CPE Company Profile

We are an independent oil and natural gas company focused on the acquisition and development of unconventional oil and natural gas reserves in the Permian Basin. The Permian Basin is located in West Texas and southeastern New Mexico and is comprised of three primary sub-basins: the Midland Basin, the Delaware Basin, and the Central Basin Platform. We have historically been focused on the Midland Basin and recently entered the Delaware Basin through an acquisition completed in February 2017. Our drilling activity during 2016 focused on the horizontal development of several prospective intervals in the Midland Basin, including multiple levels of the Wolfcamp formation and the Lower Spraberry shale. As a result of our horizontal development efforts and contributions from acquisitions, our net daily production for calendar year 2016 as compared to calendar year 2015 grew approximately 59% to 15,227 BOE/d (approximately 77% oil). We intend to grow our reserves and production through the development, exploitation and drilling of our multi-year inventory of identified, potential drilling locations. We intend to add to this inventory through delineation drilling of emerging zones on our existing acreage and acquisition of additional locations through leasehold purchases, leasing programs, joint ventures and asset swaps.

Maintain fiscal discipline, financial liquidity and our capacity to capitalize on growth opportunities. During the past several quarters of relative oil price weakness, we moderated our level of drilling activity and high-graded our investments to the highest returning projects to preserve our financial flexibility while also maintaining operational momentum. In 2016, we reduced our operational capital expenditures by 8% from 2015 to better align internal cash flows with spending, but were still able to deliver organic production and reserve growth given the attractive drilling opportunities within our portfolio. Our ability to pivot our operations and maintain a solid financial position allowed us to selectively pursue attractive acquisition opportunities during the course of 2016, ultimately putting us in the position to grow our net surface acreage position by approximately 122%. Importantly, we funded these inorganic growth initiatives with the issuance of common stock, allowing us to reduce leverage throughout the year and positioning us in a strong financial position for future growth in our organic drilling plans.

Drive production and maximize resource recovery and reserve growth through horizontal development of our resource base. We entered the Midland Basin in 2009 focused on a vertical development program that allowed us to amass a comprehensive database of subsurface geologic and other technical data. Beginning in 2012, we leveraged that subsurface knowledge base to transition to horizontal development of hydrocarbon bearing zones that were previously being exploited with vertical wells. Since that time, we have applied the continued success of our horizontal development as evidenced in our significant year-over-year production growth, which increased 59% in 2016 to 5,573 MBOE (15,227 BOE/d) compared to 3,508 MBOE (9,610 BOE/d) in 2015. Additionally, we grew reserves 69% in 2016 to 91.6 MMBOE from 54.3 MMBOE at year-end 2015, including reserve extensions and discoveries replacement in 2016 of 17.3 MMBOE. We intend to continue to grow our production volumes, both from our existing properties and from properties acquired in recent acquisitions, as we execute a resource development program exclusively focused on horizontal development of currently producing and prospective flow intervals in the Midland and Delaware Basins.

Expand our drilling portfolio through evaluation of existing acreage. We plan to further our efforts to expand our drilling inventory through downspacing tests in existing flow units and selective delineation of new flow units. During 2016, we successfully tested a second flow unit in the Lower Spraberry shale in the Midland Basin, bringing our producing flow unit count in the that sub-basin to six, including the Upper and Lower sections of the Lower Spraberry, Middle Spraberry, Upper and Lower Wolfcamp A and the Upper and Lower Wolfcamp B zones. In the Midland Basin, we believe incremental opportunities exist to develop existing flow units with tighter well spacing, and add new flow units within both currently producing zones that have adequate thickness and new flow units in other prospective zones including the Clearfork, Jo Mill, Wolfcamp C and Cline (also called the Wolfcamp D). As part of our entry into the Delaware Basin, we will be initially focused on development of established zones such as the Wolfcamp A and Wolfcamp B, but plan to test other prospective intervals within both the Bone Spring and Wolfcamp formations in the future.