropriate in connection with any necessary regulatory approval required tobe obtained in connection with the Transaction Documents and the consummation of the transactions contemplated hereby andthereby or (ii) disclosure is required by judicial or administrative process or by other requirement of Law or the applicablerequirements of any regulatory agency or relevant stock exchange.5.11 Form D; Blue Sky Filings. The Company shall timely file a Form D with respect to the Securities if and as requiredunder Regulation D. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain anexemption for, or to qualify the Securities for, sale to the Värde Parties under applicable securities or “Blue Sky” laws of the states ofthe United States.5.12 Tax Matters.(a) Absent a change in law or Internal Revenue Service practice, or a contrary determination (as defined in Section1313(a) of the Code), the Värde Parties and the Company agree not to treat, for United States federal income Tax andwithholding Tax purposes, the Preferred Stock (based on the terms of each series of Preferred Stock as set forth in the relevantCertificates of Designation) as “preferred stock” within the meaning of Section 305 of the Code and Treasury RegulationSection 1.305-5, and shall not take any position inconsistent with such treatment except pursuant to a determination within themeaning of Section 1313 of the Code; provided that, in the event Internal Revenue Service or other taxing authoritysuccessfully challenges such treatment, then the Värde Parties and the Company shall each be held harmless and shall not berequired to indemnify any person for losses incurred due to the successful challenge by the taxing authority of such treatment.(b) The Company shall pay any and all documentary, stamp or similar issue or transfer Tax due on (x) the issue of theExchanged Preferred Shares and (y) the issue of the Underlying Shares. However, in the case of conversion of Preferred Stock,the Company shall not be required to pay any Tax or duty that may be payable in respect of any transfer involved in the issueand delivery of the Underlying Shares or shares of the Preferred Stock in a name other than that of the holder of the shares tobe converted, and no such issue or delivery shall be made unless and until the Person requesting such issue has paid to theCompany the amount of any such Tax or duty, or has established to the satisfaction of the Company that such Tax or duty hasbeen paid.(c) For U.S. federal and applicable state income tax purposes, (i) the issuance to the Värde Parties on the terms andsubject to the conditions set forth herein and pursuant to the Payoff Letter of (A) 9,891,638 shares of the Common Stock, (B)60,000 shares of the Series E Preferred Stock and (C) 55,000 shares of the Series F Preferred Stock and (ii) the amendment tothe Series C Certificate of Designation, the amendment to the Series D Certificate of Designation and the receipt of the Series Cand Series D Exchanged Common Shares, shall be treated by the parties as a “recapitalization” of the Company pursuant toSection 368(a)(1)(E) of the Code except pursuant to a determination within the meaning of Section 1313 of the Code; providedthat, in the event that the transactions do not so qualify as a recapitalization, as the result of a successful challenge by theInternal Revenue Service or other taxing authority, then the Company shall be held harmless and shall not be required toindemnify any person for losses incurred due to the failure of the transaction to so qualify or the successful challenge, includingthe Värde Parties.5.13 Board Representation Right.(a) On or prior to the Closing Date, the Board of Directors shall have taken or shall take all actions necessary toincrease the number of directors constituting the entire Board of Directors by two directors (to total eleven). The Company shallcause the vacancies created by such increase to be filled by (and shall only be filled by) (i) the person designated by the holdersof the Series E Preferred Stock to be the initial Investor Director (as defined in the Series E Certificate of Designation) and (ii)the person designated by the holders of the Series F Preferred Stock to be the initial Investor Director (as defined in the Series FCertificate of Designation), in each case, as and when required under the Series E Certificate of Designation or the Series FCertificate of Designation, as applicable. The parties agree that the rights granted to the Purchasers (as defined in the SecuritiesPurchase Agreement) under Section 4.15 of the Securities Purchase Agreement, and the rights granted to the Värde Partiesunder Section 5.13 of the October Transaction Agreement are hereby superseded in their entirety by this Section 5.13.(b) Subject to Section 5.13(c), without limiting the other rights the Värde Parties and their Affiliates may have, fromand after the Closing Date and for so long as the Värde Parties and their Affiliates continue to beneficially own (as defined inRule 13d-3 under the Exchange Act) shares of Common Stock (including the Common Shares) (for purposes of calculatingbeneficial ownership in this Section 5.13, without regard to limitations based on stockholder approval and giving effect toconversion of the Exchanged Series E Shares, whether or not then convertible) representing at least the applicable percentageof the outstanding shares of Common Stock specified in clauses (i) through (v) below, the Värde Parties (by action of theVärde Parties who, together with their Affiliates, beneficially own a majority of the total number of shares of Common Stockbeneficially owned by all of the Värde Parties and their Affiliates, calculated on the basis set forth above (such Värde Parties,the “Värde Party Majority”)) shall have the right (but not the obligation) to designate to the Board of Directors the followingnumber of directors (the “Investor Directors”):(i) five Investor Directors, for as long as the Värde Parties and their Affiliates beneficially own shares ofCommon Stock representing at least 40.0% of the outstanding shares of Common Stock;(ii) four Investor Directors, for as long as the Värde Parties and their Affiliates beneficially own shares ofCommon Stock representing at least 33.3% of the outstanding shares of Common Stock;(iii) three Investor Directors, for as long as the Värde Parties and their Affiliates beneficially own shares ofCommon Stock representing at least 25.0% of the outstanding shares of Common Stock;(iv) two Investor Directors, for as long as the Värde Parties and their Affiliates beneficially own shares ofCommon Stock representing at least 10.0% of the outstanding shares of Common Stock; and(v) one Investor Director, for as long as the Värde Parties and their Affiliates beneficially own shares ofCommon Stock representing at least 5.0% of the outstanding shares of Common Stock.(c) Notwithstanding anything herein to the contrary:(i) during the time that the holders of Preferred Stock of any series are entitled to appoint one or more directorsto the Board of Directors pursuant to one or more of the Certificates of Designation, the number of Investor Directorsthe Värde Parties shall be entitled to designate pursuant to Section 5.13(b) shall be reduced by the total number ofdirectors the holders of the Preferred Stock of all series are then entitled to appoint pursuant to the Certificates ofDesignation; and(ii) the number of Investor Directors the Värde Parties shall be entitled to designate pursuant to Section 5.13(b)shall be reduced if, and only to the extent necessary in order to comply with applicable law or Trading Market rules (asdirected in writing by the Commission or the Trading Market on which the Common Stock is then listed), so that thepercentage of the number of directors constituting the entire Board of Directors represented by the number of InvestorDirectors does not exceed the percentage of the outstanding shares of Common Stock beneficially owned by the VärdeParties and their Affiliates, calculated as set forth in Section 5.13(b) (rounded up to the nearest whole number ofInvestor Directors).(d) Notwithstanding anything herein to the contrary, as long as the Värde Parties and their Affiliates meet theconditions set forth in Sections 5.13(b)(i), 5.13(b)(ii), 5.13(b)(iii), 5.13(b)(iv) or 5.13(b)(v), as applicable, without the prioraffirmative vote or prior written consent of a Värde Party Majority, the Company shall not, directly or indirectly (whether byway of amendment to the charter documents of the Company, merger, recapitalization or otherwise), subject to right of theholders of Common Stock to amend the provisions of the bylaws of the Company relating to the number of directorsconstituting the entire Board of Directors or the manner in which such number of directors is determined (but, for the sake ofclarity, without limiting the Värde Parties’ other rights pursuant to this Section 5.13), modify the number of directorsconstituting the entire the Board of Directors at any time (except as required by Section 5.13(a)); provided, that the Companymay increase the number of directors constituting the entire Board of Directors without the consent of a Värde Party Majority ifthe Värde Parties and their Affiliates are given the right to designate one or more additional Investor Directors as necessary tocause (i) the number of Investor Director(s) the Värde Parties and their Affiliates have the right to designate (subject to Section5.13(c)) relative to the number of directors constituting the entire Board of Directors to be in the same proportion as (ii) thenumber of shares of Common Stock beneficially owned by the Värde Parties and their Affiliates relative to the total number ofoutstanding shares of Common Stock, rounded up or down to the nearest whole number of directors.(e) The Company shall take all actions within its power to cause all designees designated pursuant to Section 5.13(b)to be appointed or elected to the Board of Directors, including (i) causing such designees to be included in the slate ofnominees recommended by the Board of Directors to the holders of Common Stock for election as directors at each meeting ofthe Company Stockholders called for the purpose of electing directors (and/or in connection with any election by writtenconsent), (ii) soliciting proxies in favor of the election of such nominees, (ii) seeking the adoption of stockholders’ resolutionsand amendments to the organizational documents of the Company, (iii) executing required agreements and instruments, (iv)making, or causing to be made, with governmental, administrative or regulatory authorities, all filings, registrations or similaractions that are required to achieve such result and (v) for so long as the Värde Parties retain the rights described under Section5.13(b), not nominating or recommending the election of any other candidates against or in replacement of such designatedInvestor Directors.(f) Each Investor Director designated pursuant to Section 5.13(b) shall serve until his or her successor is designated orhis or her earlier death, disability, resignation or removal. Any vacancy or newly created directorship in the position of anInvestor Director while the Värde Parties have the right to appoint such Investor Director pursuant to Section 5.13(b) may befilled by the Board of Directors only with an individual designated by the Värde Party Majority, subject to the fulfillment of therequirements set forth in Section 5.13(h). While the Värde Parties have the right to appoint any Investor Director pursuant toSection 5.13(b), the Värde Parties, by and only by a Värde Party Majority, shall have the right to, at any time, with or withoutcause (i) cause such Investor Director to resign from his or her directorship, and (ii) appoint a replacement Investor Director tofill the vacancy resulting from such resignation, subject to the fulfillment of the requirements set forth in Section 5.13(h). AnyInvestor Director appointed pursuant to Section 5.13(b) shall be deemed to have agreed to resign from his or her directorship(and the Company shall recognize such resignation) upon exercise of the Värde Parties’ rights set forth in the immediatelypreceding sentence if such Investor Director shall have previously delivered to the Company a written letter of resignationstating that such Investor Director resigns his or her directorship effective upon any exercise of the Värde Parties’ rights setforth in the immediately preceding sentence.(g) At all times while an Investor Director is serving as a member or observer of the Board of Directors, and followingany such Investor Director’s death, disability, resignation or removal, such Investor Director shall be entitled to all rights toindemnification and exculpation as are then made available to any other member or observer of the Board of Directors.(h) Notwithstanding anything to the contrary, any Investor Director shall be reasonably acceptable to the Board ofDirectors and the Nominating and Corporate Governance Committee thereof acting in good faith (provided, that, for theavoidance of doubt, any investment professional of Värde Partners, Inc. or its Affiliates shall be deemed reasonably acceptable)and satisfy all applicable Commission and stock exchange requirements regarding service as a regular director of the Companyand shall comply in all material respects with the Company’s corporate governance guidelines as in effect from time to time.(i) Without limiting the Certificates of Designation, the right to designate an Investor Director pursuant to Section5.13(b) shall automatically terminate at such time as the Värde Parties and their Affiliates no longer meet the conditions setforth in Sections 5.13(b)(i), 5.13(b)(ii), 5.13(b)(iii), 5.13(b)(iv) or 5.13(b)(v), as applicable, and at such time, if requested inwriting by the Company, any Investor Directors then serving on the Board of Directors in excess of the entitled amount (if lessthan all then Investor Directors, then as selected by the Värde Party Majority) shall promptly resign from the Board ofDirectors. For the avoidance of doubt, any such Investor Director shall not be required to resign from the Board of Directorspursuant to this Section 5.13(i) if such individual has then currently been appointed or designated as a director of the Companypursuant to a right to appoint or designate a director that is then in effect under another agreement with the Company or theCertificates of Designation, but such individual will no longer be an Investor Director under this Agreement.(j) To the fullest extent permitted by applicable law, the Company, on behalf of itself and its subsidiaries, renouncesany interest or expectancy of the Company and its subsidiaries in, or in being offered an opportunity to participate in, anybusiness opportunities that are from time to time presented to the Värde Parties or any of their respective affiliates or any oftheir respective agents, shareholders, members, partners, directors, officers, employees, investment managers, investmentadvisors, affiliates or subsidiaries (other than the Company and its subsidiaries), including any director or officer of theCompany who is also an agent, shareholder, member, partner, director, officer, employee, investment managers, investmentadvisors, affiliate or subsidiary of any Värde Party (each, a “Specified Party”), even if the business opportunity is one that theCompany or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted theopportunity to do so, and no Specified Party shall have any duty to communicate or offer any such business opportunity to theCompany or be liable to the Company or any of its subsidiaries or any stockholder, including for breach of any fiduciary orother duty, as a director or officer or controlling stockholder or otherwise, and the Company shall indemnify each SpecifiedParty against any claim that such person is liable to the Company or its stockholders for breach of any fiduciary duty, by reasonof the fact that such person (i) participates in, pursues or acquires any such business opportunity, (ii) directs any such businessopportunity to another person or (iii) fails to present any such business opportunity, or information regarding any such businessopportunity, to the Company or its subsidiaries, unless, in the case of a Person who is a director or officer of the Company,such business opportunity is expressly offered to such director or officer in writing solely in his or her capacity as a director orofficer of the Company.(k) The parties agree that, as of the Closing Date, (i) the members of the Board of Directors designated or appointedpursuant to this Section 5.13 and the Certificates of Designation shall be the individuals listed on Schedule 5.13, and (ii) eachsuch individual shall be deemed to have been designated or appointed to the Board of Directors pursuant to this Section 5.13 orthe applicable Certificate of Designation as specified for such individual on Schedule 5.13.ARTICLE VI. MISCELLANEOUS6.1 Fees and Expenses. Except as expressly set forth in the Transaction Documents to the contrary (including with respect tothe Värde Parties’ Transaction Expense Amount), each party shall pay the fees and expenses of its advisers, counsel, accountants andother experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery andperformance of this Agreement. The Company shall pay all fees of the Transfer Agent (including, without limitation, any fees requiredfor same-day processing of any instruction letter delivered by the Company and any conversion or exercise notice delivered by a VärdeParty) levied in connection with the delivery of any Securities to the Värde Parties. Further, for the avoidance of doubt, the Companyshall be responsible for the fees, commissions and expenses of brokers, financial advisors, finders, placement agents, investment banksor similar Persons engaged (or purportedly engaged) by the Company or its Subsidiaries with respect to the offer and sale or issue ofany of the Securities.6.2 Survival; Limitation on Liability. The representations and warranties of the parties contained in this Agreement shallsurvive until the first anniversary of the date hereof, except for (i) the representations and warranties of the Company contained inSections 3.1(b)(i), 3.1(c), 3.1(d), 3.1(f), 3.1(g), 3.1(u) and 3.1(w) and (ii) the representations and warranties of the Värde Partiescontained in Sections 3.2(a), 3.2(b) and 3.2(c), which will survive indefinitely and (iii) the representations and warranties of theCompany contained in Section 3.1(z), which will survive until 30 days after the expiration of the applicable statute of limitations. All ofthe covenants or other agreements of the parties contained in this Agreement shall survive until fully performed or fulfilled, unless andto the extent that non-compliance with such covenants or agreements is waived in writing by the party entitled to such performance.The Company shall not be liable hereunder to the Värde Party or any other Person for any punitive, exemplary, treble, special, indirect,incidental or consequential damages (including any loss of earnings or profits), except for any such damages that are direct damages inthe form of diminution of value or payable to a third-party.6.3 Entire Agreement. The Transaction Documents, together with the exhibits and schedules thereto, contain the entireunderstanding of the parties with respect to the subject matter hereof and thereof and supersede all prior agreements andunderstandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents,exhibits and schedules.6.4 Notices. Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall bein writing and shall be deemed given and effective on the earliest of: (a) the date of transmission (if there is no receipt of notice of afailed delivery to the notice party), if such notice or communication is delivered e-mail attachment as set forth on the signature pagesattached hereto at or prior to 5:30 p.m. (Houston, Texas time) on a Business Day, (b) the next Business Day after the date oftransmission (if there is no receipt of notice of a failed delivery to the notice party), if such notice or communication is delivered via e-mail attachment as set forth on the signature pages attached hereto on a day that is not a Business Day or later than 5:30 p.m. (Houston,Texas time) on any Business Day, (c) the second Business Day following the date of mailing, if sent by U.S. nationally recognizedovernight courier service or (d) upon actual receipt by the party to whom such notice is required to be given. The initial address forsuch notices and communications shall be as set forth on Schedule 6.4 attached hereto; provided, that a party may update its address bynotice duly given to the other parties.6.5 Amendments; Waivers. No provision of this Agreement may be waived, modified, supplemented or amended except in awritten instrument signed, in the case of an amendment, by the Company and the Värde Parties holding at least a majority in interest ofthe Securities held by such Värde Parties then outstanding or, in the case of a waiver, by the party against whom enforcement of anysuch waived provision is sought. No waiver of any default with respect to any provision, condition or requirement of this Agreementshall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision,condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner be deemedto impair the exercise of any such right.6.6 Headings. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not bedeemed to limit or affect any of the provisions hereof.6.7 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successorsand permitted assigns. The Company shall not assign this Agreement or any rights or obligations hereunder (other than by merger)without the prior written consent of each Värde Party. No Värde Party may assign this Agreement or any rights or obligationshereunder to any Person without the prior written consent of the Company, except that a Värde Party may assign any or all of its rightshereunder to (i) an Affiliate of such Värde Party or (ii) following April 26, 2021, to any Person, in each case, to which such VärdeParty transfers any Securities in accordance with the Transaction Documents; provided, that (x) such transferee or Affiliate agrees withthe Company in writing to be bound by the provisions of the Transaction Documents that apply to the Värde Parties, (y) no suchassignment by a Värde Party shall relieve such Värde Party of its obligations hereunder without the prior written consent of theCompany and (z) the Värde Parties’ rights under Section 5.13 may not be assigned pursuant to clause (ii) above unless suchassignment has been approved by a majority of the members of the Board of Directors.6.8 No Third-Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respectivesuccessors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, exceptas otherwise set forth in Section 6.15.6.9 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of the TransactionDocuments shall be governed by and construed and enforced in accordance with the internal laws of the State of New York, withoutregard to the principles of conflicts of law thereof. Each party agrees that all legal proceedings concerning the interpretations,enforcement and defense of the transactions contemplated by the Transaction Documents (whether brought against a party hereto or itsrespective affiliates, directors, officers, stockholders, partners, members, employees or agents) shall be commenced exclusively in thestate and federal courts in the state and federal courts, sitting in the City of New York. Each party hereby irrevocably submits to theexclusive jurisdiction of the state and federal courts sitting in the City of New York, Borough of Manhattan for the adjudication of anydispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect tothe enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action orproceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding isimproper or is an inconvenient venue for such proceeding. Each party hereby irrevocably waives personal service of process andconsents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered or certified mail orovernight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agreesthat such service will constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed tolimit in any way any right to serve process in any other manner permitted by law. If either party commences an action, suit orproceeding to enforce any provisions of the Transaction Documents, the prevailing party in such action, suit or proceeding shall bereimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation,preparation and prosecution of such action or proceeding.6.10 Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALLRIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THE TRANSACTIONDOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY.6.11 Execution. This Agreement may be executed in two or more counterparts, all of which when taken together shall beconsidered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered toeach other party, it being understood that the parties need not sign the same counterpart. In the event that any signature is delivered byfacsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of theparty executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf signaturepage were an original thereof.6.12 Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdictionto be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shallremain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use theircommercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as thatcontemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties thatthey would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may behereafter declared invalid, illegal, void or unenforceable.6.13 Replacement of Securities. If any certificate or instrument evidencing any of the Securities is mutilated, lost, stolen ordestroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case ofmutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonablysatisfactory to the Company of such loss, theft or destruction. The applicant for a new certificate or instrument under suchcircumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such newcertificate or instrument.6.14 Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery ofdamages, each of the Värde Parties and the Company will be entitled to specific performance under the Transaction Documents. Theparties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligationscontained in the Transaction Documents and hereby agree to waive and not to assert in any action for specific performance of any suchobligation the defense that a remedy at law would be adequate.6.15 Non-Recourse. Notwithstanding anything that may be expressed or implied in this Agreement or any document,agreement, or instrument delivered contemporaneously herewith, and notwithstanding the fact that any party may be a partnership orlimited liability company, each party hereto, by its acceptance of the benefits of the Transaction Documents, covenants, agrees andacknowledges that no Persons other than the parties shall have any obligation hereunder and that it has no rights of recovery hereunderagainst, and no recourse hereunder or under any documents, agreements, or instruments delivered contemporaneously herewith or inrespect of any oral representations made or alleged to be made in connection herewith or therewith shall be had against, any former,current or future director, officer, agent, Affiliate, manager, investment manager, investment advisor, assignee, incorporator, controllingPerson, fiduciary, representative or employee of any party (or any of their successors or permitted assignees), against any former,current, or future general or limited partner, manager, stockholder or member of any party (or any of their successors or permittedassignees) or any Affiliate thereof or against any former, current or future director, officer, agent, employee, Affiliate, manager,investment manager, investment advisor, assignee, incorporator, controlling Person, fiduciary, representative, general or limited partner,stockholder, manager or member of any of the foregoing, but in each case not including the parties, whether by or through attemptedpiercing of the corporate veil, by or through a claim (whether in tort, contract or otherwise) by or on behalf of such party against suchPersons and entities, by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any statute,regulation or other applicable law, or otherwise; it being expressly agreed and acknowledged that no personal liability whatsoever shallattach to, be imposed on, or otherwise be incurred by any such Persons, as such, for any obligations of the applicable party under thisAgreement or the transactions contemplated hereby, under any documents or instruments delivered contemporaneously herewith, inrespect of any oral representations made or alleged to be made in connection herewith or therewith, or for any claim (whether in tort,contract or otherwise) based on, in respect of, or by reason of, such obligations or their creation. Notwithstanding anything in theTransaction Documents to the contrary, the liability of the Värde Parties shall be several, not joint.6.16 Payment Set Aside. To the extent that the Company makes a payment or payments to any Värde Party pursuant to any ofthe Transaction Documents or a Värde Party enforces or exercises its rights hereunder or thereunder and such payment or payments orthe proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee, receiveror any other Person under any law (including, without limitation, any bankruptcy law, state or federal law, common law or equitablecause of action), to the extent of any such restoration the obligation or part thereof originally intended to be satisfied shall be revivedand continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred.6.17 Independent Nature of Värde Parties’ Obligations and Rights. The obligations of each Värde Party under any of theTransaction Documents are several and not joint with the obligations of any other Värde Party hereunder or thereunder and no VärdeParty will be responsible in any way for the performance or non-performance of the obligations of any other Värde Party under any ofthe Transaction Documents. Nothing contained in the Transaction Documents, and no action taken by any Värde Party pursuant heretoor thereto, shall be deemed to constitute the Värde Parties as a partnership, an association, a joint venture or any other kind of entity, orcreate a presumption that the Värde Parties are in any way acting in concert or as a group with respect to such obligations or thetransactions contemplated by the Transaction Documents. Each Värde Party shall be entitled to independently protect and enforce itsrights, including, without limitation, the rights arising out of the Transaction Documents, and it shall not be necessary for any otherVärde Party to be joined as an additional party in any proceeding for such purpose.6.18 Liquidated Damages. The Company’s obligations to pay any partial liquidated damages or other amounts owing underthe Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidateddamages and other amounts have been paid, notwithstanding the fact that the instrument or security pursuant to which such partialliquidated damages or other amounts are due and payable shall have been canceled.6.19 Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking of any action or the expiration of any rightrequired or granted herein is not a Business Day, such action may be taken or such right may be exercised on the next succeedingBusiness Day.6.20 Construction and Interpretation.(a) The term “or” when used in the Agreement is not exclusive, unless the context required otherwise. The partiesagree that each of them and their respective counsel have reviewed and had an opportunity to revise the TransactionDocuments and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against thedrafting party shall not be employed in the interpretation of the Transaction Documents or any amendments thereto. In addition,each and every reference to share prices and shares of the Common Stock in any of the Transaction Documents shall be subjectto adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of theCommon Stock that occur after the date of this Agreement.(b) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement will referto this Agreement as a whole and not to any particular provision of this Agreement, and section and subsection references areto this Agreement unless otherwise specified. The headings in this Agreement are included for convenience of reference onlyand will not limit or otherwise affect the meaning or interpretation of this Agreement. Whenever the words “include,”“includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”The phrases “the date of this Agreement,” “the date hereof” and terms of similar import, unless the context otherwise requires,shall be deemed to refer to the date set forth in the first paragraph of this Agreement. The meanings given to terms definedherein will be equally applicable to both the singular and plural forms of such terms. Except as otherwise specified herein,references to agreements, policies, standards, guidelines or instruments, or to statutes or regulations, are to such agreements,policies, standards, guidelines or instruments, or statutes or regulations, as amended or supplemented from time to time (or tosuccessors thereto).(Signature Pages Follow)IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorizedsignatories as of the date first indicated above.LILIS ENERGY, INC.By:/s/ Joseph C. DachesName: Joseph C. DachesTitle: President, Chief Financial Officer and Treasurer[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;SIGNATURE PAGES FOR VÄRDE PARTIES FOLLOW]IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their respective authorizedsignatories as of the date first indicated above.SEVERALLY AND NOT JOINTLY FOR EACH ENTITY LISTED BELOW:By: /s/ Markus Specks Name: Markus SpecksTitle: Managing DirectorTHE VÄRDE FUND VI-A, L.P.,By: Värde Investment Partners G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerVÄRDE INVESTMENT PARTNERS, L.P.,By: Värde Investment Partners G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE FUND XI (MASTER), L.P.,By: Värde Fund XI G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerVÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER, L.P.,By: Värde Investment Partners G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE SKYWAY FUND, L.P.,By: The Värde Skyway Fund G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE SKYWAY MINI-MASTER FUND, L.P.,By: The Värde Skyway Fund G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE FUND XII (MASTER), L.P.,By: The Värde Fund XII G.P., LLC, its General PartnerBy: The Värde Fund XII UGP, LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerSchedule IVärde Party AllocationVärde PartyTerm Loan Exchanged Common SharesExchanged Series E SharesExchanged Series F SharesTerm Loan ExchangeAmount (pursuant to Payoff Letter)Series C and Series D Exchanged Common SharesTHE VÄRDE FUND VI-A, L.P.296,7491,8001,650$4,007,888232,500VÄRDE INVESTMENT PARTNERS, L.P.672,6314,0803,740$9,084,547527,000THE VÄRDE FUND XI (MASTER), L.P.4,114,92224,96022,880$55,576,0523,224,000VÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER,L.P.593,4983,6003,300$8,015,777465,000THE VÄRDE SKYWAY FUND, L.P.242,4901,4711,348$3,275,061189,988THE VÄRDE SKYWAY MINI-MASTER FUND, L.P.1,043,4236,3295,802$14,092,455817,512THE VÄRDE FUND XII (MASTER), L.P.2,927,92517,76016,280$39,544,4992,294,000Total:9,891,63860,00055,000$133,596,2797,750,000Schedule 3.1(a)SubsidiariesBrushy Resources, Inc.ImPetro Resources, LLCImPetro Operating, LLCLilis Operating Company, LLCHurricane Resources, LLCSchedule 3.1(v)Registration RightsRegistration Rights Agreement, dated as of February 28, 2017, by and among the Company and the Purchasers party thereto.Registration Rights Agreement, dated as of April 26, 2017, by and among the Company and the Lenders party thereto.Registration Rights Agreement, dated as of January 31, 2018, by and among the Company and the Purchasers party thereto.Registration Rights Agreement, dated as of October 10, 2018, by and among the Company and the Värde Parties party thereto.The Registration Rights Agreement (as defined herein).Schedule 5.13Director Designees/AppointeesName:Designated or Appointed Pursuant to:Mark ChristensenSeries D Certificate of DesignationJohn JohanningSeries C Certificate of DesignationMarkus SpecksSeries C Certificate of DesignationSchedule 6.4Address for NoticeIf to the Company:201 Main Street, Suite 1351Fort Worth, Texas 76102Attn: Joseph DachesEmail: JDaches@lilisenergy.comwith a copy to (which will not constitute notice):Bracewell LLP711 Louisiana StreetSuite 2300Houston, TexasAttn: Charles H. Still, Jr.Fax: (800) 404-3970Email: charles.still@bracewell.comIf to the Värde Parties:609 Main Street, Suite 3925Houston, Texas 77002Attn: Markus SpecksEmail: mspecks@varde.com901 Marquette Ave S., Suite 3300Minneapolis, Minnesota 55402Attn: Legal DepartmentEmail: legalnotices@varde.comwith a copy to (which will not constitute notice):Kirkland & Ellis LLP609 Main StreetHouston, Texas 77002Attn: Lucas E. Spivey, P.C.Julian Seiguer, P.C.Jhett R. NelsonEmail: lucas.spivey@kirkland.comjulian.seiguer@kirkland.comjhett.nelson@kirkland.comExhibit AForm of A&R Series C Certificate of Designation[See Attached.]Exhibit BForm of A&R Series D Certificate of Designation[See Attached.]Exhibit CForm of Payoff Letter[See Attached.]Exhibit DForm of Registration Rights Agreement[See Attached.]Exhibit EForm of Series E Certificate of Designation[See Attached.]Exhibit FForm of Series F Certificate of Designation[See Attached.]Exhibit GForm of Legal Opinion of Bracewell LLP[See Attached.]Exhibit HForm of Nevada Opinion1. The Company is a corporation duly incorporated under the laws of the State and in good standing in the State of Nevada, with thecorporate power and authority to conduct its business and own its properties as presently conducted.2. The execution and delivery to the Värde Parties by the Company of the Transaction Agreement, the Payoff Letter, the Certificatesof Designation and the Registration Rights Agreement (collectively, the “Opinion Documents”), the performance by the Company ofits obligations thereunder, and the consummation of the transactions contemplated thereby, have been duly authorized by all necessarycorporate action by the Company and the Opinion Documents have been duly executed and delivered by the Company.3. The execution and delivery to the Värde Parties by the Company of the Opinion Documents, the performance by the Company ofits obligations thereunder, and the consummation of the transactions contemplated thereby, do not violate any provision of the articlesof incorporation or bylaws (together, the “Organizational Documents”) of the Company.4. The execution and delivery to the Värde Parties by the Company of the Opinion Documents, the performance by the Company ofits obligations under each Opinion Document, and the consummation of the transactions contemplated thereby, do not require underNevada law any filing or registration by the Company with, or approval or consent to the Company of, any governmental agency orauthority of the State of Nevada, that has not been made or obtained except that we express no opinion with respect to any securitieslaws. 5. Issuance of the Exchanged Shares has been duly authorized by all necessary corporate action on the part of the Company.6. Upon issuance of the Exchanged Shares, in accordance with the terms of the Transaction Agreement, the Exchanged Shares willbe duly issued, fully paid and non-assessable and, to the best of our knowledge, free and clear of all liens, and will not be issued inviolation of preemptive or other similar rights pursuant to (A) any statute, rule or regulation of the State of Nevada (B) the Company’sOrganizational Documents as in effect on the date hereof or (C) to the best of our knowledge, any agreement to which the Company orany of its subsidiaries is a party or bound.7. Issuance of (i) the Preferred Stock in accordance with the terms of the Transaction Agreement and (ii) Common Stock issuableupon conversion of the Preferred Stock, as applicable, has been duly authorized by all necessary corporate action on the part of theCompany.8. Upon issuance of the Preferred Stock in accordance with the terms of the Transaction Agreement, the Preferred Stock will be dulyissued, fully paid and non-assessable and, to the best of our knowledge, free and clear of all liens, and will not be issued in violation ofpreemptive or other similar rights pursuant to (A) any statute, rule or regulation of the State of Nevada (B) the Company’sOrganizational Documents in effect on the date hereof or (C) to the best of our knowledge, any agreement to which the Company wasa party or bound.9. The shares of Common Stock issuable upon conversion of the Preferred Stock, as applicable, when issued in accordance with theterms of the Certificates of Designations, will be duly issued, fully paid and non-assessable and, to the best of our knowledge, free andclear of all liens, and will not be issued in violation of preemptive or other similar rights pursuant to (A) any statute, rule or regulationof the State of Nevada (B) the Company’s Organizational Documents as in effect on the date hereof or (C) to the best of ourknowledge, any agreement to which the Company or any of its subsidiaries is a party or bound.iiKE 57151467.9Execution VersionExhibit 10.43AMENDED AND RESTATEDREGISTRATION RIGHTS AGREEMENTBY AND AMONGLILIS ENERGY, INC.ANDTHE VÄRDE PARTIES PARTY HERETOTABLE OF CONTENTSARTICLE IDEFINITIONS1Section 1.01Definitions. 1Section 1.02Registrable Securities. 5ARTICLE IIREGISTRATION RIGHTS5Section 2.01Shelf Registration. 5Section 2.02Underwritten Shelf Offering Requests. 7Section 2.03Delay and Suspension Rights. 9Section 2.04Piggyback Registration Rights. 9Section 2.05Participation in Underwritten Offerings. 11Section 2.06Registration and Sale Procedures. 12Section 2.07Cooperation by Holders. 15Section 2.08Restrictions on Public Sales by Holders. 15Section 2.09Expenses. 15Section 2.10Indemnification and Contribution. 15Section 2.11Rule 144 Reporting. 18Section 2.12Transfer or Assignment of Registration Rights. 18Section 2.13Other Registration Rights. 19Section 2.14Amendment and Restatement of October Registration Rights Agreement;Termination of Other Registration Rights Agreements. 19ARTICLE IIIMISCELLANEOUS19Section 3.01Communications. 19Section 3.02Successors and Assigns. 20Section 3.03Recapitalization, Exchanges, Etc. Affecting the Shares. 20Section 3.04Aggregation of Registrable Securities. 20Section 3.05Specific Performance. 20Section 3.06Counterparts. 20Section 3.07Headings. 21Section 3.08Governing Law. 21Section 3.09Severability of Provisions. 21Section 3.10Entire Agreement. 21Section 3.11Amendment. 22Section 3.12No Presumption. 22Section 3.13Obligations Limited to Parties to Agreement. 22Section 3.14Independent Nature of Holders’ Obligations. 22Section 3.15Interpretation. 23Annex A – Selling Stockholder Notice and QuestionnaireAMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENTThis AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and enteredinto as of March 5, 2019, by and among Lilis Energy, Inc., a Nevada corporation (the “Company”), and The Värde Fund VI-A, L.P.,Värde Investment Partners, L.P., The Värde Fund XI (Master), L.P., Värde Investment Partners (Offshore) Master, L.P., The VärdeSkyway Fund, L.P., The Värde Skyway Mini-Master Fund, L.P. and The Värde Fund XII (Master), L.P. (each, a “Värde Party” and,collectively, the “Värde Parties”).WHEREAS, the Company and the Värde Parties have entered into that certain Registration Rights Agreement, dated as ofOctober 10, 2018 (the “October Registration Rights Agreement”);WHEREAS, the Company and the Värde Parties desire to amend and restate the October Registration Rights Agreement inconnection with the Company’s issuance of Common Stock, Series E Preferred Stock and Series F Preferred Stock;WHEREAS, this Agreement is made pursuant to the Transaction Agreement, dated as of March 5, 2019 (the “TransactionAgreement”), among the Company and the Värde Parties, pursuant to which the Värde Parties acquired the Securities;WHEREAS, the Company has agreed to provide the registration and other rights set forth in this Agreement for the benefit ofthe Värde Parties pursuant to the October Transaction Agreement (as defined below) and the Transaction Agreement; andWHEREAS, the undersigned Holders represent the Majority Holders required to amend the October Registration RightsAgreement pursuant to Section 3.11 thereof.NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuableconsideration, the receipt and sufficiency of which are hereby acknowledged by each party hereto, the parties hereby agree as follows:ARTICLE I DEFINITIONSSection 1.01 Definitions.Capitalized terms used herein without definition shall have the meanings given to them in the Transaction Agreement. Theterms set forth below are used herein as so defined:“Agreement” has the meaning specified therefor in the introductory paragraph of this Agreement.“April Registration Rights Agreement” means that certain Registration Rights Agreement dated as of April 26, 2017, by andamong the Company and the lenders party thereto.“Commission” means the U.S. Securities and Exchange Commission, including the staff thereof as applicable.“Common Share Price” means the volume weighted average closing price of the Common Stock (as reported by the PrimaryExchange on which the Common Stock is then traded) for the ten (10) trading days immediately preceding the date on which thedetermination is made (or, if such price is not available, as determined in good faith by the Board of Directors).“Company” has the meaning specified therefor in the introductory paragraph of this Agreement.“Company Securities” has the meaning specified therefor in Section 2.04(c)(i).“Effective Date” means April 10, 2019; provided, however, that, if (a) the Company has filed the Shelf Registration Statementby March 29, 2019, (b) prior to the time the Shelf Registration Statement becomes effective, the Company (i) is notified by theCommission that the Commission intends to review the Shelf Registration Statement or any reports filed by the Company under theExchange Act or (ii) receives from the Commission any comments on the Shelf Registration Statement or any reports filed by theCompany under the Exchange Act, and (c) the Company uses commercially reasonable efforts to address any such comments receivedfrom the Commission as promptly as reasonably practicable after receipt thereof, the Effective Date shall automatically be extended tobe the date that is ninety days after the date of this Agreement.“Effectiveness Period” has the meaning specified therefor in Section 2.01(g).“Exchange Amount” means the sum of the Term Loan Exchange Amount plus $14,570,000 less $55,000,000.“Expenses” has the meaning specified therefor in Section 2.10(a).“Holder” means the record holder of any Registrable Securities; provided, that each record holder of Exchanged Series EShares shall be deemed to be the record holder of the Registrable Securities issuable upon conversion of such Exchanged Series EShares for purposes of this definition and all other references in this Agreement to holding or owning Registrable Securities.“Indemnified Party” has the meaning specified therefor in Section 2.10(c).“Indemnifying Party” has the meaning specified therefor in Section 2.10(c).“January Registration Rights Agreement” means that certain Registration Rights Agreement dated as of January 31, 2018, byand among the Company and the purchasers party thereto.“Liquidated Damages” has the meaning specified in Section 2.01(c).“Liquidated Damages Multiplier” means an amount equal to the sum of (a) the Exchange Amount and (b) $29,013,795.“Losses” has the meaning specified therefor in Section 2.10(a).“Majority Holders” means, at any time, the Holder or Holders of more than fifty percent (50%) of the Registrable Securities atsuch time.“Managing Underwriter” means, with respect to any Underwritten Offering, the lead book-running manager(s) of suchUnderwritten Offering.“October Exchanged Common Shares” means the “Exchanged Common Shares” as such term is defined in the OctoberTransaction Agreement.“October Registration Rights Agreement” has the meaning specified therefor in the recitals of this Agreement.“October Shelf Registration Statement” means the shelf registration statement (File No.: 333-228712), including anyamendments or supplements thereto, filed by the Company pursuant to the October Registration Rights Agreement.“October Transaction Agreement” means that certain Transaction Agreement, dated as of October 10, 2018, among theCompany and the Värde Parties.“Other Securities” has the meaning specified therefor in Section 2.04(c)(i).“Piggybacking Holder” has the meaning specified therefor in Section 2.04(a).“Piggyback Underwritten Offering” has the meaning specified therefor in Section 2.04(a).“Primary Exchange” means, at any time, the primary U.S. national or regional securities exchange or market on which theCommon Stock is listed or admitted for trading at such time.“Registrable Securities” means the Exchanged Common Shares, the Underlying Shares and the October Exchanged CommonShares, in each case until such Registrable Securities cease to be Registrable Securities pursuant to Section 1.02.“Registrable Securities Amount” means the Common Share Price times the number of applicable Registrable Securities.“Registration Default” has the meaning specified therefor in Section 2.01(c).“Registration Expenses” means all expenses, other than Selling Expenses, incident to the Company’s performance under orcompliance with this Agreement to effect the registration of Registrable Securities on a Registration Statement and the disposition ofsuch Registrable Securities, including, without limitation, all registration, filing, securities exchange listing fees, all registration, filing,qualification and other fees and expenses of complying with securities or blue sky laws, fees of the Financial Industry RegulatoryAuthority, fees of transfer agents and registrars, all word processing, duplicating and printing expenses and the fees and disbursementsof counsel to the Company and the independent public accountants for the Company, including the expenses of any special audits or“comfort” letters required by or incident to such performance and compliance, and the reasonable fees and expenses of one counsel forall Holders.“Registration Statement” means (a) the Shelf Registration Statement and (b) any other registration statement of the Companyfiled or to be filed with the Commission under the Securities Act in which Registrable Securities are or, as the context requires, may beincluded in the securities registered thereby pursuant to this Agreement.“Requesting Holder” has the meaning specified therefor in Section 2.02(a).“Requesting Holder and Shelf Piggybacking Holder Securities” has the meaning specified therefor in Section 2.02(c)(i).“Section 2.02 Maximum Number of Shares” has the meaning specified therefor in Section 2.02(c).“Section 2.04 Maximum Number of Shares” has the meaning specified therefor in Section 2.04(c).“Selling Expenses” means all (a) underwriting fees, discounts and selling commissions allocable to the sale of RegistrableSecurities, (b) transfer taxes allocable to the sale of the Registrable Securities, (c) costs or expenses related to any roadshows conductedin connection with the marketing of any Shelf Underwritten Offering, and (d) fees and expenses of any counsel engaged by anyHolder that are not expressly included in Registration Expenses.“Selling Holder” means a Holder selling Registrable Securities pursuant to a Registration Statement.“Selling Stockholder Questionnaire” has the meaning specified therefor in Section 2.07.“Shelf Piggybacking Holder” has the meaning specified therefor in Section 2.02(b).“Shelf Registration Statement” has the meaning specified therefor in Section 2.01(a), subject to Section 2.01(f).“Shelf Underwritten Offering” has the meaning specified therefor in Section 2.02(a).“Transaction Agreement” has the meaning specified therefor in the recitals of this Agreement.“Underwritten Offering” means an offering (including an offering pursuant to the Shelf Registration Statement) in which sharesof Common Stock are sold to an underwriter on a firm commitment basis for reoffering to the public.“Underwritten Offering Filing” means (a) with respect to a Shelf Underwritten Offering, a preliminary prospectus supplement(or prospectus supplement if no preliminary prospectus supplement is used) to the Shelf Registration Statement relating to such ShelfUnderwritten Offering, and (b) with respect to a Piggyback Underwritten Offering, (i) a preliminary prospectus supplement (orprospectus supplement if no preliminary prospectus supplement is used) to an effective shelf Registration Statement (other than theShelf Registration Statement) in which Registrable Securities could be included and Holders could be named as selling security holderswithout the filing of a post-effective amendment thereto (other than a post-effective amendment that becomes effective upon filing) or(ii) a Registration Statement (other than the Shelf Registration Statement), in each case relating to such Piggyback UnderwrittenOffering.“Värde Party” and “Värde Parties” have the meaning specified therefor in the introductory paragraph of this Agreement.Section 1.02 Registrable Securities.Any Registrable Security will cease to be a Registrable Security when (a) a Registration Statement covering such RegistrableSecurity has become effective under the Securities Act and such Registrable Security has been sold or disposed of pursuant to suchRegistration Statement; (b) such Registrable Security has been disposed of pursuant to any section of Rule 144 (or any similarprovision then in effect) under the Securities Act; (c) such Registrable Security is held by the Company or one of its Subsidiaries; (d)such Registrable Security has been sold or disposed of in a transaction in which the transferor’s rights under this Agreement are notassigned to the transferee of such Registrable Security pursuant to Section 2.12; or (e) such Registrable Security becomes eligible forresale without restriction and without volume limitations or the need for current public information pursuant to any section of Rule 144(or any similar provision then in effect) under the Securities Act. Any security that has ceased to be a Registrable Security shall notthereafter become a Registrable Security, and any security that is issued or distributed in respect of a security that has ceased to be aRegistrable Security shall not be a Registrable Security.ARTICLE II REGISTRATION RIGHTSSection 2.01 Shelf Registration.(a) The Company shall prepare and file with the Commission, and use commercially reasonable efforts to cause to be declaredeffective as soon as practicable after the filing thereof, but in no event later than the Effective Date, a Registration Statement under theSecurities Act relating to the offer and sale of all the Registrable Securities by the Holders thereof (the “Shelf Registration Statement”)from time to time in accordance with the methods of distribution set forth in the Shelf Registration Statement and Rule 415 under theSecurities Act; provided, that the Company may satisfy its obligation to file a Registration Statement under this Section 2.01(a) byfiling an amendment to the October Shelf Registration Statement to provide for the registration of all of the Registrable Securities, inwhich case the October Shelf Registration Statement shall be deemed to be the Shelf Registration Statement. Promptly following theeffective date of the Shelf Registration Statement, the Company shall notify the Holders of the effectiveness thereof.(b) Notwithstanding anything in Section 2.01(a), if for any reason the Commission does not permit the Company to includeany or all of the Registrable Securities in the initial Shelf Registration Statement due to limitations on the use of Rule 415 under theSecurities Act for the resale of the Registrable Securities by the Holders, or the Commission informs the Company that any of theSelling Holders would be deemed to be statutory underwriters, the Company shall notify the Holders thereof and use commerciallyreasonable efforts to promptly file amendments to the initial Shelf Registration Statement as required by the Commission and/orwithdraw the initial Shelf Registration Statement and file a new registration statement on Form S-3 or such other form available forregistration of the Registrable Securities as a secondary offering, in either case covering the maximum number of Registrable Securitiespermitted to be registered by the Commission and avoid the Selling Holders being deemed to be statutory underwriters; provided,however, that prior to such amendment or subsequent Shelf Registration Statement, the Company shall be obligated to usecommercially reasonable efforts to advocate with the Commission for the registration of all of the Registrable Securities and against theSelling Holders’ being deemed statutory underwriters in accordance with Commission guidance, including without limitation, theCompliance and Disclosure Interpretation “Securities Act Rules” No. 612.09, and the Securities Act. In the event the Companyamends the initial Shelf Registration Statement or files a subsequent Shelf Registration Statement, as the case may be, the Companywill use commercially reasonable efforts to file with the Commission, as promptly as allowed by the Commission, Commissionguidance or the Securities Act, one or more additional Shelf Registration Statements covering those Registrable Securities not includedin the initial Shelf Registration Statement as amended or any subsequent Shelf Registration Statement previously filed. The number ofRegistrable Securities that may be included in each such Shelf Registration Statement shall be allocated among the Holders thereof inproportion (as nearly as practicable) to the number of Registrable Securities owned by each Holder or in such other proportion as isnecessary to avoid the Selling Holders being deemed to be statutory underwriters. If the Commission requires the Company to nameany Holder as a statutory underwriter and such Holder does not consent thereto, then such Holder’s Registrable Securities shall not beincluded on the Shelf Registration Statement and the Company shall have no further obligations under this Section 2.01 or Section2.02 with respect to the Registrable Securities held by such Holder.(c) If (i) the Shelf Registration Statement required by Section 2.01(a) does not become or is not declared effective by theEffective Date or (ii) the Shelf Registration Statement is declared effective but (A) the Shelf Registration Statement shall thereafter bewithdrawn by the Company or shall become subject to an effective stop order issued pursuant to Section 8(d) of the Securities Actsuspending the effectiveness of such Shelf Registration Statement (except as specifically permitted pursuant to Section 2.03) withoutbeing succeeded by an additional Shelf Registration Statement filed and declared effective within 3 Business Days, (B) the use of anyprospectus that is a part of the Shelf Registration Statement is suspended pursuant to Section 2.03 in excess of the number of dayspermitted thereby or (C) except as addressed by the foregoing clauses (A) and (B) or except as expressly permitted by Section 2.03, theShelf Registration Statement fails to be available for the resale by the Holders of all the Registrable Securities required to be includedtherein during the Effectiveness Period (each such event referred to in clauses (i) and (ii), a “Registration Default”), then each Holdershall be entitled to a payment (with respect to each of the Holder’s pro rata share of Registrable Securities as liquidated damages(which liquidated damages will not be exclusive of any other remedies available in equity, including, without limitation, specificperformance) and not as a penalty), (x) for the first 90 days following the occurrence of such Registration Default, an amount equal to0.25% of the Liquidated Damages Multiplier, which shall accrue daily, and (y) for each non-overlapping 90-day period beginning onthe 91st day thereafter, an amount equal to the amount set forth in clause (x) plus an additional 0.25% of the Liquidated DamagesMultiplier for each subsequent 90 days (i.e., 0.5% for 91-180 days, 0.75% for 181-270 days, 1.0% for 271-360, etc.), which shallaccrue daily, up to a maximum amount equal to 2.5% of the Liquidated Damages Multiplier per non-overlapping 90-day period (the“Liquidated Damages”), until such time as such Registration Default is cured or there are no longer any Registrable Securitiesoutstanding. The Liquidated Damages shall be payable within 10 Business Days after the end of each such 90-day period inimmediately available funds to the account or accounts specified by the applicable Holders. Any amount of Liquidated Damages shallbe prorated for any period of less than 90 days accruing during any period for which a Holder is entitled to Liquidated Damageshereunder.(d) The Company may request a waiver of all or any portion of the Liquidated Damages, which may be granted by theconsent of the Majority Holders, in their sole discretion, and which such waiver shall apply to all the Holders of Registrable Securities.(e) The Shelf Registration Statement shall be on Form S-3 (or any equivalent or successor form) under the Securities Act or, ifForm S-3 is not then available to the Company, on Form S-1 or such other form of registration statements as is then available to effect aregistration for resale of the Registrable Securities; provided, however, that if the Company has filed the Shelf Registration Statementon Form S-1 and subsequently becomes eligible to use Form S-3 or any equivalent or successor form or forms, the Company shall (i)file a post-effective amendment to the Shelf Registration Statement converting such Registration Statement on Form S-1 to aRegistration Statement on Form S-3 or any equivalent or successor form or forms or (ii) withdraw the Shelf Registration Statement onForm S-1 and file a subsequent Shelf Registration Statement on Form S-3 or any equivalent or successor form or forms.(f) Unless otherwise specifically stated herein, the term “Shelf Registration Statement” shall refer individually to the initialShelf Registration Statement and to each subsequent Shelf Registration Statement, if any, filed pursuant to Section 2.01(b) or Section2.01(e).(g) The Company shall use commercially reasonable efforts to cause the Shelf Registration Statement to remain effective, andto be supplemented and amended to the extent necessary to ensure that the Shelf Registration Statement is available for the resale of allthe Registrable Securities by the Holders until all of the Registrable Securities have ceased to be Registrable Securities (the“Effectiveness Period”).(h) When effective, the Shelf Registration Statement (including the documents incorporated therein by reference) will complyas to form in all material respects with all applicable requirements of the Securities Act and the Exchange Act and will not contain anuntrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statementstherein not misleading (in the case of any prospectus contained in the Shelf Registration Statement, in the light of the circumstancesunder which such statements are made).Section 2.02 Underwritten Shelf Offering Requests.(a) In the event that any Holder or group of Holders elects to dispose of Registrable Securities under the Shelf RegistrationStatement pursuant to an Underwritten Offering and reasonably expects gross proceeds of at least $20,000,000 from suchUnderwritten Offering (including proceeds attributable to any Registrable Securities included in such Underwritten Offering by anyShelf Piggybacking Holders), the Company shall, at the request (a “Shelf Underwritten Offering Request”) of such Holder or Holders(in such capacity, a “Requesting Holder”), enter into an underwriting agreement in a form as is customary in Underwritten Offerings ofsecurities by the Company with the underwriter or underwriters selected pursuant to Section 2.02(d) and shall take all such otherreasonable actions as are requested by the Managing Underwriter of such Underwritten Offering and/or the Requesting Holders inorder to expedite or facilitate the disposition of, subject to Section 2.02(c), such Registrable Securities and the Registrable Securitiesrequested to be included by any Shelf Piggybacking Holder (a “Shelf Underwritten Offering”); provided, however, that the Companyshall have no obligation to facilitate or participate in more than one Shelf Underwritten Offering in any 180-day period or more thantwo Shelf Underwritten Offerings per calendar year.(b) If the Company receives a Shelf Underwritten Offering Request, it will give written notice of such proposed ShelfUnderwritten Offering to each Holder (other than the Requesting Holder) that, together with such Holder’s Affiliates, holds at least$5,000,000 of Registrable Securities calculated based on the Registrable Securities Amount, which notice shall be held in strictconfidence by such Holders and shall include the anticipated filing date of the related Underwritten Offering Filing and, if known, thenumber of shares of Common Stock that are proposed to be included in such Shelf Underwritten Offering, and of such Holders’ rightsunder this Section 2.02(b). Such notice shall be given promptly (and in any event at least five Business Days before the filing of theUnderwritten Offering Filing or two Business Days before the filing of the Underwritten Offering Filing in connection with a boughtor overnight Underwritten Offering); provided, that if the Shelf Underwritten Offering is a bought or overnight Underwritten Offeringand the Managing Underwriter advises the Company and the Requesting Holder that the giving of notice pursuant to this Section2.02(b) would adversely affect the offering, no such notice shall be required (and such Holders shall have no right to includeRegistrable Securities in such bought or overnight Underwritten Offering); and provided further, that the Company shall not so notifyany such other Holder that has notified the Company (and not revoked such notice) requesting that such Holder not receive notice fromthe Company of any proposed Shelf Underwritten Offering. Each such Holder shall then have four Business Days (or one BusinessDay in the case of a bought or overnight Underwritten Offering) after the date on which the Holders received notice pursuant to thisSection 2.02(b) to request inclusion of Registrable Securities in the Shelf Underwritten Offering (which request shall specify themaximum number of Registrable Securities intended to be disposed of by such Holder and include such other information as isrequested pursuant to clause (i) of Section 2.05(c)) (any such Holder making such request, a “Shelf Piggybacking Holder”). If norequest for inclusion from a Holder is received within such period, such Holder shall have no further right to participate in such ShelfUnderwritten Offering.(c) If the Managing Underwriter of the Shelf Underwritten Offering shall inform the Company and the Requesting Holders inwriting, with a copy to be provided upon request to any Shelf Piggybacking Holder, of its belief that the number of RegistrableSecurities requested to be included in such Shelf Underwritten Offering by the Requesting Holders and any Shelf PiggybackingHolders (and any other shares of Common Stock requested to be included by any other Persons having registration rights with respectto such offering) would materially adversely affect such offering, then the Company shall include in the applicable UnderwrittenOffering Filing, to the extent of the total number of Registrable Securities that the Company is so advised can be sold in such ShelfUnderwritten Offering without so materially adversely affecting such offering (the “Section 2.02 Maximum Number of Shares”),Registrable Securities in the following priority:(i) First, all Registrable Securities that the Requesting Holder and Shelf Piggybacking Holders requested to beincluded therein (the “Requesting Holder and Shelf Piggybacking Holder Securities”) (pro rata among the Requesting Holdersand Shelf Piggybacking Holders based on the number of Registrable Securities each requested to be included); and(ii) Second, to the extent that the number of Requesting Holder and Shelf Piggybacking Holder Securities is less thanthe Section 2.02 Maximum Number of Shares, the shares of Common Stock requested to be included by any other Personshaving registration rights with respect to such offering, pro rata among such other Persons based on the number of shares ofCommon Stock each requested to be included.(d) The Company shall select the Managing Underwriter and any other underwriters in connection with such ShelfUnderwritten Offering. The Requesting Holders shall determine the pricing of the Registrable Securities offered pursuant to any ShelfUnderwritten Offering and the applicable underwriting discounts and commissions and determine the timing of any such ShelfUnderwritten Offering, subject to Section 2.03.Section 2.03 Delay and Suspension Rights.Notwithstanding any other provision of this Agreement, the Company may (a) delay filing or effectiveness of the ShelfRegistration Statement (or any amendment thereto) or effecting a Shelf Underwritten Offering or (b) suspend the Holders’ use of anyprospectus that is a part of a Shelf Registration Statement upon written notice to each Holder whose Registrable Securities are includedin such Shelf Registration Statement (provided that in no event shall such notice contain any material non-public information regardingthe Company) (in which event such Holder shall immediately discontinue sales of Registrable Securities pursuant to such RegistrationStatement but may settle any then-contracted sales of Registrable Securities), in each case for a period of up to 60 days, if the Companydetermines (i) that such delay or suspension is in the best interest of the Company and its stockholders generally due to a pendingtransaction involving the Company (including a pending securities offering by the Company, or any proposed financing, acquisition,merger, tender offer, business combination, corporate reorganization, consolidation or other significant transaction involving theCompany), (ii) that such registration or offering would render the Company unable to comply with applicable securities laws or (iii)that such registration or offering would require disclosure of material information that the Company has a bona fide business purposefor preserving as confidential (any such period, a “Suspension Period”); provided, however, that in no event shall any SuspensionPeriods collectively exceed an aggregate of 120 days in any twelve-month period.Section 2.04 Piggyback Registration Rights.(a) Subject to Section 2.04(c), if the Company at any time proposes to file an Underwritten Offering Filing for anUnderwritten Offering of shares of Common Stock for its own account or for the account of any other Persons who have or have beengranted registration rights (a “Piggyback Underwritten Offering”), it will give written notice of such Piggyback Underwritten Offeringto each Holder that, together with such Holder’s Affiliates, holds at least the $5,000,000 of Registrable Securities calculated based onthe Registrable Securities Amount, which notice shall be held in strict confidence by such Holders and shall include the anticipatedfiling date of the Underwritten Offering Filing and, if known, the number of shares of Common Stock that are proposed to be includedin such Piggyback Underwritten Offering, and of such Holders’ rights under this Section 2.04(a). Such notice shall be given promptly(and in any event at least five Business Days before the filing of the Underwritten Offering Filing or two Business Days before thefiling of the Underwritten Offering Filing in connection with a bought or overnight Underwritten Offering); provided, that if thePiggyback Underwritten Offering is a bought or overnight Underwritten Offering and the Managing Underwriter advises theCompany that the giving of notice pursuant to this Section 2.04(a) would adversely affect the offering, no such notice shall be required(and such Holders shall have no right to include Registrable Securities in such bought or overnight Underwritten Offering). Each suchHolder shall then have four Business Days (or one Business Day in the case of a bought or overnight Underwritten Offering) after thedate on which the Holders received notice pursuant to this Section 2.04(a) to request inclusion of Registrable Securities in thePiggyback Underwritten Offering (which request shall specify the maximum number of Registrable Securities intended to be disposedof by such Holder and include such other information as is requested pursuant to clause (i) of Section 2.05(c)) (any such Holdermaking such request, a “Piggybacking Holder”). If no request for inclusion from a Holder is received within such period, such Holdershall have no further right to participate in such Piggyback Underwritten Offering. Subject to Section 2.04(c), the Company shall usecommercially reasonable efforts to include in the Piggyback Underwritten Offering all Registrable Securities that the Company hasbeen so requested to include by the Piggybacking Holders; provided, however, that if, at any time after giving written notice of aproposed Piggyback Underwritten Offering pursuant to this Section 2.04(a) and prior to the execution of an underwriting agreementwith respect thereto, the Company or such other Persons who have or have been granted registration rights, as applicable, shalldetermine for any reason not to proceed with or to delay such Piggyback Underwritten Offering, the Company shall give written noticeof such determination to the Piggybacking Holders (which such Holders will hold in strict confidence) and (i) in the case of adetermination not to proceed, shall be relieved of its obligation to include any Registrable Securities in such Piggyback UnderwrittenOffering (but not from any obligation of the Company to pay the Registration Expenses in connection therewith), and (ii) in the case ofa determination to delay, shall be permitted to delay inclusion of any Registrable Securities for the same period as the delay inincluding the shares of Common Stock to be sold for the Company’s account or for the account of such other Persons who have orhave been granted registration rights, as applicable.(b) Each Holder shall have the right to withdraw its request for inclusion of its Registrable Securities in any PiggybackUnderwritten Offering at any time prior to the execution of an underwriting agreement with respect thereto by giving written notice tothe Company of its request to withdraw.(c) If the Managing Underwriter of the Piggyback Underwritten Offering shall inform the Company of its belief that thenumber of Registrable Securities requested to be included in such Piggyback Underwritten Offering, when added to the number ofshares of Common Stock proposed to be offered by the Company or such other Persons who have or have been granted registrationrights (and any other shares of Common Stock requested to be included by any other Persons having registration rights on parity withthe Piggybacking Holders with respect to such offering), would materially adversely affect such offering, then the Company shallinclude in such Piggyback Underwritten Offering, to the extent of the total number of securities which the Company is so advised canbe sold in such offering without so materially adversely affecting such offering (the “Section 2.04 Maximum Number of Shares”),shares of Common Stock in the following priority:(i) First, if the Piggyback Underwritten Offering is for the account of the Company, all shares of Common Stock thatthe Company proposes to include for its own account (the “Company Securities”) or, if the Piggyback Underwritten Offering isfor the account of any other Persons who have or have been granted registration rights, all shares of Common Stock that suchPersons propose to include (the “Other Securities”); and(ii) Second, if the Piggyback Underwritten Offering is for the account of the Company, to the extent that the numberof Company Securities is less than the Section 2.04 Maximum Number of Shares, the shares of Common Stock requested to beincluded by the Piggybacking Holders; and holders of any other shares of Common Stock requested to be included by Personshaving rights of registration on parity with the Piggybacking Holders with respect to such offering, pro rata among thePiggybacking Holders and such other holders based on the number of shares of Common Stock each requested to be includedand, if the Piggyback Underwritten Offering is for the account of any other Persons who have or have been granted registrationrights, to the extent that the number of Other Securities is less than the Section 2.04 Maximum Number of Shares, the shares ofCommon Stock requested to be included by the Piggybacking Holders, pro rata among the Piggybacking Holders.(d) The Company or the other Persons who have or have been granted registration rights initiating such PiggybackUnderwritten Offering (if so entitled pursuant to such registration rights), as applicable, shall select the underwriters in any PiggybackUnderwritten Offering and shall determine the pricing of the shares of Common Stock offered pursuant to any PiggybackUnderwritten Offering, the applicable underwriting discounts and commissions and the timing of any such Piggyback UnderwrittenOffering.Section 2.05 Participation in Underwritten Offerings.(a) In connection with any Underwritten Offering contemplated by Section 2.02 or Section 2.04, the underwriting agreementinto which each Selling Holder and the Company shall enter into shall contain such representations, covenants, indemnities (subject toSection 2.10) and other rights and obligations as are customary in Underwritten Offerings by the Company. No Selling Holder shall berequired to make any representations or warranties to or agreements with the Company or the underwriters other than representations,warranties or agreements regarding such Selling Holder’s authority to enter into such underwriting agreement and to sell, andinformation provided by such Selling Holder for inclusion in the Registration Statement relating thereto and its ownership of, thesecurities being registered on its behalf, its intended method of distribution and any other representation required by law.(b) Any participation by Holders in a Piggyback Underwritten Offering shall be in accordance with the plan of distribution of(i) the Company, if such Piggyback Underwritten Offering is for the account of the Company, or (ii) any other Persons who have orhave been granted registration rights, if the Piggyback Underwritten Offering is for the account of such other Persons.(c) In connection with any Piggyback Underwritten Offering in which any Holder has the right to include RegistrableSecurities pursuant to Section 2.04, such Holder agrees (i) to supply any information reasonably requested by the Company inconnection with the preparation of a Registration Statement and/or any other documents relating to such registered offering (including aSelling Stockholder Questionnaire) and (ii) to execute and deliver any agreements and instruments being executed by all holders onsubstantially the same terms reasonably requested by the Company or the Managing Underwriter, as applicable, to effectuate suchregistered offering, including, without limitation, underwriting agreements (subject to Section 2.05(a)), custody agreements, lock-upagreements pursuant to which such Holder agrees not to sell or purchase any securities of the Company for the same period of timefollowing the registered offering as is agreed to by the Company and the other participating holders or such shorter period as theManaging Underwriter shall agree to, powers of attorney and questionnaires.(d) If the Company or the Managing Underwriter, as applicable, requests that the Holders take any of the actions referred to inclause (ii) of Section 2.05(c), the Holders shall take such action promptly but in any event within two Business Days following the dateof such request.Section 2.06 Registration and Sale Procedures.In connection with its obligations under this Article II and with respect to each Registration Statement that includes RegistrableSecurities, the Company will:(a) promptly prepare and file with the Commission such amendments and supplements to the Registration Statement and theprospectus used in connection therewith as may be necessary to keep the Registration Statement effective and to comply with theprovisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement;(b) make available to each Selling Holder (i) as far in advance as reasonably practicable before filing the RegistrationStatement, any prospectus used in connection therewith or any supplement or amendment thereto, upon request, copies of reasonablycomplete drafts of all such documents proposed to be filed (including exhibits and each document incorporated by reference therein tothe extent then required by the rules and regulations of the Commission), and provide each such Selling Holder the opportunity toobject to any information pertaining to such Selling Holder and its plan of distribution that is contained therein and make thecorrections reasonably requested by such Selling Holder with respect to such information prior to filing the Registration Statement,prospectus or supplement or amendment thereto, and (ii) such number of copies of the Registration Statement and the prospectusincluded therein and any supplements and amendments thereto as such Selling Holder may reasonably request in order to facilitate thepublic sale or other disposition of the Registrable Securities covered thereby;(c) if applicable, use commercially reasonable efforts to register or qualify the Registrable Securities covered by theRegistration Statement under the securities or blue sky laws of such jurisdictions as the Selling Holders shall reasonably request;provided, however, that the Company will not be required to qualify generally to transact business in any jurisdiction where it is notthen required to so qualify, take any action that would subject the Company to any material tax in any such jurisdiction where it is notthen so subject, or to take any action that would subject it to general service of process in any such jurisdiction where it is not then sosubject;(d) promptly notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered by any ofthem under the Securities Act, of (i) the filing of the Registration Statement or any prospectus or prospectus supplement to be used inconnection therewith, or any amendment or supplement thereto, and, with respect to the Registration Statement or any post-effectiveamendment thereto, when the same has become effective; and (ii) the receipt of any written comments from the Commission withrespect to any filing referred to in clause (i) and any written request by the Commission for amendments or supplements to theRegistration Statement or any prospectus or prospectus supplement thereto;(e) (i) immediately notify each Selling Holder, at any time when a prospectus relating thereto is required to be delivered underthe Securities Act, of (A) the happening of any event as a result of which the prospectus or prospectus supplement contained in theRegistration Statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to bestated therein or necessary to make the statements therein not misleading (in the case of any prospectus contained therein, in the light ofthe circumstances under which such statements were made); (B) the issuance or express threat of issuance by the Commission of anystop order suspending the effectiveness of the Registration Statement, or the initiation of any proceedings for that purpose; or (C) thereceipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Securities for saleunder the applicable securities or blue sky laws of any jurisdiction; and (ii) following the provision of such notice, as promptly aspracticable amend or supplement the prospectus or prospectus supplement or take other appropriate action so that the prospectus orprospectus supplement does not include an untrue statement of a material fact or omit to state a material fact required to be statedtherein or necessary to make the statements therein not misleading in the light of the circumstances then existing and take such othercommercially reasonable action as is necessary to remove a stop order, suspension, threat thereof or proceedings related thereto;(f) upon request and subject to appropriate confidentiality obligations, furnish to each Selling Holder copies of any and alltransmittal letters or other correspondence with the Commission or any other governmental agency or self-regulatory body or otherbody having jurisdiction (including any domestic or foreign securities exchange) relating to the Registration Statement;(g) otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, andmake available to its security holders, as soon as reasonably practicable, an earnings statement, which earnings statement shall satisfythe provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;(h) cause all such Registrable Securities registered pursuant to this Agreement to be listed on each securities exchange ornationally recognized quotation system on which similar securities issued by the Company are then listed;(i) use commercially reasonable efforts to cause the Registrable Securities to be registered with or approved by such othergovernmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable theSelling Holders to consummate the disposition of such Registrable Securities;(j) provide a transfer agent and registrar for all Registrable Securities covered by such registration statement not later than theeffective date of the Registration Statement;(k) if requested by a Selling Holder, (i) incorporate in a prospectus supplement or post-effective amendment such informationas such Selling Holder reasonably requests to be included therein relating to the sale and distribution of Registrable Securities,including information with respect to the number of Registrable Securities being offered or sold, the purchase price being paid thereforand any other terms of the offering of the Registrable Securities to be sold in such offering and (ii) make all required filings of suchprospectus supplement or post-effective amendment after being notified of the matters to be incorporated in such prospectussupplement or post-effective amendment;(l) in connection with an Underwritten Offering, use commercially reasonable efforts to provide to each Selling Holder a copyof any auditor “comfort” letters, customary legal opinions or reports of the independent petroleum engineers of the Company relating tothe oil and gas reserves of the Company, in each case that have been provided to the Managing Underwriter in connection with theUnderwritten Offering; and(m) make available for inspection by any Selling Holder of Registrable Securities, any underwriter participating in anydisposition pursuant to such Registration Statement and any attorney, accountant or other agent retained by any such holder orunderwriter (collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of theCompany, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any suchInspector in connection with such Registration Statement; provided, that the Company need not disclose any non-public information toany such person unless and until such person has entered into a confidentiality agreement with the Company.Each Selling Holder, upon receipt of notice from the Company of the happening of any event of the kind described insubsection (e) of this Section 2.06, shall forthwith discontinue offers and sales of the Registrable Securities by means of a prospectus orprospectus supplement until such Selling Holder’s receipt of the copies of the supplemented or amended prospectus contemplated bysubsection (e) of this Section 2.06 or until it is advised in writing by the Company that the use of the prospectus may be resumed andhas received copies of any additional or supplemental filings incorporated by reference in the prospectus, and, if so directed by theCompany, such Selling Holder will deliver to the Company (at the Company’s expense) all copies in their possession or control, otherthan permanent file copies then in such Selling Holder’s possession, of the prospectus covering such Registrable Securities current atthe time of receipt of such notice.Section 2.07 Cooperation by Holders.The Company shall have no obligation to include Registrable Securities of a Holder in a Registration Statement who has failedto furnish, within five Business Days of a request by the Company, such information that the Company determines, after consultationwith its counsel, is reasonably required in order for the Registration Statement or prospectus supplement, as applicable, to comply withthe Securities Act. The Company may require each Holder to furnish to the Company a written statement as to the number of shares ofCommon Stock beneficially owned by such Holder. Without limiting the foregoing, with respect to the Shelf Registration Statement,each Holder agrees to furnish to the Company a completed questionnaire in the form attached to this Agreement as Annex A (a“Selling Stockholder Questionnaire”) on a date that is not less than 45 days after the date hereof or three Business Days following thedate on which such Holder receives draft materials in accordance with Section 2.06(b).Section 2.08 Restrictions on Public Sales by Holders.Each Holder agrees not to effect any public sale or distribution of Registrable Securities for a period of up to 60 days followingcompletion of an Underwritten Offering of equity securities by the Company; provided that (i) the Company gives written notice tosuch Holder of the date of the commencement and termination of such period with respect to any such Underwritten Offering and (ii)the duration of the foregoing restrictions shall be no longer than the duration of the shortest restriction generally imposed by theunderwriters of such Underwritten Offering on the Company or on the officers or directors or any other shareholder of the Companyon whom a restriction is imposed and (iii) the restrictions set forth in this Section 2.08 shall not apply to any Registrable Securities thatare included in such Underwritten Offering by such Selling Holder; provided further, that this Section 2.08 shall not apply to anyHolder that, together with such Holder’s Affiliates, holds less than 5% of the outstanding shares of Common Stock.Section 2.09 Expenses.The Company will pay all reasonable Registration Expenses as determined in good faith. Each Selling Holder shall pay its prorata share of all Selling Expenses in connection with any sale of its Registrable Securities hereunder.Section 2.10 Indemnification and Contribution.(a) Indemnification by the Company. The Company will indemnify and hold harmless each Selling Holder, its directors,officers managers, employees, investment managers, agents and Affiliates and each other Person, if any, who controls such SellingHolder within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any losses, claims,damages or liabilities, joint or several (collectively, “Losses”) to which such Selling Holder or any such director, officer or controllingperson may become subject, under the Securities Act or otherwise, insofar as such Losses (or actions or proceedings, whethercommenced or threatened, in respect thereof) arise out of or are based upon (i) any untrue statement or alleged untrue statement of anymaterial fact contained in any Registration Statement or any preliminary prospectus, free writing prospectus or final prospectuscontained therein or related thereto, or any amendment or supplement thereto, or any omission or alleged omission to state therein amaterial fact required to be stated therein or necessary to make the statements therein not misleading (in the case of any prospectus, inthe light of the circumstances under which such statements were made), or (ii) any violation or alleged violation by the Company of theSecurities Act, the Exchange Act, any state securities law, or any rule or regulations promulgated under the Securities Act, theExchange Act or any state securities law applicable to the Company and relating to action or inaction required of the Company inconnection with any such registration, qualification or compliance required under this Agreement, and the Company will reimbursesuch Selling Holder and each such director, officer, manager, employee, investment manager, agent, Affiliate and controlling personfor any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such Losses,actions or proceedings (collectively, “Expenses”); provided that the Company shall not be liable in any such case to the extent that anysuch Losses or Expenses arise out of or are based upon an untrue statement or alleged untrue statement or omission or alleged omissionmade in such Registration Statement, preliminary prospectus, free writing prospectus, final prospectus, amendment or supplement inreliance upon and in conformity with information furnished to the Company in writing or electronically by or on behalf of such SellingHolder expressly for use in the preparation thereof. Such indemnity shall remain in full force and effect regardless of any investigationmade by or on behalf of such Selling Holder or any such director, officer or controlling person and shall survive the transfer of suchsecurities by such Selling Holder.(b) Indemnification by Selling Holders. Each Selling Holder, severally and not jointly, will indemnify and hold harmless theCompany, each director of the Company, its directors and officers and each other Person, if any, who controls the Company within themeaning of the Section 15 of the Securities Act or Section 20 of the Exchange Act from and against any Losses to which the Companyor any such director, officer or controlling person may become subject, under the Securities Act or otherwise, and will reimburse themfor any Expenses reasonably incurred by any of them (in each case in the same manner and to the same extent as set forth in Section2.10(a)), insofar as such Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) or Expenses arise outof or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement orany preliminary prospectus, free writing prospectus or final prospectus contained therein or related thereto, or any amendment orsupplement thereto, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary tomake the statements therein not misleading (in the case of any prospectus, in the light of the circumstances under which suchstatements were made), if such statement or alleged statement or omission or alleged omission was made in reliance upon and inconformity with information furnished to the Company in writing or electronically by or on behalf of such Selling Holder expressly foruse in the preparation thereof (it being understood that any Selling Stockholder Questionnaire furnished by such Selling Holder isfurnished expressly for this purpose). Such indemnity shall remain in full force and effect, regardless of any investigation made by oron behalf of the Company or any such director, officer or controlling person and shall survive the transfer of such securities by suchSelling Holder.(c) Notices of Claims; Indemnification Procedures. In case any proceeding (including any governmental investigation) shall beinstituted involving any Person in respect of which indemnity may be sought pursuant to Section 2.10(a) or Section 2.10(b), suchPerson (the “Indemnified Party”) shall promptly notify the Person against whom such indemnity may be sought (the “IndemnifyingParty”) in writing (provided that the failure of the Indemnified Party to give notice as provided herein shall not relieve the IndemnifyingParty of its obligations under this Section 2.10, except to the extent the Indemnifying Party is actually prejudiced by such failure to givenotice), and the Indemnifying Party shall be entitled to participate in such proceeding and, unless in the reasonable opinion of outsidecounsel to the Indemnified Party a conflict of interest between the Indemnified Party and Indemnifying Party may exist in respect ofsuch claim, to assume the defense thereof jointly with any other Indemnifying Party similarly notified, to the extent that it chooses, withcounsel reasonably satisfactory to such Indemnified Party, and after notice from the Indemnifying Party to such Indemnified Party thatit so chooses, the Indemnifying Party shall not be liable to such Indemnified Party for any legal or other Expenses subsequentlyincurred by such Indemnified Party in connection with the defense thereof other than reasonable costs of investigation; provided,however, that (i) if the Indemnifying Party fails to assume the defense or employ counsel reasonably satisfactory to the IndemnifiedParty, (ii) if such Indemnified Party who is a defendant in any action or proceeding which is also brought against the IndemnifyingParty reasonably shall have concluded that there may be one or more legal defenses available to such Indemnified Party that are notavailable to the Indemnifying Party or (iii) if representation of both parties by the same counsel is otherwise inappropriate underapplicable standards of professional conduct then, in any such case, the Indemnified Party shall have the right to assume or continue itsown defense as set forth above (but with no more than one firm of counsel for all Indemnified Parties (plus one firm of local counselfor all Indemnified Parties in each relevant jurisdiction)), and the Indemnifying Party shall be liable for any Expenses therefor. NoIndemnifying Party shall, without the written consent of the Indemnified Party, effect the settlement or compromise of, or consent tothe entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contributionmay be sought hereunder (whether or not the Indemnified Party is an actual or potential party to such action or claim) unless suchsettlement, compromise or judgment (A) includes an unconditional release of the Indemnified Party from all liability arising out of suchaction or claim and (B) does not include a statement as to, or an admission of, fault, culpability or a failure to act, by or on behalf ofany Indemnified Party.(d) Contribution.(i) If the indemnification provided for in this Section 2.10 is unavailable to an Indemnified Party in respect of anyLosses in respect of which indemnity is to be provided hereunder, then each Indemnifying Party, in lieu of indemnifying suchIndemnified Party, shall to the fullest extent permitted by law contribute to the amount paid or payable by such IndemnifiedParty as a result of such Losses in such proportion as is appropriate to reflect the relative fault of such party in connection withthe statements or omissions that resulted in such Losses, as well as any other relevant equitable considerations. The relativefault of the Company (on the one hand) and any Selling Holder (on the other hand) shall be determined by reference to, amongother things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state amaterial fact relates to information supplied by such party and the parties’ relative intent, knowledge, access to information andopportunity to correct or prevent such statement or omission.(ii) The Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section2.10(d) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitableconsiderations referred to in Section 2.10(d)(i). The amount paid or payable by an Indemnified Party as a result of the Lossesreferred to in Section 2.10(d)(i) shall be deemed to include, subject to the limitations set forth above, any Expenses reasonablyincurred by such Indemnified Party in connection with investigating or defending any such action or claim. No person guilty offraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution fromany Person who was not guilty of such fraudulent misrepresentation.(e) Limitation of Holders’ Liability. Notwithstanding the provisions of this Section 2.10, no Holder shall be liable forindemnification or contribution pursuant to this Section 2.10 for any amount in excess of the net proceeds received by such Holderfrom the sale of Registrable Securities pursuant to a Registration Statement.(f) Indemnification Payments. The indemnification and contribution required by this Section 2.10 shall be made by periodicpayments of the amount of any such Losses or Expenses as and when bills are received or such Losses or Expenses are incurred.Section 2.11 Rule 144 Reporting.With a view to making available the benefits of certain rules and regulations of the Commission that may permit the sale of theRegistrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:(a) make and keep public information regarding the Company available, as those terms are understood and defined in Rule144 under the Securities Act, at all times from and after the date hereof;(b) file with the Commission in a timely manner all reports and other documents required of the Company under the SecuritiesAct and the Exchange Act at all times from and after the date hereof; and(c) so long as a Holder owns any Registrable Securities, furnish, unless otherwise available via EDGAR, to such Holderforthwith upon request a copy of the most recent annual or quarterly report of the Company, and such other reports and documents sofiled as such Holder may reasonably request in availing itself of any rule or regulation of the Commission allowing such Holder to sellany such securities without registration.Section 2.12 Transfer or Assignment of Registration Rights.The rights to cause the Company to register Registrable Securities granted to the Holders by the Company under this Article IImay be transferred or assigned by the Holders to one or more transferees or assignees of Registrable Securities; provided, however, that(a) unless the transferee or assignee is an Affiliate of, and after such transfer or assignment continues to be an Affiliate of, thetransferee, the number of Registrable Securities transferred or assigned to such transferee or assignee, together with any otherRegistrable Securities held by such transferee or assignee, shall be at least $5,000,000 in Registrable Securities calculated based on theRegistrable Securities Amount, (b) the Company is given written notice prior to such transfer or assignment, stating the name andaddress of each such transferee or assignee and identifying the Registrable Securities with respect to which such registration rights arebeing transferred or assigned, and (c) each such transferee or assignee assumes in writing responsibility for its portion of the obligationsof the transferor under this Agreement.Section 2.13 Other Registration Rights.From and after the date hereof, the Company shall not, without the prior written consent of the Majority Holders, enter into anyagreement with any current or future holder of any securities of the Company that would allow such current or future holder to requirethe Company to include securities in any registration statement filed by the Company for such Holders on a basis other than pari passuwith, or expressly subordinate to, the piggyback rights of the Holders hereunder; provided, that in no event shall the Company enterinto any agreement that would permit another holder of securities of the Company to participate on a pari passu basis (in terms ofpriority of cut-back based on advice of underwriters) with a Requesting Holder or a Shelf Piggybacking Holder in a ShelfUnderwritten Offering.Section 2.14 Amendment and Restatement of October Registration Rights Agreement; Termination of Other RegistrationRights Agreements.This Agreement amends, restates and supersedes in all respects the October Registration Rights Agreement. Each of theJanuary Registration Rights Agreement and the April Registration Rights Agreement, and all rights and obligations thereunder of theparties thereto, are hereby terminated for all purposes effective as of the date hereof.ARTICLE III MISCELLANEOUSSection 3.01 Communications.All notices and other communications provided for or permitted hereunder shall be made in writing by electronic mail, courierservice or personal delivery:(a) if to a Värde Party, to such Värde Party at its notice address set forth in the Transaction Agreement;(b) if to any Holder other than a Värde Party, to such Holder at the address provided pursuant to Section 2.12; and(c) if to the Company, to it at:1800 Bering Drive, Suite 510 Houston, Texas 77057 Attn: Christa Garrett Email: CGarrett@lilisenergy.com; or, in each case, to such other address for such party as shall have been communicated by such party by like notice.All such notices and communications shall be deemed to have been received at the time delivered by hand, if personallydelivered; when receipt acknowledged, if sent by electronic mail; and when actually received, if sent by courier service.Section 3.02 Successors and Assigns.This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties,including subsequent Holders of Registrable Securities to the extent permitted herein; provided, however, that all or any portion of therights and obligations of any Holder under this Agreement may be transferred or assigned by such Holder only in accordance withSection 2.12.Section 3.03 Recapitalization, Exchanges, Etc. Affecting the Shares.The provisions of this Agreement shall apply to the full extent set forth herein with respect to any and all shares of theCompany or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) that may beissued in respect of, in exchange for or in substitution of, the Registrable Securities, and shall be appropriately adjusted forcombinations, share splits, recapitalizations, pro rata distributions of shares and the like occurring after the date of this Agreement.Section 3.04 Aggregation of Registrable Securities.All Registrable Securities held or acquired by Persons who are Affiliates of one another shall be aggregated together for thepurpose of determining the availability of any rights and applicability of any obligations under this Agreement.Section 3.05 Specific Performance.Damages in the event of breach of this Agreement by a party hereto may be difficult, if not impossible, to ascertain, and it istherefore agreed that each such Person, in addition to and without limiting any other remedy or right it may have, will have the right toan injunction or other equitable relief in any court of competent jurisdiction, enjoining any such breach, and enforcing specifically theterms and provisions hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground of lack ofjurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right will not precludeany such Person from pursuing any other rights and remedies at law or in equity that such Person may have.Section 3.06 Counterparts.This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, eachof which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together,shall constitute but one and the same Agreement.Section 3.07 Headings.The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaninghereof.Section 3.08 Governing Law.THIS AGREEMENT, AND ALL CLAIMS OR CAUSES OF ACTION (WHETHER IN CONTRACT OR TORT) THATMAY BE BASED UPON, ARISE OUT OF OR RELATE TO THIS AGREEMENT OR THE NEGOTIATION, EXECUTIONOR PERFORMANCE OF THIS AGREEMENT (INCLUDING ANY CLAIM OR CAUSE OF ACTION BASED UPON,ARISING OUT OF OR RELATED TO ANY REPRESENTATION OR WARRANTY MADE IN OR IN CONNECTIONWITH THIS AGREEMENT), WILL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OFTHE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS. ANY ACTIONAGAINST ANY PARTY RELATING TO THE FOREGOING SHALL BE BROUGHT IN ANY FEDERAL OR STATECOURT OF COMPETENT JURISDICTION LOCATED WITHIN THE STATE OF NEW YORK, AND THE PARTIESHERETO HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL ORSTATE COURT LOCATED WITHIN THE STATE OF NEW YORK OVER ANY SUCH ACTION. THE PARTIES HEREBYIRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THATTHEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH DISPUTE BROUGHT INSUCH COURT OR ANY DEFENSE OF INCONVENIENT FORUM FOR THE MAINTENANCE OF SUCH DISPUTE.EACH OF THE PARTIES HERETO AGREES THAT A JUDGMENT IN ANY SUCH DISPUTE MAY BE ENFORCED INOTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.Section 3.09 Severability of Provisions.Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, beineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting orimpairing the validity or enforceability of such provision in any other jurisdiction.Section 3.10 Entire Agreement.This Agreement, together with the Transaction Agreement, the October Transaction Agreement and the Series E Certificate ofDesignation, is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statementof the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions,promises, warranties or undertakings, other than those set forth or referred to herein with respect to the rights granted by the Companyset forth herein. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subjectmatter.Section 3.11 Amendment.This Agreement may be amended only by means of a written amendment signed by the Company and the Majority Holders;provided, however, that no such amendment shall materially and adversely affect the rights of any Holder hereunder without theconsent of such Holder.Section 3.12 No Presumption.If any claim is made by a party relating to any conflict, omission or ambiguity in this Agreement, no presumption or burden ofproof or persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the request of a particular party orits counsel.Section 3.13 Obligations Limited to Parties to Agreement.Each of the parties hereto covenants, agrees and acknowledges that no Person other than the Holders and the Company shallhave any obligation hereunder and that, notwithstanding that one or more of the Holders may be a corporation, partnership or limitedliability company, no recourse under this Agreement or under any documents or instruments delivered in connection herewith ortherewith shall be had against any former, current or future director, officer, employee, agent, general or limited partner, manager,member, stockholder or Affiliate of any Holder or any former, current or future director, officer, employee, agent, general or limitedpartner, manager, member, stockholder or Affiliate of any of the foregoing, whether by the enforcement of any assessment or by anylegal or equitable proceeding, or by virtue of any applicable law, it being expressly agreed and acknowledged that no personal liabilitywhatsoever shall attach to, be imposed on or otherwise be incurred by any former, current or future director, officer, employee, agent,general or limited partner, manager, member, stockholder or Affiliate of any Holder or any former, current or future director, officer,employee, agent, general or limited partner, manager, member, stockholder or Affiliate of any of the foregoing, as such, for anyobligations of the Holders under this Agreement or any documents or instruments delivered in connection herewith or therewith or forany claim based on, in respect of or by reason of such obligation or its creation, except in each case for any transferee or assignee of aHolder hereunder.Section 3.14 Independent Nature of Holders’ Obligations.The obligations of each Holder under this Agreement are several and not joint with the obligations of any other Holder, and noHolder shall be responsible in any way for the performance of the obligations of any other Holder under this Agreement. Nothingcontained herein, and no action taken by any Holder pursuant thereto, shall be deemed to constitute the Holders as a partnership, anassociation, a joint venture or any other kind of group or entity, or create a presumption that the Holders are in any way acting inconcert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Holder shall be entitledto independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement, and it shall not benecessary for any other Holder to be joined as an additional party in any proceeding for such purpose.Section 3.15 Interpretation.Article and Section references are to this Agreement, unless otherwise specified. All references to instruments, documents,contracts and agreements are references to such instruments, documents, contracts and agreements as the same may be amended,supplemented and otherwise modified from time to time, unless otherwise specified. The word “including” shall mean “including butnot limited to.” Whenever any determination, consent or approval is to be made or given by a Holder under this Agreement, suchaction shall be in such Holder’s sole discretion unless otherwise specified.[Signature pages follow]IN WITNESS WHEREOF, the parties hereto execute this Agreement, effective as of the date first above written.COMPANY:LILIS ENERGY, INC.By: /s/ Joseph C. DachesName: Joseph C. DachesTitle: President, Chief Financial Officer andTreasurerSEVERALLY AND NOT JOINTLY FOR EACH ENTITY LISTED BELOW:By: /a/ Markus SpecksName: Markus SpecksTitle: Managing DirectorTHE VÄRDE FUND VI-A, L.P.By: Värde Investment Partners G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerVÄRDE INVESTMENT PARTNERS, L.P.By: Värde Investment Partners G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE FUND XI (MASTER), L.P.By: Värde Fund XI G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerVÄRDE INVESTMENT PARTNERS (OFFSHORE) MASTER, L.P.By: Värde Investment Partners G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE SKYWAY FUND, L.P.By: The Värde Skyway Fund G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE SKYWAY MINI-MASTER FUND, L.P.By: The Värde Skyway Fund G.P., LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerTHE VÄRDE FUND XII (MASTER), L.P.By: The Värde Fund XII G.P., LLC, its General PartnerBy: The Värde Fund XII UGP, LLC, its General PartnerBy: Värde Partners, L.P., its Managing MemberBy: Värde Partners, Inc., its General PartnerLILIS ENERGY, INC.Selling Stockholder Notice and QuestionnaireThe undersigned beneficial owner of common stock (the “Registrable Securities”) of Lilis Energy, Inc., a Nevada corporation(the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the“Commission”) a registration statement (the “Registration Statement”) for the registration and resale under the Securities Act of 1933,as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Amended and RestatedRegistration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed. A copy of the RegistrationRights Agreement is available from the Company upon request at the address set forth below. All capitalized terms not otherwisedefined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the relatedprospectus. Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities lawcounsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and therelated prospectus.NOTICEThe undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the RegistrableSecurities owned by it in the Registration Statement.The undersigned hereby provides the following information to the Company and represents and warrants that such informationis accurate:QUESTIONNAIRE1.Name.(a)Full Legal Name of Selling Stockholder(b)Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:(c)Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or withothers has power to vote or dispose of the securities covered by this Questionnaire):2.Address for Notices to Selling Stockholder: Telephone: Fax: Contact Person: 3.Broker-Dealer Status:(a)Are you a broker-dealer?Yes £ No £(b)If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services tothe Company?Yes £ No £Note: If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the RegistrationStatement.(c)Are you an affiliate of a broker-dealer?Yes £ No £(d)If you are an affiliate of a broker-dealer, do you certify that you obtained the Registrable Securities in the ordinarycourse of business, and at the time you obtained the Registrable Securities to be resold, you had no agreements orunderstandings, directly or indirectly, with any person to distribute the Registrable Securities?Yes £ No £Note: If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the RegistrationStatement.4.Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of theCompany other than the securities issuable pursuant to the Transaction Agreement.(a)Type and Amount of other securities beneficially owned by the Selling Stockholder: 5.Relationships with the Company:Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders(owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other materialrelationship with the Company (or its predecessors or affiliates) during the past two years.State any exceptions here: The undersigned agrees to promptly notify the Company of any material inaccuracies or changes in the information providedherein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective; provided, that theundersigned shall not be required to notify the Company of any changes to the number of securities held or owned by the undersignedor its affiliates.By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments orsupplements thereto. The undersigned understands that such information will be relied upon by the Company in connection with thepreparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executedand delivered either in person or by its duly authorized agent.Date: Beneficial Owner: By: Name: Title: PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE ANDQUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:Lilis Energy, Inc.1800 Bering Drive, Suite 510 Houston, Texas 77057 Attn: Christa Garrett Email: CGarrett@lilisenergy.com[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]Exhibit 21.1Subsidiaries of the Registrant Name of Subsidiary Jurisdiction of Incorporation Brushy Resources, Inc. DelawareLilis Operating Company, LLC TexasImPetro Resources, LLC DelawareImPetro Operating, LLC DelawareHurricane Resources, LLC TexasExhibit 23.1Consent of Independent Registered Public Accounting Firm Lilis Energy, Inc. and SubsidiariesHouston, Texas We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-212285, No. 333-214822, No. 333-220188, andNo. 333-226742) of Lilis Energy, Inc. of our reports dated March 7, 2019, relating to the consolidated financial statements and the effectiveness of LilisEnergy, Inc.'s internal control over financial reporting, which appear in this Form 10-K. /s/ BDO USA, LLP Dallas, TexasMarch 7, 2019Exhibit 23.2Petroleum Engineer Consent and Report Certificate of QualificationCawley, Gillespie & Associates, Inc. here by consents to the use of the name, to references to our firm in the form and context in which they appear inthe Annual Report on Form 10-K of Lilis Energy, Inc. for the year ended December 31, 2018 (the “Annual Report”). We hereby further consent to theinclusion in the Annual Report of estimates of oil and natural natural gas reserves contained in our report dated January 17, 2019, and to the inclusion ofour report as an exhibit to the Annual Report and in all current and future registration statements of the Company that incorporate by reference such AnnualReport./s/ Cawley, Gillespie & Associates, Inc. Cawley, Gillespie & Associates, Inc.Texas Registered Engineering Firm F-693March 7, 2019Exhibit 31.1CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Ronald D. Ormand, certify that:1.I have reviewed this Annual Report on Form 10-K of Lilis Energy, Inc. ("Registrant");2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which arereasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.By:/s/ Ronald D. Ormand Ronald D. Ormand Executive Chairman of the Board and Chief Executive OfficerMarch 7, 2019Exhibit 31.2CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TOSECTION 302 OF THE SARBANES-OXLEY ACT OF 2002I, Joseph C. Daches, certify that:1.I have reviewed this Annual Report on Form 10-K of Lilis Energy, Inc. ("Registrant");2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;4.The registrant's other certifying officer(s) and I am responsible for establishing and maintaining disclosure controls and procedures (as defined inExchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles;c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; andd)Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recentfiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely tomaterially affect, the registrant's internal control over financial reporting; and5.The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonablylikely to adversely affect the registrant's ability to record, process, summarize and report financial information; andb)Any fraud, whether or not material, that involved management or other employees who have a significant role in the registrant's internalcontrol over financial reporting.By:/s/ Joseph C. Daches Joseph C. Daches President, Chief Financial Officer and Treasurer March 7, 2019Exhibit 32.1CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Lilis Energy, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018, as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.By:/s/ Ronald D. Ormand Ronald D. Ormand Executive Chairman of the Board and Chief Executive OfficerMarch 7, 2019Exhibit 32.2CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906OF THE SARBANES-OXLEY ACT OF 2002In connection with the Annual Report of Lilis Energy, Inc. (the “Company”) on Form 10-K for the year ended December 31, 2018, as filed with theSecurities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, as adoptedpursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.By:/s/ Joseph C. Daches Joseph C. Daches President, Chief Financial Officer and TreasurerMarch 7, 2019EVALUATION SUMMARY LILIS ENERGY, INC. INTERESTS DELAWARE BASIN PROPERTIES IN TEXAS AND NEW MEXICO TOTAL PROVED RESERVES AS OF DECEMBER 31, 2018 Pursuant to the Guidelines of the Securities and Exchange Commission for Reporting Corporate Reserves and Future Net Revenue EVALUATION SUMMARY LILIS ENERGY, INC. INTERESTS DELAWARE BASIN PROPERTIES IN TEXAS AND NEW MEXICO TOTAL PROVED RESERVES AS OF DECEMBER 31, 2018 Pursuant to the Guidelines of the Securities and Exchange Commission for Reporting Corporate Reserves and Future Net Revenue CAWLEY, GILLESPIE & ASSOCIATES, INC. PETROLEUM CONSULTANTS TEXAS REGISTERED ENGINEERING FIRM F-693 W. TODD BROOKER, P.E. PRESIDENT MATTHEW K. REGAN, P.E. PARTNER CAWLEY, GILLESPIE & ASSOCIATES, INC. PETROLEUM CONSULTANTS 13640 BRIARWICK DRIVE, SUITE 100 306 WEST SEVENTH STREET, SUITE 302 1000 LOUISIANA STREET, SUITE 1900 AUSTIN, TEXAS 78729-1107 FORT WORTH, TEXAS 76102-4987 HOUSTON, TEXAS 77002-5008 512-249-7000 817- 336-2461 713-651-9944 www.cgaus.com January 17, 2019 Lilis Energy, Inc. 300 E. Sonterra Blvd, Suite 1220 San Antonio, TX 78258 Re: Evaluation Summary Lilis Energy, Inc. Interests Total Proved Reserves As of December 31, 2018 Pursuant to the Guidelines of the Securities and Exchange Commission for Reporting Corporate Reserves and Future Net Revenue Ladies and Gentlemen: As requested, this report was prepared on January 17, 2019 for Lilis Energy, Inc. (“LEI”) for the purpose of submitting our estimates of proved reserves and forecasts of economics attributable to the subject interests. We have evaluated 100% of LEI reserves, which are made up of oil and gas properties in the Delaware Basin. This evaluation utilized an effective date of December 31, 2018, was prepared using constant prices and costs, and conforms to Item 1202(a)(8) of Regulation S-K and other rules of the Securities and Exchange Commission (SEC). The results of this evaluation are presented in the accompanying tabulations, with a composite summary of the values presented below: Proved ProvedDeveloped Developed Proved Proved Total Producing Non-Producing Undeveloped Developed Proved Net Reserves Oil - Mbbl 5,434.2 843.8 14,927.0 6,278.0 21,205.0 Gas - MMcf 24,486.2 2,560.0 51,703.4 27,046.2 78,749.6 NGL - Mbbl 2,370.6 283.3 5,722.6 2,653.9 8,376.6 Revenue Oil - M$ 313,238.1 48,680.8 861,180.5 361,918.9 1,223,099.3 Gas - M$ 45,032.8 4,761.5 96,168.4 49,794.3 145,962.7 NGL - M$ 36,700.1 4,458.2 90,042.4 41,158.3 131,200.7 Severance Taxes - M$ 21,984.7 2,939.4 59,870.8 24,924.1 84,794.9 Ad Valorem Taxes - M$ 11,482.2 1,447.5 33,344.1 12,929.8 46,273.9 Operating Expenses - M$ 51,601.5 5,609.6 80,947.9 57,211.1 138,159.0 Other Deductions - M$ 36,877.9 5,719.2 102,291.9 42,597.1 144,889.0 Investments - M$ 0.0 7,859.9 338,365.0 7,859.9 346,225.0 Net Cash Flows - M$ 273,024.6 34,324.8 432,571.4 307,349.5 739,920.9 Discounted @ 10% - M$ 172,940.8 19,948.4 134,869.5 192,889.2 327,758.7 (Present Worth) Lilis Energy, Inc. Interests January 17, 2019 Page 2 Future revenue is prior to deducting state production taxes and ad valorem taxes. Future net cash flow is after deducting these taxes, future capital costs and operating expenses, but before consideration of federal income taxes. In accordance with SEC guidelines, the future net cash flow has been discounted at an annual rate of ten percent to determine its “present worth”. The present worth is shown to indicate the effect of time on the value of money and should not be construed as being the fair market value of the properties. The oil reserves include oil and condensate. Oil and NGL volumes are expressed in barrels (42 U.S. gallons). Gas volumes are expressed in thousands of standard cubic feet (Mcf) at contract temperature and pressure base. Our estimates are for proved reserves only and do not include any probable or possible reserves nor have any values been attributed to interest in acreage beyond the location for which undeveloped reserves have been estimated. The Proved Developed category is the summation of the Proved Developed Producing and Proved Developed Non-Producing estimates. Presentation This report is divided into four main sections: Summary (Total Proved and Proved Developed), Proved Developed Producing (“PDP”), Proved Developed Non-Producing (“PDNP”) and Proved Undeveloped (“PUD”). Within each sectionare Tables I and Summary Plots. Tables II and Individual Figures and Tables are also included in the PDP, PDNP and PUD sections. The Tables I present composite reserve estimates and economic forecasts for the particular reserve category or property grouping. The Summary Plots are composite rate-time history-forecast curves for the corresponding Table I. Following certain Summary Plots are Table II “oneline” summaries that present estimates of ultimate recovery, gross and net reserves, ownership, revenue, expenses, investments, net income and discounted cash flow for the individual properties that make up the corresponding Table I. Individual Figures and Tables present reserve estimates, economic forecasts and rate-time plots on a lease or well level. For a more detailed explanation of the report layout, please refer to the Table of Contents following this letter. Hydrocarbon Pricing The base SEC oil and gas prices calculated for December 31, 2018 were $65.56/Bbl and $3.100/MMBTU, respectively. As specified by the SEC, a company must use a 12-month average price, calculated as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month period prior to the end of the reporting period. The base oil price is based upon WTI-Cushing spot prices (Bloomberg) from January - December 2018 and the base gas price is based upon Henry Hub spot prices (Gas Daily) from January -December 2018. The base prices shown above were adjusted for differentials on a per-property basis, which may include local basis differentials, transportation, gas shrinkage, gas heating value (BTU content) and/or crude quality and gravity corrections. Natural gas liquid (NGL) prices were applied as a percentage of WTI. After these adjustments, the net realized prices for the SEC price case over the life of the proved properties was estimated to be $57.680 per barrel for oil, $1.854 per MCF for gas and $15.663 per barrel for NGLs. All economic factors were held constant in accordance with SEC guidelines. Economic Parameters Ownership was accepted as furnished and has not been independently confirmed. Oil and gas price differentials, gas shrinkage, ad valorem taxes, severance taxes, lease operating expenses and investments were calculated and prepared by LEI and were reviewed by us for accuracy and completeness. In some cases, data was accepted as provided. Lease operating expenses were either determined at the area or individual well level using averages calculated from historical lease operating statements. All economic parameters, including lease operating expenses and investments, were held constant (not escalated) throughout the life of these properties. Lilis Energy, Inc. Interests January 17, 2019 Page 3 SEC Conformance and Regulations The reserve classifications and the economic considerations used herein conform to the criteria of the SEC as defined in pages 3 and 4 of the Appendix. The reserves and economics are predicated on regulatory agency classifications, rules, policies, laws, taxes and royalties currently in effect except as noted herein. The possible effects of changes in legislation or other Federal or State restrictive actions which could affect the reserves and economics have not been considered. However, we do not anticipate nor are we aware of any legislative changes or restrictive regulatory actions that may impact the recovery of reserves. This evaluation includes 37 proved undeveloped locations. Each of the drilling locations proposed conform to the proved undeveloped standards as set forth by the SEC. In our opinion, LEI has indicated they have every intent to complete this development plan as scheduled. Furthermore, LEI has indicated that they have the proper company staffing, financial backing and prior development success to ensure this development plan will be fully executed. Reserve Estimation Methods The methods employed in estimating reserves are described in page 2 of the Appendix. Reserves for proved developed producing wells were estimated using production performance methods. Certainnew producing properties with little production history were forecast using a combination of production performance and analogy to similar production, both of which are considered to provide a relatively high degree of accuracy. Non-producing reserve estimates, for both developed and undeveloped properties, were forecast using a combination of volumetric and analogy methods. These methods provide a relatively high degree of accuracy for predicting proved developed non-producing and proved undeveloped reserves for LEI properties. The assumptions, data, methods and procedures used herein are appropriate for the purpose served by this report. General Discussion The estimates and forecasts were based upon interpretations of data furnished by your office and available from our files. To some extent information from public records has been used to check and/or supplement these data. The basic engineering and geological data were subject to third party reservations and qualifications. Nothing has come to our attention, however, that would cause us to believe that we are not justified in relying on such data. All estimates represent our best judgment based on the data available at the time of preparation. Due to inherent uncertainties in future production rates, commodity prices and geologic conditions, it should be realized that the reserve estimates, the reserves actually recovered, the revenuederived therefrom and the actual cost incurred could be more or less than the estimated amounts. An on-site field inspection of the properties has not been performed. The mechanical operation or condition of the wells and their related facilities have not been examined nor have the wells been tested by Cawley, Gillespie & Associates, Inc. Possible environmental liability related to the properties has not been investigated nor considered. The cost of plugging and the salvage value of equipment at abandonment have not been included. Lilis Energy, Inc. Interests January 17, 2019 Page 4 Cawley, Gillespie & Associates, Inc. is a Texas Registered Engineering Firm (F-693), made up of independent registered professional engineers and geologists that have provided petroleum consulting services to the oil and gas industry for over 50 years. This evaluation was supervised by W. Todd Brooker, President at Cawley, Gillespie & Associates, Inc. and a State of Texas Licensed Professional Engineer (License #83462). We do not own an interest in the properties or Lilis Energy, Inc. and are not employed on a contingent basis. We have used all methods and procedures that we consider necessary under the circumstances to prepare this report. Our work-papers and related data utilized in the preparation of these estimates are available in our office. Yours very truly, CAWLEY, GILLESPIE & ASSOCIATES, INC. TEXAS REGISTERED ENGINEERING FIRM F-693 W. Todd Brooker, P. E. President TABLE OF CONTENTS Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico As of December 31, 2018 ___________________________________________________________________________________________________________________ REPORT LETTER TABLE OF CONTENTS SUMMARY TAB  Table I & Summary Plot – TP  Table I & Summary Plot – PD PROVED DEVELOPED PRODUCING  Table I & Summary Plot – PDP  Table II – PDP (One-Line Summary Alphabetical by Lease Name)  Individual Figures and Tables 1-37 PROVED DEVELOPED NON-PRODUCING  Table I & Summary Plot – PDNP  Table II – PDNP (One-Line Summary Alphabetical by Lease Name)  Individual Figures and Tables 1-4 PROVED UNDEVELOPED  Table I & Summary Plot – PUD  Table II – PUD (One-Line Summary Alphabetical by Lease Name)  Individual Figures and Tables 1-37 APPENDIX TAB  Page 1 – Explanatory Comments for Summary Tables  Page 2 – Methods Employed in the Estimation of Reserves  Pages 3–4 – Reserve Definitions and Classifications  Page 5 – Professional Qualifications of Primary Technical Person Note: Table I’s are Grand Total Summaries of Reserves and Economics Table II’s are “One–Line” Lease Summaries of Economics for wells/leases in corresponding Table I’s. Summary Plots are Grand TotalRate–Time History–Forecast Curves based on the corresponding Table I. i Table I - TP Composite Reserve Estimates and Economic Forecasts Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Total Proved Reserves As of December 31, 2018 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 2,001.7 10,763.0 797.0 1,333.380 4,761.775 536.060 57.642 1.852 15.568 12-2020 2,695.9 13,654.3 1,041.2 1,839.538 6,804.777 713.363 57.673 1.855 15.619 12-2021 3,322.4 17,635.3 1,372.9 2,153.475 8,358.448 888.295 57.681 1.856 15.647 12-2022 3,716.3 18,362.2 1,436.9 2,435.366 8,741.135 933.005 57.684 1.856 15.656 12-2023 2,735.1 14,264.4 1,105.3 1,781.211 6,728.126 712.317 57.684 1.855 15.638 12-2024 1,978.8 10,517.8 801.9 1,294.534 4,972.618 519.825 57.682 1.853 15.611 12-2025 1,596.0 8,610.6 649.2 1,046.232 4,070.905 421.846 57.682 1.852 15.593 12-2026 1,356.0 7,244.1 544.6 890.058 3,431.043 355.067 57.680 1.849 15.644 12-2027 1,186.5 6,369.9 476.1 779.505 3,016.787 310.862 57.680 1.847 15.648 12-2028 1,061.4 5,731.5 426.2 697.769 2,713.410 278.499 57.680 1.846 15.645 12-2029 956.8 5,175.0 383.4 629.2842,449.351 250.736 57.680 1.845 15.654 12-2030 872.8 4,592.0 341.0 574.128 2,176.663 223.658 57.680 1.839 15.757 12-2031 800.4 4,224.8 312.7 526.584 2,001.298 205.130 57.679 1.839 15.757 12-2032 737.9 3,906.8 288.3 485.478 1,849.357 189.107 57.679 1.838 15.757 12-2033 675.3 3,274.1 264.3 444.134 1,584.466 173.337 57.679 1.858 15.754 12-2034 618.5 2,972.6 242.8 406.505 1,442.650 159.218 57.679 1.861 15.750 12-2035 569.0 2,734.9 223.4 374.006 1,327.314 146.489 57.679 1.861 15.750 12-2036 524.9 2,522.9 206.1 345.009 1,224.406 135.132 57.679 1.861 15.750 12-2037 481.6 2,314.6 189.1 316.522 1,123.310 123.974 57.679 1.861 15.750 S Tot 27,887.3 144,870.9 11,102.5 18,352.719 68,777.839 7,275.919 57.678 1.852 15.653 After 4,341.0 20,633.1 1,685.0 2,852.317 9,971.774 1,100.632 57.692 1.861 15.729 Total 32,228.3 165,504.0 12,787.5 21,205.036 78,749.613 8,376.551 57.680 1.854 15.663 Cum 4,116.3 100,688.2 .0 Ult 36,344.6 266,192.2 12,787.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 76,858.311 8,819.310 8,345.440 0.000 0.000 94,023.062 5,076.909 2,629.174 4.585 12-2020 106,090.898 12,620.175 11,141.733 0.000 0.000 129,852.806 7,601.810 4,328.431 4.467 12-2021 124,215.068 15,511.228 13,899.410 0.000 0.000 153,625.707 8,744.497 4,785.982 4.424 12-2022 140,482.451 16,223.952 14,606.965 0.000 0.000 171,313.368 9,703.259 5,326.617 4.593 12-2023 102,746.643 12,480.855 11,139.390 0.000 0.000 126,366.888 7,085.047 3,818.594 4.854 12-2024 74,671.722 9,216.609 8,115.024 0.000 0.000 92,003.356 5,183.408 2,805.471 5.285 12-2025 60,348.539 7,540.592 6,577.862 0.000 0.000 74,466.994 4,203.253 2,277.081 5.657 12-2026 51,338.854 6,343.082 5,554.586 0.000 0.000 63,236.523 3,569.703 1,937.328 5.994 12-2027 44,961.834 5,573.126 4,864.217 0.000 0.000 55,399.177 3,128.854 1,698.649 6.319 12-2028 40,247.167 5,010.216 4,357.190 0.000 0.000 49,614.573 2,803.308 1,522.010 6.626 12-2029 36,296.882 4,519.517 3,924.912 0.000 0.000 44,741.312 2,528.389 1,373.141 6.955 12-2030 33,115.440 4,003.748 3,524.073 0.000 0.000 40,643.261 2,293.976 1,248.902 7.356 12-2031 30,373.072 3,679.759 3,232.147 0.000 0.000 37,284.978 2,104.788 1,145.929 7.686 12-2032 28,002.085 3,399.125 2,979.687 0.000 0.000 34,380.897 1,941.038 1,056.715 8.023 12-2033 25,617.378 2,944.128 2,730.7990.000 0.000 31,292.305 1,764.051 963.219 8.521 12-2034 23,446.926 2,684.553 2,507.694 0.000 0.000 28,639.173 1,615.187 882.427 8.825 12-2035 21,572.404 2,469.930 2,307.210 0.000 0.000 26,349.543 1,486.057 811.879 9.270 12-2036 19,899.881 2,278.434 2,128.330 0.000 0.000 24,306.646 1,370.842 748.934 9.737 12-2037 18,256.798 2,090.310 1,952.599 0.000 0.000 22,299.708 1,257.655 687.096 10.279 S Tot 1,058,542.356 127,408.650 113,889.269 0.000 0.000 1,299,840.275 73,462.030 40,047.581 5.736 After 164,556.965 18,554.035 17,311.430 0.000 0.000 200,422.430 11,332.902 6,226.289 16.237 Total 1,223,099.321 145,962.685 131,200.699 0.000 0.000 1,500,262.705 84,794.932 46,273.870 7.116 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 2,400.788 34 29.1 0.000 0.000 8,949.954 42,131.856 32,834.381 32,834.381 32,148.767 12-2020 2,877.613 46 39.7 0.000 0.000 12,478.008 128,027.875 -25,460.931 7,373.450 9,224.147 12-2021 3,542.743 58 49.4 0.000 0.000 14,702.145 103,954.643 17,895.697 25,269.147 23,628.005 12-2022 4,017.982 6857.8 0.000 0.000 16,645.947 72,110.580 63,508.982 88,778.130 68,338.219 12-2023 4,144.209 67 57.1 0.000 0.000 12,191.011 .000 99,128.026 187,906.156 133,138.847 12-2024 4,144.209 67 57.1 0.000 0.000 8,862.461 .000 71,007.807 258,913.963 175,273.430 12-2025 4,144.209 67 57.1 0.000 0.000 7,164.010 .000 56,678.441 315,592.404 205,829.791 12-2026 4,048.566 67 57.1 0.000 0.000 6,097.198 .000 47,583.729 363,176.133 229,146.049 12-2027 4,038.289 66 56.4 0.000 0.000 5,340.868 .000 41,192.517 404,368.650 247,493.238 12-2028 4,038.289 66 56.4 0.000 0.000 4,781.223 .000 36,469.742 440,838.393 262,257.480 12-2029 4,037.237 66 56.4 0.000 0.000 4,312.080 .000 32,490.464 473,328.856 274,213.422 12-2030 4,026.949 65 55.6 0.000 0.000 3,934.167 .000 29,139.267 502,468.124 283,961.279 12-2031 4,026.949 65 55.6 0.000 0.000 3,608.392 .000 26,398.918 528,867.042 291,989.892 12-2032 4,026.949 65 55.6 0.000 0.000 3,326.720 .000 24,029.475 552,896.516 298,633.140 12-2033 3,951.167 65 55.6 0.000 0.000 3,043.178 .000 21,570.691 574,467.208 304,054.324 12-2034 3,837.987 63 54.1 0.000 0.000 2,784.947 .000 19,518.625 593,985.833 308,513.977 12-2035 3,837.987 63 54.1 0.000 0.000 2,562.297 .000 17,651.323 611,637.155312,180.622 12-2036 3,837.987 63 54.1 0.000 0.000 2,363.641 .000 15,985.243 627,622.398 315,199.201 12-2037 3,837.987 63 54.1 0.000 0.000 2,168.481 .000 14,348.489 641,970.887 317,662.207 S Tot 72,818.096 0.000 0.000 125,316.727 346,224.953 641,970.887 641,970.887 317,662.207 After 65,340.892 0.000 0.000 19,572.295 .000 97,950.052 739,920.939 327,758.742 Total 138,158.988 0.000 0.000 144,889.031 346,224.953 739,920.939 739,920.939 327,758.742 SEC Pricing YE2018 ______________________Percent Cum. Disc. WTI Cushing Henry Hub 5.00 469,289.978 Year Oil $/STB Gas $/MMBTU 8.00 374,987.916 2019 65.56 3.100 10.00 327,758.742 Thereafter Flat Flat 12.00 289,312.377 Cap 65.56 3.100 15.00 243,682.265 ______________________ 20.00 189,247.399 12 Months in first year 42.932 Year Life (12/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. 1/16/2019 12:12:27 TEXAS REGISTERED ENGINEERING FIRM F-693. Summary Cawley, Gillespie & Associates, Inc. Summary Plot- TP Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico 9 9 _______________________________________________________________________________________________________________________________Total Proved Reserves________________________________________________________________________________________ Gross Production 8 _______________________42.93 Year Life (12/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% Q D n D Q Cumulatives ________________________________________________ i ei ef ab 7 __________________________________________________ Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 166,039. 75.9 2.84 8.2 127. Oil - mbbls 4,116.3 32,228.3 36,344.6 21,205.036 1,223,099.321 84,794.932 283,048.012 739,920.939 327,758.742 Gas - mcf/mo 946,999. 70.8 2.96 8.2818. Gas - mmcf 100,688.2 165,504.0 266,192.2 78,749.613 145,962.685 46,273.870 346,224.953 OIL (bbls/mo) Δ 6 6 GAS (mcf/mo) ∇ 5 5 4 4 3 3 2 2 9 9 8 8 7 ♦ 7 100,000. 1,000,000. 6 6 5 5 4 4 ♦ ⊗ 3 3 ⊗ 2 2 9 9 ⊗ ⊗ ⊗ ⊗ 8 8 ⊗ ⊗ ⊗ ⊗ ⊗ ⊗ ⊗ 7 7 6 ⊗ 6 5 ♦ 5 4 4 ♦ ♦ ♦ 3 3 10,000. ♦ 100,000. ♦ ♦ ♦ ♦ ♦ ♦ ♦2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 TIME (years) ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \tp.out First Production 00/ 0 First Data 01/1968 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 14 21 API: Cawley, Gillespie & Associates, Inc. SUMMARY 1,000. 10,000. Table I - PD Composite Reserve Estimates and Economic Forecasts Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Reserves As of December 31, 2018 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 1,755.1 9,827.4 720.4 1,194.951 4,371.557 492.870 57.626 1.850 15.528 12-2020 1,083.3 6,474.0 453.1 727.425 3,124.169 305.985 57.632 1.847 15.426 12-2021 774.3 4,947.4 333.7 524.110 2,373.740 225.895 57.638 1.844 15.351 12-2022 609.8 4,107.2 269.4 413.984 1,958.097 182.244 57.635 1.841 15.288 12-2023 505.2 3,556.4 228.2 343.870 1,686.919 154.346 57.638 1.838 15.244 12-2024 437.1 3,166.0 199.7 297.775 1,495.511 134.971 57.641 1.837 15.211 12-2025 384.5 2,848.8 177.3 262.169 1,341.157 119.712 57.643 1.835 15.187 12-2026 344.5 2,440.0 151.1 235.044 1,152.880 102.915 57.639 1.824 15.390 12-2027 312.8 2,224.1 136.5 213.519 1,049.492 93.117 57.640 1.821 15.415 12-2028 287.4 2,060.6 125.6 196.199 970.761 85.619 57.640 1.819 15.415 12-2029 263.5 1,888.4 114.2 179.920 888.558 77.984 57.640 1.816 15.44812-2030 242.4 1,605.0 96.4 165.534 757.732 66.608 57.640 1.796 15.817 12-2031 223.1 1,489.1 88.7 152.300 701.656 61.283 57.640 1.794 15.817 12-2032 205.8 1,385.6 81.8 140.492 651.550 56.531 57.640 1.792 15.817 12-2033 187.1 961.1 74.8 127.640 485.581 51.710 57.640 1.853 15.809 12-2034 169.3 844.5 68.5 115.313 431.617 47.315 57.639 1.863 15.793 12-2035 155.8 777.0 63.0 106.094 397.111 43.532 57.639 1.863 15.793 12-2036 143.7 716.7 58.1 97.868 366.323 40.157 57.639 1.863 15.793 12-2037 131.8 657.5 53.4 89.788 336.077 36.842 57.639 1.863 15.793 S Tot 8,216.3 51,976.8 3,494.0 5,583.995 24,540.485 2,379.636 57.635 1.837 15.456 After 1,013.5 4,921.3 398.1 694.041 2,505.710 274.272 57.691 1.863 15.708 Total 9,229.8 56,898.0 3,892.1 6,278.036 27,046.195 2,653.908 57.642 1.839 15.482 Cum 4,116.3 100,688.2 0.0 Ult 13,346.1 157,586.2 3,892.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 68,871.970 8,093.505 7,665.869 0.000 0.000 84,631.343 4,602.736 2,394.381 1.041 12-2020 41,929.958 5,774.244 4,731.893 0.000 0.000 52,436.095 2,875.053 1,485.338 1.652 12-202130,212.428 4,379.673 3,476.943 0.000 0.000 38,069.044 2,097.268 1,082.177 2.218 12-2022 23,863.213 3,607.502 2,794.192 0.000 0.000 30,264.907 1,673.545 862.283 2.495 12-2023 19,822.412 3,104.209 2,360.042 0.000 0.000 25,286.663 1,402.588 721.559 2.736 12-2024 17,165.852 2,749.190 2,059.584 0.000 0.000 21,974.625 1,220.912 627.374 3.126 12-2025 15,113.735 2,463.260 1,823.961 0.000 0.000 19,400.956 1,079.308 554.099 3.521 12-2026 13,549.238 2,105.700 1,587.129 0.000 0.000 17,242.066 956.548 493.318 3.822 12-2027 12,308.525 1,913.956 1,438.138 0.000 0.000 15,660.619 868.947 448.294 4.184 12-2028 11,310.232 1,768.888 1,322.337 0.000 0.000 14,401.458 799.391 412.316 4.541 12-2029 10,371.784 1,616.441 1,206.764 0.000 0.000 13,194.989 732.219 377.836 4.957 12-2030 9,542.505 1,364.537 1,052.982 0.000 0.000 11,960.024 660.181 343.127 5.571 12-2031 8,779.605 1,262.425 968.798 0.000 0.000 11,010.829 607.928 315.869 6.041 12-2032 8,098.917 1,171.204 893.687 0.000 0.000 10,163.808 561.297 291.547 6.532 12-2033 7,357.919 900.201 817.072 0.000 0.000 9,075.192 498.254 261.239 7.396 12-2034 6,647.266 804.033 746.964 0.000 0.000 8,198.262 450.587 236.569 7.697 12-2035 6,115.833 739.753687.246 0.000 0.000 7,542.832 414.564 217.655 8.366 12-2036 5,641.669 682.398 633.963 0.000 0.000 6,958.031 382.422 200.781 9.069 12-2037 5,175.851 626.055 581.618 0.000 0.000 6,383.524 350.846 184.203 9.885 S Tot 321,878.910 45,127.173 36,849.185 0.000 0.000 403,855.268 22,234.594 11,509.963 3.281 After 40,039.953 4,667.156 4,309.155 0.000 0.000 49,016.264 2,689.536 1,419.800 15.813 Total 361,918.863 49,794.329 41,158.340 0.000 0.000 452,871.532 24,924.130 12,929.763 4.573 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 2,334.845 32 27.6 0.000 0.000 7,975.416 7,859.948 59,464.018 59,464.018 56,791.492 12-2020 2,390.475 32 27.6 0.000 0.000 4,872.204 0.000 40,813.026 100,277.045 92,291.699 12-2021 2,365.643 32 27.6 0.000 0.000 3,516.391 0.000 29,007.564 129,284.609 115,203.143 12-2022 2,142.364 31 26.8 0.000 0.000 2,801.897 0.000 22,784.817 152,069.426 131,556.163 12-2023 1,984.239 30 26.1 0.000 0.000 2,347.206 0.000 18,831.070 170,900.496 143,839.901 12-2024 1,984.239 30 26.1 0.000 0.000 2,034.429 0.00016,107.672 187,008.168 153,389.462 12-2025 1,984.239 30 26.1 0.000 0.000 1,792.430 0.000 13,990.879 200,999.046 160,928.351 12-2026 1,888.596 30 26.1 0.000 0.000 1,609.450 0.000 12,294.155 213,293.201 166,950.708 12-2027 1,878.319 29 25.4 0.000 0.000 1,462.927 0.000 11,002.131 224,295.334 171,849.925 12-2028 1,878.319 29 25.4 0.000 0.000 1,344.541 0.000 9,966.891 234,262.225 175,884.281 12-2029 1,877.267 29 25.4 0.000 0.000 1,233.030 0.000 8,974.637 243,236.862 179,186.750 12-2030 1,866.979 28 24.6 0.000 0.000 1,134.445 0.000 7,955.291 251,192.153 181,847.984 12-2031 1,866.979 28 24.6 0.000 0.000 1,043.749 0.000 7,176.303 258,368.457 184,030.555 12-2032 1,866.979 28 24.6 0.000 0.000 962.826 0.000 6,481.160 264,849.615 185,822.461 12-2033 1,791.197 28 24.6 0.000 0.000 874.508 0.000 5,649.996 270,499.612 187,242.666 12-2034 1,678.017 26 23.1 0.000 0.000 789.656 0.000 5,043.434 275,543.046 188,395.069 12-2035 1,678.017 26 23.1 0.000 0.000 726.525 0.000 4,506.070 280,049.116 189,331.163 12-2036 1,678.017 26 23.1 0.000 0.000 670.197 0.000 4,026.615 284,075.731 190,091.605 12-2037 1,678.017 26 23.1 0.000 0.000 614.861 0.000 3,555.598 287,631.327 190,702.001 S Tot 36,812.747 0.000 0.00037,806.688 7,859.948 287,631.327 287,631.327 190,702.001 After 20,398.361 0.000 0.000 4,790.398 0.000 19,718.168 307,349.496 192,889.245 Total 57,211.108 0.000 0.000 42,597.090 7,859.948 307,349.496 307,349.496 192,889.245 SEC Pricing YE2018 ______________________Percent Cum. Disc. WTI Cushing Henry Hub 5.00 234,543.573 Year Oil $/STB Gas $/MMBTU 8.00 207,181.617 2019 65.56 3.100 10.00 192,889.245 Thereafter Flat Flat 12.00 180,876.647 Cap 65.56 3.100 15.00 166,056.016 ______________________ 20.00 147,265.030 12 Months in first year 38.806 Year Life (10/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. Summary Cawley, Gillespie & Associates, Inc. Summary Plot- PD Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico 9 9 _______________________________________________________________________________________________________________________________Proved Developed Reserves________________________________________________________________________________________ Gross Production 8 _______________________38.80 Year Life (10/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% Q D n D Q Cumulatives ________________________________________________ i ei ef ab 7 __________________________________________________ Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 166,039. 75.9 2.84 8.1 130. Oil - mbbls 4,116.3 9,229.8 13,346.1 6,278.036 361,918.863 24,924.130 99,808.196 307,349.496 192,889.245 Gas - mcf/mo 946,999. 70.8 2.96 8.2494. Gas - mmcf 100,688.2 56,898.0 157,586.2 27,046.195 49,794.329 12,929.763 7,859.948 OIL (bbls/mo) Δ 6 6 GAS (mcf/mo) ∇ 5 5 4 4 ⊗ 3 3 ⊗ 2 2 9 9 ⊗ ⊗ ⊗ ⊗ 8 8 ⊗ ⊗ ⊗ ⊗ ⊗ ⊗ ⊗ 7 ♦ 7 100,000. ⊗ 100,000. 6 6 5 5 4 4 ♦ 3 3 2 2 9 9 8 8 7 7 6 6 5 ♦ 5 4 4 ♦ ♦ ♦ 3 3 10,000. ♦ 10,000. ♦ ♦ ♦ ♦ ♦ ♦ ♦2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 TIME (years) ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PD.out First Production 00/ 0 First Data 01/1968 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 15 21 API: Cawley, Gillespie & Associates, Inc. SUMMARY 1,000. 1,000. Table I - PDP Composite Reserve Estimates and Economic Forecasts Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Producing Reserves As of December 31, 2018 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 1,409.8 8,406.5 604.0 1,016.547 3,825.589 432.441 57.626 1.850 15.528 12-2020 852.6 5,554.1 377.8 611.910 2,777.615 267.628 57.632 1.847 15.426 12-2021 629.9 4,368.1 286.3 451.396 2,154.731 201.655 57.638 1.844 15.351 12-2022 502.1 3,674.1 233.9 359.613 1,794.108 164.093 57.635 1.841 15.288 12-2023 418.4 3,206.8 199.6 299.985 1,554.460 139.685 57.638 1.838 15.244 12-2024 363.7 2,870.3 175.5 260.656 1,383.423 122.565 57.641 1.837 15.211 12-2025 321.0 2,592.7 156.3 230.024 1,244.059 108.965 57.643 1.835 15.187 12-2026 288.2 2,213.0 132.5 206.546 1,066.780 93.385 57.639 1.824 15.390 12-2027 262.1 2,019.7 119.8 187.866 971.973 84.537 57.640 1.821 15.415 12-2028 241.1 1,874.0 110.3 172.771 899.956 77.782 57.640 1.819 15.415 12-2029 221.1 1,717.5 100.2 158.463 823.707 70.806 57.640 1.81615.448 12-2030 203.4 1,447.7 83.5 145.793 698.066 60.004 57.640 1.796 15.817 12-2031 187.2 1,344.4 76.8 134.137 646.760 55.207 57.640 1.794 15.817 12-2032 172.7 1,252.1 70.9 123.737 600.910 50.926 57.640 1.792 15.817 12-2033 156.7 838.6 64.8 112.268 439.122 46.568 57.640 1.853 15.809 12-2034 141.4 731.8 59.3 101.170 388.873 42.584 57.639 1.863 15.793 12-2035 130.1 673.3 54.5 93.082 357.784 39.179 57.639 1.863 15.793 12-2036 120.0 621.1 50.3 85.865 330.045 36.142 57.639 1.863 15.793 12-2037 110.1 569.8 46.2 78.776 302.794 33.158 57.639 1.863 15.793 S Tot 6,731.5 45,975.7 3,002.5 4,830.604 22,260.752 2,127.310 57.635 1.837 15.456 After 842.2 4,201.3 339.1 603.639 2,225.472 243.255 57.691 1.863 15.708 Total 7,573.7 50,177.0 3,341.6 5,434.243 24,486.224 2,370.565 57.642 1.839 15.482 Cum 4,116.3 100,688.2 .0 Ult 11,690.0 150,865.2 3,341.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 58,579.317 7,078.004 6,715.056 0.000 0.000 72,372.377 3,979.969 2,087.907 4.645 12-2020 35,265.596 5,129.653 4,128.363 0.000 0.000 44,523.611 2,473.702 1,287.526 5.052 12-202126,017.326 3,972.316 3,095.535 0.000 0.000 33,085.177 1,844.392 957.580 5.543 12-2022 20,726.407 3,302.482 2,508.602 0.000 0.000 26,537.491 1,484.400 769.098 5.757 12-2023 17,290.571 2,857.835 2,129.363 0.000 0.000 22,277.769 1,249.895 646.337 5.946 12-2024 15,024.357 2,540.707 1,864.382 0.000 0.000 19,429.445 1,091.747 563.744 6.301 12-2025 13,259.198 2,282.659 1,654.864 0.000 0.000 17,196.721 967.443 498.993 6.669 12-2026 11,905.110 1,945.554 1,437.184 0.000 0.000 15,287.847 857.369 444.463 7.045 12-2027 10,828.512 1,769.771 1,303.138 0.000 0.000 13,901.421 779.665 404.314 7.406 12-2028 9,958.577 1,637.191 1,199.029 0.000 0.000 12,794.798 717.850 372.149 7.753 12-2029 9,133.876 1,495.818 1,093.825 0.000 0.000 11,723.519 657.538 341.049 8.179 12-2030 8,403.566 1,253.558 949.072 0.000 0.000 10,606.196 591.471 309.281 8.960 12-2031 7,731.722 1,160.318 873.196 0.000 0.000 9,765.236 544.711 284.729 9.424 12-2032 7,132.277 1,077.014 805.497 0.000 0.000 9,014.787 502.981 262.821 9.910 12-2033 6,471.092 813.788 736.163 0.000 0.000 8,021.043 444.753 234.885 11.088 12-2034 5,831.338 724.528 672.524 0.000 0.000 7,228.389 401.364 212.322 11.372 12-2035 5,365.137 666.604 618.7570.000 0.000 6,650.498 369.276 195.347 12.049 12-2036 4,949.175 614.921 570.784 0.000 0.000 6,134.880 340.645 180.202 12.761 12-2037 4,540.534 564.149 523.656 0.000 0.000 5,628.339 312.519 165.323 13.587 S Tot 278,413.686 40,886.869 32,878.991 0.000 0.000 352,179.546 19,611.689 10,218.070 6.686 After 34,824.410 4,145.913 3,821.116 0.000 0.000 42,791.439 2,372.994 1,264.179 19.540 Total 313,238.096 45,032.782 36,700.107 0.000 0.000 394,970.985 21,984.683 11,482.249 8.003 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 2,221.086 28 25.2 0.000 0.000 6,768.296 .000 57,315.120 57,315.120 54,961.386 12-2020 2,221.086 28 25.2 0.000 0.000 4,087.555 .000 34,453.743 91,768.864 84,921.326 12-2021 2,196.254 28 25.2 0.000 0.000 3,022.821 .000 25,064.130 116,832.994 104,716.016 12-2022 1,972.975 27 24.3 0.000 0.000 2,432.939 .000 19,878.079 136,711.073 118,982.046 12-2023 1,814.850 26 23.6 0.000 0.000 2,049.448 .000 16,517.238 153,228.311 129,756.082 12-2024 1,814.850 26 23.6 0.000 0.000 1,782.600 .000 14,176.504167,404.815 138,160.551 12-2025 1,814.850 26 23.6 0.000 0.000 1,574.360 .000 12,341.074 179,745.889 144,810.351 12-2026 1,719.207 26 23.6 0.000 0.000 1,416.130 .000 10,850.679 190,596.568 150,125.582 12-2027 1,708.930 25 22.9 0.000 0.000 1,288.910 .000 9,719.602 200,316.171 154,453.658 12-2028 1,708.930 25 22.9 0.000 0.000 1,185.620 .000 8,810.249 209,126.420 158,019.826 12-2029 1,707.878 25 22.9 0.000 0.000 1,087.485 .000 7,929.569 217,055.989 160,937.770 12-2030 1,697.590 24 22.1 0.000 0.000 1,000.536 .000 7,007.317 224,063.306 163,281.890 12-2031 1,697.590 24 22.1 0.000 0.000 920.546 .000 6,317.659 230,380.966 165,203.322 12-2032 1,697.590 24 22.1 0.000 0.000 849.175 .000 5,702.220 236,083.185 166,779.874 12-2033 1,621.808 24 22.1 0.000 0.000 770.240 .000 4,949.358 241,032.543 168,023.995 12-2034 1,508.628 22 20.6 0.000 0.000 693.724 .000 4,412.352 245,444.895 169,032.203 12-2035 1,508.628 22 20.6 0.000 0.000 638.263 .000 3,938.984 249,383.879 169,850.494 12-2036 1,508.628 22 20.6 0.000 0.000 588.778 .000 3,516.628 252,900.507 170,514.627 12-2037 1,508.628 22 20.6 0.000 0.000 540.164 .000 3,101.705 256,002.211 171,047.106 S Tot 33,649.987 0.000 0.000 32,697.590 .000 256,002.211256,002.211 171,047.106 After 17,951.521 0.000 0.000 4,180.306 .000 17,022.438 273,024.649 172,940.825 Total 51,601.508 0.000 0.000 36,877.895 .000 273,024.649 273,024.649 172,940.825 SEC Pricing YE2018 ______________________Percent Cum. Disc. WTI Cushing Henry Hub 5.00 209,382.391 Year Oil $/STB Gas $/MMBTU 8.00 185,445.029 2019 65.56 3.100 10.00 172,940.825 Thereafter Flat Flat 12.00 162,432.418 Cap 65.56 3.100 15.00 149,471.240 ______________________ 20.00 133,048.130 12 Months in first year 38.806 Year Life (10/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. Summary Cawley, Gillespie & Associates, Inc. Summary Plot- PDP Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico 9 9 _______________________________________________________________________________________________________________________________Proved Developed Producing Reserves________________________________________________________________________________________ Gross Production 8 _______________________38.80 Year Life (10/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% Q D n D Q Cumulatives ________________________________________________ i ei ef ab 7 __________________________________________________ Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 166,039. 71.2 1.64 8.1 130. Oil - mbbls 4,116.3 7,573.7 11,690.0 5,434.243 313,238.096 21,984.683 88,479.404 273,024.649 172,940.825 Gas - mcf/mo 946,999.67.4 2.02 8.1 494. Gas - mmcf 100,688.2 50,177.0 150,865.2 24,486.224 45,032.782 11,482.249 0.000 OIL (bbls/mo) Δ 6 6 GAS (mcf/mo) ∇ 5 5 4 4 ⊗ 3 3 ⊗ 2 2 9 9 ⊗ ⊗ ⊗ ⊗ 8 8 ⊗ ⊗ ⊗ ⊗ ⊗ ⊗ ⊗ 7 ♦ 7 100,000. ⊗ 100,000. 6 6 5 5 4 4 ♦ 3 3 2 2 9 9 8 8 7 7 6 6 5 ♦ 5 4 4 ♦ ♦ ♦ 3 3 10,000. ♦ 10,000. ♦ ♦ ♦ ♦ ♦ ♦ ♦2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 TIME (years) ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PDP.out First Production 00/ 0 First Data 01/1968 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 17 21 API: Cawley, Gillespie & Associates, Inc. SUMMARY 1,000. 1,000. Table II - PDP Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Producing Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN CHEYENNE (ATOKA) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. A.G. HILL 1 59.0625 NI 1 1.9 0.0 0.0 0.0 288.1 123.7 3,333.3 2,239.0 1 PDP Gas 1 140 78.7500 WI 10.9 7,272.2 2,987.0 1,323.1 2,666.1 96.0 0.0 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. A.G. HILL 1H 75.0000 NI 1 241.4 184.7 138.5 7,991.0 413.7 3,573.5 4,387.4 3,402.2 2 PDP Oil 1H 428 100.0000 WI 14.6 320.9 277.0 153.7 286.0 214.7 0.0 PHANTOM (2ND BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. A.G. HILL 2H 75.0000 NI 1 428.8 397.5 298.2 17,201.4 945.7 4,328.1 13,469.1 8,914.9 3 PDP Oil 2H 501 100.0000 WI 32.0 1,160.0 1,093.2 519.1 965.5 480.6 0.0 PHANTOM (3RD BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. ANTELOPE 1H 3RD BS 1.5 77.3363 NI 1 221.3 204.9 158.4 9,140.7 747.9 3,671.4 8,722.0 5,969.5 4PDP Oil 1H 412 100.0000 WI 24.5 2,392.7 2,253.5 1,124.4 2,091.4 337.0 0.0 PHANTOM (WOLFCAMP XY) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. AXIS 2H (WAS MEERKAT 1H) 75.4847 NI 1 376.6 305.9 230.9 13,323.7 1,077.6 3,975.7 13,938.3 8,536.9 5 PDP Oil 1H 435 100.0000 WI 33.9 3,496.6 3,059.4 1,709.0 3,178.7 487.0 0.0 PHANTOM (WOLFCAMP) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC BISON 1H 68.7771 NI 1 599.9 251.6 173.1 10,098.7 603.8 2,980.9 8,049.5 5,154.9 6 PDP Oil 1H 331 91.2062 WI 27.6 1,664.0 905.9 504.7 907.4 298.3 0.0 PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. EAST AXIS 2H 1.5 75.0000 NI 1 655.7 643.5 482.6 27,842.2 1,574.8 6,063.8 23,269.6 14,488.5 7 PDP Oil 531 100.0000 WI 38.3 1,967.0 1,930.4 1,071.4 1,992.7 792.5 0.0 PHANTOM (WOLFCAMP) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC GRIZZLY 1H 64.8591 NI 1 392.4 253.1 164.2 9,578.3 702.2 3,187.8 8,824.5 5,034.0 8 PDP Oil 1H 332 89.4651 WI 36.6 2,438.1 1,771.7 907.8 1,744.8 326.0 0.0 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. GRIZZLY 2H 66.8118 NI 1 496.1 382.1 255.3 14,394.7 825.7 3,072.7 12,227.7 7,625.7 9 PDP Oil 2H 426 92.2769 WI 35.2 2,587.1 2,101.7 828.5 1,386.9 413.5 0.0 EVETTS (SILURIAN) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC HALEY, J. 605 36.3786 NI 1 0.5 0.00.0 0.0 318.2 160.2 3,633.9 2,163.5 10 PDP Gas 605 522 49.8337 WI 14.1 22,092.5 7,555.8 2,721.2 4,217.9 105.4 0.0 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. HIPPO 1H 73.4685 NI 1 396.2 232.5 170.8 9,968.6 638.9 3,630.7 7,770.4 4,918.7 11 PDP Oil 1H 224 100.0000 WI 27.6 1,552.7 1,069.7 636.6 1,184.0 308.7 0.0 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: .000 1/16/2019 12:12:35 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc. Page 1 Table II - PDP (cont.) Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Producing Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. HIPPO 2H 59.4972 NI 1 450.2 332.2 197.7 10,884.9 663.8 3,277.7 8,765.4 5,867.9 12 PDP Oil 2H 432 85.4037 WI 25.9 1,652.7 1,362.1 551.1 1,059.1 325.8 0.0 PHANTOM (WOLFCAMP XY) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. HOWELL 1H 75.0000 NI 1 173.6 151.9 113.9 6,572.2 705.7 2,976.1 7,946.1 5,528.2 13 PDP Oil 1H 476 100.0000 WI 23.5 3,117.4 2,885.9 1,378.7 2,564.4 298.2 0.0 PHANTOM (WOLFCAMP) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC KUDU 1H 61.6309 NI 1 207.6 103.3 63.6 3,754.8 232.2 1,365.4 2,828.3 2,009.4 14 PDP Oil 1H 28 79.3142 WI 21.6 980.5 442.3 220.8 417.6 113.5 0.0 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. KUDU 2H 58.2447 NI 1 490.8 365.9 213.1 12,434.8 807.4 3,119.2 11,227.96,847.5 15 PDP Oil 2H 320 74.9912 WI 32.7 2,068.8 1,795.1 826.0 1,562.0 388.6 0.0 LION 1H 70.0364 NI 1 430.3 294.3 206.1 12,161.2 880.9 3,235.5 11,886.7 7,072.8 16 PDP Oil 319 94.0921 WI 35.4 2,866.2 2,207.2 1,252.1 2,367.7 410.3 0.0 LION 3H 72.3491 NI 1 494.1 376.3 272.2 14,991.3 971.2 3,720.6 13,545.5 8,551.7 17 PDP Oil 3H 427 97.2173 WI 30.4 2,699.1 2,144.7 1,287.9 2,355.5 467.6 0.0 JABALINA (WOLFCAMP, SOUTHWEST) -- LEA COUNTY, NEW MEXICO IMPETRO OPERATING, LLC MEXICO P FEDERAL 001 78.4445 NI 0 13.7 Non-Commercial 18 PDP Oil 001 133 100.0000 WI 0.0 86.3 PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. MOOSE #1H 1.5 (CGA) 61.9518 NI 1 616.2 548.8 340.0 19,614.3 1,163.9 4,325.6 16,991.5 10,028.2 19 PDP Oil 1H 498 77.2739 WI 38.8 2,213.6 2,085.4 956.0 1,778.2 576.4 0.0 PHANTOM (WOLFCAMP A) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. PRIZE HOG 2H (CGA) 79.3750 NI 1 388.6 301.7 239.5 13,815.8 1,161.6 3,687.3 10,454.8 6,856.3 20 PDP Oil 479 100.0000 WI 30.1 1,220.0 1,055.9 620.2 1,153.6 805.5 0.0 TBD (WOLFCAMP B) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. PRIZE HOG BWZ ST COM 1H 80.3125 NI 1 417.8 296.8 238.4 13,597.0 1,123.3 5,765.4 7,934.4 4,956.6 21 PDP Oil #1H 317 100.0000 WI 29.3 1,089.1 890.5 321.8 628.5 780.2 0.0 HALEY (LWR. WOLFCAMP-PENN CONS.) -- LOVING COUNTY,TEXAS IMPETRO OPERATING LLC SHAMMO C24-4 1 37.5264 NI 0 1.1 Non-Commercial 22 PDP Gas 1 68 50.0000 WI 0.0 363.4 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. TIGER 1H 72.8298 NI 1 437.1 294.7 214.6 12,381.3 828.6 3,545.5 11,034.5 6,944.8 23 PDP Oil 1H 322 89.8677 WI 29.4 2,070.6 1,502.8 897.5 1,697.2 395.1 0.0 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: .000 1/16/2019 12:12:35 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc. Page 2 Table II - PDP (cont.) Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Producing Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN PHANTOM (3RD BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. TIGER 3H 1.5 75.3079 NI 1 529.6 502.5 378.4 21,832.5 1,500.3 4,901.3 21,276.8 13,837.6 24 PDP Oil 534 93.5038 WI 37.2 3,442.1 3,266.3 1,820.2 3,385.6 709.7 0.0 CRITTENDON (ATOKA OOLITIC) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC TUBB 1 UNIT 1 57.4207 NI 0 0.2 Non-Commercial 25 PDP Gas 1 24 71.9505 WI 0.0 728.3 CRITTENDON (MORROW) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC TUBB 22 UNIT 1R 67.1790 NI 0 0.6 Non-Commercial 26 PDP Gas 1R 104 85.4286 WI 0.0 2,455.8 TUBB 9 UNIT 1 55.4437 NI 0 3.0 Non-Commercial 27 PDP Gas 1 94 69.5816 WI 0.0 1,418.8 CRITTENDON (BRUSHY CANYON) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC TUBB ESTATE 1-75 1 48.5349 NI 0 74.4 Non-Commercial 28 PDP Oil 1 2362.9061 WI 0.0 89.7 TUBB ESTATE 21 2 65.9115 NI 0 29.7 Non-Commercial 29 PDP Oil 2 88 89.8183 WI 0.0 19.5 CRITTENDON (ELLEN. 21450) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC TUBB ESTATE 25 1 72.0760 NI 0 0.0 Non-Commercial 30 PDP Gas 1 99 90.7357 WI 0.0 58.5 CRITTENDON (BRUSHY CANYON) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC TUBB ESTATE 25 3 75.7795 NI 0 11.7 Non-Commercial 31 PDP Oil 3 71 93.5935 WI 0.0 12.8 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. WEST AXIS 1H 1.5 74.9996 NI 1 590.6 527.6 395.7 22,829.3 1,204.0 5,232.3 17,775.8 11,417.1 32 PDP Oil 436 100.0000 WI 35.2 1,019.9 1,002.5 556.4 1,034.8 620.8 0.0 PHANTOM (WOLFCAMP XY) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. WILD HOG 2H (CGA) 79.3750 NI 1 334.4 268.3 213.0 12,566.7 1,110.8 3,070.9 10,386.8 6,535.4 33 PDP Oil 481 100.0000 WI 35.8 1,681.2 1,395.3 764.2 1,445.1 766.8 0.0 TBD (WOLFCAMP B) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. WILD HOG BWX ST COM 1H 80.3125 NI 1 425.4 300.8 241.5 14,252.0 1,250.2 3,384.5 11,772.9 6,773.4 34 PDP Oil #1H 314 100.0000 WI 38.7 1,816.0 1,503.8 833.3 1,575.8 863.6 0.0 CRITTENDON (PENN.) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC WOLFE UNIT 1 57.3676 NI 1 706.0 3.9 2.2 139.7 147.3 751.7 1,061.8 798.2 35 PDP Gas 1 50 70.6134 WI 7.169,781.2 1,563.5 663.7 1,316.8 50.3 0.0 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: .000 1/16/2019 12:12:35 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc. Page 3 Table II - PDP (cont.) Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Producing Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN CRITTENDON (BRUSHY CANYON) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC WOLFE UNIT 3H 69.4042 NI 1 77.7 26.2 18.2 1,060.3 57.4 713.0 373.6 346.7 36 PDP Oil 3H 111 86.4824 WI 2.9 72.2 52.4 29.4 55.7 29.3 0.0 CRITTENDON (BELL CANYON) -- WINKLER COUNTY, TEXAS IMPETRO OPERATING LLC WOLFE UNIT 5&6 61.8916 NI 1 975.2 22.7 14.1 810.6 39.3 639.0 136.1 121.3 37 PDP Oil 5,6 15 70.2980 WI 4.0 897.9 16.1 7.4 13.8 20.9 0.0 GRAND TOTAL 28 11,690.0 7,573.7 5,434.2 313,238.1 21,984.7 88,479.4 273,024.7 172,940.8 150,865.2 50,177.0 24,486.2 45,032.8 11,482.2 0.0 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: .000 1/16/2019 12:12:35 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc.Page 4 Rate-Time History-Forecast Curves And Tabular Reserves and Economics By Property Cawley, Gillespie & Associates, Inc. Petroleum Consultants Figure 1 LILIS ENERGY, INC. -- A.G. HILL 1 1 CHEYENNE (ATOKA) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________10.90 Year Life (11/2029) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 1.9 0.0 1.9 59.062 NI .000 .000 288.085 123.688 3,333.336 2,239.013 Gas - mcf/mo 34,624. 8.0 0.00 8.0 14,130. 0.0 0.0 6Gas - mmcf 4,285.2 2,987.0 7,272.2 78.750 WI 1,323.126 2,666.099 96.028 0.000 6 5 5 GAS (mcf/mo) Δ OIL (bbls/mo) ∇ 4 4 ♦ ♦ ♦ ♦ ♦ ♦ 3 ♦ ♦ 3 ♦ 2 ♦ 2 9 9 ∇ 8 8 7 7 ∇ 10,000. 100. 6 6 5 5 ⊗ ⊗ 4 4 3 3 ♦ ⊗ 2 2 9 9 ∇ 8 8 ⊗ 7 7 6 6 5 5 4 4 1,000. 3 3 10. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : ATOKA A.G. HILL 1 1 TIME (years) 521 PSL/MORELAND TX GAS 2313341 ♦⊗ ∗ -- Annual Averages Perfs: 14686. - 14702. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 12/2008 Last Data 09/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495309140100 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 140 100. 1. Table 1 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- A.G. HILL 1 1 CHEYENNE \(ATOKA\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 399.8 23.9 .000 177.092 14.111 .000 2.015 11.145 12-2020 .0 368.8 22.0 .000 163.362 13.017 .000 2.015 11.145 12-2021 .0 338.3 20.2 .000 149.873 11.942 .000 2.015 11.145 12-2022 .0 311.3 18.6 .000 137.891 10.988 .000 2.015 11.145 12-2023 .0 286.4 17.1 .000 126.867 10.109 .000 2.015 11.145 12-2024 .0 264.2 15.8 .000 117.031 9.325 .000 2.015 11.145 12-2025 .0 242.4 14.5 .000 107.368 8.555 .000 2.015 11.145 12-2026 .0 223.0 13.3 .000 98.784 7.871 .000 2.015 11.145 12-2027 .0 205.2 12.3 .000 90.887 7.242 .000 2.015 11.145 12-2028 .0 189.3 11.3 .000 83.840 6.681 .000 2.015 11.145 11-2029 .0 158.3 9.5 .000 70.128 5.588 .000 2.015 11.145 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot .0 2,987.0 178.5 .000 1,323.126 105.430 .000 2.015 11.145 After .0 .0 .0 .000 .000 .000 .000 .000 .000 Total .0 2,987.0 178.5.000 1,323.126 105.430 .000 2.015 11.145 Cum 1.9 4,285.2 .0 Ult 1.9 7,272.2 178.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 356.840 157.271 0.000 0.000 514.112 38.558 12.853 .293 12-2020 .000 329.174 145.078 0.000 0.000 474.252 35.569 11.856 .318 12-2021 .000 301.995 133.099 0.000 0.000 435.094 32.632 10.877 .346 12-2022 .000 277.851 122.458 0.000 0.000 400.310 30.023 10.008 .376 12-2023 .000 255.638 112.668 0.000 0.000 368.306 27.623 9.208 .409 12-2024 .000 235.818 103.933 0.000 0.000 339.751 25.481 8.494 .444 12-2025 .000 216.347 95.351 0.000 0.000 311.699 23.377 7.792 .483 12-2026 .000 199.051 87.728 0.000 0.000 286.779 21.508 7.169 .525 12-2027 .000 183.137 80.715 0.000 0.000 263.852 19.789 6.596 .571 12-2028 .000 168.938 74.457 0.000 0.000 243.395 18.255 6.085 .619 11-2029 .000 141.309 62.280 0.000 0.000 203.588 15.269 5.090 .672 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot .000 2,666.099 1,175.039 0.000 0.000 3,841.138 288.085 96.028 .428 After .000 .000 .000 0.000 0.000 .000 .000 .000 .000 Total .000 2,666.099 1,175.0390.000 0.000 3,841.138 288.085 96.028 .428 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 11.340 1 0.8 0.000 0.000 0.000 .000 451.360 451.360 430.785 12-2020 11.340 1 0.8 0.000 0.000 0.000 .000 415.487 866.847 791.258 12-2021 11.340 1 0.8 0.000 0.000 0.000 .000 380.245 1,247.092 1,091.146 12-2022 11.340 1 0.8 0.000 0.000 0.000 .000 348.939 1,596.031 1,341.343 12-2023 11.340 1 0.8 0.000 0.000 0.000 .000 320.135 1,916.166 1,550.033 12-2024 11.340 1 0.8 0.000 0.000 0.000 .000 294.436 2,210.602 1,724.510 12-2025 11.340 1 0.8 0.000 0.000 0.000 .000 269.189 2,479.791 1,869.516 12-2026 11.340 1 0.8 0.000 0.000 0.000 .000 246.761 2,726.552 1,990.364 12-2027 11.340 1 0.8 0.000 0.000 0.000 .000 226.127 2,952.679 2,091.046 12-2028 11.340 1 0.8 0.000 0.000 0.000 .000 207.716 3,160.394 2,175.118 11-2029 10.288 1 0.8 0.000 0.000 0.000 .000 172.941 3,333.336 2,239.013 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 123.688 0.000 0.000 0.000 .000 3,333.336 3,333.336 2,239.013 After .000 0.000 0.000 0.000 .000 .000 3,333.3362,239.013 Total 123.688 0.000 0.000 0.000 .000 3,333.336 3,333.336 2,239.013 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 2,691.645 Gas Rate 34,738. 13,991. Mcf/mo 8.0% 0.00 0.0% 1,200. 1,200. $/w/mo Expense 78.7500 78.7500 8.00 2,402.347 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 10.00 2,239.013 NGL Rate 2,107. 860. bbls/mo Revenue 12.00 2,095.073 Cond Yield 0.0 0.0 bbl/MMcf Oil 59.0625 59.0625 NGL Yield 60.7 61.5 bbl/MMcf Gas 59.0625 59.0625 15.00 1,909.313 Gas Shrinkage 25.3 24.3 % ______________________________ ______________________ 20.00 1,662.156 Oil Severance 0.0 0.0 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 46.3 % 12 Months in first year 10.908 Year Life (11/2029) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THECONDITIONS IN THE TEXT OF THE REPORT. ASN 140 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 1 Figure 2 LILIS ENERGY, INC. -- A.G. HILL 1H 1H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________14.63 Year Life (08/2033) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 4,854. 64.8 1.20 8.0 394. Initial Final Oil - mbbls 56.7 184.7 241.4 75.000 NI 138.510 7,991.034 413.696 3,573.526 4,387.422 3,402.176 Gas - mcf/mo7,280. 0.0 0.00 8.0 592. 1,500. 1,500. 6 Gas - mmcf 43.9 277.0 320.9 100.000 WI 153.746 285.968 214.734 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 Δ 7 7 10,000. 10,000. 6 6 5 5 4 4 ♦ 3 3 ⊗ 2 2 9 9 8 8 7 7 6 6 Δ 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B A.G. HILL 1H 1H TIME (years) 06 521 PSL/MORELAN TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 02/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495339400000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 428 100. 100. Table 2 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- A.G. HILL 1H 1H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 42.2 63.2 5.2 31.616 35.093 3.884 57.693 1.860 18.357 12-2020 25.5 38.3 3.1 19.139 21.245 2.351 57.693 1.860 18.357 12-2021 18.7 28.1 2.3 14.031 15.574 1.724 57.693 1.860 18.357 12-2022 15.0 22.5 1.8 11.226 12.461 1.379 57.693 1.860 18.357 12-2023 12.6 18.8 1.5 9.420 10.456 1.157 57.693 1.860 18.357 12-2024 10.9 16.3 1.3 8.172 9.071 1.004 57.693 1.860 18.357 12-2025 9.6 14.4 1.2 7.204 7.997 .885 57.693 1.860 18.357 12-2026 8.6 12.9 1.1 6.472 7.184 .795 57.693 1.860 18.357 12-2027 7.8 11.8 1.0 5.885 6.533 .723 57.693 1.860 18.357 12-2028 7.2 10.8 .9 5.415 6.011 .665 57.693 1.860 18.357 12-2029 6.6 9.9 .8 4.968 5.515 .610 57.693 1.860 18.357 12-2030 6.1 9.1 .7 4.571 5.074 .562 57.693 1.860 18.357 12-2031 5.6 8.4 .7 4.205 4.668 .517 57.693 1.860 18.357 12-2032 5.2 7.8 .6 3.879 4.306 .477 57.693 1.860 18.357 08-2033 3.1 4.6 .4 2.306 2.560 .283 57.693 1.860 18.357 12-2034 12-2035 12-2036 12-2037 S Tot 184.7 277.0 22.7 138.510 153.746 17.017 57.693 1.860 18.357 After .0 .0 .0 .000 .000 .000 .000 .000 .000 Total 184.7 277.0 22.7 138.510 153.746 17.017 57.693 1.860 18.357 Cum 56.7 43.9 .0 Ult 241.4 320.9 22.7 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,823.991 65.274 71.301 0.000 0.000 1,960.566 94.428 49.014 10.007 12-2020 1,104.203 39.515 43.164 0.000 0.000 1,186.882 57.165 29.672 12.902 12-2021 809.472 28.968 31.643 0.000 0.000 870.083 41.906 21.752 15.573 12-2022 647.672 23.178 25.318 0.000 0.000 696.168 33.530 17.404 18.073 12-2023 543.465 19.449 21.245 0.000 0.000 584.158 28.135 14.604 20.472 12-2024 471.460 16.872 18.430 0.000 0.000 506.762 24.408 12.669 22.748 12-2025 415.625 14.874 16.247 0.000 0.000 446.745 21.517 11.169 25.056 12-2026 373.370 13.361 14.595 0.000 0.000 401.327 19.329 10.033 27.262 12-2027 339.548 12.151 13.273 0.000 0.000 364.972 17.578 9.124 29.423 12-2028 312.420 11.180 12.213 0.000 0.000 335.813 16.174 8.395 31.495 12-2029 286.62110.257 11.204 0.000 0.000 308.082 14.838 7.702 33.829 12-2030 263.707 9.437 10.309 0.000 0.000 283.452 13.652 7.086 36.285 12-2031 242.624 8.683 9.484 0.000 0.000 260.791 12.561 6.520 38.954 12-2032 223.813 8.009 8.749 0.000 0.000 240.572 11.587 6.014 41.760 08-2033 133.043 4.761 5.201 0.000 0.000 143.005 6.888 3.575 43.969 12-2034 12-2035 12-2036 12-2037 S Tot 7,991.034 285.968 312.377 0.000 0.000 8,589.379 413.696 214.734 20.397 After .000 .000 .000 0.000 0.000 .000 .000 .000 .000 Total 7,991.034 285.968 312.377 0.000 0.000 8,589.379 413.696 214.734 20.397 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 177.600 1 1.0 0.000 0.000 222.574 .000 1,416.950 1,416.950 1,359.461 12-2020 177.600 1 1.0 0.000 0.000 134.741 .000 787.705 2,204.655 2,044.826 12-2021 177.600 1 1.0 0.000 0.000 98.776 .000 530.048 2,734.703 2,463.668 12-2022 177.600 1 1.0 0.000 0.000 79.033 .000 388.601 3,123.304 2,742.712 12-2023 177.600 1 1.0 0.000 0.000 66.317 .000 297.503 3,420.806 2,936.878 12-2024 177.600 1 1.0 0.000 0.000 57.530 .000 234.5553,655.361 3,076.021 12-2025 177.600 1 1.0 0.000 0.000 50.717 .000 185.743 3,841.104 3,176.165 12-2026 177.600 1 1.0 0.000 0.000 45.561 .000 148.803 3,989.908 3,249.099 12-2027 177.600 1 1.0 0.000 0.000 41.434 .000 119.236 4,109.144 3,302.229 12-2028 177.600 1 1.0 0.000 0.000 38.123 .000 95.521 4,204.664 3,340.929 12-2029 177.600 1 1.0 0.000 0.000 34.975 .000 72.967 4,277.631 3,367.804 12-2030 177.600 1 1.0 0.000 0.000 32.179 .000 52.935 4,330.566 3,385.536 12-2031 177.600 1 1.0 0.000 0.000 29.606 .000 34.504 4,365.070 3,396.053 12-2032 177.600 1 1.0 0.000 0.000 27.311 .000 18.059 4,383.129 3,401.073 08-2033 112.015 1 1.0 0.000 0.000 16.235 .000 4.292 4,387.422 3,402.176 12-2034 12-2035 12-2036 12-2037 S Tot 2,598.415 0.000 0.000 975.111 .000 4,387.422 4,387.422 3,402.176 After .000 0.000 0.000 0.000 .000 .000 4,387.422 3,402.176 Total 2,598.415 0.000 0.000 975.111 .000 4,387.422 4,387.422 3,402.176 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 3,818.887 Oil Rate 5,050. 391. bbls/mo 64.9% 1.20 0.0% 5,800. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 3,554.570 Gas Rate 7,575. 586. Mcf/mo 0.0% 0.00 0.0% 9,000. 9,000. $/mo 10.00 3,402.176 GOR 1,500. 1,500. scf/bbl Revenue 12.00 3,265.525 NGL Rate 607. 49. bbls/mo Oil 75.0000 75.0000 NGL Yield 80.2 84.1 bbl/MMcf Gas 75.0000 75.0000 15.00 3,085.222 Gas Shrinkage 28.9 25.7 % ______________________________ ______________________ 20.00 2,836.549 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 46.7 % 12 Months in first year 14.639 Year Life (08/2033) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 428 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 2 Figure 3 LILIS ENERGY, INC. -- A.G. HILL 2H 2H PHANTOM (2ND BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________32.02 Year Life (01/2051) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 12,810. 87.8 1.20 8.0 146. Initial Final Oil - mbbls 31.2 397.5 428.8 75.000 NI 298.155 17,201.391 945.710 4,328.081 13,469.144 8,914.885Gas - mcf/mo 35,228. 0.0 0.00 8.0 402. 2,750. 2,750. 6 Gas - mmcf 66.7 1,093.2 1,160.0 100.000 WI 519.073 965.476 480.588 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. Δ 10,000. 6 6 5 5 4 4 3 3 ⊗ 2 2 9 9 8 ♦ 8 7 Δ 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : 2ND BONE SPRINGS A.G. HILL 2H 2H TIME (years) 521 PSL/MORELAND TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 06/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 4249533951 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 501 100. 100. Table 3 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- A.G. HILL 2H 2H PHANTOM (2ND BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 92.6 254.7 20.9 69.476 53.711 15.649 57.693 1.860 15.734 12-2020 46.2 127.0 10.4 34.637 70.486 7.802 57.693 1.860 15.734 12-2021 32.0 88.0 7.2 24.008 48.856 5.408 57.693 1.860 15.734 12-2022 24.9 68.5 5.6 18.690 38.033 4.210 57.693 1.860 15.734 12-2023 20.6 56.6 4.6 15.427 31.395 3.475 57.693 1.860 15.734 12-2024 17.7 48.5 4.0 13.238 26.939 2.982 57.693 1.860 15.734 12-2025 15.4 42.5 3.5 11.579 23.563 2.608 57.693 1.860 15.734 12-2026 13.8 37.9 3.1 10.341 21.044 2.329 57.693 1.860 15.734 12-2027 12.5 34.3 2.8 9.361 19.051 2.109 57.693 1.860 15.734 12-2028 11.4 31.5 2.6 8.587 17.475 1.934 57.693 1.860 15.734 12-2029 10.5 28.9 2.4 7.876 16.027 1.774 57.693 1.860 15.734 12-2030 9.7 26.6 2.2 7.246 14.746 1.632 57.693 1.860 15.734 12-2031 8.9 24.4 2.0 6.667 13.567 1.502 57.693 1.86015.734 12-2032 8.2 22.5 1.8 6.150 12.515 1.385 57.693 1.860 15.734 12-2033 7.5 20.7 1.7 5.642 11.482 1.271 57.693 1.860 15.734 12-2034 6.9 19.0 1.6 5.191 10.564 1.169 57.693 1.860 15.734 12-2035 6.4 17.5 1.4 4.776 9.719 1.076 57.693 1.860 15.734 12-2036 5.9 16.2 1.3 4.406 8.966 .992 57.693 1.860 15.734 12-2037 5.4 14.8 1.2 4.042 8.225 .910 57.693 1.860 15.734 S Tot 356.5 980.2 80.3 267.339 456.362 60.215 57.693 1.860 15.734 After 41.1 113.0 9.3 30.816 62.711 6.941 57.693 1.860 15.734 Total 397.5 1,093.2 89.5 298.155 519.073 67.156 57.693 1.860 15.734 Cum 31.2 66.7 .0 Ult 428.8 1,160.0 89.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 4,008.246 99.902 246.221 0.000 0.000 4,354.369 210.941 108.859 6.306 12-2020 1,998.287 131.103 122.752 0.000 0.000 2,252.143 111.291 56.304 6.092 12-2021 1,385.087 90.873 85.084 0.000 0.000 1,561.044 77.140 39.026 6.690 12-2022 1,078.252 70.742 66.235 0.000 0.000 1,215.229 60.051 30.381 7.246 12-2023 890.053 58.394 54.675 0.000 0.000 1,003.122 49.570 25.078 7.776 12-2024 763.725 50.106 46.915 0.000 0.000 860.746 42.534 21.519 8.278 12-2025668.030 43.828 41.036 0.000 0.000 752.894 37.205 18.822 8.785 12-2026 596.605 39.142 36.649 0.000 0.000 672.396 33.227 16.810 9.269 12-2027 540.089 35.434 33.177 0.000 0.000 608.701 30.079 15.218 9.744 12-2028 495.416 32.503 30.433 0.000 0.000 558.352 27.591 13.959 10.195 12-2029 454.367 29.810 27.911 0.000 0.000 512.088 25.305 12.802 10.688 12-2030 418.041 27.427 25.680 0.000 0.000 471.148 23.282 11.779 11.205 12-2031 384.620 25.234 23.627 0.000 0.000 433.481 21.421 10.837 11.766 12-2032 354.800 23.278 21.795 0.000 0.000 399.873 19.760 9.997 12.357 12-2033 325.505 21.356 19.995 0.000 0.000 366.856 18.128 9.171 13.043 12-2034 299.482 19.648 18.397 0.000 0.000 337.527 16.679 8.438 13.764 12-2035 275.539 18.078 16.926 0.000 0.000 310.543 15.346 7.764 14.549 12-2036 254.176 16.676 15.614 0.000 0.000 286.466 14.156 7.162 15.373 12-2037 233.190 15.299 14.325 0.000 0.000 262.813 12.987 6.570 16.330 S Tot 15,423.512 848.833 947.444 0.000 0.000 17,219.789 846.694 430.495 8.377 After 1,777.879 116.643 109.213 0.000 0.000 2,003.734 99.016 50.093 24.544 Total 17,201.391 965.476 1,056.657 0.000 0.000 19,223.524 945.710 480.588 10.105 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rdParty Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 69.600 1 1.0 0.000 0.000 489.109 .000 3,475.861 3,475.861 3,339.896 12-2020 69.600 1 1.0 0.000 0.000 243.842 .000 1,771.106 5,246.966 4,881.114 12-2021 69.600 1 1.0 0.000 0.000 169.016 .000 1,206.262 6,453.228 5,834.108 12-2022 69.600 1 1.0 0.000 0.000 131.574 .000 923.623 7,376.851 6,497.116 12-2023 69.600 1 1.0 0.000 0.000 108.609 .000 750.265 8,127.115 6,986.579 12-2024 69.600 1 1.0 0.000 0.000 93.194 .000 633.899 8,761.014 7,362.422 12-2025 69.600 1 1.0 0.000 0.000 81.517 .000 545.750 9,306.765 7,656.515 12-2026 69.600 1 1.0 0.000 0.000 72.801 .000 479.958 9,786.723 7,891.626 12-2027 69.600 1 1.0 0.000 0.000 65.905 .000 427.899 10,214.621 8,082.174 12-2028 69.600 1 1.0 0.000 0.000 60.453 .000 386.748 10,601.370 8,238.721 12-2029 69.600 1 1.0 0.000 0.000 55.444 .000 348.936 10,950.306 8,367.112 12-2030 69.600 1 1.0 0.000 0.000 51.012 .000 315.475 11,265.781 8,472.646 12-2031 69.600 1 1.0 0.000 0.000 46.933 .000 284.689 11,550.471 8,559.230 12-2032 69.600 1 1.0 0.000 0.000 43.295 .000 257.221 11,807.692 8,630.346 12-2033 69.600 1 1.0 0.0000.000 39.720 .000 230.236 12,037.928 8,688.210 12-2034 69.600 1 1.0 0.000 0.000 36.544 .000 206.265 12,244.193 8,735.341 12-2035 69.600 1 1.0 0.000 0.000 33.623 .000 184.210 12,428.404 8,773.609 12-2036 69.600 1 1.0 0.000 0.000 31.016 .000 164.532 12,592.936 8,804.682 12-2037 69.600 1 1.0 0.000 0.000 28.455 .000 145.201 12,738.137 8,829.609 S Tot 1,322.400 0.000 0.000 1,882.064 .000 12,738.137 12,738.137 8,829.609 After 906.671 0.000 0.000 216.947 .000 731.007 13,469.144 8,914.885 Total 2,229.071 0.000 0.000 2,099.010 .000 13,469.144 13,469.144 8,914.885 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 10,587.972 Oil Rate 13,831. 145. bbls/mo 87.8% 1.20 0.0% 5,800. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 9,491.012 Gas Rate 38,037. 400. Mcf/mo 0.0% 0.00 0.0% 10.00 8,914.885 GOR 2,750. 2,750. scf/bbl Revenue 12.008,428.878 NGL Rate 2,938. 33. bbls/mo Oil 75.0000 75.0000 NGL Yield 77.3 83.9 bbl/MMcf Gas 75.0000 75.0000 15.00 7,826.789 Gas Shrinkage 100.0 26.0 % ______________________________ ______________________ 20.00 7,058.711 Oil Severance 4.6 4.6 % Gas Severance 0.0 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 18.2 % 12 Months in first year 32.027 Year Life (01/2051) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 501 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 3 Figure 4 LILIS ENERGY, INC. -- ANTELOPE 1H 3RD BS 1.5 1H PHANTOM (3RD BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________24.52 Year Life (07/2043) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 5,453. 75.4 1.20 8.0 156. Initial Final Oil - mbbls 16.4 204.9 221.3 77.336 NI 158.437 9,140.685 747.853 3,671.352 8,721.9525,969.473 Gas - mcf/mo 59,979. 0.0 0.00 8.0 1,721. 11,000. 11,000. 6 Gas - mmcf 139.1 2,253.5 2,392.7 100.000 WI 1,124.423 2,091.427 336.953 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 Δ 3 3 2 2 9 9 8 8 7 7 1,000. 6 6 10,000. ♦ 5 5 ⊗ 4 Δ 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 100. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : 3RD BONE SPRINGS ANTELOPE 1H 3RD BS 1.5 1H TIME (years) 1386 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 03/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495340340000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 412 10. 100. Table 4 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- ANTELOPE 1H 3RD BS 1.5 1H PHANTOM (3RD BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 44.1 485.1 39.7 34.108 112.380 30.729 57.693 1.860 15.734 12-2020 24.6 271.0 22.2 19.056 155.119 17.169 57.693 1.860 15.734 12-2021 17.6 193.6 15.9 13.613 110.807 12.264 57.693 1.860 15.734 12-2022 13.9 152.9 12.5 10.750 87.508 9.686 57.693 1.860 15.734 12-2023 11.6 127.3 10.4 8.950 72.849 8.063 57.693 1.860 15.734 12-2024 10.0 109.8 9.0 7.722 62.861 6.958 57.693 1.860 15.734 12-2025 8.8 96.5 7.9 6.782 55.204 6.110 57.693 1.860 15.734 12-2026 7.9 86.4 7.1 6.075 49.449 5.473 57.693 1.860 15.734 12-2027 7.1 78.4 6.4 5.512 44.868 4.966 57.693 1.860 15.734 12-2028 6.5 72.0 5.9 5.064 41.225 4.563 57.693 1.860 15.734 12-2029 6.0 66.1 5.4 4.646 37.817 4.186 57.693 1.860 15.734 12-2030 5.5 60.8 5.0 4.274 34.794 3.851 57.693 1.860 15.734 12-2031 5.1 55.9 4.6 3.933 32.012 3.54357.693 1.860 15.734 12-2032 4.7 51.6 4.2 3.628 29.530 3.268 57.693 1.860 15.734 12-2033 4.3 47.3 3.9 3.328 27.092 2.999 57.693 1.860 15.734 12-2034 4.0 43.6 3.6 3.062 24.926 2.759 57.693 1.860 15.734 12-2035 3.6 40.1 3.3 2.817 22.933 2.538 57.693 1.860 15.734 12-2036 3.4 37.0 3.0 2.599 21.155 2.342 57.693 1.860 15.734 12-2037 3.1 33.9 2.8 2.384 19.409 2.148 57.693 1.860 15.734 S Tot 191.8 2,109.4 172.8 148.304 1,041.939 133.615 57.693 1.860 15.734 After 13.1 144.1 11.8 10.133 82.484 9.130 57.693 1.860 15.734 Total 204.9 2,253.5 184.6 158.437 1,124.423 142.744 57.693 1.860 15.734 Cum 16.4 139.1 .0 Ult 221.3 2,392.7 184.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,967.762 209.027 483.507 0.000 0.000 2,660.296 142.813 66.507 4.648 12-2020 1,099.413 288.521 270.142 0.000 0.000 1,658.075 92.736 41.452 4.204 12-2021 785.351 206.101 192.972 0.000 0.000 1,184.424 66.245 29.611 4.957 12-2022 620.219 162.765 152.397 0.000 0.000 935.381 52.316 23.385 5.659 12-2023 516.323 135.499 126.868 0.000 0.000 778.690 43.552 19.467 6.331 12-2024 445.531 116.921 109.473 0.000 0.000671.926 37.581 16.798 6.968 12-2025 391.263 102.680 96.139 0.000 0.000 590.081 33.003 14.752 7.613 12-2026 350.471 91.975 86.116 0.000 0.000 528.562 29.562 13.214 8.229 12-2027 318.006 83.455 78.138 0.000 0.000 479.599 26.824 11.990 8.832 12-2028 292.183 76.678 71.794 0.000 0.000 440.655 24.646 11.016 9.407 12-2029 268.033 70.340 65.860 0.000 0.000 404.233 22.609 10.106 10.046 12-2030 246.605 64.717 60.594 0.000 0.000 371.916 20.801 9.298 10.717 12-2031 226.889 59.543 55.750 0.000 0.000 342.182 19.138 8.555 11.447 12-2032 209.298 54.926 51.428 0.000 0.000 315.652 17.654 7.891 12.214 12-2033 192.017 50.391 47.181 0.000 0.000 289.590 16.197 7.240 13.104 12-2034 176.666 46.363 43.409 0.000 0.000 266.438 14.902 6.661 14.041 12-2035 162.542 42.656 39.939 0.000 0.000 245.137 13.710 6.128 15.059 12-2036 149.940 39.349 36.842 0.000 0.000 226.131 12.648 5.653 16.130 12-2037 137.560 36.100 33.800 0.000 0.000 207.460 11.603 5.187 17.373 S Tot 8,556.073 1,938.007 2,102.349 0.000 0.000 12,596.429 698.540 314.911 7.385 After 584.612 153.420 143.647 0.000 0.000 881.680 49.312 22.042 21.883 Total 9,140.685 2,091.427 2,245.997 0.000 0.000 13,478.109 747.853 336.953 8.370 (21) (22) (23) (24) (25) (26) (27) (28)(29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 105.600 1 1.0 0.000 0.000 232.864 .000 2,112.512 2,112.512 2,023.190 12-2020 105.600 1 1.0 0.000 0.000 130.104 .000 1,288.184 3,400.696 3,143.914 12-2021 105.600 1 1.0 0.000 0.000 92.938 .000 890.031 4,290.726 3,847.045 12-2022 105.600 1 1.0 0.000 0.000 73.396 .000 680.684 4,971.411 4,335.674 12-2023 105.600 1 1.0 0.000 0.000 61.101 .000 548.969 5,520.380 4,693.833 12-2024 105.600 1 1.0 0.000 0.000 52.724 .000 459.223 5,979.603 4,966.130 12-2025 105.600 1 1.0 0.000 0.000 46.302 .000 390.424 6,370.028 5,176.536 12-2026 105.600 1 1.0 0.000 0.000 41.475 .000 338.711 6,708.739 5,342.469 12-2027 105.600 1 1.0 0.000 0.000 37.633 .000 297.552 7,006.291 5,474.983 12-2028 105.600 1 1.0 0.000 0.000 34.577 .000 264.816 7,271.107 5,582.187 12-2029 105.600 1 1.0 0.000 0.000 31.719 .000 234.200 7,505.307 5,668.370 12-2030 105.600 1 1.0 0.000 0.000 29.183 .000 207.034 7,712.340 5,737.637 12-2031 105.600 1 1.0 0.000 0.000 26.850 .000 182.039 7,894.380 5,793.010 12-2032 105.600 1 1.0 0.000 0.000 24.768 .000 159.7388,054.118 5,837.184 12-2033 105.600 1 1.0 0.000 0.000 22.723 .000 137.830 8,191.948 5,871.831 12-2034 105.600 1 1.0 0.000 0.000 20.907 .000 118.369 8,310.317 5,898.884 12-2035 105.600 1 1.0 0.000 0.000 19.235 .000 100.463 8,410.780 5,919.761 12-2036 105.600 1 1.0 0.000 0.000 17.744 .000 84.487 8,495.266 5,935.724 12-2037 105.600 1 1.0 0.000 0.000 16.279 .000 68.792 8,564.058 5,947.539 S Tot 2,006.400 0.000 0.000 1,012.520 .000 8,564.058 8,564.058 5,947.539 After 583.249 0.000 0.000 69.183 .000 157.894 8,721.952 5,969.473 Total 2,589.649 0.000 0.000 1,081.703 .000 8,721.952 8,721.952 5,969.473 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 7,034.153 Oil Rate 5,746. 155. bbls/mo 75.4% 1.20 0.0% 5,800. 5,716. $/w/mo Expense 100.0000 100.0000 8.00 6,343.493 Gas Rate 63,214. 1,710. Mcf/mo 0.0% 0.00 0.0% 3,000. 2,956. $/mo 10.005,969.473 GOR 11,000. 11,000. scf/bbl Revenue 12.00 5,648.002 NGL Rate 5,003. 138. bbls/mo Oil 77.3363 77.3363 NGL Yield 79.1 81.2 bbl/MMcf Gas 77.3363 77.3363 15.00 5,242.516 Gas Shrinkage 100.0 25.6 % ______________________________ ______________________ 20.00 4,714.717 Oil Severance 4.6 4.6 % Gas Severance 0.0 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 25.9 % 12 Months in first year 24.528 Year Life (07/2043) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 412 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 4 Figure 5 LILIS ENERGY, INC. -- AXIS 2H (WAS MEERKAT 1H) 1H PHANTOM (WOLFCAMP XY) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________33.91 Year Life (11/2052) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 5,469. 54.2 1.20 8.0 110. Initial Final Oil - mbbls 70.6 305.9 376.6 75.484 NI 230.942 13,323.664 1,077.577 3,975.715 13,938.2828,536.933 Gas - mcf/mo 54,690. 0.0 0.00 8.0 1,099. 10,000. 10,000. 6 Gas - mmcf 437.2 3,059.4 3,496.6 100.000 WI 1,708.967 3,178.679 486.963 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 100,000. 6 6 5 5 4 ♦ 4 3 ⊗ 3 Δ 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP XY AXIS 2H (WAS MEERKAT 1H) 1H TIME (years) 1324 PSL/BECKHAM TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 02/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495339910000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 435 100. 1,000. Table 5 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- AXIS 2H (WAS MEERKAT 1H) 1H PHANTOM (WOLFCAMP XY) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 50.5 505.0 41.4 38.120 282.085 31.222 57.693 1.860 15.734 12-2020 33.0 329.6 27.0 24.880 184.111 20.378 57.693 1.860 15.734 12-2021 24.9 248.6 20.4 18.765 138.859 15.369 57.693 1.860 15.734 12-2022 20.2 201.9 16.5 15.243 112.797 12.485 57.693 1.860 15.734 12-2023 17.1 171.1 14.0 12.912 95.547 10.575 57.693 1.860 15.734 12-2024 14.9 149.4 12.2 11.274 83.426 9.234 57.693 1.860 15.734 12-2025 13.2 132.3 10.8 9.986 73.893 8.179 57.693 1.860 15.734 12-2026 11.9 119.3 9.8 9.003 66.619 7.374 57.693 1.860 15.734 12-2027 10.9 108.8 8.9 8.210 60.755 6.725 57.693 1.860 15.734 12-2028 10.0 100.2 8.2 7.565 55.978 6.196 57.693 1.860 15.734 12-2029 9.2 91.9 7.5 6.940 51.356 5.684 57.693 1.860 15.734 12-2030 8.5 84.6 6.9 6.385 47.250 5.230 57.693 1.860 15.734 12-2031 7.8 77.8 6.45.875 43.472 4.812 57.693 1.860 15.734 12-2032 7.2 71.8 5.9 5.419 40.102 4.439 57.693 1.860 15.734 12-2033 6.6 65.9 5.4 4.972 36.791 4.072 57.693 1.860 15.734 12-2034 6.1 60.6 5.0 4.574 33.850 3.747 57.693 1.860 15.734 12-2035 5.6 55.8 4.6 4.209 31.143 3.447 57.693 1.860 15.734 12-2036 5.1 51.4 4.2 3.882 28.729 3.180 57.693 1.860 15.734 12-2037 4.7 47.2 3.9 3.562 26.357 2.917 57.693 1.860 15.734 S Tot 267.3 2,673.0 218.9 201.773 1,493.120 165.262 57.693 1.860 15.734 After 38.6 386.4 31.6 29.169 215.848 23.890 57.693 1.860 15.734 Total 305.9 3,059.4 250.6 230.942 1,708.967 189.152 57.693 1.860 15.734 Cum 70.6 437.2 .0 Ult 376.6 3,496.6 250.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,199.229 524.679 491.256 0.000 0.000 3,215.164 177.867 80.379 3.189 12-2020 1,435.389 342.446 320.632 0.000 0.000 2,098.468 116.090 52.462 3.541 12-2021 1,082.589 258.278 241.825 0.000 0.000 1,582.692 87.556 39.567 3.870 12-2022 879.402 209.802 196.438 0.000 0.000 1,285.642 71.123 32.141 4.180 12-2023 744.914 177.717 166.396 0.000 0.000 1,089.027 60.246 27.226 4.478 12-2024 650.416155.172 145.288 0.000 0.000 950.876 52.604 23.772 4.761 12-2025 576.096 137.441 128.686 0.000 0.000 842.224 46.593 21.056 5.049 12-2026 519.384 123.911 116.018 0.000 0.000 759.313 42.006 18.983 5.324 12-2027 473.668 113.005 105.806 0.000 0.000 692.479 38.309 17.312 5.594 12-2028 436.420 104.118 97.486 0.000 0.000 638.024 35.296 15.951 5.856 12-2029 400.386 95.522 89.437 0.000 0.000 585.344 32.382 14.634 6.155 12-2030 368.376 87.885 82.287 0.000 0.000 538.547 29.793 13.464 6.470 12-2031 338.925 80.859 75.708 0.000 0.000 495.492 27.411 12.387 6.813 12-2032 312.648 74.590 69.838 0.000 0.000 457.076 25.286 11.427 7.173 12-2033 286.834 68.431 64.072 0.000 0.000 419.337 23.198 10.483 7.591 12-2034 263.902 62.960 58.950 0.000 0.000 385.812 21.344 9.645 8.031 12-2035 242.804 57.927 54.237 0.000 0.000 354.967 19.637 8.874 8.509 12-2036 223.979 53.436 50.032 0.000 0.000 327.446 18.115 8.186 9.011 12-2037 205.486 49.024 45.901 0.000 0.000 300.410 16.619 7.510 9.595 S Tot 11,640.845 2,777.203 2,600.293 0.000 0.000 17,018.341 941.476 425.459 4.899 After 1,682.818 401.477 375.902 0.000 0.000 2,460.197 136.101 61.505 15.395 Total 13,323.664 3,178.679 2,976.195 0.000 0.000 19,478.538 1,077.577486.963 6.225 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 69.600 1 1.0 0.000 0.000 266.639 .000 2,620.679 2,620.679 2,510.622 12-2020 69.600 1 1.0 0.000 0.000 174.030 .000 1,686.287 4,306.966 3,976.597 12-2021 69.600 1 1.0 0.000 0.000 131.255 .000 1,254.713 5,561.679 4,967.412 12-2022 69.600 1 1.0 0.000 0.000 106.621 .000 1,006.157 6,567.836 5,689.466 12-2023 69.600 1 1.0 0.000 0.000 90.315 .000 841.640 7,409.476 6,238.439 12-2024 69.600 1 1.0 0.000 0.000 78.858 .000 726.043 8,135.519 6,668.855 12-2025 69.600 1 1.0 0.000 0.000 69.847 .000 635.128 8,770.647 7,011.074 12-2026 69.600 1 1.0 0.000 0.000 62.971 .000 565.753 9,336.400 7,288.189 12-2027 69.600 1 1.0 0.000 0.000 57.429 .000 509.830 9,846.230 7,515.205 12-2028 69.600 1 1.0 0.000 0.000 52.912 .000 464.265 10,310.495 7,703.124 12-2029 69.600 1 1.0 0.000 0.000 48.544 .000 420.185 10,730.680 7,857.728 12-2030 69.600 1 1.0 0.000 0.000 44.663 .000 381.028 11,111.708 7,985.189 12-2031 69.600 1 1.0 0.000 0.000 41.092 .000 345.001 11,456.709 8,090.114 12-2032 69.600 1 1.0 0.0000.000 37.906 .000 312.857 11,769.566 8,176.610 12-2033 69.600 1 1.0 0.000 0.000 34.776 .000 281.279 12,050.845 8,247.301 12-2034 69.600 1 1.0 0.000 0.000 31.996 .000 253.227 12,304.072 8,305.161 12-2035 69.600 1 1.0 0.000 0.000 29.438 .000 227.418 12,531.489 8,352.403 12-2036 69.600 1 1.0 0.000 0.000 27.156 .000 204.390 12,735.879 8,391.001 12-2037 69.600 1 1.0 0.000 0.000 24.914 .000 181.767 12,917.646 8,422.204 S Tot 1,322.400 0.000 0.000 1,411.361 .000 12,917.646 12,917.646 8,422.204 After 1,037.926 0.000 0.000 204.028 .000 1,020.636 13,938.282 8,536.933 Total 2,360.326 0.000 0.000 1,615.389 .000 13,938.282 13,938.282 8,536.933 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 10,478.540 Oil Rate 5,635. 108. bbls/mo 54.3% 1.20 0.0% 5,800. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 9,199.069 Gas Rate 56,358.1,088. Mcf/mo 0.0% 0.00 0.0% 10.00 8,536.933 GOR 10,000. 10,000. scf/bbl Revenue 12.00 7,984.151 NGL Rate 4,562. 91. bbls/mo Oil 75.4847 75.4847 NGL Yield 80.9 84.3 bbl/MMcf Gas 75.4847 75.4847 15.00 7,307.266 Gas Shrinkage 28.2 25.4 % ______________________________ ______________________ 20.00 6,457.794 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 17.8 % 12 Months in first year 33.914 Year Life (11/2052) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 435 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 5 Figure 6 IMPETRO OPERATING LLC -- BISON 1H 1H PHANTOM (WOLFCAMP) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________27.61 Year Life (08/2046) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 4,350. 49.9 1.20 8.0 161. Initial Final Oil - mbbls 348.3 251.6 599.9 68.777 NI 173.076 10,098.700 603.836 2,980.893 8,049.478 5,154.917 Gas -mcf/mo 15,660. 0.0 0.00 8.0 579. 3,600. 3,600. 6 Gas - mmcf 758.0 905.9 1,664.0 91.206 WI 504.689 907.431 298.313 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 ⊗ 3 3 2 2 9 ⊗ 9 8 ♦ 8 7 7 10,000. 10,000. 6 ∇ 6 5 5 ♦ 4 4 3 3 Δ 2 2 9 9 8 8 7 7 6 6 5 5 4 4 ∇ ♦ 1,000. 3 3 1,000. ♦ ♦ ♦ ⊗ Δ ⊗ 2 2 ∇ ⊗ ⊗ ∇ ∇ ∇ 05 06 07 08 09 10∇ 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B BISON 1H 1H TIME (years) 1396 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 07/1997 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495310110200 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 331 100. 100. Table 6 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- BISON 1H 1H PHANTOM \(WOLFCAMP\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 41.1 148.0 13.4 28.282 82.470 9.236 58.348 1.798 16.390 12-2020 27.7 99.6 9.0 19.033 55.501 6.216 58.348 1.798 16.390 12-2021 21.1 76.1 6.9 14.541 42.402 4.749 58.348 1.798 16.390 12-2022 17.3 62.3 5.6 11.896 34.690 3.885 58.348 1.798 16.390 12-2023 14.7 53.0 4.8 10.123 29.519 3.306 58.348 1.798 16.390 12-2024 12.9 46.4 4.2 8.867 25.856 2.896 58.348 1.798 16.390 12-2025 11.4 41.2 3.7 7.872 22.955 2.571 58.348 1.798 16.390 12-2026 10.3 37.2 3.4 7.110 20.732 2.322 58.348 1.798 16.390 12-2027 9.4 34.0 3.1 6.493 18.934 2.120 58.348 1.798 16.390 12-2028 8.7 31.3 2.8 5.985 17.453 1.955 58.348 1.798 16.390 12-2029 8.0 28.7 2.6 5.491 16.012 1.793 58.348 1.798 16.390 12-2030 7.3 26.4 2.4 5.052 14.732 1.650 58.348 1.798 16.390 12-2031 6.8 24.3 2.2 4.648 13.554 1.518 58.348 1.798 16.390 12-2032 6.222.4 2.0 4.288 12.503 1.400 58.348 1.798 16.390 12-2033 5.7 20.6 1.9 3.934 11.471 1.285 58.348 1.798 16.390 12-2034 5.3 18.9 1.7 3.619 10.554 1.182 58.348 1.798 16.390 12-2035 4.8 17.4 1.6 3.330 9.710 1.087 58.348 1.798 16.390 12-2036 4.5 16.1 1.5 3.072 8.957 1.003 58.348 1.798 16.390 12-2037 4.1 14.8 1.3 2.818 8.218 .920 58.348 1.798 16.390 S Tot 227.5 818.9 74.3 156.455 456.224 51.094 58.348 1.798 16.390 After 24.2 87.0 7.9 16.621 48.465 5.428 58.348 1.798 16.390 Total 251.6 905.9 82.2 173.076 504.689 56.522 58.348 1.798 16.390 Cum 348.3 758.0 .0 Ult 599.9 1,664.0 82.2 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,650.210 148.282 151.380 0.000 0.000 1,949.871 98.672 48.747 4.460 12-2020 1,110.570 99.792 101.877 0.000 0.000 1,312.239 66.405 32.806 5.246 12-2021 848.443 76.238 77.831 0.000 0.000 1,002.512 50.731 25.063 5.989 12-2022 694.135 62.372 63.675 0.000 0.000 820.183 41.505 20.505 6.689 12-2023 590.665 53.075 54.184 0.000 0.000 697.923 35.318 17.448 7.362 12-2024 517.371 46.489 47.460 0.000 0.000 611.321 30.935 15.283 8.003 12-2025 459.323 41.273 42.135 0.0000.000 542.732 27.465 13.568 8.655 12-2026 414.846 37.277 38.055 0.000 0.000 490.178 24.805 12.254 9.278 12-2027 378.862 34.043 34.754 0.000 0.000 447.659 22.653 11.191 9.889 12-2028 349.233 31.381 32.036 0.000 0.000 412.650 20.882 10.316 10.487 12-2029 320.398 28.790 29.391 0.000 0.000 378.579 19.158 9.464 11.175 12-2030 294.783 26.488 27.041 0.000 0.000 348.312 17.626 8.708 11.899 12-2031 271.216 24.370 24.880 0.000 0.000 320.466 16.217 8.012 12.686 12-2032 250.188 22.481 22.951 0.000 0.000 295.620 14.960 7.390 13.514 12-2033 229.531 20.625 21.056 0.000 0.000 271.211 13.724 6.780 14.474 12-2034 211.180 18.976 19.372 0.000 0.000 249.528 12.627 6.238 15.485 12-2035 194.297 17.459 17.824 0.000 0.000 229.579 11.618 5.739 16.583 12-2036 179.233 16.105 16.442 0.000 0.000 211.780 10.717 5.294 17.738 12-2037 164.434 14.775 15.084 0.000 0.000 194.294 9.832 4.857 19.079 S Tot 9,128.918 820.290 837.428 0.000 0.000 10,786.636 545.850 269.666 8.399 After 969.782 87.141 88.962 0.000 0.000 1,145.884 57.987 28.647 26.544 Total 10,098.700 907.431 926.390 0.000 0.000 11,932.520 603.836 298.313 10.142 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash FlowEnd Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 77.708 1 0.9 0.000 0.000 136.519 .000 1,588.226 1,588.226 1,521.072 12-2020 77.708 1 0.9 0.000 0.000 91.875 .000 1,043.445 2,631.671 2,428.133 12-2021 77.708 1 0.9 0.000 0.000 70.190 .000 778.820 3,410.491 3,043.144 12-2022 77.708 1 0.9 0.000 0.000 57.424 .000 623.042 4,033.533 3,490.270 12-2023 77.708 1 0.9 0.000 0.000 48.865 .000 518.585 4,552.118 3,828.536 12-2024 77.708 1 0.9 0.000 0.000 42.801 .000 444.593 4,996.711 4,092.114 12-2025 77.708 1 0.9 0.000 0.000 37.999 .000 385.992 5,382.703 4,300.102 12-2026 77.708 1 0.9 0.000 0.000 34.319 .000 341.091 5,723.795 4,467.181 12-2027 77.708 1 0.9 0.000 0.000 31.343 .000 304.764 6,028.559 4,602.893 12-2028 77.708 1 0.9 0.000 0.000 28.891 .000 274.853 6,303.412 4,714.152 12-2029 77.708 1 0.9 0.000 0.000 26.506 .000 245.743 6,549.155 4,804.577 12-2030 77.708 1 0.9 0.000 0.000 24.387 .000 219.884 6,769.039 4,878.138 12-2031 77.708 1 0.9 0.000 0.000 22.437 .000 196.092 6,965.131 4,937.781 12-2032 77.708 1 0.9 0.000 0.000 20.698 .000 174.864 7,139.995 4,986.132 12-2033 77.708 1 0.9 0.000 0.000 18.989 .000 154.010 7,294.005 5,024.842 12-203477.708 1 0.9 0.000 0.000 17.471 .000 135.485 7,429.490 5,055.803 12-2035 77.708 1 0.9 0.000 0.000 16.074 .000 118.441 7,547.931 5,080.411 12-2036 77.708 1 0.9 0.000 0.000 14.828 .000 103.233 7,651.164 5,099.910 12-2037 77.708 1 0.9 0.000 0.000 13.603 .000 88.293 7,739.457 5,115.071 S Tot 1,476.446 0.000 0.000 755.218 .000 7,739.457 7,739.457 5,115.071 After 669.002 0.000 0.000 80.228 .000 310.021 8,049.478 5,154.917 Total 2,145.447 0.000 0.000 835.446 .000 8,049.478 8,049.478 5,154.917 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 6,239.722 Oil Rate 4,467. 159. bbls/mo 49.9% 1.20 0.0% 7,099. 7,099. $/w/mo Expense 91.2062 91.2062 8.00 5,530.734 Gas Rate 16,082. 575. Mcf/mo 0.0% 0.00 0.0% 10.00 5,154.917 GOR 3,600. 3,600. scf/bbl Revenue 12.00 4,836.577 NGL Rate 1,446. 53. bbls/mo Oil 68.7771 68.7771 NGL Yield 90.0 93.0 bbl/MMcf Gas68.7771 68.7771 15.00 4,441.301 Gas Shrinkage 21.1 18.6 % ______________________________ ______________________ 20.00 3,937.412 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 19.4 % 12 Months in first year 27.617 Year Life (08/2046) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 331 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 6 Figure 7 LILIS ENERGY, INC. -- EAST AXIS 2H 1.5 PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________38.31 Year Life (04/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 16,019. 75.7 1.20 7.8 145. Initial Final Oil - mbbls 12.2 643.5 655.7 75.000 NI 482.593 27,842.170 1,574.799 6,063.767 23,269.598 14,488.548Gas - mcf/mo 48,056. 0.0 0.00 7.8 435. 3,000. 3,000. 6 Gas - mmcf 36.6 1,930.4 1,967.0 100.000 WI 1,071.358 1,992.725 792.517 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP A EAST AXIS 2H 1.5 TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 19 21 API: 42495339910000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 531 100. 100. Table 7 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- EAST AXIS 2H 1.5 PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 129.3 387.8 31.8 96.958 215.246 23.824 57.693 1.860 15.734 12-2020 72.1 216.2 17.7 54.042 119.973 13.279 57.693 1.860 15.734 12-2021 51.4 154.3 12.6 38.577 85.640 9.479 57.693 1.860 15.734 12-2022 40.6 121.8 10.0 30.455 67.609 7.483 57.693 1.860 15.734 12-2023 33.8 101.4 8.3 25.348 56.272 6.228 57.693 1.860 15.734 12-2024 29.2 87.5 7.2 21.869 48.550 5.374 57.693 1.860 15.734 12-2025 25.6 76.8 6.3 19.204 42.632 4.719 57.693 1.860 15.734 12-2026 22.9 68.8 5.6 17.200 38.184 4.226 57.693 1.860 15.734 12-2027 20.8 62.4 5.1 15.606 34.645 3.835 57.693 1.860 15.734 12-2028 19.1 57.4 4.7 14.338 31.831 3.523 57.693 1.860 15.734 12-2029 17.5 52.6 4.3 13.153 29.200 3.232 57.693 1.860 15.734 12-2030 16.1 48.4 4.0 12.101 26.865 2.974 57.693 1.860 15.734 12-2031 14.8 44.5 3.6 11.134 24.7172.736 57.693 1.860 15.734 12-2032 13.7 41.1 3.4 10.271 22.801 2.524 57.693 1.860 15.734 12-2033 12.6 37.7 3.1 9.423 20.918 2.315 57.693 1.860 15.734 12-2034 11.6 34.7 2.8 8.669 19.246 2.130 57.693 1.860 15.734 12-2035 10.6 31.9 2.6 7.976 17.707 1.960 57.693 1.860 15.734 12-2036 9.8 29.4 2.4 7.358 16.335 1.808 57.693 1.860 15.734 12-2037 9.0 27.0 2.2 6.750 14.986 1.659 57.693 1.860 15.734 S Tot 560.6 1,681.7 137.7 420.432 933.358 103.306 57.693 1.860 15.734 After 82.9 248.6 20.4 62.162 137.999 15.274 57.693 1.860 15.734 Total 643.5 1,930.4 158.1 482.593 1,071.358 118.580 57.693 1.860 15.734 Cum 12.2 36.6 .0 Ult 655.7 1,967.0 158.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 5,593.758 400.357 374.854 0.000 0.000 6,368.969 316.392 159.224 5.071 12-2020 3,117.819 223.149 208.934 0.000 0.000 3,549.903 176.349 88.748 5.444 12-2021 2,225.590 159.290 149.143 0.000 0.000 2,534.024 125.883 63.351 5.782 12-2022 1,757.014 125.753 117.743 0.000 0.000 2,000.510 99.380 50.013 6.096 12-2023 1,462.381 104.666 97.999 0.000 0.000 1,665.045 82.715 41.626 6.397 12-2024 1,261.702 90.30384.550 0.000 0.000 1,436.556 71.364 35.914 6.683 12-2025 1,107.909 79.295 74.244 0.000 0.000 1,261.449 62.665 31.536 6.971 12-2026 992.329 71.023 66.499 0.000 0.000 1,129.851 56.128 28.246 7.247 12-2027 900.352 64.440 60.335 0.000 0.000 1,025.128 50.925 25.628 7.518 12-2028 827.210 59.205 55.434 0.000 0.000 941.850 46.788 23.546 7.775 12-2029 758.836 54.312 50.852 0.000 0.000 863.999 42.921 21.600 8.061 12-2030 698.169 49.969 46.786 0.000 0.000 794.924 39.490 19.873 8.362 12-2031 642.352 45.975 43.046 0.000 0.000 731.372 36.332 18.284 8.689 12-2032 592.550 42.410 39.709 0.000 0.000 674.668 33.516 16.867 9.032 12-2033 543.625 38.908 36.430 0.000 0.000 618.963 30.748 15.474 9.431 12-2034 500.163 35.798 33.517 0.000 0.000 569.478 28.290 14.237 9.850 12-2035 460.176 32.936 30.838 0.000 0.000 523.950 26.028 13.099 10.306 12-2036 424.499 30.382 28.447 0.000 0.000 483.328 24.010 12.083 10.786 12-2037 389.449 27.874 26.098 0.000 0.000 443.421 22.028 11.086 11.342 S Tot 24,255.882 1,736.047 1,625.459 0.000 0.000 27,617.388 1,371.953 690.435 6.658 After 3,586.288 256.678 240.328 0.000 0.000 4,083.294 202.846 102.082 18.735 Total 27,842.170 1,992.725 1,865.787 0.000 0.000 31,700.682 1,574.799792.517 8.214 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 69.600 1 1.0 0.000 0.000 682.582 .000 5,141.171 5,141.171 4,935.432 12-2020 69.600 1 1.0 0.000 0.000 380.454 .000 2,834.753 7,975.924 7,401.258 12-2021 69.600 1 1.0 0.000 0.000 271.579 .000 2,003.612 9,979.535 8,983.877 12-2022 69.600 1 1.0 0.000 0.000 214.401 .000 1,567.117 11,546.652 10,108.660 12-2023 69.600 1 1.0 0.000 0.000 178.448 .000 1,292.656 12,839.309 10,951.891 12-2024 69.600 1 1.0 0.000 0.000 153.960 .000 1,105.718 13,945.026 11,607.423 12-2025 69.600 1 1.0 0.000 0.000 135.193 .000 962.454 14,907.480 12,126.031 12-2026 69.600 1 1.0 0.000 0.000 121.090 .000 854.787 15,762.268 12,544.730 12-2027 69.600 1 1.0 0.000 0.000 109.866 .000 769.108 16,531.376 12,887.204 12-2028 69.600 1 1.0 0.000 0.000 100.941 .000 700.974 17,232.350 13,170.927 12-2029 69.600 1 1.0 0.000 0.000 92.597 .000 637.281 17,869.630 13,405.404 12-2030 69.600 1 1.0 0.000 0.000 85.194 .000 580.767 18,450.398 13,599.676 12-2031 69.600 1 1.0 0.000 0.000 78.383 .000 528.772 18,979.17013,760.486 12-2032 69.600 1 1.0 0.000 0.000 72.306 .000 482.380 19,461.550 13,893.845 12-2033 69.600 1 1.0 0.000 0.000 66.336 .000 436.804 19,898.354 14,003.618 12-2034 69.600 1 1.0 0.000 0.000 61.033 .000 396.319 20,294.672 14,094.169 12-2035 69.600 1 1.0 0.000 0.000 56.153 .000 359.070 20,653.742 14,168.756 12-2036 69.600 1 1.0 0.000 0.000 51.800 .000 325.835 20,979.576 14,230.284 12-2037 69.600 1 1.0 0.000 0.000 47.523 .000 293.184 21,272.761 14,280.610 S Tot 1,322.400 0.000 0.000 2,959.839 .000 21,272.761 21,272.761 14,280.610 After 1,343.909 0.000 0.000 437.619 .000 1,996.838 23,269.598 14,488.548 Total 2,666.309 0.000 0.000 3,397.458 .000 23,269.598 23,269.598 14,488.548 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 17,586.931 Oil Rate 16,889. 143. bbls/mo 75.7% 1.20 0.0% 5,800. 5,800. $/w/mo Expense100.0000 100.0000 8.00 15,539.596 Gas Rate 50,669. 431. Mcf/mo 0.0% 0.00 0.0% 10.00 14,488.548 GOR 3,000. 3,000. scf/bbl Revenue 12.00 13,614.195 NGL Rate 4,008. 36. bbls/mo Oil 75.0000 75.0000 NGL Yield 79.1 84.2 bbl/MMcf Gas 75.0000 75.0000 15.00 12,545.776 Gas Shrinkage 29.8 25.5 % ______________________________ ______________________ 20.00 11,204.976 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 18.2 % 12 Months in first year 38.313 Year Life (04/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 531 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 7 Figure 8 IMPETRO OPERATING LLC -- GRIZZLY 1H 1H PHANTOM (WOLFCAMP) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________36.63 Year Life (08/2055) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 3,140. 33.5 1.20 8.0 78. Initial Final Oil - mbbls 139.3 253.1 392.4 64.859 NI 164.158 9,578.338 702.241 3,187.792 8,824.530 5,033.986 Gas -mcf/mo 21,979. 0.0 0.00 8.0 548. 7,000. 7,000. 6 Gas - mmcf 666.4 1,771.7 2,438.1 89.465 WI 907.792 1,744.776 326.014 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ⊗ ⊗ 2 2 9 9 8 8 7 7 10,000. 10,000. 6 6 5 ♦ 5 4 4 3 ♦ 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B GRIZZLY 1H 1H TIME (years) 1396 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 02/2017 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495319790100 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 332 100. 100. Table 8 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- GRIZZLY 1H 1H PHANTOM \(WOLFCAMP\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 32.2 225.6 20.6 20.899 115.572 13.341 58.348 1.922 16.390 12-2020 24.4 170.6 15.6 15.806 87.407 10.089 58.348 1.922 16.390 12-2021 19.7 137.9 12.6 12.781 70.680 8.159 58.348 1.922 16.390 12-2022 16.7 116.7 10.6 10.817 59.816 6.905 58.348 1.922 16.390 12-2023 14.5 101.6 9.3 9.414 52.060 6.009 58.348 1.922 16.390 12-2024 12.9 90.4 8.2 8.380 46.343 5.349 58.348 1.922 16.390 12-2025 11.6 81.3 7.4 7.531 41.645 4.807 58.348 1.922 16.390 12-2026 10.6 74.1 6.8 6.866 37.969 4.383 58.348 1.922 16.390 12-2027 9.7 68.1 6.2 6.309 34.888 4.027 58.348 1.922 16.390 12-2028 9.0 62.8 5.7 5.820 32.183 3.715 58.348 1.922 16.390 12-2029 8.2 57.6 5.3 5.339 29.525 3.408 58.348 1.922 16.390 12-2030 7.6 53.0 4.8 4.912 27.165 3.136 58.348 1.922 16.390 12-2031 7.0 48.8 4.4 4.520 24.993 2.885 58.348 1.92216.390 12-2032 6.4 45.0 4.1 4.169 23.055 2.661 58.348 1.922 16.390 12-2033 5.9 41.3 3.8 3.825 21.152 2.442 58.348 1.922 16.390 12-2034 5.4 38.0 3.5 3.519 19.461 2.246 58.348 1.922 16.390 12-2035 5.0 34.9 3.2 3.238 17.905 2.067 58.348 1.922 16.390 12-2036 4.6 32.2 2.9 2.987 16.517 1.907 58.348 1.922 16.390 12-2037 4.2 29.6 2.7 2.740 15.153 1.749 58.348 1.922 16.390 S Tot 215.7 1,509.6 137.7 139.871 773.488 89.284 58.348 1.922 16.390 After 37.4 262.1 23.9 24.287 134.304 15.503 58.348 1.922 16.390 Total 253.1 1,771.7 161.6 164.158 907.792 104.787 58.348 1.922 16.390 Cum 139.3 666.4 .0 Ult 392.4 2,438.1 161.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,219.427 222.129 218.652 0.000 0.000 1,660.208 89.403 41.505 5.492 12-2020 922.251 167.996 165.366 0.000 0.000 1,255.613 67.615 31.390 5.740 12-2021 745.760 135.847 133.720 0.000 0.000 1,015.327 54.676 25.383 5.981 12-2022 631.129 114.966 113.166 0.000 0.000 859.261 46.272 21.482 6.209 12-2023 549.302 100.060 98.494 0.000 0.000 747.856 40.272 18.696 6.431 12-2024 488.973 89.071 87.676 0.000 0.000 665.720 35.849 16.6436.642 12-2025 439.407 80.042 78.789 0.000 0.000 598.238 32.215 14.956 6.858 12-2026 400.618 72.976 71.834 0.000 0.000 545.428 29.372 13.636 7.065 12-2027 368.107 67.054 66.004 0.000 0.000 501.165 26.988 12.529 7.272 12-2028 339.567 61.855 60.887 0.000 0.000 462.309 24.896 11.558 7.486 12-2029 311.530 56.748 55.860 0.000 0.000 424.138 22.840 10.603 7.735 12-2030 286.624 52.211 51.394 0.000 0.000 390.229 21.014 9.756 7.996 12-2031 263.709 48.037 47.285 0.000 0.000 359.031 19.334 8.976 8.281 12-2032 243.264 44.313 43.619 0.000 0.000 331.195 17.835 8.280 8.580 12-2033 223.178 40.654 40.017 0.000 0.000 303.849 16.362 7.596 8.927 12-2034 205.336 37.404 36.818 0.000 0.000 279.557 15.054 6.989 9.292 12-2035 188.919 34.413 33.875 0.000 0.000 257.207 13.851 6.430 9.689 12-2036 174.272 31.745 31.248 0.000 0.000 237.266 12.777 5.932 10.107 12-2037 159.883 29.124 28.668 0.000 0.000 217.675 11.722 5.442 10.591 S Tot 8,161.258 1,486.643 1,463.372 0.000 0.000 11,111.273 598.347 277.782 6.907 After 1,417.079 258.133 254.092 0.000 0.000 1,929.305 103.894 48.233 16.395 Total 9,578.338 1,744.776 1,717.464 0.000 0.000 13,040.578 702.241 326.014 8.311 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 37.575 1 0.9 0.000 0.000 230.621 .000 1,261.103 1,261.103 1,206.047 12-2020 37.575 1 0.9 0.000 0.000 174.419 .000 944.613 2,205.717 2,026.628 12-2021 37.575 1 0.9 0.000 0.000 141.040 .000 756.653 2,962.369 2,623.881 12-2022 37.575 1 0.9 0.000 0.000 119.361 .000 634.571 3,596.941 3,079.144 12-2023 37.575 1 0.9 0.000 0.000 103.886 .000 547.426 4,144.367 3,436.139 12-2024 37.575 1 0.9 0.000 0.000 92.476 .000 483.176 4,627.543 3,722.533 12-2025 37.575 1 0.9 0.000 0.000 83.102 .000 430.389 5,057.933 3,954.406 12-2026 37.575 1 0.9 0.000 0.000 75.766 .000 389.079 5,447.012 4,144.964 12-2027 37.575 1 0.9 0.000 0.000 69.617 .000 354.455 5,801.467 4,302.788 12-2028 37.575 1 0.9 0.000 0.000 64.220 .000 324.061 6,125.528 4,433.955 12-2029 37.575 1 0.9 0.000 0.000 58.917 .000 294.201 6,419.729 4,542.202 12-2030 37.575 1 0.9 0.000 0.000 54.207 .000 267.677 6,687.406 4,631.743 12-2031 37.575 1 0.9 0.000 0.000 49.873 .000 243.273 6,930.679 4,705.728 12-2032 37.575 1 0.9 0.000 0.000 46.007 .000 221.498 7,152.177 4,766.964 12-2033 37.575 1 0.9 0.000 0.00042.208 .000 200.107 7,352.284 4,817.254 12-2034 37.575 1 0.9 0.000 0.000 38.834 .000 181.105 7,533.389 4,858.633 12-2035 37.575 1 0.9 0.000 0.000 35.729 .000 163.622 7,697.011 4,892.622 12-2036 37.575 1 0.9 0.000 0.000 32.959 .000 148.023 7,845.035 4,920.574 12-2037 37.575 1 0.9 0.000 0.000 30.238 .000 132.699 7,977.733 4,943.353 S Tot 713.932 0.000 0.000 1,543.480 .000 7,977.733 7,977.733 4,943.353 After 662.379 0.000 0.000 268.002 .000 846.797 8,824.530 5,033.986 Total 1,376.311 0.000 0.000 1,811.481 .000 8,824.530 8,824.530 5,033.986 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 6,363.738 Oil Rate 3,190. 77. bbls/mo 33.6% 1.20 0.0% 3,499. 3,499. $/w/mo Expense 89.4651 89.4651 8.00 5,482.855 Gas Rate 22,332. 543. Mcf/mo 0.0% 0.00 0.0% 10.00 5,033.986 GOR 7,000. 7,000. scf/bbl Revenue 12.00 4,663.160 NGL Rate 2,041. 50.bbls/mo Oil 64.8591 64.8591 NGL Yield 91.4 93.6 bbl/MMcf Gas 64.8591 64.8591 15.00 4,214.238 Gas Shrinkage 22.3 20.9 % ______________________________ ______________________ 20.00 3,659.562 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 10.3 % 12 Months in first year 36.635 Year Life (08/2055) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 332 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 8 Figure 9 LILIS ENERGY, INC. -- GRIZZLY 2H 2H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________35.20 Year Life (03/2054) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 7,237. 50.5 1.00 7.8 114. Initial Final Oil - mbbls 114.0 382.1 496.1 66.811 NI 255.309 14,394.705 825.672 3,072.675 12,227.693 7,625.713 Gas -mcf/mo 39,803. 0.0 0.00 7.8 628. 5,500. 5,500. 6 Gas - mmcf 485.3 2,101.7 2,587.1 92.276 WI 828.476 1,386.869 413.488 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 ⊗ 3 3 2 2 9 9 8 8 7 7 10,000. 10,000. 6 ♦ 6 5 5 Δ 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B GRIZZLY 2H 2H TIME (years) 1391 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 01/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 4249533931 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 426 100. 100. Table 9 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- GRIZZLY 2H 2H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 67.7 372.2 16.1 45.211 146.711 10.775 56.382 1.674 12.456 12-2020 44.0 242.2 10.5 29.420 95.467 7.012 56.382 1.674 12.456 12-2021 32.6 179.1 7.8 21.761 70.614 5.186 56.382 1.674 12.456 12-2022 25.9 142.5 6.2 17.311 56.173 4.126 56.382 1.674 12.456 12-2023 21.5 118.3 5.1 14.376 46.649 3.426 56.382 1.674 12.456 12-2024 18.4 101.5 4.4 12.325 39.994 2.937 56.382 1.674 12.456 12-2025 16.1 88.4 3.8 10.735 34.836 2.559 56.382 1.674 12.456 12-2026 14.3 78.5 3.4 9.531 30.929 2.272 56.382 1.674 12.456 12-2027 12.8 70.6 3.1 8.570 27.811 2.043 56.382 1.674 12.456 12-2028 11.7 64.3 2.8 7.806 25.330 1.860 56.382 1.674 12.456 12-2029 10.7 58.7 2.5 7.130 23.138 1.699 56.382 1.674 12.456 12-2030 9.8 54.0 2.3 6.559 21.283 1.563 56.382 1.674 12.456 12-2031 9.0 49.7 2.2 6.034 19.582 1.438 56.382 1.67412.456 12-2032 8.3 45.8 2.0 5.567 18.064 1.327 56.382 1.674 12.456 12-2033 7.6 42.0 1.8 5.107 16.572 1.217 56.382 1.674 12.456 12-2034 7.0 38.7 1.7 4.699 15.247 1.120 56.382 1.674 12.456 12-2035 6.5 35.6 1.5 4.323 14.028 1.030 56.382 1.674 12.456 12-2036 6.0 32.8 1.4 3.988 12.941 .950 56.382 1.674 12.456 12-2037 5.5 30.1 1.3 3.659 11.872 .872 56.382 1.674 12.456 S Tot 335.4 1,844.9 79.9 224.111 727.241 53.413 56.382 1.674 12.456 After 46.7 256.8 11.1 31.197 101.235 7.435 56.382 1.674 12.456 Total 382.1 2,101.7 91.1 255.309 828.476 60.849 56.382 1.674 12.456 Cum 114.0 485.3 .0 Ult 496.1 2,587.1 91.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,549.092 245.594 134.223 0.000 0.000 2,928.909 146.215 73.223 3.696 12-2020 1,658.735 159.812 87.341 0.000 0.000 1,905.888 95.144 47.647 4.045 12-2021 1,226.906 118.207 64.603 0.000 0.000 1,409.716 70.375 35.243 4.397 12-2022 976.004 94.034 51.392 0.000 0.000 1,121.429 55.983 28.036 4.744 12-2023 810.529 78.091 42.678 0.000 0.000 931.299 46.492 23.282 5.090 12-2024 694.899 66.951 36.590 0.000 0.000 798.440 39.859 19.961 5.430 12-2025 605.280 58.316 31.871 0.000 0.000 695.467 34.719 17.387 5.783 12-2026 537.387 51.775 28.296 0.000 0.000 617.458 30.824 15.436 6.129 12-2027 483.205 46.555 25.443 0.000 0.000 555.203 27.716 13.880 6.475 12-2028 440.109 42.403 23.174 0.000 0.000 505.685 25.244 12.642 6.811 12-2029 402.015 38.732 21.168 0.000 0.000 461.915 23.059 11.548 7.167 12-2030 369.795 35.628 19.472 0.000 0.000 424.895 21.211 10.622 7.526 12-2031 340.231 32.780 17.915 0.000 0.000 390.926 19.515 9.773 7.916 12-2032 313.853 30.238 16.526 0.000 0.000 360.617 18.002 9.015 8.325 12-2033 287.939 27.742 15.161 0.000 0.000 330.842 16.516 8.271 8.800 12-2034 264.919 25.524 13.949 0.000 0.000 304.392 15.196 7.610 9.300 12-2035 243.739 23.483 12.834 0.000 0.000 280.056 13.981 7.001 9.843 12-2036 224.842 21.663 11.839 0.000 0.000 258.343 12.897 6.459 10.415 12-2037 206.277 19.874 10.862 0.000 0.000 237.013 11.832 5.925 11.078 S Tot 12,635.755 1,217.402 665.336 0.000 0.000 14,518.493 724.780 362.962 5.537 After 1,758.950 169.467 92.618 0.000 0.000 2,021.035 100.892 50.526 18.303 Total 14,394.705 1,386.869 757.954 0.000 0.000 16,539.528 825.672 413.488 7.097 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd PartyOther Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 49.830 1 0.9 0.000 0.000 233.539 .000 2,426.103 2,426.103 2,323.826 12-2020 49.830 1 0.9 0.000 0.000 151.968 .000 1,561.300 3,987.403 3,681.294 12-2021 49.830 1 0.9 0.000 0.000 112.405 .000 1,141.864 5,129.266 4,583.132 12-2022 49.830 1 0.9 0.000 0.000 89.418 .000 898.163 6,027.429 5,227.785 12-2023 49.830 1 0.9 0.000 0.000 74.258 .000 737.437 6,764.866 5,708.859 12-2024 49.830 1 0.9 0.000 0.000 63.664 .000 625.126 7,389.992 6,079.499 12-2025 49.830 1 0.9 0.000 0.000 55.454 .000 538.079 7,928.071 6,369.463 12-2026 49.830 1 0.9 0.000 0.000 49.234 .000 472.134 8,400.205 6,600.749 12-2027 49.830 1 0.9 0.000 0.000 44.270 .000 419.508 8,819.713 6,787.567 12-2028 49.830 1 0.9 0.000 0.000 40.321 .000 377.648 9,197.361 6,940.436 12-2029 49.830 1 0.9 0.000 0.000 36.831 .000 340.647 9,538.008 7,065.775 12-2030 49.830 1 0.9 0.000 0.000 33.879 .000 309.352 9,847.361 7,169.258 12-2031 49.830 1 0.9 0.000 0.000 31.171 .000 280.637 10,127.997 7,254.607 12-2032 49.830 1 0.9 0.000 0.000 28.754 .000 255.016 10,383.013 7,325.110 12-2033 49.830 1 0.9 0.000 0.000 26.380.000 229.845 10,612.858 7,382.874 12-2034 49.830 1 0.9 0.000 0.000 24.271 .000 207.486 10,820.344 7,430.282 12-2035 49.830 1 0.9 0.000 0.000 22.331 .000 186.914 11,007.258 7,469.110 12-2036 49.830 1 0.9 0.000 0.000 20.599 .000 168.559 11,175.818 7,500.941 12-2037 49.830 1 0.9 0.000 0.000 18.898 .000 150.527 11,326.345 7,526.780 S Tot 946.761 0.000 0.000 1,157.644 .000 11,326.345 11,326.345 7,526.780 After 807.120 0.000 0.000 161.149 .000 901.347 12,227.693 7,625.713 Total 1,753.882 0.000 0.000 1,318.793 .000 12,227.693 12,227.693 7,625.713 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 9,281.146 Oil Rate 7,436. 113. bbls/mo 50.5% 1.00 0.0% 4,499. 4,138. $/w/mo Expense 92.2769 92.2769 8.00 8,191.143 Gas Rate 40,901. 623. Mcf/mo 0.0% 0.00 0.0% 10.00 7,625.713 GOR 5,500. 5,500. scf/bbl Revenue 12.00 7,152.470 NGL Rate1,756. 25. bbls/mo Oil 66.8118 66.8118 NGL Yield 42.9 40.1 bbl/MMcf Gas 66.8118 66.8118 15.00 6,570.916 Gas Shrinkage 42.6 41.0 % ______________________________ ______________________ 20.00 5,836.699 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 11.4 % 12 Months in first year 35.201 Year Life (03/2054) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 426 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 9 Figure 10 IMPETRO OPERATING LLC -- HALEY, J. 605 605 EVETTS (SILURIAN) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________14.10 Year Life (02/2033) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 0.5 0.0 0.5 36.378 NI .000 .000 318.244 160.234 3,633.937 2,163.503 Gas - mcf/mo 62,577. 5.0 0.00 5.130,515. 0.0 0.0 6 Gas - mmcf 14,536.7 7,555.8 22,092.5 49.833 WI 2,721.201 4,217.861 105.447 0.000 6 ♦ ♦ 5 5 GAS (mcf/mo) Δ Δ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ OIL (bbls/mo) ∇ ♦ Δ 4 ♦ 4 ♦ 3 3 Δ 2 2 9 ♦ 9 8 8 7 7 10,000. 100. 6 6 5 5 4 4 3 3 2 2 9 9 8 8 ∇ 7 7 ∇ 6 6 ∇ ∇ 5 5 4 4 ∇ 1,000. 3 3 10. ⊗ ⊗ ∇ ∇ 2 2 05 06 07 08 09∇ 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : SILURIAN HALEY, J. 605 605 TIME (years) 1731 PSL/OATES W TX GAS 334244 ♦⊗ ∗ -- Annual Averages Perfs: 17434. - 18214. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 03/2000 Last Data 09/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495327610100 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 522 100. 1. Table 10 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- HALEY, J. 605 605 EVETTS \(SILURIAN\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 733.1 .0 .000 264.023 .000 .000 1.550 .000 12-2020 .0 698.3 .0 .000 251.501 .000 .000 1.550 .000 12-2021 .0 661.6 .0 .000 238.264 .000 .000 1.550 .000 12-2022 .0 628.5 .0 .000 226.359 .000 .000 1.550 .000 12-2023 .0 597.1 .0 .000 215.049 .000 .000 1.550 .000 12-2024 .0 568.8 .0 .000 204.849 .000 .000 1.550 .000 12-2025 .0 538.9 .0 .000 194.068 .000 .000 1.550 .000 12-2026 .0 511.9 .0 .000 184.371 .000 .000 1.550 .000 12-2027 .0 486.4 .0 .000 175.159 .000 .000 1.550 .000 12-2028 .0 463.3 .0 .000 166.851 .000 .000 1.550 .000 12-2029 .0 438.9 .0 .000 158.069 .000 .000 1.550 .000 12-2030 .0 417.0 .0 .000 150.171 .000 .000 1.550 .000 12-2031 .0 396.1 .0 .000 142.668 .000 .000 1.550 .000 12-2032 .0 377.3 .0 .000 135.901 .000 .000 1.550 .000 02-2033 .0 38.6 .0 .000 13.898 .000 .000 1.550 .000 12-2034 12-2035 12-2036 12-2037 S Tot .0 7,555.8 .0.000 2,721.201 .000 .000 1.550 .000 After .0 .0 .0 .000 .000 .000 .000 .000 .000 Total .0 7,555.8 .0 .000 2,721.201 .000 .000 1.550 .000 Cum .5 14,536.7 .0 Ult .5 22,092.5 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 409.236 .000 0.000 0.000 409.236 30.878 10.231 .258 12-2020 .000 389.826 .000 0.000 0.000 389.826 29.413 9.746 .271 12-2021 .000 369.310 .000 0.000 0.000 369.310 27.865 9.233 .286 12-2022 .000 350.857 .000 0.000 0.000 350.857 26.473 8.771 .301 12-2023 .000 333.326 .000 0.000 0.000 333.326 25.150 8.333 .317 12-2024 .000 317.516 .000 0.000 0.000 317.516 23.957 7.938 .333 12-2025 .000 300.805 .000 0.000 0.000 300.805 22.696 7.520 .351 12-2026 .000 285.775 .000 0.000 0.000 285.775 21.562 7.144 .370 12-2027 .000 271.496 .000 0.000 0.000 271.496 20.485 6.787 .389 12-2028 .000 258.619 .000 0.000 0.000 258.619 19.513 6.465 .409 12-2029 .000 245.008 .000 0.000 0.000 245.008 18.486 6.125 .431 12-2030 .000 232.765 .000 0.000 0.000 232.765 17.563 5.819 .454 12-2031 .000 221.135 .000 0.000 0.000 221.135 16.685 5.528 .478 12-2032 .000 210.647 .000 0.000 0.000 210.647 15.894 5.266 .50202-2033 .000 21.541 .000 0.000 0.000 21.541 1.625 .539 .503 12-2034 12-2035 12-2036 12-2037 S Tot .000 4,217.861 .000 0.000 0.000 4,217.861 318.244 105.447 .353 After .000 .000 .000 0.000 0.000 .000 .000 .000 .000 Total .000 4,217.861 .000 0.000 0.000 4,217.861 318.244 105.447 .353 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 11.362 1 0.5 0.000 0.000 0.000 .000 356.766 356.766 340.415 12-2020 11.362 1 0.5 0.000 0.000 0.000 .000 339.305 696.071 634.717 12-2021 11.362 1 0.5 0.000 0.000 0.000 .000 320.850 1,016.921 887.697 12-2022 11.362 1 0.5 0.000 0.000 0.000 .000 304.250 1,321.172 1,105.794 12-2023 11.362 1 0.5 0.000 0.000 0.000 .000 288.480 1,609.652 1,293.800 12-2024 11.362 1 0.5 0.000 0.000 0.000 .000 274.259 1,883.911 1,456.278 12-2025 11.362 1 0.5 0.000 0.000 0.000 .000 259.227 2,143.138 1,595.881 12-2026 11.362 1 0.5 0.000 0.000 0.000 .000 245.706 2,388.844 1,716.181 12-2027 11.362 1 0.5 0.000 0.000 0.000 .000 232.861 2,621.705 1,819.834 12-2028 11.362 1 0.5 0.000 0.000 0.000 .000 221.278 2,842.983 1,909.371 12-2029 11.362 1 0.5 0.0000.000 0.000 .000 209.034 3,052.018 1,986.259 12-2030 11.362 1 0.5 0.000 0.000 0.000 .000 198.022 3,250.039 2,052.480 12-2031 11.362 1 0.5 0.000 0.000 0.000 .000 187.560 3,437.599 2,109.503 12-2032 11.362 1 0.5 0.000 0.000 0.000 .000 178.125 3,615.724 2,158.732 02-2033 1.165 1 0.5 0.000 0.000 0.000 .000 18.213 3,633.937 2,163.503 12-2034 12-2035 12-2036 12-2037 S Tot 160.234 0.000 0.000 0.000 .000 3,633.937 3,633.937 2,163.503 After .000 0.000 0.000 0.000 .000 .000 3,633.937 2,163.503 Total 160.234 0.000 0.000 0.000 .000 3,633.937 3,633.937 2,163.503 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 2,739.754 Gas Rate 62,704. 30,416. Mcf/mo 5.0% 0.00 0.0% 1,898. 1,898. $/w/mo Expense 49.8337 49.8337 8.00 2,365.998 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 10.00 2,163.503 NGL Rate 0. 0. bbls/mo Revenue 12.00 1,990.296 Cond Yield 0.0 0.0bbl/MMcf Oil 36.3786 36.3786 NGL Yield 0.0 0.0 bbl/MMcf Gas 36.3786 36.3786 15.00 1,774.186 Gas Shrinkage 1.2 0.7 % ______________________________ ______________________ 20.00 1,499.873 Oil Severance 0.0 0.0 % Gas Severance 7.5 7.5 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 43.4 % 12 Months in first year 14.105 Year Life (02/2033) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 522 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 10 Figure 11 LILIS ENERGY, INC. -- HIPPO 1H 1H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________27.64 Year Life (08/2046) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 3,549. 39.7 1.10 8.0 151. Initial Final Oil - mbbls 163.6 232.5 396.2 73.468 NI 170.846 9,968.565 638.894 3,630.675 7,770.369 4,918.700 Gas -mcf/mo 16,325. 0.0 0.00 8.0 695. 4,600. 4,600. 6 Gas - mmcf 483.0 1,069.7 1,552.7 100.000 WI 636.571 1,184.021 308.716 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ⊗ 2 Δ 2 9 9 ⊗ 8 8 7 7 10,000. 10,000. 6 6 ♦ 5 5 4 4 ♦ 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B HIPPO 1H 1H TIME (years) 1392 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 12310. - 16415. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 03/2017 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495320420000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 224 100. 100. Table 11 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- HIPPO 1H 1H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 35.3 162.2 15.1 25.900 96.503 11.063 58.348 1.860 16.390 12-2020 25.2 116.1 10.8 18.550 69.119 7.924 58.348 1.860 16.390 12-2021 19.7 90.8 8.4 14.494 54.006 6.191 58.348 1.860 16.390 12-2022 16.3 74.9 7.0 11.968 44.592 5.112 58.348 1.860 16.390 12-2023 13.9 64.0 5.9 10.219 38.076 4.365 58.348 1.860 16.390 12-2024 12.2 56.1 5.2 8.956 33.371 3.826 58.348 1.860 16.390 12-2025 10.8 49.7 4.6 7.944 29.600 3.393 58.348 1.860 16.390 12-2026 9.7 44.8 4.2 7.162 26.686 3.059 58.348 1.860 16.390 12-2027 8.9 40.9 3.8 6.526 24.316 2.788 58.348 1.860 16.390 12-2028 8.2 37.6 3.5 6.009 22.389 2.567 58.348 1.860 16.390 12-2029 7.5 34.5 3.2 5.513 20.540 2.355 58.348 1.860 16.390 12-2030 6.9 31.8 2.9 5.072 18.898 2.166 58.348 1.860 16.390 12-2031 6.4 29.2 2.7 4.666 17.387 1.993 58.348 1.860 16.390 12-2032 5.927.0 2.5 4.305 16.039 1.839 58.348 1.860 16.390 12-2033 5.4 24.7 2.3 3.949 14.715 1.687 58.348 1.860 16.390 12-2034 4.9 22.8 2.1 3.634 13.539 1.552 58.348 1.860 16.390 12-2035 4.6 20.9 1.9 3.343 12.456 1.428 58.348 1.860 16.390 12-2036 4.2 19.3 1.8 3.084 11.490 1.317 58.348 1.860 16.390 12-2037 3.9 17.7 1.6 2.829 10.542 1.208 58.348 1.860 16.390 S Tot 209.8 965.0 89.6 154.123 574.264 65.833 58.348 1.860 16.390 After 22.8 104.7 9.7 16.722 62.306 7.143 58.348 1.860 16.390 Total 232.5 1,069.7 99.3 170.846 636.571 72.975 58.348 1.860 16.390 Cum 163.6 483.0 .0 Ult 396.2 1,552.7 99.3 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,511.218 179.496 181.322 0.000 0.000 1,872.035 96.855 46.801 6.236 12-2020 1,082.385 128.561 129.869 0.000 0.000 1,340.814 69.371 33.520 6.851 12-2021 845.716 100.450 101.472 0.000 0.000 1,047.639 54.203 26.191 7.459 12-2022 698.294 82.940 83.784 0.000 0.000 865.019 44.754 21.625 8.045 12-2023 596.261 70.821 71.542 0.000 0.000 738.624 38.215 18.466 8.620 12-2024 522.591 62.071 62.702 0.000 0.000 647.364 33.493 16.184 9.176 12-2025 463.527 55.05655.616 0.000 0.000 574.199 29.708 14.355 9.748 12-2026 417.897 49.636 50.141 0.000 0.000 517.674 26.783 12.942 10.302 12-2027 380.785 45.228 45.688 0.000 0.000 471.701 24.405 11.793 10.850 12-2028 350.607 41.644 42.067 0.000 0.000 434.318 22.471 10.858 11.380 12-2029 321.658 38.205 38.594 0.000 0.000 398.456 20.615 9.961 11.983 12-2030 295.942 35.151 35.508 0.000 0.000 366.601 18.967 9.165 12.618 12-2031 272.282 32.340 32.669 0.000 0.000 337.292 17.451 8.432 13.308 12-2032 251.172 29.833 30.137 0.000 0.000 311.142 16.098 7.779 14.033 12-2033 230.433 27.370 27.648 0.000 0.000 285.451 14.769 7.136 14.874 12-2034 212.011 25.182 25.438 0.000 0.000 262.630 13.588 6.566 15.760 12-2035 195.061 23.168 23.404 0.000 0.000 241.634 12.502 6.041 16.722 12-2036 179.938 21.372 21.590 0.000 0.000 222.900 11.532 5.572 17.734 12-2037 165.081 19.608 19.807 0.000 0.000 204.495 10.580 5.112 18.909 S Tot 8,992.858 1,068.131 1,078.999 0.000 0.000 11,139.988 576.360 278.500 9.644 After 975.707 115.890 117.069 0.000 0.000 1,208.666 62.534 30.217 25.470 Total 9,968.565 1,184.021 1,196.068 0.000 0.000 12,348.654 638.894 308.716 11.193 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future NetCumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 76.428 1 1.0 0.000 0.000 230.203 .000 1,421.748 1,421.748 1,360.541 12-2020 76.428 1 1.0 0.000 0.000 164.879 .000 996.616 2,418.365 2,226.654 12-2021 76.428 1 1.0 0.000 0.000 128.827 .000 761.990 3,180.355 2,828.305 12-2022 76.428 1 1.0 0.000 0.000 106.371 .000 615.840 3,796.195 3,270.241 12-2023 76.428 1 1.0 0.000 0.000 90.828 .000 514.688 4,310.882 3,605.959 12-2024 76.428 1 1.0 0.000 0.000 79.606 .000 441.653 4,752.535 3,867.794 12-2025 76.428 1 1.0 0.000 0.000 70.609 .000 383.099 5,135.635 4,074.226 12-2026 76.428 1 1.0 0.000 0.000 63.658 .000 337.863 5,473.497 4,239.727 12-2027 76.428 1 1.0 0.000 0.000 58.005 .000 301.071 5,774.568 4,373.797 12-2028 76.428 1 1.0 0.000 0.000 53.408 .000 271.153 6,045.722 4,483.558 12-2029 76.428 1 1.0 0.000 0.000 48.998 .000 242.454 6,288.176 4,572.774 12-2030 76.428 1 1.0 0.000 0.000 45.081 .000 216.960 6,505.136 4,645.356 12-2031 76.428 1 1.0 0.000 0.000 41.477 .000 193.504 6,698.640 4,704.212 12-2032 76.428 1 1.0 0.000 0.000 38.261 .000 172.576 6,871.216 4,751.930 12-2033 76.428 1 1.0 0.000 0.000 35.102 .000 152.0177,023.233 4,790.139 12-2034 76.428 1 1.0 0.000 0.000 32.295 .000 133.753 7,156.986 4,820.704 12-2035 76.428 1 1.0 0.000 0.000 29.713 .000 116.950 7,273.936 4,845.003 12-2036 76.428 1 1.0 0.000 0.000 27.410 .000 101.957 7,375.893 4,864.261 12-2037 76.428 1 1.0 0.000 0.000 25.147 .000 87.228 7,463.121 4,879.238 S Tot 1,452.132 0.000 0.000 1,369.875 .000 7,463.121 7,463.121 4,879.238 After 660.039 0.000 0.000 148.629 .000 307.248 7,770.369 4,918.700 Total 2,112.171 0.000 0.000 1,518.504 .000 7,770.369 7,770.369 4,918.700 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 5,986.396 Oil Rate 3,619. 149. bbls/mo 39.8% 1.10 0.0% 6,369. 6,369. $/w/mo Expense 100.0000 100.0000 8.00 5,288.389 Gas Rate 16,650. 689. Mcf/mo 0.0% 0.00 0.0% 10.00 4,918.700 GOR 4,600. 4,600. scf/bbl Revenue 12.00 4,605.765 NGL Rate 1,543. 65. bbls/mo Oil 73.468573.4685 NGL Yield 92.7 95.4 bbl/MMcf Gas 73.4685 73.4685 15.00 4,217.544 Gas Shrinkage 20.6 18.4 % ______________________________ ______________________ 20.00 3,723.367 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 20.4 % 12 Months in first year 27.644 Year Life (08/2046) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 224 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 11 Figure 12 LILIS ENERGY, INC. -- HIPPO 2H 2H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________25.91 Year Life (11/2044) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 7,235. 63.7 1.20 8.0 234. Initial Final Oil - mbbls 118.0 332.2 450.2 59.497 NI 197.655 10,884.947 663.783 3,277.702 8,765.423 5,867.911 Gas -mcf/mo 29,665. 0.0 0.00 8.0 957. 4,100. 4,100. 6 Gas - mmcf 290.6 1,362.1 1,652.7 85.403 WI 551.063 1,059.142 325.818 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ⊗ 2 2 9 9 8 8 7 7 10,000. 10,000. 6 ♦ 6 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B HIPPO 2H 2H TIME (years) 1392 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 04/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495339970000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 432 100. 100. Table 12 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- HIPPO 2H 2H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 63.3 259.4 20.4 37.644 104.953 12.164 55.070 1.922 17.046 12-2020 38.6 158.3 12.5 22.974 64.052 7.423 55.070 1.922 17.046 12-2021 28.4 116.4 9.2 16.890 47.090 5.458 55.070 1.922 17.046 12-2022 22.7 93.3 7.4 13.534 37.733 4.373 55.070 1.922 17.046 12-2023 19.1 78.3 6.2 11.367 31.691 3.673 55.070 1.922 17.046 12-2024 16.6 68.0 5.4 9.867 27.509 3.188 55.070 1.922 17.046 12-2025 14.6 60.0 4.7 8.702 24.262 2.812 55.070 1.922 17.046 12-2026 13.1 53.9 4.2 7.820 21.803 2.527 55.070 1.922 17.046 12-2027 12.0 49.0 3.9 7.114 19.833 2.299 55.070 1.922 17.046 12-2028 11.0 45.1 3.6 6.546 18.251 2.115 55.070 1.922 17.046 12-2029 10.1 41.4 3.3 6.006 16.744 1.941 55.070 1.922 17.046 12-2030 9.3 38.1 3.0 5.526 15.406 1.785 55.070 1.922 17.046 12-2031 8.5 35.0 2.8 5.084 14.174 1.643 55.070 1.922 17.046 12-2032 7.9 32.3 2.5 4.690 13.075 1.515 55.070 1.922 17.046 12-2033 7.2 29.6 2.3 4.303 11.996 1.390 55.070 1.922 17.046 12-2034 6.7 27.3 2.1 3.959 11.037 1.279 55.070 1.922 17.046 12-2035 6.1 25.1 2.0 3.642 10.154 1.177 55.070 1.922 17.046 12-2036 5.6 23.2 1.8 3.360 9.367 1.086 55.070 1.922 17.046 12-2037 5.2 21.2 1.7 3.082 8.594 .996 55.070 1.922 17.046 S Tot 306.1 1,254.9 98.9 182.110 507.724 58.843 55.070 1.922 17.046 After 26.1 107.1 8.4 15.545 43.338 5.023 55.070 1.922 17.046 Total 332.2 1,362.1 107.3 197.655 551.063 63.866 55.070 1.922 17.046 Cum 118.0 290.6 .0 Ult 450.2 1,652.7 107.3 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,073.093 201.719 207.336 0.000 0.000 2,482.148 126.421 62.054 4.016 12-2020 1,265.203 123.109 126.537 0.000 0.000 1,514.848 77.154 37.871 4.971 12-2021 930.150 90.507 93.027 0.000 0.000 1,113.684 56.722 27.842 5.853 12-2022 745.333 72.523 74.543 0.000 0.000 892.399 45.452 22.310 6.680 12-2023 625.983 60.910 62.607 0.000 0.000 749.500 38.174 18.738 7.473 12-2024 543.382 52.873 54.345 0.000 0.000 650.600 33.136 16.265 8.226 12-2025 479.24346.632 47.931 0.000 0.000 573.806 29.225 14.345 8.989 12-2026 430.667 41.905 43.072 0.000 0.000 515.644 26.263 12.891 9.719 12-2027 391.759 38.119 39.181 0.000 0.000 469.059 23.890 11.726 10.434 12-2028 360.514 35.079 36.056 0.000 0.000 431.649 21.985 10.791 11.120 12-2029 330.745 32.183 33.079 0.000 0.000 396.006 20.169 9.900 11.894 12-2030 304.303 29.610 30.434 0.000 0.000 364.346 18.557 9.109 12.709 12-2031 279.974 27.242 28.001 0.000 0.000 335.218 17.073 8.380 13.594 12-2032 258.268 25.130 25.830 0.000 0.000 309.228 15.750 7.731 14.525 12-2033 236.943 23.055 23.697 0.000 0.000 283.696 14.449 7.092 15.605 12-2034 218.000 21.212 21.803 0.000 0.000 261.015 13.294 6.525 16.742 12-2035 200.572 19.516 20.060 0.000 0.000 240.148 12.231 6.004 17.978 12-2036 185.021 18.003 18.505 0.000 0.000 221.529 11.283 5.538 19.277 12-2037 169.744 16.517 16.977 0.000 0.000 203.238 10.351 5.081 20.785 S Tot 10,028.897 975.846 1,003.020 0.000 0.000 12,007.763 611.579 300.194 8.394 After 856.050 83.297 85.616 0.000 0.000 1,024.963 52.203 25.624 27.571 Total 10,884.947 1,059.142 1,088.637 0.000 0.000 13,032.726 663.783 325.818 9.902 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other FutureNet Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 94.286 1 0.8 0.000 0.000 158.865 .000 2,040.523 2,040.523 1,956.734 12-2020 94.286 1 0.8 0.000 0.000 96.955 .000 1,208.582 3,249.106 3,007.827 12-2021 94.286 1 0.8 0.000 0.000 71.279 .000 863.555 4,112.661 3,689.918 12-2022 94.286 1 0.8 0.000 0.000 57.116 .000 673.235 4,785.896 4,173.143 12-2023 94.286 1 0.8 0.000 0.000 47.970 .000 550.333 5,336.230 4,532.160 12-2024 94.286 1 0.8 0.000 0.000 41.640 .000 465.273 5,801.502 4,808.025 12-2025 94.286 1 0.8 0.000 0.000 36.725 .000 399.225 6,200.727 5,023.160 12-2026 94.286 1 0.8 0.000 0.000 33.003 .000 349.202 6,549.929 5,194.224 12-2027 94.286 1 0.8 0.000 0.000 30.021 .000 309.136 6,859.065 5,331.890 12-2028 94.286 1 0.8 0.000 0.000 27.627 .000 276.961 7,136.026 5,444.006 12-2029 94.286 1 0.8 0.000 0.000 25.346 .000 246.305 7,382.332 5,534.641 12-2030 94.286 1 0.8 0.000 0.000 23.319 .000 219.076 7,601.408 5,607.934 12-2031 94.286 1 0.8 0.000 0.000 21.455 .000 194.024 7,795.431 5,666.950 12-2032 94.286 1 0.8 0.000 0.000 19.792 .000 171.671 7,967.102 5,714.421 12-2033 94.286 1 0.8 0.000 0.000 18.157 .000 149.7118,116.813 5,752.053 12-2034 94.286 1 0.8 0.000 0.000 16.706 .000 130.204 8,247.018 5,781.809 12-2035 94.286 1 0.8 0.000 0.000 15.370 .000 112.257 8,359.275 5,805.134 12-2036 94.286 1 0.8 0.000 0.000 14.179 .000 96.244 8,455.518 5,823.316 12-2037 94.286 1 0.8 0.000 0.000 13.008 .000 80.512 8,536.031 5,837.142 S Tot 1,791.427 0.000 0.000 768.532 .000 8,536.031 8,536.031 5,837.142 After 652.142 0.000 0.000 65.601 .000 229.392 8,765.423 5,867.911 Total 2,443.569 0.000 0.000 834.133 .000 8,765.423 8,765.423 5,867.911 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 6,973.219 Oil Rate 7,519. 232. bbls/mo 63.7% 1.20 0.0% 9,199. 9,199. $/w/mo Expense 85.4037 85.4037 8.00 6,253.833 Gas Rate 30,831. 954. Mcf/mo 0.0% 0.00 0.0% 10.00 5,867.911 GOR 4,100. 4,100. scf/bbl Revenue 12.00 5,538.324 NGL Rate 2,381. 74. bbls/mo Oil 59.4972 59.4972NGL Yield 77.2 77.9 bbl/MMcf Gas 59.4972 59.4972 15.00 5,125.435 Gas Shrinkage 34.6 32.0 % ______________________________ ______________________ 20.00 4,592.799 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 22.6 % 12 Months in first year 25.916 Year Life (11/2044) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 432 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 12 Figure 13 LILIS ENERGY, INC. -- HOWELL 1H 1H PHANTOM (WOLFCAMP XY) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________23.49 Year Life (06/2042) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 4,520. 81.1 1.20 8.0 124. Initial Final Oil - mbbls 21.7 151.9 173.6 75.000 NI 113.918 6,572.239 705.749 2,976.089 7,946.056 5,528.163 Gas -mcf/mo 85,881. 0.0 0.00 8.0 2,359. 19,000. 19,000. 6 Gas - mmcf 231.5 2,885.9 3,117.4 100.000 WI 1,378.734 2,564.446 298.151 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 Δ 3 3 2 2 9 9 8 ♦ 8 7 7 1,000. 100,000. 6 6 5 5 4 4 3 3 2 2 9 9 8 8 7 7 ⊗ 6 6 5 5 4 4 100. 3 3 10,000. Δ 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP XY HOWELL 1H 1H TIME (years) 614 PSL/MORELAND TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 02/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495339640000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 476 10. 1,000. Table 13 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- HOWELL 1H 1H PHANTOM (WOLFCAMP XY) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 34.9 663.2 54.3 26.181 145.148 40.742 57.693 1.860 15.734 12-2020 18.6 353.0 28.9 13.933 195.892 21.682 57.693 1.860 15.734 12-2021 13.1 248.7 20.4 9.817 138.021 15.276 57.693 1.860 15.734 12-2022 10.3 195.1 16.0 7.701 108.276 11.984 57.693 1.860 15.734 12-2023 8.5 161.8 13.2 6.386 89.781 9.937 57.693 1.860 15.734 12-2024 7.3 139.2 11.4 5.496 77.268 8.552 57.693 1.860 15.734 12-2025 6.4 122.0 10.0 4.817 67.729 7.496 57.693 1.860 15.734 12-2026 5.7 109.2 8.9 4.309 60.582 6.705 57.693 1.860 15.734 12-2027 5.2 98.9 8.1 3.905 54.910 6.078 57.693 1.860 15.734 12-2028 4.8 90.8 7.4 3.586 50.413 5.580 57.693 1.860 15.734 12-2029 4.4 83.3 6.8 3.289 46.242 5.118 57.693 1.860 15.734 12-2030 4.0 76.7 6.3 3.026 42.545 4.709 57.693 1.860 15.734 12-2031 3.7 70.5 5.8 2.784 39.144 4.333 57.693 1.86015.734 12-2032 3.4 65.1 5.3 2.568 36.109 3.997 57.693 1.860 15.734 12-2033 3.1 59.7 4.9 2.356 33.128 3.667 57.693 1.860 15.734 12-2034 2.9 54.9 4.5 2.168 30.479 3.374 57.693 1.860 15.734 12-2035 2.7 50.5 4.1 1.994 28.043 3.104 57.693 1.860 15.734 12-2036 2.5 46.6 3.8 1.840 25.868 2.863 57.693 1.860 15.734 12-2037 2.3 42.8 3.5 1.688 23.732 2.627 57.693 1.860 15.734 S Tot 143.8 2,732.0 223.8 107.842 1,293.313 167.823 57.693 1.860 15.734 After 8.1 153.9 12.6 6.075 85.421 9.455 57.693 1.860 15.734 Total 151.9 2,885.9 236.4 113.918 1,378.734 177.278 57.693 1.860 15.734 Cum 21.7 231.5 .0 Ult 173.6 3,117.4 236.4 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,510.430 269.975 641.050 0.000 0.000 2,421.455 138.121 60.536 2.855 12-2020 803.810 364.359 341.149 0.000 0.000 1,509.318 90.139 37.733 2.739 12-2021 566.346 256.719 240.366 0.000 0.000 1,063.432 63.510 26.586 3.468 12-2022 444.292 201.393 188.564 0.000 0.000 834.250 49.823 20.856 4.147 12-2023 368.403 166.994 156.356 0.000 0.000 691.753 41.312 17.294 4.796 12-2024 317.056 143.718 134.563 0.000 0.000 595.337 35.55414.883 5.411 12-2025 277.914 125.976 117.951 0.000 0.000 521.840 31.165 13.046 6.032 12-2026 248.590 112.683 105.505 0.000 0.000 466.778 27.877 11.669 6.626 12-2027 225.315 102.133 95.627 0.000 0.000 423.076 25.267 10.577 7.207 12-2028 206.862 93.769 87.795 0.000 0.000 388.426 23.197 9.711 7.761 12-2029 189.748 86.011 80.532 0.000 0.000 356.291 21.278 8.907 8.371 12-2030 174.578 79.135 74.094 0.000 0.000 327.806 19.577 8.195 9.012 12-2031 160.621 72.808 68.170 0.000 0.000 301.599 18.012 7.540 9.708 12-2032 148.168 67.163 62.885 0.000 0.000 278.216 16.615 6.955 10.440 12-2033 135.934 61.618 57.693 0.000 0.000 255.244 15.244 6.381 11.290 12-2034 125.066 56.691 53.080 0.000 0.000 234.838 14.025 5.871 12.184 12-2035 115.068 52.159 48.837 0.000 0.000 216.063 12.904 5.402 13.156 12-2036 106.146 48.115 45.050 0.000 0.000 199.312 11.903 4.983 14.178 12-2037 97.382 44.142 41.331 0.000 0.000 182.855 10.920 4.571 15.364 S Tot 6,221.728 2,405.562 2,640.598 0.000 0.000 11,267.889 666.443 281.697 5.723 After 350.511 158.883 148.762 0.000 0.000 658.156 39.306 16.454 18.933 Total 6,572.239 2,564.446 2,789.361 0.000 0.000 11,926.045 705.749 298.151 6.485 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) OperatingWells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 105.600 1 1.0 0.000 0.000 113.798 .000 2,003.399 2,003.399 1,918.222 12-2020 105.600 1 1.0 0.000 0.000 60.560 .000 1,215.286 3,218.686 2,975.721 12-2021 105.600 1 1.0 0.000 0.000 42.669 .000 825.067 4,043.752 3,627.592 12-2022 105.600 1 1.0 0.000 0.000 33.474 .000 624.497 4,668.250 4,075.917 12-2023 105.600 1 1.0 0.000 0.000 27.756 .000 499.790 5,168.040 4,402.007 12-2024 105.600 1 1.0 0.000 0.000 23.887 .000 415.412 5,583.452 4,648.337 12-2025 105.600 1 1.0 0.000 0.000 20.938 .000 351.091 5,934.543 4,837.553 12-2026 105.600 1 1.0 0.000 0.000 18.729 .000 302.903 6,237.446 4,985.949 12-2027 105.600 1 1.0 0.000 0.000 16.976 .000 264.656 6,502.102 5,103.817 12-2028 105.600 1 1.0 0.000 0.000 15.585 .000 234.332 6,736.435 5,198.683 12-2029 105.600 1 1.0 0.000 0.000 14.296 .000 206.209 6,942.644 5,274.568 12-2030 105.600 1 1.0 0.000 0.000 13.153 .000 181.281 7,123.925 5,335.221 12-2031 105.600 1 1.0 0.000 0.000 12.101 .000 158.346 7,282.270 5,383.389 12-2032 105.600 1 1.0 0.000 0.000 11.163 .000 137.882 7,420.152 5,421.520 12-2033 105.600 1 1.0 0.000 0.000 10.241 .000 117.778 7,537.930 5,451.129 12-2034 105.600 1 1.0 0.000 0.000 9.423 .000 99.920 7,637.850 5,473.967 12-2035 105.600 1 1.0 0.000 0.000 8.669 .000 83.489 7,721.338 5,491.318 12-2036 105.600 1 1.0 0.000 0.000 7.997 .000 68.829 7,790.167 5,504.325 12-2037 105.600 1 1.0 0.000 0.000 7.337 .000 54.426 7,844.593 5,513.674 S Tot 2,006.400 0.000 0.000 468.755 .000 7,844.593 7,844.593 5,513.674 After 474.526 0.000 0.000 26.408 .000 101.462 7,946.056 5,528.163 Total 2,480.926 0.000 0.000 495.163 .000 7,946.056 7,946.056 5,528.163 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 6,472.771 Oil Rate 4,808. 123. bbls/mo 81.2% 1.20 0.0% 5,800. 5,716. $/w/mo Expense 100.0000 100.0000 8.00 5,861.455 Gas Rate 91,362. 2,349. Mcf/mo 0.0% 0.00 0.0% 3,000. 2,956. $/mo 10.00 5,528.163 GOR 19,000. 19,000. scf/bblRevenue 12.00 5,240.394 NGL Rate 7,164. 190. bbls/mo Oil 75.0000 75.0000 NGL Yield 78.4 81.0 bbl/MMcf Gas 75.0000 75.0000 15.00 4,875.663 Gas Shrinkage 100.0 25.8 % ______________________________ ______________________ 20.00 4,397.937 Oil Severance 4.6 4.6 % Gas Severance 0.0 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 24.9 % 12 Months in first year 23.499 Year Life (06/2042) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 476 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 13 Figure 14 IMPETRO OPERATING LLC -- KUDU 1H 1H PHANTOM (WOLFCAMP) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________21.55 Year Life (07/2040) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 2,470. 66.8 1.20 8.0 108. Initial Final Oil - mbbls 104.4 103.3 207.6 61.630 NI 63.637 3,754.824 232.237 1,365.405 2,828.277 2,009.406 Gas -mcf/mo 13,639. 81.9 1.20 8.0 434. 5,520. 4,010. 6 Gas - mmcf 538.1 442.3 980.5 79.314 WI 220.814 417.559 113.485 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 ♦ 3 ♦ Δ ⊗ 2 2 9 9 8 ♦ 8 Δ 7 ⊗ ♦ 7 1,000. 10,000. 6 6 5 ∇ 5 4 4 ⊗ ∇ 3 ∇ 3 ⊗ 2 2 9 9 8 8 7 7 6 6 5 5 4 4 100. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP A KUDU 1H 1H TIME (years) 1396 PSL/COWDEN C TX OIL 4120495 ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 08/2015 Last Data 08/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495317050100 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 28 10. 100. Table 14 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- KUDU 1H 1H PHANTOM \(WOLFCAMP\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 21.2 104.6 9.3 13.056 52.220 5.756 59.004 1.891 15.079 12-2020 12.6 55.3 4.9 7.789 27.594 3.042 59.004 1.891 15.079 12-2021 9.2 38.9 3.5 5.681 19.405 2.139 59.004 1.891 15.079 12-2022 7.4 30.5 2.7 4.533 15.209 1.677 59.004 1.891 15.079 12-2023 6.2 25.2 2.3 3.798 12.605 1.389 59.004 1.891 15.079 12-2024 5.3 21.7 1.9 3.291 10.844 1.195 59.004 1.891 15.079 12-2025 4.7 19.0 1.7 2.899 9.503 1.047 59.004 1.891 15.079 12-2026 4.2 17.0 1.5 2.603 8.499 .937 59.004 1.891 15.079 12-2027 3.8 15.4 1.4 2.366 7.702 .849 59.004 1.891 15.079 12-2028 3.5 14.2 1.3 2.176 7.070 .779 59.004 1.891 15.079 12-2029 3.2 13.0 1.2 1.997 6.485 .715 59.004 1.891 15.079 12-2030 3.0 12.0 1.1 1.837 5.967 .658 59.004 1.891 15.079 12-2031 2.7 11.0 1.0 1.690 5.490 .605 59.004 1.891 15.079 12-2032 2.5 10.1 .9 1.559 5.064 .558 59.004 1.89115.079 12-2033 2.3 9.3 .8 1.430 4.646 .512 59.004 1.891 15.079 12-2034 2.1 8.6 .8 1.316 4.275 .471 59.004 1.891 15.079 12-2035 2.0 7.9 .7 1.211 3.933 .434 59.004 1.891 15.079 12-2036 1.8 7.3 .6 1.117 3.628 .400 59.004 1.891 15.079 12-2037 1.7 6.7 .6 1.025 3.328 .367 59.004 1.891 15.079 S Tot 99.6 427.6 38.2 61.375 213.466 23.530 59.004 1.891 15.079 After 3.7 14.7 1.3 2.262 7.348 .810 59.004 1.891 15.079 Total 103.3 442.3 39.5 63.637 220.814 24.340 59.004 1.891 15.079 Cum 104.4 538.1 .0 Ult 207.6 980.5 39.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 770.372 98.748 86.796 0.000 0.000 955.916 49.496 23.898 4.601 12-2020 459.559 52.179 45.864 0.000 0.000 557.602 28.576 13.940 6.209 12-2021 335.191 36.695 32.254 0.000 0.000 404.140 20.650 10.103 7.562 12-2022 267.493 28.761 25.280 0.000 0.000 321.534 16.405 8.038 8.801 12-2023 224.096 23.835 20.951 0.000 0.000 268.882 13.707 6.722 9.978 12-2024 194.195 20.506 18.024 0.000 0.000 232.725 11.857 5.818 11.091 12-2025 171.062 17.970 15.795 0.000 0.000 204.827 10.431 5.121 12.214 12-2026 153.580 16.071 14.126 0.000 0.000 183.7779.357 4.594 13.286 12-2027 139.603 14.564 12.801 0.000 0.000 166.969 8.499 4.174 14.334 12-2028 128.415 13.370 11.752 0.000 0.000 153.536 7.814 3.838 15.335 12-2029 117.809 12.264 10.779 0.000 0.000 140.852 7.168 3.521 16.445 12-2030 108.391 11.283 9.918 0.000 0.000 129.592 6.595 3.240 17.613 12-2031 99.725 10.381 9.125 0.000 0.000 119.231 6.068 2.981 18.882 12-2032 91.994 9.576 8.417 0.000 0.000 109.987 5.597 2.750 20.215 12-2033 84.398 8.786 7.722 0.000 0.000 100.906 5.135 2.523 21.764 12-2034 77.650 8.083 7.105 0.000 0.000 92.839 4.725 2.321 23.393 12-2035 71.443 7.437 6.537 0.000 0.000 85.416 4.347 2.135 25.165 12-2036 65.904 6.860 6.030 0.000 0.000 78.794 4.010 1.970 27.027 12-2037 60.462 6.294 5.532 0.000 0.000 72.288 3.679 1.807 29.188 S Tot 3,621.342 403.664 354.807 0.000 0.000 4,379.814 224.115 109.495 10.976 After 133.482 13.895 12.213 0.000 0.000 159.590 8.122 3.990 33.248 Total 3,754.824 417.559 367.021 0.000 0.000 4,539.404 232.237 113.485 11.744 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 47.589 10.8 0.000 0.000 69.730 .000 765.204 765.204 734.349 12-2020 47.589 1 0.8 0.000 0.000 41.597 .000 425.901 1,191.106 1,104.853 12-2021 47.589 1 0.8 0.000 0.000 30.340 .000 295.458 1,486.564 1,338.267 12-2022 47.589 1 0.8 0.000 0.000 24.212 .000 225.290 1,711.854 1,499.996 12-2023 47.589 1 0.8 0.000 0.000 20.284 .000 180.581 1,892.435 1,617.815 12-2024 47.589 1 0.8 0.000 0.000 17.577 .000 149.884 2,042.318 1,706.694 12-2025 47.589 1 0.8 0.000 0.000 15.484 .000 126.203 2,168.521 1,774.711 12-2026 47.589 1 0.8 0.000 0.000 13.901 .000 108.336 2,276.857 1,827.787 12-2027 47.589 1 0.8 0.000 0.000 12.636 .000 94.071 2,370.928 1,869.684 12-2028 47.589 1 0.8 0.000 0.000 11.623 .000 82.672 2,453.600 1,903.155 12-2029 47.589 1 0.8 0.000 0.000 10.663 .000 71.911 2,525.511 1,929.620 12-2030 47.589 1 0.8 0.000 0.000 9.811 .000 62.357 2,587.868 1,950.485 12-2031 47.589 1 0.8 0.000 0.000 9.027 .000 53.567 2,641.436 1,966.782 12-2032 47.589 1 0.8 0.000 0.000 8.327 .000 45.725 2,687.161 1,979.429 12-2033 47.589 1 0.8 0.000 0.000 7.639 .000 38.020 2,725.181 1,988.988 12-2034 47.589 1 0.8 0.000 0.000 7.029 .000 31.176 2,756.356 1,996.116 12-2035 47.589 1 0.8 0.000 0.000 6.467 .000 24.879 2,781.235 2,001.288 12-2036 47.589 1 0.8 0.000 0.000 5.965 .00019.260 2,800.496 2,004.929 12-2037 47.589 1 0.8 0.000 0.000 5.473 .000 13.741 2,814.237 2,007.291 S Tot 904.182 0.000 0.000 327.785 .000 2,814.237 2,814.237 2,007.291 After 121.356 0.000 0.000 12.082 .000 14.040 2,828.277 2,009.406 Total 1,025.538 0.000 0.000 339.867 .000 2,828.277 2,828.277 2,009.406 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 2,333.990 Oil Rate 2,575. 107. bbls/mo 66.9% 1.20 0.0% 4,999. 4,927. $/w/mo Expense 79.3142 79.3142 8.00 2,124.625 Gas Rate 14,531. 430. Mcf/mo 82.0% 1.20 0.0% 10.00 2,009.406 GOR 5,640. 4,010. scf/bbl Revenue 12.00 1,909.330 NGL Rate 1,240. 38. bbls/mo Oil 61.6309 61.6309 NGL Yield 85.4 88.7 bbl/MMcf Gas 61.6309 61.6309 15.00 1,781.729 Gas Shrinkage 24.0 18.7 % ______________________________ ______________________ 20.00 1,613.420 Oil Severance 4.6 4.6 % GasSeverance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 11.6 % 12 Months in first year 21.555 Year Life (07/2040) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 28 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 14 Figure 15 LILIS ENERGY, INC. -- KUDU 2H 2H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________32.73 Year Life (09/2051) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 6,167. 50.3 1.20 8.1 148. Initial Final Oil - mbbls 124.9 365.9 490.8 58.244 NI 213.113 12,434.793 807.435 3,119.167 11,227.946 6,847.499 Gas -mcf/mo 26,085. 41.4 1.20 8.1 755. 4,230. 5,090. 6 Gas - mmcf 273.7 1,795.1 2,068.8 74.991 WI 825.991 1,561.950 388.578 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ⊗ 2 2 9 9 8 8 7 7 10,000. Δ ♦ 10,000. 6 6 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B KUDU 2H 2H TIME (years) 1396 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 12/2017 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495339170000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 320 100. 100. Table 15 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- KUDU 2H 2H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 58.2 257.6 23.2 33.888 118.540 13.540 58.348 1.891 16.390 12-2020 39.1 184.1 16.6 22.748 84.724 9.678 58.348 1.891 16.390 12-2021 29.8 144.6 13.0 17.360 66.541 7.601 58.348 1.891 16.390 12-2022 24.4 120.2 10.8 14.194 55.316 6.319 58.348 1.891 16.390 12-2023 20.7 103.4 9.3 12.073 47.565 5.433 58.348 1.891 16.390 12-2024 18.2 91.2 8.2 10.572 41.972 4.794 58.348 1.891 16.390 12-2025 16.1 81.4 7.3 9.384 37.468 4.280 58.348 1.891 16.390 12-2026 14.5 73.9 6.7 8.474 33.984 3.882 58.348 1.891 16.390 12-2027 13.3 67.7 6.1 7.738 31.134 3.556 58.348 1.891 16.390 12-2028 12.2 62.4 5.6 7.132 28.717 3.280 58.348 1.891 16.390 12-2029 11.2 57.3 5.2 6.544 26.346 3.009 58.348 1.891 16.390 12-2030 10.3 52.7 4.8 6.020 24.240 2.769 58.348 1.891 16.390 12-2031 9.5 48.5 4.4 5.539 22.302 2.547 58.348 1.89116.390 12-2032 8.8 44.7 4.0 5.110 20.573 2.350 58.348 1.891 16.390 12-2033 8.0 41.0 3.7 4.688 18.874 2.156 58.348 1.891 16.390 12-2034 7.4 37.7 3.4 4.313 17.365 1.984 58.348 1.891 16.390 12-2035 6.8 34.7 3.1 3.968 15.977 1.825 58.348 1.891 16.390 12-2036 6.3 32.0 2.9 3.661 14.738 1.683 58.348 1.891 16.390 12-2037 5.8 29.4 2.7 3.358 13.521 1.544 58.348 1.891 16.390 S Tot 320.7 1,564.5 141.2 186.763 719.899 82.231 58.348 1.891 16.390 After 45.2 230.6 20.8 26.350 106.092 12.118 58.348 1.891 16.390 Total 365.9 1,795.1 162.0 213.113 825.991 94.349 58.348 1.891 16.390 Cum 124.9 273.7 .0 Ult 490.8 2,068.8 162.0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,977.310 224.158 221.925 0.000 0.000 2,423.392 124.771 60.585 3.581 12-2020 1,327.303 160.214 158.617 0.000 0.000 1,646.134 85.212 41.153 3.971 12-2021 1,012.902 125.830 124.576 0.000 0.000 1,263.308 65.562 31.583 4.377 12-2022 828.170 104.603 103.561 0.000 0.000 1,036.334 53.862 25.908 4.771 12-2023 704.439 89.946 89.050 0.000 0.000 883.435 45.960 22.086 5.158 12-2024 616.856 79.369 78.578 0.000 0.000 774.804 40.33719.370 5.528 12-2025 547.534 70.853 70.147 0.000 0.000 688.533 35.864 17.213 5.908 12-2026 494.437 64.264 63.624 0.000 0.000 622.324 32.428 15.558 6.272 12-2027 451.493 58.875 58.288 0.000 0.000 568.657 29.641 14.216 6.632 12-2028 416.169 54.304 53.763 0.000 0.000 524.236 27.327 13.106 6.990 12-2029 381.807 49.820 49.324 0.000 0.000 480.951 25.071 12.024 7.405 12-2030 351.283 45.837 45.380 0.000 0.000 442.501 23.066 11.063 7.842 12-2031 323.199 42.173 41.752 0.000 0.000 407.124 21.222 10.178 8.317 12-2032 298.141 38.903 38.515 0.000 0.000 375.559 19.577 9.389 8.816 12-2033 273.524 35.691 35.335 0.000 0.000 344.550 17.960 8.614 9.395 12-2034 251.657 32.837 32.510 0.000 0.000 317.004 16.524 7.925 10.005 12-2035 231.537 30.212 29.911 0.000 0.000 291.661 15.203 7.292 10.667 12-2036 213.586 27.870 27.592 0.000 0.000 269.048 14.025 6.726 11.364 12-2037 195.951 25.569 25.314 0.000 0.000 246.833 12.867 6.171 12.173 S Tot 10,897.298 1,361.329 1,347.763 0.000 0.000 13,606.390 706.479 340.160 5.848 After 1,537.495 200.620 198.621 0.000 0.000 1,936.736 100.956 48.418 19.512 Total 12,434.793 1,561.950 1,546.384 0.000 0.000 15,543.126 807.435 388.578 7.569 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31)Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 64.792 1 0.8 0.000 0.000 158.818 .000 2,014.426 2,014.426 1,928.910 12-2020 64.792 1 0.8 0.000 0.000 106.610 .000 1,348.367 3,362.793 3,100.904 12-2021 64.792 1 0.8 0.000 0.000 81.357 .000 1,020.015 4,382.807 3,906.310 12-2022 64.792 1 0.8 0.000 0.000 66.519 .000 825.252 5,208.060 4,498.509 12-2023 64.792 1 0.8 0.000 0.000 56.581 .000 694.016 5,902.075 4,951.176 12-2024 64.792 1 0.8 0.000 0.000 49.546 .000 600.759 6,502.834 5,307.312 12-2025 64.792 1 0.8 0.000 0.000 43.978 .000 526.685 7,029.519 5,591.095 12-2026 64.792 1 0.8 0.000 0.000 39.713 .000 469.832 7,499.351 5,821.223 12-2027 64.792 1 0.8 0.000 0.000 36.264 .000 423.743 7,923.095 6,009.906 12-2028 64.792 1 0.8 0.000 0.000 33.427 .000 385.584 8,308.679 6,165.979 12-2029 64.792 1 0.8 0.000 0.000 30.667 .000 348.398 8,657.076 6,294.171 12-2030 64.792 1 0.8 0.000 0.000 28.215 .000 315.364 8,972.441 6,399.667 12-2031 64.792 1 0.8 0.000 0.000 25.959 .000 284.972 9,257.412 6,486.336 12-2032 64.792 1 0.8 0.000 0.000 23.947 .000 257.854 9,515.266 6,557.627 12-203364.792 1 0.8 0.000 0.000 21.970 .000 231.214 9,746.481 6,615.736 12-2034 64.792 1 0.8 0.000 0.000 20.213 .000 207.549 9,954.030 6,663.160 12-2035 64.792 1 0.8 0.000 0.000 18.597 .000 185.776 10,139.806 6,701.753 12-2036 64.792 1 0.8 0.000 0.000 17.155 .000 166.349 10,306.155 6,733.168 12-2037 64.792 1 0.8 0.000 0.000 15.739 .000 147.265 10,453.420 6,758.449 S Tot 1,231.055 0.000 0.000 875.276 .000 10,453.420 10,453.420 6,758.449 After 889.343 0.000 0.000 123.492 .000 774.526 11,227.946 6,847.499 Total 2,120.398 0.000 0.000 998.769 .000 11,227.946 11,227.946 6,847.499 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 8,430.481 Oil Rate 6,334. 146. bbls/mo 50.3% 1.20 0.0% 7,199. 7,199. $/w/mo Expense 74.9912 74.9912 8.00 7,388.188 Gas Rate 26,631. 747. Mcf/mo 41.4% 1.20 0.0% 10.00 6,847.499 GOR 4,200. 5,090. scf/bbl Revenue12.00 6,395.610 NGL Rate 2,397. 69. bbls/mo Oil 58.2447 58.2447 NGL Yield 90.0 92.8 bbl/MMcf Gas 58.2447 58.2447 15.00 5,841.893 Gas Shrinkage 22.6 20.6 % ______________________________ ______________________ 20.00 5,146.949 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 16.1 % 12 Months in first year 32.734 Year Life (09/2051) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 320 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 15 Figure 16 LILIS ENERGY, INC. -- LION 1H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________35.40 Year Life (05/2054) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 4,387. 40.8 1.10 8.0 95. Initial Final Oil - mbbls 136.0 294.3 430.3 70.036 NI 206.108 12,161.182 880.883 3,235.456 11,886.738 7,072.757 Gas - mcf/mo32,905. 0.0 0.00 8.0 716. 7,500. 7,500. 6 Gas - mmcf 659.1 2,207.1 2,866.2 94.092 WI 1,252.105 2,367.730 410.335 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ⊗ 2 ⊗ 2 9 9 8 8 7 7 10,000. 10,000. 6 6 5 5 ♦ 4 4 ♦ 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B LION 1H TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 06/2017 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 4249531858 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 319 100. 100. Table 16 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- LION 1H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 43.3 325.1 27.5 30.358 184.427 19.245 59.004 1.891 14.423 12-2020 30.8 231.0 19.5 21.570 131.040 13.674 59.004 1.891 14.423 12-2021 24.0 179.7 15.2 16.785 101.968 10.640 59.004 1.891 14.423 12-2022 19.7 148.0 12.5 13.824 83.982 8.764 59.004 1.891 14.423 12-2023 16.8 126.2 10.7 11.784 71.589 7.470 59.004 1.891 14.423 12-2024 14.7 110.5 9.3 10.316 62.667 6.539 59.004 1.891 14.423 12-2025 13.1 97.9 8.3 9.141 55.533 5.795 59.004 1.891 14.423 12-2026 11.8 88.2 7.5 8.235 50.030 5.221 59.004 1.891 14.423 12-2027 10.7 80.3 6.8 7.500 45.561 4.754 59.004 1.891 14.423 12-2028 9.9 73.9 6.2 6.903 41.936 4.376 59.004 1.891 14.423 12-2029 9.0 67.8 5.7 6.333 38.474 4.015 59.004 1.891 14.423 12-2030 8.3 62.4 5.3 5.827 35.398 3.694 59.004 1.891 14.423 12-2031 7.7 57.4 4.9 5.361 32.568 3.398 59.004 1.89114.423 12-2032 7.1 53.0 4.5 4.945 30.043 3.135 59.004 1.891 14.423 12-2033 6.5 48.6 4.1 4.537 27.562 2.876 59.004 1.891 14.423 12-2034 6.0 44.7 3.8 4.174 25.359 2.646 59.004 1.891 14.423 12-2035 5.5 41.1 3.5 3.841 23.331 2.435 59.004 1.891 14.423 12-2036 5.1 37.9 3.2 3.543 21.522 2.246 59.004 1.891 14.423 12-2037 4.6 34.8 2.9 3.250 19.745 2.060 59.004 1.891 14.423 S Tot 254.5 1,908.6 161.3 178.228 1,082.734 112.984 59.004 1.891 14.423 After 39.8 298.6 25.2 27.880 169.370 17.674 59.004 1.891 14.423 Total 294.3 2,207.1 186.6 206.108 1,252.105 130.658 59.004 1.891 14.423 Cum 136.0 659.1 .0 Ult 430.3 2,866.2 186.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,791.263 348.751 277.575 0.000 0.000 2,417.588 129.748 60.440 3.436 12-2020 1,272.736 247.796 197.224 0.000 0.000 1,717.756 92.189 42.944 3.730 12-2021 990.369 192.821 153.468 0.000 0.000 1,336.657 71.736 33.416 4.019 12-2022 815.683 158.810 126.398 0.000 0.000 1,100.891 59.083 27.522 4.298 12-2023 695.317 135.375 107.747 0.000 0.000 938.439 50.365 23.461 4.573 12-2024 608.661 118.504 94.318 0.000 0.000 821.48344.088 20.537 4.837 12-2025 539.370 105.013 83.581 0.000 0.000 727.965 39.069 18.199 5.110 12-2026 485.922 94.607 75.299 0.000 0.000 655.827 35.197 16.396 5.373 12-2027 442.511 86.155 68.572 0.000 0.000 597.238 32.053 14.931 5.634 12-2028 407.311 79.302 63.117 0.000 0.000 549.730 29.503 13.743 5.886 12-2029 373.678 72.754 57.905 0.000 0.000 504.337 27.067 12.608 6.171 12-2030 343.803 66.937 53.276 0.000 0.000 464.016 24.903 11.600 6.472 12-2031 316.317 61.586 49.017 0.000 0.000 426.919 22.912 10.673 6.798 12-2032 291.793 56.811 45.216 0.000 0.000 393.820 21.136 9.846 7.141 12-2033 267.700 52.120 41.483 0.000 0.000 361.303 19.391 9.033 7.539 12-2034 246.298 47.953 38.166 0.000 0.000 332.418 17.840 8.310 7.959 12-2035 226.607 44.119 35.115 0.000 0.000 305.842 16.414 7.646 8.414 12-2036 209.038 40.699 32.393 0.000 0.000 282.130 15.141 7.053 8.893 12-2037 191.779 37.338 29.718 0.000 0.000 258.835 13.891 6.471 9.449 S Tot 10,516.158 2,047.451 1,629.587 0.000 0.000 14,193.196 761.727 354.830 5.048 After 1,645.024 320.279 254.913 0.000 0.000 2,220.216 119.156 55.505 15.591 Total 12,161.182 2,367.730 1,884.501 0.000 0.000 16,413.412 880.883 410.335 6.475 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31)Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 53.068 1 0.9 0.000 0.000 199.850 .000 1,974.483 1,974.483 1,889.502 12-2020 53.068 1 0.9 0.000 0.000 141.998 .000 1,387.557 3,362.040 3,095.318 12-2021 53.068 1 0.9 0.000 0.000 110.495 .000 1,067.942 4,429.982 3,938.501 12-2022 53.068 1 0.9 0.000 0.000 91.005 .000 870.213 5,300.195 4,562.944 12-2023 53.068 1 0.9 0.000 0.000 77.576 .000 733.969 6,034.164 5,041.666 12-2024 53.068 1 0.9 0.000 0.000 67.908 .000 635.883 6,670.047 5,418.624 12-2025 53.068 1 0.9 0.000 0.000 60.177 .000 557.452 7,227.498 5,718.988 12-2026 53.068 1 0.9 0.000 0.000 54.214 .000 496.952 7,724.451 5,962.403 12-2027 53.068 1 0.9 0.000 0.000 49.371 .000 447.816 8,172.266 6,161.807 12-2028 53.068 1 0.9 0.000 0.000 45.443 .000 407.972 8,580.239 6,326.939 12-2029 53.068 1 0.9 0.000 0.000 41.691 .000 369.903 8,950.141 6,463.040 12-2030 53.068 1 0.9 0.000 0.000 38.358 .000 336.087 9,286.228 6,575.467 12-2031 53.068 1 0.9 0.000 0.000 35.291 .000 304.975 9,591.203 6,668.217 12-2032 53.068 1 0.9 0.000 0.000 32.555 .000 277.216 9,868.419 6,744.858 12-203353.068 1 0.9 0.000 0.000 29.867 .000 249.945 10,118.364 6,807.673 12-2034 53.068 1 0.9 0.000 0.000 27.479 .000 225.720 10,344.084 6,859.247 12-2035 53.068 1 0.9 0.000 0.000 25.282 .000 203.432 10,547.516 6,901.506 12-2036 53.068 1 0.9 0.000 0.000 23.322 .000 183.545 10,731.061 6,936.167 12-2037 53.068 1 0.9 0.000 0.000 21.397 .000 164.008 10,895.069 6,964.321 S Tot 1,008.291 0.000 0.000 1,173.279 .000 10,895.069 10,895.069 6,964.321 After 870.353 0.000 0.000 183.534 .000 991.668 11,886.738 7,072.757 Total 1,878.644 0.000 0.000 1,356.812 .000 11,886.738 11,886.738 7,072.757 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 8,784.839 Oil Rate 4,477. 94. bbls/mo 40.8% 1.10 0.0% 4,699. 4,631. $/w/mo Expense 94.0921 94.0921 8.00 7,654.177 Gas Rate 33,582. 708. Mcf/mo 0.0% 0.00 0.0% 10.00 7,072.757 GOR 7,500. 7,500. scf/bblRevenue 12.00 6,589.347 NGL Rate 2,832. 59. bbls/mo Oil 70.0364 70.0364 NGL Yield 84.3 84.1 bbl/MMcf Gas 70.0364 70.0364 15.00 5,999.931 Gas Shrinkage 20.6 18.4 % ______________________________ ______________________ 20.00 5,264.331 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.1 % 12 Months in first year 35.406 Year Life (05/2054) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 319 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 16 Figure 17 LILIS ENERGY, INC. -- LION 3H 3H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________30.37 Year Life (05/2049) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 6,962. 55.3 1.20 8.0 183. Initial Final Oil - mbbls 117.8 376.3 494.1 72.349 NI 272.222 14,991.348 971.234 3,720.562 13,545.516 8,551.683 Gas -mcf/mo 39,682. 0.0 0.00 8.0 1,046. 5,700. 5,700. 6 Gas - mmcf 554.4 2,144.7 2,699.1 97.217 WI 1,287.880 2,355.533 467.623 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 Δ 8 7 7 10,000. 100,000. 6 ♦ 6 5 5 4 4 ⊗ 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B LION 3H 3H TIME (years) 22 1414 PSL/COWDEN TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 01/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495339440000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 427 100. 1,000. Table 17 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- LION 3H 3H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 63.9 364.3 23.2 46.239 218.758 16.755 55.070 1.829 13.768 12-2020 41.4 236.0 15.0 29.956 141.724 10.855 55.070 1.829 13.768 12-2021 31.1 177.5 11.3 22.526 106.570 8.162 55.070 1.829 13.768 12-2022 25.3 143.9 9.1 18.268 86.427 6.620 55.070 1.829 13.768 12-2023 21.4 121.8 7.7 15.458 73.134 5.601 55.070 1.829 13.768 12-2024 18.6 106.3 6.8 13.488 63.811 4.887 55.070 1.829 13.768 12-2025 16.5 94.1 6.0 11.940 56.490 4.327 55.070 1.829 13.768 12-2026 14.9 84.8 5.4 10.761 50.908 3.899 55.070 1.829 13.768 12-2027 13.6 77.3 4.9 9.810 46.413 3.555 55.070 1.829 13.768 12-2028 12.5 71.2 4.5 9.038 42.758 3.275 55.070 1.829 13.768 12-2029 11.5 65.3 4.2 8.292 39.227 3.004 55.070 1.829 13.768 12-2030 10.5 60.1 3.8 7.629 36.091 2.764 55.070 1.829 13.768 12-2031 9.7 55.3 3.5 7.019 33.206 2.543 55.0701.829 13.768 12-2032 8.9 51.0 3.2 6.475 30.631 2.346 55.070 1.829 13.768 12-2033 8.2 46.8 3.0 5.940 28.102 2.152 55.070 1.829 13.768 12-2034 7.6 43.1 2.7 5.465 25.855 1.980 55.070 1.829 13.768 12-2035 6.9 39.6 2.5 5.028 23.788 1.822 55.070 1.829 13.768 12-2036 6.4 36.5 2.3 4.638 21.944 1.681 55.070 1.829 13.768 12-2037 5.9 33.5 2.1 4.255 20.132 1.542 55.070 1.829 13.768 S Tot 334.8 1,908.4 121.3 242.226 1,145.970 87.772 55.070 1.829 13.768 After 41.5 236.3 15.0 29.996 141.910 10.869 55.070 1.829 13.768 Total 376.3 2,144.7 136.3 272.222 1,287.880 98.641 55.070 1.829 13.768 Cum 117.8 554.4 .0 Ult 494.1 2,699.1 136.3 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,546.417 400.109 230.678 0.000 0.000 3,177.204 164.973 79.430 2.503 12-2020 1,649.712 259.213 149.446 0.000 0.000 2,058.371 106.879 51.459 3.058 12-2021 1,240.514 194.917 112.377 0.000 0.000 1,547.808 80.368 38.695 3.579 12-2022 1,006.040 158.075 91.136 0.000 0.000 1,255.251 65.178 31.381 4.068 12-2023 851.303 133.762 77.119 0.000 0.000 1,062.184 55.153 26.555 4.538 12-2024 742.777 116.710 67.288 0.000 0.000926.774 48.122 23.169 4.985 12-2025 657.558 103.320 59.568 0.000 0.000 820.446 42.601 20.511 5.439 12-2026 592.590 93.111 53.682 0.000 0.000 739.383 38.392 18.485 5.873 12-2027 540.260 84.889 48.942 0.000 0.000 674.090 35.001 16.852 6.298 12-2028 497.713 78.204 45.087 0.000 0.000 621.004 32.245 15.525 6.710 12-2029 456.618 71.747 41.365 0.000 0.000 569.729 29.583 14.243 7.181 12-2030 420.113 66.011 38.058 0.000 0.000 524.181 27.218 13.105 7.676 12-2031 386.526 60.733 35.015 0.000 0.000 482.274 25.042 12.057 8.214 12-2032 356.558 56.025 32.300 0.000 0.000 444.883 23.100 11.122 8.780 12-2033 327.118 51.399 29.633 0.000 0.000 408.150 21.193 10.204 9.437 12-2034 300.966 47.290 27.264 0.000 0.000 375.520 19.498 9.388 10.129 12-2035 276.904 43.509 25.085 0.000 0.000 345.498 17.940 8.637 10.880 12-2036 255.436 40.136 23.140 0.000 0.000 318.711 16.549 7.968 11.670 12-2037 234.345 36.822 21.229 0.000 0.000 292.396 15.182 7.310 12.587 S Tot 13,339.466 2,095.979 1,208.413 0.000 0.000 16,643.858 864.215 416.096 5.188 After 1,651.882 259.554 149.643 0.000 0.000 2,061.078 107.019 51.527 19.389 Total 14,991.348 2,355.533 1,358.056 0.000 0.000 18,704.936 971.234 467.623 6.753 (21) (22) (23) (24) (25) (26)(27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 95.662 1 1.0 0.000 0.000 138.557 .000 2,698.582 2,698.582 2,585.594 12-2020 95.662 1 1.0 0.000 0.000 89.765 .000 1,714.607 4,413.189 4,076.293 12-2021 95.662 1 1.0 0.000 0.000 67.499 .000 1,265.584 5,678.773 5,075.742 12-2022 95.662 1 1.0 0.000 0.000 54.741 .000 1,008.289 6,687.062 5,799.358 12-2023 95.662 1 1.0 0.000 0.000 46.321 .000 838.493 7,525.555 6,346.299 12-2024 95.662 1 1.0 0.000 0.000 40.416 .000 719.405 8,244.960 6,772.796 12-2025 95.662 1 1.0 0.000 0.000 35.779 .000 625.893 8,870.853 7,110.050 12-2026 95.662 1 1.0 0.000 0.000 32.244 .000 554.601 9,425.453 7,381.711 12-2027 95.662 1 1.0 0.000 0.000 29.397 .000 497.178 9,922.631 7,603.100 12-2028 95.662 1 1.0 0.000 0.000 27.082 .000 450.490 10,373.122 7,785.449 12-2029 95.662 1 1.0 0.000 0.000 24.846 .000 405.396 10,778.518 7,934.617 12-2030 95.662 1 1.0 0.000 0.000 22.859 .000 365.338 11,143.856 8,056.833 12-2031 95.662 1 1.0 0.000 0.000 21.032 .000 328.482 11,472.338 8,156.738 12-2032 95.662 1 1.0 0.000 0.000 19.401 .000 295.598 11,767.9368,238.467 12-2033 95.662 1 1.0 0.000 0.000 17.799 .000 263.293 12,031.228 8,304.641 12-2034 95.662 1 1.0 0.000 0.000 16.376 .000 234.595 12,265.823 8,358.247 12-2035 95.662 1 1.0 0.000 0.000 15.067 .000 208.192 12,474.015 8,401.499 12-2036 95.662 1 1.0 0.000 0.000 13.899 .000 184.634 12,658.649 8,436.369 12-2037 95.662 1 1.0 0.000 0.000 12.751 .000 161.491 12,820.139 8,464.094 S Tot 1,817.575 0.000 0.000 725.832 .000 12,820.139 12,820.139 8,464.094 After 1,087.272 0.000 0.000 89.883 .000 725.377 13,545.516 8,551.683 Total 2,904.848 0.000 0.000 815.714 .000 13,545.516 13,545.516 8,551.683 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 10,389.586 Oil Rate 7,180. 182. bbls/mo 55.3% 1.20 0.0% 8,199. 8,081. $/w/mo Expense 97.2173 97.2173 8.00 9,184.045 Gas Rate 40,928. 1,038. Mcf/mo 0.0% 0.00 0.0% 10.00 8,551.683 GOR5,700. 5,700. scf/bbl Revenue 12.00 8,019.390 NGL Rate 2,569. 65. bbls/mo Oil 72.3491 72.3491 NGL Yield 62.8 63.1 bbl/MMcf Gas 72.3491 72.3491 15.00 7,362.360 Gas Shrinkage 19.5 16.4 % ______________________________ ______________________ 20.00 6,530.147 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 22.5 % 12 Months in first year 30.371 Year Life (05/2049) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 427 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 17 Figure 18 IMPETRO OPERATING, LLC -- MEXICO P FEDERAL 001 001 JABALINA (WOLFCAMP, SOUTHWEST) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 8.0 0.00 0.0 0. Initial Final Oil - mbbls 13.7 0.0 13.7 78.444 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 0.0 0.000.0 0. 0. 0. 6 Gas - mmcf 86.3 0.0 86.3 100.000 WI .000 .000 .000 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 ⊗ 3 3 ⊗ 2 2 9 9 8 8 7 7 1,000. 1,000. 6 6 5 5 4 4 ♦ 3 ♦ ⊗ ⊗ 3 Δ N O N - C O M M E R C I A L 2 ♦ 2 9 9 8 ♦ 8 7 7 6 ∇ 6 5 5 4 4 100. 3 3 100. 2 2 ∇ 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP, SOUTHWEST MEXICO P FEDERAL 001 001 TIME (years) 21 26S 35E 23 NM OIL 3884178 ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 09/2015 Last Data 08/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 3002522405 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 133 10. 10. Table 18 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING, LLC -- MEXICO P FEDERAL 001 001 JABALINA (WOLFCAMP, SOUTHWEST) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum 13.7 86.3 .0 Ult 13.7 86.3 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Oil Rate 137. 137. bbls/mo 8.0% 0.00 0.0% 0. 0. $/w/mo Expense 97.2173 97.2173 8.00 .000 Gas Rate 0. 0. Mcf/mo 0.0% 0.00 0.0% 10.00 .000 GOR 0. 0. scf/bbl Revenue 12.00 .000 NGL Rate 0. 0. bbls/mo Oil 72.3491 72.3491 NGL Yield 0.0 0.0 bbl/MMcf Gas 72.3491 72.3491 15.00 .000 Gas Shrinkage 0.0 0.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 133 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 18 Figure 19 LILIS ENERGY, INC. -- MOOSE #1H 1.5 (CGA) 1H PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________38.80 Year Life (10/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 9,267. 51.8 1.20 8.0 130. Initial Final Oil - mbbls 67.5 548.8 616.2 61.951 NI 339.978 19,614.307 1,163.924 4,325.613 16,991.45410,028.204 Gas - mcf/mo 35,216. 0.0 0.00 8.0 494. 3,800. 3,800. 6 Gas - mmcf 128.2 2,085.4 2,213.6 77.273 WI 956.019 1,778.196 576.436 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 10,000. 6 6 ⊗ 5 5 4 ♦ 4 Δ 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP A MOOSE #1H 1.5 (CGA) 1H TIME (years) 1395 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 05/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495340350000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 498 100. 100. Table 19 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- MOOSE #1H 1.5 (CGA) 1H PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 86.7 329.6 27.0 53.732 151.095 16.724 57.693 1.860 15.734 12-2020 57.6 218.9 17.9 35.686 100.349 11.107 57.693 1.860 15.734 12-2021 43.8 166.3 13.6 27.109 76.232 8.437 57.693 1.860 15.734 12-2022 35.7 135.6 11.1 22.109 62.171 6.881 57.693 1.860 15.734 12-2023 30.3 115.2 9.4 18.775 52.796 5.844 57.693 1.860 15.734 12-2024 26.5 100.7 8.3 16.422 46.180 5.111 57.693 1.860 15.734 12-2025 23.5 89.3 7.3 14.565 40.956 4.533 57.693 1.860 15.734 12-2026 21.2 80.6 6.6 13.144 36.961 4.091 57.693 1.860 15.734 12-2027 19.4 73.6 6.0 11.996 33.733 3.734 57.693 1.860 15.734 12-2028 17.8 67.8 5.6 11.056 31.089 3.441 57.693 1.860 15.734 12-2029 16.4 62.2 5.1 10.143 28.522 3.157 57.693 1.860 15.734 12-2030 15.1 57.2 4.7 9.332 26.242 2.905 57.693 1.860 15.734 12-2031 13.9 52.7 4.3 8.586 24.1442.672 57.693 1.860 15.734 12-2032 12.8 48.6 4.0 7.920 22.272 2.465 57.693 1.860 15.734 12-2033 11.7 44.6 3.7 7.266 20.433 2.262 57.693 1.860 15.734 12-2034 10.8 41.0 3.4 6.686 18.800 2.081 57.693 1.860 15.734 12-2035 9.9 37.7 3.1 6.151 17.297 1.914 57.693 1.860 15.734 12-2036 9.2 34.8 2.9 5.674 15.956 1.766 57.693 1.860 15.734 12-2037 8.4 31.9 2.6 5.206 14.638 1.620 57.693 1.860 15.734 S Tot 470.6 1,788.4 146.5 291.560 819.866 90.745 57.693 1.860 15.734 After 78.2 297.0 24.3 48.419 136.153 15.070 57.693 1.860 15.734 Total 548.8 2,085.4 170.8 339.978 956.019 105.814 57.693 1.860 15.734 Cum 67.5 128.2 .0 Ult 616.2 2,213.6 170.8 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 3,099.972 281.038 263.135 0.000 0.000 3,644.145 183.954 91.104 4.540 12-2020 2,058.817 186.648 174.759 0.000 0.000 2,420.224 122.171 60.506 4.843 12-2021 1,564.018 141.791 132.759 0.000 0.000 1,838.568 92.810 45.964 5.129 12-2022 1,275.534 115.638 108.271 0.000 0.000 1,499.443 75.691 37.486 5.397 12-2023 1,083.203 98.201 91.946 0.000 0.000 1,273.350 64.278 31.834 5.656 12-2024 947.454 85.894 80.4230.000 0.000 1,113.772 56.222 27.844 5.901 12-2025 840.277 76.178 71.325 0.000 0.000 987.780 49.862 24.695 6.151 12-2026 758.306 68.747 64.367 0.000 0.000 891.420 44.998 22.286 6.390 12-2027 692.098 62.744 58.747 0.000 0.000 813.589 41.069 20.340 6.624 12-2028 637.850 57.826 54.143 0.000 0.000 749.818 37.850 18.745 6.853 12-2029 585.184 53.052 49.672 0.000 0.000 687.908 34.725 17.198 7.115 12-2030 538.400 48.810 45.701 0.000 0.000 632.911 31.949 15.823 7.390 12-2031 495.356 44.908 42.047 0.000 0.000 582.312 29.395 14.558 7.690 12-2032 456.951 41.426 38.787 0.000 0.000 537.165 27.116 13.429 8.005 12-2033 419.222 38.006 35.585 0.000 0.000 492.812 24.877 12.320 8.371 12-2034 385.706 34.967 32.740 0.000 0.000 453.413 22.888 11.335 8.756 12-2035 354.870 32.172 30.122 0.000 0.000 417.164 21.058 10.429 9.174 12-2036 327.356 29.678 27.787 0.000 0.000 384.821 19.426 9.621 9.614 12-2037 300.327 27.227 25.493 0.000 0.000 353.047 17.822 8.826 10.124 S Tot 16,820.901 1,524.951 1,427.811 0.000 0.000 19,773.662 998.161 494.342 6.039 After 2,793.406 253.245 237.113 0.000 0.000 3,283.764 165.762 82.094 17.101 Total 19,614.307 1,778.196 1,664.924 0.000 0.000 23,057.427 1,163.924 576.436 7.614 (21) (22)(23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 53.783 1 0.8 0.000 0.000 353.874 .000 2,961.431 2,961.431 2,836.351 12-2020 53.783 1 0.8 0.000 0.000 235.022 .000 1,948.742 4,910.173 4,530.300 12-2021 53.783 1 0.8 0.000 0.000 178.539 .000 1,467.472 6,377.645 5,689.042 12-2022 53.783 1 0.8 0.000 0.000 145.607 .000 1,186.876 7,564.521 6,540.740 12-2023 53.783 1 0.8 0.000 0.000 123.652 .000 999.804 8,564.325 7,192.848 12-2024 53.783 1 0.8 0.000 0.000 108.156 .000 867.766 9,432.092 7,707.259 12-2025 53.783 1 0.8 0.000 0.000 95.921 .000 763.519 10,195.611 8,118.644 12-2026 53.783 1 0.8 0.000 0.000 86.564 .000 683.790 10,879.401 8,453.564 12-2027 53.783 1 0.8 0.000 0.000 79.006 .000 619.392 11,498.793 8,729.358 12-2028 53.783 1 0.8 0.000 0.000 72.813 .000 566.627 12,065.420 8,958.702 12-2029 53.783 1 0.8 0.000 0.000 66.801 .000 515.401 12,580.821 9,148.335 12-2030 53.783 1 0.8 0.000 0.000 61.461 .000 469.896 13,050.717 9,305.519 12-2031 53.783 1 0.8 0.000 0.000 56.547 .000 428.030 13,478.747 9,435.692 12-2032 53.783 1 0.8 0.000 0.000 52.163 .000390.674 13,869.421 9,543.697 12-2033 53.783 1 0.8 0.000 0.000 47.856 .000 353.977 14,223.398 9,632.654 12-2034 53.783 1 0.8 0.000 0.000 44.030 .000 321.377 14,544.775 9,706.082 12-2035 53.783 1 0.8 0.000 0.000 40.510 .000 291.384 14,836.160 9,766.609 12-2036 53.783 1 0.8 0.000 0.000 37.369 .000 264.623 15,100.783 9,816.579 12-2037 53.783 1 0.8 0.000 0.000 34.284 .000 238.333 15,339.116 9,857.489 S Tot 1,021.870 0.000 0.000 1,920.173 .000 15,339.116 15,339.116 9,857.489 After 1,064.691 0.000 0.000 318.879 .000 1,652.338 16,991.454 10,028.204 Total 2,086.561 0.000 0.000 2,239.052 .000 16,991.454 16,991.454 10,028.204 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 12,460.630 Oil Rate 9,531. 128. bbls/mo 51.8% 1.20 0.0% 5,798. 5,716. $/w/mo Expense 77.2739 77.2739 8.00 10,849.326 Gas Rate 36,219. 489. Mcf/mo 0.0% 0.000.0% 10.00 10,028.204 GOR 3,800. 3,800. scf/bbl Revenue 12.00 9,348.904 NGL Rate 2,937. 39. bbls/mo Oil 61.9518 61.9518 NGL Yield 81.1 81.4 bbl/MMcf Gas 61.9518 61.9518 15.00 8,524.260 Gas Shrinkage 28.1 25.5 % ______________________________ ______________________ 20.00 7,499.475 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.5 % 12 Months in first year 38.806 Year Life (10/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 498 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 19 Figure 20 LILIS ENERGY, INC. -- PRIZE HOG 2H (CGA) PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________30.09 Year Life (02/2049) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 7,489. 73.6 1.20 8.1 140. Initial Final Oil - mbbls 86.9 301.7 388.6 79.375 NI 239.472 13,815.800 1,161.639 3,687.331 10,454.803 6,856.305Gas - mcf/mo 26,210. 0.0 0.00 8.1 490. 3,500. 3,500. 6 Gas - mmcf 164.1 1,055.9 1,220.0 100.000 WI 620.232 1,153.632 805.462 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 ⊗ 7 7 10,000. 10,000. 6 6 5 ♦ 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP A PRIZE HOG 2H (CGA) TIME (years) NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 06/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 3002544111 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 479 100. 100. Table 20 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- PRIZE HOG 2H (CGA) PHANTOM (WOLFCAMP A) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 61.4 214.8 18.6 48.705 126.147 14.733 57.693 1.860 15.734 12-2020 34.8 121.7 10.5 27.599 71.480 8.349 57.693 1.860 15.734 12-2021 24.9 87.3 7.5 19.799 51.278 5.989 57.693 1.860 15.734 12-2022 19.7 69.1 6.0 15.668 40.581 4.740 57.693 1.860 15.734 12-2023 16.5 57.6 5.0 13.060 33.826 3.951 57.693 1.860 15.734 12-2024 14.2 49.7 4.3 11.279 29.213 3.412 57.693 1.860 15.734 12-2025 12.5 43.7 3.8 9.911 25.670 2.998 57.693 1.860 15.734 12-2026 11.2 39.2 3.4 8.882 23.004 2.687 57.693 1.860 15.734 12-2027 10.2 35.5 3.1 8.062 20.880 2.439 57.693 1.860 15.734 12-2028 9.3 32.7 2.8 7.409 19.189 2.241 57.693 1.860 15.734 12-2029 8.6 30.0 2.6 6.797 17.604 2.056 57.693 1.860 15.734 12-2030 7.9 27.6 2.4 6.253 16.196 1.892 57.693 1.860 15.734 12-2031 7.2 25.4 2.2 5.753 14.901 1.740 57.693 1.860 15.734 12-2032 6.7 23.4 2.0 5.307 13.746 1.605 57.693 1.860 15.734 12-2033 6.1 21.5 1.9 4.869 12.611 1.473 57.693 1.860 15.734 12-2034 5.6 19.8 1.7 4.480 11.603 1.355 57.693 1.860 15.734 12-2035 5.2 18.2 1.6 4.122 10.675 1.247 57.693 1.860 15.734 12-2036 4.8 16.8 1.4 3.802 9.848 1.150 57.693 1.860 15.734 12-2037 4.4 15.4 1.3 3.488 9.035 1.055 57.693 1.860 15.734 S Tot 271.2 949.1 82.0 215.246 557.488 65.112 57.693 1.860 15.734 After 30.5 106.8 9.2 24.226 62.744 7.328 57.693 1.860 15.734 Total 301.7 1,055.9 91.3 239.472 620.232 72.440 57.693 1.860 15.734 Cum 86.9 164.1 .0 Ult 388.6 1,220.0 91.3 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,809.948 234.633 231.821 0.000 0.000 3,276.402 236.262 163.820 4.963 12-2020 1,592.238 132.953 131.360 0.000 0.000 1,856.551 133.876 92.828 5.634 12-2021 1,142.238 95.378 94.235 0.000 0.000 1,331.850 96.040 66.593 6.244 12-2022 903.959 75.481 74.577 0.000 0.000 1,054.017 76.005 52.701 6.813 12-2023 753.478 62.916 62.162 0.000 0.000 878.556 63.353 43.928 7.358 12-2024 650.718 54.336 53.684 0.000 0.000 758.738 54.713 37.937 7.875 12-2025 571.80147.746 47.174 0.000 0.000 666.720 48.077 33.336 8.398 12-2026 512.418 42.787 42.274 0.000 0.000 597.480 43.084 29.874 8.898 12-2027 465.114 38.837 38.372 0.000 0.000 542.323 39.107 27.116 9.387 12-2028 427.447 35.692 35.264 0.000 0.000 498.404 35.940 24.920 9.854 12-2029 392.125 32.743 32.350 0.000 0.000 457.218 32.970 22.861 10.374 12-2030 360.776 30.125 29.764 0.000 0.000 420.665 30.334 21.033 10.921 12-2031 331.933 27.717 27.384 0.000 0.000 387.034 27.909 19.352 11.515 12-2032 306.198 25.568 25.261 0.000 0.000 357.027 25.745 17.851 12.139 12-2033 280.916 23.457 23.176 0.000 0.000 327.548 23.620 16.377 12.864 12-2034 258.457 21.581 21.323 0.000 0.000 301.361 21.731 15.068 13.627 12-2035 237.794 19.856 19.618 0.000 0.000 277.268 19.994 13.863 14.456 12-2036 219.358 18.317 18.097 0.000 0.000 255.772 18.444 12.789 15.327 12-2037 201.246 16.804 16.603 0.000 0.000 234.653 16.921 11.733 16.339 S Tot 12,418.162 1,036.928 1,024.498 0.000 0.000 14,479.588 1,044.125 723.979 7.858 After 1,397.638 116.704 115.305 0.000 0.000 1,629.647 117.514 81.482 23.655 Total 13,815.800 1,153.632 1,139.803 0.000 0.000 16,109.235 1,161.639 805.462 9.456 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating WellsWorkover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 69.600 1 1.0 0.000 0.000 323.986 .000 2,482.734 2,482.734 2,383.026 12-2020 69.600 1 1.0 0.000 0.000 183.585 .000 1,376.663 3,859.396 3,580.550 12-2021 69.600 1 1.0 0.000 0.000 131.700 .000 967.918 4,827.314 4,345.127 12-2022 69.600 1 1.0 0.000 0.000 104.226 .000 751.484 5,578.798 4,884.525 12-2023 69.600 1 1.0 0.000 0.000 86.876 .000 614.800 6,193.598 5,285.595 12-2024 69.600 1 1.0 0.000 0.000 75.028 .000 521.460 6,715.058 5,594.766 12-2025 69.600 1 1.0 0.000 0.000 65.928 .000 449.778 7,164.837 5,837.137 12-2026 69.600 1 1.0 0.000 0.000 59.082 .000 395.840 7,560.677 6,031.041 12-2027 69.600 1 1.0 0.000 0.000 53.628 .000 352.873 7,913.549 6,188.178 12-2028 69.600 1 1.0 0.000 0.000 49.285 .000 318.659 8,232.209 6,317.166 12-2029 69.600 1 1.0 0.000 0.000 45.212 .000 286.575 8,518.784 6,422.613 12-2030 69.600 1 1.0 0.000 0.000 41.597 .000 258.100 8,776.884 6,508.956 12-2031 69.600 1 1.0 0.000 0.000 38.272 .000 231.901 9,008.786 6,579.487 12-2032 69.600 1 1.0 0.000 0.000 35.305 .000 208.526 9,217.311 6,637.142 12-2033 69.600 1 1.0 0.0000.000 32.390 .000 185.562 9,402.873 6,683.780 12-2034 69.600 1 1.0 0.000 0.000 29.800 .000 165.162 9,568.035 6,721.520 12-2035 69.600 1 1.0 0.000 0.000 27.418 .000 146.393 9,714.429 6,751.933 12-2036 69.600 1 1.0 0.000 0.000 25.292 .000 129.647 9,844.076 6,776.419 12-2037 69.600 1 1.0 0.000 0.000 23.204 .000 113.196 9,957.272 6,795.853 S Tot 1,322.400 0.000 0.000 1,431.812 .000 9,957.272 9,957.272 6,795.853 After 771.972 0.000 0.000 161.147 .000 497.532 10,454.803 6,856.305 Total 2,094.372 0.000 0.000 1,592.959 .000 10,454.803 10,454.803 6,856.305 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 8,190.546 Oil Rate 7,873. 139. bbls/mo 73.6% 1.20 0.0% 5,800. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 7,317.086 Gas Rate 27,555. 487. Mcf/mo 0.0% 0.00 0.0% 10.00 6,856.305 GOR 3,500. 3,500. scf/bbl Revenue 12.00 6,466.770 NGLRate 2,307. 43. bbls/mo Oil 79.3750 79.3750 NGL Yield 83.7 88.4 bbl/MMcf Gas 79.3750 79.3750 15.00 5,983.498 Gas Shrinkage 29.6 26.1 % ______________________________ ______________________ 20.00 5,366.702 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 38.0 % 12 Months in first year 30.094 Year Life (02/2049) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 479 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 20 Figure 21 LILIS ENERGY, INC. -- PRIZE HOG BWZ ST COM 1H #1H TBD (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________29.25 Year Life (04/2048) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 4,742. 45.8 1.20 7.9 166. Initial Final Oil - mbbls 120.9 296.8 417.8 80.312 NI 238.389 13,597.013 1,123.329 5,765.415 7,934.4124,956.574 Gas - mcf/mo 14,226. 0.0 0.00 7.9 498. 3,000. 3,000. 6 Gas - mmcf 198.6 890.5 1,089.1 100.000 WI 321.824 628.523 780.166 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 ⊗ 7 10,000. 10,000. 6 6 5 ♦ 5 4 4 ⊗ 3 3 ♦ 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B PRIZE HOG BWZ ST COM 1H #1H TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 10/2017 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 3002542744 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 317 100. 100. Table 21 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- PRIZE HOG BWZ ST COM 1H #1H TBD (WOLFCAMP B) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 45.8 137.4 11.9 36.782 49.655 9.537 57.037 1.953 22.290 12-2020 31.7 95.2 8.2 25.481 34.399 6.607 57.037 1.953 22.290 12-2021 24.6 73.7 6.4 19.719 26.620 5.113 57.037 1.953 22.290 12-2022 20.2 60.7 5.2 16.251 21.939 4.214 57.037 1.953 22.290 12-2023 17.3 51.9 4.5 13.895 18.758 3.603 57.037 1.953 22.290 12-2024 15.2 45.6 3.9 12.211 16.485 3.166 57.037 1.953 22.290 12-2025 13.5 40.6 3.5 10.868 14.672 2.818 57.037 1.953 22.290 12-2026 12.2 36.7 3.2 9.834 13.276 2.550 57.037 1.953 22.290 12-2027 11.2 33.6 2.9 8.995 12.143 2.332 57.037 1.953 22.290 12-2028 10.3 31.0 2.7 8.294 11.197 2.151 57.037 1.953 22.290 12-2029 9.5 28.4 2.5 7.609 10.272 1.973 57.037 1.953 22.290 12-2030 8.7 26.2 2.3 7.001 9.451 1.815 57.037 1.953 22.290 12-2031 8.0 24.1 2.1 6.441 8.696 1.670 57.037 1.953 22.290 12-2032 7.4 22.2 1.9 5.942 8.021 1.541 57.037 1.953 22.290 12-2033 6.8 20.4 1.8 5.451 7.359 1.413 57.037 1.953 22.290 12-2034 6.2 18.7 1.6 5.015 6.771 1.300 57.037 1.953 22.290 12-2035 5.7 17.2 1.5 4.614 6.229 1.196 57.037 1.953 22.290 12-2036 5.3 15.9 1.4 4.257 5.746 1.104 57.037 1.953 22.290 12-2037 4.9 14.6 1.3 3.905 5.272 1.013 57.037 1.953 22.290 S Tot 264.7 794.0 68.6 212.565 286.963 55.115 57.037 1.953 22.290 After 32.2 96.5 8.3 25.823 34.861 6.696 57.037 1.953 22.290 Total 296.8 890.5 77.0 238.389 321.824 61.811 57.037 1.953 22.290 Cum 120.9 198.6 .0 Ult 417.8 1,089.1 77.0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,097.920 96.977 212.582 0.000 0.000 2,407.479 173.321 120.374 12.832 12-2020 1,453.338 67.181 147.267 0.000 0.000 1,667.785 120.069 83.389 13.403 12-2021 1,124.705 51.990 113.966 0.000 0.000 1,290.661 92.919 64.533 13.946 12-2022 926.928 42.847 93.926 0.000 0.000 1,063.701 76.579 53.185 14.458 12-2023 792.517 36.634 80.306 0.000 0.000 909.457 65.475 45.473 14.953 12-2024 696.500 32.196 70.576 0.000 0.000 799.272 57.542 39.964 15.423 12-2025 619.88628.654 62.813 0.000 0.000 711.354 51.212 35.568 15.902 12-2026 560.929 25.929 56.839 0.000 0.000 643.697 46.342 32.185 16.360 12-2027 513.022 23.715 51.985 0.000 0.000 588.721 42.384 29.436 16.810 12-2028 473.069 21.868 47.936 0.000 0.000 542.873 39.083 27.144 17.254 12-2029 434.009 20.062 43.978 0.000 0.000 498.049 35.856 24.902 17.768 12-2030 399.311 18.458 40.462 0.000 0.000 458.231 32.989 22.912 18.309 12-2031 367.387 16.982 37.227 0.000 0.000 421.597 30.352 21.080 18.897 12-2032 338.903 15.666 34.341 0.000 0.000 388.910 27.999 19.446 19.515 12-2033 310.921 14.372 31.506 0.000 0.000 356.799 25.687 17.840 20.232 12-2034 286.064 13.223 28.987 0.000 0.000 328.274 23.633 16.414 20.987 12-2035 263.193 12.166 26.669 0.000 0.000 302.029 21.744 15.101 21.808 12-2036 242.788 11.223 24.602 0.000 0.000 278.612 20.058 13.931 22.671 12-2037 222.742 10.296 22.570 0.000 0.000 255.608 18.402 12.780 23.672 S Tot 12,124.132 560.439 1,228.539 0.000 0.000 13,913.110 1,001.646 695.655 15.778 After 1,472.882 68.084 149.247 0.000 0.000 1,690.213 121.683 84.511 30.341 Total 13,597.013 628.523 1,377.786 0.000 0.000 15,603.322 1,123.329 780.166 17.355 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating WellsWorkover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 66.000 1 1.0 0.000 0.000 591.712 .000 1,456.072 1,456.072 1,393.987 12-2020 66.000 1 1.0 0.000 0.000 409.909 .000 988.418 2,444.490 2,253.073 12-2021 66.000 1 1.0 0.000 0.000 317.220 .000 749.990 3,194.480 2,845.261 12-2022 66.000 1 1.0 0.000 0.000 261.437 .000 606.500 3,800.980 3,280.486 12-2023 66.000 1 1.0 0.000 0.000 223.527 .000 508.983 4,309.963 3,612.471 12-2024 66.000 1 1.0 0.000 0.000 196.446 .000 439.321 4,749.284 3,872.911 12-2025 66.000 1 1.0 0.000 0.000 174.837 .000 383.737 5,133.020 4,079.676 12-2026 66.000 1 1.0 0.000 0.000 158.208 .000 340.962 5,473.983 4,246.686 12-2027 66.000 1 1.0 0.000 0.000 144.696 .000 306.205 5,780.188 4,383.035 12-2028 66.000 1 1.0 0.000 0.000 133.428 .000 277.218 6,057.406 4,495.249 12-2029 66.000 1 1.0 0.000 0.000 122.411 .000 248.880 6,306.286 4,586.826 12-2030 66.000 1 1.0 0.000 0.000 112.624 .000 223.706 6,529.992 4,661.664 12-2031 66.000 1 1.0 0.000 0.000 103.620 .000 200.545 6,730.537 4,722.659 12-2032 66.000 1 1.0 0.000 0.000 95.587 .000 179.879 6,910.416 4,772.394 12-203366.000 1 1.0 0.000 0.000 87.694 .000 159.578 7,069.994 4,812.502 12-2034 66.000 1 1.0 0.000 0.000 80.683 .000 141.543 7,211.537 4,844.846 12-2035 66.000 1 1.0 0.000 0.000 74.233 .000 124.951 7,336.488 4,870.805 12-2036 66.000 1 1.0 0.000 0.000 68.478 .000 110.146 7,446.634 4,891.609 12-2037 66.000 1 1.0 0.000 0.000 62.824 .000 95.602 7,542.236 4,908.023 S Tot 1,254.000 0.000 0.000 3,419.573 .000 7,542.236 7,542.236 4,908.023 After 676.421 0.000 0.000 415.422 .000 392.176 7,934.412 4,956.574 Total 1,930.421 0.000 0.000 3,834.994 .000 7,934.412 7,934.412 4,956.574 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 6,057.576 Oil Rate 4,855. 165. bbls/mo 45.8% 1.20 0.0% 5,500. 5,500. $/w/mo Expense 100.0000 100.0000 8.00 5,335.872 Gas Rate 14,566. 496. Mcf/mo 0.0% 0.00 0.0% 10.00 4,956.574 GOR 3,000. 3,000. scf/bbl Revenue 12.004,637.071 NGL Rate 1,252. 43. bbls/mo Oil 80.3125 80.3125 NGL Yield 86.0 88.4 bbl/MMcf Gas 80.3125 80.3125 15.00 4,242.637 Gas Shrinkage 56.1 55.1 % ______________________________ ______________________ 20.00 3,743.460 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 44.4 % 12 Months in first year 29.251 Year Life (04/2048) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 317 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 21 Figure 22 IMPETRO OPERATING LLC -- SHAMMO C24-4 1 1 HALEY (LWR. WOLFCAMP-PENN CONS.) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Loving COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 1.1 0.0 1.1 37.526 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 8.0 0.00 0.0 0. 0.0 0.06 Gas - mmcf 363.4 0.0 363.4 50.000 WI .000 .000 .000 0.000 6 5 5 GAS (mcf/mo) Δ OIL (bbls/mo) ∇ 4 4 3 3 2 2 ∇ 9 9 8 8 7 7 10,000. ♦ 100. 6 6 5 5 4 4 ♦ ♦ 3 3 ∇ N O N - C O M M E R C I A L ⊗ ♦ ⊗ 2 2 9 9 Δ ♦ ⊗ 8 8 ♦ ⊗ ♦ 7 7 Δ ♦ ∇ ♦ ♦ 6 ∇ ∇ 6 5 5 Δ ⊗ ♦4 4 ♦ 1,000. 3 Δ 3 10. Δ ∇ ∇ ∇ ∇ 2 2 ⊗ ⊗ ⊗ 05 06 07 08 09 10 11 12 13 14 15 16 17 18∇ 19 20 21∇ 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : LWR. WOLFCAMP-PENN C SHAMMO C24-4 1 1 TIME (years) 1401 PSL/COWDEN C TX GAS 2175424 ♦⊗ ∗ -- Annual Averages Perfs: 15980. - 16187. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 10/2007 Last Data 09/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42301313780000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 68 100. 1. Table 22 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- SHAMMO C24-4 1 1 HALEY \(LWR. WOLFCAMP-PENN CONS.\) FIELD -- Loving COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum 1.1 363.4 .0 Ult 1.1 363.4 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Gas Rate 1,306. 1,306. Mcf/mo 8.0% 0.00 0.0% 0. 0. $/w/mo Expense 100.0000 100.0000 8.00 .000 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 10.00 .000 NGL Rate 0. 0. bbls/mo Revenue 12.00 .000 Cond Yield 0.0 0.0 bbl/MMcf Oil 80.3125 80.3125 NGL Yield 0.0 0.0 bbl/MMcf Gas 80.3125 80.3125 15.00 .000 Gas Shrinkage 100.0 100.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 68 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 22 Figure 23 LILIS ENERGY, INC. -- TIGER 1H 1H PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________29.40 Year Life (05/2048) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 5,021. 49.8 1.20 8.0 161. Initial Final Oil - mbbls 142.5 294.7 437.1 72.829 NI 214.608 12,381.338 828.591 3,545.529 11,034.487 6,944.845 Gas -mcf/mo 25,605. 0.0 0.00 8.0 820. 5,100. 5,100. 6 Gas - mmcf 567.8 1,502.8 2,070.6 89.867 WI 897.491 1,697.155 395.092 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 ⊗ 3 3 2 2 9 9 8 8 7 7 10,000. 10,000. 6 ⊗ ♦ 6 5 5 Δ 4 4 3 3 ♦ 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B TIGER 1H 1H TIME (years) 1394 PSL/COWDEN C TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 11/2017 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495300160000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 322 100. 100. Table 23 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- TIGER 1H 1H PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 47.5 242.2 21.6 34.587 144.643 15.707 57.693 1.891 17.701 12-2020 32.0 163.1 14.5 23.295 97.421 10.579 57.693 1.891 17.701 12-2021 24.4 124.7 11.1 17.803 74.453 8.085 57.693 1.891 17.701 12-2022 20.0 102.0 9.1 14.568 60.924 6.616 57.693 1.891 17.701 12-2023 17.0 86.8 7.7 12.398 51.849 5.630 57.693 1.891 17.701 12-2024 14.9 76.1 6.8 10.861 45.419 4.932 57.693 1.891 17.701 12-2025 13.2 67.5 6.0 9.643 40.326 4.379 57.693 1.891 17.701 12-2026 12.0 61.0 5.4 8.709 36.423 3.955 57.693 1.891 17.701 12-2027 10.9 55.7 5.0 7.954 33.265 3.612 57.693 1.891 17.701 12-2028 10.1 51.3 4.6 7.332 30.663 3.330 57.693 1.891 17.701 12-2029 9.2 47.1 4.2 6.727 28.132 3.055 57.693 1.891 17.701 12-2030 8.5 43.3 3.9 6.189 25.883 2.811 57.693 1.891 17.701 12-2031 7.8 39.9 3.6 5.694 23.813 2.586 57.693 1.891 17.70112-2032 7.2 36.8 3.3 5.253 21.967 2.386 57.693 1.891 17.701 12-2033 6.6 33.7 3.0 4.819 20.153 2.189 57.693 1.891 17.701 12-2034 6.1 31.0 2.8 4.434 18.542 2.014 57.693 1.891 17.701 12-2035 5.6 28.6 2.5 4.079 17.060 1.853 57.693 1.891 17.701 12-2036 5.2 26.4 2.3 3.763 15.737 1.709 57.693 1.891 17.701 12-2037 4.7 24.2 2.2 3.452 14.438 1.568 57.693 1.891 17.701 S Tot 263.0 1,341.4 119.5 191.561 801.108 86.996 57.693 1.891 17.701 After 31.6 161.4 14.4 23.047 96.383 10.467 57.693 1.891 17.701 Total 294.7 1,502.8 133.8 214.608 897.491 97.463 57.693 1.891 17.701 Cum 142.5 567.8 .0 Ult 437.1 2,070.6 133.8 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,995.420 273.520 278.040 0.000 0.000 2,546.980 133.539 63.675 3.495 12-2020 1,343.970 184.223 187.268 0.000 0.000 1,715.461 89.942 42.887 4.117 12-2021 1,027.110 140.790 143.117 0.000 0.000 1,311.017 68.737 32.775 4.705 12-2022 840.471 115.206 117.111 0.000 0.000 1,072.788 56.246 26.820 5.258 12-2023 715.277 98.046 99.666 0.000 0.000 912.989 47.868 22.825 5.791 12-2024 626.576 85.887 87.307 0.000 0.000 799.770 41.932 19.994 6.29812-2025 556.312 76.256 77.516 0.000 0.000 710.083 37.230 17.752 6.815 12-2026 502.468 68.875 70.014 0.000 0.000 641.356 33.626 16.034 7.308 12-2027 458.901 62.903 63.943 0.000 0.000 585.747 30.711 14.644 7.792 12-2028 423.017 57.985 58.943 0.000 0.000 539.945 28.309 13.499 8.265 12-2029 388.090 53.197 54.076 0.000 0.000 495.363 25.972 12.384 8.810 12-2030 357.063 48.944 49.753 0.000 0.000 455.760 23.896 11.394 9.383 12-2031 328.517 45.031 45.775 0.000 0.000 419.323 21.985 10.483 10.006 12-2032 303.047 41.540 42.226 0.000 0.000 386.813 20.281 9.670 10.662 12-2033 278.025 38.110 38.740 0.000 0.000 354.875 18.606 8.872 11.422 12-2034 255.797 35.063 35.643 0.000 0.000 326.503 17.119 8.163 12.223 12-2035 235.347 32.260 32.793 0.000 0.000 300.400 15.750 7.510 13.093 12-2036 217.100 29.759 30.251 0.000 0.000 277.110 14.529 6.928 14.007 12-2037 199.175 27.302 27.753 0.000 0.000 254.230 13.329 6.356 15.069 S Tot 11,051.684 1,514.895 1,539.934 0.000 0.000 14,106.512 739.607 352.663 6.614 After 1,329.654 182.260 185.273 0.000 0.000 1,697.187 88.984 42.430 22.248 Total 12,381.338 1,697.155 1,725.207 0.000 0.000 15,803.700 828.591 395.092 8.293 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating WellsWorkover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 88.430 1 0.9 0.000 0.000 152.362 .000 2,108.976 2,108.976 2,019.730 12-2020 88.430 1 0.9 0.000 0.000 102.620 .000 1,391.583 3,500.558 3,229.389 12-2021 88.430 1 0.9 0.000 0.000 78.426 .000 1,042.649 4,543.207 4,052.717 12-2022 88.430 1 0.9 0.000 0.000 64.175 .000 837.118 5,380.325 4,653.460 12-2023 88.430 1 0.9 0.000 0.000 54.615 .000 699.251 6,079.576 5,109.562 12-2024 88.430 1 0.9 0.000 0.000 47.843 .000 601.571 6,681.147 5,466.195 12-2025 88.430 1 0.9 0.000 0.000 42.478 .000 524.194 7,205.341 5,748.646 12-2026 88.430 1 0.9 0.000 0.000 38.366 .000 464.900 7,670.241 5,976.367 12-2027 88.430 1 0.9 0.000 0.000 35.040 .000 416.923 8,087.164 6,162.019 12-2028 88.430 1 0.9 0.000 0.000 32.300 .000 377.407 8,464.571 6,314.787 12-2029 88.430 1 0.9 0.000 0.000 29.633 .000 338.944 8,803.515 6,439.505 12-2030 88.430 1 0.9 0.000 0.000 27.264 .000 304.777 9,108.292 6,541.463 12-2031 88.430 1 0.9 0.000 0.000 25.084 .000 273.341 9,381.633 6,624.599 12-2032 88.430 1 0.9 0.000 0.000 23.139 .000 245.293 9,626.925 6,692.420 12-2033 88.430 1 0.9 0.0000.000 21.229 .000 217.738 9,844.663 6,747.146 12-2034 88.430 1 0.9 0.000 0.000 19.532 .000 193.261 10,037.924 6,791.307 12-2035 88.430 1 0.9 0.000 0.000 17.970 .000 170.740 10,208.664 6,826.779 12-2036 88.430 1 0.9 0.000 0.000 16.577 .000 150.647 10,359.311 6,855.232 12-2037 88.430 1 0.9 0.000 0.000 15.208 .000 130.907 10,490.217 6,877.707 S Tot 1,680.167 0.000 0.000 843.859 .000 10,490.217 10,490.217 6,877.707 After 919.977 0.000 0.000 101.527 .000 544.270 11,034.487 6,944.845 Total 2,600.144 0.000 0.000 945.385 .000 11,034.487 11,034.487 6,944.845 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 8,457.427 Oil Rate 5,155. 159. bbls/mo 49.8% 1.20 0.0% 8,199. 8,081. $/w/mo Expense 89.8677 89.8677 8.00 7,466.120 Gas Rate 26,294. 811. Mcf/mo 0.0% 0.00 0.0% 10.00 6,944.845 GOR 5,100. 5,100. scf/bbl Revenue 12.00 6,505.509NGL Rate 2,322. 71. bbls/mo Oil 72.8298 72.8298 NGL Yield 88.3 88.6 bbl/MMcf Gas 72.8298 72.8298 15.00 5,962.716 Gas Shrinkage 20.2 17.3 % ______________________________ ______________________ 20.00 5,274.855 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 21.2 % 12 Months in first year 29.407 Year Life (05/2048) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 322 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 23 Figure 24 LILIS ENERGY, INC. -- TIGER 3H 1.5 PHANTOM (3RD BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________37.19 Year Life (03/2056) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 17,509. 91.5 1.20 7.9 116. Initial Final Oil - mbbls 27.1 502.5 529.6 75.307 NI 378.426 21,832.474 1,500.312 4,901.293 21,276.75713,837.635 Gas - mcf/mo 113,811. 0.0 0.00 7.9 751. 6,500. 6,500. 6 Gas - mmcf 175.8 3,266.3 3,442.1 93.503 WI 1,820.231 3,385.629 709.702 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : 3RD BONE SPRINGS TIGER 3H 1.5 TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 19 21 API: 42495341770000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 534 100. 1,000. Table 24 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- TIGER 3H 1.5 PHANTOM (3RD BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 120.6 783.9 64.2 90.824 436.863 48.353 57.693 1.860 15.734 12-2020 57.4 373.4 30.6 43.256 208.063 23.029 57.693 1.860 15.734 12-2021 39.4 256.2 21.0 29.679 142.757 15.801 57.693 1.860 15.734 12-2022 30.5 198.5 16.3 22.997 110.616 12.243 57.693 1.860 15.734 12-2023 25.1 163.4 13.4 18.932 91.064 10.079 57.693 1.860 15.734 12-2024 21.5 140.0 11.5 16.216 78.001 8.633 57.693 1.860 15.734 12-2025 18.8 122.3 10.0 14.167 68.143 7.542 57.693 1.860 15.734 12-2026 16.8 109.1 8.9 12.641 60.801 6.730 57.693 1.860 15.734 12-2027 15.2 98.7 8.1 11.435 55.002 6.088 57.693 1.860 15.734 12-2028 13.9 90.5 7.4 10.483 50.425 5.581 57.693 1.860 15.734 12-2029 12.8 83.0 6.8 9.614 46.242 5.118 57.693 1.860 15.734 12-2030 11.7 76.3 6.3 8.845 42.546 4.709 57.693 1.860 15.734 12-2031 10.8 70.2 5.88.138 39.144 4.333 57.693 1.860 15.734 12-2032 10.0 64.8 5.3 7.507 36.109 3.997 57.693 1.860 15.734 12-2033 9.1 59.4 4.9 6.887 33.128 3.667 57.693 1.860 15.734 12-2034 8.4 54.7 4.5 6.337 30.479 3.374 57.693 1.860 15.734 12-2035 7.7 50.3 4.1 5.830 28.043 3.104 57.693 1.860 15.734 12-2036 7.1 46.4 3.8 5.378 25.868 2.863 57.693 1.860 15.734 12-2037 6.6 42.6 3.5 4.934 23.733 2.627 57.693 1.860 15.734 S Tot 443.6 2,883.7 236.2 334.101 1,607.028 177.869 57.693 1.860 15.734 After 58.9 382.6 31.3 44.325 213.203 23.598 57.693 1.860 15.734 Total 502.5 3,266.3 267.5 378.426 1,820.231 201.467 57.693 1.860 15.734 Cum 27.1 175.8 .0 Ult 529.6 3,442.1 267.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 5,239.886 812.565 760.804 0.000 0.000 6,813.255 360.081 170.331 3.386 12-2020 2,495.580 386.997 362.345 0.000 0.000 3,244.923 171.494 81.123 3.753 12-2021 1,712.283 265.529 248.615 0.000 0.000 2,226.426 117.667 55.661 4.073 12-2022 1,326.772 205.747 192.640 0.000 0.000 1,725.159 91.175 43.129 4.370 12-2023 1,092.249 169.378 158.589 0.000 0.000 1,420.216 75.059 35.505 4.653 12-2024935.572 145.082 135.840 0.000 0.000 1,216.494 64.292 30.412 4.921 12-2025 817.328 126.746 118.672 0.000 0.000 1,062.745 56.166 26.569 5.191 12-2026 729.267 113.090 105.886 0.000 0.000 948.242 50.115 23.706 5.450 12-2027 659.713 102.304 95.787 0.000 0.000 857.804 45.335 21.445 5.702 12-2028 604.821 93.791 87.817 0.000 0.000 786.429 41.563 19.661 5.943 12-2029 554.648 86.011 80.532 0.000 0.000 721.191 38.115 18.030 6.204 12-2030 510.306 79.135 74.094 0.000 0.000 663.534 35.068 16.588 6.478 12-2031 469.508 72.808 68.170 0.000 0.000 610.486 32.264 15.262 6.776 12-2032 433.107 67.163 62.885 0.000 0.000 563.155 29.763 14.079 7.089 12-2033 397.346 61.618 57.693 0.000 0.000 516.656 27.305 12.916 7.452 12-2034 365.579 56.692 53.080 0.000 0.000 475.351 25.122 11.884 7.834 12-2035 336.352 52.159 48.837 0.000 0.000 437.348 23.114 10.934 8.250 12-2036 310.275 48.115 45.050 0.000 0.000 403.440 21.322 10.086 8.687 12-2037 284.656 44.142 41.331 0.000 0.000 370.129 19.561 9.253 9.194 S Tot 19,275.246 2,989.072 2,798.666 0.000 0.000 25,062.984 1,324.581 626.575 4.776 After 2,557.227 396.557 371.296 0.000 0.000 3,325.081 175.731 83.127 15.489 Total 21,832.474 3,385.629 3,169.962 0.000 0.00028,388.064 1,500.312 709.702 6.030 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 65.079 1 0.9 0.000 0.000 595.419 .000 5,622.345 5,622.345 5,410.157 12-2020 65.079 1 0.9 0.000 0.000 283.578 .000 2,643.649 8,265.994 7,710.830 12-2021 65.079 1 0.9 0.000 0.000 194.570 .000 1,793.450 10,059.443 9,127.733 12-2022 65.079 1 0.9 0.000 0.000 150.764 .000 1,375.012 11,434.456 10,114.750 12-2023 65.079 1 0.9 0.000 0.000 124.115 .000 1,120.459 12,554.915 10,845.708 12-2024 65.079 1 0.9 0.000 0.000 106.311 .000 950.401 13,505.315 11,409.190 12-2025 65.079 1 0.9 0.000 0.000 92.875 .000 822.057 14,327.372 11,852.166 12-2026 65.079 1 0.9 0.000 0.000 82.868 .000 726.475 15,053.847 12,208.026 12-2027 65.079 1 0.9 0.000 0.000 74.965 .000 650.980 15,704.828 12,497.907 12-2028 65.079 1 0.9 0.000 0.000 68.727 .000 591.399 16,296.227 12,737.283 12-2029 65.079 1 0.9 0.000 0.000 63.026 .000 536.942 16,833.169 12,934.843 12-2030 65.079 1 0.9 0.000 0.000 57.987 .000 488.812 17,321.981 13,098.356 12-2031 65.079 1 0.9 0.000 0.000 53.351 .000 444.53017,766.511 13,233.548 12-2032 65.079 1 0.9 0.000 0.000 49.215 .000 405.020 18,171.531 13,345.520 12-2033 65.079 1 0.9 0.000 0.000 45.151 .000 366.205 18,537.735 13,437.552 12-2034 65.079 1 0.9 0.000 0.000 41.542 .000 331.725 18,869.460 13,513.345 12-2035 65.079 1 0.9 0.000 0.000 38.220 .000 300.001 19,169.461 13,575.663 12-2036 65.079 1 0.9 0.000 0.000 35.257 .000 271.696 19,441.158 13,626.969 12-2037 65.079 1 0.9 0.000 0.000 32.346 .000 243.890 19,685.048 13,668.834 S Tot 1,236.494 0.000 0.000 2,190.286 .000 19,685.048 19,685.048 13,668.834 After 1,183.930 0.000 0.000 290.583 .000 1,591.710 21,276.757 13,837.635 Total 2,420.424 0.000 0.000 2,480.869 .000 21,276.757 21,276.757 13,837.635 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 16,491.117 Oil Rate 19,139. 114. bbls/mo 91.6% 1.20 0.0% 5,799. 5,525. $/w/moExpense 93.5038 93.5038 8.00 14,741.963 Gas Rate 124,405. 747. Mcf/mo 0.0% 0.00 0.0% 10.00 13,837.635 GOR 6,500. 6,500. scf/bbl Revenue 12.00 13,081.631 NGL Rate 9,493. 58. bbls/mo Oil 75.3079 75.3079 NGL Yield 76.3 78.5 bbl/MMcf Gas 75.3079 75.3079 15.00 12,152.750 Gas Shrinkage 32.3 25.9 % ______________________________ ______________________ 20.00 10,978.029 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 15.6 % 12 Months in first year 37.194 Year Life (03/2056) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 534 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 24 Figure 25 IMPETRO OPERATING LLC -- TUBB 1 UNIT 1 1 CRITTENDON (ATOKA OOLITIC) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 0.2 0.0 0.2 57.420 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 8.1 0.90 0.0 0. 0.0 0.0 6 Gas - mmcf728.3 0.0 728.3 71.950 WI .000 .000 .000 0.000 6 5 5 GAS (mcf/mo) Δ OIL (bbls/mo) ∇ 4 4 3 3 Δ 2 2 ♦ 9 9 8 8 7 7 10,000. 6 6 100. ♦ 5 5 ♦ 4 4 ♦ 3 3 N O N - C O M M E R C I A L ♦ ♦ 2 2 9 9 ♦8 8 ♦ ♦ ♦ ♦ 7 Δ 7 6 ♦ 6 Δ ∇ 5 5 ♦ 4 4 1,000. ♦ 3 3 10. 2 2 ⊗ 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : ATOKA OOLITIC TUBB 1 UNIT 1 1 TIME (years) 1395 PSL/COWDEN C TX GAS 1305189 ♦⊗ ∗ -- Annual Averages Perfs: 15220. - 15270. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 10/2004 Last Data 09/2018 01 / 16 / 2019 12 : 15 : 19 21 API: 42495300700000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 24 100. 1. Table 25 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- TUBB 1 UNIT 1 1 CRITTENDON \(ATOKA OOLITIC\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum .2 728.3 .0 Ult .2 728.3 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Gas Rate 1,602. 1,602. Mcf/mo 8.2% 0.90 0.0% 0. 0. $/w/mo Expense 93.5038 93.5038 8.00 .000 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 10.00 .000 NGL Rate 0. 0. bbls/mo Revenue 12.00 .000 Cond Yield 0.0 0.0 bbl/MMcf Oil 75.3079 75.3079 NGL Yield 0.0 0.0 bbl/MMcf Gas 75.3079 75.3079 15.00 .000 Gas Shrinkage 100.0 100.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 24 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 25 Figure 26 IMPETRO OPERATING LLC -- TUBB 22 UNIT 1R 1R CRITTENDON (MORROW) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 0.6 0.0 0.6 67.179 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 0.0 0.00 0.0 0. 0.0 0.0 6 Gas - mmcf2,455.8 0.0 2,455.8 85.428 WI .000 .000 .000 0.000 6 5 5 GAS (mcf/mo) Δ OIL (bbls/mo) ∇ 4 4 3 3 2 2 ♦ 9 9 ♦ ♦ ♦ 8 8 ∇ 7 7 10,000. ♦ ♦ 100. 6 6 ♦ ♦ 5 ♦ 5 4 4 ♦ 3 ♦ 3 N O N - C O M M E R C I A L ♦ 2 2 9 9 ∇ 8 8 7 7 Δ ⊗ 6 6 ♦ ⊗ 5 5 4 4 1,000. 3 3 10. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : MORROW TUBB 22 UNIT 1R 1R TIME (years) 1414 PSL/COWDEN C TX GAS 291703 ♦⊗ ∗ -- Annual Averages Perfs: 15440. - 15504. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 02/1997 Last Data 07/2017 01 / 16 / 2019 12 : 15 : 20 21 API: 4249510934 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 104 100. 1. Table 26 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- TUBB 22 UNIT 1R 1R CRITTENDON \(MORROW\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum .6 2,455.8 .0 Ult .6 2,455.8 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Gas Rate 0. 0. Mcf/mo 0.0% 0.00 0.0% 0. 0. $/w/mo Expense 93.5038 93.5038 8.00 .000 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 10.00 .000 NGL Rate 0. 0. bbls/mo Revenue 12.00 .000 Cond Yield 0.0 0.0 bbl/MMcf Oil 75.3079 75.3079 NGL Yield 0.0 0.0 bbl/MMcf Gas 75.3079 75.3079 15.00 .000 Gas Shrinkage 0.0 0.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 104 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 26 Figure 27 IMPETRO OPERATING LLC -- TUBB 9 UNIT 1 1 CRITTENDON (MORROW) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 3.0 0.0 3.0 55.443 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 8.0 0.00 0.0 0. 0.0 0.0 6 Gas - mmcf 1,418.80.0 1,418.8 69.581 WI .000 .000 .000 0.000 6 5 5 GAS (mcf/mo) Δ OIL (bbls/mo) ∇ 4 4 3 3 2 2 9 9 8 8 ♦ 7 7 10,000. 100. 6 6 ∇ 5 5 Δ ♦ 4 4 ∇ 3 3 N O N - C O M M E R C I A L Δ ∇ ∇ 2 2 Δ ♦ 9 9 ⊗ ♦ 8 8 Δ 7 7 6 6 5 5 ♦ 4 4 ⊗ 1,000. 3 3 10. Δ Δ Δ Δ ♦ Δ Δ2 ♦ 2 Δ ⊗ Δ ♦ Δ ♦ 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : MORROW TUBB 9 UNIT 1 1 TIME (years) 1377 PSL/COWDEN C TX GAS 413705 ♦⊗ ∗ -- Annual Averages Perfs: 16008. - 15305. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 12/2000 Last Data 03/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 4249510933 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 94 100. 1. Table 27 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- TUBB 9 UNIT 1 1 CRITTENDON \(MORROW\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum 3.0 1,418.8 .0 Ult 3.0 1,418.8 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Gas Rate 22. 22. Mcf/mo 8.0% 0.00 0.0% 0. 0. $/w/mo Expense 93.5038 93.5038 8.00 .000 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 10.00 .000 NGL Rate 0. 0. bbls/mo Revenue 12.00 .000 Cond Yield 0.0 0.0 bbl/MMcf Oil 75.3079 75.3079 NGL Yield 0.0 0.0 bbl/MMcf Gas 75.3079 75.3079 15.00 .000 Gas Shrinkage 100.0 100.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 94 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 27 Figure 28 IMPETRO OPERATING LLC -- TUBB ESTATE 1-75 1 1 CRITTENDON (BRUSHY CANYON) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 17.6 1.20 0.0 0. Initial Final Oil - mbbls 74.4 0.0 74.4 48.534 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 20.7 1.20 0.0 0. 0. 0. 6Gas - mmcf 89.7 0.0 89.7 62.906 WI .000 .000 .000 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 1,000. Δ 6 6 1,000. ∇ ⊗ ⊗ ⊗ 5 5 ♦ ⊗ ♦ 4 4 ⊗ ⊗ ♦ ♦ ∇ ⊗ Δ ♦ 3 3 ⊗ Δ ⊗ N O N - C O M M E R C I A L Δ ∇ ⊗ ⊗ ♦ ♦ 2 2 Δ ♦ 9 9 ⊗ ∇ 8 ♦ 8 Δ ♦ 7 7 Δ Δ ♦6 6 ♦ 5 5 4 4 ⊗ Δ ∇ ∇ 100. ΔΔ3 3 100. Δ Δ 2 Δ 2 Δ 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : BRUSHY CANYON TUBB ESTATE 1-75 1 1 TIME (years) 1381 PSL/COWDEN C TX OIL 510038 ♦⊗ ∗ -- Annual Averages Perfs: 7900. - 8560. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 11/2001 Last Data 08/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 42495301270000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 23 10. 10. Table 28 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- TUBB ESTATE 1-75 1 1 CRITTENDON \(BRUSHY CANYON\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum 74.4 89.7 .0 Ult 74.4 89.7 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Oil Rate 3. 3. bbls/mo 17.7% 1.20 0.0% 0. 0. $/w/mo Expense 93.5038 93.5038 8.00 .000 Gas Rate 67. 67. Mcf/mo 20.8% 1.20 0.0% 10.00 .000 GOR 17,600. 17,600. scf/bbl Revenue 12.00 .000 NGL Rate 0. 0. bbls/mo Oil 75.3079 75.3079 NGL Yield 0.0 0.0 bbl/MMcf Gas 75.3079 75.3079 15.00 .000 Gas Shrinkage 100.0 100.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 23 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 28 Figure 29 IMPETRO OPERATING LLC -- TUBB ESTATE 21 2 2 CRITTENDON (BRUSHY CANYON) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 8.0 0.00 0.0 0. Initial Final Oil - mbbls 29.7 0.0 29.7 65.911 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 0.0 0.00 0.0 0. 0. 0. 6 Gas -mmcf 19.5 0.0 19.5 89.818 WI .000 .000 .000 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ Δ 4 4 ♦ 3 3 ∇ Δ ⊗ ∇ ∇ ♦ ⊗ ⊗ ⊗ Δ Δ ⊗ ♦ ♦ ∇ 2 2 9 9 ♦ ⊗ 8 8 Δ ♦ ♦ ♦ ♦ ♦7 ♦ ♦ 7 100. 100. 6 ♦ ♦ 6 ∇ ⊗ 5 5 ∇ ⊗ ∇ 4 4 ⊗ ∇ ∇ ⊗ ∇ 3 3 N O N - C O M M E R C I A L 2 2 9 9 8 8 7 7 6 6 5 5 4 4 ∇ 10. 3 3 10. ∇ 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : BRUSHY CANYON TUBB ESTATE 21 2 2 TIME (years) 1391 PSL/COWDEN C TX OIL 1320325 ♦⊗ ∗ -- Annual Averages Perfs: 8366. - 8394. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 12/2004 Last Data 09/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 42495302850000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 88 1. 1. Table 29 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- TUBB ESTATE 21 2 2 CRITTENDON \(BRUSHY CANYON\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum 29.7 19.5 .0 Ult 29.7 19.5 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Oil Rate 106. 106. bbls/mo 8.0% 0.00 0.0% 0. 0. $/w/mo Expense 93.5038 93.5038 8.00 .000 Gas Rate 0. 0. Mcf/mo 0.0% 0.00 0.0% 10.00 .000 GOR 0. 0. scf/bbl Revenue 12.00 .000 NGL Rate 0. 0. bbls/mo Oil 75.3079 75.3079 NGL Yield 0.0 0.0 bbl/MMcf Gas 75.3079 75.3079 15.00 .000 Gas Shrinkage 0.0 0.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 88 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 29 Figure 30 IMPETRO OPERATING LLC -- TUBB ESTATE 25 1 1 CRITTENDON (ELLEN. 21450) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 0.0 0.0 0.0 72.076 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 0.0 0.00 0.0 0. 0.0 0.0 6 Gas -mmcf 58.5 0.0 58.5 90.735 WI .000 .000 .000 0.000 6 5 5 GAS (mcf/mo) Δ OIL (bbls/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 100. 6 6 5 5 4 4 3 3 N O N - C O M M E R C I A L ♦ 2 2 9 9 8 8 7 7 6 6 5 5 Δ ♦4 4 ♦ ♦ 1,000. 3 3 10. Δ ♦ ♦ ♦ Δ 2 2 Δ Δ Δ 05 06 07 08 09 10 11 12♦ 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : ELLEN. 21450 TUBB ESTATE 25 1 1 TIME (years) 1394 PSL/COWDEN C TX GAS 2891901 ♦⊗ ∗ -- Annual Averages Perfs: 21466. - 21673. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 06/2009 Last Data 03/2017 01 / 16 / 2019 12 : 15 : 20 21 API: 4249510811 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 99 100. 1. Table 30 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- TUBB ESTATE 25 1 1 CRITTENDON \(ELLEN. 21450\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum .0 58.5 .0 Ult .0 58.5 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Gas Rate 0. 0. Mcf/mo 0.0% 0.00 0.0% 0. 0. $/w/mo Expense 93.5038 93.5038 8.00 .000 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 10.00 .000 NGL Rate 0. 0. bbls/mo Revenue 12.00 .000 Cond Yield 0.0 0.0 bbl/MMcf Oil 75.3079 75.3079 NGL Yield 0.0 0.0 bbl/MMcf Gas 75.3079 75.3079 15.00 .000 Gas Shrinkage 0.0 0.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 99 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 30 Figure 31 IMPETRO OPERATING LLC -- TUBB ESTATE 25 3 3 CRITTENDON (BRUSHY CANYON) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 0.0 Year Life (01/2019) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 0. 0.0 0.00 0.0 0. Initial Final Oil - mbbls 11.7 0.0 11.7 75.779 NI .000 .000 0.000 0.000 .000 .000 Gas - mcf/mo 0. 15.0 1.40 0.0 0. 0. 0. 6 Gas -mmcf 12.8 0.0 12.8 93.593 WI .000 .000 .000 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 ⊗3 3 ♦ ♦ ⊗ Δ 2 ♦ 2 Δ9 9 ⊗ 8 ♦ 8 ⊗ 7 ♦ 7 100. 100. 6 ⊗ 6 Δ ∇ 5 5 4 4 ⊗ 3 3 N O N - C O M M E R C I A L ♦ 2 2 9 9 8 8 7 7 6 6 5 5 4 4 10. 3 3 10. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : BRUSHY CANYON TUBB ESTATE 25 3 3 TIME (years) 1394 PSL/COWDEN C TX OIL 3473393 ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 06/2013 Last Data 03/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 4249532097 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 71 1. 1. Table 31 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- TUBB ESTATE 25 3 3 CRITTENDON \(BRUSHY CANYON\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL Non-Commercial Cum 11.7 12.8 .0 Ult 11.7 12.8 .0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc.________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 .000 Oil Rate 0. 0. bbls/mo 0.0% 0.00 0.0% 0. 0. $/w/mo Expense 93.5038 93.5038 8.00 .000 Gas Rate 50. 50. Mcf/mo 15.0% 1.40 0.0% 10.00 .000 GOR 0. 0. scf/bbl Revenue 12.00 .000 NGL Rate 0. 0. bbls/mo Oil 75.3079 75.3079 NGL Yield 0.0 0.0 bbl/MMcf Gas 75.3079 75.3079 15.00 .000 Gas Shrinkage 100.0 100.0 % ______________________________ ______________________ 20.00 .000 Oil Severance 0.0 0.0 % Gas Severance 0.0 0.0 % NGL Severance 0.0 0.0 % Ad___________________________________________ Valorem 0.0 % 1 Months in first year .000 Year Life (01/2019) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 71 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 31 Figure 32 LILIS ENERGY, INC. -- WEST AXIS 1H 1.5 PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________35.15 Year Life (02/2054) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,757. 81.6 1.20 8.1 153. Initial Final Oil - mbbls 63.0 527.6 590.6 74.999 NI 395.704 22,829.283 1,204.032 5,232.337 17,775.82811,417.115 Gas - mcf/mo 28,038. 0.0 0.00 8.1 290. 1,900. 1,900. 6 Gas - mmcf 17.5 1,002.5 1,019.9 100.000 WI 556.360 1,034.830 620.826 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B WEST AXIS 1H 1.5 TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 20 21 API: 42495341390000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 436 100. 100. Table 32 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- WEST AXIS 1H 1.5 PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 113.5 215.7 17.7 85.145 119.715 13.250 57.693 1.860 15.734 12-2020 60.2 114.3 9.4 45.135 63.460 7.024 57.693 1.860 15.734 12-2021 42.4 80.5 6.6 31.768 44.666 4.944 57.693 1.860 15.734 12-2022 33.2 63.1 5.2 24.909 35.022 3.876 57.693 1.860 15.734 12-2023 27.5 52.3 4.3 20.648 29.032 3.213 57.693 1.860 15.734 12-2024 23.7 45.0 3.7 17.767 24.980 2.765 57.693 1.860 15.734 12-2025 20.8 39.4 3.2 15.571 21.893 2.423 57.693 1.860 15.734 12-2026 18.6 35.3 2.9 13.927 19.581 2.167 57.693 1.860 15.734 12-2027 16.8 32.0 2.6 12.622 17.747 1.964 57.693 1.860 15.734 12-2028 15.5 29.4 2.4 11.588 16.292 1.803 57.693 1.860 15.734 12-2029 14.2 26.9 2.2 10.629 14.944 1.654 57.693 1.860 15.734 12-2030 13.0 24.8 2.0 9.779 13.749 1.522 57.693 1.860 15.734 12-2031 12.0 22.8 1.9 8.997 12.650 1.400 57.6931.860 15.734 12-2032 11.1 21.0 1.7 8.300 11.669 1.292 57.693 1.860 15.734 12-2033 10.2 19.3 1.6 7.614 10.706 1.185 57.693 1.860 15.734 12-2034 9.3 17.7 1.5 7.006 9.850 1.090 57.693 1.860 15.734 12-2035 8.6 16.3 1.3 6.446 9.063 1.003 57.693 1.860 15.734 12-2036 7.9 15.1 1.2 5.946 8.360 .925 57.693 1.860 15.734 12-2037 7.3 13.8 1.1 5.455 7.670 .849 57.693 1.860 15.734 S Tot 465.7 884.8 72.5 349.253 491.049 54.350 57.693 1.860 15.734 After 61.9 117.7 9.6 46.452 65.311 7.229 57.693 1.860 15.734 Total 527.6 1,002.5 82.1 395.704 556.360 61.579 57.693 1.860 15.734 Cum 63.0 17.5 .0 Ult 590.6 1,019.9 82.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 4,912.282 222.669 208.485 0.000 0.000 5,343.436 259.077 133.586 5.884 12-2020 2,603.976 118.036 110.517 0.000 0.000 2,832.528 137.335 70.813 6.426 12-2021 1,832.784 83.078 77.786 0.000 0.000 1,993.649 96.662 49.841 6.912 12-2022 1,437.080 65.141 60.992 0.000 0.000 1,563.213 75.793 39.080 7.364 12-2023 1,191.263 53.999 50.559 0.000 0.000 1,295.821 62.828 32.396 7.795 12-2024 1,025.027 46.463 43.504 0.000 0.000 1,114.994 54.061 27.875 8.20512-2025 898.358 40.722 38.128 0.000 0.000 977.207 47.380 24.430 8.618 12-2026 803.484 36.421 34.101 0.000 0.000 874.007 42.376 21.850 9.014 12-2027 728.199 33.009 30.906 0.000 0.000 792.113 38.406 19.803 9.400 12-2028 668.521 30.303 28.373 0.000 0.000 727.197 35.258 18.180 9.769 12-2029 613.208 27.796 26.026 0.000 0.000 667.030 32.341 16.676 10.175 12-2030 564.184 25.574 23.945 0.000 0.000 613.703 29.755 15.343 10.601 12-2031 519.079 23.529 22.031 0.000 0.000 564.639 27.377 14.116 11.064 12-2032 478.834 21.705 20.322 0.000 0.000 520.862 25.254 13.022 11.551 12-2033 439.298 19.913 18.644 0.000 0.000 477.856 23.169 11.946 12.116 12-2034 404.177 18.321 17.154 0.000 0.000 439.652 21.317 10.991 12.711 12-2035 371.864 16.856 15.783 0.000 0.000 404.503 19.612 10.113 13.357 12-2036 343.033 15.549 14.559 0.000 0.000 373.142 18.092 9.329 14.037 12-2037 314.710 14.266 13.357 0.000 0.000 342.332 16.598 8.558 14.825 S Tot 20,149.361 913.351 855.170 0.000 0.000 21,917.883 1,062.691 547.947 8.107 After 2,679.922 121.478 113.740 0.000 0.000 2,915.140 141.341 72.878 23.393 Total 22,829.283 1,034.830 968.910 0.000 0.000 24,833.023 1,204.032 620.826 9.901 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) OperatingWells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 69.600 1 1.0 0.000 0.000 599.428 .000 4,281.745 4,281.745 4,113.483 12-2020 69.600 1 1.0 0.000 0.000 317.754 .000 2,237.026 6,518.771 6,059.736 12-2021 69.600 1 1.0 0.000 0.000 223.648 .000 1,553.898 8,072.669 7,287.247 12-2022 69.600 1 1.0 0.000 0.000 175.362 .000 1,203.379 9,276.047 8,151.013 12-2023 69.600 1 1.0 0.000 0.000 145.365 .000 985.632 10,261.679 8,793.993 12-2024 69.600 1 1.0 0.000 0.000 125.080 .000 838.378 11,100.057 9,291.050 12-2025 69.600 1 1.0 0.000 0.000 109.623 .000 726.174 11,826.231 9,682.354 12-2026 69.600 1 1.0 0.000 0.000 98.046 .000 642.134 12,468.365 9,996.898 12-2027 69.600 1 1.0 0.000 0.000 88.859 .000 575.445 13,043.810 10,253.142 12-2028 69.600 1 1.0 0.000 0.000 81.577 .000 522.582 13,566.392 10,464.665 12-2029 69.600 1 1.0 0.000 0.000 74.828 .000 473.586 14,039.978 10,638.916 12-2030 69.600 1 1.0 0.000 0.000 68.845 .000 430.159 14,470.137 10,782.811 12-2031 69.600 1 1.0 0.000 0.000 63.341 .000 390.205 14,860.342 10,901.482 12-2032 69.600 1 1.0 0.000 0.000 58.430 .000 354.556 15,214.89810,999.506 12-2033 69.600 1 1.0 0.000 0.000 53.606 .000 319.534 15,534.432 11,079.810 12-2034 69.600 1 1.0 0.000 0.000 49.320 .000 288.424 15,822.856 11,145.711 12-2035 69.600 1 1.0 0.000 0.000 45.377 .000 259.801 16,082.657 11,199.679 12-2036 69.600 1 1.0 0.000 0.000 41.859 .000 234.262 16,316.919 11,243.918 12-2037 69.600 1 1.0 0.000 0.000 38.403 .000 209.173 16,526.093 11,279.825 S Tot 1,322.400 0.000 0.000 2,458.752 .000 16,526.093 16,526.093 11,279.825 After 1,124.164 0.000 0.000 327.021 .000 1,249.736 17,775.828 11,417.115 Total 2,446.564 0.000 0.000 2,785.773 .000 17,775.828 17,775.828 11,417.115 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 13,704.402 Oil Rate 15,711. 151. bbls/mo 81.6% 1.20 0.0% 5,800. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 12,198.480 Gas Rate 29,851. 287. Mcf/mo 0.0% 0.00 0.0%10.00 11,417.115 GOR 1,900. 1,900. scf/bbl Revenue 12.00 10,762.901 NGL Rate 2,338. 24. bbls/mo Oil 74.9996 74.9996 NGL Yield 78.4 84.2 bbl/MMcf Gas 74.9996 74.9996 15.00 9,958.414 Gas Shrinkage 30.5 25.8 % ______________________________ ______________________ 20.00 8,941.195 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 18.3 % 12 Months in first year 35.154 Year Life (02/2054) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 436 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 32 Figure 33 LILIS ENERGY, INC. -- WILD HOG 2H (CGA) PHANTOM (WOLFCAMP XY) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________35.81 Year Life (10/2054) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 6,506. 73.7 1.20 8.0 76. Initial Final Oil - mbbls 66.0 268.3 334.4 79.375 NI 212.981 12,566.747 1,110.809 3,070.930 10,386.837 6,535.383Gas - mcf/mo 33,829. 0.0 0.00 8.0 394. 5,200. 5,200. 6 Gas - mmcf 285.9 1,395.3 1,681.2 100.000 WI 764.177 1,445.058 766.767 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ⊗ 2 2 9 9 8 8 7 7 10,000. 10,000. 6 6 5 5 4 ♦ 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP XY WILD HOG 2H (CGA) TIME (years) NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 05/2018 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 3002544112 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 481 100. 100. Table 33 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- WILD HOG 2H (CGA) PHANTOM (WOLFCAMP XY) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 53.3 277.0 23.0 42.286 151.721 18.219 59.004 1.891 14.423 12-2020 30.2 156.9 13.0 23.945 85.915 10.317 59.004 1.891 14.423 12-2021 21.6 112.5 9.3 17.174 61.621 7.400 59.004 1.891 14.423 12-2022 17.1 89.0 7.4 13.590 48.762 5.855 59.004 1.891 14.423 12-2023 14.3 74.2 6.1 11.327 40.642 4.880 59.004 1.891 14.423 12-2024 12.3 64.1 5.3 9.782 35.098 4.215 59.004 1.891 14.423 12-2025 10.8 56.3 4.7 8.595 30.840 3.703 59.004 1.891 14.423 12-2026 9.7 50.5 4.2 7.703 27.637 3.319 59.004 1.891 14.423 12-2027 8.8 45.8 3.8 6.991 25.085 3.012 59.004 1.891 14.423 12-2028 8.1 42.1 3.5 6.425 23.054 2.768 59.004 1.891 14.423 12-2029 7.4 38.6 3.2 5.894 21.148 2.540 59.004 1.891 14.423 12-2030 6.8 35.5 2.9 5.423 19.458 2.337 59.004 1.891 14.423 12-2031 6.3 32.7 2.7 4.989 17.902 2.150 59.004 1.891 14.423 12-2032 5.8 30.2 2.5 4.603 16.514 1.983 59.004 1.891 14.423 12-2033 5.3 27.7 2.3 4.223 15.151 1.819 59.004 1.891 14.423 12-2034 4.9 25.5 2.1 3.885 13.939 1.674 59.004 1.891 14.423 12-2035 4.5 23.4 1.9 3.574 12.825 1.540 59.004 1.891 14.423 12-2036 4.2 21.6 1.8 3.297 11.831 1.421 59.004 1.891 14.423 12-2037 3.8 19.8 1.6 3.025 10.854 1.303 59.004 1.891 14.423 S Tot 235.3 1,223.3 101.4 186.733 669.998 80.455 59.004 1.891 14.423 After 33.1 172.0 14.2 26.248 94.179 11.309 59.004 1.891 14.423 Total 268.3 1,395.3 115.6 212.981 764.177 91.765 59.004 1.891 14.423 Cum 66.0 285.9 .0 Ult 334.4 1,681.2 115.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,495.024 286.904 262.778 0.000 0.000 3,044.706 220.542 152.235 4.631 12-2020 1,412.861 162.466 148.803 0.000 0.000 1,724.130 124.887 86.207 5.013 12-2021 1,013.353 116.526 106.727 0.000 0.000 1,236.607 89.573 61.830 5.360 12-2022 801.881 92.209 84.455 0.000 0.000 978.544 70.880 48.927 5.684 12-2023 668.353 76.854 70.391 0.000 0.000 815.599 59.078 40.780 5.994 12-2024 577.179 66.370 60.789 0.000 0.000 704.338 51.018 35.217 6.288 12-2025 507.166 58.319 53.415 0.000 0.000 618.900 44.830 30.945 6.585 12-2026 454.486 52.262 47.867 0.000 0.000 554.615 40.173 27.731 6.870 12-2027 412.523 47.436 43.447 0.000 0.000 503.407 36.464 25.170 7.148 12-2028 379.111 43.594 39.928 0.000 0.000 462.634 33.511 23.132 7.414 12-2029 347.783 39.992 36.629 0.000 0.000 424.404 30.741 21.220 7.710 12-2030 319.979 36.795 33.700 0.000 0.000 390.474 28.284 19.524 8.020 12-2031 294.397 33.853 31.006 0.000 0.000 359.256 26.023 17.963 8.358 12-2032 271.572 31.228 28.602 0.000 0.000 331.403 24.005 16.570 8.713 12-2033 249.149 28.650 26.241 0.000 0.000 304.040 22.023 15.202 9.126 12-2034 229.231 26.359 24.143 0.000 0.000 279.733 20.262 13.987 9.560 12-2035 210.904 24.252 22.213 0.000 0.000 257.369 18.642 12.868 10.031 12-2036 194.553 22.372 20.490 0.000 0.000 237.415 17.197 11.871 10.527 12-2037 178.489 20.525 18.799 0.000 0.000 217.812 15.777 10.891 11.103 S Tot 11,017.996 1,266.966 1,160.422 0.000 0.000 13,445.384 973.911 672.269 6.278 After 1,548.751 178.092 163.115 0.000 0.000 1,889.959 136.898 94.498 17.636 Total 12,566.747 1,445.058 1,323.538 0.000 0.000 15,335.343 1,110.809 766.767 7.677 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating WellsWorkover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 39.600 1 1.0 0.000 0.000 328.163 .000 2,304.165 2,304.165 2,211.507 12-2020 39.600 1 1.0 0.000 0.000 185.830 .000 1,287.608 3,591.773 3,331.500 12-2021 39.600 1 1.0 0.000 0.000 133.284 .000 912.320 4,504.092 4,052.120 12-2022 39.600 1 1.0 0.000 0.000 105.469 .000 713.667 5,217.760 4,564.348 12-2023 39.600 1 1.0 0.000 0.000 87.907 .000 588.235 5,805.995 4,948.070 12-2024 39.600 1 1.0 0.000 0.000 75.915 .000 502.588 6,308.583 5,246.035 12-2025 39.600 1 1.0 0.000 0.000 66.706 .000 436.819 6,745.402 5,481.413 12-2026 39.600 1 1.0 0.000 0.000 59.777 .000 387.333 7,132.736 5,671.141 12-2027 39.600 1 1.0 0.000 0.000 54.258 .000 347.914 7,480.650 5,826.064 12-2028 39.600 1 1.0 0.000 0.000 49.863 .000 316.528 7,797.178 5,954.182 12-2029 39.600 1 1.0 0.000 0.000 45.743 .000 287.099 8,084.277 6,059.817 12-2030 39.600 1 1.0 0.000 0.000 42.086 .000 260.980 8,345.257 6,147.119 12-2031 39.600 1 1.0 0.000 0.000 38.721 .000 236.950 8,582.207 6,219.181 12-2032 39.600 1 1.0 0.000 0.000 35.719 .000 215.509 8,797.716 6,278.762 12-2033 39.600 1 1.0 0.0000.000 32.770 .000 194.445 8,992.161 6,327.629 12-2034 39.600 1 1.0 0.000 0.000 30.150 .000 175.734 9,167.894 6,367.781 12-2035 39.600 1 1.0 0.000 0.000 27.740 .000 158.518 9,326.412 6,400.710 12-2036 39.600 1 1.0 0.000 0.000 25.589 .000 143.158 9,469.570 6,427.744 12-2037 39.600 1 1.0 0.000 0.000 23.476 .000 128.068 9,597.639 6,449.728 S Tot 752.400 0.000 0.000 1,449.166 .000 9,597.639 9,597.639 6,449.728 After 665.661 0.000 0.000 203.703 .000 789.198 10,386.837 6,535.383 Total 1,418.061 0.000 0.000 1,652.869 .000 10,386.837 10,386.837 6,535.383 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 7,912.271 Oil Rate 6,840. 75. bbls/mo 73.7% 1.20 0.0% 3,300. 3,252. $/w/mo Expense 100.0000 100.0000 8.00 7,004.523 Gas Rate 35,569. 389. Mcf/mo 0.0% 0.00 0.0% 10.00 6,535.383 GOR 5,200. 5,200. scf/bbl Revenue 12.00 6,143.642 NGLRate 2,854. 32. bbls/mo Oil 79.3750 79.3750 NGL Yield 80.3 82.4 bbl/MMcf Gas 79.3750 79.3750 15.00 5,663.334 Gas Shrinkage 34.4 30.5 % ______________________________ ______________________ 20.00 5,058.467 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 21.3 % 12 Months in first year 35.819 Year Life (10/2054) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 481 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 33 Figure 34 LILIS ENERGY, INC. -- WILD HOG BWX ST COM 1H #1H TBD (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________38.69 Year Life (09/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 4,254. 41.2 1.20 8.1 75. Initial Final Oil - mbbls 124.6 300.8 425.4 80.312 NI 241.542 14,251.972 1,250.182 3,384.457 11,772.8856,773.415 Gas - mcf/mo 21,270. 0.0 0.00 8.1 375. 5,000. 5,000. 6 Gas - mmcf 312.3 1,503.8 1,816.0 100.000 WI 833.322 1,575.811 863.554 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 ⊗ 8 8 7 7 10,000. 10,000. 6 ⊗ 6 5 5 ♦ 4 4 ♦ 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : WOLFCAMP B WILD HOG BWX ST COM 1H #1H TIME (years) S:20, T:26S, R:36E 2 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 09/2017 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 3002542733 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 314 100. 100. Table 34 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves LILIS ENERGY, INC. -- WILD HOG BWX ST COM 1H #1H TBD (WOLFCAMP B) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 42.1 210.3 17.4 33.779 116.537 13.994 59.004 1.891 14.423 12-2020 30.1 150.5 12.5 24.180 83.421 10.017 59.004 1.891 14.423 12-2021 23.7 118.3 9.8 19.005 65.567 7.873 59.004 1.891 14.423 12-2022 19.7 98.4 8.2 15.806 54.531 6.548 59.004 1.891 14.423 12-2023 16.9 84.6 7.0 13.595 46.904 5.632 59.004 1.891 14.423 12-2024 14.9 74.7 6.2 11.999 41.397 4.971 59.004 1.891 14.423 12-2025 13.3 66.7 5.5 10.713 36.961 4.438 59.004 1.891 14.423 12-2026 12.1 60.5 5.0 9.718 33.528 4.026 59.004 1.891 14.423 12-2027 11.1 55.4 4.6 8.904 30.719 3.689 59.004 1.891 14.423 12-2028 10.2 51.1 4.2 8.213 28.334 3.402 59.004 1.891 14.423 12-2029 9.4 46.9 3.9 7.535 25.995 3.122 59.004 1.891 14.423 12-2030 8.6 43.2 3.6 6.932 23.917 2.872 59.004 1.891 14.423 12-2031 7.9 39.7 3.3 6.378 22.005 2.642 59.004 1.89114.423 12-2032 7.3 36.6 3.0 5.884 20.299 2.438 59.004 1.891 14.423 12-2033 6.7 33.6 2.8 5.398 18.623 2.236 59.004 1.891 14.423 12-2034 6.2 30.9 2.6 4.966 17.134 2.057 59.004 1.891 14.423 12-2035 5.7 28.4 2.4 4.569 15.764 1.893 59.004 1.891 14.423 12-2036 5.2 26.2 2.2 4.215 14.542 1.746 59.004 1.891 14.423 12-2037 4.8 24.1 2.0 3.867 13.341 1.602 59.004 1.891 14.423 S Tot 256.1 1,280.4 106.1 205.657 709.517 85.201 59.004 1.891 14.423 After 44.7 223.4 18.5 35.885 123.804 14.867 59.004 1.891 14.423 Total 300.8 1,503.8 124.6 241.542 833.322 100.068 59.004 1.891 14.423 Cum 124.6 312.3 .0 Ult 425.4 1,816.0 124.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,993.091 220.372 201.840 0.000 0.000 2,415.303 174.834 120.765 4.794 12-2020 1,426.722 157.750 144.484 0.000 0.000 1,728.956 125.152 86.448 5.047 12-2021 1,121.370 123.988 113.561 0.000 0.000 1,358.918 98.366 67.946 5.289 12-2022 932.620 103.118 94.446 0.000 0.000 1,130.184 81.809 56.509 5.517 12-2023 802.178 88.695 81.236 0.000 0.000 972.110 70.367 48.605 5.738 12-2024 707.999 78.282 71.699 0.000 0.000 857.980 62.10642.899 5.948 12-2025 632.128 69.893 64.016 0.000 0.000 766.037 55.450 38.302 6.163 12-2026 573.417 63.401 58.070 0.000 0.000 694.888 50.300 34.744 6.368 12-2027 525.379 58.090 53.205 0.000 0.000 636.674 46.086 31.834 6.570 12-2028 484.591 53.580 49.074 0.000 0.000 587.246 42.508 29.362 6.773 12-2029 444.580 49.156 45.022 0.000 0.000 538.758 38.998 26.938 7.009 12-2030 409.037 45.226 41.423 0.000 0.000 495.686 35.881 24.784 7.256 12-2031 376.335 41.611 38.111 0.000 0.000 456.057 33.012 22.803 7.525 12-2032 347.158 38.384 35.157 0.000 0.000 420.699 30.453 21.035 7.808 12-2033 318.494 35.215 32.254 0.000 0.000 385.963 27.938 19.298 8.137 12-2034 293.031 32.400 29.675 0.000 0.000 355.106 25.705 17.755 8.482 12-2035 269.604 29.810 27.303 0.000 0.000 326.716 23.650 16.336 8.858 12-2036 248.701 27.498 25.186 0.000 0.000 301.386 21.816 15.069 9.253 12-2037 228.167 25.228 23.106 0.000 0.000 276.501 20.015 13.825 9.711 S Tot 12,134.599 1,341.697 1,228.869 0.000 0.000 14,705.165 1,064.446 735.258 6.143 After 2,117.373 234.114 214.426 0.000 0.000 2,565.912 185.736 128.296 15.936 Total 14,251.972 1,575.811 1,443.295 0.000 0.000 17,271.077 1,250.182 863.554 7.597 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31)Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 39.600 1 1.0 0.000 0.000 259.086 .000 1,821.018 1,821.018 1,742.563 12-2020 39.600 1 1.0 0.000 0.000 185.462 .000 1,292.294 3,113.312 2,865.487 12-2021 39.600 1 1.0 0.000 0.000 145.769 .000 1,007.237 4,120.549 3,660.664 12-2022 39.600 1 1.0 0.000 0.000 121.233 .000 831.032 4,951.581 4,256.936 12-2023 39.600 1 1.0 0.000 0.000 104.277 .000 709.261 5,660.842 4,719.502 12-2024 39.600 1 1.0 0.000 0.000 92.034 .000 621.342 6,282.183 5,087.810 12-2025 39.600 1 1.0 0.000 0.000 82.171 .000 550.513 6,832.696 5,384.412 12-2026 39.600 1 1.0 0.000 0.000 74.539 .000 495.704 7,328.400 5,627.199 12-2027 39.600 1 1.0 0.000 0.000 68.295 .000 450.859 7,779.259 5,827.946 12-2028 39.600 1 1.0 0.000 0.000 62.993 .000 412.782 8,192.041 5,995.021 12-2029 39.600 1 1.0 0.000 0.000 57.792 .000 375.430 8,567.472 6,133.155 12-2030 39.600 1 1.0 0.000 0.000 53.171 .000 342.250 8,909.721 6,247.640 12-2031 39.600 1 1.0 0.000 0.000 48.920 .000 311.722 9,221.443 6,342.441 12-2032 39.600 1 1.0 0.000 0.000 45.128 .000 284.483 9,505.926 6,421.089 12-203339.600 1 1.0 0.000 0.000 41.402 .000 257.725 9,763.651 6,485.857 12-2034 39.600 1 1.0 0.000 0.000 38.092 .000 233.954 9,997.605 6,539.311 12-2035 39.600 1 1.0 0.000 0.000 35.046 .000 212.084 10,209.690 6,583.366 12-2036 39.600 1 1.0 0.000 0.000 32.329 .000 192.571 10,402.261 6,619.729 12-2037 39.600 1 1.0 0.000 0.000 29.660 .000 173.401 10,575.662 6,649.494 S Tot 752.400 0.000 0.000 1,577.399 .000 10,575.662 10,575.662 6,649.494 After 779.417 0.000 0.000 275.241 .000 1,197.223 11,772.885 6,773.415 Total 1,531.817 0.000 0.000 1,852.640 .000 11,772.885 11,772.885 6,773.415 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 8,513.770 Oil Rate 4,342. 74. bbls/mo 41.2% 1.20 0.0% 3,300. 3,300. $/w/mo Expense 100.0000 100.0000 8.00 7,359.737 Gas Rate 21,712. 372. Mcf/mo 0.0% 0.00 0.0% 10.00 6,773.415 GOR 5,000. 5,000. scf/bblRevenue 12.00 6,289.558 NGL Rate 1,794. 31. bbls/mo Oil 80.3125 80.3125 NGL Yield 82.7 84.9 bbl/MMcf Gas 80.3125 80.3125 15.00 5,703.980 Gas Shrinkage 32.4 30.9 % ______________________________ ______________________ 20.00 4,979.790 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 21.9 % 12 Months in first year 38.691 Year Life (09/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 314 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 34 Figure 35 IMPETRO OPERATING LLC -- WOLFE UNIT 1 1 CRITTENDON (PENN.) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 7.09 Year Life (02/2026) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab YIELD_______________ - bbls/mmcf 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 55. 0.0 0.00 5.1 38. Initial Final Oil - mbbls 702.1 3.9 706.0 57.367 NI 2.242 139.656 147.262 751.717 1,061.801 798.159 Gas - mcf/mo 21,844.5.0 0.00 5.1 15,254. 2.5 2.5 6 Gas - mmcf 68,217.7 1,563.5 69,781.2 70.613 WI 663.727 1,316.835 50.276 0.000 6 5 5 GAS (mcf/mo) Δ OIL (bbls/mo) ∇ 4 4 ♦ Δ ♦ ♦ ♦ ♦ ♦ 3 3 ♦ ♦ ♦ ♦ 2 ♦ ♦ 2 9 Δ 9 8 8 7 7 10,000. ♦ 100. 6 ♦ 6 5 ∇ 5 4 4 ⊗ 3 3 ∇ 2 2 9 9 8 8 7 ⊗ 7 6 6 5 5 4 4 1,000. 3 3 10. 2 ∇ 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : PENN. WOLFE UNIT 1 1 TIME (years) 1393 PSL/COWDEN C TX GAS 181199 ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 01/1968 Last Data 09/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 42495107440000 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 50 100. 1. Table 35 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- WOLFE UNIT 1 1 CRITTENDON \(PENN.\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .6 255.9 14.2 .367 108.635 8.144 62.282 1.984 11.145 12-2020 .6 243.8 13.5 .350 103.483 7.758 62.282 1.984 11.145 12-2021 .6 230.9 12.8 .331 98.037 7.350 62.282 1.984 11.145 12-2022 .5 219.4 12.2 .315 93.138 6.982 62.282 1.984 11.145 12-2023 .5 208.4 11.6 .299 88.484 6.633 62.282 1.984 11.145 12-2024 .5 198.5 11.0 .285 84.287 6.319 62.282 1.984 11.145 12-2025 .5 188.1 10.4 .270 79.851 5.986 62.282 1.984 11.145 02-2026 .0 18.4 1.0 .026 7.811 .586 62.282 1.984 11.145 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 3.9 1,563.5 86.7 2.242 663.727 49.758 62.282 1.984 11.145 After .0 .0 .0 .000 .000 .000 .000 .000 .000 Total 3.9 1,563.5 86.7 2.242 663.727 49.758 62.282 1.984 11.145 Cum 702.1 68,217.7 .0 Ult 706.0 69,781.2 86.7 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil GasNGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 22.858 215.533 90.768 0.000 0.000 329.159 24.103 8.229 4.457 12-2020 21.774 205.310 86.463 0.000 0.000 313.547 22.960 7.839 4.679 12-2021 20.628 194.505 81.913 0.000 0.000 297.045 21.751 7.426 4.938 12-2022 19.597 184.786 77.820 0.000 0.000 282.203 20.665 7.055 5.198 12-2023 18.618 175.553 73.931 0.000 0.000 268.102 19.632 6.703 5.472 12-2024 17.735 167.226 70.425 0.000 0.000 255.386 18.701 6.385 5.744 12-2025 16.802 158.425 66.718 0.000 0.000 241.945 17.717 6.049 6.063 02-2026 1.644 15.498 6.527 0.000 0.000 23.668 1.733 .592 6.013 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 139.656 1,316.835 554.565 0.000 0.000 2,011.056 147.262 50.276 5.177 After .000 .000 .000 0.000 0.000 .000 .000 .000 .000 Total 139.656 1,316.835 554.565 0.000 0.000 2,011.056 147.262 50.276 5.177 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$M$ M$ 12-2019 105.920 1 0.7 0.000 0.000 0.000 .000 190.907 190.907 182.176 12-2020 105.920 1 0.7 0.000 0.000 0.000 .000 176.828 367.736 335.577 12-2021 105.920 1 0.7 0.000 0.000 0.000 .000 161.948 529.683 463.283 12-2022 105.920 1 0.7 0.000 0.000 0.000 .000 148.563 678.246 569.792 12-2023 105.920 1 0.7 0.000 0.000 0.000 .000 135.847 814.094 658.338 12-2024 105.920 1 0.7 0.000 0.000 0.000 .000 124.380 938.474 732.042 12-2025 105.920 1 0.7 0.000 0.000 0.000 .000 112.260 1,050.734 792.508 02-2026 10.277 1 0.7 0.000 0.000 0.000 .000 11.067 1,061.801 798.159 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 751.717 0.000 0.000 0.000 .000 1,061.801 1,061.801 798.159 After .000 0.000 0.000 0.000 .000 .000 1,061.801 798.159 Total 751.717 0.000 0.000 0.000 .000 1,061.801 1,061.801 798.159 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def_____________________________ Initial Final Units ________________Initial Final 5.00 913.318 Gas Rate 21,888. 15,208. Mcf/mo 5.0% 0.00 0.0% 12,499. 12,499. $/w/mo Expense 70.6134 70.6134 8.00 840.885 Oil Rate 54. 38. bbls/mo 0.0% 0.00 0.0% 10.00 798.159 NGL Rate 1,234. 861. bbls/mo Revenue 12.00 759.274 Cond Yield 2.5 2.5 bbl/MMcf Oil 57.3676 57.3676 NGL Yield 56.4 56.7 bbl/MMcf Gas 57.3676 57.3676 15.00 707.200 Gas Shrinkage 26.2 25.8 % ______________________________ ______________________ 20.00 634.162 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 50.0 % 12 Months in first year 7.099 Year Life (02/2026) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 50 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. GAS PDP Cawley, Gillespie & Associates, Inc. Table 35 Figure 36 IMPETRO OPERATING LLC -- WOLFE UNIT 3H 3H CRITTENDON (BRUSHY CANYON) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 2.89 Year Life (11/2021) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 1,240. 45.5 1.20 18.3 504. Initial Final Oil - mbbls 51.5 26.2 77.7 69.404 NI 18.172 1,060.315 57.421 713.037 373.570 346.658Gas - mcf/mo 2,481. 0.0 0.00 18.3 1,009. 2,000. 2,000. 6 Gas - mmcf 19.8 52.4 72.2 86.482 WI 29.439 55.669 29.334 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ♦ 2 2 9 9 8 Δ ♦⊗ 8 7 7 1,000. 1,000. 6 6 5 5 4 4 3 3 Δ 2 2 9 9 8 8 Δ 7 7 6 ♦ 6 Δ 5 5 4 4 100. 3 3 100. 2 2 ♦ 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : BRUSHY CANYON WOLFE UNIT 3H 3H TIME (years) 1393 PSL/COWDEN C TX OIL 4162079 ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 09/2015 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 42495321550100 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 111 10. 10. Table 36 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- WOLFE UNIT 3H 3H CRITTENDON \(BRUSHY CANYON\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 12.0 24.0 2.2 8.327 13.490 1.542 58.348 1.891 17.046 12-2020 8.3 16.7 1.5 5.780 9.364 1.071 58.348 1.891 17.046 11-2021 5.9 11.7 1.1 4.065 6.585 .753 58.348 1.891 17.046 12-2022 12-2023 12-2024 12-2025 12-2026 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 26.2 52.4 4.9 18.172 29.439 3.366 58.348 1.891 17.046 After .0 .0 .0 .000 .000 .000 .000 .000 .000 Total 26.2 52.4 4.9 18.172 29.439 3.366 58.348 1.891 17.046 Cum 51.5 19.8 .0 Ult 77.7 72.2 4.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 485.869 25.509 26.293 0.000 0.000 537.670 26.312 13.442 21.244 12-2020 337.26717.707 18.251 0.000 0.000 373.226 18.265 9.331 30.603 11-2021 237.179 12.452 12.835 0.000 0.000 262.466 12.844 6.562 39.125 12-2022 12-2023 12-2024 12-2025 12-2026 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 1,060.315 55.669 57.378 0.000 0.000 1,173.362 57.421 29.334 28.221 After .000 .000 .000 0.000 0.000 .000 .000 .000 .000 Total 1,060.315 55.669 57.378 0.000 0.000 1,173.362 57.421 29.334 28.221 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 245.956 1 0.9 0.000 0.000 0.000 .000 251.960 251.960 241.965 12-2020 245.956 1 0.9 0.000 0.000 0.000 .000 99.674 351.635 329.055 11-2021 221.125 1 0.9 0.000 0.000 0.000 .000 21.935 373.570 346.658 12-2022 12-2023 12-2024 12-2025 12-2026 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 713.037 0.000 0.000 0.000 .000 373.570 373.570 346.658 After .000 0.000 0.000 0.000 .000 .000 373.570 346.658 Total 713.037 0.000 0.000 0.000 .000 373.570 373.570 346.658_________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 359.381 Oil Rate 1,269. 493. bbls/mo 45.5% 1.20 0.0% 23,699. 23,699. $/w/mo Expense 86.4824 86.4824 8.00 351.586 Gas Rate 2,539. 987. Mcf/mo 0.0% 0.00 0.0% 10.00 346.658 GOR 2,000. 2,000. scf/bbl Revenue 12.00 341.929 NGL Rate 234. 95. bbls/mo Oil 69.4042 69.4042 NGL Yield 92.1 96.4 bbl/MMcf Gas 69.4042 69.4042 15.00 335.183 Gas Shrinkage 20.9 17.4 % ______________________________ ______________________ 20.00 324.779 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 57.6 % 12 Months in first year 2.899 Year Life (11/2021) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 111 DEFAULT 1/16/2019 12:12:35 TEXASREGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 36 Figure 37 IMPETRO OPERATING LLC -- WOLFE UNIT 5&6 5,6 CRITTENDON (BELL CANYON) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDP Winkler COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________ 3.98 Year Life (12/2022) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 579. 11.2 0.90 8.1 395. Initial Final Oil - mbbls 952.5 22.7 975.2 61.891 NI 14.050 810.609 39.253 638.963 136.118 121.267 Gas -mcf/mo 411. 10.0 0.00 10.0 275. 711. 696. 6 Gas - mmcf 881.7 16.1 897.9 70.298 WI 7.393 13.752 20.880 0.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 ♦ ♦ ♦ ⊗ ♦ ⊗ ♦ ♦ ♦ ♦ ⊗ ♦ 2 2 ⊗ 9 9 ⊗ ⊗ ♦ 8 ♦ 8 ⊗ 7 7 ♦ ⊗ 1,000. ∇ ⊗ 6 ♦ 6 1,000. ⊗ ⊗ 5 5 4 4 ♦ 3 ⊗ 3 ⊗ 2 2 9 ⊗ 9 8 8 7 7 6 6 ∇ 5 5 4 4 100. 3 3 100. 2 2 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 Reservoir : BELL CANYON WOLFE UNIT 5&6 5,6 TIME (years) 1393 PSL/COWDEN C TX OIL 265883 ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \pdp.out First Production 00/ 0 First Data 07/1997 Last Data 11/2018 01 / 16 / 2019 12 : 15 : 20 21 API: 4249532776 Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 15 10. 10. Table 37 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Producing Reserves IMPETRO OPERATING LLC -- WOLFE UNIT 5&6 5,6 CRITTENDON \(BELL CANYON\) FIELD -- Winkler COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 6.6 4.7 .3 4.077 2.154 .201 57.693 1.860 15.734 12-2020 5.9 4.2 .3 3.669 1.944 .181 57.693 1.860 15.734 12-2021 5.4 3.8 .3 3.315 1.745 .163 57.693 1.860 15.734 12-2022 4.8 3.4 .2 2.989 1.550 .145 57.693 1.860 15.734 12-2023 12-2024 12-2025 12-2026 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 22.7 16.1 1.1 14.050 7.393 .690 57.693 1.860 15.734 After .0 .0 .0 .000 .000 .000 .000 .000 .000 Total 22.7 16.1 1.1 14.050 7.393 .690 57.693 1.860 15.734 Cum 952.5 881.7 .0 Ult 975.2 897.9 1.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 235.232 4.007 3.163 0.000 0.000 242.402 11.393 6.060 35.09512-2020 211.675 3.616 2.854 0.000 0.000 218.145 10.253 5.454 38.989 12-2021 191.269 3.245 2.562 0.000 0.000 197.076 9.262 4.927 43.180 12-2022 172.433 2.883 2.276 0.000 0.000 177.592 8.344 4.440 47.326 12-2023 12-2024 12-2025 12-2026 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 810.609 13.752 10.854 0.000 0.000 835.215 39.253 20.880 40.618 After .000 .000 .000 0.000 0.000 .000 .000 .000 .000 Total 810.609 13.752 10.854 0.000 0.000 835.215 39.253 20.880 40.618 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 160.279 1 0.7 0.000 0.000 0.000 .000 64.670 64.670 61.840 12-2020 160.279 1 0.7 0.000 0.000 0.000 .000 42.159 106.828 98.520 12-2021 160.279 1 0.7 0.000 0.000 0.000 .000 22.607 129.436 116.419 12-2022 158.125 1 0.7 0.000 0.000 0.000 .000 6.683 136.118 121.267 12-2023 12-2024 12-2025 12-2026 12-2027 12-2028 12-2029 12-2030 12-2031 12-2032 12-2033 12-2034 12-2035 12-2036 12-2037 S Tot 638.963 0.000 0.000 0.000 .000 136.118 136.118 121.267 After .000 0.000 0.000 0.000.000 .000 136.118 121.267 Total 638.963 0.000 0.000 0.000 .000 136.118 136.118 121.267 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________Initial Final 5.00 128.183 Oil Rate 581. 391. bbls/mo 11.3% 0.90 0.0% 0. 0. $/w/mo Expense 70.2980 70.2980 8.00 123.923 Gas Rate 413. 271. Mcf/mo 10.0% 0.00 0.0% 18,999. 18,999. $/mo 10.00 121.267 GOR 710. 694. scf/bbl Revenue 12.00 118.744 NGL Rate 28. 18. bbls/mo Oil 61.8916 61.8916 NGL Yield 70.0 68.9 bbl/MMcf Gas 61.8916 61.8916 15.00 115.191 Gas Shrinkage 26.9 25.6 % ______________________________ ______________________ 20.00 109.816 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 35.8 % 12 Months in first year 3.986 Year Life (12/2022) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THECONDITIONS IN THE TEXT OF THE REPORT. ASN 15 DEFAULT 1/16/2019 12:12:35 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDP Cawley, Gillespie & Associates, Inc. Table 37 Table I - PDNP Composite Reserve Estimates and Economic Forecasts Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Non-Producing Reserves As of December 31, 2018 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 345.3 1,420.9 116.4 178.404 545.968 60.429 57.693 1.860 15.734 12-2020 230.7 919.9 75.3 115.515 346.554 38.357 57.693 1.860 15.734 12-2021 144.4 579.3 47.4 72.714 219.009 24.240 57.693 1.860 15.734 12-2022 107.7 433.1 35.5 54.371 163.989 18.151 57.693 1.860 15.734 12-2023 86.8 349.6 28.6 43.885 132.459 14.661 57.693 1.860 15.734 12-2024 73.4 295.7 24.2 37.119 112.088 12.406 57.693 1.860 15.734 12-2025 63.5 256.1 21.0 32.145 97.098 10.747 57.693 1.860 15.734 12-2026 56.3 227.0 18.6 28.498 86.100 9.530 57.693 1.860 15.734 12-2027 50.7 204.4 16.7 25.653 77.519 8.580 57.693 1.860 15.734 12-2028 46.3 186.6 15.3 23.428 70.805 7.837 57.693 1.860 15.734 12-2029 42.4 170.9 14.0 21.457 64.851 7.178 57.693 1.860 15.734 12-2030 39.0 157.3 12.9 19.741 59.666 6.604 57.693 1.860 15.734 12-2031 35.9144.7 11.9 18.163 54.896 6.076 57.693 1.860 15.734 12-2032 33.1 133.5 10.9 16.755 50.640 5.605 57.693 1.860 15.734 12-2033 30.4 122.5 10.0 15.372 46.459 5.142 57.693 1.860 15.734 12-2034 27.9 112.7 9.2 14.143 42.744 4.731 57.693 1.860 15.734 12-2035 25.7 103.7 8.5 13.012 39.327 4.353 57.693 1.860 15.734 12-2036 23.7 95.6 7.8 12.003 36.278 4.015 57.693 1.860 15.734 12-2037 21.7 87.7 7.2 11.012 33.283 3.684 57.693 1.860 15.734 S Tot 1,484.8 6,001.1 491.5 753.391 2,279.733 252.326 57.693 1.860 15.734 After 171.3 720.0 59.0 90.402 280.238 31.017 57.693 1.860 15.734 Total 1,656.1 6,721.0 550.5 843.793 2,559.971 283.343 57.693 1.860 15.734 Cum .0 .0 .0 Ult 1,656.1 6,721.0 550.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 10,292.653 1,015.501 950.813 0.000 0.000 12,258.966 622.767 306.474 4.279 12-2020 6,664.362 644.591 603.530 0.000 0.000 7,912.484 401.351 197.812 4.813 12-2021 4,195.102 407.357 381.408 0.000 0.000 4,983.867 252.876 124.597 5.305 12-2022 3,136.806 305.020 285.590 0.000 0.000 3,727.416 189.145 93.185 5.758 12-2023 2,531.841 246.374 230.679 0.000 0.0003,008.894 152.693 75.222 6.188 12-2024 2,141.495 208.483 195.202 0.000 0.000 2,545.180 129.165 63.630 6.596 12-2025 1,854.537 180.601 169.097 0.000 0.000 2,204.235 111.865 55.106 7.005 12-2026 1,644.128 160.146 149.945 0.000 0.000 1,954.219 99.179 48.855 7.396 12-2027 1,480.013 144.185 135.000 0.000 0.000 1,759.198 89.282 43.980 7.778 12-2028 1,351.655 131.697 123.308 0.000 0.000 1,606.660 81.541 40.167 8.142 12-2029 1,237.908 120.623 112.939 0.000 0.000 1,471.470 74.681 36.787 8.528 12-2030 1,138.939 110.979 103.910 0.000 0.000 1,353.828 68.710 33.846 8.926 12-2031 1,047.883 102.107 95.602 0.000 0.000 1,245.593 63.217 31.140 9.359 12-2032 966.640 94.190 88.190 0.000 0.000 1,149.021 58.316 28.726 9.815 12-2033 886.827 86.413 80.909 0.000 0.000 1,054.149 53.501 26.354 10.343 12-2034 815.928 79.505 74.440 0.000 0.000 969.873 49.223 24.247 10.900 12-2035 750.696 73.149 68.489 0.000 0.000 892.334 45.288 22.308 11.504 12-2036 692.494 67.477 63.179 0.000 0.000 823.151 41.777 20.579 12.140 12-2037 635.317 61.906 57.962 0.000 0.000 755.185 38.327 18.880 12.878 S Tot 43,465.224 4,240.304 3,970.194 0.000 0.000 51,675.722 2,622.905 1,291.893 6.376 After 5,215.543 521.243 488.039 0.000 0.0006,224.825 316.542 155.621 19.438 Total 48,680.767 4,761.547 4,458.233 0.000 0.000 57,900.547 2,939.447 1,447.514 7.788 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 113.759 4 2.4 0.000 0.000 1,207.120 7,859.948 2,148.898 2,148.898 1,830.106 12-2020 169.389 4 2.4 0.000 0.000 784.649 .000 6,359.283 8,508.181 7,370.373 12-2021 169.389 4 2.4 0.000 0.000 493.570 .000 3,943.434 12,451.615 10,487.127 12-2022 169.389 4 2.4 0.000 0.000 368.958 .000 2,906.738 15,358.353 12,574.117 12-2023 169.389 4 2.4 0.000 0.000 297.758 .000 2,313.832 17,672.185 14,083.819 12-2024 169.389 4 2.4 0.000 0.000 251.829 .000 1,931.168 19,603.353 15,228.911 12-2025 169.389 4 2.4 0.000 0.000 218.070 .000 1,649.805 21,253.157 16,118.000 12-2026 169.389 4 2.4 0.000 0.000 193.320 .000 1,443.476 22,696.633 16,825.126 12-2027 169.389 4 2.4 0.000 0.000 174.017 .000 1,282.529 23,979.163 17,396.267 12-2028 169.389 4 2.4 0.000 0.000 158.921 .000 1,156.642 25,135.805 17,864.455 12-2029 169.389 4 2.4 0.000 0.000 145.545 .000 1,045.068 26,180.873 18,248.980 12-2030 169.389 4 2.4 0.000 0.000 133.909 .000 947.974 27,128.847 18,566.094 12-2031 169.389 4 2.4 0.000 0.000 123.203 .000 858.644 27,987.491 18,827.233 12-2032 169.389 4 2.4 0.000 0.000 113.651 .000 778.940 28,766.430 19,042.587 12-2033 169.389 4 2.4 0.000 0.000 104.268 .000 700.638 29,467.069 19,218.671 12-2034 169.389 4 2.4 0.000 0.000 95.932 .000 631.082 30,098.151 19,362.866 12-2035 169.389 4 2.4 0.000 0.000 88.262 .000 567.086 30,665.237 19,480.669 12-2036 169.389 4 2.4 0.000 0.000 81.419 .000 509.987 31,175.224 19,576.978 12-2037 169.389 4 2.4 0.000 0.000 74.697 .000 453.893 31,629.116 19,654.895 S Tot 3,162.760 0.000 0.000 5,109.100 7,859.948 31,629.116 31,629.116 19,654.895 After 2,446.840 0.000 0.000 610.092 .000 2,695.730 34,324.847 19,948.420 Total 5,609.600 0.000 0.000 5,719.192 7,859.948 34,324.847 34,324.847 19,948.420 SEC Pricing YE2018 ______________________Percent Cum. Disc. WTI Cushing Henry Hub 5.00 25,161.182 Year Oil $/STB Gas $/MMBTU 8.00 21,736.588 2019 65.56 3.100 10.00 19,948.420 Thereafter Flat Flat 12.00 18,444.229 Cap 65.56 3.100 15.00 16,584.776 ______________________ 20.00 14,216.900 12 Months in first year 38.196 Year Life (03/2057) THESE DATA ARE PART OF A CG&A REPORT ANDARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. Summary Cawley, Gillespie & Associates, Inc. Summary Plot- PDNP Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico 9 9 _______________________________________________________________________________________________________________________________Proved Developed Non-Producing Reserves________________________________________________________________________________________ Gross Production 8 _______________________38.19 Year Life (03/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ Start Date 03/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% Q D n D Q Cumulatives ________________________________________________ i ei ef ab 7 __________________________________________________ Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 933. N.A. 0.00 7.7 129. Oil - mbbls 0.0 1,656.1 1,656.1 843.793 48,680.767 2,939.447 11,328.792 34,324.847 19,948.420 Gas - mcf/mo 3,339. N.A. 0.00 7.8462. Gas - mmcf 0.0 6,721.0 6,721.0 2,559.971 4,761.547 1,447.514 7,859.948 OIL (bbls/mo) Δ 6 6 GAS (mcf/mo) ∇ 5 5 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 TIME (years) ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PDNP.out First Production 00/ 0 First Data 00/ 0 Last Data 00/ 0 01 / 16 / 2019 12 : 15 : 22 21 API: Cawley, Gillespie & Associates, Inc. SUMMARY 100. 1,000. Table II - PDNP Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Developed Non-Producing Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. HALEY 1H 36.3790 NI 1 317.8 317.8 115.6 6,670.4 354.1 1,782.2 4,083.8 2,502.6 1 PDNP Oil 05/19 505 48.7900 WI 28.4 635.6 635.6 171.1 318.3 182.2 884.4 HALEY 2H 36.3790 NI 1 317.8 317.8 115.6 6,670.4 354.1 1,782.2 3,794.5 2,224.4 2 PDNP Oil 05/19 506 48.7900 WI 28.4 635.6 635.6 171.1 318.3 182.2 1,173.7 PHANTOM (LOWER WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. NW AXIS 1H 44.7568 NI 1 400.1 400.1 179.1 10,330.7 766.3 2,669.0 8,460.9 4,932.3 3 PDNP Oil 04/19 507 59.6758 WI 33.9 3,228.7 3,228.7 1,069.3 1,989.0 354.5 1,931.3 PHANTOM (UPPER WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. OSO 1H 1.5 69.8704 NI 1 620.4 620.4 433.5 25,009.4 1,465.0 5,095.5 17,985.6 10,289.1 4 PDNP Oil 03/19 575 86.1192 WI37.9 2,221.1 2,221.1 1,148.4 2,136.0 728.6 3,870.7 GRAND TOTAL 4 1,656.1 1,656.1 843.8 48,680.8 2,939.4 11,328.8 34,324.8 19,948.4 6,721.0 6,721.0 2,560.0 4,761.5 1,447.5 7,859.9 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: .813 1/16/2019 12:12:37 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc. Page 1 Rate-Time History-Forecast Curves And Tabular Reserves and Economics By Property Cawley, Gillespie & Associates, Inc. Petroleum Consultants Figure 1 LILIS ENERGY, INC. -- HALEY 1H PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDNP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________28.79 Year Life (10/2047) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 496. 96.3 1.20 8.0 153. Initial Final Oil - mbbls 0.0 317.8 317.8 36.379 NI 115.618 6,670.350 354.116 1,782.164 4,083.826 2,502.631 Gas - mcf/mo 992.0.0 0.00 8.0 305. 2,000. 2,000. 6 Gas - mmcf 0.0 635.6 635.6 48.790 WI 171.115 318.274 182.166 884.353 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A HALEY 1H TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PDNP.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 23 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 505 100. 100. Table 1 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Non-Producing Reserves LILIS ENERGY, INC. -- HALEY 1H PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 62.0 124.1 10.2 22.571 33.405 3.697 57.693 1.860 15.734 12-2020 47.7 95.4 7.8 17.354 25.684 2.843 57.693 1.860 15.734 12-2021 29.1 58.3 4.8 10.602 15.690 1.737 57.693 1.860 15.734 12-2022 21.5 43.1 3.5 7.838 11.600 1.284 57.693 1.860 15.734 12-2023 17.3 34.6 2.8 6.288 9.306 1.030 57.693 1.860 15.734 12-2024 14.6 29.1 2.4 5.298 7.841 .868 57.693 1.860 15.734 12-2025 12.6 25.2 2.1 4.576 6.773 .750 57.693 1.860 15.734 12-2026 11.1 22.3 1.8 4.049 5.993 .663 57.693 1.860 15.734 12-2027 10.0 20.0 1.6 3.640 5.387 .596 57.693 1.860 15.734 12-2028 9.1 18.3 1.5 3.320 4.914 .544 57.693 1.860 15.734 12-2029 8.4 16.7 1.4 3.039 4.498 .498 57.693 1.860 15.734 12-2030 7.7 15.4 1.3 2.796 4.139 .458 57.693 1.860 15.734 12-2031 7.1 14.1 1.2 2.573 3.808 .421 57.693 1.860 15.734 12-2032 6.5 13.0 1.1 2.373 3.512 .389 57.6931.860 15.734 12-2033 6.0 12.0 1.0 2.177 3.222 .357 57.693 1.860 15.734 12-2034 5.5 11.0 .9 2.003 2.965 .328 57.693 1.860 15.734 12-2035 5.1 10.1 .8 1.843 2.728 .302 57.693 1.860 15.734 12-2036 4.7 9.3 .8 1.700 2.516 .279 57.693 1.860 15.734 12-2037 4.3 8.6 .7 1.560 2.309 .256 57.693 1.860 15.734 S Tot 290.3 580.6 47.6 105.601 156.289 17.298 57.693 1.860 15.734 After 27.5 55.1 4.5 10.018 14.826 1.641 57.693 1.860 15.734 Total 317.8 635.6 52.1 115.618 171.115 18.939 57.693 1.860 15.734 Cum .0 .0 .0 Ult 317.8 635.6 52.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,302.174 62.133 58.175 0.000 0.000 1,422.482 69.130 35.562 5.885 12-2020 1,001.189 47.772 44.728 0.000 0.000 1,093.689 53.151 27.342 6.679 12-2021 611.634 29.184 27.325 0.000 0.000 668.143 32.470 16.704 7.600 12-2022 452.171 21.575 20.201 0.000 0.000 493.947 24.005 12.349 8.435 12-2023 362.754 17.309 16.206 0.000 0.000 396.269 19.258 9.907 9.224 12-2024 305.663 14.585 13.656 0.000 0.000 333.903 16.227 8.348 9.970 12-2025 264.015 12.597 11.795 0.000 0.000 288.408 14.016 7.210 10.717 12-2026 233.618 11.147 10.437 0.0000.000 255.202 12.402 6.380 11.431 12-2027 209.996 10.020 9.382 0.000 0.000 229.397 11.148 5.735 12.128 12-2028 191.565 9.141 8.558 0.000 0.000 209.264 10.170 5.232 12.791 12-2029 175.346 8.367 7.834 0.000 0.000 191.546 9.309 4.789 13.490 12-2030 161.327 7.698 7.207 0.000 0.000 176.232 8.565 4.406 14.208 12-2031 148.429 7.082 6.631 0.000 0.000 162.143 7.880 4.054 14.988 12-2032 136.921 6.533 6.117 0.000 0.000 149.572 7.269 3.739 15.807 12-2033 125.616 5.994 5.612 0.000 0.000 137.222 6.669 3.431 16.759 12-2034 115.573 5.515 5.163 0.000 0.000 126.251 6.136 3.156 17.761 12-2035 106.334 5.074 4.750 0.000 0.000 116.158 5.645 2.904 18.849 12-2036 98.090 4.680 4.382 0.000 0.000 107.152 5.207 2.679 19.994 12-2037 89.991 4.294 4.020 0.000 0.000 98.305 4.777 2.458 21.322 S Tot 6,092.407 290.698 272.180 0.000 0.000 6,655.285 323.434 166.382 9.650 After 577.943 27.576 25.820 0.000 0.000 631.340 30.682 15.783 29.747 Total 6,670.350 318.274 298.000 0.000 0.000 7,286.625 354.116 182.166 11.391 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$M$ 12-2019 19.900 1 0.5 0.000 0.000 159.831 884.353 253.706 253.706 218.607 12-2020 33.958 1 0.5 0.000 0.000 122.888 .000 856.350 1,110.056 965.016 12-2021 33.958 1 0.5 0.000 0.000 75.073 .000 509.938 1,619.994 1,368.132 12-2022 33.958 1 0.5 0.000 0.000 55.500 .000 368.135 1,988.130 1,632.480 12-2023 33.958 1 0.5 0.000 0.000 44.525 .000 288.622 2,276.751 1,820.815 12-2024 33.958 1 0.5 0.000 0.000 37.518 .000 237.853 2,514.604 1,961.863 12-2025 33.958 1 0.5 0.000 0.000 32.406 .000 200.818 2,715.422 2,070.093 12-2026 33.958 1 0.5 0.000 0.000 28.675 .000 173.787 2,889.209 2,155.233 12-2027 33.958 1 0.5 0.000 0.000 25.775 .000 152.781 3,041.990 2,223.274 12-2028 33.958 1 0.5 0.000 0.000 23.513 .000 136.392 3,178.382 2,278.487 12-2029 33.958 1 0.5 0.000 0.000 21.522 .000 121.969 3,300.351 2,323.367 12-2030 33.958 1 0.5 0.000 0.000 19.802 .000 109.502 3,409.853 2,360.000 12-2031 33.958 1 0.5 0.000 0.000 18.218 .000 98.033 3,507.886 2,389.816 12-2032 33.958 1 0.5 0.000 0.000 16.806 .000 87.800 3,595.686 2,414.093 12-2033 33.958 1 0.5 0.000 0.000 15.418 .000 77.746 3,673.432 2,433.634 12-2034 33.958 1 0.5 0.000 0.000 14.186 .000 68.816 3,742.248 2,449.359 12-2035 33.958 1 0.5 0.000 0.000 13.052 .000 60.599 3,802.847 2,461.94912-2036 33.958 1 0.5 0.000 0.000 12.040 .000 53.268 3,856.116 2,472.010 12-2037 33.958 1 0.5 0.000 0.000 11.046 .000 46.066 3,902.182 2,479.919 S Tot 631.141 0.000 0.000 747.793 884.353 3,902.182 3,902.182 2,479.919 After 332.292 0.000 0.000 70.938 .000 181.644 4,083.826 2,502.631 Total 963.433 0.000 0.000 818.731 884.353 4,083.826 4,083.826 2,502.631 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 3,099.764 Oil Rate 15,360. 151. bbls/mo 96.3% 1.20 0.0% 186. 5,716. $/w/mo Expense 48.7900 48.7900 8.00 2,710.565 Gas Rate 30,720. 303. Mcf/mo 0.0% 0.00 0.0% 10.00 2,502.631 GOR 2,000. 2,000. scf/bbl Revenue 12.00 2,325.300 NGL Rate 82. 24. bbls/mo Oil 36.3790 36.3790 NGL Yield 2.7 81.3 bbl/MMcf Gas 36.3790 36.3790 15.00 2,103.191 Gas Shrinkage 97.6 26.5 % ______________________________ ______________________ 20.001,816.127 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 8.6 % Start Date: 05/2019 8 Months in year ‘19 28.461 Year Life (10/2047) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 505 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDNP Cawley, Gillespie & Associates, Inc. Table 1 Figure 2 LILIS ENERGY, INC. -- HALEY 2H PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDNP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________28.79 Year Life (10/2047) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 496. 96.3 1.20 8.0 153. Initial Final Oil - mbbls 0.0 317.8 317.8 36.379 NI 115.618 6,670.350 354.116 1,782.164 3,794.518 2,224.428 Gas - mcf/mo 992.0.0 0.00 8.0 305. 2,000. 2,000. 6 Gas - mmcf 0.0 635.6 635.6 48.790 WI 171.115 318.274 182.166 1,173.661 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A HALEY 2H TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PDNP.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 23 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 506 100. 100. Table 2 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Non-Producing Reserves LILIS ENERGY, INC. -- HALEY 2H PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 62.0 124.1 10.2 22.571 33.405 3.697 57.693 1.860 15.734 12-2020 47.7 95.4 7.8 17.354 25.684 2.843 57.693 1.860 15.734 12-2021 29.1 58.3 4.8 10.602 15.690 1.737 57.693 1.860 15.734 12-2022 21.5 43.1 3.5 7.838 11.600 1.284 57.693 1.860 15.734 12-2023 17.3 34.6 2.8 6.288 9.306 1.030 57.693 1.860 15.734 12-2024 14.6 29.1 2.4 5.298 7.841 .868 57.693 1.860 15.734 12-2025 12.6 25.2 2.1 4.576 6.773 .750 57.693 1.860 15.734 12-2026 11.1 22.3 1.8 4.049 5.993 .663 57.693 1.860 15.734 12-2027 10.0 20.0 1.6 3.640 5.387 .596 57.693 1.860 15.734 12-2028 9.1 18.3 1.5 3.320 4.914 .544 57.693 1.860 15.734 12-2029 8.4 16.7 1.4 3.039 4.498 .498 57.693 1.860 15.734 12-2030 7.7 15.4 1.3 2.796 4.139 .458 57.693 1.860 15.734 12-2031 7.1 14.1 1.2 2.573 3.808 .421 57.693 1.860 15.734 12-2032 6.5 13.0 1.1 2.373 3.512 .389 57.6931.860 15.734 12-2033 6.0 12.0 1.0 2.177 3.222 .357 57.693 1.860 15.734 12-2034 5.5 11.0 .9 2.003 2.965 .328 57.693 1.860 15.734 12-2035 5.1 10.1 .8 1.843 2.728 .302 57.693 1.860 15.734 12-2036 4.7 9.3 .8 1.700 2.516 .279 57.693 1.860 15.734 12-2037 4.3 8.6 .7 1.560 2.309 .256 57.693 1.860 15.734 S Tot 290.3 580.6 47.6 105.601 156.289 17.298 57.693 1.860 15.734 After 27.5 55.1 4.5 10.018 14.826 1.641 57.693 1.860 15.734 Total 317.8 635.6 52.1 115.618 171.115 18.939 57.693 1.860 15.734 Cum .0 .0 .0 Ult 317.8 635.6 52.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 1,302.174 62.133 58.175 0.000 0.000 1,422.482 69.130 35.562 5.885 12-2020 1,001.189 47.772 44.728 0.000 0.000 1,093.689 53.151 27.342 6.679 12-2021 611.634 29.184 27.325 0.000 0.000 668.143 32.470 16.704 7.600 12-2022 452.171 21.575 20.201 0.000 0.000 493.947 24.005 12.349 8.435 12-2023 362.754 17.309 16.206 0.000 0.000 396.269 19.258 9.907 9.224 12-2024 305.663 14.585 13.656 0.000 0.000 333.903 16.227 8.348 9.970 12-2025 264.015 12.597 11.795 0.000 0.000 288.408 14.016 7.210 10.717 12-2026 233.618 11.147 10.437 0.0000.000 255.202 12.402 6.380 11.431 12-2027 209.996 10.020 9.382 0.000 0.000 229.397 11.148 5.735 12.128 12-2028 191.565 9.141 8.558 0.000 0.000 209.264 10.170 5.232 12.791 12-2029 175.346 8.367 7.834 0.000 0.000 191.546 9.309 4.789 13.490 12-2030 161.327 7.698 7.207 0.000 0.000 176.232 8.565 4.406 14.208 12-2031 148.429 7.082 6.631 0.000 0.000 162.143 7.880 4.054 14.988 12-2032 136.921 6.533 6.117 0.000 0.000 149.572 7.269 3.739 15.807 12-2033 125.616 5.994 5.612 0.000 0.000 137.222 6.669 3.431 16.759 12-2034 115.573 5.515 5.163 0.000 0.000 126.251 6.136 3.156 17.761 12-2035 106.334 5.074 4.750 0.000 0.000 116.158 5.645 2.904 18.849 12-2036 98.090 4.680 4.382 0.000 0.000 107.152 5.207 2.679 19.994 12-2037 89.991 4.294 4.020 0.000 0.000 98.305 4.777 2.458 21.322 S Tot 6,092.407 290.698 272.180 0.000 0.000 6,655.285 323.434 166.382 9.650 After 577.943 27.576 25.820 0.000 0.000 631.340 30.682 15.783 29.747 Total 6,670.350 318.274 298.000 0.000 0.000 7,286.625 354.116 182.166 11.391 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$M$ 12-2019 19.900 1 0.5 0.000 0.000 159.831 1,173.661 -35.602 -35.602 -59.596 12-2020 33.958 1 0.5 0.000 0.000 122.888 .000 856.350 820.748 686.813 12-2021 33.958 1 0.5 0.000 0.000 75.073 .000 509.938 1,330.686 1,089.929 12-2022 33.958 1 0.5 0.000 0.000 55.500 .000 368.135 1,698.822 1,354.277 12-2023 33.958 1 0.5 0.000 0.000 44.525 .000 288.622 1,987.443 1,542.612 12-2024 33.958 1 0.5 0.000 0.000 37.518 .000 237.853 2,225.296 1,683.660 12-2025 33.958 1 0.5 0.000 0.000 32.406 .000 200.818 2,426.114 1,791.890 12-2026 33.958 1 0.5 0.000 0.000 28.675 .000 173.787 2,599.901 1,877.030 12-2027 33.958 1 0.5 0.000 0.000 25.775 .000 152.781 2,752.682 1,945.072 12-2028 33.958 1 0.5 0.000 0.000 23.513 .000 136.392 2,889.074 2,000.285 12-2029 33.958 1 0.5 0.000 0.000 21.522 .000 121.969 3,011.043 2,045.164 12-2030 33.958 1 0.5 0.000 0.000 19.802 .000 109.502 3,120.545 2,081.797 12-2031 33.958 1 0.5 0.000 0.000 18.218 .000 98.033 3,218.578 2,111.614 12-2032 33.958 1 0.5 0.000 0.000 16.806 .000 87.800 3,306.378 2,135.890 12-2033 33.958 1 0.5 0.000 0.000 15.418 .000 77.746 3,384.124 2,155.431 12-2034 33.958 1 0.5 0.000 0.000 14.186 .000 68.816 3,452.940 2,171.156 12-2035 33.958 1 0.5 0.000 0.000 13.052 .000 60.599 3,513.539 2,183.746 12-2036 33.958 1 0.5 0.000 0.000 12.040 .000 53.268 3,566.808 2,193.807 12-2037 33.958 1 0.5 0.000 0.000 11.046 .000 46.066 3,612.874 2,201.716 S Tot 631.141 0.000 0.000 747.793 1,173.661 3,612.874 3,612.874 2,201.716 After 332.292 0.000 0.000 70.938 .000 181.644 3,794.518 2,224.428 Total 963.433 0.000 0.000 818.731 1,173.661 3,794.518 3,794.518 2,224.428 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 2,816.195 Oil Rate 15,360. 151. bbls/mo 96.3% 1.20 0.0% 186. 5,716. $/w/mo Expense 48.7900 48.7900 8.00 2,430.257 Gas Rate 30,720. 303. Mcf/mo 0.0% 0.00 0.0% 10.00 2,224.428 GOR 2,000. 2,000. scf/bbl Revenue 12.00 2,049.148 NGL Rate 82. 24. bbls/mo Oil 36.3790 36.3790 NGL Yield 2.7 81.3 bbl/MMcf Gas 36.3790 36.3790 15.00 1,830.021 Gas Shrinkage 97.6 26.5 % ______________________________ ______________________ 20.001,547.690 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 8.6 % Start Date: 05/2019 8 Months in year ‘19 28.461 Year Life (10/2047) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 506 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDNP Cawley, Gillespie & Associates, Inc. Table 2 Figure 3 LILIS ENERGY, INC. -- NW AXIS 1H PHANTOM (LOWER WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDNP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________34.21 Year Life (03/2053) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 6,020. 96.3 1.20 7.8 118. Initial Final Oil - mbbls 0.0 400.1 400.1 44.756 NI 179.064 10,330.698 766.257 2,668.964 8,460.886 4,932.303 Gas -mcf/mo 48,580. 0.0 0.00 7.8 954. 8,070. 8,070. 6 Gas - mmcf 0.0 3,228.7 3,228.7 59.675 WI 1,069.334 1,988.961 354.548 1,931.266 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : LOWER WOLFCAMP A NW AXIS 1H TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PDNP.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 23 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 507 100. 1,000. Table 3 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Non-Producing Reserves LILIS ENERGY, INC. -- NW AXIS 1H PHANTOM (LOWER WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 84.8 684.4 56.1 37.958 226.677 25.089 57.693 1.860 15.734 12-2020 54.5 440.2 36.1 24.413 145.787 16.136 57.693 1.860 15.734 12-2021 34.4 277.7 22.7 15.399 91.960 10.178 57.693 1.860 15.734 12-2022 25.7 207.7 17.0 11.520 68.797 7.615 57.693 1.860 15.734 12-2023 20.8 167.7 13.7 9.301 55.541 6.147 57.693 1.860 15.734 12-2024 17.6 141.9 11.6 7.868 46.984 5.200 57.693 1.860 15.734 12-2025 15.2 122.9 10.1 6.814 40.691 4.504 57.693 1.860 15.734 12-2026 13.5 108.9 8.9 6.041 36.077 3.993 57.693 1.860 15.734 12-2027 12.2 98.1 8.0 5.438 32.477 3.595 57.693 1.860 15.734 12-2028 11.1 89.6 7.3 4.967 29.661 3.283 57.693 1.860 15.734 12-2029 10.2 82.0 6.7 4.549 27.166 3.007 57.693 1.860 15.734 12-2030 9.4 75.5 6.2 4.185 24.994 2.766 57.693 1.860 15.734 12-2031 8.6 69.4 5.7 3.851 22.996 2.54557.693 1.860 15.734 12-2032 7.9 64.0 5.2 3.552 21.213 2.348 57.693 1.860 15.734 12-2033 7.3 58.8 4.8 3.259 19.461 2.154 57.693 1.860 15.734 12-2034 6.7 54.1 4.4 2.998 17.905 1.982 57.693 1.860 15.734 12-2035 6.2 49.7 4.1 2.759 16.474 1.823 57.693 1.860 15.734 12-2036 5.7 45.9 3.8 2.545 15.197 1.682 57.693 1.860 15.734 12-2037 5.2 42.1 3.4 2.335 13.942 1.543 57.693 1.860 15.734 S Tot 356.9 2,880.4 235.9 159.751 953.999 105.591 57.693 1.860 15.734 After 43.2 348.2 28.5 19.313 115.335 12.766 57.693 1.860 15.734 Total 400.1 3,228.7 264.4 179.064 1,069.334 118.356 57.693 1.860 15.734 Cum .0 .0 .0 Ult 400.1 3,228.7 264.4 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 2,189.894 421.618 394.761 0.000 0.000 3,006.273 162.431 75.157 3.217 12-2020 1,408.430 271.164 253.891 0.000 0.000 1,933.484 104.467 48.337 3.605 12-2021 888.409 171.045 160.149 0.000 0.000 1,219.603 65.896 30.490 4.015 12-2022 664.640 127.963 119.811 0.000 0.000 912.414 49.298 22.810 4.390 12-2023 536.579 103.307 96.726 0.000 0.000 736.613 39.800 18.415 4.745 12-2024 453.908 87.391 81.824 0.000 0.000 623.12333.668 15.578 5.080 12-2025 393.115 75.686 70.865 0.000 0.000 539.666 29.158 13.492 5.417 12-2026 348.532 67.103 62.828 0.000 0.000 478.462 25.852 11.962 5.738 12-2027 313.753 60.407 56.559 0.000 0.000 430.719 23.272 10.768 6.053 12-2028 286.550 55.169 51.655 0.000 0.000 393.374 21.254 9.834 6.352 12-2029 262.444 50.528 47.309 0.000 0.000 360.282 19.466 9.007 6.668 12-2030 241.463 46.489 43.527 0.000 0.000 331.478 17.910 8.287 6.996 12-2031 222.158 42.772 40.047 0.000 0.000 304.977 16.478 7.624 7.351 12-2032 204.934 39.456 36.942 0.000 0.000 281.332 15.201 7.033 7.725 12-2033 188.013 36.198 33.892 0.000 0.000 258.103 13.945 6.453 8.159 12-2034 172.982 33.304 31.183 0.000 0.000 237.469 12.831 5.937 8.616 12-2035 159.153 30.642 28.690 0.000 0.000 218.484 11.805 5.462 9.112 12-2036 146.813 28.266 26.465 0.000 0.000 201.545 10.890 5.039 9.634 12-2037 134.691 25.932 24.280 0.000 0.000 184.904 9.990 4.623 10.240 S Tot 9,216.462 1,774.438 1,661.405 0.000 0.000 12,652.304 683.611 316.308 4.908 After 1,114.236 214.523 200.858 0.000 0.000 1,529.616 82.646 38.240 16.396 Total 10,330.698 1,988.961 1,862.263 0.000 0.000 14,181.921 766.257 354.548 6.147 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating WellsWorkover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 28.843 1 0.6 0.000 0.000 267.223 1,931.266 541.353 541.353 461.459 12-2020 41.534 1 0.6 0.000 0.000 171.865 .000 1,567.281 2,108.634 1,826.859 12-2021 41.534 1 0.6 0.000 0.000 108.409 .000 973.274 3,081.908 2,596.097 12-2022 41.534 1 0.6 0.000 0.000 81.103 .000 717.668 3,799.576 3,111.370 12-2023 41.534 1 0.6 0.000 0.000 65.476 .000 571.387 4,370.963 3,484.181 12-2024 41.534 1 0.6 0.000 0.000 55.388 .000 476.954 4,847.917 3,766.993 12-2025 41.534 1 0.6 0.000 0.000 47.970 .000 407.512 5,255.428 3,986.603 12-2026 41.534 1 0.6 0.000 0.000 42.530 .000 356.585 5,612.013 4,161.285 12-2027 41.534 1 0.6 0.000 0.000 38.286 .000 316.858 5,928.872 4,302.390 12-2028 41.534 1 0.6 0.000 0.000 34.966 .000 285.785 6,214.657 4,418.071 12-2029 41.534 1 0.6 0.000 0.000 32.025 .000 258.249 6,472.906 4,513.092 12-2030 41.534 1 0.6 0.000 0.000 29.465 .000 234.282 6,707.189 4,591.463 12-2031 41.534 1 0.6 0.000 0.000 27.109 .000 212.232 6,919.420 4,656.009 12-2032 41.534 1 0.6 0.000 0.000 25.007 .000 192.557 7,111.977 4,709.245 12-2033 41.534 1 0.6 0.0000.000 22.942 .000 173.229 7,285.206 4,752.781 12-2034 41.534 1 0.6 0.000 0.000 21.108 .000 156.059 7,441.265 4,788.439 12-2035 41.534 1 0.6 0.000 0.000 19.421 .000 140.262 7,581.527 4,817.576 12-2036 41.534 1 0.6 0.000 0.000 17.915 .000 126.167 7,707.694 4,841.402 12-2037 41.534 1 0.6 0.000 0.000 16.436 .000 112.320 7,820.014 4,860.683 S Tot 776.461 0.000 0.000 1,124.644 1,931.266 7,820.014 7,820.014 4,860.683 After 631.893 0.000 0.000 135.965 .000 640.872 8,460.886 4,932.303 Total 1,408.354 0.000 0.000 1,260.610 1,931.266 8,460.886 8,460.886 4,932.303 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 6,216.775 Oil Rate 18,858. 117. bbls/mo 96.3% 1.20 0.0% 1,932. 5,335. $/w/mo Expense 59.6757 59.6757 8.00 5,373.378 Gas Rate 152,186. 946. Mcf/mo 0.0% 0.00 0.0% 10.00 4,932.303 GOR 8,070. 8,070. scf/bbl Revenue 12.00 4,561.008NGL Rate 3,921. 71. bbls/mo Oil 44.7568 44.7568 NGL Yield 25.8 75.9 bbl/MMcf Gas 44.7568 44.7568 15.00 4,101.780 Gas Shrinkage 76.4 25.6 % ______________________________ ______________________ 20.00 3,516.747 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 9.6 % Start Date: 04/2019 9 Months in year ‘19 33.968 Year Life (03/2053) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 507 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDNP Cawley, Gillespie & Associates, Inc. Table 3 Figure 4 LILIS ENERGY, INC. -- OSO 1H 1.5 PHANTOM (UPPER WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PDNP WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________38.19 Year Life (03/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 933. 96.3 1.20 7.8 129. Initial Final Oil - mbbls 0.0 620.4 620.4 69.870 NI 433.492 25,009.369 1,464.958 5,095.500 17,985.617 10,289.058Gas - mcf/mo 3,339. 0.0 0.00 7.8 462. 3,580. 3,580. 6 Gas - mmcf 0.0 2,221.1 2,221.1 86.119 WI 1,148.407 2,136.037 728.634 3,870.668 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : UPPER WOLFCAMP A OSO 1H 1.5 TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PDNP.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 23 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 575 100. 100. Table 4 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Developed Non-Producing Reserves LILIS ENERGY, INC. -- OSO 1H 1.5 PHANTOM (UPPER WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 136.4 488.3 40.0 95.305 252.482 27.945 57.693 1.860 15.734 12-2020 80.7 289.0 23.7 56.394 149.400 16.536 57.693 1.860 15.734 12-2021 51.7 185.0 15.2 36.112 95.669 10.589 57.693 1.860 15.734 12-2022 38.9 139.2 11.4 27.175 71.993 7.968 57.693 1.860 15.734 12-2023 31.5 112.8 9.2 22.009 58.306 6.453 57.693 1.860 15.734 12-2024 26.7 95.6 7.8 18.655 49.421 5.470 57.693 1.860 15.734 12-2025 23.2 82.9 6.8 16.179 42.860 4.744 57.693 1.860 15.734 12-2026 20.5 73.6 6.0 14.358 38.038 4.210 57.693 1.860 15.734 12-2027 18.5 66.3 5.4 12.935 34.268 3.793 57.693 1.860 15.734 12-2028 16.9 60.6 5.0 11.821 31.316 3.466 57.693 1.860 15.734 12-2029 15.5 55.5 4.5 10.829 28.689 3.175 57.693 1.860 15.734 12-2030 14.3 51.1 4.2 9.964 26.395 2.921 57.693 1.860 15.734 12-2031 13.1 47.0 3.8 9.167 24.2852.688 57.693 1.860 15.734 12-2032 12.1 43.3 3.5 8.456 22.402 2.480 57.693 1.860 15.734 12-2033 11.1 39.8 3.3 7.758 20.553 2.275 57.693 1.860 15.734 12-2034 10.2 36.6 3.0 7.138 18.909 2.093 57.693 1.860 15.734 12-2035 9.4 33.6 2.8 6.567 17.398 1.926 57.693 1.860 15.734 12-2036 8.7 31.0 2.5 6.058 16.049 1.776 57.693 1.860 15.734 12-2037 8.0 28.5 2.3 5.558 14.724 1.630 57.693 1.860 15.734 S Tot 547.4 1,959.5 160.5 382.439 1,013.156 112.138 57.693 1.860 15.734 After 73.1 261.6 21.4 51.054 135.251 14.970 57.693 1.860 15.734 Total 620.4 2,221.1 181.9 433.492 1,148.407 127.108 57.693 1.860 15.734 Cum .0 .0 .0 Ult 620.4 2,221.1 181.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 5,498.412 469.616 439.702 0.000 0.000 6,407.730 322.077 160.193 4.277 12-2020 3,253.553 277.884 260.183 0.000 0.000 3,791.621 190.581 94.791 4.639 12-2021 2,083.424 177.944 166.609 0.000 0.000 2,427.978 122.039 60.699 5.004 12-2022 1,567.824 133.907 125.377 0.000 0.000 1,827.108 91.837 45.678 5.339 12-2023 1,269.753 108.449 101.541 0.000 0.000 1,479.743 74.378 36.994 5.656 12-2024 1,076.262 91.92386.067 0.000 0.000 1,254.252 63.043 31.356 5.956 12-2025 933.391 79.720 74.642 0.000 0.000 1,087.753 54.675 27.194 6.257 12-2026 828.360 70.750 66.243 0.000 0.000 965.353 48.522 24.134 6.545 12-2027 746.268 63.738 59.678 0.000 0.000 869.685 43.714 21.742 6.826 12-2028 681.974 58.247 54.537 0.000 0.000 794.758 39.948 19.869 7.094 12-2029 624.771 53.361 49.962 0.000 0.000 728.095 36.597 18.202 7.379 12-2030 574.822 49.095 45.968 0.000 0.000 669.886 33.671 16.747 7.673 12-2031 528.867 45.170 42.293 0.000 0.000 616.330 30.979 15.408 7.994 12-2032 487.863 41.668 39.014 0.000 0.000 568.545 28.577 14.214 8.330 12-2033 447.582 38.228 35.793 0.000 0.000 521.602 26.218 13.040 8.721 12-2034 411.799 35.172 32.931 0.000 0.000 479.901 24.122 11.998 9.132 12-2035 378.876 32.360 30.298 0.000 0.000 441.534 22.193 11.038 9.580 12-2036 349.502 29.851 27.949 0.000 0.000 407.302 20.473 10.183 10.050 12-2037 320.644 27.386 25.642 0.000 0.000 373.672 18.782 9.342 10.595 S Tot 22,063.949 1,884.470 1,764.428 0.000 0.000 25,712.847 1,292.426 642.821 5.788 After 2,945.421 251.567 235.542 0.000 0.000 3,432.529 172.532 85.813 17.793 Total 25,009.369 2,136.037 1,999.970 0.000 0.000 29,145.377 1,464.958 728.6347.202 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 45.115 1 0.9 0.000 0.000 620.235 3,870.668 1,389.441 1,389.441 1,209.636 12-2020 59.939 1 0.9 0.000 0.000 367.009 .000 3,079.301 4,468.742 3,891.685 12-2021 59.939 1 0.9 0.000 0.000 235.016 .000 1,950.284 6,419.026 5,432.970 12-2022 59.939 1 0.9 0.000 0.000 176.855 .000 1,452.800 7,871.826 6,475.990 12-2023 59.939 1 0.9 0.000 0.000 143.231 .000 1,165.201 9,037.027 7,236.210 12-2024 59.939 1 0.9 0.000 0.000 121.405 .000 978.508 10,015.536 7,816.395 12-2025 59.939 1 0.9 0.000 0.000 105.289 .000 840.657 10,856.193 8,269.414 12-2026 59.939 1 0.9 0.000 0.000 93.441 .000 739.316 11,595.509 8,631.577 12-2027 59.939 1 0.9 0.000 0.000 84.181 .000 660.109 12,255.618 8,925.531 12-2028 59.939 1 0.9 0.000 0.000 76.928 .000 598.074 12,853.692 9,167.613 12-2029 59.939 1 0.9 0.000 0.000 70.476 .000 542.881 13,396.573 9,367.357 12-2030 59.939 1 0.9 0.000 0.000 64.841 .000 494.687 13,891.260 9,532.835 12-2031 59.939 1 0.9 0.000 0.000 59.658 .000 450.346 14,341.606 9,669.794 12-2032 59.939 1 0.90.000 0.000 55.032 .000 410.783 14,752.390 9,783.359 12-2033 59.939 1 0.9 0.000 0.000 50.488 .000 371.917 15,124.307 9,876.825 12-2034 59.939 1 0.9 0.000 0.000 46.452 .000 337.391 15,461.698 9,953.913 12-2035 59.939 1 0.9 0.000 0.000 42.738 .000 305.626 15,767.324 10,017.399 12-2036 59.939 1 0.9 0.000 0.000 39.425 .000 277.283 16,044.607 10,069.759 12-2037 59.939 1 0.9 0.000 0.000 36.170 .000 249.440 16,294.047 10,112.576 S Tot 1,124.016 0.000 0.000 2,488.870 3,870.668 16,294.047 16,294.047 10,112.576 After 1,150.363 0.000 0.000 332.251 .000 1,691.570 17,985.617 10,289.058 Total 2,274.379 0.000 0.000 2,821.121 3,870.668 17,985.617 17,985.617 10,289.058 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 13,028.449 Oil Rate 28,895. 128. bbls/mo 96.3% 1.20 0.0% 186. 5,334. $/w/mo Expense 86.1192 86.1192 8.0011,222.388 Gas Rate 103,447. 459. Mcf/mo 0.0% 0.00 0.0% 10.00 10,289.058 GOR 3,580. 3,580. scf/bbl Revenue 12.00 9,508.772 NGL Rate 278. 34. bbls/mo Oil 69.8704 69.8704 NGL Yield 2.7 75.8 bbl/MMcf Gas 69.8704 69.8704 15.00 8,549.784 Gas Shrinkage 97.6 25.9 % ______________________________ ______________________ 20.00 7,336.336 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.9 % Start Date: 03/2019 10 Months in year ‘19 38.029 Year Life (03/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 575 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PDNP Cawley, Gillespie & Associates, Inc. Table 4 Table I - PUD Composite Reserve Estimates and Economic Forecasts Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Undeveloped Reserves As of December 31, 2018 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 246.5 935.6 76.6 138.429 390.218 43.190 57.693 1.860 15.734 12-2020 1,612.6 7,180.3 588.1 1,112.113 3,680.608 407.377 57.693 1.860 15.734 12-2021 2,548.1 12,687.9 1,039.2 1,629.365 5,984.707 662.400 57.693 1.860 15.734 12-2022 3,106.5 14,255.0 1,167.6 2,021.383 6,783.038 750.761 57.693 1.860 15.734 12-2023 2,229.8 10,708.0 877.0 1,437.341 5,041.208 557.972 57.693 1.860 15.734 12-2024 1,541.7 7,351.8 602.1 996.760 3,477.107 384.854 57.693 1.860 15.734 12-2025 1,211.5 5,761.8 471.9 784.063 2,729.748 302.134 57.693 1.860 15.734 12-2026 1,011.5 4,804.0 393.5 655.014 2,278.163 252.152 57.693 1.860 15.734 12-2027 873.7 4,145.9 339.6 565.986 1,967.296 217.744 57.693 1.860 15.734 12-2028 774.1 3,670.8 300.7 501.569 1,742.649 192.880 57.693 1.860 15.734 12-2029 693.4 3,286.6 269.2 449.365 1,560.793172.752 57.693 1.860 15.734 12-2030 630.3 2,987.1 244.7 408.594 1,418.931 157.050 57.693 1.860 15.734 12-2031 577.4 2,735.7 224.1 374.284 1,299.642 143.847 57.693 1.860 15.734 12-2032 532.2 2,521.2 206.5 344.985 1,197.807 132.576 57.693 1.860 15.734 12-2033 488.2 2,313.0 189.4 316.495 1,098.886 121.627 57.693 1.860 15.734 12-2034 449.2 2,128.1 174.3 291.192 1,011.032 111.903 57.693 1.860 15.734 12-2035 413.3 1,958.0 160.4 267.912 930.203 102.957 57.693 1.860 15.734 12-2036 381.2 1,806.2 147.9 247.140 858.084 94.975 57.693 1.860 15.734 12-2037 349.8 1,657.0 135.7 226.734 787.234 87.133 57.693 1.860 15.734 S Tot 19,671.0 92,894.1 7,608.5 12,768.724 44,237.353 4,896.284 57.693 1.860 15.734 After 3,327.5 15,711.8 1,286.9 2,158.276 7,466.064 826.360 57.693 1.860 15.734 Total 22,998.5 108,605.9 8,895.3 14,927.001 51,703.418 5,722.643 57.693 1.860 15.734 Cum .0 .0 .0 Ult 22,998.5 108,605.9 8,895.3 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 7,986.341 725.806 679.571 0.000 0.000 9,391.718 474.173 234.793 4.494 12-2020 64,160.940 6,845.931 6,409.840 0.000 0.00077,416.711 4,726.757 2,843.093 4.066 12-2021 94,002.641 11,131.555 10,422.467 0.000 0.000 115,556.663 6,647.229 3,703.805 4.044 12-2022 116,619.238 12,616.450 11,812.772 0.000 0.000 141,048.461 8,029.714 4,464.334 4.319 12-2023 82,924.231 9,376.647 8,779.347 0.000 0.000 101,080.225 5,682.459 3,097.034 4.546 12-2024 57,505.871 6,467.420 6,055.440 0.000 0.000 70,028.730 3,962.496 2,178.097 4.921 12-2025 45,234.804 5,077.332 4,753.902 0.000 0.000 55,066.038 3,123.945 1,722.982 5.247 12-2026 37,789.616 4,237.382 3,967.458 0.000 0.000 45,994.456 2,613.155 1,444.009 5.546 12-2027 32,653.310 3,659.170 3,426.078 0.000 0.000 39,738.558 2,259.907 1,250.356 5.831 12-2028 28,936.934 3,241.328 3,034.853 0.000 0.000 35,213.115 2,003.917 1,109.695 6.101 12-2029 25,925.099 2,903.076 2,718.148 0.000 0.000 31,546.322 1,796.170 995.306 6.375 12-2030 23,572.936 2,639.211 2,471.091 0.000 0.000 28,683.237 1,633.795 905.775 6.638 12-2031 21,593.467 2,417.334 2,263.348 0.000 0.000 26,274.149 1,496.861 830.060 6.903 12-2032 19,903.168 2,227.921 2,086.000 0.000 0.000 24,217.089 1,379.741 765.169 7.172 12-2033 18,259.459 2,043.927 1,913.727 0.000 0.000 22,217.113 1,265.797 701.980 7.480 12-2034 16,799.6611,880.520 1,760.730 0.000 0.000 20,440.911 1,164.600 645.859 7.804 12-2035 15,456.570 1,730.177 1,619.964 0.000 0.000 18,806.711 1,071.493 594.224 8.157 12-2036 14,258.212 1,596.036 1,494.367 0.000 0.000 17,348.615 988.419 548.153 8.527 12-2037 13,080.948 1,464.255 1,370.981 0.000 0.000 15,916.184 906.808 502.894 8.958 S Tot 736,663.446 82,281.477 77,040.085 0.000 0.000 895,985.008 51,227.437 28,537.618 5.296 After 124,517.011 13,886.880 13,002.275 0.000 0.000 151,406.166 8,643.365 4,806.489 15.159 Total 861,180.457 96,168.357 90,042.360 0.000 0.000 1,047,391.174 59,870.803 33,344.107 6.721 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 65.944 2 1.5 0.000 0.000 974.538 34,271.908 -26,629.638 -26,629.638 -24,642.726 12-2020 487.138 14 12.1 0.000 0.000 7,605.804 128,027.875 -66,273.956 -92,903.594 -83,067.552 12-2021 1,177.099 26 21.8 0.000 0.000 11,185.753 103,954.643 -11,111.867 -104,015.461 -91,575.138 12-2022 1,875.618 37 31.0 0.000 0.000 13,844.051 72,110.580 40,724.165 -63,291.296 -63,217.943 12-20232,159.970 37 31.0 0.000 0.000 9,843.805 .000 80,296.956 17,005.660 -10,701.054 12-2024 2,159.970 37 31.0 0.000 0.000 6,828.032 .000 54,900.136 71,905.796 21,883.968 12-2025 2,159.970 37 31.0 0.000 0.000 5,371.579 .000 42,687.562 114,593.358 44,901.440 12-2026 2,159.970 37 31.0 0.000 0.000 4,487.748 .000 35,289.574 149,882.932 62,195.340 12-2027 2,159.970 37 31.0 0.000 0.000 3,877.940 .000 30,190.386 180,073.317 75,643.313 12-2028 2,159.970 37 31.0 0.000 0.000 3,436.682 .000 26,502.851 206,576.168 86,373.199 12-2029 2,159.970 37 31.0 0.000 0.000 3,079.050 .000 23,515.826 230,091.994 95,026.672 12-2030 2,159.970 37 31.0 0.000 0.000 2,799.721 .000 21,183.976 251,275.970 102,113.294 12-2031 2,159.970 37 31.0 0.000 0.000 2,564.643 .000 19,222.615 270,498.586 107,959.336 12-2032 2,159.970 37 31.0 0.000 0.000 2,363.894 .000 17,548.316 288,046.901 112,810.679 12-2033 2,159.970 37 31.0 0.000 0.000 2,168.671 .000 15,920.695 303,967.596 116,811.659 12-2034 2,159.970 37 31.0 0.000 0.000 1,995.291 .000 14,475.191 318,442.788 120,118.908 12-2035 2,159.970 37 31.0 0.000 0.000 1,835.772 .000 13,145.252 331,588.039 122,849.458 12-2036 2,159.970 37 31.0 0.000 0.000 1,693.444 .000 11,958.628 343,546.668125,107.597 12-2037 2,159.970 37 31.0 0.000 0.000 1,553.620 .000 10,792.891 354,339.559 126,960.206 S Tot 36,005.349 0.000 0.000 87,510.039 338,365.005 354,339.559 354,339.559 126,960.206 After 44,942.531 0.000 0.000 14,781.897 .000 78,231.884 432,571.443 134,869.497 Total 80,947.880 0.000 0.000 102,291.938 338,365.005 432,571.443 432,571.443 134,869.497 SEC Pricing YE2018 ______________________Percent Cum. Disc. WTI Cushing Henry Hub 5.00 234,746.406 Year Oil $/STB Gas $/MMBTU 8.00 167,806.299 2019 65.56 3.100 10.00 134,869.497 Thereafter Flat Flat 12.00 108,435.731 Cap 65.56 3.100 15.00 77,626.249 ______________________ 20.00 41,982.369 12 Months in first year 42.932 Year Life (12/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. Summary Cawley, Gillespie & Associates, Inc. Summary Plot- PUD Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico 9 9 _______________________________________________________________________________________________________________________________Proved Undeveloped Reserves________________________________________________________________________________________ Gross Production 8 _______________________42.93 Year Life (12/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% Q D n D Q Cumulatives ________________________________________________ i ei ef ab 7 __________________________________________________ Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 31,721. N.A. N.A. 8.5 127. Oil - mbbls 0.0 22,998.5 22,998.5 14,927.001 861,180.457 59,870.803 183,239.816 432,571.443 134,869.497 Gas - mcf/mo 113,036. N.A. N.A. 8.5818. Gas - mmcf 0.0 108,605.9 108,605.9 51,703.418 96,168.357 33,344.107 338,365.005 OIL (bbls/mo) Δ 6 6 GAS (mcf/mo) ∇ 5 5 4 4 3 3 2 2 9 9 8 8 7 7 100,000. 6 6 1,000,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 10,000. 3 3 100,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 TIME (years) ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 00/ 0 Last Data 00/ 0 01 / 16 / 2019 12 : 15 : 24 21 API: Cawley, Gillespie & Associates, Inc. SUMMARY 1,000. 10,000. Table II - PUD Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Undeveloped Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. A.G. HILL PUD 3 (1.0 WC A) 75.0000 NI 1 419.9 419.9 314.9 18,167.1 1,031.3 4,455.2 6,730.2 1,461.6 1 PUD Oil 11/21 587 100.0000 WI 32.1 1,284.8 1,284.8 713.0 1,326.3 518.4 8,000.0 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. A.G. HILL PUD 4 (1.0 WC B) 75.0000 NI 1 427.9 427.9 320.9 18,513.3 1,146.2 4,563.0 8,126.9 2,273.9 2 PUD Oil 03/21 588 100.0000 WI 33.1 1,942.5 1,942.5 1,078.1 2,005.2 559.9 8,000.0 PHANTOM (3RD BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. ANTELOPE PUD 1 (1.5 3RD BS) 77.3363 NI 1 291.2 291.2 225.2 12,992.0 1,090.5 3,748.6 6,194.8 1,129.9 3 PUD Oil 07/22 564 100.0000 WI 31.7 3,168.1 3,168.1 1,813.1 3,372.3 488.0 8,000.0 PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. BISON PUD 1(1.5 WC A) 69.3195 NI 1 619.0 619.0 429.1 24,755.8 1,450.1 5,333.9 11,768.0 3,193.1 4 PUD Oil 05/22 590 91.2062 WI 37.0 2,216.1 2,216.1 1,136.8 2,114.4 721.2 9,576.6 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. BISON PUD 2 (1.5 WC B) 69.3195 NI 1 629.9 629.9 436.6 25,191.1 1,559.6 5,429.4 13,146.8 4,400.4 5 PUD Oil 11/20 591 91.2062 WI 37.7 2,859.7 2,859.7 1,466.9 2,728.5 761.9 9,576.6 E AXIS PUD 1 (1.5 WC B) 75.0000 NI 1 629.6 629.6 472.2 27,243.1 1,686.7 5,939.3 14,006.9 4,330.4 6 PUD Oil 07/21 592 100.0000 WI 37.5 2,858.4 2,858.4 1,586.4 2,950.8 823.9 10,500.0 PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. E AXIS PUD 2 (1.5 WC A) 75.0000 NI 1 614.9 614.9 461.2 26,605.8 1,510.4 5,789.9 11,807.2 3,028.6 7 PUD Oil 04/22 593 100.0000 WI 36.5 1,881.5 1,881.5 1,044.3 1,942.3 759.2 10,500.0 PHANTOM (3RD BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. ELK PUD 1 (1.5 3RD BS) 38.0028 NI 1 511.2 511.2 194.3 11,208.5 768.7 2,502.7 5,927.0 1,509.3 8 PUD Oil 10/22 594 47.5350 WI 36.8 3,302.5 3,302.5 928.7 1,727.4 363.8 4,991.2 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. ELK PUD 2 (1.5 WC B) 38.0028 NI 1 630.9 630.9 239.8 13,833.4 856.4 2,854.9 7,613.7 2,465.4 9 PUD Oil 10/21 595 47.5350 WI 38.4 2,864.5 2,864.5 805.6 1,498.3 418.4 4,991.2 GRIZZLY PUD 1 (1.5 WCB) 67.3550 NI 1 629.0 629.0 423.7 24,442.8 1,513.3 5,453.6 12,173.8 3,958.5 10 PUD Oil 08/20 596 92.2769 WI 37.2 2,855.7 2,855.7 1,423.4 2,647.5 739.2 9,689.1 GRIZZLY PUD 2 (1.5 WC B) 67.3550 NI 1 629.0 629.0 423.7 24,442.8 1,513.3 5,454.3 12,173.2 3,926.6 11 PUD Oil 09/20 597 92.2769 WI 37.2 2,855.7 2,855.7 1,423.4 2,647.5 739.2 9,689.1 PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. KUDU PUD 1 (1.5 WC A) 38.6422 NI 1 618.5 618.5 239.0 13,788.8 807.7 3,028.6 6,371.2 1,907.7 12 PUD Oil 12/20 598 51.9993 WI 36.7 2,214.2 2,214.2 633.2 1,177.7 401.7 5,459.9 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. KUDU PUD 2 (1.5 WC B) 37.9699 NI 1 629.2 629.2 238.9 13,784.0 853.4 3,049.4 6,947.2 2,133.3 13 PUD Oil 05/21 599 51.5049 WI 37.3 2,856.7 2,856.7 802.7 1,493.0 416.9 5,408.0 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: 6.294 1/16/2019 12:12:37 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc. Page 1 Table II - PUD (cont.) Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Undeveloped Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN PHANTOM (2ND BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. LYNX PUD 1 (1.5 2ND BS) 66.5538 NI 1 621.3 621.3 413.5 23,855.0 1,324.4 5,164.3 12,571.8 4,046.2 14 PUD Oil 11/22 600 88.7384 WI 36.4 1,677.4 1,677.4 826.1 1,536.6 670.8 7,099.1 PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. MOOSE PUD 1 (1.5 WC A) 62.3836 NI 1 620.3 620.3 387.0 22,325.7 1,307.8 4,568.3 11,377.6 3,394.9 15 PUD Oil 03/22 601 77.2739 WI 37.8 2,220.7 2,220.7 1,025.2 1,906.8 650.4 8,113.8 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. MOOSE PUD 2 (1.5 WC B) 62.3836 NI 1 631.1 631.1 393.7 22,715.3 1,406.3 4,648.8 12,623.5 4,647.7 16 PUD Oil 07/20 602 77.2739 WI 38.5 2,865.4 2,865.4 1,322.8 2,460.4 687.0 8,113.8 PHANTOM (WOLFCAMP) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. NE AXIS 2H55.0438 NI 1 614.9 614.9 338.5 19,526.4 1,108.5 4,249.8 12,300.4 6,577.2 17 PUD Oil 05/19 576 73.3917 WI 36.5 1,881.5 1,881.5 766.4 1,425.5 557.2 4,070.7 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. NW AXIS PUD 4 (1.5 WC B) 44.7568 NI 1 629.6 629.6 281.8 16,257.5 1,006.5 3,544.3 8,358.7 2,542.7 18 PUD Oil 09/21 607 59.6758 WI 37.5 2,858.4 2,858.4 946.7 1,760.9 491.7 6,266.0 OSO PUD 3 (1.5 WC B) 69.8704 NI 1 631.2 631.2 441.0 25,445.4 1,575.3 5,185.3 14,209.2 4,815.4 19 PUD Oil 06/21 609 86.1192 WI 38.6 2,865.8 2,865.8 1,481.7 2,756.1 769.5 9,042.5 PHANTOM (WOLFCAMP) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. OX 1H 1.5 57.2656 NI 1 629.6 629.6 360.6 20,801.3 1,287.8 4,534.8 13,903.3 7,276.5 20 PUD Oil 05/19 502 76.3541 WI 37.5 2,858.4 2,858.4 1,211.3 2,253.0 629.1 4,808.8 PHANTOM (3RD BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. OX PUD 1 (1.5 3RD BS) 57.2656 NI 1 290.7 290.7 166.5 9,603.6 806.1 2,839.0 4,316.2 669.9 21 PUD Oil 08/22 610 76.3541 WI 31.3 3,162.6 3,162.6 1,340.2 2,492.8 360.8 6,108.3 PHANTOM (WOLFCAMP A) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. OX PUD 2 (1.5 WC A) 57.2656 NI 1 614.9 614.9 352.1 20,314.6 1,153.3 4,421.3 9,014.9 2,367.2 22 PUD Oil 01/22 611 76.3541 WI 36.5 1,881.5 1,881.5 797.3 1,483.0 579.7 8,017.2 TBD (WOLFCAMP A) -- LEA COUNTY, NEW MEXICOLILIS ENERGY, INC. TBD 17-20 PUD 1 (2.0 WC A) 79.3750 NI 1 685.7 685.7 544.3 31,399.5 2,587.9 6,259.8 11,926.8 2,328.6 23 PUD Oil 12/21 614 100.0000 WI 37.9 2,153.0 2,153.0 1,264.6 2,352.2 1,797.7 13,382.0 TBD (WOLFCAMP B) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. TBD 17-20 PUD 2 (2.0 WC B) 79.3750 NI 1 744.1 744.1 590.6 34,073.1 2,983.2 6,683.6 16,109.3 5,106.3 24 PUD Oil 02/20 615 100.0000 WI 39.5 3,378.0 3,378.0 1,984.2 3,690.5 2,061.0 13,382.0 TBD 17-20 PUD 3 (2.0 WC B) 79.3750 NI 1 744.1 744.1 590.6 34,073.1 2,983.2 6,684.2 16,108.8 5,027.1 25 PUD Oil 04/20 616 100.0000 WI 39.5 3,378.0 3,378.0 1,984.2 3,690.5 2,061.0 13,382.0 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: 6.294 1/16/2019 12:12:37 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc. Page 2 Table II - PUD (cont.) Lease Reserve Summary Lilis Energy, Inc. Interests Delaware Basin Properties in Texas and New Mexico Proved Undeveloped Reserves As of December 31, 2018 Current WellCnt Ultimate Gross Net Oil Revenue Prod Tax Expenses Future Net Cash Flow OPERATOR Interest Life Recovery Reserves Reserves Gas Revenue Adv. Tax Investments Cash Flow Disc.@ 10.0 LEASE NAME Start % _______________MBBL / MMCF_______________ M$ / M$ M$ / M$ M$ / M$ M$ M$ Table Class Major Well No. Date ASN TBD (WOLFCAMP XY) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. TBD 17-20 PUD 4 (2.0 WC XY) 79.3750 NI 1 566.3 566.3 449.5 25,931.3 2,320.8 5,541.4 9,160.3 1,111.9 26 PUD Oil 02/21 617 100.0000 WI 36.6 2,871.0 2,871.0 1,686.3 3,136.6 1,600.2 13,382.0 TBD (WOLFCAMP A) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. TBD 18-19 PUD 1 (2.0 WC A) 79.3750 NI 1 786.6 786.6 624.3 36,019.1 2,968.6 6,903.2 14,612.8 3,144.2 27 PUD Oil 02/22 618 100.0000 WI 39.5 2,469.8 2,469.8 1,450.7 2,698.3 2,062.2 14,697.0 TBD (WOLFCAMP B) -- LEA COUNTY, NEW MEXICO LILIS ENERGY, INC. TBD 18-19 PUD 2 (2.0 WC B) 79.3750 NI 1 855.0 855.0 678.7 39,154.5 3,428.1 7,382.6 19,490.2 6,366.2 28 PUD Oil 05/20 619 100.0000 WI 41.2 3,881.8 3,881.8 2,280.1 4,240.9 2,368.3 14,697.0 TBD 18-19 PUD 3 (2.0 WC B) 79.3750 NI 1 855.0 855.0 678.7 39,154.5 3,428.17,382.5 19,490.3 6,314.8 29 PUD Oil 06/20 620 100.0000 WI 41.2 3,881.8 3,881.8 2,280.1 4,240.9 2,368.3 14,697.0 PHANTOM (3RD BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. TBD 22-23 PUD 2 (2.0 3RD BS) 60.6259 NI 1 694.7 694.7 421.2 24,299.1 1,666.4 5,243.0 15,271.7 4,953.0 30 PUD Oil 06/22 622 81.7202 WI 39.4 4,487.9 4,487.9 2,013.4 3,745.0 788.8 8,580.6 PHANTOM (WOLFCAMP B) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. TBD 22-23 PUD 4 (2.0 WC B) 60.6259 NI 1 854.7 854.7 518.1 29,893.4 1,850.7 6,019.5 15,378.1 5,061.8 31 PUD Oil 01/20 624 81.7202 WI 41.0 3,880.2 3,880.2 1,740.8 3,237.8 904.1 12,010.4 TBD 22-23 PUD 5 (2.0 WC B) 60.6259 NI 1 854.7 854.7 518.1 29,893.4 1,850.7 6,019.3 15,378.3 4,983.4 32 PUD Oil 03/20 625 81.7202 WI 41.0 3,880.2 3,880.2 1,740.8 3,237.8 904.1 12,010.4 PHANTOM (WOLFCAMP XY) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. TBD 5-14 PUD 2 (2.0 XY) 58.5000 NI 1 391.1 391.1 228.8 13,199.6 1,432.1 3,630.5 10,288.5 3,214.4 33 PUD Oil 01/21 627 78.0000 WI 37.2 7,020.2 7,020.2 3,039.0 5,652.6 603.6 8,190.0 PHANTOM (3RD BONE SPRINGS) -- WINKLER COUNTY, TEXAS LILIS ENERGY, INC. TIGER PUD 1 (1.5 3RD BS) 72.2518 NI 1 511.9 511.9 369.9 21,338.0 1,463.4 4,616.9 11,791.7 3,196.4 34 PUD Oil 09/22 628 87.0568 WI 37.3 3,306.9 3,306.9 1,768.1 3,288.6 692.6 9,141.0 PHANTOM (WOLFCAMP B) --WINKLER COUNTY, TEXAS LILIS ENERGY, INC. TIGER PUD 2 (1.5 WC B) 72.2518 NI 1 631.7 631.7 456.4 26,331.1 1,630.2 5,261.9 15,024.0 5,532.0 35 PUD Oil 10/20 629 87.0568 WI 38.9 2,867.8 2,867.8 1,533.3 2,852.0 796.3 9,141.0 W AXIS PUD 4 (1.5 WC B) 73.8673 NI 1 629.6 629.6 465.1 26,831.7 1,661.2 5,849.6 13,795.3 4,230.6 36 PUD Oil 08/21 633 98.4898 WI 37.5 2,858.4 2,858.4 1,562.5 2,906.2 811.5 10,341.4 W SHAMMO PUD 1 (1.5 WC B) 37.9241 NI 1 629.6 629.6 238.8 13,775.6 852.9 3,002.9 7,083.0 2,242.4 37 PUD Oil 04/21 634 50.5655 WI 37.5 2,858.4 2,858.4 802.2 1,492.1 416.6 5,309.4 GRAND TOTAL 37 22,998.5 22,998.5 14,927.0 861,180.4 59,870.8 183,239.8 432,571.4 134,869.5 108,605.9 108,605.9 51,703.4 96,168.4 33,344.1 338,365.0 THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. Scenario: 6.294 1/16/2019 12:12:37 PM TEXAS REGISTERED ENGINEERING FIRM F-693. Cawley, Gillespie & Associates, Inc. Page 3 Rate-Time History-Forecast Curves And Tabular Reserves and Economics By Property Cawley, Gillespie & Associates, Inc. Petroleum Consultants Figure 1 LILIS ENERGY, INC. -- A.G. HILL PUD 3 (1.0 WC A) PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________35.03 Year Life (01/2054) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 9,931. 96.3 1.20 8.0 144. Initial Final Oil - mbbls 0.0 419.9 419.9 75.000 NI 314.893 18,167.059 1,031.345 4,455.185 6,730.190 1,461.608Gas - mcf/mo 30,388. 0.0 0.00 8.0 442. 3,060. 3,060. 6 Gas - mmcf 0.0 1,284.8 1,284.8 100.000 WI 713.044 1,326.261 518.377 8,000.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A A.G. HILL PUD 3 (1.0 WC A) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 587 100. 100. Table 1 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- A.G. HILL PUD 3 (1.0 WC A) PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 25.7 78.8 6.5 19.305 43.714 4.838 57.693 1.860 15.734 12-2022 92.9 284.1 23.3 69.642 157.698 17.454 57.693 1.860 15.734 12-2023 45.7 139.9 11.5 34.282 77.628 8.592 57.693 1.860 15.734 12-2024 31.8 97.2 8.0 23.833 53.967 5.973 57.693 1.860 15.734 12-2025 24.6 75.4 6.2 18.474 41.832 4.630 57.693 1.860 15.734 12-2026 20.3 62.2 5.1 15.239 34.508 3.819 57.693 1.860 15.734 12-2027 17.4 53.2 4.4 13.037 29.522 3.268 57.693 1.860 15.734 12-2028 15.3 46.8 3.8 11.463 25.957 2.873 57.693 1.860 15.734 12-2029 13.6 41.6 3.4 10.205 23.109 2.558 57.693 1.860 15.734 12-2030 12.3 37.7 3.1 9.237 20.916 2.315 57.693 1.860 15.734 12-2031 11.3 34.5 2.8 8.450 19.133 2.118 57.693 1.860 15.734 12-2032 10.4 31.8 2.6 7.792 17.644 1.95357.693 1.860 15.734 12-2033 9.5 29.2 2.4 7.148 16.187 1.792 57.693 1.860 15.734 12-2034 8.8 26.8 2.2 6.577 14.893 1.648 57.693 1.860 15.734 12-2035 8.1 24.7 2.0 6.051 13.702 1.517 57.693 1.860 15.734 12-2036 7.4 22.8 1.9 5.582 12.640 1.399 57.693 1.860 15.734 12-2037 6.8 20.9 1.7 5.121 11.596 1.284 57.693 1.860 15.734 S Tot 361.9 1,107.5 90.7 271.439 614.646 68.030 57.693 1.860 15.734 After 57.9 177.3 14.5 43.454 98.398 10.891 57.693 1.860 15.734 Total 419.9 1,284.8 105.2 314.893 713.044 78.921 57.693 1.860 15.734 Cum .0 .0 .0 Ult 419.9 1,284.8 105.2 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 1,113.747 81.308 76.128 0.000 0.000 1,271.182 63.227 31.780 4.870 12-2022 4,017.863 293.319 274.634 0.000 0.000 4,585.816 228.094 114.645 5.219 12-2023 1,977.829 144.389 135.191 0.000 0.000 2,257.409 112.282 56.435 5.889 12-2024 1,374.981 100.379 93.984 0.000 0.000 1,569.345 78.058 39.234 6.466 12-2025 1,065.792 77.807 72.850 0.000 0.000 1,216.449 60.505 30.411 7.016 12-2026879.197 64.185 60.096 0.000 0.000 1,003.477 49.912 25.087 7.536 12-2027 752.168 54.911 51.413 0.000 0.000 858.492 42.701 21.462 8.036 12-2028 661.325 48.279 45.204 0.000 0.000 754.807 37.543 18.870 8.512 12-2029 588.769 42.982 40.244 0.000 0.000 671.996 33.424 16.800 8.998 12-2030 532.904 38.904 36.426 0.000 0.000 608.233 30.253 15.206 9.462 12-2031 487.481 35.588 33.321 0.000 0.000 556.390 27.674 13.910 9.918 12-2032 449.533 32.818 30.727 0.000 0.000 513.078 25.520 12.827 10.370 12-2033 412.416 30.108 28.190 0.000 0.000 470.714 23.413 11.768 10.892 12-2034 379.445 27.701 25.936 0.000 0.000 433.082 21.541 10.827 11.441 12-2035 349.109 25.486 23.863 0.000 0.000 398.458 19.819 9.961 12.038 12-2036 322.042 23.510 22.013 0.000 0.000 367.565 18.282 9.189 12.665 12-2037 295.452 21.569 20.195 0.000 0.000 337.216 16.773 8.430 13.394 S Tot 15,660.055 1,143.241 1,070.416 0.000 0.000 17,873.711 889.022 446.843 7.255 After 2,507.005 183.020 171.362 0.000 0.000 2,861.387 142.323 71.535 21.242 Total 18,167.059 1,326.261 1,241.777 0.000 0.000 20,735.098 1,031.345 518.377 9.185 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross NetExpense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 8.893 1 1.0 0.000 0.000 135.906 8,000.000 -6,968.624 -6,968.624 -5,400.564 12-2022 69.600 1 1.0 0.000 0.000 490.282 .000 3,683.194 -3,285.430 -2,739.264 12-2023 69.600 1 1.0 0.000 0.000 241.346 .000 1,777.747 -1,507.683 -1,576.886 12-2024 69.600 1 1.0 0.000 0.000 167.783 .000 1,214.670 -293.013 -855.834 12-2025 69.600 1 1.0 0.000 0.000 130.054 .000 925.879 632.866 -356.519 12-2026 69.600 1 1.0 0.000 0.000 107.285 .000 751.594 1,384.460 11.852 12-2027 69.600 1 1.0 0.000 0.000 91.784 .000 632.945 2,017.405 293.820 12-2028 69.600 1 1.0 0.000 0.000 80.699 .000 548.095 2,565.500 515.742 12-2029 69.600 1 1.0 0.000 0.000 71.845 .000 480.327 3,045.827 692.509 12-2030 69.600 1 1.0 0.000 0.000 65.028 .000 428.147 3,473.973 835.745 12-2031 69.600 1 1.0 0.000 0.000 59.485 .000 385.721 3,859.694 953.054 12-2032 69.600 1 1.0 0.000 0.000 54.855 .000 350.276 4,209.970 1,049.895 12-2033 69.600 1 1.0 0.000 0.000 50.325 .000 315.608 4,525.579 1,129.212 12-2034 69.600 1 1.0 0.000 0.000 46.302 .000 284.812 4,810.390 1,194.288 12-2035 69.600 1 1.0 0.000 0.000 42.600 .000 256.477 5,066.868 1,247.566 12-2036 69.600 1 1.0 0.000 0.000 39.297 .000 231.196 5,298.064 1,291.226 12-2037 69.600 1 1.0 0.000 0.000 36.053 .000 206.360 5,504.425 1,326.650 S Tot 1,122.493 0.000 0.000 1,910.928 8,000.000 5,504.425 5,504.425 1,326.650 After 1,115.845 0.000 0.000 305.919 .000 1,225.766 6,730.190 1,461.608 Total 2,238.338 0.000 0.000 2,216.847 8,000.000 6,730.190 6,730.190 1,461.608 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 3,223.208 Oil Rate 19,922. 143. bbls/mo 96.3% 1.20 0.0% 3,093. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 2,037.059 Gas Rate 60,964. 438. Mcf/mo 0.0% 0.00 0.0% 10.00 1,461.608 GOR 3,060. 3,060. scf/bbl Revenue 12.00 1,007.505 NGL Rate 2,453. 36. bbls/mo Oil 75.0000 75.0000 NGL Yield 40.2 83.9 bbl/MMcf Gas 75.0000 75.0000 15.00 492.257 GasShrinkage 63.1 25.9 % ______________________________ ______________________ 20.00 -71.998 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 18.1 % Start Date: 11/2021 2 Months in year ‘21 32.201 Year Life (01/2054) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 587 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 1 Figure 2 LILIS ENERGY, INC. -- A.G. HILL PUD 4 (1.0 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________35.31 Year Life (04/2054) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 10,326. 96.3 1.20 7.8 136. Initial Final Oil - mbbls 0.0 427.9 427.9 75.000 NI 320.894 18,513.286 1,146.176 4,562.994 8,126.925 2,273.861Gas - mcf/mo 46,880. 0.0 0.00 7.8 616. 4,540. 4,540. 6 Gas - mmcf 0.0 1,942.5 1,942.5 100.000 WI 1,078.076 2,005.222 559.900 8,000.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B A.G. HILL PUD 4 (1.0 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 588 100. 100. Table 2 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- A.G. HILL PUD 4 (1.0 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 98.8 448.4 36.7 74.082 248.885 27.547 57.693 1.860 15.734 12-2022 55.0 249.5 20.4 41.218 138.477 15.327 57.693 1.860 15.734 12-2023 35.7 162.0 13.3 26.761 89.907 9.951 57.693 1.860 15.734 12-2024 27.0 122.7 10.0 20.269 68.097 7.537 57.693 1.860 15.734 12-2025 21.9 99.3 8.1 16.404 55.109 6.100 57.693 1.860 15.734 12-2026 18.5 84.1 6.9 13.889 46.662 5.165 57.693 1.860 15.734 12-2027 16.1 73.2 6.0 12.093 40.627 4.497 57.693 1.860 15.734 12-2028 14.4 65.2 5.3 10.767 36.174 4.004 57.693 1.860 15.734 12-2029 12.9 58.6 4.8 9.678 32.514 3.599 57.693 1.860 15.734 12-2030 11.8 53.4 4.4 8.825 29.648 3.282 57.693 1.860 15.734 12-2031 10.8 49.1 4.0 8.109 27.244 3.015 57.693 1.860 15.734 12-2032 10.0 45.3 3.7 7.48025.131 2.782 57.693 1.860 15.734 12-2033 9.2 41.5 3.4 6.863 23.056 2.552 57.693 1.860 15.734 12-2034 8.4 38.2 3.1 6.314 21.213 2.348 57.693 1.860 15.734 12-2035 7.7 35.2 2.9 5.809 19.517 2.160 57.693 1.860 15.734 12-2036 7.1 32.4 2.7 5.359 18.004 1.993 57.693 1.860 15.734 12-2037 6.6 29.8 2.4 4.916 16.517 1.828 57.693 1.860 15.734 S Tot 371.8 1,687.9 138.2 278.837 936.782 103.685 57.693 1.860 15.734 After 56.1 254.6 20.9 42.057 141.294 15.639 57.693 1.860 15.734 Total 427.9 1,942.5 159.1 320.894 1,078.076 119.324 57.693 1.860 15.734 Cum .0 .0 .0 Ult 427.9 1,942.5 159.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 4,273.981 462.926 433.437 0.000 0.000 5,170.344 264.606 129.259 4.322 12-2022 2,377.992 257.566 241.159 0.000 0.000 2,876.718 147.224 71.918 4.845 12-2023 1,543.924 167.226 156.574 0.000 0.000 1,867.725 95.586 46.693 5.351 12-2024 1,169.391 126.660 118.591 0.000 0.000 1,414.642 72.398 35.366 5.813 12-2025 946.368 102.504 95.974 0.000 0.000 1,144.845 58.59128.621 6.263 12-2026 801.309 86.792 81.263 0.000 0.000 969.364 49.610 24.234 6.689 12-2027 697.663 75.566 70.752 0.000 0.000 843.980 43.193 21.100 7.102 12-2028 621.200 67.284 62.998 0.000 0.000 751.481 38.459 18.787 7.495 12-2029 558.340 60.475 56.623 0.000 0.000 675.438 34.567 16.886 7.899 12-2030 509.131 55.145 51.633 0.000 0.000 615.909 31.521 15.398 8.285 12-2031 467.843 50.673 47.445 0.000 0.000 565.962 28.965 14.149 8.671 12-2032 431.571 46.745 43.767 0.000 0.000 522.082 26.719 13.052 9.072 12-2033 395.937 42.885 40.153 0.000 0.000 478.975 24.513 11.974 9.537 12-2034 364.283 39.456 36.943 0.000 0.000 440.682 22.553 11.017 10.026 12-2035 335.159 36.302 33.990 0.000 0.000 405.451 20.750 10.136 10.557 12-2036 309.174 33.487 31.354 0.000 0.000 374.016 19.141 9.350 11.116 12-2037 283.647 30.722 28.765 0.000 0.000 343.134 17.561 8.578 11.765 S Tot 16,086.912 1,742.415 1,631.422 0.000 0.000 19,460.749 995.957 486.519 6.235 After 2,426.373 262.807 246.066 0.000 0.000 2,935.246 150.219 73.381 18.886 Total 18,513.286 2,005.222 1,877.488 0.000 0.000 22,395.995 1,146.176 559.900 7.893 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow EndExpense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 55.381 1 1.0 0.000 0.000 521.535 8,000.000 -3,800.437 -3,800.437 -3,286.248 12-2022 69.600 1 1.0 0.000 0.000 290.176 .000 2,297.800 -1,502.637 -1,632.397 12-2023 69.600 1 1.0 0.000 0.000 188.398 .000 1,467.447 -35.190 -673.843 12-2024 69.600 1 1.0 0.000 0.000 142.696 .000 1,094.582 1,059.393 -24.373 12-2025 69.600 1 1.0 0.000 0.000 115.481 .000 872.552 1,931.945 446.059 12-2026 69.600 1 1.0 0.000 0.000 97.780 .000 728.140 2,660.085 802.871 12-2027 69.600 1 1.0 0.000 0.000 85.133 .000 624.955 3,285.040 1,081.245 12-2028 69.600 1 1.0 0.000 0.000 75.802 .000 548.833 3,833.873 1,303.444 12-2029 69.600 1 1.0 0.000 0.000 68.132 .000 486.253 4,320.126 1,482.379 12-2030 69.600 1 1.0 0.000 0.000 62.127 .000 437.264 4,757.389 1,628.655 12-2031 69.600 1 1.0 0.000 0.000 57.089 .000 396.159 5,153.548 1,749.138 12-2032 69.600 1 1.0 0.000 0.000 52.663 .000 360.048 5,513.597 1,848.679 12-2033 69.600 1 1.0 0.000 0.000 48.314 .000 324.573 5,838.170 1,930.250 12-2034 69.600 1 1.0 0.000 0.000 44.452 .000 293.0606,131.231 1,997.210 12-2035 69.600 1 1.0 0.000 0.000 40.898 .000 264.067 6,395.297 2,052.064 12-2036 69.600 1 1.0 0.000 0.000 37.727 .000 238.197 6,633.494 2,097.046 12-2037 69.600 1 1.0 0.000 0.000 34.612 .000 212.783 6,846.277 2,133.572 S Tot 1,168.981 0.000 0.000 1,963.016 8,000.000 6,846.277 6,846.277 2,133.572 After 1,134.918 0.000 0.000 296.080 .000 1,280.647 8,126.925 2,273.861 Total 2,303.899 0.000 0.000 2,259.095 8,000.000 8,126.925 8,126.925 2,273.861 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 4,282.945 Oil Rate 20,227. 134. bbls/mo 96.3% 1.20 0.0% 3,180. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 2,940.715 Gas Rate 91,831. 610. Mcf/mo 0.0% 0.00 0.0% 10.00 2,273.861 GOR 4,540. 4,540. scf/bbl Revenue 12.00 1,736.516 NGL Rate 3,910. 51. bbls/mo Oil 75.0000 75.0000 NGL Yield 42.6 84.2 bbl/MMcf Gas 75.0000 75.000015.00 1,109.263 Gas Shrinkage 62.2 25.6 % ______________________________ ______________________ 20.00 386.295 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 18.1 % Start Date: 03/2021 10 Months in year ‘21 33.143 Year Life (04/2054) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 588 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 2 Figure 3 LILIS ENERGY, INC. -- ANTELOPE PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________35.31 Year Life (04/2054) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 7,065. 96.3 1.20 7.8 104. Initial Final Oil - mbbls 0.0 291.2 291.2 77.336 NI 225.194 12,992.048 1,090.471 3,748.5706,194.794 1,129.889 Gas - mcf/mo 76,869. 0.0 0.00 7.8 1,129. 10,800. 10,800. 6 Gas - mmcf 0.0 3,168.1 3,168.1 100.000 WI 1,813.079 3,372.326 488.047 8,000.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : 3RD BONE SPRINGS ANTELOPE PUD 1 (1.5 3RD BS) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 564 100. 1,000. Table 3 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- ANTELOPE PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 47.9 521.0 42.7 37.031 298.146 32.999 57.693 1.860 15.734 12-2023 46.9 510.1 41.8 36.257 291.912 32.309 57.693 1.860 15.734 12-2024 27.6 300.2 24.6 21.341 171.822 19.018 57.693 1.860 15.734 12-2025 20.0 218.0 17.9 15.496 124.762 13.809 57.693 1.860 15.734 12-2026 16.0 173.6 14.2 12.338 99.337 10.995 57.693 1.860 15.734 12-2027 13.3 145.2 11.9 10.322 83.105 9.198 57.693 1.860 15.734 12-2028 11.6 125.7 10.3 8.936 71.948 7.963 57.693 1.860 15.734 12-2029 10.2 110.7 9.1 7.866 63.334 7.010 57.693 1.860 15.734 12-2030 9.1 99.3 8.1 7.059 56.833 6.290 57.693 1.860 15.734 12-2031 8.3 90.2 7.4 6.414 51.640 5.716 57.693 1.860 15.734 12-2032 7.6 83.0 6.8 5.89847.490 5.256 57.693 1.860 15.734 12-2033 7.0 76.1 6.2 5.411 43.567 4.822 57.693 1.860 15.734 12-2034 6.4 70.0 5.7 4.979 40.084 4.437 57.693 1.860 15.734 12-2035 5.9 64.4 5.3 4.581 36.879 4.082 57.693 1.860 15.734 12-2036 5.5 59.4 4.9 4.225 34.020 3.765 57.693 1.860 15.734 12-2037 5.0 54.5 4.5 3.877 31.211 3.455 57.693 1.860 15.734 S Tot 248.3 2,701.6 221.3 192.032 1,546.091 171.125 57.693 1.860 15.734 After 42.9 466.5 38.2 33.161 266.988 29.551 57.693 1.860 15.734 Total 291.2 3,168.1 259.5 225.194 1,813.079 200.675 57.693 1.860 15.734 Cum .0 .0 .0 Ult 291.2 3,168.1 259.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 2,136.434 554.551 519.226 0.000 0.000 3,210.210 179.319 80.255 2.635 12-2023 2,091.767 542.957 508.370 0.000 0.000 3,143.093 175.570 78.577 2.994 12-2024 1,231.235 319.590 299.232 0.000 0.000 1,850.056 103.342 46.251 3.454 12-2025 894.013 232.058 217.275 0.000 0.000 1,343.346 75.038 33.584 3.875 12-2026711.821 184.766 172.997 0.000 0.000 1,069.584 59.746 26.740 4.268 12-2027 595.507 154.575 144.728 0.000 0.000 894.810 49.983 22.370 4.646 12-2028 515.561 133.823 125.299 0.000 0.000 774.683 43.273 19.367 5.004 12-2029 453.838 117.802 110.298 0.000 0.000 681.938 38.092 17.048 5.366 12-2030 407.249 105.709 98.975 0.000 0.000 611.933 34.182 15.298 5.713 12-2031 370.038 96.050 89.932 0.000 0.000 556.020 31.059 13.900 6.052 12-2032 340.298 88.331 82.704 0.000 0.000 511.333 28.563 12.783 6.377 12-2033 312.191 81.035 75.873 0.000 0.000 469.099 26.203 11.727 6.740 12-2034 287.232 74.556 69.807 0.000 0.000 431.596 24.108 10.790 7.123 12-2035 264.269 68.596 64.226 0.000 0.000 397.091 22.181 9.927 7.539 12-2036 243.780 63.278 59.247 0.000 0.000 366.304 20.461 9.158 7.976 12-2037 223.652 58.053 54.355 0.000 0.000 336.059 18.772 8.401 8.484 S Tot 11,078.885 2,875.729 2,692.543 0.000 0.000 16,647.157 929.892 416.179 4.256 After 1,913.164 496.597 464.963 0.000 0.000 2,874.724 160.579 71.868 14.053 Total 12,992.048 3,372.326 3,157.506 0.000 0.000 19,521.881 1,090.471 488.047 5.699 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense GrossNet Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 32.181 1 1.0 0.000 0.000 252.824 8,000.000 -5,334.369 -5,334.369 -3,934.830 12-2023 69.600 1 1.0 0.000 0.000 247.538 .000 2,571.808 -2,762.561 -2,249.707 12-2024 69.600 1 1.0 0.000 0.000 145.704 .000 1,485.159 -1,277.402 -1,367.456 12-2025 69.600 1 1.0 0.000 0.000 105.797 .000 1,059.328 -218.074 -795.967 12-2026 69.600 1 1.0 0.000 0.000 84.236 .000 829.262 611.188 -389.440 12-2027 69.600 1 1.0 0.000 0.000 70.472 .000 682.385 1,293.573 -85.401 12-2028 69.600 1 1.0 0.000 0.000 61.011 .000 581.432 1,875.005 150.045 12-2029 69.600 1 1.0 0.000 0.000 53.707 .000 503.491 2,378.496 335.352 12-2030 69.600 1 1.0 0.000 0.000 48.194 .000 444.659 2,823.155 484.121 12-2031 69.600 1 1.0 0.000 0.000 43.790 .000 397.671 3,220.826 605.071 12-2032 69.600 1 1.0 0.000 0.000 40.271 .000 360.117 3,580.942 704.632 12-2033 69.600 1 1.0 0.000 0.000 36.945 .000 324.624 3,905.566 786.215 12-2034 69.600 1 1.0 0.000 0.000 33.991 .000 293.107 4,198.673 853.186 12-2035 69.600 1 1.0 0.0000.000 31.273 .000 264.109 4,462.782 908.049 12-2036 69.600 1 1.0 0.000 0.000 28.849 .000 238.236 4,701.019 953.038 12-2037 69.600 1 1.0 0.000 0.000 26.467 .000 212.819 4,913.838 989.571 S Tot 1,076.181 0.000 0.000 1,311.068 8,000.000 4,913.838 4,913.838 989.571 After 1,134.918 0.000 0.000 226.403 .000 1,280.956 6,194.794 1,129.889 Total 2,211.099 0.000 0.000 1,537.471 8,000.000 6,194.794 6,194.794 1,129.889 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 2,777.822 Oil Rate 13,839. 102. bbls/mo 96.3% 1.20 0.0% 3,180. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 1,659.810 Gas Rate 150,574. 1,119. Mcf/mo 0.0% 0.00 0.0% 10.00 1,129.889 GOR 10,800. 10,800. scf/bbl Revenue 12.00 720.005 NGL Rate 6,412. 94. bbls/mo Oil 77.3363 77.3363 NGL Yield 42.6 84.2 bbl/MMcf Gas 77.3363 77.3363 15.00 267.307 Gas Shrinkage 62.2 25.4 %______________________________ ______________________ 20.00 -204.774 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 17.7 % Start Date: 07/2022 6 Months in year ‘22 31.810 Year Life (04/2054) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 564 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 3 Figure 4 LILIS ENERGY, INC. -- BISON PUD 1 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.44 Year Life (06/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,751. 96.3 1.20 8.0 139. Initial Final Oil - mbbls 0.0 619.0 619.0 69.319 NI 429.097 24,755.822 1,450.106 5,333.857 11,768.039 3,193.107Gas - mcf/mo 52,810. 0.0 0.00 8.0 497. 3,580. 3,580. 6 Gas - mmcf 0.0 2,216.1 2,216.1 91.206 WI 1,136.764 2,114.382 721.247 9,576.649 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A BISON PUD 1 (1.5 WC A) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 590 100. 100. Table 4 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- BISON PUD 1 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 122.2 437.4 35.8 84.687 224.353 24.832 57.693 1.860 15.734 12-2023 87.0 311.4 25.5 60.290 159.719 17.678 57.693 1.860 15.734 12-2024 54.1 193.8 15.9 37.527 99.416 11.004 57.693 1.860 15.734 12-2025 40.1 143.5 11.8 27.787 73.613 8.148 57.693 1.860 15.734 12-2026 32.2 115.4 9.5 22.349 59.208 6.553 57.693 1.860 15.734 12-2027 27.1 97.2 8.0 18.814 49.843 5.517 57.693 1.860 15.734 12-2028 23.6 84.5 6.9 16.357 43.334 4.796 57.693 1.860 15.734 12-2029 20.8 74.6 6.1 14.443 38.263 4.235 57.693 1.860 15.734 12-2030 18.7 67.1 5.5 12.990 34.414 3.809 57.693 1.860 15.734 12-2031 17.1 61.1 5.0 11.825 31.327 3.467 57.693 1.860 15.734 12-2032 15.7 56.2 4.6 10.886 28.839 3.19257.693 1.860 15.734 12-2033 14.4 51.6 4.2 9.987 26.458 2.928 57.693 1.860 15.734 12-2034 13.3 47.5 3.9 9.189 24.342 2.694 57.693 1.860 15.734 12-2035 12.2 43.7 3.6 8.454 22.396 2.479 57.693 1.860 15.734 12-2036 11.3 40.3 3.3 7.799 20.660 2.287 57.693 1.860 15.734 12-2037 10.3 37.0 3.0 7.155 18.954 2.098 57.693 1.860 15.734 S Tot 520.1 1,862.0 152.5 360.539 955.139 105.717 57.693 1.860 15.734 After 98.9 354.1 29.0 68.558 181.625 20.103 57.693 1.860 15.734 Total 619.0 2,216.1 181.5 429.097 1,136.764 125.819 57.693 1.860 15.734 Cum .0 .0 .0 Ult 619.0 2,216.1 181.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 4,885.838 417.297 390.715 0.000 0.000 5,693.849 286.195 142.346 4.545 12-2023 3,478.278 297.078 278.154 0.000 0.000 4,053.509 203.745 101.338 4.902 12-2024 2,165.032 184.914 173.135 0.000 0.000 2,523.081 126.820 63.077 5.293 12-2025 1,603.107 136.921 128.199 0.000 0.000 1,868.226 93.904 46.706 5.656 12-2026 1,289.397110.127 103.112 0.000 0.000 1,502.636 75.528 37.566 5.997 12-2027 1,085.442 92.707 86.802 0.000 0.000 1,264.951 63.581 31.624 6.324 12-2028 943.704 80.601 75.467 0.000 0.000 1,099.772 55.279 27.494 6.634 12-2029 833.268 71.169 66.635 0.000 0.000 971.073 48.810 24.277 6.949 12-2030 749.458 64.011 59.933 0.000 0.000 873.402 43.901 21.835 7.250 12-2031 682.214 58.268 54.556 0.000 0.000 795.038 39.962 19.876 7.546 12-2032 628.035 53.640 50.223 0.000 0.000 731.899 36.788 18.297 7.829 12-2033 576.179 49.211 46.076 0.000 0.000 671.467 33.750 16.787 8.151 12-2034 530.115 45.277 42.393 0.000 0.000 617.784 31.052 15.445 8.489 12-2035 487.734 41.657 39.003 0.000 0.000 568.394 28.570 14.210 8.857 12-2036 449.919 38.427 35.980 0.000 0.000 524.326 26.355 13.108 9.244 12-2037 412.771 35.255 33.009 0.000 0.000 481.034 24.179 12.026 9.693 S Tot 20,800.492 1,776.559 1,663.391 0.000 0.000 24,240.442 1,218.417 606.011 5.942 After 3,955.330 337.823 316.303 0.000 0.000 4,609.456 231.689 115.236 16.417 Total 24,755.822 2,114.382 1,979.694 0.000 0.000 28,849.899 1,450.106 721.247 7.616 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross NetExpense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 39.931 1 0.9 0.000 0.000 588.329 9,576.649 -4,939.600 -4,939.600 -3,776.140 12-2023 63.480 1 0.9 0.000 0.000 418.837 .000 3,266.110 -1,673.490 -1,637.786 12-2024 63.480 1 0.9 0.000 0.000 260.703 .000 2,009.003 335.512 -444.667 12-2025 63.480 1 0.9 0.000 0.000 193.038 .000 1,471.098 1,806.611 348.848 12-2026 63.480 1 0.9 0.000 0.000 155.263 .000 1,170.799 2,977.410 922.747 12-2027 63.480 1 0.9 0.000 0.000 130.704 .000 975.563 3,952.973 1,357.377 12-2028 63.480 1 0.9 0.000 0.000 113.636 .000 839.884 4,792.856 1,697.456 12-2029 63.480 1 0.9 0.000 0.000 100.338 .000 734.168 5,527.025 1,967.647 12-2030 63.480 1 0.9 0.000 0.000 90.246 .000 653.941 6,180.966 2,186.424 12-2031 63.480 1 0.9 0.000 0.000 82.149 .000 589.572 6,770.538 2,365.732 12-2032 63.480 1 0.9 0.000 0.000 75.625 .000 537.709 7,308.247 2,514.384 12-2033 63.480 1 0.9 0.000 0.000 69.381 .000 488.069 7,796.316 2,637.039 12-2034 63.480 1 0.9 0.000 0.000 63.834 .000 443.974 8,240.290 2,738.477 12-203563.480 1 0.9 0.000 0.000 58.731 .000 403.405 8,643.695 2,822.272 12-2036 63.480 1 0.9 0.000 0.000 54.177 .000 367.207 9,010.902 2,891.611 12-2037 63.480 1 0.9 0.000 0.000 49.704 .000 331.646 9,342.548 2,948.539 S Tot 992.123 0.000 0.000 2,504.694 9,576.649 9,342.548 9,342.548 2,948.539 After 1,360.758 0.000 0.000 476.282 .000 2,425.492 11,768.039 3,193.107 Total 2,352.881 0.000 0.000 2,980.976 9,576.649 11,768.039 11,768.039 3,193.107 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 5,986.872 Oil Rate 28,895. 138. bbls/mo 96.3% 1.20 0.0% 3,179. 5,798. $/w/mo Expense 91.2062 91.2062 8.00 4,098.732 Gas Rate 103,447. 494. Mcf/mo 0.0% 0.00 0.0% 10.00 3,193.107 GOR 3,580. 3,580. scf/bbl Revenue 12.00 2,482.114 NGL Rate 4,405. 41. bbls/mo Oil 69.3195 69.3195 NGL Yield 42.6 83.9 bbl/MMcf Gas 69.3195 69.3195 15.00 1,677.467 Gas Shrinkage62.2 25.9 % ______________________________ ______________________ 20.00 793.620 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 16.5 % Start Date: 05/2022 8 Months in year ‘22 37.108 Year Life (06/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 590 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 4 Figure 5 LILIS ENERGY, INC. -- BISON PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________39.62 Year Life (08/2058) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,631. 96.3 1.20 8.0 134. Initial Final Oil - mbbls 0.0 629.9 629.9 69.319 NI 436.643 25,191.149 1,559.610 5,429.433 13,146.826 4,400.450Gas - mcf/mo 66,424. 0.0 0.00 8.0 606. 4,540. 4,540. 6 Gas - mmcf 0.0 2,859.7 2,859.7 91.206 WI 1,466.945 2,728.518 761.859 9,576.649 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B BISON PUD 2 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 591 100. 1,000. Table 5 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- BISON PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 37.9 172.2 14.1 26.287 88.315 9.775 57.693 1.860 15.734 12-2021 136.8 621.1 50.9 94.832 318.597 35.263 57.693 1.860 15.734 12-2022 67.3 305.7 25.0 46.682 156.832 17.359 57.693 1.860 15.734 12-2023 46.7 212.0 17.4 32.376 108.771 12.039 57.693 1.860 15.734 12-2024 36.4 165.3 13.5 25.232 84.771 9.383 57.693 1.860 15.734 12-2025 29.9 135.9 11.1 20.751 69.716 7.716 57.693 1.860 15.734 12-2026 25.6 116.3 9.5 17.753 59.643 6.601 57.693 1.860 15.734 12-2027 22.5 102.0 8.4 15.569 52.305 5.789 57.693 1.860 15.734 12-2028 20.1 91.3 7.5 13.937 46.821 5.182 57.693 1.860 15.734 12-2029 18.1 82.4 6.7 12.578 42.257 4.677 57.693 1.860 15.734 12-2030 16.6 75.4 6.2 11.506 38.655 4.278 57.693 1.860 15.734 12-2031 15.3 69.3 5.7 10.582 35.552 3.935 57.693 1.86015.734 12-2032 14.1 63.9 5.2 9.762 32.796 3.630 57.693 1.860 15.734 12-2033 12.9 58.7 4.8 8.956 30.088 3.330 57.693 1.860 15.734 12-2034 11.9 54.0 4.4 8.240 27.683 3.064 57.693 1.860 15.734 12-2035 10.9 49.7 4.1 7.581 25.469 2.819 57.693 1.860 15.734 12-2036 10.1 45.8 3.8 6.993 23.495 2.600 57.693 1.860 15.734 12-2037 9.3 42.0 3.4 6.416 21.555 2.386 57.693 1.860 15.734 S Tot 542.5 2,462.8 201.7 376.033 1,263.320 139.827 57.693 1.860 15.734 After 87.4 397.0 32.5 60.610 203.625 22.538 57.693 1.860 15.734 Total 629.9 2,859.7 234.2 436.643 1,466.945 162.365 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.9 2,859.7 234.2 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 1,516.585 164.265 153.801 0.000 0.000 1,834.651 93.893 45.866 4.027 12-2021 5,471.109 592.590 554.842 0.000 0.000 6,618.541 338.722 165.464 4.228 12-2022 2,693.203 291.708 273.126 0.000 0.000 3,258.036 166.739 81.451 4.611 12-2023 1,867.864 202.313 189.426 0.000 0.000 2,259.603 115.641 56.490 4.944 12-2024 1,455.727 157.674 147.630 0.000 0.000 1,761.031 90.126 44.0265.252 12-2025 1,197.199 129.672 121.412 0.000 0.000 1,448.282 74.120 36.207 5.554 12-2026 1,024.224 110.936 103.870 0.000 0.000 1,239.030 63.411 30.976 5.841 12-2027 898.206 97.287 91.090 0.000 0.000 1,086.582 55.609 27.165 6.119 12-2028 804.043 87.088 81.540 0.000 0.000 972.671 49.779 24.317 6.384 12-2029 725.653 78.597 73.591 0.000 0.000 877.841 44.926 21.946 6.657 12-2030 663.801 71.898 67.318 0.000 0.000 803.018 41.097 20.075 6.918 12-2031 610.524 66.127 61.915 0.000 0.000 738.566 37.798 18.464 7.186 12-2032 563.190 61.001 57.115 0.000 0.000 681.305 34.868 17.033 7.465 12-2033 516.688 55.964 52.399 0.000 0.000 625.051 31.989 15.626 7.790 12-2034 475.381 51.490 48.210 0.000 0.000 575.080 29.431 14.377 8.132 12-2035 437.375 47.373 44.356 0.000 0.000 529.104 27.078 13.228 8.504 12-2036 403.465 43.700 40.917 0.000 0.000 488.082 24.979 12.202 8.894 12-2037 370.152 40.092 37.538 0.000 0.000 447.782 22.916 11.195 9.348 S Tot 21,694.388 2,349.775 2,200.093 0.000 0.000 26,244.256 1,343.122 656.106 5.461 After 3,496.760 378.743 354.617 0.000 0.000 4,230.120 216.488 105.753 15.841 Total 25,191.149 2,728.518 2,554.710 0.000 0.000 30,474.377 1,559.610 761.859 6.902 (21) (22) (23) (24) (25) (26) (27) (28) (29)(30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 8.111 1 0.9 0.000 0.000 182.620 9,576.649 -8,072.489 -8,072.489 -6,886.820 12-2021 63.480 1 0.9 0.000 0.000 658.804 .000 5,392.071 -2,680.417 -2,601.684 12-2022 63.480 1 0.9 0.000 0.000 324.302 .000 2,622.065 -58.353 -716.023 12-2023 63.480 1 0.9 0.000 0.000 224.919 .000 1,799.073 1,740.720 458.753 12-2024 63.480 1 0.9 0.000 0.000 175.292 .000 1,388.108 3,128.829 1,282.223 12-2025 63.480 1 0.9 0.000 0.000 144.161 .000 1,130.315 4,259.144 1,891.546 12-2026 63.480 1 0.9 0.000 0.000 123.332 .000 957.832 5,216.975 2,360.868 12-2027 63.480 1 0.9 0.000 0.000 108.158 .000 832.172 6,049.147 2,731.513 12-2028 63.480 1 0.9 0.000 0.000 96.819 .000 738.277 6,787.424 3,030.389 12-2029 63.480 1 0.9 0.000 0.000 87.380 .000 660.110 7,447.534 3,273.286 12-2030 63.480 1 0.9 0.000 0.000 79.932 .000 598.434 8,045.968 3,473.469 12-2031 63.480 1 0.9 0.000 0.000 73.516 .000 545.308 8,591.276 3,639.307 12-2032 63.480 1 0.9 0.000 0.000 67.817 .000 498.109 9,089.385 3,777.013 12-2033 63.480 10.9 0.000 0.000 62.217 .000 451.740 9,541.124 3,890.538 12-2034 63.480 1 0.9 0.000 0.000 57.243 .000 410.549 9,951.674 3,984.340 12-2035 63.480 1 0.9 0.000 0.000 52.667 .000 372.652 10,324.325 4,061.748 12-2036 63.480 1 0.9 0.000 0.000 48.583 .000 338.838 10,663.164 4,125.730 12-2037 63.480 1 0.9 0.000 0.000 44.572 .000 305.620 10,968.784 4,178.191 S Tot 1,087.263 0.000 0.000 2,612.333 9,576.649 10,968.784 10,968.784 4,178.191 After 1,308.774 0.000 0.000 421.063 .000 2,178.042 13,146.826 4,400.450 Total 2,396.037 0.000 0.000 3,033.396 9,576.649 13,146.826 13,146.826 4,400.450 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 7,384.112 Oil Rate 29,352. 132. bbls/mo 96.3% 1.20 0.0% 3,092. 5,798. $/w/mo Expense 91.2062 91.2062 8.00 5,392.909 Gas Rate 133,258. 601. Mcf/mo 0.0% 0.00 0.0% 10.00 4,400.450 GOR 4,540. 4,540. scf/bblRevenue 12.00 3,595.758 NGL Rate 5,362. 50. bbls/mo Oil 69.3195 69.3195 NGL Yield 40.2 84.0 bbl/MMcf Gas 69.3195 69.3195 15.00 2,645.918 Gas Shrinkage 63.1 25.7 % ______________________________ ______________________ 20.00 1,524.789 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 16.4 % Start Date: 11/2020 2 Months in year ‘20 37.792 Year Life (08/2058) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 591 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 5 Figure 6 LILIS ENERGY, INC. -- E AXIS PUD 1 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.11 Year Life (02/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,984. 96.3 1.20 8.1 135. Initial Final Oil - mbbls 0.0 629.6 629.6 75.000 NI 472.210 27,243.135 1,686.650 5,939.257 14,006.892 4,330.437Gas - mcf/mo 68,029. 0.0 0.00 8.1 614. 4,540. 4,540. 6 Gas - mmcf 0.0 2,858.4 2,858.4 100.000 WI 1,586.438 2,950.774 823.918 10,500.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B E AXIS PUD 1 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 592 100. 1,000. Table 6 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- E AXIS PUD 1 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 101.6 461.1 37.8 76.166 255.888 28.322 57.693 1.860 15.734 12-2022 99.4 451.4 37.0 74.574 250.538 27.730 57.693 1.860 15.734 12-2023 58.4 265.1 21.7 43.795 147.133 16.285 57.693 1.860 15.734 12-2024 42.6 193.5 15.9 31.972 107.415 11.889 57.693 1.860 15.734 12-2025 33.8 153.6 12.6 25.377 85.257 9.436 57.693 1.860 15.734 12-2026 28.3 128.5 10.5 21.230 71.326 7.894 57.693 1.860 15.734 12-2027 24.4 111.0 9.1 18.333 61.593 6.817 57.693 1.860 15.734 12-2028 21.6 98.2 8.0 16.227 54.516 6.034 57.693 1.860 15.734 12-2029 19.4 87.9 7.2 14.519 48.778 5.399 57.693 1.860 15.734 12-2030 17.6 79.9 6.5 13.192 44.321 4.906 57.693 1.860 15.734 12-2031 16.1 73.2 6.0 12.100 40.652 4.499 57.693 1.860 15.734 12-2032 14.967.6 5.5 11.162 37.499 4.150 57.693 1.860 15.734 12-2033 13.7 62.0 5.1 10.240 34.403 3.808 57.693 1.860 15.734 12-2034 12.6 57.0 4.7 9.421 31.652 3.503 57.693 1.860 15.734 12-2035 11.6 52.5 4.3 8.668 29.122 3.223 57.693 1.860 15.734 12-2036 10.7 48.4 4.0 7.996 26.864 2.973 57.693 1.860 15.734 12-2037 9.8 44.4 3.6 7.336 24.646 2.728 57.693 1.860 15.734 S Tot 536.4 2,435.3 199.5 402.310 1,351.600 149.598 57.693 1.860 15.734 After 93.2 423.1 34.7 69.900 234.837 25.992 57.693 1.860 15.734 Total 629.6 2,858.4 234.1 472.210 1,586.438 175.590 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.6 2,858.4 234.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 4,394.237 475.951 445.633 0.000 0.000 5,315.821 272.052 132.896 4.142 12-2022 4,302.365 466.000 436.316 0.000 0.000 5,204.681 266.364 130.117 4.426 12-2023 2,526.650 273.668 256.235 0.000 0.000 3,056.553 156.427 76.414 4.790 12-2024 1,844.579 199.791 187.064 0.000 0.000 2,231.435 114.200 55.786 5.116 12-2025 1,464.081 158.578 148.4770.000 0.000 1,771.136 90.643 44.278 5.430 12-2026 1,224.845 132.666 124.215 0.000 0.000 1,481.726 75.831 37.043 5.727 12-2027 1,057.699 114.562 107.264 0.000 0.000 1,279.525 65.483 31.988 6.015 12-2028 936.171 101.399 94.940 0.000 0.000 1,132.510 57.959 28.313 6.288 12-2029 837.633 90.726 84.947 0.000 0.000 1,013.306 51.859 25.333 6.568 12-2030 761.097 82.436 77.185 0.000 0.000 920.719 47.120 23.018 6.836 12-2031 698.095 75.612 70.796 0.000 0.000 844.504 43.220 21.113 7.100 12-2032 643.952 69.748 65.305 0.000 0.000 779.005 39.868 19.475 7.369 12-2033 590.782 63.989 59.913 0.000 0.000 714.684 36.576 17.867 7.680 12-2034 543.551 58.873 55.123 0.000 0.000 657.547 33.652 16.439 8.008 12-2035 500.095 54.167 50.716 0.000 0.000 604.978 30.961 15.124 8.364 12-2036 461.322 49.967 46.784 0.000 0.000 558.073 28.561 13.952 8.739 12-2037 423.232 45.841 42.921 0.000 0.000 511.995 26.203 12.800 9.174 S Tot 23,210.386 2,513.977 2,353.835 0.000 0.000 28,078.197 1,436.978 701.955 5.488 After 4,032.749 436.797 408.973 0.000 0.000 4,878.519 249.672 121.963 15.573 Total 27,243.135 2,950.774 2,762.808 0.000 0.000 32,956.716 1,686.650 823.918 6.981 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rdParty Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 32.181 1 1.0 0.000 0.000 536.209 10,500.000 -6,157.517 -6,157.517 -5,030.413 12-2022 69.600 1 1.0 0.000 0.000 524.999 .000 4,213.602 -1,943.915 -1,993.825 12-2023 69.600 1 1.0 0.000 0.000 308.316 .000 2,445.796 501.881 -395.614 12-2024 69.600 1 1.0 0.000 0.000 225.086 .000 1,766.763 2,268.644 652.863 12-2025 69.600 1 1.0 0.000 0.000 178.655 .000 1,387.959 3,656.604 1,401.237 12-2026 69.600 1 1.0 0.000 0.000 149.462 .000 1,149.789 4,806.392 1,964.697 12-2027 69.600 1 1.0 0.000 0.000 129.066 .000 983.387 5,789.780 2,402.739 12-2028 69.600 1 1.0 0.000 0.000 114.237 .000 862.401 6,652.181 2,751.892 12-2029 69.600 1 1.0 0.000 0.000 102.213 .000 764.302 7,416.483 3,033.147 12-2030 69.600 1 1.0 0.000 0.000 92.873 .000 688.107 8,104.590 3,263.337 12-2031 69.600 1 1.0 0.000 0.000 85.186 .000 625.386 8,729.976 3,453.528 12-2032 69.600 1 1.0 0.000 0.000 78.579 .000 571.483 9,301.459 3,611.518 12-2033 69.600 1 1.0 0.000 0.000 72.091 .000 518.551 9,820.0103,741.833 12-2034 69.600 1 1.0 0.000 0.000 66.327 .000 471.529 10,291.539 3,849.567 12-2035 69.600 1 1.0 0.000 0.000 61.024 .000 428.268 10,719.807 3,938.527 12-2036 69.600 1 1.0 0.000 0.000 56.293 .000 389.668 11,109.474 4,012.108 12-2037 69.600 1 1.0 0.000 0.000 51.645 .000 351.747 11,461.221 4,072.485 S Tot 1,145.781 0.000 0.000 2,832.262 10,500.000 11,461.221 11,461.221 4,072.485 After 1,469.115 0.000 0.000 492.099 .000 2,545.671 14,006.892 4,330.437 Total 2,614.896 0.000 0.000 3,324.361 10,500.000 14,006.892 14,006.892 4,330.437 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 7,568.661 Oil Rate 29,352. 134. bbls/mo 96.3% 1.20 0.0% 3,180. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 5,396.123 Gas Rate 133,258. 610. Mcf/mo 0.0% 0.00 0.0% 10.00 4,330.437 GOR 4,540. 4,540. scf/bbl Revenue 12.00 3,477.833 NGL Rate 5,674.51. bbls/mo Oil 75.0000 75.0000 NGL Yield 42.6 83.9 bbl/MMcf Gas 75.0000 75.0000 15.00 2,488.783 Gas Shrinkage 62.2 25.8 % ______________________________ ______________________ 20.00 1,355.373 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 18.0 % Start Date: 07/2021 6 Months in year ‘21 37.610 Year Life (02/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 592 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 6 Figure 7 LILIS ENERGY, INC. -- E AXIS PUD 2 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________39.84 Year Life (11/2058) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,328. 96.3 1.20 8.0 144. Initial Final Oil - mbbls 0.0 614.9 614.9 75.000 NI 461.163 26,605.784 1,510.412 5,789.937 11,807.177 3,028.587Gas - mcf/mo 43,842. 0.0 0.00 8.0 441. 3,060. 3,060. 6 Gas - mmcf 0.0 1,881.5 1,881.5 100.000 WI 1,044.257 1,942.319 759.167 10,500.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A E AXIS PUD 2 (1.5 WC A) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 593 100. 100. Table 7 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- E AXIS PUD 2 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 131.1 401.3 32.9 98.348 222.699 24.649 57.693 1.860 15.734 12-2023 82.1 251.3 20.6 61.597 139.479 15.438 57.693 1.860 15.734 12-2024 52.3 160.1 13.1 39.235 88.844 9.833 57.693 1.860 15.734 12-2025 39.1 119.6 9.8 29.307 66.362 7.345 57.693 1.860 15.734 12-2026 31.6 96.6 7.9 23.682 53.625 5.935 57.693 1.860 15.734 12-2027 26.7 81.6 6.7 19.994 45.274 5.011 57.693 1.860 15.734 12-2028 23.2 71.1 5.8 17.417 39.440 4.365 57.693 1.860 15.734 12-2029 20.5 62.8 5.1 15.402 34.875 3.860 57.693 1.860 15.734 12-2030 18.5 56.6 4.6 13.868 31.402 3.476 57.693 1.860 15.734 12-2031 16.8 51.5 4.2 12.634 28.609 3.167 57.693 1.860 15.734 12-2032 15.5 47.5 3.9 11.636 26.348 2.916 57.6931.860 15.734 12-2033 14.2 43.6 3.6 10.675 24.173 2.676 57.693 1.860 15.734 12-2034 13.1 40.1 3.3 9.822 22.240 2.462 57.693 1.860 15.734 12-2035 12.0 36.9 3.0 9.037 20.462 2.265 57.693 1.860 15.734 12-2036 11.1 34.0 2.8 8.336 18.876 2.089 57.693 1.860 15.734 12-2037 10.2 31.2 2.6 7.648 17.317 1.917 57.693 1.860 15.734 S Tot 518.2 1,585.6 129.9 388.635 880.026 97.403 57.693 1.860 15.734 After 96.7 295.9 24.2 72.528 164.231 18.177 57.693 1.860 15.734 Total 614.9 1,881.5 154.1 461.163 1,044.257 115.581 57.693 1.860 15.734 Cum .0 .0 .0 Ult 614.9 1,881.5 154.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 5,673.958 414.220 387.833 0.000 0.000 6,476.011 322.111 161.900 4.897 12-2023 3,553.684 259.432 242.906 0.000 0.000 4,056.022 201.743 101.401 5.304 12-2024 2,263.582 165.250 154.723 0.000 0.000 2,583.555 128.504 64.589 5.722 12-2025 1,690.784 123.433 115.571 0.000 0.000 1,929.788 95.986 48.245 6.112 12-2026 1,366.257 99.74293.388 0.000 0.000 1,559.387 77.563 38.985 6.479 12-2027 1,153.490 84.209 78.845 0.000 0.000 1,316.543 65.484 32.914 6.831 12-2028 1,004.864 73.359 68.686 0.000 0.000 1,146.908 57.046 28.673 7.165 12-2029 888.557 64.868 60.736 0.000 0.000 1,014.161 50.443 25.354 7.504 12-2030 800.066 58.408 54.687 0.000 0.000 913.161 45.420 22.829 7.829 12-2031 728.913 53.213 49.824 0.000 0.000 831.950 41.380 20.799 8.147 12-2032 671.310 49.008 45.886 0.000 0.000 766.204 38.110 19.155 8.454 12-2033 615.881 44.962 42.097 0.000 0.000 702.941 34.964 17.574 8.803 12-2034 566.643 41.367 38.732 0.000 0.000 646.742 32.168 16.169 9.171 12-2035 521.342 38.060 35.635 0.000 0.000 595.037 29.597 14.876 9.571 12-2036 480.922 35.109 32.873 0.000 0.000 548.903 27.302 13.723 9.991 12-2037 441.213 32.210 30.158 0.000 0.000 503.582 25.048 12.590 10.479 S Tot 22,421.466 1,636.848 1,532.580 0.000 0.000 25,590.895 1,272.868 639.772 6.397 After 4,184.318 305.470 286.012 0.000 0.000 4,775.800 237.544 119.395 17.549 Total 26,605.784 1,942.319 1,818.592 0.000 0.000 30,366.695 1,510.412 759.167 8.151 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net ExpenseCOPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 49.493 1 1.0 0.000 0.000 692.368 10,500.000 -5,249.862 -5,249.862 -4,064.871 12-2023 69.600 1 1.0 0.000 0.000 433.641 .000 3,249.638 -2,000.224 -1,937.920 12-2024 69.600 1 1.0 0.000 0.000 276.215 .000 2,044.647 44.423 -723.744 12-2025 69.600 1 1.0 0.000 0.000 206.319 .000 1,509.638 1,554.061 90.524 12-2026 69.600 1 1.0 0.000 0.000 166.718 .000 1,206.522 2,760.583 681.918 12-2027 69.600 1 1.0 0.000 0.000 140.755 .000 1,007.791 3,768.373 1,130.899 12-2028 69.600 1 1.0 0.000 0.000 122.619 .000 868.970 4,637.343 1,482.752 12-2029 69.600 1 1.0 0.000 0.000 108.427 .000 760.337 5,397.680 1,762.572 12-2030 69.600 1 1.0 0.000 0.000 97.629 .000 677.684 6,075.364 1,989.291 12-2031 69.600 1 1.0 0.000 0.000 88.946 .000 611.225 6,686.589 2,175.183 12-2032 69.600 1 1.0 0.000 0.000 81.917 .000 557.422 7,244.011 2,329.286 12-2033 69.600 1 1.0 0.000 0.000 75.153 .000 505.650 7,749.661 2,456.359 12-2034 69.600 1 1.0 0.000 0.000 69.145 .000 459.660 8,209.321 2,561.381 12-2035 69.600 11.0 0.000 0.000 63.617 .000 417.347 8,626.668 2,648.073 12-2036 69.600 1 1.0 0.000 0.000 58.685 .000 379.594 9,006.262 2,719.752 12-2037 69.600 1 1.0 0.000 0.000 53.839 .000 342.505 9,348.767 2,778.543 S Tot 1,093.493 0.000 0.000 2,735.993 10,500.000 9,348.767 9,348.767 2,778.543 After 1,449.857 0.000 0.000 510.594 .000 2,458.410 11,807.177 3,028.587 Total 2,543.350 0.000 0.000 3,246.587 10,500.000 11,807.177 11,807.177 3,028.587 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 5,889.017 Oil Rate 28,743. 143. bbls/mo 96.3% 1.20 0.0% 3,093. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 3,955.132 Gas Rate 87,955. 438. Mcf/mo 0.0% 0.00 0.0% 10.00 3,028.587 GOR 3,060. 3,060. scf/bbl Revenue 12.00 2,302.237 NGL Rate 3,539. 36. bbls/mo Oil 75.0000 75.0000 NGL Yield 40.2 83.8 bbl/MMcf Gas 75.0000 75.0000 15.00 1,482.231 Gas Shrinkage 63.125.9 % ______________________________ ______________________ 20.00 586.303 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 18.1 % Start Date: 04/2022 9 Months in year ‘22 36.591 Year Life (11/2058) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 593 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 7 Figure 8 LILIS ENERGY, INC. -- ELK PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.66 Year Life (08/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 12,189. 96.3 1.20 8.0 117. Initial Final Oil - mbbls 0.0 511.2 511.2 38.002 NI 194.280 11,208.542 768.686 2,502.738 5,926.9631,509.299 Gas - mcf/mo 78,743. 0.0 0.00 8.0 757. 6,460. 6,460. 6 Gas - mmcf 0.0 3,302.5 3,302.5 47.535 WI 928.735 1,727.447 363.835 4,991.175 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : 3RD BONE SPRINGS ELK PUD 1 (1.5 3RD BS) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 594 100. 1,000. Table 8 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- ELK PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 46.7 301.7 24.7 17.745 84.831 9.389 57.693 1.860 15.734 12-2023 101.2 653.8 53.5 38.459 183.851 20.349 57.693 1.860 15.734 12-2024 52.8 341.3 28.0 20.079 95.985 10.624 57.693 1.860 15.734 12-2025 37.0 239.3 19.6 14.076 67.289 7.448 57.693 1.860 15.734 12-2026 29.0 187.3 15.3 11.016 52.661 5.829 57.693 1.860 15.734 12-2027 24.0 155.1 12.7 9.122 43.605 4.826 57.693 1.860 15.734 12-2028 20.6 133.3 10.9 7.843 37.492 4.150 57.693 1.860 15.734 12-2029 18.1 116.8 9.6 6.870 32.842 3.635 57.693 1.860 15.734 12-2030 16.2 104.4 8.6 6.142 29.362 3.250 57.693 1.860 15.734 12-2031 14.6 94.6 7.7 5.565 26.603 2.944 57.693 1.860 15.734 12-2032 13.4 86.8 7.1 5.108 24.417 2.70357.693 1.860 15.734 12-2033 12.3 79.6 6.5 4.685 22.396 2.479 57.693 1.860 15.734 12-2034 11.3 73.3 6.0 4.310 20.606 2.281 57.693 1.860 15.734 12-2035 10.4 67.4 5.5 3.966 18.958 2.098 57.693 1.860 15.734 12-2036 9.6 62.2 5.1 3.658 17.488 1.936 57.693 1.860 15.734 12-2037 8.8 57.1 4.7 3.356 16.045 1.776 57.693 1.860 15.734 S Tot 426.3 2,753.8 225.6 162.001 774.431 85.716 57.693 1.860 15.734 After 84.9 548.7 44.9 32.278 154.304 17.079 57.693 1.860 15.734 Total 511.2 3,302.5 270.5 194.280 928.735 102.794 57.693 1.860 15.734 Cum .0 .0 .0 Ult 511.2 3,302.5 270.5 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 1,023.787 157.785 147.734 0.000 0.000 1,329.305 70.212 33.233 3.270 12-2023 2,218.825 341.963 320.179 0.000 0.000 2,880.967 152.168 72.024 3.487 12-2024 1,158.410 178.533 167.160 0.000 0.000 1,504.103 79.444 37.603 3.855 12-2025 812.088 125.158 117.185 0.000 0.000 1,054.431 55.693 26.361 4.183 12-2026 635.549 97.950 91.7100.000 0.000 825.209 43.586 20.630 4.488 12-2027 526.248 81.105 75.938 0.000 0.000 683.291 36.090 17.082 4.780 12-2028 452.478 69.735 65.293 0.000 0.000 587.507 31.031 14.688 5.056 12-2029 396.355 61.086 57.194 0.000 0.000 514.635 27.182 12.866 5.335 12-2030 354.358 54.613 51.134 0.000 0.000 460.105 24.302 11.503 5.601 12-2031 321.057 49.481 46.329 0.000 0.000 416.867 22.018 10.422 5.862 12-2032 294.681 45.416 42.523 0.000 0.000 382.620 20.209 9.566 6.111 12-2033 270.292 41.657 39.003 0.000 0.000 350.952 18.537 8.774 6.384 12-2034 248.682 38.327 35.885 0.000 0.000 322.894 17.055 8.072 6.671 12-2035 228.801 35.263 33.016 0.000 0.000 297.080 15.691 7.427 6.982 12-2036 211.062 32.529 30.457 0.000 0.000 274.047 14.475 6.851 7.310 12-2037 193.635 29.843 27.942 0.000 0.000 251.420 13.280 6.285 7.690 S Tot 9,346.307 1,440.441 1,348.684 0.000 0.000 12,135.432 640.973 303.386 4.537 After 1,862.235 287.005 268.723 0.000 0.000 2,417.964 127.713 60.449 13.453 Total 11,208.542 1,727.447 1,617.407 0.000 0.000 14,553.396 768.686 363.835 6.018 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions InvestmentCash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 7.026 1 0.5 0.000 0.000 117.198 4,991.175 -3,889.538 -3,889.538 -2,773.378 12-2023 33.084 1 0.5 0.000 0.000 254.000 .000 2,369.691 -1,519.847 -1,218.122 12-2024 33.084 1 0.5 0.000 0.000 132.609 .000 1,221.363 -298.484 -492.322 12-2025 33.084 1 0.5 0.000 0.000 92.964 .000 846.329 547.845 -35.681 12-2026 33.084 1 0.5 0.000 0.000 72.754 .000 655.154 1,202.998 285.513 12-2027 33.084 1 0.5 0.000 0.000 60.242 .000 536.792 1,739.790 524.688 12-2028 33.084 1 0.5 0.000 0.000 51.797 .000 456.906 2,196.696 709.709 12-2029 33.084 1 0.5 0.000 0.000 45.373 .000 396.130 2,592.826 855.502 12-2030 33.084 1 0.5 0.000 0.000 40.565 .000 350.651 2,943.477 972.818 12-2031 33.084 1 0.5 0.000 0.000 36.753 .000 314.590 3,258.067 1,068.499 12-2032 33.084 1 0.5 0.000 0.000 33.734 .000 286.027 3,544.095 1,147.573 12-2033 33.084 1 0.5 0.000 0.000 30.942 .000 259.616 3,803.710 1,212.816 12-2034 33.084 1 0.5 0.000 0.000 28.468 .000 236.215 4,039.925 1,266.785 12-2035 33.084 1 0.5 0.000 0.000 26.192 .000 214.685 4,254.6111,311.380 12-2036 33.084 1 0.5 0.000 0.000 24.161 .000 195.475 4,450.086 1,348.291 12-2037 33.084 1 0.5 0.000 0.000 22.166 .000 176.604 4,626.690 1,378.605 S Tot 503.291 0.000 0.000 1,069.917 4,991.175 4,626.690 4,626.690 1,378.605 After 716.350 0.000 0.000 213.179 .000 1,300.273 5,926.963 1,509.299 Total 1,219.641 0.000 0.000 1,283.097 4,991.175 5,926.963 5,926.963 1,509.299 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 2,928.218 Oil Rate 23,877. 116. bbls/mo 96.3% 1.20 0.0% 3,178. 5,799. $/w/mo Expense 47.5350 47.5350 8.00 1,965.623 Gas Rate 154,246. 749. Mcf/mo 0.0% 0.00 0.0% 10.00 1,509.299 GOR 6,460. 6,460. scf/bbl Revenue 12.00 1,154.535 NGL Rate 6,568. 63. bbls/mo Oil 38.0028 38.0028 NGL Yield 42.6 84.3 bbl/MMcf Gas 38.0028 38.0028 15.00 758.135 Gas Shrinkage 62.2 25.6 % ____________________________________________________ 20.00 332.154 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 8.5 % Start Date: 10/2022 3 Months in year ‘22 36.910 Year Life (08/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 594 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 8 Figure 9 LILIS ENERGY, INC. -- ELK PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________41.21 Year Life (03/2060) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,984. 96.3 1.20 7.9 126. Initial Final Oil - mbbls 0.0 630.9 630.9 38.002 NI 239.777 13,833.393 856.439 2,854.881 7,613.748 2,465.418 Gas -mcf/mo 68,029. 0.0 0.00 7.9 573. 4,540. 4,540. 6 Gas - mmcf 0.0 2,864.5 2,864.5 47.535 WI 805.554 1,498.331 418.365 4,991.175 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B ELK PUD 2 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 595 100. 1,000. Table 9 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- ELK PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 57.4 260.6 21.3 21.815 73.288 8.112 57.693 1.860 15.734 12-2022 124.4 564.8 46.3 47.278 158.835 17.580 57.693 1.860 15.734 12-2023 64.8 294.2 24.1 24.628 82.741 9.158 57.693 1.860 15.734 12-2024 45.7 207.4 17.0 17.359 58.318 6.455 57.693 1.860 15.734 12-2025 35.6 161.8 13.3 13.542 45.496 5.036 57.693 1.860 15.734 12-2026 29.5 134.0 11.0 11.213 37.672 4.170 57.693 1.860 15.734 12-2027 25.3 114.9 9.4 9.617 32.308 3.576 57.693 1.860 15.734 12-2028 22.3 101.2 8.3 8.470 28.456 3.150 57.693 1.860 15.734 12-2029 19.9 90.2 7.4 7.551 25.367 2.808 57.693 1.860 15.734 12-2030 18.0 81.7 6.7 6.841 22.983 2.544 57.693 1.860 15.734 12-2031 16.5 74.8 6.1 6.263 21.040 2.329 57.693 1.860 15.734 12-2032 15.2 69.0 5.7 5.77619.404 2.148 57.693 1.860 15.734 12-2033 13.9 63.3 5.2 5.299 17.802 1.970 57.693 1.860 15.734 12-2034 12.8 58.2 4.8 4.875 16.379 1.813 57.693 1.860 15.734 12-2035 11.8 53.6 4.4 4.485 15.069 1.668 57.693 1.860 15.734 12-2036 10.9 49.4 4.0 4.138 13.901 1.539 57.693 1.860 15.734 12-2037 10.0 45.3 3.7 3.796 12.753 1.412 57.693 1.860 15.734 S Tot 534.0 2,424.5 198.6 202.944 681.811 75.464 57.693 1.860 15.734 After 96.9 440.0 36.0 36.833 123.743 13.696 57.693 1.860 15.734 Total 630.9 2,864.5 234.6 239.777 805.554 89.160 57.693 1.860 15.734 Cum .0 .0 .0 Ult 630.9 2,864.5 234.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 1,258.540 136.316 127.632 0.000 0.000 1,522.488 77.917 38.062 3.845 12-2022 2,727.600 295.433 276.614 0.000 0.000 3,299.648 168.869 82.491 4.054 12-2023 1,420.865 153.898 144.094 0.000 0.000 1,718.857 87.967 42.971 4.411 12-2024 1,001.466 108.471 101.562 0.000 0.000 1,211.500 62.002 30.287 4.724 12-2025 781.279 84.622 79.232 0.000 0.000 945.134 48.370 23.6285.022 12-2026 646.916 70.069 65.606 0.000 0.000 782.591 40.051 19.565 5.303 12-2027 554.812 60.093 56.265 0.000 0.000 671.171 34.349 16.779 5.575 12-2028 488.657 52.928 49.556 0.000 0.000 591.141 30.253 14.779 5.834 12-2029 435.612 47.182 44.177 0.000 0.000 526.971 26.969 13.174 6.098 12-2030 394.676 42.748 40.025 0.000 0.000 477.449 24.435 11.936 6.350 12-2031 361.303 39.134 36.641 0.000 0.000 437.077 22.369 10.927 6.598 12-2032 333.218 36.092 33.793 0.000 0.000 403.103 20.630 10.078 6.845 12-2033 305.705 33.112 31.002 0.000 0.000 369.819 18.927 9.245 7.131 12-2034 281.265 30.465 28.524 0.000 0.000 340.253 17.413 8.506 7.432 12-2035 258.778 28.029 26.243 0.000 0.000 313.051 16.021 7.826 7.760 12-2036 238.715 25.856 24.209 0.000 0.000 288.780 14.779 7.219 8.104 12-2037 219.005 23.721 22.210 0.000 0.000 264.936 13.559 6.623 8.503 S Tot 11,708.414 1,268.169 1,187.385 0.000 0.000 14,163.968 724.880 354.099 5.133 After 2,124.979 230.162 215.500 0.000 0.000 2,570.642 131.560 64.266 14.741 Total 13,833.393 1,498.331 1,402.886 0.000 0.000 16,734.609 856.439 418.365 6.609 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross NetExpense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 7.026 1 0.5 0.000 0.000 144.071 4,991.175 -3,735.764 -3,735.764 -2,933.729 12-2022 33.084 1 0.5 0.000 0.000 312.242 .000 2,702.962 -1,032.802 -982.496 12-2023 33.084 1 0.5 0.000 0.000 162.653 .000 1,392.180 359.379 -72.415 12-2024 33.084 1 0.5 0.000 0.000 114.643 .000 971.483 1,330.862 504.208 12-2025 33.084 1 0.5 0.000 0.000 89.437 .000 750.614 2,081.476 908.970 12-2026 33.084 1 0.5 0.000 0.000 74.056 .000 615.835 2,697.311 1,210.782 12-2027 33.084 1 0.5 0.000 0.000 63.512 .000 523.446 3,220.757 1,443.956 12-2028 33.084 1 0.5 0.000 0.000 55.939 .000 457.086 3,677.843 1,629.018 12-2029 33.084 1 0.5 0.000 0.000 49.867 .000 403.876 4,081.719 1,777.643 12-2030 33.084 1 0.5 0.000 0.000 45.180 .000 362.813 4,444.533 1,899.016 12-2031 33.084 1 0.5 0.000 0.000 41.360 .000 329.337 4,773.870 1,999.173 12-2032 33.084 1 0.5 0.000 0.000 38.145 .000 301.166 5,075.035 2,082.432 12-2033 33.084 1 0.5 0.000 0.000 34.996 .000 273.567 5,348.603 2,151.181 12-2034 33.084 1 0.5 0.000 0.000 32.198 .000 249.051 5,597.654 2,208.08312-2035 33.084 1 0.5 0.000 0.000 29.624 .000 226.495 5,824.150 2,255.131 12-2036 33.084 1 0.5 0.000 0.000 27.327 .000 206.370 6,030.520 2,294.099 12-2037 33.084 1 0.5 0.000 0.000 25.071 .000 186.599 6,217.119 2,326.128 S Tot 536.376 0.000 0.000 1,340.319 4,991.175 6,217.119 6,217.119 2,326.128 After 734.930 0.000 0.000 243.257 .000 1,396.630 7,613.748 2,465.418 Total 1,271.305 0.000 0.000 1,583.576 4,991.175 7,613.748 7,613.748 2,465.418 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 4,179.047 Oil Rate 29,352. 125. bbls/mo 96.3% 1.20 0.0% 3,178. 5,524. $/w/mo Expense 47.5350 47.5350 8.00 3,028.366 Gas Rate 133,258. 568. Mcf/mo 0.0% 0.00 0.0% 10.00 2,465.418 GOR 4,540. 4,540. scf/bbl Revenue 12.00 2,015.688 NGL Rate 5,674. 44. bbls/mo Oil 38.0028 38.0028 NGL Yield 42.6 78.6 bbl/MMcf Gas 38.0028 38.0028 15.00 1,494.630 GasShrinkage 62.2 26.0 % ______________________________ ______________________ 20.00 898.078 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 8.0 % Start Date: 10/2021 3 Months in year ‘21 38.466 Year Life (03/2060) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 595 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 9 Figure 10 LILIS ENERGY, INC. -- GRIZZLY PUD 1 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________38.82 Year Life (10/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,984. 96.3 1.20 8.0 140. Initial Final Oil - mbbls 0.0 629.0 629.0 67.355 NI 423.671 24,442.774 1,513.277 5,453.637 12,173.8293,958.540 Gas - mcf/mo 68,029. 0.0 0.00 8.0 636. 4,540. 4,540. 6 Gas - mmcf 0.0 2,855.7 2,855.7 92.276 WI 1,423.366 2,647.460 739.226 9,689.078 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B GRIZZLY PUD 1 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 596 100. 1,000. Table 10 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- GRIZZLY PUD 1 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 88.4 401.2 32.9 59.520 199.965 22.133 57.693 1.860 15.734 12-2021 106.4 483.2 39.6 71.689 240.847 26.657 57.693 1.860 15.734 12-2022 60.4 274.2 22.5 40.676 136.654 15.125 57.693 1.860 15.734 12-2023 43.5 197.5 16.2 29.300 98.436 10.895 57.693 1.860 15.734 12-2024 34.5 156.7 12.8 23.254 78.123 8.647 57.693 1.860 15.734 12-2025 28.7 130.3 10.7 19.330 64.942 7.188 57.693 1.860 15.734 12-2026 24.7 112.3 9.2 16.655 55.954 6.193 57.693 1.860 15.734 12-2027 21.8 98.9 8.1 14.680 49.318 5.459 57.693 1.860 15.734 12-2028 19.6 88.9 7.3 13.190 44.314 4.905 57.693 1.860 15.734 12-2029 17.7 80.5 6.6 11.939 40.111 4.440 57.693 1.860 15.734 12-2030 16.2 73.8 6.0 10.944 36.769 4.070 57.693 1.860 15.734 12-2031 14.9 67.9 5.6 10.069 33.827 3.744 57.6931.860 15.734 12-2032 13.8 62.6 5.1 9.288 31.204 3.454 57.693 1.860 15.734 12-2033 12.7 57.4 4.7 8.521 28.628 3.169 57.693 1.860 15.734 12-2034 11.6 52.8 4.3 7.840 26.339 2.915 57.693 1.860 15.734 12-2035 10.7 48.6 4.0 7.213 24.233 2.682 57.693 1.860 15.734 12-2036 9.9 44.9 3.7 6.654 22.355 2.474 57.693 1.860 15.734 12-2037 9.1 41.1 3.4 6.105 20.509 2.270 57.693 1.860 15.734 S Tot 544.7 2,472.8 202.5 366.867 1,232.527 136.419 57.693 1.860 15.734 After 84.3 382.9 31.4 56.804 190.839 21.122 57.693 1.860 15.734 Total 629.0 2,855.7 233.9 423.671 1,423.366 157.541 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.0 2,855.7 233.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 3,433.899 371.934 348.242 0.000 0.000 4,154.076 212.596 103.852 4.242 12-2021 4,135.944 447.975 419.438 0.000 0.000 5,003.357 256.060 125.084 4.512 12-2022 2,346.696 254.177 237.985 0.000 0.000 2,838.858 145.286 70.971 4.891 12-2023 1,690.389 183.090 171.427 0.000 0.000 2,044.907 104.654 51.123 5.232 12-2024 1,341.567 145.309 136.052 0.000 0.000 1,622.928 83.05840.573 5.548 12-2025 1,115.216 120.792 113.097 0.000 0.000 1,349.105 69.044 33.728 5.859 12-2026 960.871 104.074 97.445 0.000 0.000 1,162.390 59.489 29.060 6.155 12-2027 846.907 91.731 85.887 0.000 0.000 1,024.525 52.433 25.613 6.443 12-2028 760.991 82.425 77.174 0.000 0.000 920.590 47.114 23.015 6.718 12-2029 688.815 74.607 69.855 0.000 0.000 833.277 42.645 20.832 7.001 12-2030 631.413 68.390 64.033 0.000 0.000 763.836 39.091 19.096 7.272 12-2031 580.893 62.918 58.910 0.000 0.000 702.721 35.964 17.568 7.556 12-2032 535.856 58.040 54.343 0.000 0.000 648.238 33.175 16.206 7.853 12-2033 491.611 53.248 49.856 0.000 0.000 594.715 30.436 14.868 8.199 12-2034 452.308 48.991 45.870 0.000 0.000 547.169 28.003 13.679 8.562 12-2035 416.147 45.074 42.203 0.000 0.000 503.424 25.764 12.586 8.957 12-2036 383.883 41.579 38.931 0.000 0.000 464.393 23.767 11.610 9.372 12-2037 352.187 38.146 35.716 0.000 0.000 426.050 21.804 10.651 9.855 S Tot 21,165.593 2,292.500 2,146.466 0.000 0.000 25,604.559 1,310.383 640.114 5.704 After 3,277.181 354.960 332.349 0.000 0.000 3,964.489 202.894 99.112 16.452 Total 24,442.774 2,647.460 2,478.815 0.000 0.000 29,569.048 1,513.277 739.226 7.145 (21) (22) (23) (24) (25) (26) (27) (28)(29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 24.343 1 0.9 0.000 0.000 430.550 9,689.078 -6,306.343 -6,306.343 -5,580.555 12-2021 64.225 1 0.9 0.000 0.000 518.574 .000 4,039.415 -2,266.929 -2,377.076 12-2022 64.225 1 0.9 0.000 0.000 294.234 .000 2,264.142 -2.787 -749.518 12-2023 64.225 1 0.9 0.000 0.000 211.945 .000 1,612.961 1,610.174 303.533 12-2024 64.225 1 0.9 0.000 0.000 168.209 .000 1,266.864 2,877.038 1,055.001 12-2025 64.225 1 0.9 0.000 0.000 139.828 .000 1,042.280 3,919.318 1,616.830 12-2026 64.225 1 0.9 0.000 0.000 120.476 .000 889.141 4,808.459 2,052.476 12-2027 64.225 1 0.9 0.000 0.000 106.187 .000 776.067 5,584.527 2,398.121 12-2028 64.225 1 0.9 0.000 0.000 95.415 .000 690.822 6,275.349 2,677.780 12-2029 64.225 1 0.9 0.000 0.000 86.365 .000 619.210 6,894.559 2,905.623 12-2030 64.225 1 0.9 0.000 0.000 79.168 .000 562.256 7,456.815 3,093.703 12-2031 64.225 1 0.9 0.000 0.000 72.834 .000 512.131 7,968.946 3,249.452 12-2032 64.225 1 0.9 0.000 0.000 67.187 .000 467.445 8,436.391 3,378.681 12-203364.225 1 0.9 0.000 0.000 61.639 .000 423.547 8,859.938 3,485.122 12-2034 64.225 1 0.9 0.000 0.000 56.711 .000 384.551 9,244.489 3,572.984 12-2035 64.225 1 0.9 0.000 0.000 52.177 .000 348.672 9,593.161 3,645.411 12-2036 64.225 1 0.9 0.000 0.000 48.132 .000 316.660 9,909.821 3,705.206 12-2037 64.225 1 0.9 0.000 0.000 44.158 .000 285.211 10,195.032 3,754.164 S Tot 1,116.164 0.000 0.000 2,653.787 9,689.078 10,195.032 10,195.032 3,754.164 After 1,272.786 0.000 0.000 410.900 .000 1,978.797 12,173.829 3,958.540 Total 2,388.950 0.000 0.000 3,064.687 9,689.078 12,173.829 12,173.829 3,958.540 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 6,781.472 Oil Rate 29,352. 138. bbls/mo 96.3% 1.20 0.0% 3,180. 5,716. $/w/mo Expense 92.2769 92.2769 8.00 4,900.656 Gas Rate 133,258. 629. Mcf/mo 0.0% 0.00 0.0% 10.00 3,958.540 GOR 4,540. 4,540.scf/bbl Revenue 12.00 3,191.816 NGL Rate 5,674. 51. bbls/mo Oil 67.3550 67.3550 NGL Yield 42.6 81.5 bbl/MMcf Gas 67.3550 67.3550 15.00 2,282.721 Gas Shrinkage 62.2 25.5 % ______________________________ ______________________ 20.00 1,202.064 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 16.2 % Start Date: 08/2020 5 Months in year ‘20 37.245 Year Life (10/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 596 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 10 Figure 11 LILIS ENERGY, INC. -- GRIZZLY PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________38.91 Year Life (11/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,631. 96.3 1.20 8.0 140. Initial Final Oil - mbbls 0.0 629.0 629.0 67.355 NI 423.671 24,442.774 1,513.277 5,454.308 12,173.1583,926.611 Gas - mcf/mo 66,424. 0.0 0.00 8.0 636. 4,540. 4,540. 6 Gas - mmcf 0.0 2,855.7 2,855.7 92.276 WI 1,423.366 2,647.460 739.226 9,689.078 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B GRIZZLY PUD 2 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 597 100. 1,000. Table 11 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- GRIZZLY PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 73.6 334.2 27.4 49.584 166.584 18.438 57.693 1.860 15.734 12-2021 114.7 520.9 42.7 77.276 259.615 28.735 57.693 1.860 15.734 12-2022 62.5 284.0 23.3 42.128 141.535 15.665 57.693 1.860 15.734 12-2023 44.5 202.1 16.6 29.990 100.753 11.152 57.693 1.860 15.734 12-2024 35.1 159.5 13.1 23.663 79.498 8.799 57.693 1.860 15.734 12-2025 29.1 132.1 10.8 19.602 65.856 7.289 57.693 1.860 15.734 12-2026 25.0 113.6 9.3 16.850 56.610 6.266 57.693 1.860 15.734 12-2027 22.0 99.9 8.2 14.827 49.814 5.513 57.693 1.860 15.734 12-2028 19.8 89.7 7.3 13.306 44.704 4.948 57.693 1.860 15.734 12-2029 17.9 81.1 6.6 12.033 40.425 4.474 57.693 1.860 15.734 12-2030 16.4 74.3 6.1 11.023 37.032 4.099 57.693 1.860 15.734 12-2031 15.1 68.3 5.6 10.140 34.067 3.771 57.6931.860 15.734 12-2032 13.9 63.1 5.2 9.354 31.426 3.478 57.693 1.860 15.734 12-2033 12.7 57.8 4.7 8.582 28.831 3.191 57.693 1.860 15.734 12-2034 11.7 53.2 4.4 7.896 26.526 2.936 57.693 1.860 15.734 12-2035 10.8 49.0 4.0 7.264 24.405 2.701 57.693 1.860 15.734 12-2036 9.9 45.2 3.7 6.701 22.513 2.492 57.693 1.860 15.734 12-2037 9.1 41.4 3.4 6.148 20.654 2.286 57.693 1.860 15.734 S Tot 543.9 2,469.5 202.3 366.368 1,230.851 136.233 57.693 1.860 15.734 After 85.1 386.2 31.6 57.303 192.515 21.308 57.693 1.860 15.734 Total 629.0 2,855.7 233.9 423.671 1,423.366 157.541 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.0 2,855.7 233.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 2,860.665 309.846 290.109 0.000 0.000 3,460.620 177.107 86.515 4.227 12-2021 4,458.249 482.884 452.124 0.000 0.000 5,393.258 276.015 134.831 4.476 12-2022 2,430.504 263.254 246.485 0.000 0.000 2,940.243 150.475 73.506 4.861 12-2023 1,730.188 187.401 175.464 0.000 0.000 2,093.052 107.118 52.326 5.204 12-2024 1,365.189 147.867 138.448 0.000 0.000 1,651.505 84.52041.288 5.522 12-2025 1,130.912 122.492 114.689 0.000 0.000 1,368.093 70.016 34.202 5.834 12-2026 972.143 105.295 98.588 0.000 0.000 1,176.026 60.186 29.401 6.131 12-2027 855.425 92.653 86.751 0.000 0.000 1,034.830 52.960 25.871 6.419 12-2028 767.689 83.150 77.854 0.000 0.000 928.693 47.528 23.217 6.694 12-2029 694.205 75.191 70.401 0.000 0.000 839.798 42.979 20.995 6.978 12-2030 635.936 68.880 64.492 0.000 0.000 769.308 39.371 19.233 7.249 12-2031 585.018 63.365 59.328 0.000 0.000 707.711 36.219 17.693 7.531 12-2032 539.661 58.452 54.729 0.000 0.000 652.842 33.411 16.321 7.826 12-2033 495.103 53.626 50.210 0.000 0.000 598.938 30.652 14.973 8.169 12-2034 455.521 49.339 46.196 0.000 0.000 551.055 28.202 13.776 8.530 12-2035 419.103 45.394 42.502 0.000 0.000 506.999 25.947 12.675 8.922 12-2036 386.610 41.875 39.207 0.000 0.000 467.691 23.935 11.692 9.335 12-2037 354.688 38.417 35.970 0.000 0.000 429.075 21.959 10.727 9.813 S Tot 21,136.808 2,289.382 2,143.547 0.000 0.000 25,569.738 1,308.601 639.243 5.698 After 3,305.965 358.078 335.268 0.000 0.000 3,999.311 204.676 99.983 16.403 Total 24,442.774 2,647.460 2,478.815 0.000 0.000 29,569.048 1,513.277 739.226 7.146 (21) (22) (23) (24) (25) (26) (27) (28)(29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 18.911 1 0.9 0.000 0.000 358.676 9,689.078 -6,869.668 -6,869.668 -5,999.179 12-2021 64.225 1 0.9 0.000 0.000 558.985 .000 4,359.202 -2,510.466 -2,540.137 12-2022 64.225 1 0.9 0.000 0.000 304.742 .000 2,347.295 -163.170 -852.578 12-2023 64.225 1 0.9 0.000 0.000 216.935 .000 1,652.449 1,489.279 226.318 12-2024 64.225 1 0.9 0.000 0.000 171.170 .000 1,290.302 2,779.580 991.715 12-2025 64.225 1 0.9 0.000 0.000 141.796 .000 1,057.854 3,837.434 1,561.951 12-2026 64.225 1 0.9 0.000 0.000 121.889 .000 900.325 4,737.759 2,003.083 12-2027 64.225 1 0.9 0.000 0.000 107.255 .000 784.519 5,522.278 2,352.497 12-2028 64.225 1 0.9 0.000 0.000 96.254 .000 697.468 6,219.746 2,634.848 12-2029 64.225 1 0.9 0.000 0.000 87.041 .000 624.558 6,844.304 2,864.661 12-2030 64.225 1 0.9 0.000 0.000 79.735 .000 566.744 7,411.048 3,054.243 12-2031 64.225 1 0.9 0.000 0.000 73.351 .000 516.224 7,927.272 3,211.236 12-2032 64.225 1 0.9 0.000 0.000 67.664 .000 471.221 8,398.494 3,341.509 12-203364.225 1 0.9 0.000 0.000 62.077 .000 427.011 8,825.504 3,448.821 12-2034 64.225 1 0.9 0.000 0.000 57.114 .000 387.738 9,213.242 3,537.411 12-2035 64.225 1 0.9 0.000 0.000 52.548 .000 351.605 9,564.847 3,610.447 12-2036 64.225 1 0.9 0.000 0.000 48.474 .000 319.365 9,884.212 3,670.753 12-2037 64.225 1 0.9 0.000 0.000 44.472 .000 287.693 10,171.905 3,720.136 S Tot 1,110.731 0.000 0.000 2,650.178 9,689.078 10,171.905 10,171.905 3,720.136 After 1,278.890 0.000 0.000 414.509 .000 2,001.253 12,173.158 3,926.611 Total 2,389.621 0.000 0.000 3,064.687 9,689.078 12,173.158 12,173.158 3,926.611 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 6,753.329 Oil Rate 29,352. 138. bbls/mo 96.3% 1.20 0.0% 3,092. 5,799. $/w/mo Expense 92.2769 92.2769 8.00 4,868.697 Gas Rate 133,258. 629. Mcf/mo 0.0% 0.00 0.0% 10.00 3,926.611 GOR 4,540. 4,540.scf/bbl Revenue 12.00 3,161.235 NGL Rate 5,362. 53. bbls/mo Oil 67.3550 67.3550 NGL Yield 40.2 84.3 bbl/MMcf Gas 67.3550 67.3550 15.00 2,255.781 Gas Shrinkage 63.1 25.3 % ______________________________ ______________________ 20.00 1,183.587 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 16.8 % Start Date: 09/2020 4 Months in year ‘20 37.246 Year Life (11/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 597 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 11 Figure 12 LILIS ENERGY, INC. -- KUDU PUD 1 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________38.72 Year Life (09/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,751. 96.3 1.20 8.1 143. Initial Final Oil - mbbls 0.0 618.5 618.5 38.642 NI 239.003 13,788.768 807.696 3,028.567 6,371.218 1,907.714Gas - mcf/mo 52,810. 0.0 0.00 8.1 511. 3,580. 3,580. 6 Gas - mmcf 0.0 2,214.2 2,214.2 51.999 WI 633.167 1,177.692 401.728 5,459.922 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A KUDU PUD 1 (1.5 WC A) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 598 100. 100. Table 12 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- KUDU PUD 1 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 15.0 53.8 4.4 5.806 15.380 1.702 57.693 1.860 15.734 12-2021 149.9 536.6 44.0 57.920 153.442 16.983 57.693 1.860 15.734 12-2022 68.9 246.8 20.2 26.637 70.568 7.811 57.693 1.860 15.734 12-2023 47.1 168.7 13.8 18.210 48.241 5.339 57.693 1.860 15.734 12-2024 36.5 130.6 10.7 14.099 37.351 4.134 57.693 1.860 15.734 12-2025 29.9 107.0 8.8 11.551 30.602 3.387 57.693 1.860 15.734 12-2026 25.5 91.3 7.5 9.858 26.116 2.891 57.693 1.860 15.734 12-2027 22.3 80.0 6.5 8.630 22.863 2.531 57.693 1.860 15.734 12-2028 20.0 71.5 5.9 7.715 20.440 2.262 57.693 1.860 15.734 12-2029 18.0 64.4 5.3 6.956 18.429 2.040 57.693 1.860 15.734 12-2030 16.5 58.9 4.8 6.359 16.845 1.864 57.693 1.860 15.734 12-2031 15.1 54.2 4.4 5.847 15.491 1.715 57.693 1.860 15.734 12-2032 14.050.0 4.1 5.394 14.290 1.582 57.693 1.860 15.734 12-2033 12.8 45.8 3.8 4.949 13.110 1.451 57.693 1.860 15.734 12-2034 11.8 42.2 3.5 4.553 12.062 1.335 57.693 1.860 15.734 12-2035 10.8 38.8 3.2 4.189 11.097 1.228 57.693 1.860 15.734 12-2036 10.0 35.8 2.9 3.864 10.237 1.133 57.693 1.860 15.734 12-2037 9.2 32.8 2.7 3.545 9.392 1.040 57.693 1.860 15.734 S Tot 533.3 1,909.3 156.4 206.083 545.955 60.427 57.693 1.860 15.734 After 85.2 305.0 25.0 32.920 87.213 9.653 57.693 1.860 15.734 Total 618.5 2,214.2 181.4 239.003 633.167 70.080 57.693 1.860 15.734 Cum .0 .0 .0 Ult 618.5 2,214.2 181.4 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 334.944 28.607 26.785 0.000 0.000 390.336 19.620 9.758 4.528 12-2021 3,341.578 285.402 267.222 0.000 0.000 3,894.203 195.737 97.355 4.736 12-2022 1,536.784 131.256 122.895 0.000 0.000 1,790.934 90.019 44.773 5.186 12-2023 1,050.567 89.728 84.013 0.000 0.000 1,224.308 61.538 30.608 5.571 12-2024 813.405 69.473 65.047 0.000 0.000 947.925 47.646 23.698 5.926 12-2025 666.425 56.919 53.293 0.000 0.000776.637 39.037 19.416 6.273 12-2026 568.736 48.575 45.481 0.000 0.000 662.793 33.314 16.570 6.603 12-2027 497.897 42.525 39.816 0.000 0.000 580.238 29.165 14.506 6.923 12-2028 445.126 38.018 35.596 0.000 0.000 518.740 26.074 12.969 7.227 12-2029 401.329 34.277 32.094 0.000 0.000 467.700 23.508 11.693 7.541 12-2030 366.846 31.332 29.336 0.000 0.000 427.514 21.488 10.688 7.841 12-2031 337.349 28.813 26.977 0.000 0.000 393.139 19.761 9.828 8.146 12-2032 311.194 26.579 24.886 0.000 0.000 362.659 18.229 9.066 8.464 12-2033 285.500 24.384 22.831 0.000 0.000 332.715 16.724 8.318 8.834 12-2034 262.675 22.435 21.006 0.000 0.000 306.115 15.387 7.653 9.224 12-2035 241.674 20.641 19.326 0.000 0.000 281.642 14.156 7.041 9.647 12-2036 222.937 19.041 17.828 0.000 0.000 259.806 13.059 6.495 10.092 12-2037 204.530 17.469 16.356 0.000 0.000 238.355 11.981 5.959 10.608 S Tot 11,889.496 1,015.476 950.789 0.000 0.000 13,855.761 696.443 346.394 6.187 After 1,899.272 162.216 151.883 0.000 0.000 2,213.371 111.252 55.334 17.633 Total 13,788.768 1,177.692 1,102.672 0.000 0.000 16,069.132 807.696 401.728 7.764 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash FlowEnd Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 1.654 1 0.5 0.000 0.000 41.250 5,459.922 -5,141.868 -5,141.868 -4,339.944 12-2021 36.191 1 0.5 0.000 0.000 411.528 .000 3,153.391 -1,988.477 -1,831.188 12-2022 36.191 1 0.5 0.000 0.000 189.261 .000 1,430.690 -557.787 -802.124 12-2023 36.191 1 0.5 0.000 0.000 129.381 .000 966.589 408.802 -170.904 12-2024 36.191 1 0.5 0.000 0.000 100.174 .000 740.215 1,149.017 268.235 12-2025 36.191 1 0.5 0.000 0.000 82.073 .000 599.920 1,748.937 591.645 12-2026 36.191 1 0.5 0.000 0.000 70.042 .000 506.675 2,255.612 839.913 12-2027 36.191 1 0.5 0.000 0.000 61.318 .000 439.058 2,694.670 1,035.471 12-2028 36.191 1 0.5 0.000 0.000 54.819 .000 388.687 3,083.357 1,192.825 12-2029 36.191 1 0.5 0.000 0.000 49.425 .000 346.883 3,430.240 1,320.467 12-2030 36.191 1 0.5 0.000 0.000 45.178 .000 313.968 3,744.207 1,425.494 12-2031 36.191 1 0.5 0.000 0.000 41.546 .000 285.813 4,030.020 1,512.415 12-2032 36.191 1 0.5 0.000 0.000 38.325 .000 260.848 4,290.868 1,584.529 12-2033 36.191 1 0.5 0.000 0.000 35.160 .000 236.322 4,527.190 1,643.919 12-2034 36.191 1 0.5 0.000 0.00032.349 .000 214.535 4,741.725 1,692.935 12-2035 36.191 1 0.5 0.000 0.000 29.763 .000 194.490 4,936.215 1,733.336 12-2036 36.191 1 0.5 0.000 0.000 27.456 .000 176.605 5,112.820 1,766.684 12-2037 36.191 1 0.5 0.000 0.000 25.189 .000 159.035 5,271.855 1,793.983 S Tot 616.909 0.000 0.000 1,464.237 5,459.922 5,271.855 5,271.855 1,793.983 After 713.518 0.000 0.000 233.903 .000 1,099.363 6,371.218 1,907.714 Total 1,330.428 0.000 0.000 1,698.139 5,459.922 6,371.218 6,371.218 1,907.714 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 3,425.854 Oil Rate 28,895. 141. bbls/mo 96.3% 1.20 0.0% 3,178. 5,798. $/w/mo Expense 51.9993 51.9993 8.00 2,411.234 Gas Rate 103,447. 507. Mcf/mo 0.0% 0.00 0.0% 10.00 1,907.714 GOR 3,580. 3,580. scf/bbl Revenue 12.00 1,501.248 NGL Rate 4,405. 42. bbls/mo Oil 38.6422 38.6422 NGL Yield 42.6 84.1 bbl/MMcf Gas38.6422 38.6422 15.00 1,024.525 Gas Shrinkage 62.2 26.0 % ______________________________ ______________________ 20.00 468.540 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 9.4 % Start Date: 12/2020 1 Months in year ‘20 36.807 Year Life (09/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 598 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 12 Figure 13 LILIS ENERGY, INC. -- KUDU PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________39.71 Year Life (09/2058) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,984. 96.3 1.20 8.1 138. Initial Final Oil - mbbls 0.0 629.2 629.2 37.969 NI 238.920 13,783.950 853.378 3,049.378 6,947.153 2,133.322Gas - mcf/mo 68,029. 0.0 0.00 8.1 627. 4,540. 4,540. 6 Gas - mmcf 0.0 2,856.7 2,856.7 51.504 WI 802.675 1,492.975 416.870 5,408.018 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B KUDU PUD 2 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 599 100. 1,000. Table 13 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- KUDU PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 124.1 563.4 46.1 47.120 158.304 17.521 57.693 1.860 15.734 12-2022 88.3 401.1 32.9 33.545 112.699 12.474 57.693 1.860 15.734 12-2023 54.9 249.1 20.4 20.832 69.987 7.746 57.693 1.860 15.734 12-2024 40.8 185.4 15.2 15.509 52.103 5.767 57.693 1.860 15.734 12-2025 32.8 148.7 12.2 12.435 41.777 4.624 57.693 1.860 15.734 12-2026 27.6 125.2 10.3 10.468 35.169 3.893 57.693 1.860 15.734 12-2027 23.9 108.5 8.9 9.078 30.498 3.376 57.693 1.860 15.734 12-2028 21.2 96.4 7.9 8.060 27.077 2.997 57.693 1.860 15.734 12-2029 19.0 86.4 7.1 7.228 24.283 2.688 57.693 1.860 15.734 12-2030 17.3 78.7 6.4 6.579 22.104 2.447 57.693 1.860 15.734 12-2031 15.9 72.2 5.9 6.041 20.295 2.246 57.693 1.860 15.734 12-2032 14.7 66.6 5.5 5.57318.722 2.072 57.693 1.860 15.734 12-2033 13.5 61.1 5.0 5.113 17.176 1.901 57.693 1.860 15.734 12-2034 12.4 56.2 4.6 4.704 15.803 1.749 57.693 1.860 15.734 12-2035 11.4 51.7 4.2 4.328 14.539 1.609 57.693 1.860 15.734 12-2036 10.5 47.7 3.9 3.992 13.412 1.484 57.693 1.860 15.734 12-2037 9.6 43.8 3.6 3.663 12.305 1.362 57.693 1.860 15.734 S Tot 538.0 2,442.4 200.0 204.267 686.255 75.956 57.693 1.860 15.734 After 91.3 414.3 33.9 34.653 116.420 12.886 57.693 1.860 15.734 Total 629.2 2,856.7 234.0 238.920 802.675 88.842 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.2 2,856.7 234.0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 2,718.485 294.446 275.690 0.000 0.000 3,288.621 168.304 82.216 4.241 12-2022 1,935.317 209.619 196.266 0.000 0.000 2,341.203 119.817 58.530 4.569 12-2023 1,201.849 130.175 121.883 0.000 0.000 1,453.908 74.408 36.348 4.930 12-2024 894.747 96.912 90.739 0.000 0.000 1,082.399 55.395 27.060 5.258 12-2025 717.422 77.706 72.756 0.000 0.000 867.884 44.416 21.6975.575 12-2026 603.941 65.414 61.247 0.000 0.000 730.603 37.391 18.265 5.876 12-2027 523.733 56.727 53.113 0.000 0.000 633.573 32.425 15.839 6.167 12-2028 464.977 50.363 47.155 0.000 0.000 562.494 28.787 14.062 6.444 12-2029 416.999 45.166 42.289 0.000 0.000 504.455 25.817 12.611 6.728 12-2030 379.585 41.114 38.495 0.000 0.000 459.193 23.500 11.480 7.000 12-2031 348.524 37.750 35.345 0.000 0.000 421.619 21.577 10.540 7.269 12-2032 321.502 34.823 32.604 0.000 0.000 388.929 19.905 9.723 7.546 12-2033 294.957 31.948 29.912 0.000 0.000 356.816 18.261 8.920 7.867 12-2034 271.375 29.393 27.521 0.000 0.000 328.290 16.801 8.207 8.205 12-2035 249.680 27.043 25.321 0.000 0.000 302.044 15.458 7.551 8.573 12-2036 230.322 24.947 23.358 0.000 0.000 278.626 14.259 6.966 8.959 12-2037 211.305 22.887 21.429 0.000 0.000 255.621 13.082 6.391 9.408 S Tot 11,784.720 1,276.433 1,195.124 0.000 0.000 14,256.277 729.604 356.407 5.595 After 1,999.230 216.542 202.748 0.000 0.000 2,418.520 123.774 60.463 15.862 Total 13,783.950 1,492.975 1,397.872 0.000 0.000 16,674.797 853.378 416.870 7.084 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross NetExpense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 22.549 1 0.5 0.000 0.000 337.480 5,408.018 -2,729.946 -2,729.946 -2,299.213 12-2022 35.847 1 0.5 0.000 0.000 240.256 .000 1,886.752 -843.194 -940.502 12-2023 35.847 1 0.5 0.000 0.000 149.201 .000 1,158.104 314.910 -183.899 12-2024 35.847 1 0.5 0.000 0.000 111.076 .000 853.020 1,167.930 322.270 12-2025 35.847 1 0.5 0.000 0.000 89.063 .000 676.860 1,844.791 687.205 12-2026 35.847 1 0.5 0.000 0.000 74.975 .000 564.125 2,408.916 963.647 12-2027 35.847 1 0.5 0.000 0.000 65.018 .000 484.444 2,893.359 1,179.432 12-2028 35.847 1 0.5 0.000 0.000 57.723 .000 426.074 3,319.433 1,351.930 12-2029 35.847 1 0.5 0.000 0.000 51.767 .000 378.412 3,697.845 1,491.179 12-2030 35.847 1 0.5 0.000 0.000 47.123 .000 341.243 4,039.088 1,605.332 12-2031 35.847 1 0.5 0.000 0.000 43.267 .000 310.386 4,349.474 1,699.726 12-2032 35.847 1 0.5 0.000 0.000 39.912 .000 283.542 4,633.016 1,778.113 12-2033 35.847 1 0.5 0.000 0.000 36.617 .000 257.171 4,890.187 1,842.742 12-2034 35.847 1 0.5 0.000 0.000 33.689 .000 233.745 5,123.932 1,896.14812-2035 35.847 1 0.5 0.000 0.000 30.996 .000 212.192 5,336.123 1,940.225 12-2036 35.847 1 0.5 0.000 0.000 28.593 .000 192.961 5,529.084 1,976.661 12-2037 35.847 1 0.5 0.000 0.000 26.232 .000 174.069 5,703.153 2,006.540 S Tot 596.108 0.000 0.000 1,462.988 5,408.018 5,703.153 5,703.153 2,006.540 After 742.092 0.000 0.000 248.190 .000 1,244.001 6,947.153 2,133.322 Total 1,338.200 0.000 0.000 1,711.178 5,408.018 6,947.153 6,947.153 2,133.322 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 3,751.452 Oil Rate 29,352. 137. bbls/mo 96.3% 1.20 0.0% 3,180. 5,799. $/w/mo Expense 51.5049 51.5049 8.00 2,666.967 Gas Rate 133,258. 622. Mcf/mo 0.0% 0.00 0.0% 10.00 2,133.322 GOR 4,540. 4,540. scf/bbl Revenue 12.00 1,705.350 NGL Rate 5,674. 52. bbls/mo Oil 37.9699 37.9699 NGL Yield 42.6 84.0 bbl/MMcf Gas 37.9699 37.9699 15.00 1,207.436 GasShrinkage 62.2 26.0 % ______________________________ ______________________ 20.00 634.207 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 9.3 % Start Date: 05/2021 8 Months in year ‘21 37.377 Year Life (09/2058) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 599 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 13 Figure 14 LILIS ENERGY, INC. -- LYNX PUD 1 (1.5 2ND BS) PHANTOM (2ND BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.36 Year Life (05/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,479. 96.3 1.20 8.0 147. Initial Final Oil - mbbls 0.0 621.3 621.3 66.553 NI 413.483 23,854.990 1,324.419 5,164.335 12,571.7564,046.175 Gas - mcf/mo 39,094. 0.0 0.00 8.0 396. 2,700. 2,700. 6 Gas - mmcf 0.0 1,677.4 1,677.4 88.738 WI 826.139 1,536.618 670.759 7,099.074 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : 2ND BONE SPRINGS LYNX PUD 1 (1.5 2ND BS) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 600 100. 100. Table 14 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- LYNX PUD 1 (1.5 2ND BS) PHANTOM (2ND BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 37.5 101.3 8.3 24.977 49.904 5.523 57.693 1.860 15.734 12-2023 135.4 365.5 29.9 90.105 180.029 19.926 57.693 1.860 15.734 12-2024 66.8 180.3 14.8 44.453 88.817 9.830 57.693 1.860 15.734 12-2025 46.2 124.7 10.2 30.737 61.413 6.797 57.693 1.860 15.734 12-2026 35.9 97.0 7.9 23.901 47.755 5.286 57.693 1.860 15.734 12-2027 29.6 80.0 6.6 19.717 39.394 4.360 57.693 1.860 15.734 12-2028 25.4 68.6 5.6 16.911 33.789 3.740 57.693 1.860 15.734 12-2029 22.2 60.0 4.9 14.788 29.546 3.270 57.693 1.860 15.734 12-2030 19.8 53.6 4.4 13.204 26.381 2.920 57.693 1.860 15.734 12-2031 18.0 48.5 4.0 11.951 23.878 2.643 57.693 1.860 15.734 12-2032 16.5 44.5 3.6 10.961 21.900 2.42457.693 1.860 15.734 12-2033 15.1 40.8 3.3 10.053 20.085 2.223 57.693 1.860 15.734 12-2034 13.9 37.5 3.1 9.249 18.479 2.045 57.693 1.860 15.734 12-2035 12.8 34.5 2.8 8.509 17.002 1.882 57.693 1.860 15.734 12-2036 11.8 31.8 2.6 7.850 15.684 1.736 57.693 1.860 15.734 12-2037 10.8 29.2 2.4 7.202 14.389 1.593 57.693 1.860 15.734 S Tot 517.7 1,397.9 114.5 344.567 688.445 76.198 57.693 1.860 15.734 After 103.5 279.6 22.9 68.916 137.694 15.240 57.693 1.860 15.734 Total 621.3 1,677.4 137.4 413.483 826.139 91.439 57.693 1.860 15.734 Cum .0 .0 .0 Ult 621.3 1,677.4 137.4 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 1,440.988 92.821 86.908 0.000 0.000 1,620.717 80.003 40.518 4.981 12-2023 5,198.391 334.854 313.524 0.000 0.000 5,846.769 288.612 146.169 5.231 12-2024 2,564.607 165.199 154.676 0.000 0.000 2,884.482 142.386 72.112 5.708 12-2025 1,773.326 114.229 106.952 0.000 0.000 1,994.507 98.454 49.863 6.128 12-2026 1,378.943 88.82583.166 0.000 0.000 1,550.934 76.558 38.773 6.517 12-2027 1,137.522 73.273 68.606 0.000 0.000 1,279.402 63.155 31.985 6.888 12-2028 975.655 62.847 58.843 0.000 0.000 1,097.345 54.168 27.434 7.240 12-2029 853.149 54.956 51.455 0.000 0.000 959.559 47.366 23.989 7.595 12-2030 761.761 49.069 45.943 0.000 0.000 856.773 42.293 21.419 7.935 12-2031 689.481 44.413 41.584 0.000 0.000 775.478 38.280 19.387 8.267 12-2032 632.369 40.734 38.139 0.000 0.000 711.242 35.109 17.781 8.583 12-2033 579.959 37.358 34.978 0.000 0.000 652.295 32.199 16.307 8.928 12-2034 533.593 34.371 32.182 0.000 0.000 600.146 29.625 15.004 9.289 12-2035 490.933 31.623 29.609 0.000 0.000 552.166 27.256 13.804 9.682 12-2036 452.871 29.172 27.313 0.000 0.000 509.356 25.143 12.734 10.095 12-2037 415.478 26.763 25.058 0.000 0.000 467.300 23.067 11.682 10.575 S Tot 19,879.027 1,280.507 1,198.938 0.000 0.000 22,358.472 1,103.675 558.962 6.603 After 3,975.963 256.112 239.797 0.000 0.000 4,471.872 220.744 111.797 17.729 Total 23,854.990 1,536.618 1,438.735 0.000 0.000 26,830.343 1,324.419 670.759 8.458 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net ExpenseCOPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 7.892 1 0.9 0.000 0.000 175.837 7,099.074 -5,782.607 -5,782.607 -4,081.205 12-2023 61.762 1 0.9 0.000 0.000 634.337 .000 4,715.889 -1,066.719 -983.441 12-2024 61.762 1 0.9 0.000 0.000 312.948 .000 2,295.274 1,228.556 380.758 12-2025 61.762 1 0.9 0.000 0.000 216.391 .000 1,568.037 2,796.592 1,226.860 12-2026 61.762 1 0.9 0.000 0.000 168.266 .000 1,205.574 4,002.166 1,817.924 12-2027 61.762 1 0.9 0.000 0.000 138.807 .000 983.693 4,985.859 2,256.234 12-2028 61.762 1 0.9 0.000 0.000 119.055 .000 834.927 5,820.786 2,594.338 12-2029 61.762 1 0.9 0.000 0.000 104.106 .000 722.336 6,543.122 2,860.193 12-2030 61.762 1 0.9 0.000 0.000 92.954 .000 638.345 7,181.467 3,073.765 12-2031 61.762 1 0.9 0.000 0.000 84.134 .000 571.915 7,753.382 3,247.710 12-2032 61.762 1 0.9 0.000 0.000 77.165 .000 519.425 8,272.807 3,391.310 12-2033 61.762 1 0.9 0.000 0.000 70.770 .000 471.257 8,744.064 3,509.740 12-2034 61.762 1 0.9 0.000 0.000 65.112 .000 428.643 9,172.708 3,607.675 12-2035 61.762 10.9 0.000 0.000 59.906 .000 389.437 9,562.144 3,688.569 12-2036 61.762 1 0.9 0.000 0.000 55.262 .000 354.455 9,916.599 3,755.500 12-2037 61.762 1 0.9 0.000 0.000 50.699 .000 320.089 10,236.688 3,810.443 S Tot 934.321 0.000 0.000 2,425.751 7,099.074 10,236.688 10,236.688 3,810.443 After 1,319.094 0.000 0.000 485.169 .000 2,335.067 12,571.756 4,046.175 Total 2,253.415 0.000 0.000 2,910.920 7,099.074 12,571.756 12,571.756 4,046.175 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 6,852.781 Oil Rate 29,047. 145. bbls/mo 96.3% 1.20 0.0% 3,092. 5,715. $/w/mo Expense 88.7384 88.7384 8.00 4,961.405 Gas Rate 78,429. 393. Mcf/mo 0.0% 0.00 0.0% 10.00 4,046.175 GOR 2,700. 2,700. scf/bbl Revenue 12.00 3,322.073 NGL Rate 3,155. 32. bbls/mo Oil 66.5538 66.5538 NGL Yield 40.2 81.2 bbl/MMcf Gas 66.5538 66.5538 15.00 2,493.849 Gas Shrinkage 63.125.9 % ______________________________ ______________________ 20.00 1,565.880 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 15.6 % Start Date: 11/2022 2 Months in year ‘22 36.528 Year Life (05/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 600 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 14 Figure 15 LILIS ENERGY, INC. -- MOOSE PUD 1 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________41.08 Year Life (02/2060) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,751. 96.3 1.20 8.1 130. Initial Final Oil - mbbls 0.0 620.3 620.3 62.383 NI 386.976 22,325.725 1,307.759 4,568.313 11,377.6343,394.944 Gas - mcf/mo 52,810. 0.0 0.00 8.1 464. 3,580. 3,580. 6 Gas - mmcf 0.0 2,220.7 2,220.7 77.273 WI 1,025.177 1,906.829 650.448 8,113.761 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A MOOSE PUD 1 (1.5 WC A) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 601 100. 100. Table 15 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- MOOSE PUD 1 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 141.1 505.2 41.4 88.028 233.204 25.812 57.693 1.860 15.734 12-2023 78.5 281.1 23.0 48.978 129.752 14.361 57.693 1.860 15.734 12-2024 51.1 182.9 15.0 31.873 84.439 9.346 57.693 1.860 15.734 12-2025 38.5 137.8 11.3 24.011 63.610 7.040 57.693 1.860 15.734 12-2026 31.2 111.9 9.2 19.492 51.637 5.715 57.693 1.860 15.734 12-2027 26.5 94.7 7.8 16.504 43.722 4.839 57.693 1.860 15.734 12-2028 23.1 82.7 6.8 14.406 38.165 4.224 57.693 1.860 15.734 12-2029 20.5 73.2 6.0 12.757 33.797 3.741 57.693 1.860 15.734 12-2030 18.4 66.0 5.4 11.500 30.465 3.372 57.693 1.860 15.734 12-2031 16.8 60.2 4.9 10.486 27.780 3.075 57.693 1.860 15.734 12-2032 15.5 55.4 4.5 9.661 25.594 2.83357.693 1.860 15.734 12-2033 14.2 50.9 4.2 8.863 23.481 2.599 57.693 1.860 15.734 12-2034 13.1 46.8 3.8 8.155 21.604 2.391 57.693 1.860 15.734 12-2035 12.0 43.1 3.5 7.503 19.877 2.200 57.693 1.860 15.734 12-2036 11.1 39.7 3.3 6.921 18.336 2.029 57.693 1.860 15.734 12-2037 10.2 36.4 3.0 6.350 16.822 1.862 57.693 1.860 15.734 S Tot 521.8 1,867.9 153.0 325.489 862.286 95.440 57.693 1.860 15.734 After 98.6 352.9 28.9 61.487 162.891 18.029 57.693 1.860 15.734 Total 620.3 2,220.7 181.9 386.976 1,025.177 113.469 57.693 1.860 15.734 Cum .0 .0 .0 Ult 620.3 2,220.7 181.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 5,078.597 433.760 406.129 0.000 0.000 5,918.486 297.486 147.962 4.305 12-2023 2,825.671 241.339 225.966 0.000 0.000 3,292.976 165.517 82.324 4.680 12-2024 1,838.868 157.057 147.052 0.000 0.000 2,142.977 107.714 53.574 5.041 12-2025 1,385.254 118.314 110.777 0.000 0.000 1,614.345 81.143 40.359 5.380 12-2026 1,124.53096.046 89.927 0.000 0.000 1,310.503 65.871 32.763 5.698 12-2027 952.162 81.324 76.143 0.000 0.000 1,109.629 55.774 27.741 6.004 12-2028 831.137 70.987 66.465 0.000 0.000 968.589 48.685 24.215 6.295 12-2029 736.013 62.863 58.858 0.000 0.000 857.734 43.113 21.443 6.590 12-2030 663.453 56.665 53.056 0.000 0.000 773.173 38.863 19.329 6.873 12-2031 604.980 51.671 48.380 0.000 0.000 705.031 35.438 17.626 7.150 12-2032 557.379 47.605 44.573 0.000 0.000 649.557 32.649 16.239 7.418 12-2033 511.358 43.675 40.893 0.000 0.000 595.925 29.953 14.898 7.725 12-2034 470.476 40.183 37.623 0.000 0.000 548.282 27.559 13.707 8.048 12-2035 432.862 36.971 34.616 0.000 0.000 504.449 25.356 12.611 8.399 12-2036 399.302 34.104 31.932 0.000 0.000 465.338 23.390 11.633 8.768 12-2037 366.333 31.288 29.295 0.000 0.000 426.916 21.458 10.673 9.197 S Tot 18,778.375 1,603.851 1,501.685 0.000 0.000 21,883.911 1,099.969 547.098 5.606 After 3,547.350 302.977 283.677 0.000 0.000 4,134.004 207.791 103.350 15.844 Total 22,325.725 1,906.829 1,785.362 0.000 0.000 26,017.915 1,307.759 650.448 7.233 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net ExpenseCOPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 42.795 1 0.8 0.000 0.000 575.729 8,113.761 -3,259.247 -3,259.247 -2,604.781 12-2023 53.783 1 0.8 0.000 0.000 320.329 .000 2,671.022 -588.224 -857.033 12-2024 53.783 1 0.8 0.000 0.000 208.461 .000 1,719.444 1,131.220 163.924 12-2025 53.783 1 0.8 0.000 0.000 157.038 .000 1,282.022 2,413.242 855.383 12-2026 53.783 1 0.8 0.000 0.000 127.481 .000 1,030.606 3,443.848 1,360.531 12-2027 53.783 1 0.8 0.000 0.000 107.941 .000 864.391 4,308.239 1,745.616 12-2028 53.783 1 0.8 0.000 0.000 94.221 .000 747.686 5,055.925 2,048.353 12-2029 53.783 1 0.8 0.000 0.000 83.437 .000 655.958 5,711.882 2,289.755 12-2030 53.783 1 0.8 0.000 0.000 75.212 .000 585.987 6,297.870 2,485.794 12-2031 53.783 1 0.8 0.000 0.000 68.583 .000 529.602 6,827.471 2,646.860 12-2032 53.783 1 0.8 0.000 0.000 63.187 .000 483.700 7,311.171 2,780.581 12-2033 53.783 1 0.8 0.000 0.000 57.969 .000 439.321 7,750.493 2,890.985 12-2034 53.783 1 0.8 0.000 0.000 53.335 .000 399.899 8,150.391 2,982.352 12-2035 53.783 1 0.80.000 0.000 49.071 .000 363.628 8,514.020 3,057.885 12-2036 53.783 1 0.8 0.000 0.000 45.266 .000 331.266 8,845.286 3,120.437 12-2037 53.783 1 0.8 0.000 0.000 41.529 .000 299.474 9,144.759 3,171.841 S Tot 849.534 0.000 0.000 2,128.790 8,113.761 9,144.759 9,144.759 3,171.841 After 1,187.847 0.000 0.000 402.141 .000 2,232.875 11,377.634 3,394.944 Total 2,037.382 0.000 0.000 2,530.931 8,113.761 11,377.634 11,377.634 3,394.944 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 6,017.269 Oil Rate 28,895. 129. bbls/mo 96.3% 1.20 0.0% 3,179. 5,798. $/w/mo Expense 77.2739 77.2739 8.00 4,249.750 Gas Rate 103,447. 462. Mcf/mo 0.0% 0.00 0.0% 10.00 3,394.944 GOR 3,580. 3,580. scf/bbl Revenue 12.00 2,718.767 NGL Rate 4,405. 38. bbls/mo Oil 62.3836 62.3836 NGL Yield 42.6 83.7 bbl/MMcf Gas 62.3836 62.3836 15.00 1,945.503 Gas Shrinkage 62.2 25.8 %______________________________ ______________________ 20.00 1,079.884 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.8 % Start Date: 03/2022 10 Months in year ‘22 37.920 Year Life (02/2060) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 601 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 15 Figure 16 LILIS ENERGY, INC. -- MOOSE PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.09 Year Life (02/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,984. 96.3 1.20 8.1 124. Initial Final Oil - mbbls 0.0 631.1 631.1 62.383 NI 393.729 22,715.319 1,406.328 4,648.776 12,623.4554,647.698 Gas - mcf/mo 68,029. 0.0 0.00 8.1 565. 4,540. 4,540. 6 Gas - mmcf 0.0 2,865.4 2,865.4 77.273 WI 1,322.771 2,460.355 686.983 8,113.761 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B MOOSE PUD 2 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 602 100. 1,000. Table 16 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- MOOSE PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 101.6 461.1 37.8 63.354 212.843 23.558 57.693 1.860 15.734 12-2021 99.4 451.4 37.0 62.029 208.393 23.065 57.693 1.860 15.734 12-2022 58.4 265.1 21.7 36.428 122.383 13.546 57.693 1.860 15.734 12-2023 42.5 193.1 15.8 26.530 89.130 9.865 57.693 1.860 15.734 12-2024 33.9 154.1 12.6 21.172 71.130 7.873 57.693 1.860 15.734 12-2025 28.3 128.5 10.5 17.659 59.328 6.566 57.693 1.860 15.734 12-2026 24.4 111.0 9.1 15.249 51.232 5.670 57.693 1.860 15.734 12-2027 21.6 98.0 8.0 13.462 45.228 5.006 57.693 1.860 15.734 12-2028 19.4 88.1 7.2 12.111 40.689 4.504 57.693 1.860 15.734 12-2029 17.6 79.9 6.5 10.973 36.865 4.080 57.693 1.860 15.734 12-2030 16.1 73.2 6.0 10.065 33.813 3.743 57.693 1.860 15.734 12-2031 14.8 67.4 5.5 9.260 31.109 3.443 57.693 1.86015.734 12-2032 13.7 62.2 5.1 8.542 28.697 3.176 57.693 1.860 15.734 12-2033 12.6 57.0 4.7 7.837 26.328 2.914 57.693 1.860 15.734 12-2034 11.6 52.5 4.3 7.210 24.223 2.681 57.693 1.860 15.734 12-2035 10.6 48.3 4.0 6.634 22.286 2.467 57.693 1.860 15.734 12-2036 9.8 44.5 3.6 6.119 20.559 2.275 57.693 1.860 15.734 12-2037 9.0 40.9 3.3 5.614 18.861 2.088 57.693 1.860 15.734 S Tot 545.4 2,476.2 202.8 340.248 1,143.097 126.520 57.693 1.860 15.734 After 85.7 389.2 31.9 53.481 179.674 19.887 57.693 1.860 15.734 Total 631.1 2,865.4 234.7 393.729 1,322.771 146.407 57.693 1.860 15.734 Cum .0 .0 .0 Ult 631.1 2,865.4 234.7 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 3,655.044 395.887 370.669 0.000 0.000 4,421.601 226.287 110.540 3.848 12-2021 3,578.627 387.610 362.919 0.000 0.000 4,329.157 221.556 108.229 4.111 12-2022 2,101.621 227.632 213.132 0.000 0.000 2,542.384 130.113 63.560 4.450 12-2023 1,530.593 165.782 155.222 0.000 0.000 1,851.597 94.761 46.290 4.755 12-2024 1,221.489 132.303 123.875 0.000 0.000 1,477.666 75.624 36.9425.040 12-2025 1,018.803 110.349 103.320 0.000 0.000 1,232.472 63.075 30.812 5.321 12-2026 879.774 95.291 89.221 0.000 0.000 1,064.285 54.468 26.607 5.588 12-2027 776.680 84.124 78.765 0.000 0.000 939.570 48.085 23.489 5.848 12-2028 698.737 75.682 70.861 0.000 0.000 845.280 43.260 21.132 6.095 12-2029 633.067 68.569 64.201 0.000 0.000 765.837 39.194 19.146 6.351 12-2030 580.663 62.893 58.887 0.000 0.000 702.442 35.949 17.561 6.596 12-2031 534.224 57.863 54.177 0.000 0.000 646.264 33.074 16.157 6.854 12-2032 492.805 53.377 49.977 0.000 0.000 596.159 30.510 14.904 7.125 12-2033 452.115 48.970 45.850 0.000 0.000 546.935 27.991 13.673 7.440 12-2034 415.970 45.055 42.185 0.000 0.000 503.209 25.753 12.580 7.771 12-2035 382.714 41.453 38.812 0.000 0.000 462.979 23.694 11.574 8.130 12-2036 353.042 38.239 35.803 0.000 0.000 427.084 21.857 10.677 8.509 12-2037 323.892 35.082 32.847 0.000 0.000 391.821 20.052 9.796 8.948 S Tot 19,629.859 2,126.161 1,990.723 0.000 0.000 23,746.742 1,215.304 593.669 5.162 After 3,085.460 334.194 312.906 0.000 0.000 3,732.560 191.024 93.314 15.405 Total 22,715.319 2,460.355 2,303.628 0.000 0.000 27,479.302 1,406.328 686.983 6.554 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31)Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 24.867 1 0.8 0.000 0.000 414.350 8,113.761 -4,468.205 -4,468.205 -4,029.919 12-2021 53.783 1 0.8 0.000 0.000 405.687 .000 3,539.902 -928.303 -1,223.937 12-2022 53.783 1 0.8 0.000 0.000 238.248 .000 2,056.681 1,128.377 254.294 12-2023 53.783 1 0.8 0.000 0.000 173.514 .000 1,483.250 2,611.628 1,222.597 12-2024 53.783 1 0.8 0.000 0.000 138.473 .000 1,172.846 3,784.473 1,918.267 12-2025 53.783 1 0.8 0.000 0.000 115.495 .000 969.307 4,753.780 2,440.746 12-2026 53.783 1 0.8 0.000 0.000 99.735 .000 829.693 5,583.473 2,847.255 12-2027 53.783 1 0.8 0.000 0.000 88.047 .000 726.165 6,309.638 3,170.670 12-2028 53.783 1 0.8 0.000 0.000 79.212 .000 647.894 6,957.533 3,432.946 12-2029 53.783 1 0.8 0.000 0.000 71.767 .000 581.948 7,539.481 3,647.076 12-2030 53.783 1 0.8 0.000 0.000 65.826 .000 529.323 8,068.804 3,824.138 12-2031 53.783 1 0.8 0.000 0.000 60.562 .000 482.689 8,551.492 3,970.932 12-2032 53.783 1 0.8 0.000 0.000 55.866 .000 441.096 8,992.588 4,092.876 12-2033 53.783 1 0.80.000 0.000 51.254 .000 400.235 9,392.823 4,193.457 12-2034 53.783 1 0.8 0.000 0.000 47.156 .000 363.937 9,756.760 4,276.609 12-2035 53.783 1 0.8 0.000 0.000 43.386 .000 330.542 10,087.302 4,345.269 12-2036 53.783 1 0.8 0.000 0.000 40.022 .000 300.745 10,388.047 4,402.058 12-2037 53.783 1 0.8 0.000 0.000 36.718 .000 271.472 10,659.519 4,448.657 S Tot 939.172 0.000 0.000 2,225.317 8,113.761 10,659.519 10,659.519 4,448.657 After 1,134.506 0.000 0.000 349.780 .000 1,963.936 12,623.455 4,647.698 Total 2,073.679 0.000 0.000 2,575.097 8,113.761 12,623.455 12,623.455 4,647.698 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 7,392.395 Oil Rate 29,352. 123. bbls/mo 96.3% 1.20 0.0% 3,179. 5,798. $/w/mo Expense 77.2739 77.2739 8.00 5,565.969 Gas Rate 133,258. 562. Mcf/mo 0.0% 0.00 0.0% 10.00 4,647.698 GOR 4,540. 4,540. scf/bblRevenue 12.00 3,897.321 NGL Rate 5,674. 47. bbls/mo Oil 62.3836 62.3836 NGL Yield 42.6 83.8 bbl/MMcf Gas 62.3836 62.3836 15.00 3,002.124 Gas Shrinkage 62.2 25.9 % ______________________________ ______________________ 20.00 1,925.477 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.8 % Start Date: 07/2020 6 Months in year ‘20 38.596 Year Life (02/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 602 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 16 Figure 17 LILIS ENERGY, INC. -- NE AXIS 2H PHANTOM (WOLFCAMP) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________36.90 Year Life (11/2055) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 20,929. 96.3 1.20 8.0 145. Initial Final Oil - mbbls 0.0 614.9 614.9 55.043 NI 338.455 19,526.433 1,108.517 4,249.840 12,300.409 6,577.204 Gas -mcf/mo 64,043. 0.0 0.00 8.0 443. 3,060. 3,060. 6 Gas - mmcf 0.0 1,881.5 1,881.5 73.391 WI 766.398 1,425.501 557.166 4,070.697 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP NE AXIS 2H TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 576 100. 100. Table 17 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- NE AXIS 2H PHANTOM (WOLFCAMP) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 124.2 379.9 31.1 68.341 154.751 17.128 57.693 1.860 15.734 12-2020 85.5 261.5 21.4 47.045 106.530 11.791 57.693 1.860 15.734 12-2021 53.3 163.0 13.3 29.314 66.379 7.347 57.693 1.860 15.734 12-2022 39.7 121.4 9.9 21.829 49.430 5.471 57.693 1.860 15.734 12-2023 31.9 97.7 8.0 17.580 39.807 4.406 57.693 1.860 15.734 12-2024 27.0 82.5 6.8 14.848 33.622 3.721 57.693 1.860 15.734 12-2025 23.3 71.4 5.8 12.846 29.088 3.220 57.693 1.860 15.734 12-2026 20.7 63.3 5.2 11.380 25.769 2.852 57.693 1.860 15.734 12-2027 18.6 56.9 4.7 10.239 23.184 2.566 57.693 1.860 15.734 12-2028 17.0 52.0 4.3 9.347 21.164 2.343 57.693 1.860 15.734 12-2029 15.5 47.6 3.9 8.558 19.380 2.145 57.693 1.860 15.734 12-2030 14.3 43.8 3.6 7.874 17.830 1.973 57.693 1.860 15.734 12-2031 13.2 40.3 3.3 7.245 16.405 1.816 57.693 1.860 15.73412-2032 12.1 37.2 3.0 6.683 15.133 1.675 57.693 1.860 15.734 12-2033 11.1 34.1 2.8 6.131 13.883 1.537 57.693 1.860 15.734 12-2034 10.2 31.4 2.6 5.641 12.773 1.414 57.693 1.860 15.734 12-2035 9.4 28.9 2.4 5.190 11.752 1.301 57.693 1.860 15.734 12-2036 8.7 26.6 2.2 4.788 10.841 1.200 57.693 1.860 15.734 12-2037 8.0 24.4 2.0 4.392 9.946 1.101 57.693 1.860 15.734 S Tot 543.7 1,663.7 136.3 299.271 677.669 75.006 57.693 1.860 15.734 After 71.2 217.8 17.8 39.184 88.729 9.821 57.693 1.860 15.734 Total 614.9 1,881.5 154.1 338.455 766.398 84.827 57.693 1.860 15.734 Cum .0 .0 .0 Ult 614.9 1,881.5 154.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 3,942.786 287.838 269.502 0.000 0.000 4,500.126 223.832 112.503 4.886 12-2020 2,714.182 198.145 185.523 0.000 0.000 3,097.850 154.084 77.446 5.275 12-2021 1,691.216 123.465 115.600 0.000 0.000 1,930.281 96.010 48.257 5.702 12-2022 1,259.385 91.940 86.083 0.000 0.000 1,437.408 71.495 35.935 6.090 12-2023 1,014.216 74.041 69.325 0.000 0.000 1,157.582 57.577 28.940 6.457 12-2024 856.628 62.537 58.553 0.000 0.000 977.718 48.631 24.443 6.804 12-2025 741.111 54.104 50.657 0.000 0.000 845.872 42.073 21.147 7.152 12-2026 656.555 47.931 44.878 0.000 0.000 749.364 37.273 18.734 7.485 12-2027 590.693 43.123 40.376 0.000 0.000 674.192 33.534 16.855 7.809 12-2028 539.230 39.366 36.858 0.000 0.000 615.454 30.612 15.386 8.119 12-2029 493.757 36.046 33.750 0.000 0.000 563.553 28.031 14.089 8.445 12-2030 454.282 33.164 31.052 0.000 0.000 518.497 25.790 12.962 8.782 12-2031 417.963 30.513 28.569 0.000 0.000 477.045 23.728 11.926 9.148 12-2032 385.558 28.147 26.354 0.000 0.000 440.059 21.888 11.001 9.533 12-2033 353.723 25.823 24.178 0.000 0.000 403.725 20.081 10.093 9.979 12-2034 325.444 23.759 22.245 0.000 0.000 371.448 18.475 9.286 10.449 12-2035 299.426 21.859 20.467 0.000 0.000 341.752 16.998 8.544 10.960 12-2036 276.211 20.164 18.880 0.000 0.000 315.255 15.681 7.881 11.497 12-2037 253.405 18.499 17.321 0.000 0.000 289.226 14.386 7.231 12.121 S Tot 17,265.771 1,260.464 1,180.171 0.000 0.000 19,706.406 980.179 492.660 6.637 After 2,260.662 165.037 154.524 0.000 0.000 2,580.223 128.338 64.506 19.721 Total 19,526.433 1,425.501 1,334.695 0.000 0.000 22,286.629 1,108.517 557.166 8.152 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating WellsWorkover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 33.230 1 0.7 0.000 0.000 481.121 4,070.697 -421.257 -421.257 -497.462 12-2020 51.081 1 0.7 0.000 0.000 331.200 .000 2,484.039 2,062.783 1,666.895 12-2021 51.081 1 0.7 0.000 0.000 206.372 .000 1,528.561 3,591.344 2,875.047 12-2022 51.081 1 0.7 0.000 0.000 153.677 .000 1,125.219 4,716.563 3,682.939 12-2023 51.081 1 0.7 0.000 0.000 123.760 .000 896.224 5,612.788 4,267.693 12-2024 51.081 1 0.7 0.000 0.000 104.531 .000 749.033 6,361.821 4,711.830 12-2025 51.081 1 0.7 0.000 0.000 90.435 .000 641.137 7,002.958 5,057.339 12-2026 51.081 1 0.7 0.000 0.000 80.117 .000 562.160 7,565.118 5,332.724 12-2027 51.081 1 0.7 0.000 0.000 72.080 .000 500.643 8,065.761 5,555.670 12-2028 51.081 1 0.7 0.000 0.000 65.800 .000 452.575 8,518.335 5,738.861 12-2029 51.081 1 0.7 0.000 0.000 60.251 .000 410.102 8,928.437 5,889.753 12-2030 51.081 1 0.7 0.000 0.000 55.434 .000 373.231 9,301.668 6,014.603 12-2031 51.081 1 0.7 0.000 0.000 51.002 .000 339.308 9,640.976 6,117.794 12-2032 51.081 1 0.7 0.000 0.000 47.048 .000 309.041 9,950.017 6,203.232 12-2033 51.081 10.7 0.000 0.000 43.163 .000 279.307 10,229.324 6,273.425 12-2034 51.081 1 0.7 0.000 0.000 39.713 .000 252.893 10,482.217 6,331.207 12-2035 51.081 1 0.7 0.000 0.000 36.538 .000 228.591 10,710.808 6,378.692 12-2036 51.081 1 0.7 0.000 0.000 33.705 .000 206.908 10,917.716 6,417.763 12-2037 51.081 1 0.7 0.000 0.000 30.922 .000 185.607 11,103.323 6,449.624 S Tot 952.681 0.000 0.000 2,106.867 4,070.697 11,103.323 11,103.323 6,449.624 After 914.434 0.000 0.000 275.859 .000 1,197.087 12,300.409 6,577.204 Total 1,867.115 0.000 0.000 2,382.725 4,070.697 12,300.409 12,300.409 6,577.204 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 8,624.455 Oil Rate 28,743. 143. bbls/mo 96.3% 1.20 0.0% 4,676. 5,799. $/w/mo Expense 73.3917 73.3917 8.00 7,275.523 Gas Rate 87,955. 438. Mcf/mo 0.0% 0.00 0.0% 10.00 6,577.204 GOR 3,060. 3,060. scf/bblRevenue 12.00 5,993.148 NGL Rate 5,342. 37. bbls/mo Oil 55.0438 55.0438 NGL Yield 60.7 84.2 bbl/MMcf Gas 55.0438 55.0438 15.00 5,275.573 Gas Shrinkage 46.1 25.9 % ______________________________ ______________________ 20.00 4,369.302 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.4 % Start Date: 05/2019 8 Months in year ‘19 36.568 Year Life (11/2055) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 576 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 17 Figure 18 LILIS ENERGY, INC. -- NW AXIS PUD 4 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.27 Year Life (04/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,631. 96.3 1.20 7.8 135. Initial Final Oil - mbbls 0.0 629.6 629.6 44.756 NI 281.795 16,257.544 1,006.521 3,544.307 8,358.7052,542.720 Gas - mcf/mo 66,424. 0.0 0.00 7.8 615. 4,540. 4,540. 6 Gas - mmcf 0.0 2,858.4 2,858.4 59.675 WI 946.719 1,760.897 491.679 6,265.954 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B NW AXIS PUD 4 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 607 100. 1,000. Table 18 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- NW AXIS PUD 4 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 73.6 334.2 27.4 32.948 110.694 12.252 57.693 1.860 15.734 12-2022 114.7 520.9 42.7 51.349 172.512 19.094 57.693 1.860 15.734 12-2023 62.5 284.0 23.3 27.994 94.048 10.409 57.693 1.860 15.734 12-2024 44.6 202.6 16.6 19.976 67.110 7.428 57.693 1.860 15.734 12-2025 35.0 159.0 13.0 15.676 52.666 5.829 57.693 1.860 15.734 12-2026 29.1 132.1 10.8 13.026 43.761 4.844 57.693 1.860 15.734 12-2027 25.0 113.6 9.3 11.197 37.617 4.164 57.693 1.860 15.734 12-2028 22.1 100.2 8.2 9.878 33.186 3.673 57.693 1.860 15.734 12-2029 19.7 89.4 7.3 8.817 29.620 3.278 57.693 1.860 15.734 12-2030 17.9 81.1 6.6 7.996 26.862 2.973 57.693 1.860 15.734 12-2031 16.4 74.3 6.1 7.325 24.608 2.724 57.693 1.860 15.734 12-2032 15.1 68.5 5.66.756 22.697 2.512 57.693 1.860 15.734 12-2033 13.8 62.9 5.1 6.198 20.823 2.305 57.693 1.860 15.734 12-2034 12.7 57.8 4.7 5.702 19.158 2.120 57.693 1.860 15.734 12-2035 11.7 53.2 4.4 5.247 17.626 1.951 57.693 1.860 15.734 12-2036 10.8 49.1 4.0 4.840 16.260 1.800 57.693 1.860 15.734 12-2037 9.9 45.0 3.7 4.440 14.917 1.651 57.693 1.860 15.734 S Tot 534.8 2,428.0 198.9 239.363 804.165 89.007 57.693 1.860 15.734 After 94.8 430.4 35.3 42.432 142.554 15.778 57.693 1.860 15.734 Total 629.6 2,858.4 234.1 281.795 946.719 104.785 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.6 2,858.4 234.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 1,900.887 205.890 192.775 0.000 0.000 2,299.552 117.686 57.489 4.114 12-2022 2,962.468 320.873 300.433 0.000 0.000 3,583.773 183.409 89.594 4.357 12-2023 1,615.049 174.930 163.787 0.000 0.000 1,953.766 99.989 48.844 4.731 12-2024 1,152.450 124.825 116.873 0.000 0.000 1,394.148 71.349 34.854 5.062 12-2025 904.401 97.958 91.718 0.000 0.000 1,094.07755.992 27.352 5.378 12-2026 751.481 81.395 76.210 0.000 0.000 909.086 46.525 22.727 5.677 12-2027 645.980 69.968 65.511 0.000 0.000 781.459 39.993 19.536 5.966 12-2028 569.891 61.726 57.794 0.000 0.000 689.412 35.283 17.235 6.241 12-2029 508.654 55.094 51.584 0.000 0.000 615.331 31.491 15.383 6.522 12-2030 461.293 49.964 46.781 0.000 0.000 558.038 28.559 13.951 6.791 12-2031 422.574 45.770 42.854 0.000 0.000 511.199 26.162 12.780 7.055 12-2032 389.761 42.216 39.527 0.000 0.000 471.503 24.130 11.788 7.320 12-2033 357.579 38.730 36.263 0.000 0.000 432.573 22.138 10.814 7.627 12-2034 328.992 35.634 33.364 0.000 0.000 397.989 20.368 9.950 7.950 12-2035 302.689 32.785 30.697 0.000 0.000 366.171 18.740 9.154 8.302 12-2036 279.222 30.243 28.317 0.000 0.000 337.782 17.287 8.445 8.671 12-2037 256.167 27.746 25.979 0.000 0.000 309.892 15.860 7.747 9.100 S Tot 13,809.539 1,495.747 1,400.467 0.000 0.000 16,705.753 854.963 417.644 5.477 After 2,448.005 265.150 248.259 0.000 0.000 2,961.414 151.558 74.035 15.467 Total 16,257.544 1,760.897 1,648.726 0.000 0.000 19,667.167 1,006.521 491.679 6.981 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow EndExpense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 12.230 1 0.6 0.000 0.000 231.957 6,265.954 -4,385.763 -4,385.763 -3,483.827 12-2022 41.534 1 0.6 0.000 0.000 361.497 .000 2,907.738 -1,478.025 -1,386.151 12-2023 41.534 1 0.6 0.000 0.000 197.077 .000 1,566.321 88.296 -362.371 12-2024 41.534 1 0.6 0.000 0.000 140.628 .000 1,105.783 1,194.079 293.928 12-2025 41.534 1 0.6 0.000 0.000 110.360 .000 858.838 2,052.917 757.036 12-2026 41.534 1 0.6 0.000 0.000 91.700 .000 706.600 2,759.517 1,103.324 12-2027 41.534 1 0.6 0.000 0.000 78.826 .000 601.569 3,361.086 1,371.296 12-2028 41.534 1 0.6 0.000 0.000 69.541 .000 525.819 3,886.904 1,584.184 12-2029 41.534 1 0.6 0.000 0.000 62.069 .000 464.854 4,351.758 1,755.248 12-2030 41.534 1 0.6 0.000 0.000 56.290 .000 417.704 4,769.462 1,894.983 12-2031 41.534 1 0.6 0.000 0.000 51.565 .000 379.157 5,148.620 2,010.292 12-2032 41.534 1 0.6 0.000 0.000 47.561 .000 346.490 5,495.110 2,106.081 12-2033 41.534 1 0.6 0.000 0.000 43.634 .000 314.452 5,809.562 2,185.105 12-2034 41.534 1 0.6 0.000 0.000 40.145 .000285.992 6,095.554 2,250.448 12-2035 41.534 1 0.6 0.000 0.000 36.936 .000 259.807 6,355.361 2,304.415 12-2036 41.534 1 0.6 0.000 0.000 34.072 .000 236.444 6,591.804 2,349.062 12-2037 41.534 1 0.6 0.000 0.000 31.259 .000 213.492 6,805.296 2,385.708 S Tot 676.779 0.000 0.000 1,685.118 6,265.954 6,805.296 6,805.296 2,385.708 After 883.692 0.000 0.000 298.719 .000 1,553.409 8,358.705 2,542.720 Total 1,560.470 0.000 0.000 1,983.837 6,265.954 8,358.705 8,358.705 2,542.720 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 4,479.362 Oil Rate 29,352. 134. bbls/mo 96.3% 1.20 0.0% 3,091. 5,799. $/w/mo Expense 59.6758 59.6758 8.00 3,178.348 Gas Rate 133,258. 610. Mcf/mo 0.0% 0.00 0.0% 10.00 2,542.720 GOR 4,540. 4,540. scf/bbl Revenue 12.00 2,035.856 NGL Rate 5,362. 51. bbls/mo Oil 44.7568 44.7568 NGL Yield 40.2 83.9 bbl/MMcf Gas 44.7568 44.756815.00 1,450.365 Gas Shrinkage 63.1 25.8 % ______________________________ ______________________ 20.00 784.178 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 10.8 % Start Date: 09/2021 4 Months in year ‘21 37.612 Year Life (04/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 607 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 18 Figure 19 LILIS ENERGY, INC. -- OSO PUD 3 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________41.07 Year Life (01/2060) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,631. 96.3 1.20 8.0 125. Initial Final Oil - mbbls 0.0 631.2 631.2 69.870 NI 441.049 25,445.360 1,575.348 5,185.288 14,209.208 4,815.418Gas - mcf/mo 66,424. 0.0 0.00 8.0 565. 4,540. 4,540. 6 Gas - mmcf 0.0 2,865.8 2,865.8 86.119 WI 1,481.749 2,756.053 769.548 9,042.512 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B OSO PUD 3 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 27 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 609 100. 1,000. Table 19 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- OSO PUD 3 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 113.1 513.6 42.1 79.046 265.563 29.393 57.693 1.860 15.734 12-2022 93.6 424.9 34.8 65.399 219.714 24.318 57.693 1.860 15.734 12-2023 56.6 256.9 21.0 39.544 132.852 14.704 57.693 1.860 15.734 12-2024 41.7 189.5 15.5 29.158 97.958 10.842 57.693 1.860 15.734 12-2025 33.3 151.1 12.4 23.261 78.149 8.650 57.693 1.860 15.734 12-2026 27.9 126.8 10.4 19.521 65.584 7.259 57.693 1.860 15.734 12-2027 24.2 109.8 9.0 16.893 56.753 6.282 57.693 1.860 15.734 12-2028 21.4 97.3 8.0 14.975 50.309 5.568 57.693 1.860 15.734 12-2029 19.2 87.2 7.1 13.414 45.066 4.988 57.693 1.860 15.734 12-2030 17.5 79.3 6.5 12.199 40.985 4.536 57.693 1.860 15.734 12-2031 16.0 72.7 6.0 11.195 37.612 4.163 57.693 1.860 15.734 12-2032 14.867.1 5.5 10.327 34.696 3.840 57.693 1.860 15.734 12-2033 13.6 61.6 5.0 9.475 31.831 3.523 57.693 1.860 15.734 12-2034 12.5 56.6 4.6 8.717 29.286 3.241 57.693 1.860 15.734 12-2035 11.5 52.1 4.3 8.020 26.945 2.982 57.693 1.860 15.734 12-2036 10.6 48.1 3.9 7.398 24.856 2.751 57.693 1.860 15.734 12-2037 9.7 44.1 3.6 6.788 22.804 2.524 57.693 1.860 15.734 S Tot 537.2 2,438.8 199.7 375.331 1,260.961 139.566 57.693 1.860 15.734 After 94.1 427.0 35.0 65.718 220.787 24.437 57.693 1.860 15.734 Total 631.2 2,865.8 234.7 441.049 1,481.749 164.003 57.693 1.860 15.734 Cum .0 .0 .0 Ult 631.2 2,865.8 234.7 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 4,560.383 493.947 462.482 0.000 0.000 5,516.812 282.338 137.920 3.841 12-2022 3,773.045 408.668 382.636 0.000 0.000 4,564.349 233.593 114.109 4.121 12-2023 2,281.400 247.104 231.364 0.000 0.000 2,759.868 141.244 68.997 4.454 12-2024 1,682.182 182.201 170.595 0.000 0.000 2,034.978 104.146 50.874 4.753 12-2025 1,342.019 145.358 136.0980.000 0.000 1,623.475 83.086 40.587 5.042 12-2026 1,126.235 121.985 114.215 0.000 0.000 1,362.435 69.726 34.061 5.316 12-2027 974.598 105.561 98.837 0.000 0.000 1,178.996 60.338 29.475 5.582 12-2028 863.933 93.575 87.614 0.000 0.000 1,045.122 53.487 26.128 5.834 12-2029 773.889 83.822 78.482 0.000 0.000 936.193 47.912 23.405 6.092 12-2030 703.811 76.232 71.376 0.000 0.000 851.418 43.574 21.285 6.339 12-2031 645.897 69.959 65.502 0.000 0.000 781.358 39.988 19.534 6.584 12-2032 595.814 64.534 60.423 0.000 0.000 720.772 36.887 18.019 6.834 12-2033 546.619 59.206 55.434 0.000 0.000 661.259 33.842 16.531 7.124 12-2034 502.918 54.472 51.002 0.000 0.000 608.393 31.136 15.210 7.429 12-2035 462.711 50.117 46.925 0.000 0.000 559.754 28.647 13.994 7.760 12-2036 426.837 46.232 43.287 0.000 0.000 516.356 26.426 12.909 8.109 12-2037 391.594 42.415 39.713 0.000 0.000 473.721 24.244 11.843 8.514 S Tot 21,653.885 2,345.388 2,195.985 0.000 0.000 26,195.259 1,340.614 654.881 5.079 After 3,791.475 410.664 384.505 0.000 0.000 4,586.644 234.734 114.666 14.789 Total 25,445.360 2,756.053 2,580.490 0.000 0.000 30,781.902 1,575.348 769.548 6.526 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party OtherFuture Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 32.633 1 0.9 0.000 0.000 514.423 9,042.512 -4,493.015 -4,493.015 -3,747.739 12-2022 59.939 1 0.9 0.000 0.000 425.609 .000 3,731.099 -761.916 -1,059.942 12-2023 59.939 1 0.9 0.000 0.000 257.348 .000 2,232.341 1,470.425 398.614 12-2024 59.939 1 0.9 0.000 0.000 189.754 .000 1,630.265 3,100.690 1,366.031 12-2025 59.939 1 0.9 0.000 0.000 151.383 .000 1,288.480 4,389.171 2,060.741 12-2026 59.939 1 0.9 0.000 0.000 127.042 .000 1,071.667 5,460.837 2,585.904 12-2027 59.939 1 0.9 0.000 0.000 109.937 .000 919.306 6,380.144 2,995.393 12-2028 59.939 1 0.9 0.000 0.000 97.454 .000 808.114 7,188.257 3,322.562 12-2029 59.939 1 0.9 0.000 0.000 87.297 .000 717.640 7,905.898 3,586.642 12-2030 59.939 1 0.9 0.000 0.000 79.392 .000 647.228 8,553.126 3,803.155 12-2031 59.939 1 0.9 0.000 0.000 72.859 .000 589.039 9,142.164 3,982.291 12-2032 59.939 1 0.9 0.000 0.000 67.209 .000 538.717 9,680.881 4,131.222 12-2033 59.939 1 0.9 0.000 0.000 61.660 .000 489.287 10,170.168 4,254.18212-2034 59.939 1 0.9 0.000 0.000 56.730 .000 445.378 10,615.546 4,355.940 12-2035 59.939 1 0.9 0.000 0.000 52.195 .000 404.979 11,020.525 4,440.062 12-2036 59.939 1 0.9 0.000 0.000 48.148 .000 368.934 11,389.459 4,509.727 12-2037 59.939 1 0.9 0.000 0.000 44.173 .000 333.523 11,722.981 4,566.976 S Tot 991.656 0.000 0.000 2,442.614 9,042.512 11,722.981 11,722.981 4,566.976 After 1,323.329 0.000 0.000 427.688 .000 2,486.226 14,209.208 4,815.418 Total 2,314.986 0.000 0.000 2,870.302 9,042.512 14,209.208 14,209.208 4,815.418 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 7,971.602 Oil Rate 29,352. 123. bbls/mo 96.3% 1.20 0.0% 3,092. 5,798. $/w/mo Expense 86.1192 86.1192 8.00 5,857.757 Gas Rate 133,258. 559. Mcf/mo 0.0% 0.00 0.0% 10.00 4,815.418 GOR 4,540. 4,540. scf/bbl Revenue 12.00 3,977.188 NGL Rate 5,362. 47. bbls/mo Oil69.8704 69.8704 NGL Yield 40.2 84.3 bbl/MMcf Gas 69.8704 69.8704 15.00 2,997.627 Gas Shrinkage 63.1 25.6 % ______________________________ ______________________ 20.00 1,859.699 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 15.5 % Start Date: 06/2021 7 Months in year ‘21 38.662 Year Life (01/2060) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 609 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 19 Figure 20 LILIS ENERGY, INC. -- OX 1H 1.5 PHANTOM (WOLFCAMP) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________37.95 Year Life (12/2056) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 10,792. 96.3 1.20 8.0 135. Initial Final Oil - mbbls 0.0 629.6 629.6 57.265 NI 360.552 20,801.261 1,287.827 4,534.844 13,903.258 7,276.482 Gas - mcf/mo48,994. 0.0 0.00 8.0 615. 4,540. 4,540. 6 Gas - mmcf 0.0 2,858.4 2,858.4 76.354 WI 1,211.311 2,253.038 629.095 4,808.793 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP OX 1H 1.5 TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 502 100. 1,000. Table 20 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- OX 1H 1.5 PHANTOM (WOLFCAMP) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 122.4 555.7 45.5 70.088 235.467 26.062 57.693 1.860 15.734 12-2020 89.3 405.6 33.2 51.155 171.861 19.022 57.693 1.860 15.734 12-2021 55.1 250.1 20.5 31.542 105.970 11.729 57.693 1.860 15.734 12-2022 40.9 185.5 15.2 23.397 78.606 8.700 57.693 1.860 15.734 12-2023 32.8 149.1 12.2 18.804 63.174 6.992 57.693 1.860 15.734 12-2024 27.7 125.8 10.3 15.862 53.290 5.898 57.693 1.860 15.734 12-2025 23.9 108.7 8.9 13.711 46.063 5.098 57.693 1.860 15.734 12-2026 21.2 96.2 7.9 12.139 40.782 4.514 57.693 1.860 15.734 12-2027 19.1 86.5 7.1 10.916 36.673 4.059 57.693 1.860 15.734 12-2028 17.4 79.0 6.5 9.961 33.465 3.704 57.693 1.860 15.734 12-2029 15.9 72.3 5.9 9.119 30.637 3.391 57.693 1.860 15.734 12-2030 14.7 66.5 5.4 8.390 28.188 3.120 57.693 1.860 15.734 12-2031 13.5 61.2 5.0 7.719 25.934 2.870 57.6931.860 15.734 12-2032 12.4 56.5 4.6 7.121 23.924 2.648 57.693 1.860 15.734 12-2033 11.4 51.8 4.2 6.533 21.948 2.429 57.693 1.860 15.734 12-2034 10.5 47.7 3.9 6.011 20.194 2.235 57.693 1.860 15.734 12-2035 9.7 43.8 3.6 5.530 18.579 2.056 57.693 1.860 15.734 12-2036 8.9 40.4 3.3 5.101 17.139 1.897 57.693 1.860 15.734 12-2037 8.2 37.1 3.0 4.680 15.724 1.740 57.693 1.860 15.734 S Tot 554.9 2,519.4 206.3 317.781 1,067.616 118.166 57.693 1.860 15.734 After 74.7 339.1 27.8 42.771 143.695 15.904 57.693 1.860 15.734 Total 629.6 2,858.4 234.1 360.552 1,211.311 134.070 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.6 2,858.4 234.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 4,043.555 437.968 410.069 0.000 0.000 4,891.592 250.341 122.290 4.167 12-2020 2,951.284 319.661 299.298 0.000 0.000 3,570.243 182.717 89.256 4.484 12-2021 1,819.772 197.104 184.549 0.000 0.000 2,201.425 112.664 55.036 4.843 12-2022 1,349.866 146.207 136.894 0.000 0.000 1,632.967 83.572 40.824 5.168 12-2023 1,084.849 117.503 110.018 0.000 0.000 1,312.370 67.164 32.809 5.476 12-2024 915.115 99.118 92.805 0.000 0.0001,107.038 56.656 27.676 5.767 12-2025 791.020 85.677 80.220 0.000 0.000 956.917 48.973 23.923 6.059 12-2026 700.326 75.854 71.022 0.000 0.000 847.202 43.358 21.180 6.338 12-2027 629.770 68.212 63.867 0.000 0.000 761.849 38.990 19.046 6.610 12-2028 574.684 62.246 58.280 0.000 0.000 695.210 35.579 17.380 6.869 12-2029 526.119 56.985 53.355 0.000 0.000 636.459 32.573 15.911 7.142 12-2030 484.056 52.429 49.090 0.000 0.000 585.574 29.968 14.639 7.423 12-2031 445.357 48.238 45.165 0.000 0.000 538.759 27.572 13.469 7.729 12-2032 410.828 44.498 41.663 0.000 0.000 496.989 25.435 12.425 8.050 12-2033 376.907 40.824 38.223 0.000 0.000 455.954 23.335 11.399 8.423 12-2034 346.774 37.560 35.167 0.000 0.000 419.501 21.469 10.488 8.815 12-2035 319.050 34.557 32.356 0.000 0.000 385.963 19.753 9.649 9.241 12-2036 294.314 31.878 29.847 0.000 0.000 356.039 18.221 8.901 9.690 12-2037 270.013 29.246 27.383 0.000 0.000 326.642 16.717 8.166 10.210 S Tot 18,333.659 1,985.766 1,859.271 0.000 0.000 22,178.696 1,135.055 554.467 5.635 After 2,467.603 267.272 250.247 0.000 0.000 2,985.122 152.772 74.628 16.979 Total 20,801.261 2,253.038 2,109.518 0.000 0.000 25,163.818 1,287.827 629.095 6.981 (21) (22) (23) (24) (25) (26)(27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 32.714 1 0.8 0.000 0.000 493.417 4,808.793 -815.963 -815.963 -880.168 12-2020 53.142 1 0.8 0.000 0.000 360.132 .000 2,884.995 2,069.033 1,633.865 12-2021 53.142 1 0.8 0.000 0.000 222.059 .000 1,758.524 3,827.556 3,023.825 12-2022 53.142 1 0.8 0.000 0.000 164.718 .000 1,290.711 5,118.267 3,950.550 12-2023 53.142 1 0.8 0.000 0.000 132.379 .000 1,026.875 6,145.142 4,620.554 12-2024 53.142 1 0.8 0.000 0.000 111.668 .000 857.897 7,003.039 5,129.241 12-2025 53.142 1 0.8 0.000 0.000 96.525 .000 734.354 7,737.393 5,524.985 12-2026 53.142 1 0.8 0.000 0.000 85.458 .000 644.064 8,381.457 5,840.493 12-2027 53.142 1 0.8 0.000 0.000 76.848 .000 573.822 8,955.279 6,096.026 12-2028 53.142 1 0.8 0.000 0.000 70.126 .000 518.982 9,474.261 6,306.097 12-2029 53.142 1 0.8 0.000 0.000 64.200 .000 470.633 9,944.894 6,479.259 12-2030 53.142 1 0.8 0.000 0.000 59.067 .000 428.757 10,373.651 6,622.682 12-2031 53.142 1 0.8 0.000 0.000 54.345 .000 390.230 10,763.881 6,741.359 12-2032 53.142 1 0.8 0.000 0.000 50.132 .000 355.85511,119.737 6,839.739 12-2033 53.142 1 0.8 0.000 0.000 45.992 .000 322.085 11,441.822 6,920.683 12-2034 53.142 1 0.8 0.000 0.000 42.315 .000 292.087 11,733.909 6,987.419 12-2035 53.142 1 0.8 0.000 0.000 38.932 .000 264.487 11,998.396 7,042.359 12-2036 53.142 1 0.8 0.000 0.000 35.914 .000 239.861 12,238.257 7,087.653 12-2037 53.142 1 0.8 0.000 0.000 32.949 .000 215.668 12,453.925 7,124.673 S Tot 989.279 0.000 0.000 2,237.176 4,808.793 12,453.925 12,453.925 7,124.673 After 1,007.279 0.000 0.000 301.111 .000 1,449.333 13,903.258 7,276.482 Total 1,996.557 0.000 0.000 2,538.287 4,808.793 13,903.258 13,903.258 7,276.482 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 9,632.391 Oil Rate 29,352. 134. bbls/mo 96.3% 1.20 0.0% 2,244. 5,799. $/w/mo Expense 76.3541 76.3541 8.00 8,078.269 Gas Rate 133,258. 610. Mcf/mo 0.0% 0.00 0.0%10.00 7,276.482 GOR 4,540. 4,540. scf/bbl Revenue 12.00 6,607.316 NGL Rate 4,087. 49. bbls/mo Oil 57.2656 57.2656 NGL Yield 30.7 81.3 bbl/MMcf Gas 57.2656 57.2656 15.00 5,786.956 Gas Shrinkage 72.8 26.0 % ______________________________ ______________________ 20.00 4,753.763 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.3 % Start Date: 05/2019 8 Months in year ‘19 37.622 Year Life (12/2056) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 502 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 20 Figure 21 LILIS ENERGY, INC. -- OX PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________34.99 Year Life (12/2053) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 7,065. 96.3 1.20 8.0 107. Initial Final Oil - mbbls 0.0 290.7 290.7 57.265 NI 166.461 9,603.599 806.065 2,839.016 4,316.217 669.857Gas - mcf/mo 76,869. 0.0 0.00 8.0 1,169. 10,800. 10,800. 6 Gas - mmcf 0.0 3,162.6 3,162.6 76.354 WI 1,340.211 2,492.792 360.760 6,108.331 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : 3RD BONE SPRINGS OX PUD 1 (1.5 3RD BS) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 610 100. 1,000. Table 21 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- OX PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 41.7 453.3 37.1 23.860 192.103 21.262 57.693 1.860 15.734 12-2023 50.2 546.0 44.7 28.738 231.378 25.609 57.693 1.860 15.734 12-2024 28.5 310.5 25.4 16.343 131.579 14.563 57.693 1.860 15.734 12-2025 20.5 223.0 18.3 11.737 94.496 10.459 57.693 1.860 15.734 12-2026 16.2 176.6 14.5 9.294 74.824 8.282 57.693 1.860 15.734 12-2027 13.5 147.2 12.1 7.749 62.389 6.905 57.693 1.860 15.734 12-2028 11.7 127.2 10.4 6.694 53.892 5.965 57.693 1.860 15.734 12-2029 10.3 111.8 9.2 5.883 47.363 5.242 57.693 1.860 15.734 12-2030 9.2 100.2 8.2 5.272 42.450 4.698 57.693 1.860 15.734 12-2031 8.4 90.9 7.4 4.786 38.535 4.265 57.693 1.860 15.734 12-2032 7.7 83.6 6.8 4.399 35.416 3.92057.693 1.860 15.734 12-2033 7.0 76.7 6.3 4.035 32.490 3.596 57.693 1.860 15.734 12-2034 6.5 70.5 5.8 3.713 29.892 3.309 57.693 1.860 15.734 12-2035 6.0 64.9 5.3 3.416 27.502 3.044 57.693 1.860 15.734 12-2036 5.5 59.9 4.9 3.151 25.370 2.808 57.693 1.860 15.734 12-2037 5.0 54.9 4.5 2.891 23.275 2.576 57.693 1.860 15.734 S Tot 247.9 2,697.1 220.9 141.961 1,142.954 126.505 57.693 1.860 15.734 After 42.8 465.5 38.1 24.500 197.257 21.833 57.693 1.860 15.734 Total 290.7 3,162.6 259.0 166.461 1,340.211 148.337 57.693 1.860 15.734 Cum .0 .0 .0 Ult 290.7 3,162.6 259.0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 1,376.562 357.312 334.551 0.000 0.000 2,068.425 115.540 51.711 2.699 12-2023 1,657.994 430.363 402.948 0.000 0.000 2,491.305 139.162 62.283 3.043 12-2024 942.861 244.737 229.147 0.000 0.000 1,416.745 79.138 35.419 3.523 12-2025 677.132 175.762 164.566 0.000 0.000 1,017.461 56.834 25.437 3.960 12-2026 536.170 139.173130.307 0.000 0.000 805.650 45.003 20.141 4.368 12-2027 447.061 116.043 108.651 0.000 0.000 671.755 37.523 16.794 4.758 12-2028 386.175 100.239 93.854 0.000 0.000 580.268 32.413 14.507 5.128 12-2029 339.394 88.096 82.484 0.000 0.000 509.975 28.487 12.749 5.503 12-2030 304.184 78.956 73.927 0.000 0.000 457.067 25.531 11.427 5.861 12-2031 276.128 71.674 67.108 0.000 0.000 414.911 23.176 10.373 6.211 12-2032 253.782 65.874 61.678 0.000 0.000 381.333 21.301 9.533 6.546 12-2033 232.812 60.431 56.581 0.000 0.000 349.823 19.541 8.746 6.918 12-2034 214.199 55.599 52.058 0.000 0.000 321.856 17.979 8.046 7.310 12-2035 197.074 51.154 47.896 0.000 0.000 296.124 16.541 7.403 7.736 12-2036 181.795 47.188 44.182 0.000 0.000 273.166 15.259 6.829 8.184 12-2037 166.785 43.292 40.534 0.000 0.000 250.611 13.999 6.265 8.703 S Tot 8,190.108 2,125.894 1,990.473 0.000 0.000 12,306.475 687.426 307.662 4.381 After 1,413.491 366.898 343.526 0.000 0.000 2,123.915 118.640 53.098 14.285 Total 9,603.599 2,492.792 2,333.999 0.000 0.000 14,430.390 806.065 360.760 5.839 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS DeductionsInvestment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 20.143 1 0.8 0.000 0.000 167.976 6,108.331 -4,395.275 -4,395.275 -3,200.381 12-2023 53.142 1 0.8 0.000 0.000 202.318 .000 2,034.401 -2,360.875 -1,866.745 12-2024 53.142 1 0.8 0.000 0.000 115.053 .000 1,133.993 -1,226.882 -1,193.015 12-2025 53.142 1 0.8 0.000 0.000 82.628 .000 799.420 -427.462 -761.715 12-2026 53.142 1 0.8 0.000 0.000 65.426 .000 621.937 194.475 -456.813 12-2027 53.142 1 0.8 0.000 0.000 54.553 .000 509.742 704.218 -229.690 12-2028 53.142 1 0.8 0.000 0.000 47.123 .000 433.082 1,137.300 -54.313 12-2029 53.142 1 0.8 0.000 0.000 41.415 .000 374.181 1,511.482 83.404 12-2030 53.142 1 0.8 0.000 0.000 37.118 .000 329.848 1,841.330 193.763 12-2031 53.142 1 0.8 0.000 0.000 33.695 .000 294.524 2,135.854 283.342 12-2032 53.142 1 0.8 0.000 0.000 30.968 .000 266.389 2,402.243 356.991 12-2033 53.142 1 0.8 0.000 0.000 28.409 .000 239.986 2,642.229 417.303 12-2034 53.142 1 0.8 0.000 0.000 26.138 .000 216.551 2,858.780 466.782 12-2035 53.142 1 0.8 0.000 0.000 24.048 .000 194.989 3,053.769507.287 12-2036 53.142 1 0.8 0.000 0.000 22.184 .000 175.752 3,229.521 540.477 12-2037 53.142 1 0.8 0.000 0.000 20.352 .000 156.852 3,386.373 567.402 S Tot 817.280 0.000 0.000 999.403 6,108.331 3,386.373 3,386.373 567.402 After 849.851 0.000 0.000 172.482 .000 929.844 4,316.217 669.857 Total 1,667.131 0.000 0.000 1,171.885 6,108.331 4,316.217 4,316.217 669.857 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 1,848.142 Oil Rate 13,839. 106. bbls/mo 96.3% 1.20 0.0% 3,179. 5,799. $/w/mo Expense 76.3541 76.3541 8.00 1,046.989 Gas Rate 150,574. 1,157. Mcf/mo 0.0% 0.00 0.0% 10.00 669.857 GOR 10,800. 10,800. scf/bbl Revenue 12.00 380.049 NGL Rate 6,412. 94. bbls/mo Oil 57.2656 57.2656 NGL Yield 42.6 81.5 bbl/MMcf Gas 57.2656 57.2656 15.00 63.004 Gas Shrinkage 62.2 25.3 % ____________________________________________________ 20.00 -261.331 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.1 % Start Date: 08/2022 5 Months in year ‘22 31.409 Year Life (12/2053) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 610 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 21 Figure 22 LILIS ENERGY, INC. -- OX PUD 2 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________39.59 Year Life (08/2058) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,674. 96.3 1.20 8.0 144. Initial Final Oil - mbbls 0.0 614.9 614.9 57.265 NI 352.117 20,314.619 1,153.262 4,421.265 9,014.862 2,367.225Gas - mcf/mo 44,902. 0.0 0.00 8.0 441. 3,060. 3,060. 6 Gas - mmcf 0.0 1,881.5 1,881.5 76.354 WI 797.334 1,483.041 579.656 8,017.185 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A OX PUD 2 (1.5 WC A) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 611 100. 100. Table 22 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- OX PUD 2 (1.5 WC A) PHANTOM (WOLFCAMP A) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 156.3 478.4 39.2 89.533 202.739 22.440 57.693 1.860 15.734 12-2023 71.5 218.9 17.9 40.969 92.771 10.268 57.693 1.860 15.734 12-2024 48.2 147.6 12.1 27.621 62.546 6.923 57.693 1.860 15.734 12-2025 36.9 112.8 9.2 21.118 47.820 5.293 57.693 1.860 15.734 12-2026 30.2 92.4 7.6 17.285 39.140 4.332 57.693 1.860 15.734 12-2027 25.7 78.6 6.4 14.713 33.315 3.687 57.693 1.860 15.734 12-2028 22.5 68.9 5.6 12.890 29.187 3.230 57.693 1.860 15.734 12-2029 20.0 61.2 5.0 11.445 25.916 2.868 57.693 1.860 15.734 12-2030 18.1 55.2 4.5 10.338 23.409 2.591 57.693 1.860 15.734 12-2031 16.5 50.5 4.1 9.442 21.381 2.366 57.693 1.860 15.734 12-2032 15.2 46.5 3.8 8.704 19.709 2.181 57.693 1.86015.734 12-2033 13.9 42.7 3.5 7.985 18.082 2.001 57.693 1.860 15.734 12-2034 12.8 39.3 3.2 7.347 16.636 1.841 57.693 1.860 15.734 12-2035 11.8 36.1 3.0 6.759 15.306 1.694 57.693 1.860 15.734 12-2036 10.9 33.3 2.7 6.235 14.119 1.563 57.693 1.860 15.734 12-2037 10.0 30.6 2.5 5.721 12.954 1.434 57.693 1.860 15.734 S Tot 520.6 1,592.9 130.5 298.106 675.031 74.714 57.693 1.860 15.734 After 94.3 288.6 23.6 54.011 122.303 13.537 57.693 1.860 15.734 Total 614.9 1,881.5 154.1 352.117 797.334 88.251 57.693 1.860 15.734 Cum .0 .0 .0 Ult 614.9 1,881.5 154.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 5,165.423 377.095 353.073 0.000 0.000 5,895.591 293.241 147.390 4.941 12-2023 2,363.635 172.554 161.562 0.000 0.000 2,697.751 134.184 67.444 5.413 12-2024 1,593.556 116.335 108.925 0.000 0.000 1,818.817 90.466 45.470 5.820 12-2025 1,218.378 88.946 83.280 0.000 0.000 1,390.604 69.167 34.765 6.204 12-2026 997.226 72.801 68.164 0.0000.000 1,138.190 56.613 28.455 6.567 12-2027 848.814 61.967 58.019 0.000 0.000 968.800 48.187 24.220 6.916 12-2028 743.635 54.288 50.830 0.000 0.000 848.753 42.216 21.219 7.247 12-2029 660.296 48.204 45.133 0.000 0.000 753.634 37.485 18.841 7.585 12-2030 596.425 43.541 40.768 0.000 0.000 680.734 33.859 17.018 7.908 12-2031 544.738 39.768 37.235 0.000 0.000 621.740 30.925 15.544 8.225 12-2032 502.149 36.659 34.324 0.000 0.000 573.131 28.507 14.328 8.534 12-2033 460.688 33.632 31.490 0.000 0.000 525.809 26.153 13.145 8.891 12-2034 423.857 30.943 28.972 0.000 0.000 483.772 24.062 12.094 9.267 12-2035 389.971 28.469 26.656 0.000 0.000 445.096 22.139 11.127 9.675 12-2036 359.736 26.262 24.589 0.000 0.000 410.587 20.422 10.265 10.104 12-2037 330.034 24.094 22.559 0.000 0.000 376.686 18.736 9.417 10.602 S Tot 17,198.561 1,255.557 1,175.577 0.000 0.000 19,629.696 976.364 490.742 6.418 After 3,116.058 227.484 212.993 0.000 0.000 3,556.535 176.899 88.913 17.721 Total 20,314.619 1,483.041 1,388.570 0.000 0.000 23,186.231 1,153.262 579.656 8.152 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS DeductionsInvestment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 8,017.185 -8,017.185 -8,017.185 -6,095.770 12-2022 51.142 1 0.8 0.000 0.000 630.314 .000 4,773.503 -3,243.682 -2,648.762 12-2023 53.142 1 0.8 0.000 0.000 288.424 .000 2,154.557 -1,089.125 -1,239.552 12-2024 53.142 1 0.8 0.000 0.000 194.455 .000 1,435.283 346.158 -387.450 12-2025 53.142 1 0.8 0.000 0.000 148.673 .000 1,084.856 1,431.014 197.624 12-2026 53.142 1 0.8 0.000 0.000 121.687 .000 878.293 2,309.307 628.098 12-2027 53.142 1 0.8 0.000 0.000 103.577 .000 739.673 3,048.981 957.613 12-2028 53.142 1 0.8 0.000 0.000 90.742 .000 641.433 3,690.413 1,217.324 12-2029 53.142 1 0.8 0.000 0.000 80.573 .000 563.592 4,254.006 1,424.732 12-2030 53.142 1 0.8 0.000 0.000 72.779 .000 503.935 4,757.941 1,593.320 12-2031 53.142 1 0.8 0.000 0.000 66.472 .000 455.658 5,213.598 1,731.897 12-2032 53.142 1 0.8 0.000 0.000 61.275 .000 415.879 5,629.477 1,846.869 12-2033 53.142 1 0.8 0.000 0.000 56.216 .000 377.153 6,006.629 1,941.650 12-2034 53.142 1 0.8 0.000 0.000 51.721 .000 342.752 6,349.381 2,019.961 12-2035 53.142 1 0.8 0.0000.000 47.586 .000 311.101 6,660.482 2,084.584 12-2036 53.142 1 0.8 0.000 0.000 43.897 .000 282.861 6,943.343 2,137.997 12-2037 53.142 1 0.8 0.000 0.000 40.273 .000 255.118 7,198.461 2,181.788 S Tot 848.280 0.000 0.000 2,098.665 8,017.185 7,198.461 7,198.461 2,181.788 After 1,094.082 0.000 0.000 380.239 .000 1,816.402 9,014.862 2,367.225 Total 1,942.361 0.000 0.000 2,478.904 8,017.185 9,014.862 9,014.862 2,367.225 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 4,550.660 Oil Rate 28,743. 143. bbls/mo 96.3% 1.20 0.0% 3,179. 5,799. $/w/mo Expense 76.3541 76.3541 8.00 3,077.526 Gas Rate 87,955. 438. Mcf/mo 0.0% 0.00 0.0% 10.00 2,367.225 GOR 3,060. 3,060. scf/bbl Revenue 12.00 1,807.469 NGL Rate 3,745. 36. bbls/mo Oil 57.2656 57.2656 NGL Yield 42.6 83.8 bbl/MMcf Gas 57.2656 57.2656 15.00 1,171.253 Gas Shrinkage 62.2 26.0 %______________________________ ______________________ 20.00 468.115 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.8 % Start Date: 01/2022 12 Months in year ‘22 36.595 Year Life (08/2058) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 611 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 22 Figure 23 LILIS ENERGY, INC. -- TBD 17-20 PUD 1 (2.0 WC A) TBD (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________40.87 Year Life (11/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 16,304. 96.3 1.20 8.0 143. Initial Final Oil - mbbls 0.0 685.7 685.7 79.375 NI 544.254 31,399.524 2,587.860 6,259.789 11,926.750 2,328.555Gas - mcf/mo 51,195. 0.0 0.00 8.0 450. 3,140. 3,140. 6 Gas - mmcf 0.0 2,153.0 2,153.0 100.000 WI 1,264.628 2,352.208 1,797.705 13,382.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A TBD 17-20 PUD 1 (2.0 WC A) TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 614 100. 100. Table 23 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 17-20 PUD 1 (2.0 WC A) TBD (WOLFCAMP A) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 16.6 52.1 4.3 13.181 30.627 3.390 57.693 1.860 15.734 12-2022 165.7 520.2 42.6 131.498 305.548 33.819 57.693 1.860 15.734 12-2023 76.2 239.2 19.6 60.475 140.521 15.553 57.693 1.860 15.734 12-2024 52.2 163.9 13.4 41.440 96.290 10.658 57.693 1.860 15.734 12-2025 40.2 126.2 10.3 31.911 74.149 8.207 57.693 1.860 15.734 12-2026 33.0 103.7 8.5 26.225 60.937 6.745 57.693 1.860 15.734 12-2027 28.2 88.5 7.3 22.381 52.004 5.756 57.693 1.860 15.734 12-2028 24.7 77.7 6.4 19.644 45.644 5.052 57.693 1.860 15.734 12-2029 22.0 69.1 5.7 17.466 40.584 4.492 57.693 1.860 15.734 12-2030 19.9 62.5 5.1 15.793 36.697 4.062 57.693 1.860 15.734 12-2031 18.2 57.1 4.7 14.436 33.544 3.713 57.693 1.860 15.734 12-2032 16.8 52.7 4.313.310 30.928 3.423 57.693 1.860 15.734 12-2033 15.4 48.3 4.0 12.211 28.374 3.140 57.693 1.860 15.734 12-2034 14.2 44.4 3.6 11.235 26.106 2.889 57.693 1.860 15.734 12-2035 13.0 40.9 3.3 10.337 24.018 2.658 57.693 1.860 15.734 12-2036 12.0 37.7 3.1 9.535 22.156 2.452 57.693 1.860 15.734 12-2037 11.0 34.6 2.8 8.748 20.327 2.250 57.693 1.860 15.734 S Tot 579.3 1,819.0 149.0 459.826 1,068.452 118.259 57.693 1.860 15.734 After 106.4 334.0 27.4 84.428 196.176 21.713 57.693 1.860 15.734 Total 685.7 2,153.0 176.3 544.254 1,264.628 139.972 57.693 1.860 15.734 Cum .0 .0 .0 Ult 685.7 2,153.0 176.3 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 760.431 56.966 53.337 0.000 0.000 870.734 62.673 43.537 4.435 12-2022 7,586.465 568.319 532.117 0.000 0.000 8,686.901 625.255 434.345 4.620 12-2023 3,488.997 261.369 244.719 0.000 0.000 3,995.084 287.553 199.754 5.020 12-2024 2,390.778 179.098 167.690 0.000 0.000 2,737.566 197.041 136.878 5.360 12-2025 1,841.044 137.917 129.131 0.0000.000 2,108.091 151.734 105.405 5.682 12-2026 1,513.000 113.342 106.122 0.000 0.000 1,732.464 124.697 86.623 5.987 12-2027 1,291.215 96.728 90.566 0.000 0.000 1,478.509 106.418 73.925 6.280 12-2028 1,133.301 84.898 79.490 0.000 0.000 1,297.690 93.403 64.884 6.559 12-2029 1,007.665 75.486 70.678 0.000 0.000 1,153.830 83.049 57.691 6.843 12-2030 911.147 68.256 63.908 0.000 0.000 1,043.311 75.094 52.166 7.114 12-2031 832.858 62.391 58.417 0.000 0.000 953.667 68.642 47.683 7.381 12-2032 767.903 57.525 53.861 0.000 0.000 879.290 63.288 43.964 7.643 12-2033 704.500 52.776 49.414 0.000 0.000 806.689 58.063 40.334 7.946 12-2034 648.177 48.556 45.463 0.000 0.000 742.196 53.421 37.110 8.265 12-2035 596.357 44.674 41.829 0.000 0.000 682.860 49.150 34.143 8.611 12-2036 550.121 41.211 38.586 0.000 0.000 629.917 45.339 31.496 8.975 12-2037 504.699 37.808 35.400 0.000 0.000 577.906 41.596 28.895 9.398 S Tot 26,528.657 1,987.321 1,860.727 0.000 0.000 30,376.705 2,186.417 1,518.835 5.842 After 4,870.867 364.887 341.644 0.000 0.000 5,577.399 401.443 278.870 15.882 Total 31,399.524 2,352.208 2,202.371 0.000 0.000 35,954.103 2,587.860 1,797.705 7.399 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rdParty Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 3.181 1 1.0 0.000 0.000 87.678 13,382.000 -12,708.334 -12,708.334 -9,750.323 12-2022 69.600 1 1.0 0.000 0.000 874.718 .000 6,682.983 -6,025.351 -4,916.594 12-2023 69.600 1 1.0 0.000 0.000 402.281 .000 3,035.896 -2,989.455 -2,931.339 12-2024 69.600 1 1.0 0.000 0.000 275.656 .000 2,058.390 -931.064 -1,709.413 12-2025 69.600 1 1.0 0.000 0.000 212.272 .000 1,569.081 638.017 -863.233 12-2026 69.600 1 1.0 0.000 0.000 174.449 .000 1,277.095 1,915.112 -237.317 12-2027 69.600 1 1.0 0.000 0.000 148.877 .000 1,079.689 2,994.801 243.658 12-2028 69.600 1 1.0 0.000 0.000 130.669 .000 939.132 3,933.933 623.898 12-2029 69.600 1 1.0 0.000 0.000 116.184 .000 827.306 4,761.239 928.350 12-2030 69.600 1 1.0 0.000 0.000 105.055 .000 741.396 5,502.635 1,176.375 12-2031 69.600 1 1.0 0.000 0.000 96.028 .000 671.713 6,174.348 1,380.657 12-2032 69.600 1 1.0 0.000 0.000 88.539 .000 613.898 6,788.246 1,550.372 12-2033 69.600 1 1.0 0.000 0.000 81.229 .000 557.463 7,345.7091,690.466 12-2034 69.600 1 1.0 0.000 0.000 74.735 .000 507.331 7,853.040 1,806.379 12-2035 69.600 1 1.0 0.000 0.000 68.760 .000 461.207 8,314.246 1,902.181 12-2036 69.600 1 1.0 0.000 0.000 63.429 .000 420.053 8,734.299 1,981.498 12-2037 69.600 1 1.0 0.000 0.000 58.192 .000 379.624 9,113.923 2,046.660 S Tot 1,116.781 0.000 0.000 3,058.749 13,382.000 9,113.923 9,113.923 2,046.660 After 1,522.649 0.000 0.000 561.610 .000 2,812.827 11,926.750 2,328.555 Total 2,639.430 0.000 0.000 3,620.359 13,382.000 11,926.750 11,926.750 2,328.555 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 5,421.036 Oil Rate 31,937. 142. bbls/mo 96.3% 1.20 0.0% 3,180. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 3,324.737 Gas Rate 100,283. 446. Mcf/mo 0.0% 0.00 0.0% 10.00 2,328.555 GOR 3,140. 3,140. scf/bbl Revenue 12.00 1,552.842 NGL Rate 4,270. 37.bbls/mo Oil 79.3750 79.3750 NGL Yield 42.6 84.0 bbl/MMcf Gas 79.3750 79.3750 15.00 685.010 Gas Shrinkage 62.2 25.5 % ______________________________ ______________________ 20.00 -246.962 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 38.3 % Start Date: 12/2021 1 Months in year ‘21 37.959 Year Life (11/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 614 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 23 Figure 24 LILIS ENERGY, INC. -- TBD 17-20 PUD 2 (2.0 WC B) TBD (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________40.71 Year Life (09/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 16,756. 96.3 1.20 8.1 135. Initial Final Oil - mbbls 0.0 744.1 744.1 79.375 NI 590.595 34,073.098 2,983.175 6,683.621 16,109.348 5,106.275Gas - mcf/mo 76,070. 0.0 0.00 8.1 612. 4,540. 4,540. 6 Gas - mmcf 0.0 3,378.0 3,378.0 100.000 WI 1,984.164 3,690.545 2,060.955 13,382.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B TBD 17-20 PUD 2 (2.0 WC B) TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 615 100. 1,000. Table 24 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 17-20 PUD 2 (2.0 WC B) TBD (WOLFCAMP B) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 178.3 809.5 66.3 141.531 475.489 52.628 57.693 1.860 15.734 12-2021 89.7 407.4 33.4 71.226 239.292 26.485 57.693 1.860 15.734 12-2022 59.3 269.4 22.1 47.092 158.211 17.511 57.693 1.860 15.734 12-2023 45.2 205.0 16.8 35.849 120.438 13.330 57.693 1.860 15.734 12-2024 36.9 167.5 13.7 29.291 98.406 10.892 57.693 1.860 15.734 12-2025 31.2 141.8 11.6 24.792 83.291 9.219 57.693 1.860 15.734 12-2026 27.2 123.7 10.1 21.624 72.650 8.041 57.693 1.860 15.734 12-2027 24.2 110.0 9.0 19.230 64.606 7.151 57.693 1.860 15.734 12-2028 21.9 99.5 8.1 17.397 58.446 6.469 57.693 1.860 15.734 12-2029 19.9 90.5 7.4 15.831 53.185 5.887 57.693 1.860 15.734 12-2030 18.3 83.2 6.8 14.551 48.886 5.411 57.693 1.860 15.734 12-2031 16.9 76.6 6.3 13.388 44.978 4.978 57.6931.860 15.734 12-2032 15.6 70.6 5.8 12.350 41.491 4.592 57.693 1.860 15.734 12-2033 14.3 64.8 5.3 11.330 38.065 4.213 57.693 1.860 15.734 12-2034 13.1 59.6 4.9 10.424 35.022 3.876 57.693 1.860 15.734 12-2035 12.1 54.9 4.5 9.591 32.222 3.566 57.693 1.860 15.734 12-2036 11.1 50.6 4.1 8.847 29.724 3.290 57.693 1.860 15.734 12-2037 10.2 46.4 3.8 8.117 27.270 3.018 57.693 1.860 15.734 S Tot 645.6 2,931.1 240.1 512.463 1,721.671 190.558 57.693 1.860 15.734 After 98.4 446.9 36.6 78.132 262.493 29.053 57.693 1.860 15.734 Total 744.1 3,378.0 276.7 590.595 1,984.164 219.611 57.693 1.860 15.734 Cum .0 .0 .0 Ult 744.1 3,378.0 276.7 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 8,165.346 884.410 828.072 0.000 0.000 9,877.828 714.894 493.891 3.931 12-2021 4,109.246 445.083 416.731 0.000 0.000 4,971.060 359.774 248.553 4.235 12-2022 2,716.882 294.272 275.527 0.000 0.000 3,286.682 237.869 164.334 4.513 12-2023 2,068.221 224.014 209.744 0.000 0.000 2,501.980 181.077 125.099 4.770 12-2024 1,689.883 183.036 171.376 0.000 0.000 2,044.294147.953 102.215 5.011 12-2025 1,430.317 154.921 145.053 0.000 0.000 1,730.291 125.227 86.515 5.250 12-2026 1,247.576 135.128 126.520 0.000 0.000 1,509.225 109.228 75.461 5.479 12-2027 1,109.448 120.167 112.512 0.000 0.000 1,342.127 97.135 67.106 5.701 12-2028 1,003.673 108.710 101.785 0.000 0.000 1,214.168 87.874 60.708 5.913 12-2029 913.323 98.924 92.623 0.000 0.000 1,104.870 79.963 55.244 6.132 12-2030 839.502 90.929 85.136 0.000 0.000 1,015.567 73.500 50.778 6.347 12-2031 772.386 83.659 78.330 0.000 0.000 934.375 67.624 46.719 6.578 12-2032 712.502 77.173 72.257 0.000 0.000 861.932 62.381 43.097 6.820 12-2033 653.673 70.801 66.291 0.000 0.000 790.764 57.230 39.538 7.102 12-2034 601.413 65.141 60.991 0.000 0.000 727.545 52.655 36.377 7.398 12-2035 553.332 59.933 56.115 0.000 0.000 669.379 48.445 33.469 7.720 12-2036 510.431 55.286 51.764 0.000 0.000 617.482 44.689 30.874 8.059 12-2037 468.286 50.721 47.490 0.000 0.000 566.498 41.000 28.325 8.452 S Tot 29,565.439 3,202.309 2,998.319 0.000 0.000 35,766.067 2,588.519 1,788.303 5.040 After 4,507.660 488.236 457.135 0.000 0.000 5,453.031 394.656 272.652 14.425 Total 34,073.098 3,690.545 3,455.455 0.000 0.000 41,219.098 2,983.1752,060.955 6.281 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 13,382.000 -13,382.000 -13,382.000 -12,213.962 12-2020 61.000 1 1.0 0.000 0.000 941.463 .000 7,666.580 -5,715.420 -5,550.859 12-2021 69.600 1 1.0 0.000 0.000 473.795 .000 3,819.338 -1,896.082 -2,528.012 12-2022 69.600 1 1.0 0.000 0.000 313.256 .000 2,501.623 605.540 -730.863 12-2023 69.600 1 1.0 0.000 0.000 238.465 .000 1,887.738 2,493.278 501.200 12-2024 69.600 1 1.0 0.000 0.000 194.843 .000 1,529.684 4,022.962 1,408.394 12-2025 69.600 1 1.0 0.000 0.000 164.915 .000 1,284.034 5,306.995 2,100.448 12-2026 69.600 1 1.0 0.000 0.000 143.845 .000 1,111.090 6,418.085 2,644.789 12-2027 69.600 1 1.0 0.000 0.000 127.919 .000 980.367 7,398.453 3,081.394 12-2028 69.600 1 1.0 0.000 0.000 115.723 .000 880.263 8,278.716 3,437.721 12-2029 69.600 1 1.0 0.000 0.000 105.306 .000 794.757 9,073.473 3,730.144 12-2030 69.600 1 1.0 0.000 0.000 96.794 .000 724.894 9,798.367 3,972.625 12-2031 69.600 1 1.0 0.000 0.000 89.056 .000 661.376 10,459.743 4,173.761 12-2032 69.6001 1.0 0.000 0.000 82.151 .000 604.703 11,064.446 4,340.934 12-2033 69.600 1 1.0 0.000 0.000 75.368 .000 549.027 11,613.473 4,478.907 12-2034 69.600 1 1.0 0.000 0.000 69.343 .000 499.570 12,113.043 4,593.047 12-2035 69.600 1 1.0 0.000 0.000 63.799 .000 454.066 12,567.109 4,687.366 12-2036 69.600 1 1.0 0.000 0.000 58.853 .000 413.466 12,980.575 4,765.440 12-2037 69.600 1 1.0 0.000 0.000 53.993 .000 373.580 13,354.155 4,829.565 S Tot 1,244.200 0.000 0.000 3,408.889 13,382.000 13,354.155 13,354.155 4,829.565 After 1,510.799 0.000 0.000 519.732 .000 2,755.193 16,109.348 5,106.275 Total 2,754.999 0.000 0.000 3,928.622 13,382.000 16,109.348 16,109.348 5,106.275 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 8,891.395 Oil Rate 34,522. 133. bbls/mo 96.3% 1.20 0.0% 2,999. 5,800. $/w/mo Expense 100.0000 100.0000 8.006,373.631 Gas Rate 156,734. 607. Mcf/mo 0.0% 0.00 0.0% 10.00 5,106.275 GOR 4,540. 4,540. scf/bbl Revenue 12.00 4,068.963 NGL Rate 5,936. 51. bbls/mo Oil 79.3750 79.3750 NGL Yield 37.9 84.1 bbl/MMcf Gas 79.3750 79.3750 15.00 2,828.192 Gas Shrinkage 64.1 25.5 % ______________________________ ______________________ 20.00 1,328.104 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 38.0 % Start Date: 02/2020 11 Months in year ‘20 39.632 Year Life (09/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 615 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 24 Figure 25 LILIS ENERGY, INC. -- TBD 17-20 PUD 3 (2.0 WC B) TBD (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________40.87 Year Life (11/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 17,208. 96.3 1.20 8.0 135. Initial Final Oil - mbbls 0.0 744.1 744.1 79.375 NI 590.595 34,073.098 2,983.175 6,684.155 16,108.814 5,027.065Gas - mcf/mo 78,125. 0.0 0.00 8.0 612. 4,540. 4,540. 6 Gas - mmcf 0.0 3,378.0 3,378.0 100.000 WI 1,984.164 3,690.545 2,060.955 13,382.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B TBD 17-20 PUD 3 (2.0 WC B) TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 616 100. 1,000. Table 25 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 17-20 PUD 3 (2.0 WC B) TBD (WOLFCAMP B) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 157.5 715.0 58.6 125.012 419.990 46.485 57.693 1.860 15.734 12-2021 98.6 447.8 36.7 78.297 263.046 29.114 57.693 1.860 15.734 12-2022 62.7 284.6 23.3 49.757 167.163 18.502 57.693 1.860 15.734 12-2023 47.0 213.2 17.5 37.277 125.236 13.861 57.693 1.860 15.734 12-2024 38.0 172.7 14.1 30.193 101.436 11.227 57.693 1.860 15.734 12-2025 32.0 145.4 11.9 25.414 85.382 9.450 57.693 1.860 15.734 12-2026 27.8 126.3 10.3 22.083 74.190 8.211 57.693 1.860 15.734 12-2027 24.7 112.0 9.2 19.583 65.792 7.282 57.693 1.860 15.734 12-2028 22.3 101.1 8.3 17.678 59.392 6.574 57.693 1.860 15.734 12-2029 20.2 91.9 7.5 16.060 53.955 5.972 57.693 1.860 15.734 12-2030 18.6 84.4 6.9 14.752 49.561 5.485 57.693 1.860 15.734 12-2031 17.1 77.6 6.4 13.573 45.598 5.04757.693 1.860 15.734 12-2032 15.8 71.6 5.9 12.520 42.063 4.656 57.693 1.860 15.734 12-2033 14.5 65.7 5.4 11.486 38.590 4.271 57.693 1.860 15.734 12-2034 13.3 60.4 5.0 10.568 35.505 3.930 57.693 1.860 15.734 12-2035 12.2 55.6 4.6 9.723 32.666 3.616 57.693 1.860 15.734 12-2036 11.3 51.3 4.2 8.969 30.134 3.335 57.693 1.860 15.734 12-2037 10.4 47.1 3.9 8.229 27.646 3.060 57.693 1.860 15.734 S Tot 644.0 2,923.8 239.5 511.175 1,717.343 190.079 57.693 1.860 15.734 After 100.1 454.3 37.2 79.420 266.821 29.532 57.693 1.860 15.734 Total 744.1 3,378.0 276.7 590.595 1,984.164 219.611 57.693 1.860 15.734 Cum .0 .0 .0 Ult 744.1 3,378.0 276.7 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 7,212.281 781.181 731.419 0.000 0.000 8,724.881 631.451 436.244 3.912 12-2021 4,517.159 489.265 458.099 0.000 0.000 5,464.522 395.487 273.226 4.186 12-2022 2,870.614 310.924 291.118 0.000 0.000 3,472.655 251.329 173.633 4.469 12-2023 2,150.622 232.939 218.101 0.000 0.000 2,601.663 188.292 130.083 4.729 12-2024 1,741.914 188.671 176.653 0.000 0.0002,107.238 152.508 105.362 4.972 12-2025 1,466.223 158.810 148.694 0.000 0.000 1,773.728 128.371 88.686 5.212 12-2026 1,274.027 137.993 129.203 0.000 0.000 1,541.223 111.544 77.061 5.442 12-2027 1,129.809 122.373 114.577 0.000 0.000 1,366.759 98.917 68.338 5.665 12-2028 1,019.909 110.469 103.432 0.000 0.000 1,233.810 89.295 61.691 5.877 12-2029 926.536 100.356 93.963 0.000 0.000 1,120.854 81.120 56.043 6.098 12-2030 851.080 92.183 86.311 0.000 0.000 1,029.573 74.514 51.479 6.311 12-2031 783.038 84.813 79.410 0.000 0.000 947.261 68.557 47.363 6.538 12-2032 722.329 78.237 73.253 0.000 0.000 873.819 63.241 43.691 6.778 12-2033 662.688 71.777 67.205 0.000 0.000 801.670 58.020 40.084 7.055 12-2034 609.707 66.039 61.832 0.000 0.000 737.579 53.381 36.879 7.348 12-2035 560.963 60.759 56.889 0.000 0.000 678.611 49.114 33.931 7.665 12-2036 517.471 56.049 52.478 0.000 0.000 625.998 45.306 31.300 7.999 12-2037 474.745 51.421 48.145 0.000 0.000 574.311 41.565 28.716 8.387 S Tot 29,491.115 3,194.259 2,990.782 0.000 0.000 35,676.156 2,582.012 1,783.808 5.031 After 4,581.983 496.286 464.673 0.000 0.000 5,542.942 401.163 277.147 14.335 Total 34,073.098 3,690.545 3,455.455 0.000 0.000 41,219.0982,983.175 2,060.955 6.282 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 49.493 1 1.0 0.000 0.000 831.575 13,382.000 -6,605.882 -6,605.882 -6,194.684 12-2021 69.600 1 1.0 0.000 0.000 520.828 .000 4,205.382 -2,400.501 -2,864.660 12-2022 69.600 1 1.0 0.000 0.000 330.981 .000 2,647.112 246.611 -962.664 12-2023 69.600 1 1.0 0.000 0.000 247.966 .000 1,965.721 2,212.333 320.409 12-2024 69.600 1 1.0 0.000 0.000 200.842 .000 1,578.925 3,791.258 1,256.855 12-2025 69.600 1 1.0 0.000 0.000 169.055 .000 1,318.015 5,109.273 1,967.250 12-2026 69.600 1 1.0 0.000 0.000 146.895 .000 1,136.123 6,245.396 2,523.870 12-2027 69.600 1 1.0 0.000 0.000 130.267 .000 999.637 7,245.033 2,969.065 12-2028 69.600 1 1.0 0.000 0.000 117.595 .000 895.629 8,140.663 3,331.617 12-2029 69.600 1 1.0 0.000 0.000 106.829 .000 807.262 8,947.925 3,628.645 12-2030 69.600 1 1.0 0.000 0.000 98.129 .000 735.851 9,683.776 3,874.791 12-2031 69.600 1 1.0 0.000 0.000 90.284 .000 671.457 10,355.233 4,078.992 12-2032 69.600 1 1.0 0.0000.000 83.284 .000 614.003 10,969.235 4,248.736 12-2033 69.600 1 1.0 0.000 0.000 76.408 .000 557.559 11,526.794 4,388.854 12-2034 69.600 1 1.0 0.000 0.000 70.299 .000 507.419 12,034.214 4,504.787 12-2035 69.600 1 1.0 0.000 0.000 64.679 .000 461.288 12,495.502 4,600.606 12-2036 69.600 1 1.0 0.000 0.000 59.664 .000 420.128 12,915.630 4,679.938 12-2037 69.600 1 1.0 0.000 0.000 54.738 .000 379.692 13,295.322 4,745.112 S Tot 1,232.693 0.000 0.000 3,400.320 13,382.000 13,295.322 13,295.322 4,745.112 After 1,522.839 0.000 0.000 528.302 .000 2,813.491 16,108.814 5,027.065 Total 2,755.533 0.000 0.000 3,928.622 13,382.000 16,108.814 16,108.814 5,027.065 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 8,820.435 Oil Rate 34,522. 133. bbls/mo 96.3% 1.20 0.0% 3,093. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 6,293.651 GasRate 156,734. 607. Mcf/mo 0.0% 0.00 0.0% 10.00 5,027.065 GOR 4,540. 4,540. scf/bbl Revenue 12.00 3,994.044 NGL Rate 6,306. 51. bbls/mo Oil 79.3750 79.3750 NGL Yield 40.2 84.0 bbl/MMcf Gas 79.3750 79.3750 15.00 2,764.147 Gas Shrinkage 63.1 25.7 % ______________________________ ______________________ 20.00 1,289.083 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 38.0 % Start Date: 04/2020 9 Months in year ‘20 39.629 Year Life (11/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 616 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 25 Figure 26 LILIS ENERGY, INC. -- TBD 17-20 PUD 4 (2.0 WC XY) TBD (WOLFCAMP XY) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________38.79 Year Life (10/2057) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 12,465. 96.3 1.20 8.0 132. Initial Final Oil - mbbls 0.0 566.3 566.3 79.375 NI 449.473 25,931.348 2,320.757 5,541.445 9,160.2641,111.873 Gas - mcf/mo 63,199. 0.0 0.00 8.0 668. 5,070. 5,070. 6 Gas - mmcf 0.0 2,871.0 2,871.0 100.000 WI 1,686.332 3,136.578 1,600.235 13,382.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP XY TBD 17-20 PUD 4 (2.0 WC XY) TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 617 100. 1,000. Table 26 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 17-20 PUD 4 (2.0 WC XY) TBD (WOLFCAMP XY) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 136.4 691.7 56.7 108.289 406.277 44.968 57.693 1.860 15.734 12-2022 68.9 349.2 28.6 54.678 205.140 22.705 57.693 1.860 15.734 12-2023 45.5 230.8 18.9 36.129 135.549 15.003 57.693 1.860 15.734 12-2024 34.7 176.1 14.4 27.564 103.413 11.446 57.693 1.860 15.734 12-2025 28.2 143.1 11.7 22.396 84.025 9.300 57.693 1.860 15.734 12-2026 24.0 121.4 9.9 19.011 71.326 7.895 57.693 1.860 15.734 12-2027 20.9 105.9 8.7 16.581 62.210 6.886 57.693 1.860 15.734 12-2028 18.6 94.4 7.7 14.783 55.463 6.139 57.693 1.860 15.734 12-2029 16.8 85.0 7.0 13.300 49.900 5.523 57.693 1.860 15.734 12-2030 15.3 77.5 6.3 12.137 45.537 5.040 57.693 1.860 15.734 12-2031 14.1 71.3 5.8 11.156 41.856 4.633 57.693 1.860 15.734 12-203213.0 65.7 5.4 10.291 38.611 4.274 57.693 1.860 15.734 12-2033 11.9 60.3 4.9 9.442 35.423 3.921 57.693 1.860 15.734 12-2034 10.9 55.5 4.5 8.687 32.591 3.607 57.693 1.860 15.734 12-2035 10.1 51.1 4.2 7.992 29.986 3.319 57.693 1.860 15.734 12-2036 9.3 47.1 3.9 7.373 27.661 3.062 57.693 1.860 15.734 12-2037 8.5 43.2 3.5 6.764 25.377 2.809 57.693 1.860 15.734 S Tot 487.0 2,469.2 202.2 386.574 1,450.347 160.527 57.693 1.860 15.734 After 79.2 401.8 32.9 62.899 235.985 26.119 57.693 1.860 15.734 Total 566.3 2,871.0 235.1 449.473 1,686.332 186.647 57.693 1.860 15.734 Cum .0 .0 .0 Ult 566.3 2,871.0 235.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 6,247.471 755.675 707.538 0.000 0.000 7,710.685 559.125 385.534 3.807 12-2022 3,154.506 381.560 357.254 0.000 0.000 3,893.319 282.316 194.666 4.182 12-2023 2,084.393 252.122 236.062 0.000 0.000 2,572.576 186.545 128.629 4.526 12-2024 1,590.224 192.349 180.096 0.000 0.000 1,962.669 142.319 98.133 4.842 12-2025 1,292.089 156.287 146.3320.000 0.000 1,594.708 115.637 79.735 5.150 12-2026 1,096.813 132.667 124.216 0.000 0.000 1,353.696 98.161 67.685 5.442 12-2027 956.622 115.710 108.339 0.000 0.000 1,180.671 85.614 59.034 5.725 12-2028 852.877 103.161 96.590 0.000 0.000 1,052.628 76.329 52.631 5.994 12-2029 767.331 92.814 86.902 0.000 0.000 947.047 68.673 47.352 6.271 12-2030 700.246 84.700 79.304 0.000 0.000 864.250 62.669 43.213 6.536 12-2031 643.642 77.853 72.894 0.000 0.000 794.388 57.603 39.719 6.802 12-2032 593.740 71.817 67.242 0.000 0.000 732.799 53.137 36.640 7.078 12-2033 544.716 65.887 61.690 0.000 0.000 672.293 48.750 33.615 7.399 12-2034 501.167 60.620 56.758 0.000 0.000 618.545 44.853 30.927 7.737 12-2035 461.100 55.773 52.221 0.000 0.000 569.094 41.267 28.455 8.105 12-2036 425.351 51.449 48.172 0.000 0.000 524.972 38.067 26.249 8.491 12-2037 390.231 47.201 44.194 0.000 0.000 481.626 34.924 24.081 8.939 S Tot 22,302.519 2,697.646 2,525.804 0.000 0.000 27,525.968 1,995.990 1,376.298 5.113 After 3,628.829 438.932 410.972 0.000 0.000 4,478.734 324.766 223.937 15.062 Total 25,931.348 3,136.578 2,936.776 0.000 0.000 32,004.702 2,320.757 1,600.235 6.505 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rdParty Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 13,382.000 -13,382.000 -13,382.000 -11,101.429 12-2021 60.900 1 1.0 0.000 0.000 720.332 .000 5,984.794 -7,397.206 -6,373.207 12-2022 69.600 1 1.0 0.000 0.000 363.714 .000 2,983.023 -4,414.183 -4,226.701 12-2023 69.600 1 1.0 0.000 0.000 240.330 .000 1,947.472 -2,466.711 -2,954.726 12-2024 69.600 1 1.0 0.000 0.000 183.353 .000 1,469.264 -997.447 -2,083.000 12-2025 69.600 1 1.0 0.000 0.000 148.978 .000 1,180.758 183.311 -1,446.433 12-2026 69.600 1 1.0 0.000 0.000 126.462 .000 991.788 1,175.099 -960.445 12-2027 69.600 1 1.0 0.000 0.000 110.298 .000 856.126 2,031.225 -579.115 12-2028 69.600 1 1.0 0.000 0.000 98.336 .000 755.731 2,786.956 -273.162 12-2029 69.600 1 1.0 0.000 0.000 88.473 .000 672.948 3,459.904 -25.534 12-2030 69.600 1 1.0 0.000 0.000 80.738 .000 608.030 4,067.934 177.863 12-2031 69.600 1 1.0 0.000 0.000 74.212 .000 553.254 4,621.187 346.118 12-2032 69.600 1 1.0 0.000 0.000 68.458 .000 504.963 5,126.151 485.720 12-2033 69.600 1 1.0 0.000 0.000 62.806 .000 457.5235,583.674 600.699 12-2034 69.600 1 1.0 0.000 0.000 57.785 .000 415.381 5,999.055 695.605 12-2035 69.600 1 1.0 0.000 0.000 53.165 .000 376.608 6,375.663 773.835 12-2036 69.600 1 1.0 0.000 0.000 49.043 .000 342.013 6,717.676 838.418 12-2037 69.600 1 1.0 0.000 0.000 44.994 .000 308.027 7,025.703 891.292 S Tot 1,174.500 0.000 0.000 2,571.476 13,382.000 7,025.703 7,025.703 891.292 After 1,377.066 0.000 0.000 418.403 .000 2,134.561 9,160.264 1,111.873 Total 2,551.566 0.000 0.000 2,989.879 13,382.000 9,160.264 9,160.264 1,111.873 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 3,772.349 Oil Rate 26,462. 130. bbls/mo 96.3% 1.20 0.0% 2,899. 5,716. $/w/mo Expense 100.0000 100.0000 8.00 1,979.434 Gas Rate 134,164. 663. Mcf/mo 0.0% 0.00 0.0% 10.00 1,111.873 GOR 5,070. 5,070. scf/bbl Revenue 12.00 426.880 NGL Rate 4,761. 53. bbls/mo Oil79.3750 79.3750 NGL Yield 35.5 81.3 bbl/MMcf Gas 79.3750 79.3750 15.00 -352.578 Gas Shrinkage 65.1 25.7 % ______________________________ ______________________ 20.00 -1,212.702 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 36.7 % Start Date: 02/2021 11 Months in year ‘21 36.712 Year Life (10/2057) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 617 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 26 Figure 27 LILIS ENERGY, INC. -- TBD 18-19 PUD 1 (2.0 WC A) TBD (WOLFCAMP A) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________42.64 Year Life (08/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 17,193. 96.3 1.20 8.0 144. Initial Final Oil - mbbls 0.0 786.6 786.6 79.375 NI 624.326 36,019.087 2,968.591 6,903.153 14,612.814 3,144.174Gas - mcf/mo 53,987. 0.0 0.00 8.0 451. 3,140. 3,140. 6 Gas - mmcf 0.0 2,469.8 2,469.8 100.000 WI 1,450.683 2,698.270 2,062.187 14,697.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 10,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 1,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP A TBD 18-19 PUD 1 (2.0 WC A) TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 618 100. 100. Table 27 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 18-19 PUD 1 (2.0 WC A) TBD (WOLFCAMP A) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 188.2 590.9 48.4 149.364 347.061 38.413 57.693 1.860 15.734 12-2023 95.0 298.3 24.4 75.417 175.240 19.396 57.693 1.860 15.734 12-2024 62.9 197.6 16.2 49.950 116.064 12.846 57.693 1.860 15.734 12-2025 47.8 149.9 12.3 37.902 88.069 9.748 57.693 1.860 15.734 12-2026 38.9 122.2 10.0 30.891 71.778 7.945 57.693 1.860 15.734 12-2027 33.0 103.7 8.5 26.222 60.930 6.744 57.693 1.860 15.734 12-2028 28.9 90.7 7.4 22.930 53.279 5.897 57.693 1.860 15.734 12-2029 25.6 80.4 6.6 20.332 47.242 5.229 57.693 1.860 15.734 12-2030 23.1 72.6 5.9 18.345 42.627 4.718 57.693 1.860 15.734 12-2031 21.1 66.2 5.4 16.741 38.900 4.306 57.693 1.860 15.734 12-2032 19.4 61.0 5.0 15.429 35.850 3.96857.693 1.860 15.734 12-2033 17.8 56.0 4.6 14.155 32.890 3.640 57.693 1.860 15.734 12-2034 16.4 51.5 4.2 13.023 30.260 3.349 57.693 1.860 15.734 12-2035 15.1 47.4 3.9 11.982 27.841 3.081 57.693 1.860 15.734 12-2036 13.9 43.7 3.6 11.053 25.682 2.843 57.693 1.860 15.734 12-2037 12.8 40.1 3.3 10.140 23.562 2.608 57.693 1.860 15.734 S Tot 660.0 2,072.4 169.7 523.876 1,217.277 134.731 57.693 1.860 15.734 After 126.6 397.4 32.5 100.450 233.406 25.834 57.693 1.860 15.734 Total 786.6 2,469.8 202.3 624.326 1,450.683 160.565 57.693 1.860 15.734 Cum .0 .0 .0 Ult 786.6 2,469.8 202.3 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 8,617.202 645.534 604.413 0.000 0.000 9,867.149 710.205 493.357 4.542 12-2023 4,351.043 325.946 305.183 0.000 0.000 4,982.172 358.601 249.109 4.873 12-2024 2,881.772 215.880 202.128 0.000 0.000 3,299.780 237.507 164.989 5.176 12-2025 2,186.665 163.808 153.373 0.000 0.000 2,503.846 180.219 125.192 5.461 12-2026 1,782.192 133.508 125.003 0.000 0.000 2,040.703 146.883 102.035 5.729 12-2027 1,512.845 113.331 106.111 0.000 0.000 1,732.287 124.684 86.614 5.987 12-2028 1,322.876 99.100 92.787 0.000 0.000 1,514.762 109.028 75.738 6.232 12-2029 1,172.984 87.871 82.273 0.000 0.000 1,343.129 96.674 67.156 6.482 12-2030 1,058.388 79.286 74.236 0.000 0.000 1,211.909 87.229 60.595 6.720 12-2031 965.857 72.354 67.745 0.000 0.000 1,105.957 79.603 55.298 6.954 12-2032 890.114 66.680 62.433 0.000 0.000 1,019.227 73.361 50.961 7.181 12-2033 816.619 61.175 57.278 0.000 0.000 935.072 67.303 46.754 7.443 12-2034 751.333 56.284 52.699 0.000 0.000 860.315 61.923 43.016 7.718 12-2035 691.265 51.784 48.486 0.000 0.000 791.535 56.972 39.577 8.016 12-2036 637.671 47.769 44.726 0.000 0.000 730.167 52.555 36.508 8.330 12-2037 585.020 43.825 41.033 0.000 0.000 669.879 48.216 33.494 8.695 S Tot 30,223.846 2,264.136 2,119.908 0.000 0.000 34,607.889 2,490.964 1,730.394 5.636 After 5,795.241 434.134 406.480 0.000 0.000 6,635.856 477.627 331.793 14.816 Total 36,019.087 2,698.270 2,526.388 0.000 0.000 41,243.745 2,968.591 2,062.187 7.113 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net CumulativeCum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 14,697.000 -14,697.000 -14,697.000 -11,084.656 12-2022 60.900 1 1.0 0.000 0.000 993.562 .000 7,609.124 -7,087.876 -5,619.389 12-2023 69.600 1 1.0 0.000 0.000 501.674 .000 3,803.189 -3,284.687 -3,131.388 12-2024 69.600 1 1.0 0.000 0.000 332.268 .000 2,495.416 -789.271 -1,649.813 12-2025 69.600 1 1.0 0.000 0.000 252.122 .000 1,876.713 1,087.442 -637.657 12-2026 69.600 1 1.0 0.000 0.000 205.486 .000 1,516.698 2,604.140 105.723 12-2027 69.600 1 1.0 0.000 0.000 174.431 .000 1,276.958 3,881.098 674.592 12-2028 69.600 1 1.0 0.000 0.000 152.527 .000 1,107.869 4,988.967 1,123.158 12-2029 69.600 1 1.0 0.000 0.000 135.245 .000 974.453 5,963.420 1,481.765 12-2030 69.600 1 1.0 0.000 0.000 122.032 .000 872.453 6,835.873 1,773.636 12-2031 69.600 1 1.0 0.000 0.000 111.363 .000 790.093 7,625.966 2,013.921 12-2032 69.600 1 1.0 0.000 0.000 102.630 .000 722.675 8,348.640 2,213.706 12-2033 69.600 1 1.0 0.000 0.000 94.156 .000 657.259 9,005.899 2,378.878 12-203469.600 1 1.0 0.000 0.000 86.628 .000 599.148 9,605.048 2,515.767 12-2035 69.600 1 1.0 0.000 0.000 79.703 .000 545.684 10,150.731 2,629.116 12-2036 69.600 1 1.0 0.000 0.000 73.523 .000 497.980 10,648.711 2,723.147 12-2037 69.600 1 1.0 0.000 0.000 67.453 .000 451.117 11,099.828 2,800.580 S Tot 1,104.900 0.000 0.000 3,484.803 14,697.000 11,099.828 11,099.828 2,800.580 After 1,645.259 0.000 0.000 668.190 .000 3,512.986 14,612.814 3,144.174 Total 2,750.159 0.000 0.000 4,152.994 14,697.000 14,612.814 14,612.814 3,144.174 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 6,809.514 Oil Rate 36,500. 142. bbls/mo 96.3% 1.20 0.0% 2,899. 5,800. $/w/mo Expense 100.0000 100.0000 8.00 4,322.081 Gas Rate 114,610. 446. Mcf/mo 0.0% 0.00 0.0% 10.00 3,144.174 GOR 3,140. 3,140. scf/bbl Revenue 12.00 2,228.454 NGL Rate 4,067. 37. bbls/mo Oil 79.375079.3750 NGL Yield 35.5 84.2 bbl/MMcf Gas 79.3750 79.3750 15.00 1,204.955 Gas Shrinkage 65.1 25.5 % ______________________________ ______________________ 20.00 105.163 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 38.3 % Start Date: 02/2022 11 Months in year ‘22 39.565 Year Life (08/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 618 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 27 Figure 28 LILIS ENERGY, INC. -- TBD 18-19 PUD 2 (2.0 WC B) TBD (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________42.58 Year Life (08/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 20,186. 96.3 1.20 8.0 134. Initial Final Oil - mbbls 0.0 855.0 855.0 79.375 NI 678.672 39,154.487 3,428.062 7,382.629 19,490.184 6,366.154Gas - mcf/mo 91,646. 0.0 0.00 8.0 610. 4,540. 4,540. 6 Gas - mmcf 0.0 3,881.8 3,881.8 100.000 WI 2,280.066 4,240.923 2,368.309 14,697.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B TBD 18-19 PUD 2 (2.0 WC B) TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 619 100. 1,000. Table 28 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 18-19 PUD 2 (2.0 WC B) TBD (WOLFCAMP B) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 167.2 759.0 62.2 132.698 445.813 49.344 57.693 1.860 15.734 12-2021 119.0 540.3 44.3 94.469 317.379 35.128 57.693 1.860 15.734 12-2022 73.9 335.6 27.5 58.666 197.095 21.815 57.693 1.860 15.734 12-2023 54.9 249.2 20.4 43.570 146.377 16.201 57.693 1.860 15.734 12-2024 44.3 200.9 16.5 35.126 118.008 13.061 57.693 1.860 15.734 12-2025 37.1 168.6 13.8 29.480 99.042 10.962 57.693 1.860 15.734 12-2026 32.2 146.2 12.0 25.565 85.889 9.506 57.693 1.860 15.734 12-2027 28.5 129.5 10.6 22.638 76.056 8.418 57.693 1.860 15.734 12-2028 25.7 116.8 9.6 20.414 68.582 7.591 57.693 1.860 15.734 12-2029 23.3 106.0 8.7 18.529 62.249 6.890 57.693 1.860 15.734 12-2030 21.4 97.3 8.0 17.013 57.156 6.326 57.693 1.860 15.734 12-2031 19.7 89.5 7.3 15.652 52.5865.820 57.693 1.860 15.734 12-2032 18.2 82.6 6.8 14.439 48.509 5.369 57.693 1.860 15.734 12-2033 16.7 75.8 6.2 13.247 44.504 4.926 57.693 1.860 15.734 12-2034 15.4 69.7 5.7 12.188 40.946 4.532 57.693 1.860 15.734 12-2035 14.1 64.1 5.3 11.213 37.672 4.170 57.693 1.860 15.734 12-2036 13.0 59.2 4.8 10.344 34.752 3.846 57.693 1.860 15.734 12-2037 12.0 54.3 4.4 9.490 31.882 3.529 57.693 1.860 15.734 S Tot 736.7 3,344.5 273.9 584.741 1,964.497 217.435 57.693 1.860 15.734 After 118.3 537.3 44.0 93.931 315.569 34.928 57.693 1.860 15.734 Total 855.0 3,881.8 317.9 678.672 2,280.066 252.363 57.693 1.860 15.734 Cum .0 .0 .0 Ult 855.0 3,881.8 317.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 7,655.738 829.213 776.391 0.000 0.000 9,261.342 670.277 463.067 3.875 12-2021 5,450.198 590.325 552.721 0.000 0.000 6,593.244 477.177 329.662 4.101 12-2022 3,384.621 366.597 343.245 0.000 0.000 4,094.462 296.331 204.723 4.351 12-2023 2,513.664 272.261 254.918 0.000 0.000 3,040.843 220.077 152.042 4.579 12-2024 2,026.492 219.495 205.5130.000 0.000 2,451.499 177.424 122.575 4.792 12-2025 1,700.806 184.219 172.484 0.000 0.000 2,057.509 148.909 102.875 5.003 12-2026 1,474.925 159.753 149.577 0.000 0.000 1,784.254 129.133 89.213 5.203 12-2027 1,306.073 141.464 132.453 0.000 0.000 1,579.990 114.350 78.999 5.399 12-2028 1,177.728 127.563 119.437 0.000 0.000 1,424.727 103.113 71.236 5.585 12-2029 1,068.978 115.784 108.408 0.000 0.000 1,293.170 93.591 64.659 5.777 12-2030 981.506 106.309 99.537 0.000 0.000 1,187.353 85.933 59.368 5.963 12-2031 903.035 97.810 91.579 0.000 0.000 1,092.425 79.063 54.621 6.160 12-2032 833.022 90.227 84.479 0.000 0.000 1,007.728 72.933 50.386 6.368 12-2033 764.242 82.777 77.504 0.000 0.000 924.523 66.911 46.226 6.608 12-2034 703.142 76.159 71.308 0.000 0.000 850.609 61.562 42.530 6.862 12-2035 646.928 70.070 65.607 0.000 0.000 782.605 56.640 39.130 7.137 12-2036 596.771 64.638 60.520 0.000 0.000 721.929 52.249 36.096 7.427 12-2037 547.497 59.301 55.523 0.000 0.000 662.322 47.935 33.116 7.763 S Tot 33,735.366 3,653.965 3,421.204 0.000 0.000 40,810.535 2,953.606 2,040.527 4.857 After 5,419.121 586.959 549.569 0.000 0.000 6,555.649 474.456 327.782 13.390 Total 39,154.487 4,240.923 3,970.7730.000 0.000 47,366.184 3,428.062 2,368.309 6.038 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 43.781 1 1.0 0.000 0.000 882.705 14,697.000 -7,495.488 -7,495.488 -6,938.364 12-2021 69.600 1 1.0 0.000 0.000 628.407 .000 5,088.398 -2,407.090 -2,907.976 12-2022 69.600 1 1.0 0.000 0.000 390.246 .000 3,133.562 726.472 -656.262 12-2023 69.600 1 1.0 0.000 0.000 289.825 .000 2,309.299 3,035.772 851.131 12-2024 69.600 1 1.0 0.000 0.000 233.654 .000 1,848.246 4,884.018 1,947.332 12-2025 69.600 1 1.0 0.000 0.000 196.103 .000 1,540.021 6,424.039 2,777.396 12-2026 69.600 1 1.0 0.000 0.000 170.059 .000 1,326.250 7,750.289 3,427.168 12-2027 69.600 1 1.0 0.000 0.000 150.590 .000 1,166.451 8,916.740 3,946.657 12-2028 69.600 1 1.0 0.000 0.000 135.792 .000 1,044.987 9,961.727 4,369.669 12-2029 69.600 1 1.0 0.000 0.000 123.253 .000 942.067 10,903.794 4,716.299 12-2030 69.600 1 1.0 0.000 0.000 113.167 .000 859.285 11,763.079 5,003.732 12-2031 69.600 1 1.0 0.000 0.000 104.120 .000 785.021 12,548.1005,242.468 12-2032 69.600 1 1.0 0.000 0.000 96.047 .000 718.762 13,266.861 5,441.172 12-2033 69.600 1 1.0 0.000 0.000 88.117 .000 653.669 13,920.530 5,605.441 12-2034 69.600 1 1.0 0.000 0.000 81.072 .000 595.845 14,516.375 5,741.576 12-2035 69.600 1 1.0 0.000 0.000 74.591 .000 542.644 15,059.019 5,854.293 12-2036 69.600 1 1.0 0.000 0.000 68.808 .000 495.177 15,554.196 5,947.795 12-2037 69.600 1 1.0 0.000 0.000 63.126 .000 448.545 16,002.741 6,024.786 S Tot 1,226.981 0.000 0.000 3,889.681 14,697.000 16,002.741 16,002.741 6,024.786 After 1,641.143 0.000 0.000 624.824 .000 3,487.444 19,490.184 6,366.154 Total 2,868.124 0.000 0.000 4,514.505 14,697.000 19,490.184 19,490.184 6,366.154 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 10,823.688 Oil Rate 39,541. 133. bbls/mo 96.3% 1.20 0.0% 3,180. 5,800. $/w/mo Expense100.0000 100.0000 8.00 7,850.766 Gas Rate 179,519. 607. Mcf/mo 0.0% 0.00 0.0% 10.00 6,366.154 GOR 4,540. 4,540. scf/bbl Revenue 12.00 5,157.870 NGL Rate 7,644. 50. bbls/mo Oil 79.3750 79.3750 NGL Yield 42.6 83.8 bbl/MMcf Gas 79.3750 79.3750 15.00 3,722.096 Gas Shrinkage 62.2 25.9 % ______________________________ ______________________ 20.00 2,003.789 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 37.9 % Start Date: 05/2020 8 Months in year ‘20 41.254 Year Life (08/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 619 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 28 Figure 29 LILIS ENERGY, INC. -- TBD 18-19 PUD 3 (2.0 WC B) TBD (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD LEA COUNTY, NEW MEXICO ________________________________________________________________________________________ As of 01/2019 8 _______________________42.67 Year Life (09/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 19,710. 96.3 1.20 8.1 134. Initial Final Oil - mbbls 0.0 855.0 855.0 79.375 NI 678.672 39,154.486 3,428.062 7,382.548 19,490.264 6,314.836Gas - mcf/mo 89,483. 0.0 0.00 8.1 610. 4,540. 4,540. 6 Gas - mmcf 0.0 3,881.8 3,881.8 100.000 WI 2,280.066 4,240.923 2,368.309 14,697.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B TBD 18-19 PUD 3 (2.0 WC B) TIME (years) S:19, T:26S, R:36E 3 NM OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 620 100. 1,000. Table 29 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 18-19 PUD 3 (2.0 WC B) TBD (WOLFCAMP B) FIELD -- LEA COUNTY, NEW MEXICO (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 152.4 691.9 56.7 120.972 406.419 44.983 57.693 1.860 15.734 12-2021 126.1 572.5 46.9 100.087 336.252 37.217 57.693 1.860 15.734 12-2022 76.2 346.1 28.4 60.518 203.317 22.504 57.693 1.860 15.734 12-2023 56.1 254.6 20.9 44.515 149.553 16.553 57.693 1.860 15.734 12-2024 45.0 204.2 16.7 35.707 119.962 13.278 57.693 1.860 15.734 12-2025 37.6 170.9 14.0 29.875 100.369 11.109 57.693 1.860 15.734 12-2026 32.6 147.9 12.1 25.853 86.856 9.613 57.693 1.860 15.734 12-2027 28.8 130.7 10.7 22.858 76.794 8.500 57.693 1.860 15.734 12-2028 25.9 117.8 9.6 20.588 69.167 7.656 57.693 1.860 15.734 12-2029 23.5 106.8 8.7 18.670 62.723 6.942 57.693 1.860 15.734 12-2030 21.6 98.0 8.0 17.134 57.562 6.371 57.693 1.860 15.734 12-2031 19.9 90.2 7.4 15.764 52.9605.862 57.693 1.860 15.734 12-2032 18.3 83.2 6.8 14.541 48.854 5.407 57.693 1.860 15.734 12-2033 16.8 76.3 6.2 13.341 44.820 4.961 57.693 1.860 15.734 12-2034 15.5 70.2 5.8 12.274 41.237 4.564 57.693 1.860 15.734 12-2035 14.2 64.6 5.3 11.293 37.940 4.199 57.693 1.860 15.734 12-2036 13.1 59.6 4.9 10.417 34.998 3.874 57.693 1.860 15.734 12-2037 12.0 54.7 4.5 9.557 32.109 3.554 57.693 1.860 15.734 S Tot 735.7 3,340.1 273.6 583.966 1,961.891 217.146 57.693 1.860 15.734 After 119.3 541.7 44.4 94.706 318.175 35.216 57.693 1.860 15.734 Total 855.0 3,881.8 317.9 678.672 2,280.066 252.363 57.693 1.860 15.734 Cum .0 .0 .0 Ult 855.0 3,881.8 317.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 6,979.236 755.939 707.785 0.000 0.000 8,442.961 611.048 422.148 3.866 12-2021 5,774.290 625.428 585.588 0.000 0.000 6,985.307 505.552 349.265 4.078 12-2022 3,491.468 378.170 354.080 0.000 0.000 4,223.718 305.686 211.186 4.331 12-2023 2,568.204 278.169 260.449 0.000 0.000 3,106.822 224.852 155.341 4.560 12-2024 2,060.052 223.130 208.9160.000 0.000 2,492.097 180.362 124.605 4.774 12-2025 1,723.596 186.687 174.795 0.000 0.000 2,085.078 150.905 104.254 4.985 12-2026 1,491.530 161.551 151.260 0.000 0.000 1,804.342 130.587 90.217 5.186 12-2027 1,318.753 142.838 133.739 0.000 0.000 1,595.330 115.460 79.766 5.382 12-2028 1,187.778 128.651 120.456 0.000 0.000 1,436.886 103.993 71.844 5.569 12-2029 1,077.116 116.665 109.234 0.000 0.000 1,303.015 94.304 65.151 5.761 12-2030 988.485 107.065 100.245 0.000 0.000 1,195.796 86.544 59.790 5.947 12-2031 909.448 98.505 92.230 0.000 0.000 1,100.183 79.624 55.009 6.143 12-2032 838.938 90.868 85.079 0.000 0.000 1,014.885 73.451 50.744 6.349 12-2033 769.669 83.365 78.054 0.000 0.000 931.089 67.386 46.554 6.588 12-2034 708.136 76.700 71.814 0.000 0.000 856.650 61.999 42.833 6.840 12-2035 651.522 70.568 66.073 0.000 0.000 788.163 57.042 39.408 7.113 12-2036 601.009 65.097 60.950 0.000 0.000 727.057 52.620 36.353 7.401 12-2037 551.386 59.722 55.918 0.000 0.000 667.025 48.275 33.351 7.734 S Tot 33,690.618 3,649.118 3,416.666 0.000 0.000 40,756.402 2,949.688 2,037.820 4.853 After 5,463.868 591.806 554.107 0.000 0.000 6,609.781 478.374 330.489 13.345 Total 39,154.486 4,240.923 3,970.7730.000 0.000 47,366.183 3,428.062 2,368.309 6.038 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 37.893 1 1.0 0.000 0.000 804.705 14,697.000 -8,129.833 -8,129.833 -7,404.504 12-2021 69.600 1 1.0 0.000 0.000 665.775 .000 5,395.115 -2,734.718 -3,129.684 12-2022 69.600 1 1.0 0.000 0.000 402.566 .000 3,234.681 499.963 -805.062 12-2023 69.600 1 1.0 0.000 0.000 296.113 .000 2,360.915 2,860.878 736.102 12-2024 69.600 1 1.0 0.000 0.000 237.524 .000 1,880.007 4,740.885 1,851.173 12-2025 69.600 1 1.0 0.000 0.000 198.730 .000 1,561.589 6,302.474 2,692.879 12-2026 69.600 1 1.0 0.000 0.000 171.973 .000 1,341.965 7,644.439 3,350.360 12-2027 69.600 1 1.0 0.000 0.000 152.052 .000 1,178.451 8,822.890 3,875.199 12-2028 69.600 1 1.0 0.000 0.000 136.951 .000 1,054.498 9,877.389 4,302.065 12-2029 69.600 1 1.0 0.000 0.000 124.191 .000 949.769 10,827.158 4,651.531 12-2030 69.600 1 1.0 0.000 0.000 113.972 .000 865.890 11,693.047 4,941.173 12-2031 69.600 1 1.0 0.000 0.000 104.859 .000 791.090 12,484.1385,181.755 12-2032 69.600 1 1.0 0.000 0.000 96.729 .000 724.361 13,208.498 5,382.006 12-2033 69.600 1 1.0 0.000 0.000 88.743 .000 658.805 13,867.303 5,547.566 12-2034 69.600 1 1.0 0.000 0.000 81.648 .000 600.571 14,467.874 5,684.781 12-2035 69.600 1 1.0 0.000 0.000 75.120 .000 546.993 15,014.867 5,798.401 12-2036 69.600 1 1.0 0.000 0.000 69.296 .000 499.188 15,514.055 5,892.660 12-2037 69.600 1 1.0 0.000 0.000 63.575 .000 452.224 15,966.279 5,970.283 S Tot 1,221.093 0.000 0.000 3,884.522 14,697.000 15,966.279 15,966.279 5,970.283 After 1,646.950 0.000 0.000 629.983 .000 3,523.985 19,490.264 6,314.836 Total 2,868.043 0.000 0.000 4,514.505 14,697.000 19,490.264 19,490.264 6,314.836 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 10,778.947 Oil Rate 39,541. 133. bbls/mo 96.3% 1.20 0.0% 3,093. 5,800. $/w/mo Expense100.0000 100.0000 8.00 7,799.628 Gas Rate 179,519. 607. Mcf/mo 0.0% 0.00 0.0% 10.00 6,314.836 GOR 4,540. 4,540. scf/bbl Revenue 12.00 5,108.466 NGL Rate 7,223. 50. bbls/mo Oil 79.3750 79.3750 NGL Yield 40.2 83.8 bbl/MMcf Gas 79.3750 79.3750 15.00 3,678.173 Gas Shrinkage 63.1 25.9 % ______________________________ ______________________ 20.00 1,972.985 Oil Severance 7.1 7.1 % Gas Severance 7.9 7.9 % NGL Severance 7.9 7.9 % Ad___________________________________________ Valorem 37.9 % Start Date: 06/2020 7 Months in year ‘20 41.255 Year Life (09/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 620 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 29 Figure 30 LILIS ENERGY, INC. -- TBD 22-23 PUD 2 (2.0 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________42.93 Year Life (12/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 16,071. 96.3 1.20 8.0 127. Initial Final Oil - mbbls 0.0 694.7 694.7 60.625 NI 421.181 24,299.125 1,666.442 5,242.95915,271.688 4,952.995 Gas - mcf/mo 103,819. 0.0 0.00 8.0 818. 6,460. 6,460. 6 Gas - mmcf 0.0 4,487.9 4,487.9 81.720 WI 2,013.415 3,744.952 788.762 8,580.621 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : 3RD BONE SPRINGS TBD 22-23 PUD 2 (2.0 3RD BS) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 622 100. 1,000. Table 30 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 22-23 PUD 2 (2.0 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 124.3 802.8 65.8 75.340 360.154 39.863 57.693 1.860 15.734 12-2023 102.8 664.2 54.4 62.332 297.974 32.980 57.693 1.860 15.734 12-2024 62.3 402.5 33.0 37.776 180.586 19.988 57.693 1.860 15.734 12-2025 45.7 295.2 24.2 27.704 132.436 14.658 57.693 1.860 15.734 12-2026 36.6 236.2 19.3 22.171 105.985 11.731 57.693 1.860 15.734 12-2027 30.7 198.3 16.2 18.606 88.944 9.844 57.693 1.860 15.734 12-2028 26.6 172.0 14.1 16.142 77.166 8.541 57.693 1.860 15.734 12-2029 23.5 151.6 12.4 14.231 68.031 7.530 57.693 1.860 15.734 12-2030 21.1 136.2 11.2 12.785 61.117 6.765 57.693 1.860 15.734 12-2031 19.2 123.9 10.1 11.627 55.583 6.152 57.693 1.860 15.734 12-2032 17.6 114.0 9.3 10.699 51.143 5.661 57.693 1.860 15.734 12-2033 16.2 104.6 8.6 9.815 46.920 5.193 57.693 1.860 15.734 12-2034 14.9 96.2 7.9 9.030 43.169 4.778 57.693 1.860 15.734 12-2035 13.7 88.5 7.3 8.308 39.718 4.396 57.693 1.860 15.734 12-2036 12.6 81.7 6.7 7.664 36.638 4.055 57.693 1.860 15.734 12-2037 11.6 74.9 6.1 7.031 33.613 3.720 57.693 1.860 15.734 S Tot 579.4 3,742.9 306.6 351.263 1,679.177 185.855 57.693 1.860 15.734 After 115.3 745.0 61.0 69.918 334.238 36.994 57.693 1.860 15.734 Total 694.7 4,487.9 367.6 421.181 2,013.415 222.849 57.693 1.860 15.734 Cum .0 .0 .0 Ult 694.7 4,487.9 367.6 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 4,346.554 669.886 627.213 0.000 0.000 5,643.653 298.088 141.091 3.517 12-2023 3,596.133 554.232 518.927 0.000 0.000 4,669.292 246.624 116.732 3.751 12-2024 2,179.422 335.890 314.493 0.000 0.000 2,829.806 149.466 70.745 4.028 12-2025 1,598.314 246.330 230.639 0.000 0.0002,075.283 109.613 51.882 4.284 12-2026 1,279.094 197.132 184.575 0.000 0.000 1,660.802 87.721 41.520 4.523 12-2027 1,073.427 165.435 154.897 0.000 0.000 1,393.760 73.616 34.844 4.753 12-2028 931.284 143.528 134.386 0.000 0.000 1,209.198 63.868 30.230 4.971 12-2029 821.041 126.538 118.477 0.000 0.000 1,066.056 56.307 26.651 5.192 12-2030 737.602 113.678 106.437 0.000 0.000 957.718 50.585 23.943 5.403 12-2031 670.810 103.384 96.799 0.000 0.000 870.994 46.004 21.775 5.610 12-2032 617.229 95.127 89.067 0.000 0.000 801.423 42.330 20.036 5.808 12-2033 566.260 87.271 81.712 0.000 0.000 735.244 38.834 18.381 6.032 12-2034 520.989 80.294 75.179 0.000 0.000 676.463 35.730 16.912 6.267 12-2035 479.337 73.875 69.169 0.000 0.000 622.381 32.873 15.560 6.523 12-2036 442.174 68.147 63.806 0.000 0.000 574.128 30.324 14.353 6.791 12-2037 405.665 62.521 58.538 0.000 0.000 526.723 27.821 13.168 7.103 S Tot 20,265.338 3,123.269 2,924.315 0.000 0.000 26,312.922 1,389.804 657.823 4.501 After 4,033.787 621.682 582.081 0.000 0.000 5,237.550 276.638 130.939 12.420 Total 24,299.125 3,744.952 3,506.395 0.000 0.000 31,550.472 1,666.442 788.762 5.815 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd PartyOther Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 30.967 1 0.8 0.000 0.000 536.202 8,580.621 -3,943.316 -3,943.316 -3,007.830 12-2023 56.877 1 0.8 0.000 0.000 443.628 .000 3,805.430 -137.886 -515.552 12-2024 56.877 1 0.8 0.000 0.000 268.859 .000 2,283.859 2,145.973 840.923 12-2025 56.877 1 0.8 0.000 0.000 197.172 .000 1,659.739 3,805.712 1,736.225 12-2026 56.877 1 0.8 0.000 0.000 157.792 .000 1,316.892 5,122.603 2,381.745 12-2027 56.877 1 0.8 0.000 0.000 132.421 .000 1,096.002 6,218.605 2,870.036 12-2028 56.877 1 0.8 0.000 0.000 114.886 .000 943.338 7,161.942 3,252.005 12-2029 56.877 1 0.8 0.000 0.000 101.286 .000 824.934 7,986.876 3,555.600 12-2030 56.877 1 0.8 0.000 0.000 90.993 .000 735.320 8,722.196 3,801.602 12-2031 56.877 1 0.8 0.000 0.000 82.753 .000 663.584 9,385.781 4,003.418 12-2032 56.877 1 0.8 0.000 0.000 76.143 .000 606.037 9,991.818 4,170.959 12-2033 56.877 1 0.8 0.000 0.000 69.855 .000 551.296 10,543.114 4,309.501 12-2034 56.8771 0.8 0.000 0.000 64.271 .000 502.674 11,045.788 4,424.349 12-2035 56.877 1 0.8 0.000 0.000 59.132 .000 457.939 11,503.727 4,519.471 12-2036 56.877 1 0.8 0.000 0.000 54.548 .000 418.025 11,921.752 4,598.404 12-2037 56.877 1 0.8 0.000 0.000 50.044 .000 378.814 12,300.565 4,663.426 S Tot 884.125 0.000 0.000 2,499.984 8,580.621 12,300.565 12,300.565 4,663.426 After 1,361.232 0.000 0.000 497.618 .000 2,971.122 15,271.688 4,952.995 Total 2,245.357 0.000 0.000 2,997.602 8,580.621 15,271.688 15,271.688 4,952.995 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 8,334.962 Oil Rate 32,241. 126. bbls/mo 96.3% 1.20 0.0% 3,092. 5,799. $/w/mo Expense 81.7202 81.7202 8.00 6,056.384 Gas Rate 208,281. 814. Mcf/mo 0.0% 0.00 0.0% 10.00 4,952.995 GOR 6,460. 6,460. scf/bbl Revenue 12.00 4,078.116 NGL Rate 8,381. 66. bbls/mo Oil 60.6259 60.6259 NGLYield 40.2 81.1 bbl/MMcf Gas 60.6259 60.6259 15.00 3,073.392 Gas Shrinkage 63.1 25.9 % ______________________________ ______________________ 20.00 1,938.276 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 14.2 % Start Date: 06/2022 7 Months in year ‘22 39.515 Year Life (12/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 622 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 30 Figure 31 LILIS ENERGY, INC. -- TBD 22-23 PUD 4 (2.0 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________42.03 Year Life (01/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 20,186. 96.3 1.20 8.0 137. Initial Final Oil - mbbls 0.0 854.7 854.7 60.625 NI 518.149 29,893.444 1,850.733 6,019.546 15,378.0945,061.825 Gas - mcf/mo 91,646. 0.0 0.00 8.0 623. 4,540. 4,540. 6 Gas - mmcf 0.0 3,880.2 3,880.2 81.720 WI 1,740.772 3,237.836 904.072 12,010.418 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B TBD 22-23 PUD 4 (2.0 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 624 100. 1,000. Table 31 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 22-23 PUD 4 (2.0 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 215.4 978.1 80.1 130.608 438.789 48.566 57.693 1.860 15.734 12-2021 98.3 446.2 36.5 59.583 200.176 22.156 57.693 1.860 15.734 12-2022 66.1 300.3 24.6 40.098 134.714 14.910 57.693 1.860 15.734 12-2023 50.7 230.3 18.9 30.756 103.329 11.437 57.693 1.860 15.734 12-2024 41.6 189.0 15.5 25.237 84.786 9.384 57.693 1.860 15.734 12-2025 35.3 160.4 13.1 21.419 71.958 7.964 57.693 1.860 15.734 12-2026 30.9 140.2 11.5 18.718 62.883 6.960 57.693 1.860 15.734 12-2027 27.5 124.8 10.2 16.668 55.999 6.198 57.693 1.860 15.734 12-2028 24.9 113.0 9.3 15.095 50.714 5.613 57.693 1.860 15.734 12-2029 22.7 103.0 8.4 13.748 46.188 5.112 57.693 1.860 15.734 12-2030 20.8 94.7 7.8 12.640 42.466 4.700 57.693 1.860 15.734 12-2031 19.2 87.1 7.1 11.630 39.0704.324 57.693 1.860 15.734 12-2032 17.7 80.3 6.6 10.728 36.041 3.989 57.693 1.860 15.734 12-2033 16.2 73.7 6.0 9.842 33.065 3.660 57.693 1.860 15.734 12-2034 14.9 67.8 5.6 9.055 30.422 3.367 57.693 1.860 15.734 12-2035 13.7 62.4 5.1 8.331 27.990 3.098 57.693 1.860 15.734 12-2036 12.7 57.6 4.7 7.685 25.820 2.858 57.693 1.860 15.734 12-2037 11.6 52.8 4.3 7.051 23.688 2.622 57.693 1.860 15.734 S Tot 740.4 3,361.6 275.3 448.893 1,508.101 166.920 57.693 1.860 15.734 After 114.2 518.6 42.5 69.256 232.671 25.753 57.693 1.860 15.734 Total 854.7 3,880.2 317.8 518.149 1,740.772 192.672 57.693 1.860 15.734 Cum .0 .0 .0 Ult 854.7 3,880.2 317.8 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 7,535.121 816.148 764.159 0.000 0.000 9,115.429 466.507 227.886 4.183 12-2021 3,437.529 372.328 348.610 0.000 0.000 4,158.466 212.821 103.962 4.480 12-2022 2,313.384 250.569 234.607 0.000 0.000 2,798.560 143.224 69.964 4.738 12-2023 1,774.427 192.193 179.950 0.000 0.000 2,146.570 109.857 53.664 4.977 12-2024 1,455.991 157.702 147.656 0.000 0.0001,761.350 90.142 44.034 5.201 12-2025 1,235.704 133.842 125.316 0.000 0.000 1,494.863 76.504 37.372 5.424 12-2026 1,079.867 116.963 109.513 0.000 0.000 1,306.342 66.856 32.659 5.637 12-2027 961.645 104.158 97.523 0.000 0.000 1,163.327 59.536 29.083 5.844 12-2028 870.894 94.329 88.320 0.000 0.000 1,053.543 53.918 26.339 6.042 12-2029 793.161 85.909 80.437 0.000 0.000 959.507 49.105 23.988 6.247 12-2030 729.240 78.986 73.954 0.000 0.000 882.180 45.148 22.054 6.448 12-2031 670.939 72.671 68.042 0.000 0.000 811.652 41.539 20.291 6.665 12-2032 618.921 67.037 62.767 0.000 0.000 748.724 38.318 18.718 6.893 12-2033 567.818 61.502 57.584 0.000 0.000 686.904 35.154 17.173 7.158 12-2034 522.422 56.585 52.980 0.000 0.000 631.987 32.344 15.800 7.437 12-2035 480.656 52.061 48.745 0.000 0.000 581.462 29.758 14.537 7.740 12-2036 443.390 48.025 44.966 0.000 0.000 536.381 27.451 13.410 8.058 12-2037 406.781 44.059 41.253 0.000 0.000 492.093 25.184 12.302 8.428 S Tot 25,897.890 2,805.067 2,626.382 0.000 0.000 31,329.340 1,603.365 783.233 5.214 After 3,995.554 432.769 405.201 0.000 0.000 4,833.523 247.369 120.838 14.451 Total 29,893.444 3,237.836 3,031.583 0.000 0.000 36,162.863 1,850.733 904.0726.448 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 12,010.418 -12,010.418 -12,010.418 -11,051.133 12-2020 54.737 1 0.8 0.000 0.000 929.552 .000 7,436.748 -4,573.670 -4,553.273 12-2021 56.877 1 0.8 0.000 0.000 424.062 .000 3,360.744 -1,212.926 -1,893.977 12-2022 56.877 1 0.8 0.000 0.000 285.385 .000 2,243.110 1,030.184 -282.683 12-2023 56.877 1 0.8 0.000 0.000 218.898 .000 1,707.274 2,737.458 831.543 12-2024 56.877 1 0.8 0.000 0.000 179.615 .000 1,390.682 4,128.140 1,656.273 12-2025 56.877 1 0.8 0.000 0.000 152.440 .000 1,171.671 5,299.811 2,287.753 12-2026 56.877 1 0.8 0.000 0.000 133.215 .000 1,016.736 6,316.547 2,785.859 12-2027 56.877 1 0.8 0.000 0.000 118.631 .000 899.199 7,215.746 3,186.310 12-2028 56.877 1 0.8 0.000 0.000 107.436 .000 808.973 8,024.719 3,513.774 12-2029 56.877 1 0.8 0.000 0.000 97.846 .000 731.690 8,756.410 3,782.990 12-2030 56.877 1 0.8 0.000 0.000 89.961 .000 668.139 9,424.549 4,006.485 12-2031 56.877 1 0.8 0.000 0.000 82.769 .000 610.176 10,034.725 4,192.049 12-2032 56.877 1 0.8 0.0000.000 76.352 .000 558.459 10,593.184 4,346.436 12-2033 56.877 1 0.8 0.000 0.000 70.047 .000 507.652 11,100.836 4,474.011 12-2034 56.877 1 0.8 0.000 0.000 64.447 .000 462.520 11,563.356 4,579.685 12-2035 56.877 1 0.8 0.000 0.000 59.295 .000 420.995 11,984.351 4,667.134 12-2036 56.877 1 0.8 0.000 0.000 54.698 .000 383.945 12,368.296 4,739.632 12-2037 56.877 1 0.8 0.000 0.000 50.181 .000 347.548 12,715.844 4,799.288 S Tot 1,021.650 0.000 0.000 3,194.830 12,010.418 12,715.844 12,715.844 4,799.288 After 1,310.165 0.000 0.000 492.902 .000 2,662.250 15,378.094 5,061.825 Total 2,331.815 0.000 0.000 3,687.731 12,010.418 15,378.094 15,378.094 5,061.825 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 8,600.049 Oil Rate 39,541. 136. bbls/mo 96.3% 1.20 0.0% 3,180. 5,799. $/w/mo Expense 81.7202 81.7202 8.00 6,246.395 Gas Rate179,519. 618. Mcf/mo 0.0% 0.00 0.0% 10.00 5,061.825 GOR 4,540. 4,540. scf/bbl Revenue 12.00 4,091.501 NGL Rate 7,644. 51. bbls/mo Oil 60.6259 60.6259 NGL Yield 42.6 84.0 bbl/MMcf Gas 60.6259 60.6259 15.00 2,928.794 Gas Shrinkage 62.2 25.9 % ______________________________ ______________________ 20.00 1,517.317 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 14.8 % Start Date: 01/2020 12 Months in year ‘20 41.037 Year Life (01/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 624 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 31 Figure 32 LILIS ENERGY, INC. -- TBD 22-23 PUD 5 (2.0 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________42.20 Year Life (03/2061) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 20,186. 96.3 1.20 7.8 137. Initial Final Oil - mbbls 0.0 854.7 854.7 60.625 NI 518.149 29,893.444 1,850.733 6,019.319 15,378.3214,983.410 Gas - mcf/mo 91,646. 0.0 0.00 7.8 622. 4,540. 4,540. 6 Gas - mmcf 0.0 3,880.2 3,880.2 81.720 WI 1,740.772 3,237.836 904.072 12,010.418 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B TBD 22-23 PUD 5 (2.0 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 625 100. 1,000. Table 32 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 22-23 PUD 5 (2.0 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 193.1 876.7 71.8 117.066 393.294 43.531 57.693 1.860 15.734 12-2021 107.4 487.8 39.9 65.134 218.824 24.220 57.693 1.860 15.734 12-2022 69.8 316.7 25.9 42.289 142.073 15.725 57.693 1.860 15.734 12-2023 52.7 239.3 19.6 31.952 107.346 11.881 57.693 1.860 15.734 12-2024 42.9 194.7 15.9 25.999 87.347 9.668 57.693 1.860 15.734 12-2025 36.2 164.4 13.5 21.948 73.737 8.161 57.693 1.860 15.734 12-2026 31.5 143.1 11.7 19.109 64.199 7.106 57.693 1.860 15.734 12-2027 28.0 127.1 10.4 16.971 57.015 6.311 57.693 1.860 15.734 12-2028 25.3 114.9 9.4 15.337 51.527 5.703 57.693 1.860 15.734 12-2029 23.0 104.4 8.6 13.945 46.851 5.186 57.693 1.860 15.734 12-2030 21.1 96.0 7.9 12.814 43.051 4.765 57.693 1.860 15.734 12-2031 19.4 88.3 7.2 11.790 39.6094.384 57.693 1.860 15.734 12-2032 17.9 81.4 6.7 10.876 36.538 4.044 57.693 1.860 15.734 12-2033 16.5 74.7 6.1 9.978 33.522 3.710 57.693 1.860 15.734 12-2034 15.1 68.7 5.6 9.180 30.842 3.414 57.693 1.860 15.734 12-2035 13.9 63.2 5.2 8.446 28.376 3.141 57.693 1.860 15.734 12-2036 12.9 58.3 4.8 7.791 26.176 2.897 57.693 1.860 15.734 12-2037 11.8 53.5 4.4 7.148 24.015 2.658 57.693 1.860 15.734 S Tot 738.6 3,353.2 274.6 447.774 1,504.341 166.504 57.693 1.860 15.734 After 116.1 527.0 43.2 70.375 236.431 26.169 57.693 1.860 15.734 Total 854.7 3,880.2 317.8 518.149 1,740.772 192.672 57.693 1.860 15.734 Cum .0 .0 .0 Ult 854.7 3,880.2 317.8 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 6,753.850 731.527 684.928 0.000 0.000 8,170.305 418.138 204.258 4.165 12-2021 3,757.762 407.013 381.086 0.000 0.000 4,545.861 232.647 113.647 4.435 12-2022 2,439.747 264.255 247.422 0.000 0.000 2,951.425 151.047 73.786 4.697 12-2023 1,843.399 199.663 186.945 0.000 0.000 2,230.007 114.127 55.750 4.938 12-2024 1,499.975 162.466 152.117 0.000 0.0001,814.558 92.865 45.364 5.165 12-2025 1,266.248 137.151 128.414 0.000 0.000 1,531.812 78.395 38.295 5.389 12-2026 1,102.464 119.411 111.804 0.000 0.000 1,333.679 68.255 33.342 5.602 12-2027 979.095 106.048 99.293 0.000 0.000 1,184.436 60.617 29.611 5.811 12-2028 884.843 95.840 89.735 0.000 0.000 1,070.417 54.782 26.760 6.009 12-2029 804.542 87.142 81.591 0.000 0.000 973.275 49.810 24.332 6.214 12-2030 739.297 80.075 74.974 0.000 0.000 894.346 45.771 22.359 6.414 12-2031 680.192 73.673 68.980 0.000 0.000 822.846 42.111 20.571 6.628 12-2032 627.456 67.961 63.632 0.000 0.000 759.050 38.846 18.976 6.853 12-2033 575.649 62.350 58.378 0.000 0.000 696.377 35.639 17.409 7.114 12-2034 529.627 57.365 53.711 0.000 0.000 640.703 32.790 16.018 7.389 12-2035 487.285 52.779 49.417 0.000 0.000 589.481 30.168 14.737 7.688 12-2036 449.505 48.687 45.586 0.000 0.000 543.778 27.829 13.594 8.002 12-2037 412.391 44.667 41.822 0.000 0.000 498.880 25.532 12.472 8.367 S Tot 25,833.328 2,798.074 2,619.835 0.000 0.000 31,251.237 1,599.367 781.281 5.205 After 4,060.116 439.762 411.748 0.000 0.000 4,911.626 251.366 122.791 14.357 Total 29,893.444 3,237.836 3,031.583 0.000 0.000 36,162.863 1,850.733 904.0726.448 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 45.257 1 0.8 0.000 0.000 833.172 12,010.418 -5,340.937 -5,340.937 -5,111.539 12-2021 56.877 1 0.8 0.000 0.000 463.567 .000 3,679.123 -1,661.814 -2,199.038 12-2022 56.877 1 0.8 0.000 0.000 300.973 .000 2,368.741 706.927 -497.226 12-2023 56.877 1 0.8 0.000 0.000 227.406 .000 1,775.847 2,482.774 661.850 12-2024 56.877 1 0.8 0.000 0.000 185.041 .000 1,434.411 3,917.185 1,512.556 12-2025 56.877 1 0.8 0.000 0.000 156.208 .000 1,202.038 5,119.223 2,160.425 12-2026 56.877 1 0.8 0.000 0.000 136.003 .000 1,039.202 6,158.425 2,669.550 12-2027 56.877 1 0.8 0.000 0.000 120.784 .000 916.548 7,074.973 3,077.735 12-2028 56.877 1 0.8 0.000 0.000 109.156 .000 822.841 7,897.814 3,410.817 12-2029 56.877 1 0.8 0.000 0.000 99.250 .000 743.006 8,640.820 3,684.200 12-2030 56.877 1 0.8 0.000 0.000 91.202 .000 678.138 9,318.958 3,911.039 12-2031 56.877 1 0.8 0.000 0.000 83.910 .000 619.376 9,938.334 4,099.401 12-2032 56.877 1 0.8 0.000 0.000 77.405 .000566.945 10,505.279 4,256.134 12-2033 56.877 1 0.8 0.000 0.000 71.014 .000 515.438 11,020.717 4,385.666 12-2034 56.877 1 0.8 0.000 0.000 65.336 .000 469.683 11,490.400 4,492.976 12-2035 56.877 1 0.8 0.000 0.000 60.113 .000 427.586 11,917.985 4,581.794 12-2036 56.877 1 0.8 0.000 0.000 55.452 .000 390.025 12,308.010 4,655.440 12-2037 56.877 1 0.8 0.000 0.000 50.874 .000 353.125 12,661.135 4,716.054 S Tot 1,012.171 0.000 0.000 3,186.865 12,010.418 12,661.135 12,661.135 4,716.054 After 1,319.417 0.000 0.000 500.866 .000 2,717.186 15,378.321 4,983.410 Total 2,331.588 0.000 0.000 3,687.731 12,010.418 15,378.321 15,378.321 4,983.410 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 8,531.589 Oil Rate 39,541. 136. bbls/mo 96.3% 1.20 0.0% 3,180. 5,335. $/w/mo Expense 81.7202 81.7202 8.00 6,168.129 Gas Rate 179,519. 618. Mcf/mo0.0% 0.00 0.0% 10.00 4,983.410 GOR 4,540. 4,540. scf/bbl Revenue 12.00 4,016.267 NGL Rate 7,644. 46. bbls/mo Oil 60.6259 60.6259 NGL Yield 42.6 75.8 bbl/MMcf Gas 60.6259 60.6259 15.00 2,862.567 Gas Shrinkage 62.2 25.9 % ______________________________ ______________________ 20.00 1,472.820 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.3 % Start Date: 03/2020 10 Months in year ‘20 41.034 Year Life (03/2061) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 625 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 32 Figure 33 LILIS ENERGY, INC. -- TBD 5-14 PUD 2 (2.0 XY) PHANTOM (WOLFCAMP XY) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________39.24 Year Life (03/2058) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 9,317. 96.3 1.20 7.8 87. Initial Final Oil - mbbls 0.0 391.1 391.1 58.500 NI 228.791 13,199.592 1,432.051 3,630.511 10,288.5303,214.355 Gas - mcf/mo 167,235. 0.0 0.00 7.8 1,554. 17,900. 17,900. 6 Gas - mmcf 0.0 7,020.2 7,020.2 78.000 WI 3,039.030 5,652.597 603.618 8,190.000 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP XY TBD 5-14 PUD 2 (2.0 XY) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 627 100. 1,000. Table 33 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TBD 5-14 PUD 2 (2.0 XY) PHANTOM (WOLFCAMP XY) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 99.3 1,781.9 145.9 58.072 771.368 85.377 57.693 1.860 15.734 12-2022 45.4 815.4 66.8 26.573 352.969 39.067 57.693 1.860 15.734 12-2023 30.6 548.4 44.9 17.873 237.411 26.277 57.693 1.860 15.734 12-2024 23.5 421.6 34.5 13.740 182.504 20.200 57.693 1.860 15.734 12-2025 19.2 344.0 28.2 11.211 148.919 16.483 57.693 1.860 15.734 12-2026 16.3 292.8 24.0 9.543 126.756 14.030 57.693 1.860 15.734 12-2027 14.3 255.9 21.0 8.339 110.764 12.260 57.693 1.860 15.734 12-2028 12.7 228.4 18.7 7.445 98.889 10.945 57.693 1.860 15.734 12-2029 11.5 205.7 16.9 6.705 89.066 9.858 57.693 1.860 15.734 12-2030 10.5 187.9 15.4 6.124 81.347 9.004 57.693 1.860 15.734 12-2031 9.6 172.8 14.2 5.631 74.791 8.278 57.693 1.86015.734 12-2032 8.9 159.4 13.1 5.194 68.992 7.636 57.693 1.860 15.734 12-2033 8.1 146.2 12.0 4.765 63.296 7.006 57.693 1.860 15.734 12-2034 7.5 134.5 11.0 4.384 58.236 6.446 57.693 1.860 15.734 12-2035 6.9 123.8 10.1 4.034 53.580 5.930 57.693 1.860 15.734 12-2036 6.4 114.2 9.4 3.721 49.426 5.471 57.693 1.860 15.734 12-2037 5.8 104.7 8.6 3.414 45.345 5.019 57.693 1.860 15.734 S Tot 336.4 6,037.6 494.5 196.767 2,613.659 289.285 57.693 1.860 15.734 After 54.7 982.6 80.5 32.024 425.372 47.081 57.693 1.860 15.734 Total 391.1 7,020.2 575.0 228.791 3,039.030 336.366 57.693 1.860 15.734 Cum .0 .0 .0 Ult 391.1 7,020.2 575.0 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 3,350.328 1,434.745 1,343.351 0.000 0.000 6,128.424 363.484 153.211 1.904 12-2022 1,533.069 656.522 614.701 0.000 0.000 2,804.292 166.326 70.107 2.178 12-2023 1,031.160 441.584 413.455 0.000 0.000 1,886.199 111.873 47.155 2.417 12-2024 792.680 339.457 317.834 0.000 0.000 1,449.971 86.000 36.249 2.636 12-2025646.807 276.989 259.344 0.000 0.000 1,183.140 70.173 29.579 2.850 12-2026 550.547 235.766 220.748 0.000 0.000 1,007.061 59.730 25.177 3.053 12-2027 481.087 206.021 192.897 0.000 0.000 880.005 52.194 22.000 3.250 12-2028 429.512 183.934 172.218 0.000 0.000 785.664 46.599 19.642 3.437 12-2029 386.845 165.663 155.110 0.000 0.000 707.618 41.970 17.690 3.630 12-2030 353.321 151.306 141.668 0.000 0.000 646.294 38.332 16.157 3.815 12-2031 324.844 139.111 130.250 0.000 0.000 594.205 35.243 14.855 4.001 12-2032 299.659 128.326 120.151 0.000 0.000 548.136 32.511 13.703 4.195 12-2033 274.917 117.730 110.231 0.000 0.000 502.878 29.826 12.572 4.421 12-2034 252.938 108.318 101.418 0.000 0.000 462.674 27.442 11.567 4.658 12-2035 232.716 99.658 93.310 0.000 0.000 425.684 25.248 10.642 4.916 12-2036 214.673 91.932 86.076 0.000 0.000 392.681 23.290 9.817 5.188 12-2037 196.948 84.341 78.969 0.000 0.000 360.258 21.367 9.006 5.503 S Tot 11,352.050 4,861.405 4,551.730 0.000 0.000 20,765.184 1,231.608 519.130 2.811 After 1,847.542 791.192 740.792 0.000 0.000 3,379.526 200.444 84.488 9.919 Total 13,199.592 5,652.597 5,292.522 0.000 0.000 24,144.710 1,432.051 603.618 3.806 (21) (22) (23) (24) (25) (26) (27) (28) (29)(30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 8,190.000 -8,190.000 -8,190.000 -6,849.438 12-2021 52.245 1 0.8 0.000 0.000 408.826 .000 5,150.658 -3,039.342 -2,758.435 12-2022 54.288 1 0.8 0.000 0.000 187.074 .000 2,326.497 -712.844 -1,084.715 12-2023 54.288 1 0.8 0.000 0.000 125.828 .000 1,547.055 834.211 -74.355 12-2024 54.288 1 0.8 0.000 0.000 96.727 .000 1,176.707 2,010.918 623.763 12-2025 54.288 1 0.8 0.000 0.000 78.927 .000 950.173 2,961.091 1,136.002 12-2026 54.288 1 0.8 0.000 0.000 67.181 .000 800.685 3,761.777 1,528.340 12-2027 54.288 1 0.8 0.000 0.000 58.705 .000 692.818 4,454.595 1,836.926 12-2028 54.288 1 0.8 0.000 0.000 52.411 .000 612.724 5,067.319 2,084.980 12-2029 54.288 1 0.8 0.000 0.000 47.205 .000 546.465 5,613.784 2,286.063 12-2030 54.288 1 0.8 0.000 0.000 43.114 .000 494.402 6,108.186 2,451.448 12-2031 54.288 1 0.8 0.000 0.000 39.639 .000 450.180 6,558.366 2,588.357 12-2032 54.288 1 0.8 0.000 0.000 36.566 .000 411.068 6,969.434 2,701.999 12-2033 54.288 1 0.8 0.0000.000 33.547 .000 372.645 7,342.078 2,795.648 12-2034 54.288 1 0.8 0.000 0.000 30.865 .000 338.512 7,680.591 2,872.991 12-2035 54.288 1 0.8 0.000 0.000 28.397 .000 307.109 7,987.700 2,936.784 12-2036 54.288 1 0.8 0.000 0.000 26.196 .000 279.090 8,266.790 2,989.485 12-2037 54.288 1 0.8 0.000 0.000 24.033 .000 251.564 8,518.353 3,032.666 S Tot 920.853 0.000 0.000 1,385.241 8,190.000 8,518.353 8,518.353 3,032.666 After 1,098.970 0.000 0.000 225.447 .000 1,770.177 10,288.530 3,214.355 Total 2,019.823 0.000 0.000 1,610.688 8,190.000 10,288.530 10,288.530 3,214.355 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 5,615.246 Oil Rate 18,250. 86. bbls/mo 96.3% 1.20 0.0% 3,179. 5,800. $/w/mo Expense 78.0000 78.0000 8.00 4,010.165 Gas Rate 327,587. 1,548. Mcf/mo 0.0% 0.00 0.0% 10.00 3,214.355 GOR 17,900. 17,900. scf/bbl Revenue 12.002,572.199 NGL Rate 13,950. 129. bbls/mo Oil 58.5000 58.5000 NGL Yield 42.6 83.7 bbl/MMcf Gas 58.5000 58.5000 15.00 1,819.205 Gas Shrinkage 62.2 25.8 % ______________________________ ______________________ 20.00 940.859 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 13.6 % Start Date: 01/2021 12 Months in year ‘21 37.247 Year Life (03/2058) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 627 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 33 Figure 34 LILIS ENERGY, INC. -- TIGER PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________41.07 Year Life (01/2060) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 11,902. 96.3 1.20 8.0 112. Initial Final Oil - mbbls 0.0 511.9 511.9 72.251 NI 369.855 21,337.959 1,463.364 4,616.950 11,791.7113,196.446 Gas - mcf/mo 76,885. 0.0 0.00 8.0 726. 6,460. 6,460. 6 Gas - mmcf 0.0 3,306.9 3,306.9 87.056 WI 1,768.054 3,288.580 692.641 9,140.968 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : 3RD BONE SPRINGS TIGER PUD 1 (1.5 3RD BS) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 628 100. 1,000. Table 34 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TIGER PUD 1 (1.5 3RD BS) PHANTOM (3RD BONE SPRINGS) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2022 59.9 386.9 31.7 43.268 206.838 22.893 57.693 1.860 15.734 12-2023 93.3 602.9 49.4 67.432 322.350 35.678 57.693 1.860 15.734 12-2024 51.0 329.4 27.0 36.844 176.131 19.495 57.693 1.860 15.734 12-2025 36.2 233.8 19.1 26.149 125.005 13.836 57.693 1.860 15.734 12-2026 28.5 184.1 15.1 20.586 98.409 10.892 57.693 1.860 15.734 12-2027 23.7 152.9 12.5 17.105 81.770 9.050 57.693 1.860 15.734 12-2028 20.4 131.8 10.8 14.741 70.470 7.800 57.693 1.860 15.734 12-2029 17.9 115.6 9.5 12.934 61.831 6.844 57.693 1.860 15.734 12-2030 16.0 103.5 8.5 11.578 55.347 6.126 57.693 1.860 15.734 12-2031 14.5 93.9 7.7 10.500 50.194 5.556 57.693 1.860 15.734 12-2032 13.3 86.2 7.19.644 46.102 5.103 57.693 1.860 15.734 12-2033 12.2 79.1 6.5 8.846 42.290 4.681 57.693 1.860 15.734 12-2034 11.3 72.8 6.0 8.139 38.909 4.306 57.693 1.860 15.734 12-2035 10.4 67.0 5.5 7.489 35.798 3.962 57.693 1.860 15.734 12-2036 9.6 61.8 5.1 6.908 33.023 3.655 57.693 1.860 15.734 12-2037 8.8 56.7 4.6 6.338 30.296 3.353 57.693 1.860 15.734 S Tot 427.0 2,758.3 225.9 308.502 1,474.761 163.230 57.693 1.860 15.734 After 84.9 548.6 44.9 61.353 293.293 32.462 57.693 1.860 15.734 Total 511.9 3,306.9 270.8 369.855 1,768.054 195.692 57.693 1.860 15.734 Cum .0 .0 .0 Ult 511.9 3,306.9 270.8 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2022 2,496.250 384.719 360.212 0.000 0.000 3,241.181 171.194 81.030 3.165 12-2023 3,890.321 599.572 561.378 0.000 0.000 5,051.271 266.800 126.282 3.392 12-2024 2,125.654 327.603 306.735 0.000 0.000 2,759.991 145.778 69.000 3.740 12-2025 1,508.634 232.509 217.698 0.000 0.000 1,958.840 103.463 48.971 4.05412-2026 1,187.662 183.041 171.381 0.000 0.000 1,542.084 81.450 38.552 4.347 12-2027 986.847 152.092 142.403 0.000 0.000 1,281.342 67.678 32.034 4.627 12-2028 850.474 131.074 122.725 0.000 0.000 1,104.273 58.326 27.607 4.892 12-2029 746.212 115.005 107.679 0.000 0.000 968.896 51.175 24.222 5.160 12-2030 667.965 102.946 96.388 0.000 0.000 867.300 45.809 21.682 5.417 12-2031 605.772 93.361 87.414 0.000 0.000 786.546 41.544 19.664 5.668 12-2032 556.383 85.749 80.287 0.000 0.000 722.419 38.157 18.060 5.907 12-2033 510.377 78.659 73.648 0.000 0.000 662.684 35.002 16.567 6.172 12-2034 469.574 72.370 67.760 0.000 0.000 609.704 32.204 15.243 6.450 12-2035 432.033 66.584 62.343 0.000 0.000 560.960 29.629 14.024 6.752 12-2036 398.537 61.422 57.509 0.000 0.000 517.468 27.332 12.937 7.069 12-2037 365.631 56.351 52.761 0.000 0.000 474.742 25.075 11.869 7.438 S Tot 17,798.325 2,743.056 2,568.321 0.000 0.000 23,109.703 1,220.615 577.743 4.375 After 3,539.634 545.524 510.774 0.000 0.000 4,595.932 242.749 114.898 13.154 Total 21,337.959 3,288.580 3,079.095 0.000 0.000 27,705.634 1,463.364 692.641 5.831 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash FlowEnd Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2022 17.841 1 0.9 0.000 0.000 275.267 9,140.968 -6,445.118 -6,445.118 -4,653.211 12-2023 60.592 1 0.9 0.000 0.000 428.995 .000 4,168.603 -2,276.515 -1,919.137 12-2024 60.592 1 0.9 0.000 0.000 234.401 .000 2,250.221 -26.294 -582.129 12-2025 60.592 1 0.9 0.000 0.000 166.361 .000 1,579.454 1,553.161 270.020 12-2026 60.592 1 0.9 0.000 0.000 130.966 .000 1,230.524 2,783.685 873.270 12-2027 60.592 1 0.9 0.000 0.000 108.822 .000 1,012.217 3,795.902 1,324.267 12-2028 60.592 1 0.9 0.000 0.000 93.784 .000 863.965 4,659.867 1,674.116 12-2029 60.592 1 0.9 0.000 0.000 82.287 .000 750.620 5,410.487 1,950.374 12-2030 60.592 1 0.9 0.000 0.000 73.658 .000 665.558 6,076.046 2,173.045 12-2031 60.592 1 0.9 0.000 0.000 66.800 .000 597.947 6,673.993 2,354.904 12-2032 60.592 1 0.9 0.000 0.000 61.354 .000 544.256 7,218.249 2,505.367 12-2033 60.592 1 0.9 0.000 0.000 56.280 .000 494.243 7,712.492 2,629.573 12-2034 60.592 1 0.9 0.000 0.000 51.781 .000 449.8858,162.377 2,732.361 12-2035 60.592 1 0.9 0.000 0.000 47.641 .000 409.074 8,571.451 2,817.333 12-2036 60.592 1 0.9 0.000 0.000 43.948 .000 372.661 8,944.112 2,887.702 12-2037 60.592 1 0.9 0.000 0.000 40.319 .000 336.888 9,281.000 2,945.529 S Tot 926.714 0.000 0.000 1,962.663 9,140.968 9,281.000 9,281.000 2,945.529 After 1,337.249 0.000 0.000 390.324 .000 2,510.711 11,791.711 3,196.446 Total 2,263.963 0.000 0.000 2,352.987 9,140.968 11,791.711 11,791.711 3,196.446 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 5,971.813 Oil Rate 23,877. 111. bbls/mo 96.3% 1.20 0.0% 3,092. 5,799. $/w/mo Expense 87.0568 87.0568 8.00 4,092.212 Gas Rate 154,246. 719. Mcf/mo 0.0% 0.00 0.0% 10.00 3,196.446 GOR 6,460. 6,460. scf/bbl Revenue 12.00 2,496.645 NGL Rate 6,206. 60. bbls/mo Oil 72.2518 72.2518 NGL Yield 40.2 84.2 bbl/MMcf Gas 72.2518 72.251815.00 1,709.380 Gas Shrinkage 63.1 25.6 % ______________________________ ______________________ 20.00 852.661 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 15.5 % Start Date: 09/2022 4 Months in year ‘22 37.403 Year Life (01/2060) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 628 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 34 Figure 35 LILIS ENERGY, INC. -- TIGER PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.71 Year Life (09/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,984. 96.3 1.20 8.1 121. Initial Final Oil - mbbls 0.0 631.7 631.7 72.251 NI 456.402 26,331.115 1,630.186 5,261.938 15,023.9965,531.958 Gas - mcf/mo 68,029. 0.0 0.00 8.1 550. 4,540. 4,540. 6 Gas - mmcf 0.0 2,867.8 2,867.8 87.056 WI 1,533.329 2,851.991 796.336 9,140.968 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B TIGER PUD 2 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 629 100. 1,000. Table 35 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- TIGER PUD 2 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 57.4 260.6 21.3 41.474 139.337 15.422 57.693 1.860 15.734 12-2021 124.4 564.8 46.3 89.886 301.981 33.424 57.693 1.860 15.734 12-2022 64.8 294.2 24.1 46.824 157.308 17.411 57.693 1.860 15.734 12-2023 45.6 206.9 16.9 32.924 110.611 12.243 57.693 1.860 15.734 12-2024 35.7 162.3 13.3 25.825 86.762 9.603 57.693 1.860 15.734 12-2025 29.5 134.0 11.0 21.319 71.622 7.927 57.693 1.860 15.734 12-2026 25.3 114.9 9.4 18.283 61.425 6.799 57.693 1.860 15.734 12-2027 22.2 100.9 8.3 16.062 53.961 5.973 57.693 1.860 15.734 12-2028 19.9 90.5 7.4 14.397 48.367 5.353 57.693 1.860 15.734 12-2029 18.0 81.7 6.7 13.006 43.696 4.836 57.693 1.860 15.734 12-2030 16.5 74.8 6.1 11.906 40.001 4.427 57.693 1.860 15.734 12-2031 15.2 68.8 5.6 10.952 36.795 4.073 57.6931.860 15.734 12-2032 14.0 63.5 5.2 10.103 33.942 3.757 57.693 1.860 15.734 12-2033 12.8 58.2 4.8 9.269 31.140 3.447 57.693 1.860 15.734 12-2034 11.8 53.6 4.4 8.528 28.650 3.171 57.693 1.860 15.734 12-2035 10.9 49.3 4.0 7.846 26.360 2.918 57.693 1.860 15.734 12-2036 10.0 45.5 3.7 7.238 24.316 2.691 57.693 1.860 15.734 12-2037 9.2 41.7 3.4 6.640 22.308 2.469 57.693 1.860 15.734 S Tot 543.2 2,466.2 202.0 392.482 1,318.583 145.944 57.693 1.860 15.734 After 88.5 401.6 32.9 63.920 214.746 23.769 57.693 1.860 15.734 Total 631.7 2,867.8 234.9 456.402 1,533.329 169.712 57.693 1.860 15.734 Cum .0 .0 .0 Ult 631.7 2,867.8 234.9 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 2,392.765 259.167 242.657 0.000 0.000 2,894.589 148.138 72.365 3.703 12-2021 5,185.775 561.685 525.905 0.000 0.000 6,273.365 321.057 156.834 3.905 12-2022 2,701.380 292.593 273.955 0.000 0.000 3,267.929 167.245 81.698 4.249 12-2023 1,899.475 205.737 192.631 0.000 0.000 2,297.843 117.598 57.446 4.553 12-2024 1,489.922 161.377 151.097 0.000 0.000 1,802.396 92.24345.060 4.833 12-2025 1,229.932 133.217 124.731 0.000 0.000 1,487.880 76.146 37.197 5.109 12-2026 1,054.821 114.250 106.973 0.000 0.000 1,276.045 65.305 31.901 5.371 12-2027 926.653 100.368 93.975 0.000 0.000 1,120.996 57.370 28.025 5.625 12-2028 830.588 89.963 84.232 0.000 0.000 1,004.784 51.423 25.120 5.867 12-2029 750.366 81.274 76.097 0.000 0.000 907.737 46.456 22.693 6.117 12-2030 686.917 74.402 69.662 0.000 0.000 830.981 42.528 20.775 6.356 12-2031 631.862 68.439 64.079 0.000 0.000 764.380 39.119 19.109 6.602 12-2032 582.873 63.133 59.111 0.000 0.000 705.117 36.086 17.628 6.860 12-2033 534.747 57.920 54.230 0.000 0.000 646.897 33.107 16.172 7.160 12-2034 491.995 53.289 49.895 0.000 0.000 595.179 30.460 14.879 7.475 12-2035 452.662 49.029 45.906 0.000 0.000 547.596 28.025 13.690 7.818 12-2036 417.566 45.228 42.347 0.000 0.000 505.141 25.852 12.629 8.178 12-2037 383.089 41.493 38.850 0.000 0.000 463.433 23.717 11.586 8.596 S Tot 22,643.389 2,452.564 2,296.334 0.000 0.000 27,392.287 1,401.875 684.807 5.006 After 3,687.726 399.427 373.983 0.000 0.000 4,461.136 228.311 111.528 14.954 Total 26,331.115 2,851.991 2,670.317 0.000 0.000 31,853.423 1,630.186 796.336 6.399 (21) (22) (23) (24) (25)(26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 12.868 1 0.9 0.000 0.000 263.856 9,140.968 -6,743.606 -6,743.606 -5,827.806 12-2021 60.592 1 0.9 0.000 0.000 571.848 .000 5,163.035 -1,580.570 -1,728.247 12-2022 60.592 1 0.9 0.000 0.000 297.888 .000 2,660.506 1,079.936 184.740 12-2023 60.592 1 0.9 0.000 0.000 209.460 .000 1,852.748 2,932.683 1,394.474 12-2024 60.592 1 0.9 0.000 0.000 164.297 .000 1,440.205 4,372.889 2,248.812 12-2025 60.592 1 0.9 0.000 0.000 135.627 .000 1,178.317 5,551.206 2,883.993 12-2026 60.592 1 0.9 0.000 0.000 116.318 .000 1,001.929 6,553.135 3,374.911 12-2027 60.592 1 0.9 0.000 0.000 102.184 .000 872.825 7,425.960 3,763.656 12-2028 60.592 1 0.9 0.000 0.000 91.591 .000 776.059 8,202.019 4,077.822 12-2029 60.592 1 0.9 0.000 0.000 82.745 .000 695.251 8,897.271 4,333.648 12-2030 60.592 1 0.9 0.000 0.000 75.748 .000 631.339 9,528.610 4,544.836 12-2031 60.592 1 0.9 0.000 0.000 69.677 .000 575.883 10,104.493 4,719.971 12-2032 60.592 1 0.9 0.000 0.000 64.275 .000 526.536 10,631.0294,865.535 12-2033 60.592 1 0.9 0.000 0.000 58.968 .000 478.059 11,109.088 4,985.674 12-2034 60.592 1 0.9 0.000 0.000 54.253 .000 434.995 11,544.083 5,085.060 12-2035 60.592 1 0.9 0.000 0.000 49.916 .000 395.374 11,939.457 5,167.187 12-2036 60.592 1 0.9 0.000 0.000 46.046 .000 360.023 12,299.479 5,235.169 12-2037 60.592 1 0.9 0.000 0.000 42.244 .000 325.294 12,624.773 5,291.006 S Tot 1,042.924 0.000 0.000 2,496.940 9,140.968 12,624.773 12,624.773 5,291.006 After 1,315.420 0.000 0.000 406.654 .000 2,399.223 15,023.996 5,531.958 Total 2,358.344 0.000 0.000 2,903.594 9,140.968 15,023.996 15,023.996 5,531.958 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 8,776.818 Oil Rate 29,352. 120. bbls/mo 96.3% 1.20 0.0% 3,179. 5,799. $/w/mo Expense 87.0568 87.0568 8.00 6,614.096 Gas Rate 133,258. 545. Mcf/mo 0.0% 0.00 0.0% 10.005,531.958 GOR 4,540. 4,540. scf/bbl Revenue 12.00 4,650.973 NGL Rate 5,674. 45. bbls/mo Oil 72.2518 72.2518 NGL Yield 42.6 84.1 bbl/MMcf Gas 72.2518 72.2518 15.00 3,604.829 Gas Shrinkage 62.2 25.7 % ______________________________ ______________________ 20.00 2,356.103 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 15.6 % Start Date: 10/2020 3 Months in year ‘20 38.967 Year Life (09/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 629 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 35 Figure 36 LILIS ENERGY, INC. -- W AXIS PUD 4 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________40.19 Year Life (03/2059) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,984. 96.3 1.20 7.8 135. Initial Final Oil - mbbls 0.0 629.6 629.6 73.867 NI 465.079 26,831.694 1,661.177 5,849.623 13,795.2874,230.645 Gas - mcf/mo 68,029. 0.0 0.00 7.8 615. 4,540. 4,540. 6 Gas - mmcf 0.0 2,858.4 2,858.4 98.489 WI 1,562.478 2,906.210 811.475 10,341.424 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B W AXIS PUD 4 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 633 100. 1,000. Table 36 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- W AXIS PUD 4 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 88.4 401.2 32.9 65.275 219.299 24.272 57.693 1.860 15.734 12-2022 106.4 483.2 39.6 78.620 264.133 29.235 57.693 1.860 15.734 12-2023 60.4 274.2 22.5 44.609 149.867 16.588 57.693 1.860 15.734 12-2024 43.6 198.0 16.2 32.210 108.213 11.977 57.693 1.860 15.734 12-2025 34.4 156.3 12.8 25.425 85.417 9.454 57.693 1.860 15.734 12-2026 28.7 130.3 10.7 21.199 71.221 7.883 57.693 1.860 15.734 12-2027 24.7 112.3 9.2 18.265 61.364 6.792 57.693 1.860 15.734 12-2028 21.9 99.2 8.1 16.141 54.226 6.002 57.693 1.860 15.734 12-2029 19.5 88.7 7.3 14.424 48.459 5.364 57.693 1.860 15.734 12-2030 17.7 80.5 6.6 13.094 43.990 4.869 57.693 1.860 15.734 12-2031 16.2 73.8 6.0 12.003 40.324 4.463 57.693 1.860 15.734 12-2032 15.068.0 5.6 11.071 37.195 4.117 57.693 1.860 15.734 12-2033 13.8 62.4 5.1 10.157 34.124 3.777 57.693 1.860 15.734 12-2034 12.7 57.4 4.7 9.345 31.396 3.475 57.693 1.860 15.734 12-2035 11.6 52.8 4.3 8.598 28.886 3.197 57.693 1.860 15.734 12-2036 10.7 48.7 4.0 7.931 26.646 2.949 57.693 1.860 15.734 12-2037 9.9 44.7 3.7 7.276 24.446 2.706 57.693 1.860 15.734 S Tot 535.6 2,431.7 199.2 395.643 1,329.204 147.119 57.693 1.860 15.734 After 94.0 426.8 35.0 69.435 233.275 25.819 57.693 1.860 15.734 Total 629.6 2,858.4 234.1 465.079 1,562.478 172.938 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.6 2,858.4 234.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 3,765.911 407.896 381.912 0.000 0.000 4,555.719 233.151 113.893 4.128 12-2022 4,535.834 491.288 459.992 0.000 0.000 5,487.114 280.818 137.178 4.392 12-2023 2,573.589 278.752 260.995 0.000 0.000 3,113.337 159.334 77.833 4.760 12-2024 1,858.286 201.276 188.454 0.000 0.000 2,248.016 115.048 56.200 5.089 12-2025 1,466.820 158.875 148.7550.000 0.000 1,774.449 90.812 44.361 5.404 12-2026 1,223.042 132.471 124.032 0.000 0.000 1,479.545 75.720 36.989 5.702 12-2027 1,053.774 114.137 106.866 0.000 0.000 1,274.778 65.240 31.869 5.991 12-2028 931.193 100.860 94.435 0.000 0.000 1,126.488 57.651 28.162 6.265 12-2029 832.166 90.134 84.392 0.000 0.000 1,006.693 51.520 25.167 6.545 12-2030 755.414 81.821 76.609 0.000 0.000 913.844 46.768 22.846 6.813 12-2031 692.462 75.002 70.225 0.000 0.000 837.689 42.871 20.942 7.078 12-2032 638.731 69.183 64.776 0.000 0.000 772.689 39.544 19.317 7.344 12-2033 585.992 63.470 59.427 0.000 0.000 708.890 36.279 17.722 7.654 12-2034 539.144 58.396 54.676 0.000 0.000 652.216 33.379 16.305 7.979 12-2035 496.040 53.727 50.305 0.000 0.000 600.073 30.710 15.002 8.333 12-2036 457.582 49.562 46.405 0.000 0.000 553.549 28.329 13.839 8.705 12-2037 419.801 45.470 42.573 0.000 0.000 507.844 25.990 12.696 9.136 S Tot 22,825.781 2,472.319 2,314.831 0.000 0.000 27,612.931 1,413.167 690.323 5.483 After 4,005.913 433.891 406.252 0.000 0.000 4,846.055 248.010 121.151 15.520 Total 26,831.694 2,906.210 2,721.082 0.000 0.000 32,458.986 1,661.177 811.475 6.981 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rdParty Other Future Net Cumulative Cum.Cash Flow End Expense Gross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 25.982 1 1.0 0.000 0.000 459.538 10,341.424 -6,618.269 -6,618.269 -5,328.776 12-2022 68.549 1 1.0 0.000 0.000 553.488 .000 4,447.082 -2,171.188 -2,122.411 12-2023 68.549 1 1.0 0.000 0.000 314.044 .000 2,493.577 322.390 -492.777 12-2024 68.549 1 1.0 0.000 0.000 226.758 .000 1,781.460 2,103.849 564.483 12-2025 68.549 1 1.0 0.000 0.000 178.990 .000 1,391.737 3,495.587 1,314.919 12-2026 68.549 1 1.0 0.000 0.000 149.242 .000 1,149.045 4,644.632 1,878.026 12-2027 68.549 1 1.0 0.000 0.000 128.587 .000 980.532 5,625.164 2,314.803 12-2028 68.549 1 1.0 0.000 0.000 113.629 .000 858.497 6,483.661 2,662.379 12-2029 68.549 1 1.0 0.000 0.000 101.546 .000 759.911 7,243.572 2,942.020 12-2030 68.549 1 1.0 0.000 0.000 92.180 .000 683.501 7,927.072 3,170.670 12-2031 68.549 1 1.0 0.000 0.000 84.498 .000 620.828 8,547.901 3,359.476 12-2032 68.549 1 1.0 0.000 0.000 77.941 .000 567.337 9,115.237 3,516.319 12-2033 68.549 1 1.0 0.000 0.000 71.506 .000 514.833 9,630.0703,645.700 12-2034 68.549 1 1.0 0.000 0.000 65.789 .000 468.193 10,098.264 3,752.672 12-2035 68.549 1 1.0 0.000 0.000 60.530 .000 425.282 10,523.546 3,841.012 12-2036 68.549 1 1.0 0.000 0.000 55.837 .000 386.995 10,910.541 3,914.087 12-2037 68.549 1 1.0 0.000 0.000 51.226 .000 349.382 11,259.923 3,974.059 S Tot 1,122.764 0.000 0.000 2,785.330 10,341.424 11,259.923 11,259.923 3,974.059 After 1,452.705 0.000 0.000 488.824 .000 2,535.365 13,795.287 4,230.645 Total 2,575.469 0.000 0.000 3,274.154 10,341.424 13,795.287 13,795.287 4,230.645 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 7,423.493 Oil Rate 29,352. 134. bbls/mo 96.3% 1.20 0.0% 3,180. 5,334. $/w/mo Expense 98.4898 98.4898 8.00 5,279.985 Gas Rate 133,258. 610. Mcf/mo 0.0% 0.00 0.0% 10.00 4,230.645 GOR 4,540. 4,540. scf/bbl Revenue 12.00 3,392.500 NGL Rate 5,674. 46.bbls/mo Oil 73.8673 73.8673 NGL Yield 42.6 75.8 bbl/MMcf Gas 73.8673 73.8673 15.00 2,422.285 Gas Shrinkage 62.2 25.8 % ______________________________ ______________________ 20.00 1,314.419 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 16.0 % Start Date: 08/2021 5 Months in year ‘21 37.611 Year Life (03/2059) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 633 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 36 Figure 37 LILIS ENERGY, INC. -- W SHAMMO PUD 1 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD 9 9 Reserve_______________________________________________________________________________________________________________________________ Category : PUD WINKLER COUNTY, TEXAS ________________________________________________________________________________________ As of 01/2019 8 _______________________39.86 Year Life (11/2058) Current NetOilProd. OilRevenue Prod. Tax Expenses FutureNet CashFlow 8 ______________________________ As of 01/2019 12/2018 Remaining Ultimate Interest NetGasSales GasRevenue Adv.Tax Investments CashFlow Disc.@10.0% ________________________________________________ Q i D ei n D ef Q ab _______________ GOR - scf/bbl 7 __________________________________________________Cumulatives Reserves Recovery _________________________________________________________________________________________ % mbbl/mmcf M$ M$ M$ M$ M$ 7 Oil - bbls/mo 14,631. 96.3 1.20 8.0 135. Initial Final Oil - mbbls 0.0 629.6 629.6 37.924 NI 238.775 13,775.622 852.863 3,002.905 7,082.9602,242.366 Gas - mcf/mo 66,424. 0.0 0.00 8.0 614. 4,540. 4,540. 6 Gas - mmcf 0.0 2,858.4 2,858.4 50.565 WI 802.190 1,492.073 416.618 5,309.376 6 5 5 OIL (bbls/mo) Δ GAS (mcf/mo) ∇ 4 4 3 3 2 2 9 9 8 8 7 7 10,000. 6 6 100,000. 5 5 4 4 3 3 2 2 9 9 8 8 7 7 6 6 5 5 4 4 1,000. 3 3 10,000. 2 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Reservoir : WOLFCAMP B W SHAMMO PUD 1 (1.5 WC B) TIME (years) TX OIL ♦⊗ ∗ -- Annual Averages Perfs: 0. - 0. Status: MKR G:\CGA8538\PHD \PUD.out First Production 00/ 0 First Data 12/2049 Last Data 01/1900 01 / 16 / 2019 12 : 15 : 28 21 API: Cawley, Gillespie & Associates, Inc. (DEFAULT) ASN 634 100. 1,000. Table 37 Reserve Estimates and Economic Forecasts as of December 31, 2018 Lilis Energy, Inc. Interests Proved Undeveloped Reserves LILIS ENERGY, INC. -- W SHAMMO PUD 1 (1.5 WC B) PHANTOM (WOLFCAMP B) FIELD -- WINKLER COUNTY, TEXAS (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) Gross Oil Gross Gas Gross NGL Net Oil Net Gas Net NGL Avg Oil Avg Gas Avg NGL End Production Production Production Production Sales Production Price Price Price Mo-Year MBBLS MMCF MBBLS MBBLS MMCF MBBLS $/BBL $/MCF $/BBL 12-2019 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2020 .0 .0 .0 .000 .000 .000 .000 .000 .000 12-2021 133.9 607.9 49.8 50.783 170.609 18.883 57.693 1.860 15.734 12-2022 83.9 380.8 31.2 31.806 106.855 11.827 57.693 1.860 15.734 12-2023 53.3 242.0 19.8 20.212 67.905 7.516 57.693 1.860 15.734 12-2024 40.0 181.7 14.9 15.180 50.998 5.645 57.693 1.860 15.734 12-2025 32.2 146.4 12.0 12.228 41.082 4.547 57.693 1.860 15.734 12-2026 27.2 123.6 10.1 10.324 34.684 3.839 57.693 1.860 15.734 12-2027 23.7 107.4 8.8 8.971 30.138 3.336 57.693 1.860 15.734 12-2028 21.0 95.5 7.8 7.976 26.795 2.966 57.693 1.860 15.734 12-2029 18.9 85.7 7.0 7.161 24.057 2.663 57.693 1.860 15.734 12-2030 17.2 78.1 6.4 6.524 21.918 2.426 57.693 1.860 15.734 12-2031 15.8 71.7 5.9 5.993 20.133 2.228 57.693 1.860 15.734 12-2032 14.6 66.2 5.45.528 18.572 2.056 57.693 1.860 15.734 12-2033 13.4 60.7 5.0 5.072 17.038 1.886 57.693 1.860 15.734 12-2034 12.3 55.9 4.6 4.666 15.676 1.735 57.693 1.860 15.734 12-2035 11.3 51.4 4.2 4.293 14.423 1.596 57.693 1.860 15.734 12-2036 10.4 47.4 3.9 3.960 13.305 1.473 57.693 1.860 15.734 12-2037 9.6 43.5 3.6 3.633 12.206 1.351 57.693 1.860 15.734 S Tot 538.7 2,445.8 200.3 204.308 686.392 75.971 57.693 1.860 15.734 After 90.9 412.6 33.8 34.468 115.798 12.817 57.693 1.860 15.734 Total 629.6 2,858.4 234.1 238.775 802.190 88.788 57.693 1.860 15.734 Cum .0 .0 .0 Ult 629.6 2,858.4 234.1 (11) (12) (13) (14) (15) (16) (17) (18) (19) (20) Oil Gas NGL Hedge Other Total Production Ad Valorem End Revenue Revenue Revenue Revenue Revenue Revenue Taxes Taxes $/BOE6 Mo-Year M$ M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 .000 .000 0.000 0.000 .000 .000 .000 .000 12-2021 2,929.785 317.333 297.118 0.000 0.000 3,544.236 181.386 88.606 4.181 12-2022 1,834.968 198.750 186.090 0.000 0.000 2,219.808 113.605 55.495 4.522 12-2023 1,166.106 126.304 118.258 0.000 0.000 1,410.668 72.195 35.267 4.874 12-2024 875.757 94.855 88.813 0.000 0.000 1,059.425 54.219 26.486 5.194 12-2025 705.476 76.412 71.544 0.000 0.000 853.432 43.67721.336 5.505 12-2026 595.612 64.512 60.403 0.000 0.000 720.527 36.875 18.013 5.800 12-2027 517.537 56.056 52.485 0.000 0.000 626.078 32.041 15.652 6.085 12-2028 460.143 49.839 46.664 0.000 0.000 556.646 28.488 13.916 6.357 12-2029 413.120 44.746 41.896 0.000 0.000 499.761 25.577 12.494 6.636 12-2030 376.379 40.767 38.170 0.000 0.000 455.315 23.302 11.383 6.902 12-2031 345.727 37.447 35.061 0.000 0.000 418.235 21.404 10.456 7.167 12-2032 318.923 34.543 32.343 0.000 0.000 385.809 19.745 9.645 7.441 12-2033 292.590 31.691 29.672 0.000 0.000 353.954 18.115 8.849 7.759 12-2034 269.198 29.158 27.300 0.000 0.000 325.656 16.666 8.141 8.094 12-2035 247.676 26.826 25.118 0.000 0.000 299.620 15.334 7.491 8.458 12-2036 228.474 24.747 23.170 0.000 0.000 276.391 14.145 6.910 8.840 12-2037 209.609 22.703 21.257 0.000 0.000 253.570 12.977 6.339 9.284 S Tot 11,787.079 1,276.689 1,195.363 0.000 0.000 14,259.131 729.750 356.478 5.505 After 1,988.543 215.384 201.664 0.000 0.000 2,405.591 123.113 60.140 15.724 Total 13,775.622 1,492.073 1,397.027 0.000 0.000 16,664.722 852.863 416.618 6.980 (21) (22) (23) (24) (25) (26) (27) (28) (29) (30) (31) Operating Wells Workover 3rd Party Other Future Net Cumulative Cum.Cash Flow End ExpenseGross Net Expense COPAS Deductions Investment Cash Flow Cash Flow Disc.@ 10. % Mo-Year M$ Count M$ M$ M$ M$ M$ M$ M$ 12-2019 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2020 .000 0 0.0 0.000 0.000 0.000 .000 .000 .000 .000 12-2021 25.027 1 0.5 0.000 0.000 357.509 5,309.376 -2,417.668 -2,417.668 -2,075.495 12-2022 35.194 1 0.5 0.000 0.000 223.913 .000 1,791.601 -626.067 -785.688 12-2023 35.194 1 0.5 0.000 0.000 142.295 .000 1,125.718 499.651 -50.314 12-2024 35.194 1 0.5 0.000 0.000 106.865 .000 836.662 1,336.313 446.124 12-2025 35.194 1 0.5 0.000 0.000 86.086 .000 667.140 2,003.453 805.807 12-2026 35.194 1 0.5 0.000 0.000 72.680 .000 557.765 2,561.218 1,079.127 12-2027 35.194 1 0.5 0.000 0.000 63.153 .000 480.039 3,041.257 1,292.948 12-2028 35.194 1 0.5 0.000 0.000 56.149 .000 422.900 3,464.157 1,464.158 12-2029 35.194 1 0.5 0.000 0.000 50.411 .000 376.086 3,840.242 1,602.550 12-2030 35.194 1 0.5 0.000 0.000 45.928 .000 339.509 4,179.751 1,716.123 12-2031 35.194 1 0.5 0.000 0.000 42.188 .000 308.993 4,488.745 1,810.093 12-2032 35.194 1 0.5 0.000 0.000 38.917 .000 282.308 4,771.053 1,888.139 12-2033 35.194 1 0.5 0.000 0.000 35.703 .000 256.093 5,027.146 1,952.497 12-2034 35.194 1 0.5 0.000 0.000 32.849 .000 232.805 5,259.9522,005.688 12-2035 35.194 1 0.5 0.000 0.000 30.223 .000 211.380 5,471.331 2,049.596 12-2036 35.194 1 0.5 0.000 0.000 27.880 .000 192.263 5,663.594 2,085.901 12-2037 35.194 1 0.5 0.000 0.000 25.578 .000 173.482 5,837.076 2,115.679 S Tot 588.124 0.000 0.000 1,438.326 5,309.376 5,837.076 5,837.076 2,115.679 After 733.802 0.000 0.000 242.653 .000 1,245.884 7,082.960 2,242.366 Total 1,321.926 0.000 0.000 1,680.979 5,309.376 7,082.960 7,082.960 2,242.366 _________________________________________________________________Evaluation Parameters (Gross) _____________________________Expenses (Gross) ______________________________Percent Interests ______________________Percent Cum. Disc. ________________________________ Initial Final Units ___________________Dei n Def _____________________________ Initial Final Units ________________ Final 5.00 3,874.004 Oil Rate 29,352. 134. bbls/mo 96.3% 1.20 0.0% 3,093. 5,798. $/w/mo Expense 50.5655 50.5655 8.00 2,781.444 Gas Rate 133,258. 610. Mcf/mo 0.0% 0.00 0.0% 10.00 2,242.366 GOR 4,540. 4,540. scf/bbl Revenue 12.00 1,808.984 NGL Rate 5,362. 51. bbls/mo Oil 37.9241 37.9241 NGL Yield 40.2 83.9 bbl/MMcf Gas 37.9241 37.9241 15.00 1,303.099Gas Shrinkage 63.1 26.2 % ______________________________ ______________________ 20.00 717.246 Oil Severance 4.6 4.6 % Gas Severance 7.5 7.5 % NGL Severance 7.5 7.5 % Ad___________________________________________ Valorem 9.1 % Start Date: 04/2021 9 Months in year ‘21 37.610 Year Life (11/2058) THESE DATA ARE PART OF A CG&A REPORT AND ARE SUBJECT TO THE CONDITIONS IN THE TEXT OF THE REPORT. ASN 634 DEFAULT 1/16/2019 12:12:37 TEXAS REGISTERED ENGINEERING FIRM F-693. OIL PUD Cawley, Gillespie & Associates, Inc. Table 37 APPENDIX Explanatory Comments for Summary Tables HEADINGS Table I Description of Table Information Identity of Interest Evaluated Property Description – Location Reserve Classification and Development Status Effective Date of Evaluation FORECAST (Columns) (1) (11) (21) Calendar or Fiscal years/months commencing on effective date. (2) (3) (4) Gross Production (8/8th) for the years/months which are economical. These are expressed as thousands of barrels (Mbbl) and millions of cubic feet (MMcf) of gas at standard conditions. Total future production, cumulative production to effective date and ultimate recovery at the effective date are shown following the annual/monthly forecasts. (5) (6) (7) Net Production accruable to evaluated interest is calculated by multiplying the revenue interest times the gross production. These values take into account changes in interest and gas shrinkage. (8) Average (volume weighted) gross liquid price per barrel before deducting production-severance taxes. (9) Average (volume weighted) gross gas price per Mcf before deducting production-severance taxes. (10) Average (volume weighted) gross NGL price per barrel before deducting production-severance taxes. (12) Revenue derived from oil sales -- column (5) times column (8). (13) Revenue derived from gas sales -- column (6) times column (9). (14) Revenue derived from NGL sales -- column (7) times column (10). (15) Revenue derived from hedgepositions. (16) Revenue derived from other sources not included in column (12) through column (15); may include revenue from electrical sales, pipeline gas transportation, 3rd party saltwater disposal, etc. (17) Total Revenue – sum of column (12) through column (16). (18) Production-Severance taxes deducted from gross oil, gas and NGL revenue. (19) Ad Valorem taxes. (20) $/BOE6 – is the total of column (22), column (25), column (26), and column (27) divided by Barrels of Oil Equivalent (“BOE”). BOE is net oil production column (5) plus net gas production column (6) converted to oil at six Mcf gas per one bbl oil plus net NGL production column (7) converted to oil at one bbl NGL per 0.65 bbls of oil. (22) Operating Expenses are direct operating expenses to the evaluated working interest and may include combined fixed rate administrative overhead charges for operated oil and gas producers known as COPAS. (23) Average gross wells. (24) Average net wells are gross wells times working interest. (25) Workover Expenses are non-direct operating expenses and may include maintenance, well service, compressor, tubing, and pump repair. (26) 3rd Party COPAS are combined fixed rate administrative overhead charges for non-operated oil and gas producers. (27) Other Deductions may include compression-gathering expenses, transportation costs and water disposal costs. (28) Investments, if any, include re-completions, future drilling costs,pumping units, etc. and may include either tangible or intangible or both, and the costs for plugging and the salvage value of equipment at abandonment may be shown as negative investments at end of life. (29) (30) Future Net Cash Flow is column (17) less the total of column (18), column (19), column (22), column (25), column (26), column (27) and column (28). The data in column (29) are accumulated in column (30). Federal income taxes have not been considered. (31) Cumulative Discounted Cash Flow is calculated by discounting monthly cash flows at the specified annual rates. MISCELLANEOUS DCF Profile • The cumulative cash flow discounted at six different interest rates are shown at the bottom of columns (30-31). Interest has been compounded monthly. The DCF’s for the “Without Hedge” case may be shown to the left of the main DCF profile. Life • The economic life of the appraised property is noted in the lower right-hand corner of the table. Footnotes • Comments regarding the evaluation may be shown in the lower left-hand footnotes. Price Deck • A table of oil and gas prices, price caps and escalation rates may be shown in the lower middle footnotes. Differentials • Total annual price adjustments may be shown in gray font to the left of column (8), column (9) and column (10). Appendix Cawley, Gillespie & Associates, Inc. Page 1 APPENDIX Methods Employed in the Estimation of Reserves The four methods customarily employed in the estimation of reserves are (1) production performance, (2) material balance, (3) volumetric and (4) analogy. Most estimates, although based primarily on one method, utilize other methods depending on the nature and extent of the data available and the characteristics of the reservoirs. Basic information includes production, pressure, geological and laboratory data. However, a large variation exists in the quality, quantity and types of information available on individual properties. Operators are generally required by regulatory authorities to file monthly production reports and may be required to measure and report periodically such data as well pressures, gas-oil ratios, well tests, etc. As a general rule, an operator has complete discretion in obtaining and/or making available geological and engineering data. The resulting lack of uniformity in data renders impossible the application of identical methods to all properties, and may result in significant differences in the accuracy and reliability of estimates. A brief discussion of each method, its basis, data requirements, applicability and generalization as to its relative degree of accuracy follows: Production performance. This method employs graphical analyses of production data on the premise that all factors which have controlled the performance to date will continue to control and that historical trends can beextrapolated to predict future performance. The only information required is production history. Capacity production can usually be analyzed from graphs of rates versus time or cumulative production. This procedure is referred to as "decline curve" analysis. Both capacity and restricted production can, in some cases, be analyzed from graphs of producing rate relationships of the various production components. Reserve estimates obtained by this method are generally considered to have a relatively high degree of accuracy with the degree of accuracy increasing as production history accumulates. Material balance. This method employs the analysis of the relationship of production and pressure performance on the premise that the reservoir volume and its initial hydrocarbon content are fixed and that this initial hydrocarbon volume and recoveries therefrom can be estimated by analyzing changes in pressure with respect to production relationships. This method requires reliable pressure and temperature data, production data, fluid analyses and knowledge of the nature of the reservoir. The material balance method is applicable to all reservoirs, but the time and expense required for its use is dependent on the nature of the reservoir and its fluids. Reserves for depletion type reservoirs can be estimated from graphs of pressures corrected for compressibility versus cumulative production, requiring only data that are usuallyavailable. Estimates for other reservoir types require extensive data and involve complex calculations most suited to computer models which makes this method generally applicable only to reservoirs where there is economic justification for its use. Reserve estimates obtained by this method are generally considered to have a degree of accuracy that is directly related to the complexity of the reservoir and the quality and quantity of data available. Volumetric. This method employs analyses of physical measurements of rock and fluid properties to calculate the volume of hydrocarbons in-place. The data required are well information sufficient to determine reservoir subsurface datum, thickness, storage volume, fluid content and location. The volumetric method is most applicable to reservoirs which are not susceptible to analysis by production performance or material balance methods. These are most commonly newly developed and/or no-pressure depleting reservoirs. The amount of hydrocarbons in-place that can be recovered is not an integral part of the volumetric calculations but is an estimate inferred by other methods and a knowledge of the nature of the reservoir. Reserve estimates obtained by this method are generally considered to have a low degree of accuracy; but the degree of accuracy can be relatively high where rock quality and subsurface control is good and the nature of the reservoir is uncomplicated.Analogy. This method which employs experience and judgment to estimate reserves, is based on observations of similar situations and includes consideration of theoretical performance. The analogy method is a common approach used for “resource plays,” where an abundance of wells with similar production profiles facilitates the reliable estimation of future reserves with a relatively high degree of accuracy. The analogy method may also be applicable where the data are insufficient or so inconclusive that reliable reserve estimates cannot be made by other methods. Reserve estimates obtained in this manner are generally considered to have a relatively low degree of accuracy. Much of the information used in the estimation of reserves is itself arrived at by the use of estimates. These estimates are subject to continuing change as additional information becomes available. Reserve estimates which presently appear to be correct may be found to contain substantial errors as time passes and new information is obtained about well and reservoir performance. Appendix Cawley, Gillespie & Associates, Inc. Page 2 APPENDIX Reserve Definitions and Classifications The Securities and Exchange Commission, in SX Reg. 210.4-10 dated November 18, 1981, as amended on September 19, 1989 and January 1, 2010, requires adherence to the following definitions of oil and gas reserves: "(22) Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations— prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. "(i) The area of a reservoir considered as proved includes: (A) The area identified by drilling and limited by fluid contacts, if any, and (B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data. "(ii) In the absence of data on fluid contacts, provedquantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty. "(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty. "(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when: (A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and (B) The project has been approved for development by all necessary parties and entities, including governmental entities. "(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be theaverage price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. "(6) Developed oil and gas reserves. Developed oil and gas reserves are reserves of any category that can be expected to be recovered: “(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and “(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well. "(31) Undeveloped oil and gas reserves. Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. “(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances. “(ii) Undrilled locations can be classified as having undeveloped reserves only if adevelopment plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time. “(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty. Appendix Cawley, Gillespie & Associates, Inc. Page 3 "(18) Probable reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered. “(i) When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates. “(ii) Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir. “(iii) Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves. “(iv) See also guidelines in paragraphs (17)(iv) and (17)(vi) of this section (below). "(17) Possible reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. “(i) When deterministic methods are used, the total quantitiesultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates. “(ii) Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project. “(iii) Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves. “(iv) The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects. “(v) Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formationthickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir. “(vi) Pursuant to paragraph (22)(iii) of this section (above), where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.” Instruction 4 of Item 2(b) of Securities and Exchange Commission Regulation S-K was revised January 1, 2010 to state that "a registrant engaged in oil and gas producing activities shall provide the information required by Subpart 1200 of Regulation S–K." This is relevant in that Instruction 2 to paragraph (a)(2) states: “The registrant is permitted, but not required, to disclose probable or possible reserves pursuant to paragraphs (a)(2)(iv) through (a)(2)(vii) of this Item.” "(26) Reserves. Reserves are estimatedremaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project. “Note to paragraph (26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).” Appendix Cawley, Gillespie & Associates, Inc. Page 4 CAWLEY, GILLESPIE & ASSOCIATES, INC. PETROLEUM CONSULTANTS 13640 BRIARWICK DRIVE, SUITE 100 306 WEST SEVENTH STREET, SUITE 302 1000 LOUISIANA STREET, SUITE 1900 AUSTIN, TEXAS 78729-1107 FORT WORTH, TEXAS 76102-4987 HOUSTON, TEXAS 77002-5008 512-249-7000 817- 336-2461 713-651-9944 www.cgaus.com Professional Qualifications of Primary Technical Person The evaluation summarized by this report was conducted by a proficient team of geologists and reservoir engineers who integrate geological, geophysical, engineering and economic data to produce high quality reserve estimates and economic forecasts. This report was supervised by Todd Brooker, President of Cawley, Gillespie & Associates (CG&A). Prior to joining CG&A, Mr. Brooker worked in Gulf of Mexico drilling and production engineering at Chevron. Mr. Brooker has been an employee of CG&A since 1992. His responsibilities include reserve and economic evaluations, fair market valuations, field studies, pipeline resource studies and acquisition/divestiture analysis. His reserve reports are routinely used for public company SEC disclosures. His experience includes significant projects in both conventional and unconventional resources in every major U.S. producing basin and abroad, including oil and gas shale plays, coalbed methane fields, waterfloods and complex,faulted structures. Mr. Brooker graduated with honors from the University of Texas at Austin in 1989 with a Bachelor of Science degree in Petroleum Engineering, and is a registered Professional Engineer in the State of Texas. He is also a member of the Society of Petroleum Engineers (SPE) and the Society of Petroleum Evaluation Engineers (SPEE). Based on his educational background, professional training and more than 20 years of experience, Mr. Brooker and CG&A continue to deliver professional, ethical and reliable engineering and geological services to the petroleum industry. CAWLEY, GILLESPIE & ASSOCIATES, INC. TEXAS REGISTERED ENGINEERING FIRM F-693 

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