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The Reporting Persons acquired the shares of
Common Stock to which this Schedule 13D relates for investment purposes in the ordinary course of business. The Reporting Persons
acquired the shares of Common Stock because they believed that the shares of Common Stock reported herein, when purchased, represented
an attractive investment opportunity.
The Reporting Persons and their representatives
have, from time to time, engaged in, and intend to continue to engage in, discussions with members of management and the
board of directors of the Issuer (the "
Board
"), other shareholders, industry analysts, existing or potential
strategic partners or competitors and other third parties regarding a variety of matters relating to the Issuer, which
may include, among other things, the Issuer's business, operations and expenses, strategic alternatives and direction,
management, Board composition, and capital structure and allocation, and may take other steps seeking to bring about changes
to increase shareholder value as well as pursue other plans or proposals that relate to or could result in any of the
matters set forth in clauses (a)-(j) of Item 4 of Schedule 13D.
On February 14, 2019, the Reporting Persons delivered to the Board a letter and presentation advising the
Issuer that it should, among other things, (1) reduce its general and administrative expenses, which the Reporting Persons believe
are excessive, by at least 50%, (2) transition to wider spacing between its wells and eliminate all non-productive capital spending
and (3) formulate a reasonable business plan which includes the return of capital to shareholders and align management compensation
with the realization of that plan. The Reporting Persons also called on the Issuer to evaluate strategic alternatives, including
potential mergers or sales, to enhance value and return capital to the shareholders. The letter and presentation are attached hereto
as
Exhibits D
and
E
, respectively, and are incorporated herein by reference.
The Reporting Persons intend to review their
investment in the Issuer on a continuing basis. Depending on various factors, including, without limitation, the outcome of any
discussions referenced above, the Issuer's financial position, results and strategic direction, actions taken by the Issuer's management
and the Board, price levels of the shares of Common Stock, other investment opportunities available to the Reporting Persons, conditions
in the securities market and general economic and industry conditions, the Reporting Persons may in the future take such actions
with respect to their investment in the Issuer as they deem appropriate, including, without limitation, exchanging information
with the Issuer pursuant to appropriate confidentiality or similar agreements; acquiring additional shares of Common Stock and/or
other equity, debt, notes, instruments or other securities of the Issuer (collectively, the "
Securities
") or disposing
of some or all of the Securities beneficially owned by them, in public market or privately negotiated transactions; entering into
financial instruments or other agreements that increase or decrease the Reporting Persons' economic exposure with respect to their
investment in the Issuer and/or otherwise changing their intention with respect to any and all matters referred to in Item 4 of
Schedule 13D.
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