SECURITIES & EXCHANGE COMMISSION EDGAR...

SECURITIES & EXCHANGE COMMISSION EDGAR FILING

Resolute Energy Corp

Form: 10-Q

Date Filed: 2017-11-06

Corporate Issuer CIK: 1469510

© Copyright 2017, Issuer Direct Corporation. All Right Reserved. Distribution of this document is strictly prohibited, subject to the terms of use.

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UNITED STATESSECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-Q

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File No. 001-34464

RESOLUTE ENERGY CORPORATION(Exact Name of Registrant as Specified in its Charter)

Delaware 27-0659371

(State or other Jurisdiction ofIncorporation or Organization)

(I.R.S. EmployerIdentification Number)

1700 Lincoln Street, Suite 2800 Denver, CO 80203

(Address of Principal Executive Offices) (Zip Code)

(303) 534-4600(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filingrequirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data Filerequired 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 shorterperiod that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or anemerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” inRule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐

Non-accelerated filer ☑ (Do not check if a small reporting company) Smaller reporting company ☐

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 newor revised financial accounting 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). ☐ No ☑

As of October 31, 2017, 22,503,907 shares of the Registrant’s $0.0001 par value Common Stock were outstanding.

EDGAR Stream is a copyright of Issuer Direct Corporation, all rights reserved.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995.The use of any statements containing the words “anticipate,” “intend,” “believe,” “estimate,” “project,” “expect,” “plan,” “should” or similar expressions areintended to identify such statements. Forward-looking statements included in this report relate to, among other things; anticipated production in 2017; anticipatedgas to oil ratios in 2017; anticipated capital expenditures and activity in 2017, including our 2017 expanded capital plan; our financial condition and managementof the Company in the current commodity price environment, including expectations regarding price fluctuations; future financial and operating results; liquidityand availability of capital; future borrowing base adjustments and the effect thereof; future pad drilling plans and expected resulting cost savings and productionimpact; future production, reserve growth and decline rates; our plans and expectations regarding our development activities including drilling and completingwells, the number of such potential projects, locations, and anticipated acreage held by production by the end of 2017; the potential impact of well interferenceand the effectiveness of operational adjustments to mitigate it; the prospectivity of our properties and acreage; the expected benefits of the Aneth Disposition(defined below); and the anticipated accounting treatment of various activities. Although we believe that these statements are based upon reasonable currentassumptions, no assurance can be given that the future results covered by the forward-looking statements will be achieved. Forward-looking statements can besubject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by the forward-lookingstatements. All forward-looking statements speak only as of the date made. All subsequent written and oral forward-looking statements attributable to us, orpersons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Except as required by law, we undertake no obligation toupdate any forward-looking statement. Factors that could cause actual results to differ materially from our expectations include, among others, those factorsreferenced in the “Risk Factors” section of this report, if any, in our Annual Report on Form 10-K for the year ended December 31, 2016, and such things as:

• volatility of oil and gas prices, including extended periods of depressed prices that would adversely affect our revenue, income, cash flow fromoperations and liquidity and the discovery, estimation and development of, and our ability to replace oil and gas reserves;

• a lack of available capital and financing, including the capital needed to pursue our operations and other development plans for our properties, onacceptable terms, including as a result of a reduction in the borrowing base under our revolving credit facility;

• our ability to achieve the growth and benefits we expect from our acquisitions;

• our ability to achieve the benefits we expect from the disposition of Aneth Field;

• the success of the development plan for and production from our oil and gas properties;

• the completion, timing and success of drilling on our properties;

• the timing and amount of future production of oil and gas;

• risks related to our level of indebtedness;

• our ability to fulfill our obligations under our revolving credit facility, the senior notes and any additional indebtedness we may incur;

• constraints imposed on our business and operations by our revolving credit facility and senior notes, which may limit our ability to execute ourbusiness strategy;

• future write downs of reserves and the carrying value of our oil and gas properties;

• acquisitions and other business opportunities (or lack thereof) that may be presented to and pursued by us, and the risk that any opportunitycurrently being pursued will fail to consummate or encounter material complications;

• risks associated with unanticipated liabilities assumed, or title, environmental or other problems resulting from, our acquisitions;

• our future cash flow, liquidity and financial position;

• the success of our business and financial strategy, derivative strategies and plans;

• risks associated with rising interest rates;

• inaccuracies in reserve estimates;

• operational problems, or uninsured or underinsured losses affecting our operations or financial results;

• the amount, nature and timing of our capital expenditures, including future development costs;


• the impact of any U.S. or global economic recession;

• the ability to sell or otherwise monetize assets at values and on terms that are advantageous to us;

• availability of, or delays related to, drilling, completion and production, personnel, supplies and equipment;

• risks and uncertainties in the application of available horizontal drilling and completion techniques;

• uncertainty surrounding occurrence and timing of identifying drilling locations and necessary capital to drill such locations;

• our ability to fund and develop our estimated proved undeveloped reserves;

• the effect of third party activities on our oil and gas operations, including our dependence on third party owned water sourcing, gathering anddisposal, oil gathering and gas gathering and processing systems;

• the concentration of our credit risk as the result of depending on one primary oil purchaser and one primary gas purchaser in the Delaware Basin;

• our operating costs and other expenses;

• our success in marketing oil and gas;

• the impact and costs related to compliance with, or changes in, laws or regulations governing our oil and gas operations, and the potential forincreased regulation of drilling and completion techniques, underground injection or fracing operations;

• our relationship with the local communities in the areas where we operate;

• the availability of water and our ability to adequately treat and dispose of water while and after drilling and completing wells;

• regulation of waste water injection intended to address seismic activity;

• the concentration of our producing properties in a single geographic area;

• potential changes to regulations affecting derivatives instruments;

• environmental liabilities under existing or future laws and regulations;

• the impact of climate change regulations on oil and gas production and demand;

• potential changes in income tax deductions and credits currently available to the oil and gas industry;

• the impact of weather and the occurrence of disasters, such as fires, explosions, floods and other events and natural disasters;

• competition in the oil and gas industry and failure to keep pace with technological development;

• actions, announcements and other developments in OPEC and in other oil and gas producing countries;

• risks relating to our joint interest partners’ and other counterparties’ inability to fulfill their contractual commitments;

• loss of senior management or key technical personnel;

• the impact of long-term incentive programs, including performance-based awards and stock appreciation rights;

• timing of issuance of permits and rights of way, including the effects of any government shut-downs;

• potential power disruptions or supply limitations in the electrical infrastructure serving our operations;

• timing of installation of gathering infrastructure in areas of new exploration and development;

• potential breakdown of equipment and machinery relating to the gathering and compression infrastructure;

• losses possible from pending or future litigation;

• cybersecurity risks;

• the risk of a transaction that could trigger a change of control under our debt agreements;

• risks related to our common stock, potential declines in stock prices and potential future dilution to stockholders;

• risk factors discussed or referenced in this report; and


• other factors, many of which are beyond our control.

Additionally, the Securities and Exchange Commission (“SEC”) requires oil and gas companies, in filings made with the SEC, to disclose provedreserves, which are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to beeconomically producible from a given date forward, from known reservoirs, under existing economic conditions, operating methods and governmentalregulations. The SEC permits the optional disclosure of “probable” and “possible” reserves. From time to time, we may elect to disclose probable reserves andpossible reserves, excluding their valuation, in our SEC filings, press releases and investor presentations. The SEC defines “probable” reserves as “thoseadditional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are likely as not to be recovered.” TheSEC defines “possible” reserves as “those additional reserves that are less certain to be recovered than probable reserves.” The Company applies thesedefinitions when estimating probable and possible reserves. Statements of reserves are only estimates and may not correspond to the ultimate quantities of oiland gas recovered. Any reserves estimates or potential resources disclosed in our public filings, press releases and investor presentations that are notspecifically designated as being estimates of proved reserves may include estimated reserves not necessarily calculated in accordance with, or contemplated by,the SEC’s reserves reporting guidelines.

SEC rules prohibit us from including resource estimates in our public filings with the SEC. Our potential resource estimates include estimates ofhydrocarbon quantities for (i) new areas for which we do not have sufficient information to date to classify as proved, probable or possible reserves, (ii) otherareas to take into account the level of certainty of recovery of the resources and (iii) uneconomic proved, probable or possible reserves. Potential resourceestimates do not take into account the certainty of resource recovery and are therefore not indicative of the expected future recovery and should not be reliedupon for such purpose. Potential resources might never be recovered and are contingent on exploration success, technical improvements in drilling access,commerciality and other factors. In our press releases and investor presentations, we sometimes include estimates of quantities of oil and gas using certainterms, such as “resource,” “resource potential,” “EUR,” “oil in place,” or other descriptions of volumes of reserves, which terms include quantities of oil and gasthat may not meet the SEC definition of proved, probable and possible reserves. These estimates are by their nature more speculative than estimates of provedreserves and accordingly are subject to substantially greater risk of being recovered by Resolute. The Company believes its potential resource estimates arereasonable, but such estimates have not been reviewed by independent engineers. Furthermore, estimates of potential resources may change significantly asdevelopment provides additional data, and actual quantities that are ultimately recovered may differ substantially from prior estimates.

Production rates, including 24‐hour peak IP rates, 30‐day peak IP rates, 90‐day peak IP rates, 120 ‐day peak IP rates and 150-day peak IP rates, for bothour wells and for those wells that are located near to our properties are limited data points in each well’s productive history. These rates are sometimes actualrates and sometimes extrapolated or normalized rates. As such the rates for a particular well may change as additional data becomes available. Peak productionrates are not necessarily indicative or predictive of future production rates, EUR or economic rates of return from such wells and should not be relied upon forsuch purpose. Equally, the way we calculate and report peak IP rates and the methodologies employed by others may not be consistent, and thus the valuesreported may not be directly and meaningfully comparable. Lateral lengths described are indicative only. Actual completed lateral lengths depend on variousconsiderations such as lease‐line offsets. Standard length laterals, sometimes referred to as 5,000 foot laterals, are laterals with completed length generallybetween 4,000 feet and 5,500 feet. Mid‐length laterals, sometimes referred to as 7,500 foot laterals, are laterals with completed length generally between 6,500feet and 8,000 feet. Long laterals, sometimes referred to as 10,000 foot laterals, are laterals with completed length generally longer than 8,000 feet.

You are urged to consider closely the disclosure in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K for the year endedDecember 31, 2016, in particular the factors described under “Risk Factors.”


TABLE OF CONTENTS PART I - FINANCIAL INFORMATION

Item 1. Financial Statements 1

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22

Item 3. Quantitative and Qualitative Disclosures About Market Risk 35

Item 4. Controls and Procedures 38

PART II - OTHER INFORMATION 39

Item 1. Legal Proceedings 39

Item 1 A. Risk Factors 39

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 40

Item 3. Defaults Upon Senior Securities 40

Item 4. Mine Safety Disclosures 40

Item 5. Other Information 40

Item 6. Exhibits 41

Signatures 42


RESOLUTE ENERGY CORPORATION

Condensed Consolidated Balance Sheets (UNAUDITED)(in thousands, except share amounts)

September 30, December 31, 2017 2016

Assets Current assets:

Cash and cash equivalents $ 888 $ 133,089 Accounts receivable 73,830 55,228 Commodity derivative instruments 1,653 218 Prepaid expenses and other current assets 1,911 3,249

Total current assets 78,282 191,784 Property and equipment, at cost:

Oil and gas properties, full cost method of accounting Unproved 254,865 121,375 Proved 2,132,497 1,889,111

Other property and equipment 13,271 9,754 Accumulated depletion, depreciation and amortization (1,709,800 ) (1,647,120 )

Net property and equipment 690,833 373,120 Other assets:

Restricted cash 23,195 23,137 Other assets 10 332

Total assets $ 792,320 $ 588,373

Liabilities and Stockholders’ Deficit Current liabilities:

Accounts payable $ 27,123 $ 8,675 Accrued expenses 71,873 37,507 Accrued revenue payable 33,219 19,801 Accrued cash-settled incentive awards 27,278 27,158 Accrued interest payable 18,651 5,784 Asset retirement obligations 1,216 895 Commodity derivative instruments 8,177 8,014 Secured term loan facility — 122,139

Total current liabilities 187,537 229,973 Long term liabilities:

Revolving credit facility 122,185 8,821 Senior notes 523,008 397,154 Asset retirement obligations 17,230 19,457 Commodity derivative instruments 4,557 4,104 Other long term liabilities 11,568 4,611

Total liabilities 866,085 664,120 Commitments and contingencies (See Note 10) Stockholders’ deficit:

Convertible preferred stock, $0.0001 par value; 1,000,000 shares authorized; issued and outstanding 62,500 shares at September 30, 2017 and December 31, 2016; $62.5 million liquidation preference —

—

Common stock, $0.0001 par value; 45,000,000 shares authorized; issued and outstanding 22,494,040 and 21,932,842 shares at September 30, 2017 and December 31, 2016, respectively 2

2

Additional paid-in capital 954,198 948,380 Accumulated deficit (1,027,965 ) (1,024,129 )

Total stockholders’ deficit (73,765) (75,747)Total liabilities and stockholders’ deficit $ 792,320 $ 588,373

See notes to condensed consolidated financial statements

1



Condensed Consolidated Statements of Operations (UNAUDITED)(in thousands, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2017 2016 2017 2016

Revenue: Oil $ 67,665 $ 42,394 $ 186,027 $ 93,672 Gas 8,805 3,574 20,978 5,761 Natural gas liquids 5,082 1,451 10,799 2,377

Total revenue 81,552 47,419 217,804 101,810 Operating expenses:

Lease operating 25,093 16,572 63,339 46,078 Production and ad valorem taxes 8,767 4,839 21,701 12,229 Depletion, depreciation, amortization, and asset retirement obligation accretion 25,521

12,474

63,889

33,700

Impairment of proved oil and gas properties — — — 58,000 General and administrative 9,546 7,161 29,433 23,659 Cash-settled incentive awards 4,996 16,043 9,010 18,275

Total operating expenses 73,923 57,089 187,372 191,941 Income (loss) from operations 7,629 (9,670) 30,432 (90,131)Other income (expense):

Interest expense, net (8,527) (13,272) (35,003) (39,330)Commodity derivative instruments gain (loss) (13,719) 3,972 4,579 (11,739)Other income (expense) (13) 114 63 126

Total other expense (22,259) (9,186) (30,361) (50,943)Income (loss) before income taxes (14,630) (18,856) 71 (141,074)

Income tax benefit 28 — 28 — Net income (loss) (14,602) (18,856) 99 (141,074)

Preferred stock dividends — — (3,935) — Net loss available to common shareholders $ (14,602) $ (18,856) $ (3,836) $ (141,074)

Net loss per common share: Basic and diluted $ (0.71 ) $ (1.24 ) $ (0.22 ) $ (9.33 )

Weighted average common shares outstanding: Basic and diluted 21,941 15,173 21,866 15,122


2



Condensed Consolidated Statements of Stockholders’ Deficit (UNAUDITED)(in thousands)

Additional Total Common Stock Preferred Stock Paid-in Accumulated Stockholders’

Shares Amount Shares Amount Capital Deficit Deficit

Balance as of January 1, 2017 21,933 $ 2 63 $ — $ 948,380 $ (1,024,129 ) $ (75,747)Issuance of stock, restricted stock and share-based compensation 581 — — — 8,969 — 8,969 Redemption of restricted stock for employee income tax and restricted stock forfeitures (93) — — — (3,393) — (3,393)Exercise of employee options to purchase common stock 73 — — — 242 — 242 Preferred stock dividend — — — — — (3,935) (3,935)Net income — — — — — 99 99 Balance as of September 30, 2017 22,494 $ 2 63 $ — $ 954,198 $ (1,027,965 ) $ (73,765)


3



Condensed Consolidated Statements of Cash Flows (UNAUDITED)(in thousands)

Nine Months Ended September 30,

2017 2016

Operating activities: Net income (loss) $ 99 $ (141,074)Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depletion, depreciation, amortization and asset retirement obligation accretion 63,889 33,700 Impairment of proved oil and gas properties — 58,000 Amortization of deferred financing costs and long-term debt premium and discount 8,801 3,922 Share-based compensation 8,952 5,143 Commodity derivative instruments (gain) loss (4,579) 11,739 Commodity derivative settlement gain 3,760 69,649 Change in operating assets and liabilities:

Accounts receivable (12,541) (9,970)Other current assets (632) (430)Accounts payable and accrued expenses 31,334 19,416 Accrued interest payable 12,867 8,600

Net cash provided by operating activities 111,950 58,695 Investing activities:

Oil and gas exploration and development expenditures (218,972) (98,313)Purchase of oil and gas properties (161,264) — Proceeds from sale of oil and gas properties 28,439 32,962 Deposit for Aneth disposition 10,000 — Purchase of other property and equipment (3,517) (106)Restricted cash (58) (1,640)Other long-term assets 31 38

Net cash used in investing activities (345,341) (67,059)Financing activities:

Proceeds from bank borrowings 291,000 73,500 Repayments of borrowings (176,000) (73,500)Proceeds from issuance of senior notes 126,875 — Repayment of term loan (128,303) — Payment of financing costs (5,296) — Payment of preferred dividend (3,935) — Redemption of restricted stock for employee income taxes (3,393) (73)Proceeds from exercise of employee options to purchase common stock 242 48

Net cash provided by (used in) financing activities 101,190 (25)Net decrease in cash and cash equivalents (132,201) (8,389)Cash and cash equivalents at beginning of period 133,089 9,297 Cash and cash equivalents at end of period $ 888 $ 908


4



Notes to Condensed Consolidated Financial Statements Note 1 — Organization and Nature of Business

Resolute Energy Corporation (“Resolute” or the “Company”), is an independent oil and gas company engaged in the exploitation, development,exploration for and acquisition of oil and gas properties. The Company’s operating assets are comprised of properties in the Delaware Basin in west Texas (the“Delaware Basin Properties”) and Aneth Field located in the Paradox Basin in southeast Utah (the “Aneth Field Properties” or “Aneth Field”). As discussed inNote 11, the Company closed on the disposition of Aneth Field on November 6, 2017. All periods presented include the results related to Aneth Field. TheCompany conducts all of its activities in the United States of America.

Resolute Energy Corporation, the stand-alone parent entity, has insignificant independent assets and no operations. Its guarantees are full andunconditional and joint and several, and there are no subsidiaries of the parent company other than the Guarantors (defined below). There are no restrictions onthe Company’s ability to obtain cash dividends or other distributions of funds from its subsidiaries, except those imposed by applicable law.

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation

The unaudited condensed consolidated financial statements include Resolute and its subsidiaries, and have been prepared in accordance withaccounting principles generally accepted in the United States (“GAAP”) and Regulation S-X for interim financial reporting. Except as disclosed herein, there hasbeen no material change in our basis of presentation from the information disclosed in the notes to Resolute’s consolidated financial statements for the yearended December 31, 2016. In the opinion of management, all adjustments consisting of normal recurring accruals considered necessary for a fair presentation ofthe interim financial information have been included. Operating results for the periods presented are not necessarily indicative of the results that may beexpected for the full year. All intercompany transactions have been eliminated upon consolidation. Certain prior period amounts have been reclassified toconform to the current period presentation.

In connection with the preparation of the condensed consolidated financial statements, Resolute evaluated subsequent events that occurred after thebalance sheet date, through the date of filing. See Note 11.

Significant Accounting Policies

The significant accounting policies followed by Resolute are set forth in Resolute’s consolidated financial statements for the year ended December 31,2016. These unaudited condensed consolidated financial statements are to be read in conjunction with the consolidated financial statements appearing inResolute’s Annual Report on Form 10-K and related notes for the year ended December 31, 2016.

Recent Accounting Pronouncements

In January 2017 the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2017-01, BusinessCombinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business to assist entities with evaluating when a set oftransferred assets and activities is deemed to be a business. Determining whether a transferred set constitutes a business is important because the accountingfor a business combination differs from that of an asset acquisition. The definition of a business also affects the accounting for dispositions. Under the newstandard, when substantially all of the fair value of assets acquired is concentrated in a single asset, or a group of similar assets, the assets acquired would notrepresent a business and business combination accounting would not be required. The standard is effective for interim and annual periods beginning afterDecember 15, 2017 and shall be applied prospectively. Early adoption is permitted. The Company elected to early adopt this standard in the second quarter of2017.

In May 2014 the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which creates Topic 606 (“ASC 606”). ASC 606 supersedesexisting revenue recognition requirements under GAAP and will require entities to recognize revenue at an amount that reflects the consideration to which weexpect to be entitled in exchange for transferring goods or services to a customer. Additional disclosures will be required as to the nature, timing and uncertaintyof revenue and cash flows from contracts with customers. In August 2015 the FASB issued ASU 2015-14, which defers the effective date of ASU 2014-09 forone year to annual reports beginning after December 15, 2017. Early adoption is permitted for fiscal years beginning after December 15, 2016.

5


In May 2016 the FASB issued ASU 2016-12 : Revenue from Contracts with Customers (Topic 606): Narrow Scope Improvements and PracticalExpedients (“ASU 2016-12”), which updates ASU 2014-09 to clarify core recognition principles including collectability, sales tax presentation, noncashconsideration, contract modifications and completed contracts at transition. This ASU is required to be adopted using either the retrospective transition method,which requires restating previously reported results or the cumulative effect (modified retrospective) transition method, which utilizes a cumulative-effectadjustment to retained earnings in the period of adoption to account for the prior period effects. The Company has not yet selected a transition method, butexpects that it will use the cumulative effect method. We have aggregated and reviewed our contracts that are within the scope of ASC 606. Based on ourevaluation to date, there will not be a material impact on our financial statements. However, we anticipate the new standard will result in more robust footnotedisclosures. We cannot currently determine the extent of the new footnote disclosures as further clarification is needed for certain practices common to theindustry. We will continue to evaluate the impacts that future contracts may have.

In February 2016 the FASB issued ASU 2016-02: Leases (Topic 842), which requires that lessees recognize both a lease liability and a right-of-use assetat the commencement date. This authoritative accounting guidance is effective for the annual period beginning after December 15, 2018, and interim periodswithin annual periods beginning after December 15, 2018. The Company is currently evaluating the provisions of this guidance and assessing its impact on theCompany’s financial statements and disclosures.

Assumptions, Judgments and Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make various assumptions,judgments and estimates to determine the reported amounts of assets, liabilities, revenue and expenses, and in the disclosures of commitments andcontingencies. Changes in these assumptions, judgments and estimates will occur as a result of the passage of time and the occurrence of future events.Accordingly, actual results could differ from amounts previously established.

Significant estimates with regard to the condensed consolidated financial statements include proved oil and gas reserve volumes and the related presentvalue of estimated future net cash flows used in the ceiling test applied to capitalized oil and gas properties; asset retirement obligations; valuation of derivativeassets and liabilities; the estimated fair value and allocation of the purchase price related to business combinations; share-based compensation expense; cash-settled long-term incentive expense; depletion, depreciation and amortization; accrued liabilities; revenue and related receivables and income taxes.

Accounts Receivable

The Company’s accounts receivable consist of the following as of the dates indicated (in thousands):

September 30, 2017 December 31, 2016

Trade receivables $ 21,452 $ 14,898 Revenue receivables 45,048 32,817 Derivative receivables 434 5,695 Other receivables 6,896 1,818 Total accounts receivable $ 73,830 $ 55,228

The Company’s accounts receivable consist mainly of receivables from oil, gas, and natural gas liquids (“NGL”) purchasers and from joint interest ownerson properties the Company operates. For receivables from joint interest owners, the Company typically has the ability to withhold future revenue disbursementsto recover non-payment of joint interest billings. Generally, the Company’s oil and gas receivables are due within fifteen days and are collected in less than twomonths, and the Company historically has had limited receivables that were not collected.

The Company routinely assesses the recoverability of all material trade and other receivables to determine their collectability. As of September 30, 2017and December 31, 2016, the Company had no allowance for doubtful accounts recorded.

Oil and Gas Properties

Pursuant to full cost accounting rules, Resolute is required to perform a quarterly “ceiling test” calculation to test its oil and gas properties for possibleimpairment. The primary components impacting the calculation are commodity prices, reserve quantities and associated production, overall exploration anddevelopment costs and depletion expense. If the net capitalized cost of the Company’s oil and gas properties subject to amortization (the “carrying value”)exceeds the ceiling limitation, the excess would be charged to expense. The ceiling limitation is equal to the sum of the present value discounted at 10% ofestimated future net cash flows from proved reserves, the cost of properties not being amortized, the lower of cost or estimated fair value of unproven propertiesincluded in the costs being amortized, and all related income tax effects.

6


No impairment was recorded for the three and nine months ended September 30, 2017. For the three and nine months ended September 30, 2016, theCompany recorded non-cash impairments of its oil and gas properties of $0 and $58 million, respectively, as a result of the ceiling test limitation. If in futureperiods a negative factor impacts one or more of the components of the calculation, including market prices of oil and gas (based on a trailing twelve-monthunweighted average of the oil and gas prices in effect on the first day of each month), differentials from posted prices, future drilling and capital plans, operatingcosts or expected production, the Company may incur further full cost ceiling impairment related to its oil and gas properties in such periods.

Note 3 — Acquisitions and Divestitures

Acquisition of Reeves County Properties in the Delaware Basin

Delaware Basin Bronco Acquisition

On March 3, 2017, Resolute Natural Resources Southwest, LLC (“Resolute Southwest”), a wholly owned subsidiary of the Company, entered into aPurchase and Sale Agreement with CP Exploration II, LLC and Petrocap CPX, LLC pursuant to which Resolute Southwest agreed to acquire certainundeveloped and developed oil and gas properties in the Delaware Basin in Reeves County, Texas (the “Delaware Basin Bronco Acquisition”). The closing ofthe Delaware Basin Bronco Acquisition occurred on May 15, 2017, with an effective date of May 1, 2017.

The acquisition was accounted for as an asset acquisition, and therefore, the properties were recorded based on the fair value of the total considerationtransferred on the acquisition date and transaction costs were capitalized as a component of the cost of the assets acquired. The Company acquired theseproperties for $161.3 million, which it financed substantially with proceeds received from the offering of $125 million of 8.50% Senior Notes due 2020 (as definedin Note 5) that closed in May 2017. The Company recorded $144.8 million of the total consideration transferred as unproved oil and gas property.

The properties acquired include approximately 4,600 net acres in Reeves County, Texas (the “Bronco Assets”), which were considered predominantlyunproved, consisting of 2,187 net acres adjacent to the Company’s existing operating area in Reeves County and 2,405 net acres in southern Reeves County.

Delaware Basin Firewheel Acquisition

In October 2016 Resolute and Resolute Southwest entered into a Purchase and Sale Agreement with Firewheel Energy, LLC (“Firewheel”) pursuant towhich Resolute Southwest agreed to acquire certain oil and gas interests in the Delaware Basin in Reeves County, Texas (the “Firewheel Properties”), forconsideration to Firewheel consisting of $90 million in cash and 2,114,523 shares of common stock of the Company, par value $0.0001 per share, issued toFirewheel upon the closing of the purchase of the Firewheel Properties (the “Delaware Basin Firewheel Acquisition”). The closing of the Delaware BasinFirewheel Acquisition occurred on October 7, 2016.

The Company acquired the Firewheel Properties for $153.2 million. Revenue and expenses related to the acquired properties are included in theconsolidated statement of operations on the closing date of the transaction. The Delaware Basin Firewheel Acquisition was accounted for as a businesscombination using the acquisition method.

The Company completed its assessment of the fair values of the assets acquired and liabilities assumed. Accordingly, the following table presents thepurchase price allocation of the Delaware Basin Firewheel Acquisition at the indicated date below, based on the fair values of assets acquired and liabilitiesassumed (in thousands):

December 31, 2016

Proved oil and gas properties $ 40,900 Unproved oil and gas properties 112,800 Asset retirement obligations assumed (500)

Total purchase price $ 153,200

Divestiture of Southeast New Mexico Properties in the Permian Basin

In February 2017 the Company closed on the sale of its Denton and South Knowles properties in the Northwest Shelf project area in Lea County, NewMexico, for approximately $14.5 million in cash, subject to customary purchase price adjustments. The effective date of this sale was October 1, 2016. Theproceeds of the sale were used to reduce amounts outstanding under the Company’s Revolving Credit Facility (as defined in Note 5) and for other corporatepurposes. As part of the sale, the Company was also no longer liable for asset retirement obligations of $3.6 million at March 31, 2017.

7


Divestiture of Midstream Assets in the Delaware Basin

In July 2016 Resolute Southwest entered into a definitive Purchase and Sale Agreement (the “Mustang Agreement”) with Caprock Permian ProcessingLLC and Caprock Field Services LLC, as buyers (collectively, “Caprock”) pursuant to which Resolute Southwest and an existing minority interest holder agreed tosell certain gas gathering and produced water handling and disposal systems owned by them in the Mustang project area in Reeves County, Texas, (“Mustang”)for a cash payment of $35 million, plus certain earn-out payments described below.

In July 2016 Resolute Southwest also entered into a definitive Purchase and Sale Agreement (the “Appaloosa Agreement”) with Caprock, pursuant towhich Resolute Southwest agreed to sell certain gas gathering and produced water handling and disposal systems owned by Resolute Southwest in theAppaloosa project area in Reeves County, Texas, (“Appaloosa”) for a cash payment of $15 million, plus certain earn-out payments described below.

In August 2016 Resolute Southwest closed the transactions contemplated by the Mustang Agreement and the Appaloosa Agreement. ResoluteSouthwest received aggregate consideration of approximately $36 million (including earn-out payments earned as of the closing). As the sale did not significantlyalter the relationship between capital costs and proved reserves, no gain or loss was recognized.

In July 2016, in connection with the Appaloosa Agreement and the Mustang Agreement, Resolute Southwest also entered into a definitive Earn-outAgreement (the “Earn-out Agreement”), pursuant to which Resolute Southwest will be entitled to receive certain earn-out payments based on drilling andcompletion activity in Appaloosa and Mustang through 2020 that will deliver gas and produced water into the system. Earn-out payments for each qualifying wellwill vary depending on the lateral length of the well and the year in which the well is drilled and completed. In March 2017 the Earn-out Agreement was amendedby the parties to provide for an increase in earn-out payments for the wells drilled and completed in 2017. Earn-out payments are contingent on future drilling,and therefore will be recognized when earned.

In connection with the closing of the transactions contemplated by the Appaloosa Agreement and the Mustang Agreement, Resolute Southwest enteredinto fifteen year commercial agreements with Caprock for gas gathering services and water handling and disposal services for all current and future gas and waterproduced by Resolute Southwest in Mustang and Appaloosa in exchange for customary fees based on the volume of gas and water produced and delivered.Resolute Southwest has agreed to dedicate and deliver all gas and water produced from its acreage in Mustang and Appaloosa to Caprock for gathering,processing, compression and disposal services for a term of fifteen years.

In April 2017, Resolute Southwest entered into a Crude Oil Connection and Dedication Agreement with Caprock Permian Crude LLC (“Caprock Crude”),an affiliate of Caprock. The agreement provides that Caprock Crude will construct the gathering systems, pipelines and other infrastructure for the gathering ofcrude oil from our Mustang and Appaloosa operating areas in exchange for customary fees based on the volume of crude oil produced and delivered. ResoluteSouthwest has agreed to dedicate and deliver all crude oil produced from its acreage in Mustang and Appaloosa to Caprock Crude for gathering for a termthrough July 31, 2031, coterminous with our other commercial agreements with Caprock. For the first five years of the agreement, the crude oil will be deliveredto Midland Station under a joint tariff arrangement between Caprock Crude and Plains Pipeline, L.P. In April 2017, Resolute Southwest also entered into a CrudeOil Purchase Contract with Plains Marketing, L.P. (“Plains”) providing for the sale to Plains of substantially all of the crude oil produced from the Mustang andAppaloosa areas for a price equal to an indexed market price less a $1.75 transportation differential that will cover the joint tariff payable to Caprock Crude underthe Crude Oil Connection and Dedication Agreement.

Pro Forma Financial Information

The unaudited pro forma financial information for the three and nine months ended September 30, 2016 reflects Resolute’s results as if the DelawareBasin Firewheel Acquisition and the sale of the midstream assets in the Delaware Basin had occurred on January 1, 2016 (in thousands, except per shareamounts):

Three Months Ended Nine Months Ended

September 30, 2016 September 30, 2016

Revenue $ 49,805 $ 108,527 Loss from operations (10,252) (92,036)Net loss (19,634) (143,564) Net loss per share Basic and diluted $ (1.14 ) $ (8.33 )Weighted average common shares outstanding Basic and diluted 17,288 17,237

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Note 4 — Earnings per Share

The Company computes basic net income (loss) per share using the weighted average number of shares of common stock outstanding during theperiod. Diluted net income (loss) per share is computed using the weighted average number of shares of common stock and, if dilutive, potential shares ofcommon stock outstanding during the period. Net income (loss) available to common stockholders is computed by deducting both the dividends declared in theperiod on preferred stock and the dividends accumulated for the period on cumulative preferred stock from net income (loss). Potentially dilutive shares consistof the incremental shares and options issuable under the Company’s 2009 Performance Incentive Plan (the “Incentive Plan”) as well as common shares issuableupon the assumed conversion of the Convertible Preferred Stock (as defined in Note 7). The treasury stock method is used to measure the dilutive impact ofpotentially dilutive shares.

The following table details the potential weighted average dilutive and anti-dilutive securities for the periods presented (in thousands):


September 30, September 30,

2017 2016 2017 2016

Potential dilutive restricted stock 3,762 1,474 3,724 1,015 Anti-dilutive securities 3,762 1,474 3,724 1,386

The following table sets forth the computation of basic and diluted net income (loss) per share of common stock for the periods presented (in thousands,

except per share amounts):



2017 2016 2017 2016

Net loss available to common shareholders $ (14,602) $ (18,856) $ (3,836) $ (141,074)Accumulated undeclared dividend (1,058) — (1,058) — Adjusted net loss available to common shareholders $ (15,660) $ (18,856) $ (4,894) $ (141,074) Basic weighted average common shares outstanding 21,941 15,173 21,866 15,122 Add: dilutive effect of non-vested restricted stock — — — — Add: dilutive effect of options — — — —

Diluted weighted average common shares outstanding 21,941 15,173 21,866 15,122

Basic and diluted net loss per common share $ (0.71 ) $ (1.24 ) $ (0.22 ) $ (9.33 )

Note 5 — Long Term Debt

As of the dates indicated, the Company’s long-term debt consisted of the following (in thousands):

Principal

Unamortizedpremium/(discount)

Unamortizeddeferred financing

costs September 30,

2017

Revolving credit facility $ 125,000 $ — $ (2,815) $ 122,185 8.50% senior notes 525,000 2,438 (4,430) 523,008

Total long-term debt $ 650,000 $ 2,438 $ (7,245) $ 645,193

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Principal

Unamortizedpremium/(discount)

Unamortizeddeferred financing

costs December 31, 2016

Revolving credit facility $ 10,000 $ — $ (1,179) $ 8,821 Secured term loan facility 128,303 (4,882) (1,282) 122,139 8.50% senior notes 400,000 985 (3,831) 397,154

Total long-term debt $ 538,303 $ (3,897) $ (6,292) $ 528,114 Current portion of secured term loan facility 128,303 (4,882) (1,282) 122,139 Long-term debt $ 410,000 $ 985 $ (5,010) $ 405,975

For the three months ended September 30, 2017 and 2016, the Company reported interest expense on long-term debt of $8.5 million and $13.3 million,respectively. For the nine months ended September 30, 2017 and 2016, the Company reported interest expense on long-term debt of $35.0 million and $39.3million, respectively. Approximately $9.7 million in interest expense was incurred in 2017 as a result of the extinguishment of the Secured Term Loan Facility (asdefined below) on January 3, 2017. Additionally, $1.0 million in interest expense was incurred in 2017 as a result of the fees associated with the $100 millionunsecured bridge facility with BMO Capital Markets that terminated because the facility was never drawn in connection with the Delaware Basin BroncoAcquisition. The Company capitalized $4.7 million and $0.3 million of interest expense during the three months ended September 30, 2017 and 2016,respectively. The Company capitalized $10.9 million and $1.4 million of interest expense during the nine months ended September 30, 2017 and 2016,respectively. During the three months ended September 30, 2017 and 2016, the Company paid cash for interest expense in the amount of $1.8 million and $3.7million, respectively. During the nine months ended September 30, 2017 and 2016, the Company paid cash for interest expense in the amount of $24.2 millionand $28.2 million, respectively.

Revolving Credit Facility

On February 17, 2017, the Company entered into the Third Amended and Restated Credit Agreement with a syndicate of banks led by Bank of Montreal,as Administrative Agent, Capital One, National Association, as syndication agent, and Barclays Bank PLC, ING Capital LLC and SunTrust Bank, as co-documentation agents (the “Revolving Credit Facility”). In connection with entering into the Revolving Credit Facility, the Company repaid all amountsoutstanding under the Second Amended and Restated Credit Agreement, dated as of April 15, 2015, by and among Resolute Energy Corporation, as borrower,certain subsidiaries of Resolute Energy Corporation, as Guarantors (defined below), Wells Fargo Bank, National Association, as administrative agent, and thelenders party thereto, as amended, and terminated that agreement.

The Revolving Credit Facility specifies a maximum borrowing base as determined by the lenders. The determination of the borrowing base takes intoconsideration the estimated value of Resolute’s oil and gas properties in accordance with the lenders’ customary practices for oil and gas loans. The borrowingbase is redetermined semi-annually, and the amount available for borrowing could be increased or decreased as a result of such redeterminations. Under certaincircumstances, either Resolute or the lenders may request an interim redetermination. The Revolving Credit Facility matures in February 2021, unless there is amaturity of material indebtedness prior to such date.

The Revolving Credit Facility also includes customary additional terms and covenants that place limitations on certain types of activities, hedging, thepayment of dividends, and that require satisfaction of certain financial tests.

On May 8, 2017, the Company entered into the First Amendment to the Third Amended and Restated Credit Agreement. The First Amendment, amongother things, amended the leverage ratio covenant to increase the maximum ratio to 4.25:1.00 for the fiscal quarter ending September 30, 2017 and 4.00:1.00 forthe fiscal quarters ending thereafter. Furthermore, the amendment provided that the borrowing base shall automatically be reduced by 25% of all unsecuredindebtedness of the Company in excess of $500 million. As a result of the issuance of the Incremental Senior Notes (defined below) on May 9, 2017, theborrowing base was reduced to $218.8 million.

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On October 18, 2017, the Company entered into the Second Amendment to the Third Amended and Restated Credit Agreem ent. The SecondAmendment, among other things, amended the definition of EBITDA to include customary transaction costs and expenses incurred in connection with anymaterial acquisition or disposition, provided for certain amendments to the calculation of EBITDA for purposes of the Revolving Credit Facility and amended thecovenant governing the ratio of current assets to current liabilities for the quarter ended September 30, 2017 to 0.85 to 1.00 (returning to 1.00 to 1.00 for fiscalquarters ending thereafter). Additionally, the amended covenants prohibit us from entering into derivative arrangements during which such derivativearrangements are in effect for more than (i) for the first year, the greater of 85% of anticipated projected production from proved properties or 75% of ouranticipated projected production from properties, (ii) for the second year, 85% of anticipated projected production from proved properties and (iii) for the periodafter such two year period, the greater of 75% of our anticipated projected production from proved properties or 85% of our anticipated projected production fromproved developed producing properties after such two year period (not to exceed a term of 60 months for any such derivative arrangement). Furthermore, theSecond Amendment reaffirmed the borrowing base at $218.8 million. Upon the consummation of the disposition of the Aneth Field Properties, the borrowingbase was automatically reduced to $210 million. Lastly, the amendment provided that the borrowing base shall automatically be reduced by 25% of allunsecured indebtedness of the Company in excess of $550 million, increased from $500 million. Resolute was in compliance with the terms and covenants ofthe Revolving Credit Facility at September 30, 2017.

As of September 30, 2017, outstanding borrowings under the Revolving Credit Facility were $125 million with a weighted average interest rate of 4.74%,under a borrowing base of $218.8 million. The borrowing base availability was reduced by $2.8 million in conjunction with letters of credit issued at September30, 2017.

To the extent that the borrowing base, as adjusted from time to time, exceeds the outstanding balance, no repayments of principal are required prior tomaturity. However, should the borrowing base be set at a level below the outstanding balance, Resolute would be required to eliminate that excess within 120days following that determination. The Revolving Credit Facility is guaranteed by all of Resolute’s subsidiaries and is collateralized by substantially all of theassets of the Company and it’s wholly-owned subsidiaries.

Each base rate borrowing under the Revolving Credit Facility accrues interest at either (a) the London Interbank Offered Rate (“LIBOR”), plus a marginthat ranges from 3.0% to 4.0% or (b) the Alternative Base Rate defined as the greater of (i) the Administrative Agent’s Prime Rate (ii) the Federal Funds effectiveRate plus 0.5% or (iii) an adjusted London Interbank Offered Rate plus a margin that ranges from 2.0% to 3.0%. Each such margin is based on the level ofutilization under the borrowing base.

Secured Term Loan Agreement

In December 2014 Resolute and certain of its subsidiaries, as guarantors, entered into a second lien Secured Term Loan Agreement with Bank ofMontreal, as administrative agent, and the lenders party thereto, pursuant to which the Company borrowed $150 million (the “Secured Term Loan Facility”). InMay 2015 Resolute and certain of its subsidiaries, as guarantors, entered into an Amendment to the Secured Term Loan Agreement and Increased FacilityActivation Notice-Incremental Term Loans (the “Amendment”) with Bank of Montreal, as administrative agent, and the lenders party thereto, pursuant to whichthe Company borrowed an additional $50 million of second lien term debt (the “Incremental Term Loans”) under its Secured Term Loan Facility.

In December 2015 the Company retired $70 million of the amount outstanding under the Secured Term Loan Facility following the sale of certainproperties in the Midland Basin in accordance with mandatory prepayment provisions stipulated in the Secured Term Loan Facility.

On January 3, 2017, the Company repaid approximately $132 million constituting all amounts due under the Secured Term Loan Facility (includingprepayment fees of $3.5 million), with a portion of the proceeds from its previously announced common stock offering that closed on December 23, 2016. Inaddition $6.2 million of deferred financing costs and original issue discount were expensed as part of the extinguishment. The Secured Term Loan Facility wasterminated in connection with the repayment.

Senior Notes

In 2012 the Company consummated two private placements of senior notes with principal totaling $400 million (the “Original Senior Notes”). The OriginalSenior Notes are due May 1, 2020, and bear an annual interest rate of 8.50% with the interest on the Original Senior Notes payable semiannually in cash onMay 1 and November 1 of each year.

On May 9, 2017, the Company consummated a private placement of senior notes totaling an additional $125 million aggregate principal amount of theCompany’s 8.50% Senior Notes due 2020 (the “Incremental Senior Notes”), under the same indenture as the Original Senior Notes that were previously issued(collectively referred to as the “Senior Notes”). The net proceeds of the offering of the Incremental Senior Notes, after reflecting the purchasers’ discounts andcommissions, and estimated offering expenses, were approximately $125.1 million. The closing of the Incremental Senior Notes occurred on May 12, 2017.

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The Senior Notes were issued under an Indenture (the “Indenture”) among the Company and all of the Company’s subsidiaries, each of which is 100%owned by the Company (the “Guarantors”) in a private transaction not subject to the registration requirements of the Securities Act of 1933. In March 2013 andJuly 2017 the Company registered the exchange of the Original Senior Notes and the Incremental Senior Notes, respectively, with the Securities and ExchangeCommission pursuant to registration statements on Form S-4 that enabled holders of the Senior Notes to exchange the privately placed Senior Notes forregistered Senior Notes with substantially identical terms. All of the Original Senior Notes and Incremental Senior Notes have been exchanged for publicallyregistered Senior Notes. The Indenture contains affirmative and negative covenants that, among other things, limit the Company’s and the Guarantors’ ability tomake investments, incur additional indebtedness or issue certain types of preferred stock, create liens, sell assets, enter into agreements that restrict dividendsor other payments by restricted subsidiaries, consolidate, merge or transfer all or substantially all of the assets of the Company, engage in transactions with theCompany’s affiliates, pay dividends or make other distributions on capital stock or prepay subordinated indebtedness and create unrestricted subsidiaries. TheIndenture also contains customary events of default. Upon occurrence of events of default arising from certain events of bankruptcy or insolvency, the SeniorNotes shall become due and payable immediately without any declaration or other act of the trustee or the holders of the Senior Notes. Upon the occurrence ofcertain other events of default, the trustee or the holders of the Senior Notes may declare all outstanding Senior Notes to be due and payable immediately. TheCompany was in compliance with all financial covenants under its Senior Notes as of September 30, 2017.

The Senior Notes are general unsecured senior obligations of the Company and guaranteed on a senior unsecured basis by the Guarantors. The SeniorNotes rank equally in right of payment with all existing and future senior indebtedness of the Company, will be subordinated in right of payment to all existing andfuture senior secured indebtedness of the Guarantors, will rank senior in right of payment to any future subordinated indebtedness of the Company and will befully and unconditionally guaranteed by the Guarantors on a senior basis.

The Senior Notes are redeemable by the Company on not less than 30 or more than 60 days’ prior notice, at a redemption price of 102.125%, reducing to100.000% at May 1, 2018. If a change of control occurs, each holder of the Senior Notes will have the right to require that the Company purchase all of suchholder’s Senior Notes in an amount equal to 101% of the principal of such Senior Notes, plus accrued and unpaid interest, if any, to the date of the purchase.

The fair value of the Senior Notes at September 30, 2017, was estimated to be $534.3 million based upon data from independent market makers (Level2 fair value measurement).

Note 6 — Income Taxes

Income tax benefit (expense) during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income (loss),plus any significant, unusual or infrequently occurring items that are recorded in the interim period. The provision for income taxes for the three and nine monthsended September 30, 2017 and 2016, differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 35% to incomebefore income taxes. This difference relates primarily to the valuation allowance established, in addition to state income taxes and estimated permanentdifferences.

The following table summarizes the components of the provision for income taxes:



2017 2016 2017 2016

Current income tax benefit $ 28 $ — $ 28 $ — Deferred income tax benefit (expense) — — — —

Total income tax benefit $ 28 $ — $ 28 $ —

The Company had an income tax benefit of less than $0.1 million for the three and nine months ended September 30, 2017. This benefit was the resultof a refund of Texas state taxes which were accrued for at year-end 2016 and paid in early 2017. The Company had no reserve for uncertain tax positions as ofSeptember 30, 2017. The Company assesses the recoverability of its deferred tax assets each period by considering whether it is more likely than not that all ora portion of the deferred tax assets will be realized. The Company considers all available evidence (both positive and negative) in determining whether avaluation allowance is required. As a result of the Company’s analysis, it was concluded that as of September 30, 2017, a valuation allowance should beestablished against the Company’s net deferred tax asset. The Company recorded a valuation allowance as of September 30, 2017 and December 31, 2016, of$312.1 million and $309.6 million, respectively, on its long-term deferred tax asset. The Company will continue to monitor facts and circumstances in thereassessment of the likelihood that the deferred tax assets will be realized.

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Note 7 — Stockholders’ Equity and Long-term Employee Incentive Plan

Preferred Stock

The Company is authorized to issue up to 1,000,000 shares of preferred stock, par value $0.0001 with such designations, voting and other rights andpreferences as may be determined from time to time by the Board of Directors. At September 30, 2017 and December 31, 2016, the Company had 62,500shares of preferred stock issued and outstanding.

In October 2016, the Company entered into a Purchase Agreement (the “Preferred Stock Purchase Agreement”) with BMO Capital Markets Corp. (“InitialPurchaser”), pursuant to which the Company agreed to issue and sell to Initial Purchaser 55,000 shares (the “Firm Securities”) of the Company’s 8⅛% Series BCumulative Perpetual Convertible Preferred Stock, par value $0.0001 per share (the “Convertible Preferred Stock”) and, at Initial Purchaser’s option, up to 7,500additional shares of Convertible Preferred Stock (together with the Firm Securities, collectively, the “Securities”). The Initial Purchaser exercised its over-allotment option to purchase the additional 7,500 shares of Convertible Preferred Stock in full, bringing the total shares of Convertible Preferred Stock purchasedby Initial Purchaser to 62,500, for an aggregate net consideration of $60 million, before offering expenses.

Each holder has the right at any time, at its option, to convert, any or all of such holder’s shares of Convertible Preferred Stock at an initial conversionrate of 33.8616 shares of fully paid and nonassessable shares of Common Stock, per share of Convertible Preferred Stock. Additionally, at any time on or afterOctober 15, 2021, the Company shall have the right, at its option, to elect to cause all, and not part, of the outstanding shares of Convertible Preferred Stock tobe automatically converted into that number of shares of Common Stock for each share of Convertible Preferred Stock equal to the conversion rate in effect onthe mandatory conversion date as such terms are defined in the Certificate of Designation.

As of September 30, 2017, the Company had accumulated undeclared preferred dividends of $1.1 million. A preferred dividend of $1.3 million wasdeclared on October 3, 2017, and paid on October 16, 2017, to holders of record at the close of business on October 1, 2017.

Common Stock

The authorized common stock of the Company consists of 45,000,000 shares. The holders of the common shares are entitled to one vote for each shareof common stock. In addition, the holders of the common stock are entitled to receive dividends when, as and if declared by the Board of Directors. At September30, 2017 and December 31, 2016, the Company had 22,494,040 and 21,932,842 shares of common stock issued and outstanding, respectively.

In May 2016, Resolute adopted a stockholder rights plan and in connection with such plan declared a dividend of one preferred share purchase right (a“Right”) for each outstanding share of common stock, par value $0.0001 per share. The Rights trade with, and are inseparable from, the common stock until suchtime as they become exercisable on the distribution date. The Rights are evidenced only by certificates that represent shares of common stock and not byseparate certificates. New Rights will accompany any new shares of common stock issued after May 27, 2016, until the earlier of the distribution date and theredemption or expiration of the rights.

Each Right allows its holder to purchase from the Company one one-thousandth of a share of Series A Junior Participating Preferred Stock (a “PreferredShare”) for $4.50, once the Rights become exercisable. Prior to exercise, the Right does not give its holder any dividend, voting or liquidation rights. The Rightswill not be exercisable until 10 days after the public announcement that a person or group has become an “Acquiring Person” by obtaining beneficial ownershipof 20% or more of our outstanding common stock, or, if earlier, 10 business days (or a later date determined by the Board before any person or group becomesan Acquiring Person) after a person or group begins a tender or exchange offer which, if completed, would result in that person or group becoming an AcquiringPerson. The stockholder rights plan was approved by the Company’s stockholders at the 2017 annual meeting in May 2017.

In June 2016 Resolute filed a certificate of amendment to its certificate of incorporation to effect the previously-announced reverse stock split of theCompany’s common stock, par value $0.0001 per share, at a ratio of 1-for-5 (the “Reverse Stock Split”). The certificate of amendment also reduced the numberof authorized shares of common stock from 225,000,000 to 45,000,000. The Reverse Stock Split, including the certificate of amendment, was approved bystockholders at the Company’s 2016 annual meeting of stockholders and by the Company’s Board of Directors. All historical share amounts disclosed have beenretroactively adjusted to reflect this Reverse Stock Split.

During the fourth quarter of 2016, the Company issued 4,370,000 shares of common stock in a public offering at $38.00 per share for net proceeds of$160.9 million, after deducting fees and estimated expenses. The net proceeds were used to repay outstanding borrowings under the Secured Term LoanFacility and Revolving Credit Facility.

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Long Term Employee Incentive Plan

The Company accounts for share-based compensation in accordance with FASB ASC Topic 718, Stock Compensation.

In July 2009, the Company adopted the 2009 Performance Incentive Plan, providing for long-term share-based awards intended as a means for theCompany to attract, motivate, retain and reward directors, officers, employees and other eligible persons through the grant of awards and incentives for highlevels of individual performance and improved financial performance of the Company. The share-based awards are also intended to further align the interests ofaward recipients and the Company’s stockholders. The maximum number of shares of common stock that may be issued under the Incentive Plan is 4,901,548(which includes the 1,000,000 shares under Amendment No. 3 to the Incentive Plan approved by the Company’s stockholders in May 2016 and the 1,450,000shares under Amendment No. 4 to the Incentive Plan approved by the Company’s stockholders in May 2017).

For the three and nine months ended September 30, 2017 and 2016, the Company recorded expense related to the Incentive Plan as follows (inthousands):


2017 2016 2017 2016

Time-based restricted stock awards $ 1,447 $ 938 $ 4,498 $ 3,658 TSR awards 1,402 221 3,704 777 Stock option awards 253 250 750 686 Total share-based compensation expense 3,102 1,409 8,952 5,121 Time-based restricted cash awards 787 860 2,022 2,549 Performance-based restricted cash awards 465 7,798 1,670 7,925 Cash-settled stock appreciation awards 3,744 7,385 5,648 7,801 Total cash-based compensation expense 4,996 16,043 9,340 18,275

Total Incentive Plan compensation expense $ 8,098 $ 17,452 $ 18,292 $ 23,396

As of September 30, 2017, the Company holds unrecognized share-based compensation expense (in thousands) which is expected to be recognizedover a weighted-average period as follows:

Weighted

Unrecognized Average Compensation Years Expense Remaining

Time-based restricted stock awards $ 12,132 2.3 TSR awards 6,514 2.4 Stock option awards 974 1.3

Total unrecognized compensation expense $ 19,620

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Equity Awards

Equity awards consist of service-based and performance-based restricted stock and stock options under the Incentive Plan. All historical exercise, baseand threshold prices disclosed have been retroactively adjusted to reflect the Reverse Stock Split.

Time-Based Restricted Stock Awards

Shares of time-based restricted stock issued to employees generally vest in three equal annual installments at specified dates based on continuedemployment. Shares issued to non-employee directors vest in one year based on continued service. The compensation expense to be recognized for the time-based restricted stock awards was measured based on the Company’s closing stock price on the dates of grant, utilizing estimated forfeiture rates between 0%and 15% which are updated periodically based on actual employee turnover. During the nine months ended September 30, 2017, the Company granted386,977 shares of time-based restricted stock to employees and non-employee directors, pursuant to the Incentive Plan.

The following table summarizes the changes in non-vested time-based restricted stock awards for the nine months ended September 30, 2017: Weighted

Average Grant Date Shares Fair Value

Non-vested, beginning of period 151,781 $ 25.07 Granted 386,977 43.44 Vested (126,875) 27.23 Forfeited (3,092) 43.96

Non-vested, end of period 408,791 $ 41.64 TSR Awards

In February 2017 the Board and its Compensation Committee awarded performance-based restricted shares to senior employees and executive officersof the Company under the Incentive Plan. The restricted stock grants vest only upon achievement of thresholds of cumulative total shareholder return (“TSR”) ascompared to a specified peer group (the “Performance-Vested Shares”). A TSR percentile (the “TSR Percentile”) is calculated based on the change in the valueof the Company’s common stock between the grant date and the applicable vesting date, including any dividends paid during the period, as compared to therespective TSRs of a specified group of twelve peer companies. The Performance-Vested Shares vest in three installments to the extent that the applicable TSRPercentile ranking thresholds are met upon the one-, two- and three-year anniversaries of the grant date. Performance-Vested Shares that are eligible to vest ona vesting date, but do not qualify for vesting, become eligible for vesting again on the next vesting date. All Performance-Vested Shares that do not vest as of thefinal vesting date will be forfeited on such date.

The Board and its Compensation Committee also granted rights to earn additional shares of common stock upon achievement of a higher TSR Percentile(“Outperformance Shares”). The Outperformance Shares are earned in increasing increments based on a TSR Percentile attained over a specified threshold.Outperformance Shares may be earned on any vesting date to the extent that the applicable TSR Percentile ranking thresholds are met in three installments onthe one-, two- and three-year anniversaries of the grant date. Outperformance Shares that are earned at a vesting date will be issued to the recipient; however,prior to such issuance, the recipient is not entitled to stockholder rights with respect to Outperformance Shares. Outperformance Shares that are eligible to beearned but remain unearned on a vesting date become eligible to be earned again on the next vesting date. The right to earn any unearned OutperformanceShares terminates immediately following the final vesting date. The Performance-Vested Shares and the Outperformance Shares are referred to as the “TSRAwards.”

The compensation expense to be recognized for the TSR Awards was measured based on the estimated fair value at the date of grant using a MonteCarlo simulation model and utilizes estimated forfeiture rates between 0% and 2% which are updated periodically based on actual employee turnover.

The valuation model for TSR Awards used the following assumptions:

Grant Year Average Expected

Volatility Expected Dividend

Yield Risk-Free

Interest Rate

2017 49.07% - 108.21% 0% 0.83% - 1.45%

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The following table summarizes the changes in non-vested TSR Awards for the nine months ended September 30, 2017:

Weighted

Average Grant Date Shares Fair Value

Non-vested, beginning of period 97,561 $ 66.60 Granted 131,379 77.23 Vested (97,561) 66.60 Forfeited (481) 77.21

Non-vested, end of period 130,898 $ 77.23

In addition to the vested TSR awards above, 63,024 outperformance shares were also earned and vested during the nine months ended September 30,

2017, related to the TSR awards granted in 2014.

Stock Option Awards

Options issued to employees to purchase shares of common stock vest in three equal annual installments at specified dates based on continuedemployment with a ten year term. The compensation expense to be recognized for the option awards was measured based on the Company’s estimated fairvalue at the date of grant using a Black-Scholes pricing model as well as estimated forfeiture rates between 0% and 15%, no dividends, expected stock pricevolatility ranging from 63% to 67% and a risk-free rate ranging between 1.75% and 2.27%.

The following table summarizes the option award activity for the nine months ended September 30, 2017:

Weighted Weighted Average Aggregate

Average Remaining Intrinsic Value

Shares Exercise Price Contractual Term (in thousands)

Outstanding, beginning of period 1,052,513 $ 4.03 Exercised (75,138) 4.18 Forfeited (12,026) 3.52

Outstanding, end of period 965,349 $ 4.03 8.1 $ 24,775

Exercisable, end of period 385,889 $ 4.71 8.0 $ 9,638

The weighted average grant date fair value of options granted during the nine months ended September 30, 2016, was $1.93. No options were grantedduring the nine months ended September 30, 2017. The total intrinsic value for options exercised during the nine months ended September 30, 2017 and 2016was $2.5 million and $0.1 million, respectively.

Liability Awards

Liability awards consist of awards that are settled in cash instead of shares, as discussed below. The fair value of those instruments at a single point intime is not a forecast of what the estimated fair value of those instruments may be in the future. As the fair value of liability awards is required to be re-measuredat each period end, amounts recognized in future periods will vary.

Cash-settled Stock Appreciation Rights

A stock appreciation right is the right to receive an amount in cash equal to the excess, if any, of the fair market value of a share of common stock on thedate on which the right is exercised over its base price. The February 2016 grants of cash-settled stock appreciation rights hold base prices of $2.65 per share(as to 486,373 rights) and $2.915 per share (as to 1,216,479 rights). The awards granted to employees vest in three equal annual installments and have a ten-year term. The awards granted to non-employee directors vest in one year based on continued service and also have a ten-year term. The compensationexpense to be recognized for the cash-settled stock appreciation rights was measured using a Black-Scholes pricing model, estimated forfeiture rates between0% and 15% which will be updated periodically based on actual employee turnover, no dividends and expected price volatility and risk-free rates relative to theexpected term. The fair value of the cash-settled stock appreciation rights as of September 30, 2017, was $45.6 million, of which $23.8 million has beenexpensed.

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Time-Based Restricted Cash Awards

Awards of time-based restricted cash issued to employees vest in three equal annual increments at specified dates based on continued employment.Time-based restricted cash issued to non-employee directors vests in one year based on continued service. The compensation expense to be recognized for thetime-based restricted cash awards was measured based on the cash value per unit ($1 per unit) on the date of grant and utilized estimated forfeiture ratesbetween 0% and 25% which will be updated periodically based on actual employee turnover. The total estimated future liability of the time-based restricted cashawards as of September 30, 2017, was $9.5 million, of which $6.4 million has been expensed.

Performance-Based Restricted Cash Awards

The performance criteria for the performance-based restricted cash awards granted in May 2015 are based on future prices of the Company’s commonstock trading at or above specified thresholds. If and as certain stock price thresholds are met, using a 60 trading day average, various multiples of theperformance-vested cash award will be attained. The first stock price hurdle was at $10.00 at which the award was payable at 1x, and the highest stock pricehurdle was $40.00 at which the award was payable at a multiple of 6x. Interim hurdles and multiples between these end points are set forth in the governingagreements. As of September 30, 2017, all of the stock price hurdles up to $40.00 had previously been met. A time vesting element will apply to theperformance-vested cash awards such that attained multiples will not be paid out earlier than upon satisfaction of a three-year vesting timetable from the date ofgrant. In order for an award to be paid, both the performance criteria and the time criteria would need to be satisfied. Once a time vesting date passes, theemployee is entitled to be paid one third, two thirds or 100%, as applicable, of whatever multiples have been achieved provided the employee continues to beemployed by the Company.

The estimated fair value of the performance-based restricted cash awards as of September 30, 2017, was $16.8 million of which $15.7 million has beenexpensed, based upon the three-year vesting. The fair value was estimated using Black-Scholes option pricing model for a cash or nothing call, an estimatedforfeiture rate of 5%, an average effective term of less than one year, no dividends and expected price volatility and risk-free rates relative to the expected term. Note 8 — Asset Retirement Obligation

Resolute’s estimated asset retirement obligation liability is based on estimated economic lives, estimates as to the cost to abandon the wells and facilitiesin the future, and federal and state regulatory requirements. The liability is discounted using a credit-adjusted risk-free rate estimated at the time the liability isincurred or revised, that ranges between 7% and 12%. Revisions to the liability could occur due to changes in estimated abandonment costs or well economiclives, or if federal or state regulators enact new requirements regarding the abandonment of wells. Asset retirement obligations are valued utilizing Level 3 fairvalue measurement inputs.

The following table provides a reconciliation of Resolute’s asset retirement obligations for the periods presented (in thousands):


2017 2016

Asset retirement obligations at beginning of period $ 20,352 $ 19,238 Additional liability incurred / acquired 246 22 Accretion expense 1,208 1,338 Liabilities settled / sold (4,062) (7 )Revisions to previous estimates 702 (20)Asset retirement obligations at end of period 18,446 20,571 Less: current asset retirement obligations (1,216) (1,051)Long-term asset retirement obligations $ 17,230 $ 19,520

Note 9 — Derivative Instruments

Resolute enters into commodity derivative contracts to manage its exposure to oil and gas price volatility. Resolute has not elected to designate derivativeinstruments as hedges under the provisions of FASB ASC Topic 815, Derivatives and Hedging. As a result, these derivative instruments are marked to market atthe end of each reporting period and changes in the fair value are recorded in the accompanying condensed consolidated statements of operations. Gains andlosses on commodity derivative instruments from Resolute’s price risk management activities are recognized in other income (expense). The cash flows fromderivatives are reported as cash flows from operating activities unless the derivative contract is deemed to contain a financing element. Derivatives deemed tocontain a financing element are reported as financing activities in the condensed consolidated statement of cash flows.

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The Company utilizes fixed price swaps, basis swaps, option contracts and two- and thre e-way collars. These instruments generally entitle Resolute (thefloating price payer in most cases) to receive settlement from the counterparty (the fixed price payer in most cases) for each calculation period in amounts, ifany, by which the settlement price for the scheduled trading days applicable to each calculation period is less than the fixed strike price or floor price. TheCompany would pay the counterparty if the settlement price for the scheduled trading days applicable to each calculation period exceeds the fixed strike price orceiling price. The amount payable by Resolute, if the floating price is above the fixed or ceiling price is the product of the notional contract quantity and theexcess of the floating price over the fixed or ceiling price per calculation period. The amount payable by the counterparty, if the floating price is below the fixed orfloor price, is the product of the notional contract quantity and the excess of the fixed or floor price over the floating price per calculation period. A three-waycollar consists of a two-way collar contract combined with a put option contract sold by the Company with a strike price below the floor price of the two-waycollar. The Company receives price protection at the purchased put option floor price of the two-way collar if commodity prices are above the sold put optionstrike price. If commodity prices fall below the sold put option strike price, the Company receives the cash market price plus the variance between the two putoption strike prices. This type of instrument captures more value in a rising commodity price environment, but limits the benefits in a downward commodity priceenvironment. Basis swaps, when used in connection with fixed price swaps, are used to fix the price differential between the NYMEX commodity price and theindex price at which the production is sold.

As of September 30, 2017, the fair value of the Company’s commodity derivatives was a net liability of $11.1 million (Level 2 fair value measurement).

The following table represents Resolute’s commodity swap contracts as of September 30, 2017:

Oil (NYMEX WTI) Gas (NYMEX Henry Hub) NGL (Mont Belvieu)

Remaining Term Bbl per Day

WeightedAverage SwapPrice per Bbl MMBtu per Day

WeightedAverage Swap

Price per MMBtu Bbl per Day

WeightedAverage SwapPrice per Bbl

Oct – Dec 2017 1 3,000 $ 53.93 14,000 $ 3.476 300 $ 19.53 Jan – Dec 20182 3,248 $ 50.63 — $ — — $ — Jan – Dec 20183 4,210 $ 47.73 — $ — — $ — Jan – Dec 20193 4,000 $ 50.20 — $ — — $ — Jan – Dec 20203 3,788 $ 50.20 — $ — — $ —

1 Subsequent to September 30, 2017, Resolute terminated all 2017 NGL swap contract volumes.2 Subsequent to September 30, 2017, Resolute terminated 2018 oil swap contract volumes totaling 500 Bbl per day at a weighted average price of $51.50 per Bbl.3 As of September 30, 2017, Resolute was party to certain commodity swap contracts averaging 4,000 Bbl per day for the years 2018-2020. These contracts were entered into pursuant to the

terms of the Purchase and Sale Agreement related to the Aneth Disposition (as defined below) discussed at Note 11. These contract amounts were novated to the buyer upon the closing of thetransaction.

The following table represents Resolute’s two-way commodity collar contracts as of September 30, 2017:

Oil (NYMEX WTI) Gas (NYMEX Henry Hub)


WeightedAverage FloorPrice per Bbl

WeightedAverage Ceiling

Price per Bbl MMBtu per Day

WeightedAverage Floor

Price per MMBtu

Weighted AverageCeiling Price per

MMBtu

Oct – Dec 2017 1 2,500 $ 47.80 $ 60.19 9,250 $ 2.477 $ 3.301

1

Subsequent to September 30, 2017, Resolute terminated 2017 two-way gas collar contract volumes totaling 6,000 MMBtu per day at a weighted average floor price of $2.600 per MMBtu anda weighted average ceiling price of $3.600 per MMBtu.

The following table represents Resolute’s three-way oil collar contracts as of September 30, 2017:

Oil (NYMEX WTI)

Weighted

Average WeightedAverage Weighted Average

Remaining Term

Bbl per Day Short Put

Price per Bbl Floor Price

per Bbl Ceiling Price

per Bbl

Oct – Dec 2017 1 1,500 $ 40.00 $ 50.00 $ 60.10 Jan – Dec 2018 2,748 $ 40.18 $ 49.27 $ 53.86

1 Subsequent to September 30, 2017, Resolute terminated all 2017 three-way oil collar contract volumes.

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The following table represents Resolute’s three-wa y gas collar contracts as of September 30, 2017:

Gas (NYMEX Henry Hub)

Weighted

Average Short Weighted

Average Floor Weighted Average

Remaining Term

MMBtu per Day Put Price

per MMBtu Price per MMBtu Ceiling Price per

MMBtu

Oct – Dec 2017 1,500 $ 2.750 $ 3.250 $ 4.010 The following table represents Resolute’s commodity option contracts as of September 30, 2017:

Oil (NYMEX WTI)


WeightedAverage Sold Call

Price per Bbl

Jan – Dec 2018 1,100 $ 55.00 Jan – Dec 2019 1,100 $ 62.85

Subsequent to September 30, 2017, Resolute entered into additional oil swap contracts as summarized below:

Oil (NYMEX WTI)


WeightedAverage SwapPrice per Bbl

Jan – Jun 2018 1,000 $ 54.00 Jul – Dec 2018 500 $ 51.95

Subsequent to September 30, 2017, Resolute entered into an additional three-way oil collar contract as summarized below:

Oil (NYMEX WTI)

Weighted


Remaining Term




per Bbl

Jul – Dec 2018 1,000 $ 40.00 $ 50.00 $ 56.00

The table below summarizes the location and amount of commodity derivative instrument gains and losses reported in the condensed consolidatedstatements of operations (in thousands):


2017 2016 2017 2016

Other income (expense): Commodity derivative settlement gain $ 2,354 $ 21,357 $ 3,760 $ 69,649 Mark-to-market gain (loss) (16,073) (17,385) 819 (81,388)

Commodity derivative instruments gain (loss) $ (13,719) $ 3,972 $ 4,579 $ (11,739)

Credit Risk in Derivative Instruments

Resolute is exposed to credit risk to the extent of nonperformance by the counterparties in the derivative contracts discussed above. All counterpartieshave high credit ratings and are current or former lenders under Resolute’s Revolving Credit Facility. Accordingly, Resolute is not required to provide any creditsupport to its counterparties other than cross collateralization with the properties securing the Revolving Credit Facility. Resolute’s derivative contracts aredocumented with industry standard contracts known as a Schedule to the Master Agreement and International Swaps and Derivative Association, Inc. MasterAgreement (“ISDA”). Typical terms for each ISDA include credit support requirements, cross default provisions, termination events, and set-off provisions.Resolute generally has set-off provisions with its lenders that, in the event of counterparty default, allow Resolute to set-off amounts owed under the RevolvingCredit Facility or other general obligations against amounts owed for derivative contract liabilities.

Resolute does not offset the fair value amounts of commodity derivative assets and liabilities with the same counterparty for financial reporting purposes.

The following is a listing of Resolute’s commodity derivative assets and liabilities required to be

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measured at fair value on a recurring basis and where they are classified within the hierarchy as of September 30, 2017, and December 31, 2016 (in thousands): Level 2

September 30, 2017 December 31, 2016

Assets Derivative instruments, current $ 1,653 $ 218 Derivative instruments, long term — —

Total assets $ 1,653 $ 218

Liabilities Derivative instruments, current $ 8,177 $ 8,014 Derivative instruments, long term 4,557 4,104

Total liabilities $ 12,734 $ 12,118

As of September 30, 2017, the maximum amount of loss in the event of all counterparties defaulting was $0.8 million.

Note 10 — Commitments and Contingencies

CO2 Take-or-Pay Agreements

As of September 30, 2017, Resolute was party to a take-or-pay purchase agreement with Kinder Morgan CO 2 Company L.P., under which Resolute wascommitted to buy specified volumes of CO2. This agreement was assigned to and assumed by the buyer in connection with the closing of the Aneth Disposition(defined below). See Note 11 for additional information related to the Aneth Disposition. The purchased CO2 was for use in Resolute’s enhanced tertiaryrecovery projects in Aneth Field. Resolute was obligated to purchase a minimum daily volume of CO2 or pay for any deficiencies at the price in effect whendelivery was to have occurred. The ultimate CO2 volumes planned for use on the enhanced recovery projects exceed the minimum daily volumes provided inthese take-or-pay purchase agreements.

Future minimum CO 2 purchase commitments as of September 30, 2017, under this purchase agreement which transferred to the Aneth Field buyer uponclosing of the transaction, based on prices and volumes in effect at September 30, 2017, were as follows (in thousands):

CO2 Purchase Year Commitments

2017 1,380 2018 5,475

Total $ 6,855

The terms of the CO2 contract, as amended in Amendment No. 3 to the Kinder Morgan Product Sale and Purchase Contract dated July 1, 2007, containsa unit price floor, below which the price cannot fall. As a result, the Company was exposed to the risk of paying higher than the market rate for CO2 in a climateof declining oil and CO2 prices. Based on this floor pricing term, the Company determined that this contract contained an embedded derivative. However,assuming the prices in effect as of September 30, 2017, the fair value of this embedded derivative was immaterial.

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Note 11 — Subsequent Events

Aneth Field Disposition

On September 14, 2017, Resolute and certain of its wholly-owned subsidiaries (together, the “Sellers”) entered into a Membership Interest and AssetPurchase Agreement (the “Purchase and Sale Agreement”) pursuant to which the Sellers agreed to sell their respective equity interests in Resolute Aneth, LLC,the entity which holds all of Resolute’s interest in Aneth Field, and certain other assets associated with Aneth Field operations, to an affiliate of Elk PetroleumLimited (“Elk”) (the “Buyer”). The sale closed on November 6, 2017 for total consideration of up to $195 million (the “Aneth Disposition”). The effective date of thissale is October 1, 2017. The proceeds of the Aneth Disposition initially will be used to repay borrowings under Resolute’s Revolving Credit Facility. TheCompany is in the process of assessing whether a gain will be recognized on the Aneth Disposition.

Under the terms of the Purchase and Sale Agreement, the Buyer funded a performance deposit of $10 million which was creditable against the purchaseprice. This performance deposit is contained in other long term liabilities on the Condensed Consolidated Balance Sheet at September 30, 2017. In addition tothe performance deposit, Resolute received cash consideration of $150 million at closing, subject to customary purchase price adjustments, and is entitled toreceive additional cash consideration of up to $35 million if oil prices exceed certain levels in the three years after closing, as follows: Buyer will pay Resolute$40,000 for each week day in the twelve months after closing that the WTI spot oil price exceeds $52.50 per barrel (up to $10 million); $50,000 for each weekday in the twelve months following the first anniversary of closing that the oil price exceeds $55.00 per barrel (up to $10 million) and $60,000 for each week dayin the twelve months following the second anniversary of closing that the oil price exceeds $60.00 per barrel (up to $15 million).

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” contained in our Annual Report on Form 10-K for the year ended December 31, 2016, as well as the accompanying financial statements and therelated notes contained elsewhere in this report. References to “Resolute,” “the Company,” “we,” “our,” and “us” refer to Resolute Energy Corporation and itssubsidiaries. Overview

We are a publicly traded, independent oil and gas company with assets located primarily in the Delaware Basin in west Texas. As discussed in Note 11to the Condensed Consolidated Financial Statements, we closed on the disposition of our Aneth Field Properties on November 6, 2017. The historical results ofoperations of the Aneth Field are contained in our financial position and results as of September 30, 2017 and for the three and nine months ended September30, 2017. Our development activity is focused on our 27,100 gross (21,100 net) operated acreage position in what we believe to be the core of the Wolfcamphorizontal play in northern Reeves County, Texas. Our corporate strategy is to drive organic growth in reserves, production and cash flow through developmentof our Reeves County acreage and opportunistic bolt-on acquisitions in the Delaware Basin and to focus on de-risking certain future growth projects throughselectively targeted capital investment.

During 2016 oil sales comprised approximately 90% of revenue, and our December 31, 2016 estimated net proved reserves were approximately 60.3million barrels of oil equivalent (“MMBoe”), of which approximately 62% and 59% were proved developed reserves and proved developed producing reserves(“PDP”), respectively. Approximately 73% of our estimated net proved reserves were oil and approximately 85% were oil and natural gas liquids (“NGL”). TheDecember 31, 2016, pre-tax present value discounted at 10% (“PV-10”) of our net proved reserves and the standardized measure of our estimated net provedreserves were $344 million.

Pursuant to full cost accounting rules, we perform ceiling tests each quarter on our proved oil and gas assets. We recorded a non-cash impairment of thecarrying value of our proved oil and gas properties of $58 million during the nine months ended September 30, 2016, as a result of the ceiling test limitation. Noimpairment was recorded during the nine months ended September 30, 2017. If in future periods a negative factor impacts one or more of the components ofthe calculation, including market prices of oil and gas (based on a trailing twelve-month unweighted average of the oil and gas prices in effect on the first day ofeach month), differentials from posted prices, future drilling and capital plans, operating costs or expected production, we may incur further full cost ceilingimpairment related to our oil and gas properties in such periods.

For 2017 the Board initially approved a capital expenditure plan of $210 to $240 million primarily focused on a two rig drilling program spudding 22 grosswells in the Delaware Basin. This original capital program did not contemplate the Delaware Basin Bronco Acquisition or any related capital activities. When weincluded approximately $37 million in net capital allocated to the development of the Bronco Assets, approximately $15 million in increased capital associatedwith the acquisition of incremental working interests in certain second quarter wells and unbudgeted outside-operated wells, we previously increased our 2017capital guidance range to $270 million to $285 million. Due to the continuing efficiency of our drilling to date we have now completed the 22 wells originallycontemplated in our 2017 plan. With the closing of the Aneth Disposition our Board has approved an expansion to our 2017 capital program, which will allow usto retain the rigs and completion crews that have provided these excellent results. Under the extended plan we will spud an incremental five wells and completeone incremental well beyond our original program. This should result in our carrying eight drilled but uncompleted wells into the first quarter of 2018. We expectthese wells will be completed in early 2018 providing significant momentum to our first quarter production growth. The total capital required to execute theextended capital plan will be approximately $19 million. In addition to executing the extended plan, we are currently completing the planning process necessaryto potentially add a third rig in early 2018. The total capital required to execute the expanded capital plan will be approximately $19 million, causing us toincrease our 2017 capital guidance range to $290 million to $305 million.

We expect our 2017 capital program to accomplish a number of important initiatives for the Company. We will further delineate our development inventoryas we drill wells across our acreage block, conduct multiple spacing tests and complete wells in multiple landing zones in the Wolfcamp A as well as in theWolfcamp B and C. We anticipate that substantially all of our acreage will be held by production by the end of 2017.

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During the second and third quarters of 2017, we experienced a limited number of instances of well interference, primarily in Appaloosa, as we complete dinfill wells in close proximity to older producing wells in the same horizon. We estimate these events reduced production for each quarter marginally. These typesof events are not atypical for development in the Permian Basin and have been reported by other operators as well. We have made operational adjustments withthe objective of reducing these impacts in the future. First, we anticipate that our future drilling will be done in groups of two to four wells followed by sequentialfrac operations on all of the wells in the group. We believe this shift to pad drilling will ultimately result in savings of between $0.5 and $1.0 million dollars perpad. Second, we have moved to increase the density of perforation clusters in our frac design. We do not expect this to change our overall proppant loading orcompletion costs. The goal of this revised design is to give us a more effective completion in the near wellbore environment while reducing the instances whereindividual fractures reach out long distances and negatively affect adjacent wells. The shift to pad drilling is expected to modestly impact production growth inthe fourth quarter as a small number of completions are delayed.

We expect that the effect of the mid-period sale of our Aneth Field Properties will reduce fourth quarter production by 4,000 Boe per day. This is partiallyoffset by contribution from the Delaware Basin Bronco Acquisition as well as capital activity across our Reeves County asset base. Combining these factors,fourth quarter production is anticipated to be between 26,000 and 27,000 Boe per day. Full year production is expected to be between 24,500 to 25,500 Boe perday including the full year impact of the Aneth Disposition and the contribution of approximately 1,000 Boe per day from the Delaware Basin Bronco Acquisition.

During the third quarter, we experienced a modest shift in our oil percentage resulting from our mix of producing wells. Of the seven wells turned toproduction, four of them were in our Bronco and Mustang areas where we have higher initial gas to oil ratios. Based on our mix of producing wells and the sale ofAneth Field, which is 99% oil, we expect that our 2017 oil percentage will be between 60 and 62 percent.

We will outspend our cash flows from operations during 2017. A deterioration of commodity prices from current levels could negatively affect our resultsof operations, financial condition and future development plans. We may reduce our 2017 capital investment forecast during the year as a result of, among otherthings, a decline in commodity prices, drilling results, cost increases, or unfavorable changes in our borrowing capacity. We will also continue to explore otherways to enhance our liquidity, de-lever our balance sheet and increase drilling activity, including potential asset sales and potential joint ventures. Such strategicinitiatives are considered on an ongoing basis and decisions related thereto will be made if the terms are determined to be advantageous to us.

On August 1, 2016, we closed the sale of our Reeves County gas gathering and produced water handling and disposal assets. This transaction providedapproximately $36 million of net proceeds to Resolute, with the remaining proceeds used principally to repay all then-outstanding Revolving Credit Facility debt.In connection with such sale, we also entered into long-term gas gathering and processing and water gathering and disposal agreements with the purchaser ofsuch assets. On October 7, 2016, we closed the acquisition of certain Reeves County interests in the Delaware Basin for consideration consisting of $90 millionin cash and 2,114,523 shares of our common stock. The cash paid for this acquisition was funded in part by net proceeds from the sale of preferred stock andborrowings on our Revolving Credit Facility. On December 23, 2016, we closed our public stock offering of 4,370,000 shares of common stock. The netproceeds from the offering, after deducting fees and estimated expenses, were approximately $160.9 million. With a portion of these proceeds, on January 3,2017, we repaid approximately $132 million constituting all amounts due under the Secured Term Loan Facility (including prepayment fees). The Secured TermLoan Facility was terminated in connection with the repayment.

On February 22, 2017, we closed on the sale of our Denton and South Knowles properties in the Northwest Shelf project area in Lea County, NewMexico, for approximately $14.5 million in cash, subject to customary purchase price adjustments. The effective date of this sale was October 1, 2016. Theproceeds of the sale were used for general corporate purposes. As part of the sale, the Company was also no longer liable for asset retirement obligations of$3.6 million at March 31, 2017.

On April 27, 2017, Resolute Southwest entered into a Crude Oil Connection and Dedication Agreement with Caprock Crude, an affiliate of Caprock. Theagreement provides that Caprock Crude will construct the gathering systems, pipelines and other infrastructure for the gathering of crude oil from our Mustangand Appaloosa operating areas in exchange for customary fees based on the volume of crude oil produced and delivered. Resolute Southwest has agreed todedicate and deliver all crude oil produced from its acreage in Mustang and Appaloosa to Caprock Crude for gathering for a term through July 31, 2031,coterminous with our other commercial agreements with Caprock. For the first five years of the agreement, the crude oil will be delivered to Midland Stationunder a joint tariff arrangement between Caprock Crude and Plains Pipeline, L.P. On April 27, 2017, Resolute Southwest also entered into a Crude Oil PurchaseContract with Plains Marketing, L.P. providing for the sale to Plains of substantially all of the crude oil produced from the Mustang and Appaloosa areas for aprice equal to an indexed market price less a $1.75 transportation differential that will cover the joint tariff payable to Caprock Crude under the Crude OilConnection and Dedication Agreement.

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On March 3, 2017, Resolute Southwest entered into a Purchase and Sale Agreement with CP Exploration II, LLC and Petrocap CPX, LLC pursuant towhich Resolute Southwest agreed to acquire certain producing and undeveloped oil and gas properties in the Delaware Basin in Reeves County, Texas. Theclosing of the Delaware Basin Bronco Acquisition occurred on May 15, 2017, with an effective date of May 1, 2017. The acquisition was accounted for as anasset acquisition. The Company acquired these properties for $161.3 million, which it financed substantially with proceeds received from the offering of $125million of 8.50% Senior Notes due 2020 that closed in May 2017. The properties acquired included approximately 4,600 net acres in Reeves County, Texas,which were considered predominantly unproved, consisting of 2,187 net acres adjacent to the Company’s existing operating area in Reeves County and 2,405net acres in southern Reeves County.

While the closing of the Incremental Senior Notes issuance related to the Delaware Basin Bronco Acquisition resulted in a short term rise in our level ofindebtedness on an absolute basis and in relation to our cash flows, the sale of Aneth Field, which closed in the fourth quarter of 2017, was a significantdeleveraging event. We secured a precautionary amendment to ensure that we remained in compliance with our covenants under our Revolving Credit Facilityduring this interim period of increased indebtedness.

On September 14, 2017, to complete our repositioning as a pure-play Delaware Basin company, Resolute entered into the Purchase and Sale Agreementpursuant to which we agreed to sell the equity interests in Resolute Aneth, LLC, the entity which holds all of Resolute’s interest in Aneth Field, and certain otherassets associated with Aneth Field operations, to Elk. The sale closed on November 6, 2017 for total consideration of up to $195 million, comprised of $160million ($150 million of which was received at closing and $10 million of which was a deposit received in the third quarter), adjusted for normal closing purchaseprice adjustments and up to an additional $35 million if oil prices exceed certain levels in the next three years. The effective date of the sale is October 1, 2017.The proceeds of the Aneth Disposition initially will be used to repay borrowings under Resolute’s Revolving Credit Facility.

Our Revolving Credit Facility and Senior Notes include customary terms and covenants that place limitations on certain types of activities and requiresatisfaction of certain financial tests. We were in compliance with all material terms and covenants of the Revolving Credit Facility and Senior Notes atSeptember 30, 2017.

How We Evaluate Our Operations

Our management uses a variety of financial and operational measurements to analyze our operating performance, including but not limited to, productionlevels, pricing and cost trends, reserve trends, operating and general and administrative expenses, operating cash flow and Adjusted EBITDA (defined below).

Production Levels, Trends and Prices . Oil and gas revenue is the result of our production multiplied by the price that we receive for that production.Because the price that we receive is highly dependent on many factors outside of our control, except to the extent that we have entered into derivativearrangements that can influence our net price either positively or negatively, production is the primary revenue driver over which we have some influence.Although we cannot greatly alter reservoir performance, we can aggressively implement exploitation activities that can increase production or diminishproduction declines relative to what would have been the case without intervention. Examples of activities that can positively influence production includeminimizing production downtime due to equipment malfunction, well workovers and cleanouts, recompletions of existing wells in new parts of the reservoir andexpanded secondary and tertiary recovery programs.

The price of oil had been trending lower from June 2014 through January 2016, and has been extremely volatile. We expect that volatility to continue.Given the inherent volatility of oil prices, we plan our activities and budget based on product price assumptions that we believe to be reasonable. We usederivative contracts to provide a measure of stability to our cash flows in an environment of volatile oil and gas prices and currently have such contracts in placethrough 2018. These instruments limit our exposure to declines in prices, but also limit our ability to receive the benefit of price increases. Changes in the priceof oil or gas will result in the recognition of a non-cash gain or loss recorded in other income or expense due to changes in the future fair value of the derivativecontracts. Recognized gains or losses arise only from payments made or received on monthly settlements of derivative contracts or if a derivative contract isterminated prior to its expiration. We typically enter into derivative contracts that cover a significant portion of our estimated future oil and gas production.

Reserve Trends. We acquired our Permian Basin Properties in 2011, 2012, 2016 and 2017. Over that time we have added reserves and productionprincipally through drilling and completion of mid-length to long lateral horizontal wells in the Wolfcamp formation. Since then we have added reserves by drillingvertical and horizontal wells in our various operating areas. We will seek to add reserves through similar means in the future. We also believe that our knowledgeof various domestic onshore operating areas, strong management and staff and solid industry relationships will allow us to locate, capitalize on and integratestrategic acquisition opportunities which may include acquisitions of reserves.

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At December 31, 2016, we had estimated net proved reserves of ap proximately 25,005 MBoe that were classified as proved developed non-producingand proved undeveloped, as compared to 7,798 MBoe at December 31, 2015. The largest portion of these reserves is comprised of 17,957 MBoe of reservesadded through the addition of twenty immediate offset proved undeveloped Permian locations. Additionally, the 2016 drilling program for the Permian BasinProperties resulted in an addition of proved developed producing reserves of 14,762 MBoe from successful drilling of proved locations.

Operating Expenses. Operating expenses consist of costs associated with the operation of oil and gas properties and production and ad valorem taxes.Direct labor, repair and maintenance, workovers, utilities, rental equipment, fluids and chemicals and contract services comprise the most significant portion oflease operating expenses. We monitor our operating expenses in relation to production amounts and the number of wells operated. Some of these expenses arerelatively independent of the volume of hydrocarbons produced, but may fluctuate depending on the activities performed during a specific period. Otherexpenses, such as taxes and utility costs, are more directly related to production volumes or reserves. Severance taxes, for example, are charged based onproduction revenue and therefore are based on the product of the volumes that are sold and the related price received. Ad valorem taxes are generally based onthe value of reserves. Volatility in commodity prices can also lead to changes in demand for drilling rigs, workover rigs, operating personnel and field suppliesand services, which in turn can affect the costs of those goods and services.

General and Administrative Expenses . We monitor our general and administrative expenses carefully, attempting to balance costs against the benefits of,among other things, hiring and retaining highly qualified staff who can add value to our asset base. General and administrative expenses include, among otherthings, salaries and benefits, share-based compensation, general corporate overhead, fees paid to independent auditors, attorneys, petroleum engineers andother professional advisors, costs associated with public company financial reporting, proxy statements and shareholder reports, investor relations activities,registrar and transfer agent fees, director and officer liability insurance costs and director compensation.

Operating Cash Flow. Operating cash flow is the cash directly derived from our oil and gas properties, before considering such things as administrativeexpenses and interest costs. Operating cash flow per unit of production is a measure of field efficiency, and can be compared to results obtained by operators ofoil and gas properties with characteristics similar to ours in order to evaluate relative performance. Aggregate operating cash flow is a measure of our ability tosustain overhead expenses and costs related to capital structure, including interest expenses.

Credit facility EBITDA . Credit facility EBITDA (a non-GAAP measure) is defined under the Revolving Credit Facility as consolidated net income adjustedto exclude interest expense, interest income, income taxes, depletion, depreciation and amortization, impairment expense, accretion of asset retirementobligation, change in fair value of derivative instruments, non-cash share-based compensation expense, cash-settled incentive award payments andnoncontrolling interest amounts. Credit facility EBITDA is a financial measure that we report to our lenders and is used as a gauge for compliance with a financialcovenant under our Revolving Credit Facility.

Adjusted EBITDA. We define Adjusted EBITDA (a non-GAAP measure) as consolidated net income adjusted to exclude interest expense, interestincome, income taxes, depletion, depreciation and amortization, impairment expense, accretion of asset retirement obligation, change in fair value of derivativeinstruments, non-cash share-based compensation expense, non-recurring cash-settled incentive award payments and noncontrolling interest amounts. AdjustedEBITDA is used as a supplemental liquidity or performance measure by our management and by external users of our financial statements such as investors,research analysts and others, to assess:

• the ability of our assets to generate cash sufficient to pay interest costs;

• the financial metrics that support our indebtedness;

• our ability to finance capital expenditures;

• financial performance of the assets without regard to financing methods, capital structure or historical cost basis;

• our operating performance and return on capital as compared to those of other companies in the exploration and production industry, withoutregard to financing methods or capital structure; and

• the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities.

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Credit facility EBITDA and Adjusted EBITDA should not be considered as alternatives to, or more meaningful than net income available to commonshareholders, net income, operating income, cash flows from operating activities or any other measure of financial performance presented in accordance withprinciples generally accepted in the United States (“GAAP”) as measures of operating performance, liquidity or ability to service debt obligations. Because wehave borrowed money to finance our operations, interest expense is a necessary element of our costs and our ability to generate gross margins. Because we usecapital assets, depletion, depreciation and amortization are also necessary elements of our costs. Therefore, any measures that exclude these elements havematerial limitations. To compensate for these limitations, we believe that it is important to consider both net income and net cash provided by operating activitiesdetermined under GAAP, as well as credit facility EBITDA and Adjusted EBITDA, when evaluating our financial performance and liquidity. Credit facility EBITDAand Adjusted EBITDA exclude some, but not all, items that affect net income, operating income and net cash provided by operating activities and thesemeasures may vary among companies. Our credit facility EBITDA and Adjusted EBITDA may not be comparable to credit facility EBITDA and Adjusted EBITDAof any other company because other entities may not calculate credit facility EBITDA and Adjusted EBITDA in the same manner.

Permian Basin Properties

Our Permian Basin Properties, constituting 59% of net proved reserves as of December 31, 2016, are located in the Permian Basin of west Texas. Ourproject area located in the Delaware Basin portion of the Permian Basin, in Reeves County, targets the Wolfcamp formation.

During the nine months ended September 30, 2017, we completed 25 gross (19.9 net) wells and had 6 gross (5.0 net) wells awaiting completion atquarter end. Furthermore, as of September 30, 2017, we were in the process of drilling 2 gross (2.0 net) wells. All such wells are located in the Delaware Basin.

See Note 3 to the Condensed Consolidated Financial Statements for additional information on the following events:

• In May 2017 we acquired certain Reeves County interests in the Delaware Basin.

• In February 2017 we sold our Denton and South Knowles properties in the Northwest Shelf project area in the Permian Basin.

• In October 2016 we acquired certain Reeves County interests in the Delaware Basin.

• In August 2016 we sold certain midstream asset interests in the Delaware Basin.

Aneth Field Properties

The Aneth Field Properties constituted 41% of our net proved reserves as of December 31, 2016. The working interests we held at September 30, 2017in Aneth Field, a mature, long-lived oil producing field, were located primarily on the Navajo Reservation in southeast Utah. We owned a majority of the workinginterests in, and were the operator of, three federal production units which constituted the Aneth Field Properties. These were the Aneth Unit, the McElmo CreekUnit and the Ratherford Unit, in which we owned working interests of 62.4%, 67.5% and 58.6%, respectively, at September 30, 2017.

In November 2017 we completed the sale of our Aneth Field Properties. See Note 11 to the Condensed Consolidated Financial Statements for additionalinformation. Factors That Significantly Affect Our Financial Results

Revenue, cash flow from operations and future growth depend on many factors beyond our control, such as oil prices, cost of services and supplies,economic, political and regulatory developments and competition from other sources of energy. Historical oil prices have been volatile and are expected tofluctuate widely in the future. Sustained periods of low prices for oil could materially and adversely affect our financial position, our results of operations, thequantities of oil and gas that we can economically produce, and our ability to obtain capital.

Like all businesses engaged in the exploration for and production of oil and gas, we face the challenge of natural production declines. As initial reservoirpressures are depleted, oil and gas production from a given well decreases. Thus, an oil and gas exploration and production company depletes part of its assetbase with each unit of oil or gas it produces. We attempt to overcome this natural decline by developing existing properties, implementing secondary and tertiaryrecovery techniques and by acquiring more reserves than we produce. Our future growth will depend on our ability to enhance production levels from existingreserves and to continue to add reserves in excess of production through exploration, development and acquisition. We will maintain our focus on costsnecessary to produce our reserves as well as the costs necessary to add reserves through production enhancement, drilling and acquisitions. Our ability to makecapital expenditures to increase production from existing reserves and to acquire more reserves is dependent on availability of capital resources, and can belimited by many factors, including the ability to obtain capital in a cost-effective manner and to obtain permits and regulatory approvals in a timely manner.

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Results of Operations

For the purposes of management’s discussion and analysis of the results of operations, management has analyzed the operational results for the threeand nine months ended September 30, 2017, in comparison to results for the three and nine months ended September 30, 2016.

The following table presents our sales volumes, revenues and operating expenses, and sets forth our sales prices, costs and expenses on a barrel of oilequivalent (“Boe”) basis for the periods indicated:



2017 2016 2017 2016

Net Sales: Oil (MBbl) 1,554 1,072 4,168 2,582 Gas (MMcf) 3,563 1,436 8,366 2,908 NGL (MBbl) 480 169 1,056 313

Total sales (MBoe) 2,628 1,480 6,618 3,380 Average daily sales (Boe/d) 28,566 16,085 24,240 12,336

Average Sales Prices: Oil ($/Bbl) $ 43.53 $ 39.55 $ 44.64 $ 36.27 Gas ($/Mcf) 2.47 2.49 2.51 1.98 NGL ($/Bbl) 10.59 8.61 10.23 7.59

Average sales price ($/Boe, excluding commodity derivative settlements) $ 31.03 $ 32.04 $ 32.91 $ 30.12

Operating Expenses ($/Boe): Lease operating $ 9.55 $ 11.20 $ 9.57 $ 13.63 Production and ad valorem taxes 3.34 3.27 3.28 3.62 General and administrative 3.63 4.84 4.45 7.00 General and administrative (excluding non-cash compensation expense) 2.45

3.94 3.11

5.56

Cash-settled incentive awards 1.90 10.84 1.36 5.41 Depletion, depreciation, amortization and accretion 9.71 8.43 9.65 9.97

Quarter Ended September 30, 2017, Compared to the Quarter Ended September 30, 2016

Revenue. Revenue from oil and gas activities increased by 72% to $81.6 million during 2017, from $47.4 million during 2016. Of the $34.2 millionincrease in revenue, approximately $36.8 million was attributable to increased production, offset by $2.6 million attributable to decreased commodity pricing($31.03 per Boe in 2017 versus $32.04 per Boe in 2016). Sales volumes increased 78% to 2,628 MBoe during 2017 as compared to 1,480 MBoe during 2016,principally as a result of production from newly drilled and completed wells in the Delaware Basin.

Operating Expenses. Lease operating expenses include direct labor, contract services, field office rent, production and ad valorem taxes, vehicleexpenses, supervision, transportation, minor maintenance, tools and supplies, workover expenses, utilities and other customary charges. Resolute assesseslease operating expenses in part by monitoring the expenses in relation to production volumes and the number of wells operated.

Lease operating expenses increased 51% to $25.1 million during 2017, from $16.6 million during 2016. On a per-unit basis, lease operating expensedecreased 15% to $9.55 per Boe in 2017 compared to $11.20 per Boe in 2016. The decrease in per-unit operating expense is primarily due to the increase inproduction from mid-length and long lateral horizontal wells in the Delaware Basin, which increased by a greater percentage than the associated lease operatingexpense.

Production and ad valorem taxes increased to $8.8 million during 2017, as compared to $4.8 million during 2016, but remained relatively unchanged on aper-unit basis as compared to 2016. Production and ad valorem taxes were 10.8% of total revenue in 2017 versus 10.2% of total revenue in 2016. The higherproduction and ad valorem taxes as a percentage of revenue in 2017 as compared to 2016 is primarily the result of higher ad valorem tax estimates in 2017. Asproduction increased period over period, production taxes increased in a corresponding manner.

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General and administrative expenses include the costs of employees and executive officers, related benefits, share-based compensation, office leases,professional fees, general corporate overhead and other costs not directly associated with field operations. We monitor our general and administrative expensescarefully, attempting to balance the cash effect of incurring general and administrative costs against the related benefits, with a focus on hiring and retaininghighly qualified staff who can add value to our asset base.

General and administrative expenses increased to $9.5 million during 2017, as compared to $7.2 million during 2016. The $2.3 million, or 33% increase,primarily resulted from increases in share based compensation due to a shift in 2017 from granting cash-based to equity-based long-term incentive awards. On aper-unit basis, general and administrative expenses decreased to $3.63 per Boe in 2017 from the $4.84 per Boe in 2016. Cash-based general and administrativeexpense was $6.4 million, or $2.45 per Boe, in 2017 compared to $5.8 million, or $3.94 per Boe, in 2016.

Cash-settled incentive award expense is comprised of the expense related to the grant of time-and performance-based restricted cash awards as well as

cash-settled stock appreciation rights under the long-term incentive program. The time-based awards will vest and be expensed ratably over three years. Theperformance-based awards and stock appreciation rights will vest ratably over three years but their fair value will be re-measured at each period end over theirten-year lives.

Cash-settled incentive award expense decreased to $5.0 million in 2017, as compared to $16.0 million in 2016. This decrease was the result of the

achievement of multiple performance targets (which primarily occurred in 2016) that are based on the Company’s stock price under the performance-basedrestricted cash awards as well as a decrease in expense related to the fair value of the cash-settled stock appreciation rights under the long-term incentiveprogram. Actual cash payments during the 2017 period were $0.6 million.

Depletion, depreciation, amortization and accretion expenses increased to $25.5 million during 2017, as compared to $12.5 million during 2016 primarilyas a result of the 78% increase in production. On a per-unit basis, depreciation, amortization and accretion expenses increased to $9.71 per Boe in 2017compared to $8.43 per Boe in 2016. The increase on a per-unit basis was attributable to capitalized costs increasing by a greater percentage than theassociated proved reserve quantities between the two periods.

Pursuant to full cost accounting rules, we perform ceiling tests each quarter on our proved oil and gas assets. The primary components affecting thiscalculation are commodity prices, reserve quantities and associated production, overall exploration and development costs and depletion expense. If the netcapitalized cost of the Company’s oil and gas properties subject to amortization (the “carrying value”) exceeds the ceiling limitation, the excess is charged toexpense. No impairment was recorded during the three months ended September 30, 2017 and 2016. If in future periods a negative factor impacts one or moreof the components of the calculation, including market prices of oil and gas (based on a trailing twelve-month unweighted average of the oil and gas prices ineffect on the first day of each month), differentials from posted prices, future drilling and capital plans, operating costs or expected production, the Company mayincur full cost ceiling impairment related to its oil and gas properties in such periods.

Other Income (Expense). All of our oil and gas derivative instruments are accounted for under mark-to-market accounting rules, which provide for thefair value of the contracts to be reflected as either an asset or a liability on the balance sheet. The change in the fair value during an accounting period isreflected in the income statement for that period. During 2017 the loss on oil and gas commodity derivatives was $13.7 million, consisting of $16.1 million mark-to-market losses offset by $2.4 million of derivative settlement gains. During 2016 the gain on oil and gas commodity derivatives was $4.0 million, consisting of$21.4 million of derivative settlement gains offset by $17.4 million of mark-to-market losses.

Interest expense in 2017 decreased to $8.5 million from the $13.3 million recorded in 2016. The decrease in interest expense was primarily due to thetermination of the Secured Term Loan Facility and increases in amounts capitalized offset by interest incurred on the May 2017 issuance of the 8.50%Incremental Senior Notes. The components of our interest expense are as follows (in thousands):

Three Months Ended September 30,

2017 2016

8.50% senior notes $ 11,156 $ 8,500 Secured term loan facility — 3,607 Revolving credit facility 1,554 177 Amortization of deferred financing costs, senior notes premium and secured term loan facility discount 538

1,312

Bridge facility commitment fee and other, net (33) 25 Capitalized interest (4,688) (349)

Total interest expense $ 8,527 $ 13,272

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Income Tax Benefit (Expense). Income tax benefit recognized during the three months ended September 30, 2017 was less than $0.1 million, which

was the result of a refund of Texas state taxes which were accrued for at year-end 2016 and paid in early 2017. No income tax benefit or expense wasrecognized during the three months ended September 30, 2016 due to the deferred tax asset valuation allowance previously established by the Company. Nine Months Ended September 30, 2017, Compared to the Nine Months Ended September 30, 2016

Revenue. Revenue from oil and gas activities increased by 114% to $217.8 million during 2017, from $101.8 million during 2016. Of the $116.0 millionincrease in revenue, approximately $97.5 million was attributable to increased production and $18.5 million was attributable to increased commodity pricing($32.91 per Boe in 2017 versus $30.12 per Boe in 2016). Sales volumes increased 96% to 6,618 MBoe during 2017 as compared to 3,380 MBoe during 2016,principally as a result of production from newly drilled and completed wells in the Delaware Basin.

Operating Expenses. Lease operating expenses increased to $63.3 million during 2017, from $46.1 million during 2016. On a per-unit basis, leaseoperating expense decreased 30% to $9.57 in 2017 compared to $13.63 in 2016. The significant decrease in per-unit operating expense is primarily due to thesignificant increase in production from mid-length and long lateral horizontal wells in the Delaware Basin, which increased by a greater percentage than theassociated lease operating expense.

Production and ad valorem taxes increased to $21.7 million during 2017, as compared to $12.2 million during 2016 and were less on a per-unit basis,compared to 2016. Production and ad valorem taxes were 10.0% of total revenue in 2017 versus 12.0% of total revenue in 2016. The lower production and advalorem taxes as a percentage of revenue in 2017 as compared to 2016 are attributable to the increase in the percentage of revenue realized in the State ofTexas, which has a lower effective tax rate than the Aneth Field properties. This decrease is also the result of the timing of the assessment of ad valorem taxes,as they are assessed on January 1st of each year, based on the producing wells at that point in time and are not updated for wells that come online throughoutthe year.

General and administrative expenses increased to $29.4 million during 2017, as compared to $23.7 million during 2016. The $5.7 million, or 24%,increase primarily resulted from an increase in share-based compensation expense due to a shift in 2017 from granting cash-based to equity-based long-termincentive awards and a restoration of short-term incentive compensation which had been reduced during 2016 in response to lower commodity prices, offset byan increase in the portion of general and administrative expenses capitalized. On a unit-of-production basis, general and administrative expenses decreased36%. Cash-based general and administrative expense was $20.6 million, or $3.11 per Boe, in 2017 compared to $18.8 million, or $5.56 per Boe, in 2016.

Cash-settled incentive award expense decreased to $9.0 million in 2017, as compared to $18.3 million in 2016. This decrease was primarily the result ofthe achievement of multiple performance targets (which primarily occurred in 2016) that are based on the Company’s stock price under the performance-basedrestricted cash awards as well as a decrease in expense related to the fair value of cash-settled stock appreciation rights under the long-term incentive program.Actual cash payments during the 2017 period were $11.9 million.

Depletion, depreciation, amortization and accretion expenses increased to $63.9 million during 2017, as compared to $33.7 million during 2016,principally as a result of the 96% increase in production. Conversely, on a per-unit basis, depletion, depreciation, amortization and accretion expenses remainedrelatively unchanged at $9.65 per Boe in 2017 compared to $9.97 per Boe in 2016.

Pursuant to full cost accounting rules, we perform ceiling tests each quarter on our proved oil and gas assets. The primary components affecting thiscalculation are commodity prices, reserve quantities added and produced, overall exploration and development costs and depletion expense. If the netcapitalized cost of the Company’s oil and gas properties subject to amortization (the “carrying value”) exceeds the ceiling limitation, the excess is charged toexpense. We recorded a non-cash impairment of the carrying value of our proved oil and gas properties of $58 million during the nine months ended September30, 2016, as a result of the ceiling test limitation. No impairment was recorded during the nine months ended September 30, 2017. If in future periods a negativefactor impacts one or more of the components of the calculation, including market prices of oil and gas (based on a trailing twelve-month unweighted average ofthe oil and gas prices in effect on the first day of each month), differentials from posted prices, future drilling and capital plans, operating costs or expectedproduction, the Company may incur further full cost ceiling impairment related to its oil and gas properties in such periods.

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Other Income (Expense). All of our oil and gas derivative instruments are accounted for under mark-to-m arket accounting rules, which provide for the fairvalue of the contracts to be reflected as either an asset or a liability on the balance sheet. The change in the fair value during an accounting period is reflectedin the income statement for that period. During 2017 the gain on oil and gas commodity derivatives was $4.6 million, consisting of $3.8 million of derivativesettlement gains and $0.8 million of mark-to-market gains. During 2016 the loss on oil and gas commodity derivatives was $11.7 million, co nsisting of $81.4million of mark-to-market losses offset by $69.7 million of derivative settlement gains.

Interest expense in 2017 decreased to $35.0 million from the $39.3 million recorded in 2016. The decrease in interest expense was primarily due to theextinguishment of the Secured Term Loan Facility as well as increases in the amount capitalized offset by the penalties incurred related to the repayment of theSecured Term Loan Facility and the issuance of the 8.50% Incremental Senior Notes. The components of our interest expense are as follows (in thousands):


2017 2016

8.50% senior notes $ 29,602 $ 25,500 Secured term loan facility 3,631 10,742 Revolving credit facility 2,857 559 Amortization of deferred financing costs, senior notes premium and secured term loan facility discount 8,801

3,922

Bridge facility commitment fee and other, net 971 33 Capitalized interest (10,859) (1,426)

Total interest expense $ 35,003 $ 39,330 Approximately $9.7 million in interest expense was incurred in 2017 as a result of the extinguishment of the Secured Term Loan Facility on January 3,

2017. Additionally, $1.0 million in interest expense was incurred in 2017 as a result of the fees associated with the $100 million unsecured bridge facility withBMO Capital Markets that terminated because the facility was never drawn in connection with the Delaware Basin Bronco Acquisition.

Income Tax Benefit (Expense). Income tax benefit recognized during the nine months ended September 30, 2017 was less than $0.1 million, which

was the result of a refund of Texas state taxes which were accrued for at year-end 2016 and paid in early 2017. No income tax benefit or expense wasrecognized during the nine months ended September 30, 2016 due to the deferred tax asset valuation allowance previously established by the Company.

Liquidity and Capital Resources

Our primary sources of liquidity have been cash generated from operations, amounts available under our Revolving Credit Facility, proceeds from theissuance of debt and equity securities and sales of oil and gas properties. For purposes of Management’s Discussion and Analysis of Liquidity and CapitalResources, we have analyzed our cash flows and capital resources for the nine months ended September 30, 2017 and 2016.

Nine Months Ended

September 30, 2017 2016

(in thousands)

Cash provided by operating activities $ 111,950 $ 58,695 Cash used in investing activities (345,341) (67,059)Cash provided by (used in) financing activities 101,190 (25)

Net cash provided by operating activities was $112.0 million in 2017 as compared to $58.7 million for the 2016 period. The increase in net cash provided

by operating activities in 2017 as compared to 2016 was primarily due to increased revenue resulting from the 96% increase in 2017 production volumes.

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Net cash used in investing activities was $345.3 million in 2017 compared to $67.1 million in 2016. The primary investing activities in 2017 were cashused for capital expenditures of $219.0 million and acquisitions of $161.3 million. Capital expenditures in 2017 consisted primarily of $209.5 million in drillingactivities and infrastructure projects in the Permian Basin, $6.5 million in facility projects in Aneth Field and $3.0 million in CO 2 acquisition for Aneth Field.Capital divestitures in 2017 included $13.2 million of cash receipts related to the Earnout Agreement entered into in connection with the divestiture of themidstream assets in the Delaware Basin and $13.1 million of net proceeds primarily from the sale of the New Mexico Properties. The primary investing activity in2016 was cash used for capital expenditures of $98.3 million. Capital expenditures in 2016 consisted primarily of $87.1 million in drilling activities andinfrastructure projects in the Permian Basin, $6.3 million in facility projects in Aneth Field and $4.9 million in CO2 acquisition for Aneth Field. Capital divestituresin 2016 included $33.0 million of proceeds from the sale of the Reeves County midstream assets.

Net cash provided by financing activities was $101.2 million in 2017 compared to less than $0.1 million used in 2016. The primary financing activities in

2017 were $126.9 million of proceeds received from the issuance of the Incremental Senior Notes and $115.0 million in net borrowings under the RevolvingCredit Facility, offset by the repayment of $128.3 million of principal on the Secured Term Loan.

If cash flow from operating activities does not meet expectations, we may reduce our expected level of capital expenditures and/or fund a portion of ourcapital expenditures using borrowings under our Revolving Credit Facility (if available), issuances of other debt or equity securities or from other sources. Therecan be no assurance that needed capital will be available on acceptable terms or at all. Our ability to raise funds through the incurrence of additionalindebtedness could be limited by the covenants in our Revolving Credit Facility or Senior Notes. If we are unable to obtain funds when needed or on acceptableterms, we may not be able to satisfy our obligations under our existing indebtedness, finance the capital expenditures necessary to maintain production orproved reserves or complete acquisitions that may be favorable to us.

While the closing of the Incremental Senior Notes issuance related to the Delaware Basin Bronco Acquisition resulted in a short term rise in our level ofindebtedness on an absolute basis and in relation to our cash flows, the sale of Aneth Field, which closed in the fourth quarter of 2017, was a significantdeleveraging event. We secured a precautionary amendment to ensure that we remained in compliance with our covenants under our Revolving Credit Facilityduring this interim period of increased indebtedness. As discussed above, in future periods we may again use additional borrowings under our Revolving CreditFacility or issue other debt or equity securities to fund ongoing operations or asset acquisitions.

We plan to continue our practice of hedging a significant portion of our production through the use of various commodity derivative transactions. Ourexisting derivative transactions have not been designated as cash flow hedges, and we anticipate that future transactions will receive similar accountingtreatment. Derivative settlements usually occur within five days of the end of the month. As is typical in the oil and gas industry, however, we do not generallyreceive the proceeds from the sale of our oil production until the 20th day of the month following the month of production. As a result, when commodity pricesincrease above the fixed price in the derivative contacts, we will be required to pay the derivative counterparty the difference between the fixed price in thederivative contract and the market price before receiving the proceeds from the sale of the hedged production. If this occurs, we may use working capital orborrowings under the Revolving Credit Facility to fund our operations.

Revolving Credit Facility

On February 17, 2017, we entered into the Third Amended and Restated Credit Agreement with a syndicate of banks led by Bank of Montreal, asAdministrative Agent, Capital One, National Association, as syndication agent, and Barclays Bank PLC, ING Capital LLC and SunTrust Bank, as co-documentation agents. In connection with entering into the Revolving Credit Facility, we repaid all amounts outstanding under the Second Amended andRestated Credit Agreement, dated as of April 15, 2015, by and among Resolute Energy Corporation, as Borrower, certain subsidiaries of Resolute EnergyCorporation, as Guarantors, Wells Fargo Bank, National Association, as administrative agent, and the lenders party thereto, as amended, and terminated thatagreement.

The Revolving Credit Facility specifies a maximum borrowing base as determined by the lenders in their sole discretion. The determination of theborrowing base takes into consideration the estimated value of our oil and gas properties in accordance with the lenders’ customary practices for oil and gasloans. The borrowing base is re-determined semi-annually, and the amount available for borrowing could be increased or decreased as a result of suchredeterminations. Under certain circumstances, either the Company or the lenders may request an interim redetermination. The Revolving Credit Facilitymatures in February 2021, unless there is a maturity of material indebtedness prior to such date.

The Revolving Credit Facility also includes customary additional terms and covenants that place limitations on certain types of activities, hedging, thepayment of dividends, and that require satisfaction of certain financial tests.

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On May 8, 2017, we entered into the First Amendment to the Third Amended and Restated Cre dit Agreement. The First Amendment, among otherthings, amended the leverage ratio covenant to increase the maximum ratio to 4.25:1.00 for the fiscal quarter ending September 30, 2017 and 4.00:1.00 for fiscalquarters ending thereafter. Furthermore, the amendment provided that the borrowing base shall automatically be reduced by 25% of all unsecured indebtednessof the Company in excess of $500 million. As a result of the Incremental Senior Notes on May 9, 2017 the borrowing base was reduced to $218.8 million.

On October 18, 2017, we entered into the Second Amendment to the Third Amended and Restated Credit Agreement. The Second Amendment, amongother things, amended the definition of EBITDA to include customary transaction costs and expenses incurred in connection with any material acquisition ordisposition, provided for certain amendments to the calculation of EBITDA for purposes of the Revolving Credit Facility (providing for annualization of quarterlyEBITDA through the first quarter of 2018) and amended the covenant governing the ratio of current assets to current liabilities for the quarter ended September30, 2017 to 0.85 to 1.00 (returning to 1.00 to 1.00 for fiscal quarters ending thereafter). Additionally, the amended covenants prohibit us from entering intoderivative arrangements during which such derivative arrangements are in effect for more than (i) for the first year, the greater of 85% of anticipated projectedproduction from proved properties or 75% of our anticipated projected production from properties, (ii) for the second year, 85% of anticipated projectedproduction from proved properties and (iii) for the period after such two year period, the greater of 75% of our anticipated projected production from provedproperties or 85% of our anticipated projected production from proved developed producing properties after such two year period (not to exceed a term of 60months for any such derivative arrangement). Furthermore, the Second Amendment reaffirmed our borrowing base at $218.8 million. Upon the consummationof the disposition of the Aneth Field Properties, our borrowing base was automatically decreased to $210 million. Lastly, the amendment provided that theborrowing base shall automatically be reduced by 25% of all unsecured indebtedness of the Company in excess of $550 million, increased from $500 million.We were in compliance with all material terms and covenants of the Revolving Credit Facility at September 30, 2017.

To the extent that the borrowing base, as adjusted from time to time, exceeds the outstanding balance, no repayments of principal are required prior tomaturity. However, should the borrowing base be set at a level below the outstanding balance, we would be required to eliminate that excess over the 120 daysfollowing that determination. The Revolving Credit Facility is guaranteed by all of our subsidiaries and is collateralized by substantially all of the assets of theCompany’s and its wholly-owned subsidiaries.

Each borrowing under the Revolving Credit Facility accrues interest at either (a) the London Interbank Offered Rate, plus a margin that ranges from 3.0%to 4.0% or (b) the Alternative Base Rate defined as the greater of (i) the Administrative Agent’s Prime Rate (ii) the Federal Funds Effective Rate plus 0.5% or(iii) an adjusted LIBOR plus a margin for the Alternate Base Rate that ranges from 2.0% to 3.0%. Each such margin is based on the level of utilization under theborrowing base.

Resolute Energy Corporation, the stand-alone parent entity, has insignificant independent assets and no operations. There are no restrictions on ourability to obtain cash dividends or other distributions of funds from our subsidiaries, except those imposed by applicable law.

Secured Term Loan Agreement

In December 2014 we entered into a second lien Secured Term Loan Agreement with Bank of Montreal, as administrative agent, and the lenders partythereto, pursuant to which we borrowed $150 million. In May 2015 Resolute and certain of its subsidiaries, as guarantors, entered into an Amendment to theSecured Term Loan Agreement and Increased Facility Activation Notice-Incremental Term Loans with Bank of Montreal, as administrative agent, and the lendersparty thereto, pursuant to which we borrowed an additional $50 million of Incremental Term Loans under its Secured Term Loan Facility.

In December 2015 we retired $70 million of the amount outstanding under the Secured Term Loan Facility following the sale of certain properties in theMidland Basin in accordance with mandatory prepayment provisions stipulated in the Secured Term Loan Facility.

On January 3, 2017, we paid approximately $132 million constituting all amounts due under the Secured Term Loan Facility (including prepayment fees of$3.5 million), with a portion of the proceeds from the previously announced common stock offering that closed on December 23, 2016. In addition, $6.2 million ofdeferred financing costs and original issue discount were expensed as part of the extinguishment. The Secured Term Loan Facility was terminated in connectionwith the repayment.

Senior Notes

In 2012 we consummated two private placements of senior notes with principal totaling $400 million. The Original Senior Notes are due May 1, 2020, andbear an annual interest rate of 8.50% with the interest on the notes payable semiannually in cash on May and November 1 of each year.

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On May 9, 2017, we consummated a private placement of senior notes totaling $125 million aggregate principal amount of the Company’s 8.50%Incremental Senior Notes due 2020. The Incremental Senior Notes constituted an additional issuance of notes under the same indenture as the Original SeniorNotes that were previously issued. The net proceeds of the offering of the Senior Notes, after reflecting the purchasers’ discounts and commissions, andestimated offering expenses, were approximately $125.1 million. The closing of the Incremental Senior Notes occurred on May 12, 2017.

The Senior Notes were issued under an Indenture among the Company and all of the Company’s subsidiaries, each of which is 100% owned by theCompany, in a private transaction not subject to the registration requirements of the Securities Act of 1933. In March 2013 and July 2017 we registered theexchange of the Original Senior Notes and the Incremental Senior Notes, respectively, with the Securities and Exchange Commission pursuant to registrationstatements on Form S-4 that enabled holders of the Senior Notes to exchange the privately placed Senior Notes for registered Senior Notes with substantiallyidentical terms. The Indenture contains affirmative and negative covenants that, among other things, limit our and the Guarantors’ ability to make investments,incur additional indebtedness or issue certain types of preferred stock, create liens, sell assets, enter into agreements that restrict dividends or other paymentsby restricted subsidiaries, consolidate, merge or transfer all or substantially all of our assets, engage in transactions with our affiliates, pay dividends or makeother distributions on capital stock or prepay subordinated indebtedness and create unrestricted subsidiaries. The Indenture also contains customary events ofdefault. Upon occurrence of events of default arising from certain events of bankruptcy or insolvency, the Senior Notes shall become due and payableimmediately without any declaration or other act of the trustee or the holders of the Senior Notes. Upon the occurrence of certain other events of default, thetrustee or the holders of the Senior Notes may declare all outstanding Senior Notes to be due and payable immediately. We were in compliance with all materialterms and covenants under our Senior Notes as of September 30, 2017.

The Senior Notes are general unsecured senior obligations of the Company and guaranteed on a senior unsecured basis by the Guarantors. The SeniorNotes rank equally in right of payment with all existing and future senior indebtedness of the Company, will be subordinated in right of payment to all existing andfuture senior secured indebtedness of the Guarantors, will rank senior in right of payment to any future subordinated indebtedness of the Company and will befully and unconditionally guaranteed by the Guarantors on a senior basis.

The Senior Notes are redeemable by us on not less than 30 or more than 60 days prior notice, at a redemption price of 102.125%, reducing to 100.000%at May 1, 2018. If a change of control occurs, each holder of the Senior Notes will have the right to require that we purchase all of such holder’s Senior Notes inan amount equal to 101% of the principal of such Senior Notes, plus accrued and unpaid interest, if any, to the date of the purchase. In light of the significantlylower interest rate environment currently compared to when the Senior Notes were first issued, the Company is evaluating a potential refinance of the SeniorNotes.

Preferred Stock

In October 2016, the Company entered into a Purchase Agreement with BMO Capital Markets Corp., pursuant to which the Company agreed to issueand sell to Initial Purchaser 55,000 shares of the Company’s 8⅛% Series B Cumulative Perpetual Convertible Preferred Stock, par value $0.0001 per share and,at Initial Purchaser’s option, up to 7,500 additional shares of Convertible Preferred Stock. The Initial Purchaser exercised its over-allotment option to purchasethe additional 7,500 shares of Convertible Preferred Stock in full, bringing the total shares of Convertible Preferred Stock purchased by Initial Purchaser to62,500, for an aggregate net consideration of $60 million, before offering expenses.

Each holder has the right at any time, at its option, to convert, any or all of such holder’s shares of Convertible Preferred Stock at an initial conversionrate of 33.8616 shares of fully paid and nonassessable shares of Common Stock, per share of Convertible Preferred Stock. Additionally, at any time on or afterOctober 15, 2021, the Company shall have the right, at its option, to elect to cause all, and not part, of the outstanding shares of Convertible Preferred Stock tobe automatically converted into that number of shares of Common Stock for each share of Convertible Preferred Stock equal to the conversion rate in effect onthe mandatory conversion date as such terms are defined in the Certificate of Designation.

As of September 30, 2017, the Company has accumulated undeclared preferred dividends of $1.1 million. A preferred dividend of $1.3 million wasdeclared on October 3, 2017 and paid on October 16, 2017, to holders of record at the close of business on October 1, 2017.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet financing arrangements other than operating leases and have not guaranteed any debt or commitments of otherentities or are party to any options on non-financial assets.

33


Critical Accounting Policies

The following discussion should be read in conjunction with the “Critical Accounting Policies” disclosure contained in our Annual Report on Form 10-K forthe year ended December 31, 2016.

Long-term Incentive Compensation

Share-based compensation expense is measured at the estimated grant date fair value of the awards and is amortized over the requisite service period(usually the vesting period). The unique inputs of each of the equity awards are outlined as follows:

• Stock option award expense – measured using a Black-Scholes pricing model, no dividends, and expected price volatility and risk-freerates relative to the expected term.

• Time-based restricted stock award expense – measured based on the Company’s closing stock price on the date of grant.

• TSR award expense – measured based a Monte Carlo simulation model, no dividends, and expected price volatility and risk-free rates relativeto the expected term.

Cash-settled incentive award expense is measured quarterly and is amortized over the requisite service period (usually the vesting period). The uniqueinputs of each of the liability awards are outlined as follows:

• Cash-settled stock appreciation rights – measured using a Black Scholes pricing model, no dividends, and expected price volatility and risk-freerates relative to the expected term.

• Time-based restricted cash awards – measured based on the cash value per unit ($1 per unit) on the date of grant.

• Performance-based restricted cash awards – measured using a Black-Scholes cash-or-nothing valuation model, no dividends, and expectedprice volatility and risk-free rates relative to the expected term.

The Company estimates forfeitures in calculating the cost related to share-based compensation expense and cash-settled incentive awards expense asopposed to recognizing these forfeitures and the corresponding reduction in expense as they occur.

The Company calculates the respective award’s price volatility using an average of the Company’s peer group (as determined by our Total StockholderReturn awards) based on the date of grant or quarterly valuation date for the expected term. Risk-free rates are obtained directly from the U.S Department ofthe Treasury.

34


ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk and Derivative Arrangements

Our major market risk exposure is in the pricing applicable to oil and gas production. Realized pricing on our unhedged volumes of production is primarilydriven by the spot market prices applicable to oil production and the prevailing price for gas. Oil and gas prices have been volatile and unpredictable for severalyears, and we expect this volatility to continue in the future. The prices we receive for unhedged production depend on many factors outside of our control.

We employ derivative instruments such as swaps, puts, calls, collars and other such agreements. The purpose of these instruments is to manage ourexposure to commodity price risk in order to provide a measure of stability to our cash flows in an environment of volatile oil and gas prices.

Under the terms of our Revolving Credit Facility, the form of derivative instruments to be entered into is at our discretion, but prohibit us from entering intoderivative arrangements during which such derivative arrangements are in effect for more than (i) for the first year, the greater of 85% of anticipated projectedproduction from proved properties or 75% of our anticipated projected production from properties, (ii) for the second year, 85% of anticipated projectedproduction from proved properties and (iii) for the period after such two year period, the greater of 75% of our anticipated projected production from provedproperties or 85% of our anticipated projected production from proved developed producing properties after such two year period (not to exceed a term of 60months for any such derivative arrangement).

By removing the price volatility from a significant portion of our oil and gas production, we have mitigated, but not eliminated, the potential effects ofvolatile prices on cash flow from operations for the periods hedged. While mitigating negative effects of falling commodity prices, certain of these derivativecontracts also limit the benefits we would receive from increases in commodity prices. It is our policy to enter into derivative contracts only with counterpartiesthat are major, creditworthy financial institutions deemed by management as competent and competitive market makers. As of September 30, 2017, the fairvalue of our commodity derivatives was a net liability of $11.1 million.

The following table represents our oil swap contracts as of September 30, 2017:

Oil (NYMEX WTI)

Remaining Term

Bbl per Day

Weighted AverageSwap Price

per Bbl

Fair Value ofAsset (Liability)(in thousands)

Oct – Dec 2017 3,000 $ 53.93 $ 538 Jan – Dec 20181 3,248 $ 50.63 $ (1,445)Jan – Dec 20182 4,210 $ 47.73 $ (6,205)Jan – Dec 20192 4,000 $ 50.20 $ (1,033)Jan – Dec 20202 3,788 $ 50.20 $ (455)

1 Subsequent to September 30, 2017, we terminated 2018 oil swap contract volumes totaling 500 Bbl per day at a weighted average price of $51.50 per Bbl.2 As of September 30, 2017, we were party to certain commodity swap contracts averaging 4,000 Bbl per day for the years 2018-2020. These contracts were entered into pursuant to the terms

of the Purchase and Sale Agreement related to the Aneth Disposition discussed at Note 11. These contracts were novated to the buyer upon the closing of the transaction.

The following table represents our gas swap contracts as of September 30, 2017:


Remaining Term

MMBtuper Day

WeightedAverage Swap Price

per MMBtu


Oct – Dec 2017 14,000 $ 3.476 $ 542

35


The following table represents our NGL swap contracts as of September 30, 2017:

NGL (Mont Belvieu)

Remaining Term

Bbl per Day Weighted AverageSwap Price per Bbl

Fair Value of

Asset (Liability)(in thousands)

Oct – Dec 2017 1 300 $ 19.53 $ (239)

1 Subsequent to September 30, 2017, we terminated all 2017 NGL swap contract volumes.

The following table represents our two-way oil collar contracts as of September 30, 2017:

Oil (NYMEX WTI)

Remaining Term

Bbl per Day

Weighted AverageFloor Price

per Bbl

Weighted AverageCeiling Price

per Bbl


Oct – Dec 2017 1 2,500 $ 47.80 $ 60.19 $ 154

The following table represents our two-way gas collar contracts as of September 30, 2017:


Remaining Term

MMBtu per Day

Weighted AverageFloor Priceper MMBtu

Weighted AverageCeiling Priceper MMBtu


Oct – Dec 2017 1 9,250 $ 2.477 $ 3.301 $ (103)

1 Subsequent to September 30, 2017, we terminated 2017 two-way gas collar contract volumes totaling 6,000 MMBtu per day at a weighted average floor price of $2.600 per MMBtu and aweighted average ceiling price of $3.600 per MMBtu.

The following table represents our three-way oil collar contracts as of September 30, 2017:

Oil (NYMEX WTI)

Remaining Term

Bbl per Day

Weighted AverageShort Put Price

per Bbl

Weighted AverageFloor Price

per Bbl

Weighted AverageCeiling Price

per Bbl


Oct – Dec 2017 1 1,500 40.00 $ 50.00 $ 60.10 $ 113 Jan – Dec 2018 2,748 40.18 $ 49.27 $ 53.86 $ (1,083)

1 Subsequent to September 30, 2017, we terminated all 2017 three-way oil collar contract volumes.

The following table represents our three-way gas collar contracts as of September 30, 2017:


Remaining Term

MMBtu per Day

Weighted AverageShort Put Price per

MMBtu

Weighted AverageFloor Priceper MMBtu

Weighted AverageCeiling Priceper MMBtu


Oct – Dec 2017 1,500 $ 2.750 $ 3.250 $ 4.010 $ 32

The following table represents our commodity option contracts as of September 30, 2017:

Oil (NYMEX WTI)


Weighted AverageSold Call Price

per Bbl


Jan – Dec 2018 1,100 $ 55.00 $ (1,208)Jan – Dec 2019 1,100 $ 62.85 $ (689)

Subsequent to September 30, 2017, we entered into additional oil swap contracts as summarized below:

Oil (NYMEX WTI)

Commodity Swaps

BBl per Day

Weighted AverageSwap Price

per Bbl

Jan – Jun 2018 1,000 $ 54.00 Jul – Dec 2018 500 $ 51.95

36


Subsequent to September 30, 2017, we entered into an additional three-way oil collar contract as summarized below:

Oil (NYMEX WTI)

Weighted


Remaining Term




per Bbl

Jul – Dec 2018 1,000 $ 40.00 $ 50.00 $ 56.00

Interest Rate Risk

At September 30, 2017, we had $125 million of outstanding debt under the Revolving Credit Facility. Interest is calculated under the terms of theagreement based principally on a LIBOR spread. A 10% increase in LIBOR would result in an estimated $0.2 million increase in annual interest expense. We donot currently have any derivative arrangements to protect against fluctuations in interest rates applicable to our outstanding indebtedness.

Credit Risk in Derivative Instruments

We are exposed to credit risk to the extent of nonperformance by the counterparties in the derivative contracts discussed above. All counterparties havehigh credit ratings and are current or former lenders under our Revolving Credit Facility. For these contracts, we are not required to provide any credit support toour counterparties other than cross collateralization with the properties securing the Revolving Credit Facility. Our derivative contracts are documented withindustry standard contracts known as a Schedule to the Master Agreement and International Swaps and Derivative Association, Inc. Master Agreement. Typicalterms for the ISDAs include credit support requirements, cross default provisions, termination events, and set-off provisions. We have set-off provisions with ourRevolving Credit Facility lenders that, in the event of counterparty default, allow us to set-off amounts owed under the Revolving Credit Facility or other generalobligations against amounts owed for derivative contract liabilities.

37


ITEM 4. CONTROLS AND PROCEDURES

Our management, with the participation of Richard F. Betz, our Chief Executive Officer, and Theodore Gazulis, our Chief Financial Officer, evaluated theeffectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2017. Based on the evaluation, those officers haveconcluded that:

• our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submitunder the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rulesand forms; and

• our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submitunder the Securities Exchange Act of 1934 was accumulated and communicated to our management, including our Chief Executive Officer andChief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There has not been any change in the Company’s internal control over financial reporting that occurred during the quarterly period ended September 30,2017 that has materially affected, or is reasonably likely to affect, the Company’s internal control over financial reporting.

38


PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS

Resolute is not a party to any material pending legal or governmental proceedings, other than ordinary routine litigation incidental to our business. Whilethe ultimate outcome and impact of any proceeding cannot be predicted with certainty, our management believes that the resolution of any of our pendingproceedings will not have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS

Information about material risks related to our business, financial condition and results of operations for the quarter ended September 30, 2017 does notmaterially differ from those set out in Part I, Item 1A of the Annual Report on Form 10-K for the year ended December 31, 2016. The additional risk factor setforth below is related to the Aneth Disposition.

We repositioned Resolute to a pure-play Delaware Basin company by disposing of our Aneth Field Properties, and the divesture could materiallyadversely affect our business, financial position, results of operations or cash flows.

We disposed of our Aneth Field Properties in order to reposition us as a pure-play Delaware Basin company. The disposition of Aneth Field Properties willprovide meaningful additional capital to the Company. This capital will be deployed initially to reduce leverage.

Aneth Field has been a meaningful part of our operations, and sales of oil and gas from Aneth Field represented a meaningful part of our total cash flow.At December 31, 2016, Aneth Field held approximately 41% of our net proved reserves and averaged production of 6,161 Boe per day in 2016 (representing44% of total Company production), of which approximately 95% was oil. During 2016, Aneth Field had sales of 2,132 MBbl of oil and 739 MMcf of gas withaverage realized prices of $36.37 per Bbl of oil and $1.31 per Mcf of gas with average production costs of $20.24 per Boe of lease operating expenses and $4.31per Boe of production and ad valorem taxes. Additionally at December 31, 2016, Aneth Field consisted of 43,218 developed gross acres or 67.1% of our totaldeveloped gross acreage and 27,157 developed net acres or 60.5% of our total developed net acreage.

For the nine months ended September 30, 2017, Aneth Field averaged production of 5,938 Boe per day (representing 25% of total Companyproduction). These 2017 sales were comprised of 1,555 MBbl of oil and 393 MMcf of gas with average realized prices of $42.17 per Bbl of oil and $1.57 per Mcfof gas with average production costs of $21.61 per Boe of lease operating expenses and $5.43 per Boe of production and ad valorem taxes.

The price we ultimately receive from the divestiture of the Aneth Field Properties will be contingent on the price of oil (as specified in the additional cashconsideration clause outlined in Note 11 to the Condensed Consolidated Financial Statements) and may be affected by the foregoing or other factors.Additionally, there can be no assurances that our subsequent investments in the Delaware Basin from the proceeds and the redeployment of resources madeavailable by the sale of our Aneth Field Properties will meet our internal production and profitability projections for a pure-play Delaware Basin strategy or evenmeet current production and profitability projections prior to divesting of the Aneth Field Properties. We previously depended in part on the cash flow generatedby our Aneth Field Properties for the payment of our indebtedness, and if we do not meet our internal projections and experience lower cash flow due to the saleof our Aneth Field Properties, it may materially adversely affect our ability make payments on our outstanding indebtedness. Consequently, the sale of our AnethField Properties could materially adversely affect our business, financial position, results of operations or cash flows.

39


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Issuer Purchases of Equity Securities

In connection with the vesting of Company restricted common stock under the 2009 Performance Incentive Plan (“Incentive Plan”), we retain shares ofcommon stock at the election of the recipients of such awards in satisfaction of withholding tax obligations. These shares are retired by the Company.

2017 Total Number of Shares

Purchased(1)(2) Average Price Paid

Per Share

March 1 – 31 84,835 $ 38.22 April 1 – 30 1,088 $ 41.76 May 1 – 31 154 $ 38.09 June 1 – 30 32 $ 40.69 July 1 – 31 166 $ 29.77 August 1 – 31 183 $ 33.60 September 1 – 30 2,947 $ 29.63

1) All shares purchased in 2017 were to offset tax withholding obligations that occur upon the vesting and delivery of outstanding common shares under the terms of the Incentive Plan.2) As of September 30, 2017, the maximum number of shares that may yet be purchased would not exceed the employees’ portion of taxes withheld on unvested shares (539,689 shares), outstanding

stock options (965,349 options), shares yet to be granted under the Incentive Plan (1,907,312 shares) and potential Outperformance Shares (130,898 shares).

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

40


ITEM 6. EXHIBITS

ExhibitNumber Description

2.1

Membership Interest and Asset Purchase Agreement dated September 14, 2017 by and between Resolute Energy Corporation, Hicks AcquisitionCompany I. Inc., and Resolute Natural Resources Company, LLC as sellers, Resolute Aneth, LLC as the Company and Elk Petroleum Aneth, LLCas Buyer and Elk Petroleum Limited as Parent Guarantor (filed herewith). Schedules and exhibits have been omitted pursuant to Item 601(b)(2) ofRegulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the to the Securities and Exchange Commissionupon request.

31.1 Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith) 31.2 Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith) 32.1

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnishedherewith)

101

The following materials are filed herewith: (i) XBRL Instance Document, (ii) XBRL Taxonomy Extension Schema Document, (iii) XBRL TaxonomyExtension Calculation Linkbase Document, (iv) XBRL Taxonomy Extension Labels Linkbase Document, (v) XBRL Taxonomy ExtensionPresentation Linkbase Document, and (vi) XBRL Taxonomy Extension Definition Linkbase Document.

41


ren-ex21_414.htm

ren-ex311_7.htm

ren-ex312_9.htm

ren-ex321_10.htm

SIGNATURES

Pursuant to the requirements of the Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned thereunto dulyauthorized. Signature Capacity Date

/s/ Richard F. Betz Richard F. Betz Chief Executive Officer and Director

(Principal Executive Officer) November 6, 2017

/s/ Theodore Gazulis Theodore Gazulis Executive Vice President and

Chief Financial Officer(Principal Financial Officer)

November 6, 2017

42


Exhibit 2.1

Execution Version

MEMBERSHIP INTEREST AND ASSET PURCHASE AGREEMENT

AMONG

RESOLUTE ENERGY CORPORATION,

HICKS ACQUISITION COMPANY I, INC.

AND

RESOLUTE NATURAL RESOURCES COMPANY, LLC

AS SELLERS,

RESOLUTE ANETH, LLC

AS THE COMPANY

AND

ELK PETROLEUM ANETH, LLC

AS BUYER,

AND

ELK PETROLEUM LIMITED

AS PARENT GUARANTOR

SEPTEMBER 14, 2017


MEMBERSHIP INTEREST AND ASSET PURCHASE AGREEMENT

This Membership Interest and Asset Purchase Agreement (this “Agreement”) is made and entered into this September 14,2017 (the “Execution Date”), local time in Denver, Colorado, by and among RESOLUTE ENERGY CORPORATION, a Delawarecorporation (“Resolute”), HICKS ACQUISITION COMPANY I, INC., a Delaware corporation (“HACI” and together with Resolute,the “Company Sellers”), RESOLUTE NATURAL RESOURCES COMPANY, LLC, a Delaware limited liability company (“RNR” andtogether with the Company Sellers, the “Sellers”), RESOLUTE ANETH, LLC, a Delaware limited liability company (the “Company”),ELK PETROLEUM ANETH, LLC, a Delaware limited liability company (“Buyer”), and ELK PETROLEUM LIMITED, an Australiancompany limited by shares (“Parent Guarantor”). Buyer, the Company and Sellers are collectively referred to as the “Parties” andindividually as a “Party.” Parent Guarantor joins this Agreement solely for the purposes of Section 3.04, Article VIII, Section 9.08,Section 11.03 and Section 12.05.

W I T N E S S E T H:

WHEREAS, the Company is engaged in the ownership of certain interests in, and the operation of Aneth Field (as definedbelow) and assets associated therewith (collectively, the “Business”) and RNR owns certain assets associated with the Business;

WHEREAS, Resolute owns 27.2114% and HACI owns 72.7886% of the issued and outstanding units of the Company(the “Company Units”); and

WHEREAS, on the terms and subject to the conditions set forth herein, Sellers desire to sell to Buyer, and Buyer desires topurchase from Sellers, the Business through (a) the sale, assignment, transfer and delivery to Buyer of (i) the Company Units and (ii)the Purchased Assets (as defined below), and (b) the assumption of certain liabilities related to the Purchased Assets.

NOW, THEREFORE, in consideration of the mutual benefits derived and to be derived from this Agreement by each Party,Sellers and Buyer agree as follows:

ARTICLE IDEFINITIONS AND USAGE

Section 1.01 Definitions. For purposes of this Agreement, the following terms and their variations have the meaningsspecified or referred to in this Section 1.01:

“Accounting Statement” – as defined in Section 14.02(a).

“Additional Consideration” – as defined in Section 3.04(c).

“Advisor” – means any financial, commercial or legal advisor of Seller.

“Affiliate” – means, with respect to any Person, any other Person controlling, controlled by or under common control withthat Person.

“Aggregate Net Hedge Value” – as defined in Section 9.06(f)(i).


“Agreement” – as defined in the first paragraph of this Agreement.

“Allocated Value” – means, with respect to any Federal Unit, the amount allocated to that Federal Unit as set forth onExhibit F.

“Allocation Schedule” – as defined in Section 10.01(b).

“Aneth Field” – means the business and assets represented by Aneth Unit, McElmo Unit, Ratherford Unit and the AnethPlant.

“Aneth Unit” – means that certain unit as defined by the Bureau of Land Management Unit Agreement dated June 20, 1961and as described by serial number UTU-068927A.

“Aneth Plant” – has the same meaning as the term “Plant” in that certain Plant Ownership and Operating Agreement for theAneth Gas Plant dated December 31, 1986, as subsequently amended.

“Asset” or “Assets” – as defined in Section 1.03.

“Asset Taxes” – means ad valorem or property or similar Taxes and excise, severance, production or similar Taxes(including any interest, fine, penalty or additions to Tax imposed by a Governmental Authority in connection with such Taxes) basedupon operation or ownership of the Assets or the production of Hydrocarbons therefrom but excluding, for the avoidance of doubt, (a)Income Taxes, and (b) Transfer Taxes.

“Assignment” – as defined in Section 12.04.

“Assignment and Bill of Sale” – as defined in Section 12.04.

“Assumed Environmental Obligations” – as defined in Section 5.02(a).

“Assumed Obligations” – as defined in Section 16.02.

“Authorized Action” – as defined in Section 16.06(b).

“Business” – as defined in the Recitals of this Agreement.

“Business Day” – as defined in Section 4.01.

“Business Employee” – means each employee of RNR or any of its Affiliates who either (a) is field personnel and providesall or substantially all of his or her services to the Business or (b) is a Designated Employee.

“Business Employee Benefit Plan” – means each Employee Benefit Plan (a) that is sponsored, maintained, administered, orcontributed to by any Seller or ERISA Affiliate of any Seller for the benefit of any current or former Business Employee, or (b) withrespect to which any Seller or ERISA Affiliate of any Seller has any Liability that could reasonably be expected to

2


become a Liability of Buyer, the Company, or any of their respective ERISA Affiliates, at or following the Closing.

“Business Employee Health Plans” – as defined in Section 9.04(f).

“Business Employee List” – as defined in Section 7.09(a).

“Buyer” – as defined in the first paragraph of this Agreement.

“Buyer Indemnitees” – as defined in Section 16.04.

“Buyer’s Environmental Consultant” – as defined in Section 5.01(a).

“Buyer’s Environmental Review” – as defined in Section 5.01(a).

“Buyer Health Plans” – as defined in Section 9.04(f).

“Buyer Plans” – as defined in Section 9.04(f).

“Claim” – as defined in Section 16.05(b).

“Claim Notice” – as defined in Section 16.05(b).

“Closing” – as defined in Section 12.01.

“Closing Date” – as defined in Section 12.01.

“Closing Statement” – as defined in Section 12.03.

“Code” – means the Internal Revenue Code of 1986, as amended.

“Company” – as defined in the first paragraph of this Agreement.

“Company Sellers” – as defined in the first paragraph of this Agreement.

“Company Units” – as defined in the Recitals of this Agreement.

“Confidentiality Agreement” – as defined in Section 4.01.

“Contracts” – as defined in Section 1.03(i).

“Control” (and correlative terms) – means the power, whether by contract, equity ownership or otherwise, to direct thepolicies or management of a Person.

“Defensible Title” – as defined in Section 4.02(c).

“Deposit” – as defined in Section 3.02(a).

3


“Designated Employee” – means each person employed by RNR or any of its Affiliates who provides services to the

Business (but is not described in clause (a) of the definition of Business Employee) who Sellers and Buyer have agreed in writing priorto or after the date of this Agreement is a Designated Employee.

“Disclosure Schedule” – as defined in Article VI.

“Dispute” or “Disputes” – as defined in Section 18.01.

“Documents” – as defined in Section 19.03.

“DOJ” – means the United States Department of Justice.

“Easements” – as defined in Section 1.03(d).

“Effective Date’ – means the day that includes the Effective Time.

“Effective Time” – as defined in Section 3.03.

“Election Notice” – as defined in Section 18.01.

“Employee Benefit Plan” – means any “employee benefit plan,” as defined in Section 3(3) of ERISA (whether or not subjectto ERISA), any written employment, severance or similar contract, plan, agreement, arrangement, or policy, and any plan, policy, orarrangement providing for compensation, bonuses, profit-sharing, stock option or other stock related rights or other forms of incentiveor deferred compensation, vacation benefits, insurance (including any self-insured arrangements), health or medical benefits,employee assistance program, disability or sick leave benefits, workers’ compensation, supplemental unemployment benefits,severance benefits, post-employment or retirement benefits (including compensation, pension, retirement savings, health, medical orlife insurance benefits).

“Employment Offers” – as defined in Section 9.04(a).

“Encumbrances” – as defined in Section 2.01.

“Environmental Defect” – as defined in Section 5.02(b).

“Environmental Defect Notice” – as defined in Section 5.03.

“Environmental Defect Value” – as defined in Section 5.02(c).

“Environmental Indemnity Agreement” – as defined in Section 5.04(a)(ii).

“Environmental Information” – as defined in Section 5.01(b).

“Environmental Laws” – as defined in Section 5.02(d).

“Environmental Permits” – as defined in Section 7.14(b).

4


“ERISA” – means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” – means, with respect to any Person, any entity, whether or not incorporated, that together with suchPerson is treated as a single employer under Section 414(b), (c), (m) or (o) of the Code.

“Escrow Agreement” – means that certain Escrow Agreement dated April 14, 2006 among Exxon, the Company, NNOGCand U.S. Bank National Association, as escrow agent, as amended by the parties thereto by Amendment to Escrow Agreement datedJanuary 1, 2012, and as proposed to be amended by the parties thereto by the First Escrow Amendment, and pursuant to suchEscrow Agreement, the Company and NNOGC are obligated to make annual deposits that will be used to fund plugging andabandonment liabilities associated with the properties purchased in that certain Purchase and Sale Agreement dated January 1, 2005among Exxon, ExxonMobil Oil Corporation, Mobil Exploration and Producing North America Inc., Mobil Producing Texas & NewMexico Inc. and Mobil Exploration & Producing U.S. Inc., as sellers, and Company and NNOGC, as buyer.

“Examination Period” – as defined in Section 4.01.

“Excluded Assets” – as defined in Section 2.03.

“Excluded Employees” – means James M. Piccone and Jeff W. Roedell.

“Exclusivity Payment” – means the $2,000,000.00 payment made by Buyer to Sellers on August 14, 2017.

“Execution Date” – as defined in the first paragraph of this Agreement.

“Existing Hedging Agreements” – means that certain (i) International Swaps and Derivatives Association Master Agreementbetween the Company and Citibank, N.A. dated February 23, 2006, as amended, and (ii) International Swaps and DerivativesAssociation Master Agreement between the Company and the Bank of Montreal dated July 31, 2008, as amended.

“Exxon” – means Exxon Mobil Corporation.

“Exxon Escrow Account” – means that certain escrow account established pursuant to the Escrow Agreement and held atU.S. Bank National Association.

“Exxon Escrow Refund” – means the $1,632,786.15 refund owed by Exxon to the Company and NNOGC for overpaymentsmade by the Company and NNOGC to the Exxon Escrow Account relating to periods prior to the Effective Time, as to be evidencedby the First Escrow Amendment.

“Federal Unit” – means the federal units in which the Company Sellers and the Company have Federal Unit AgreementInterests.

“Federal Unit Agreement Interests” – means the Company Sellers’ and the Company’s interests under the federal UnitAgreements and Unit Operating Agreements and all related

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amendments, supplements and ancillary agreements related to the Aneth Unit, the McElmo Unit and the Ratherford Unit as set forthon Exhibit F.

“Final Statement” – as defined in Section 14.02(b).

“Final Settlement Date” – as defined in Section 14.02(a).

“First Additional Consideration” – as defined in Section 3.04(a).

“First Contingent Period” – means the period starting the first week day immediately following the Closing Date and endingon the last week day immediately preceding the day that is the first anniversary of the Closing Date.

“First Escrow Amendment” – means that certain draft Amendment to Escrow Agreement dated effective July 31, 2017,among Exxon, the Company, NNOGC and U.S. Bank National Association, as escrow agent, the form of which is set forth on ExhibitK.

“First Period Eligible Day” – as defined in Section 3.04(a).

“FTC” – means the United States Federal Trade Commission.

“Fundamental Representations” – means those representations and warranties at Section 6.01 (Existence), Section 6.02(Legal Power), Section 6.03 (Execution), Section 6.04 (Ownership of Company Units), Section 6.06 (Brokers), Section 7.01(Existence), Section 7.02 (Legal Power) and Section 7.03 (Execution).

“GAAP” – means generally accepted accounting principles in the United States.

“Governmental Authority” – as defined in Section 4.02(d)(vi).

“Governmental Authorizations” – as defined in Section 7.13(a).

“HACI” – as defined in the first paragraph of this Agreement.

“Hazardous Substances” – as defined in Section 5.02(e).

“Hedging Indemnities” – as defined in Section 9.06(e).

“Hydrocarbons” – means oil and gas and other hydrocarbons produced or processed in association therewith.

“Imbalances” – as defined in Section 14.01.

“Income Taxes” – means all Taxes based upon, measured by, or calculated with respect to net income (excluding payrolltaxes).

“Indebtedness” – means, without duplication, the outstanding principal amount of, accrued and unpaid interest on, discountsand fees on, and any other payment obligations of the Business existing under any and all of the following, whether or not contingent:(i) indebtedness for

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borrowed money, (ii) obligations evidenced by notes, bonds, debentures or any other contractual arrangements, (iii) amounts payableas deferred purchase price for property or services, (iv) obligations to fund any entity or joint venture, (v) obligations under anyfutures, hedge, swap, collar, put, call, floor, cap, option or other contracts that are intended to benefit from, relate to or reduce oreliminate the risk of fluctuations in the price of commodities, including Hydrocarbons, securities, foreign exchange rates or interestrates that will continue after Closing, and (vi) obligations as lessee under leases that are recorded as capital leases in accordancewith either the past practices or GAAP consistently applied.

“Indemnified Environmental Defect” – as defined in Section 5.02(f).

“Indemnified Party” – as defined in Section 16.05(a).

“Indemnified Title Defect” – as defined in Section 4.05(a)(ii).

“Indemnifying Party” – as defined in Section 16.05(a).

“Independent Expert” – as defined in Section 18.01.

“Knowledge” – as defined in Section 19.17.

“Law” – as defined in Section 1.02(a)(v).

“Leases” – as defined in Section 1.03(a).

“Liability” – means any debts, claims, liabilities, obligations, damages or expenses (whether known or unknown, vested orunvested, asserted or unasserted, absolute or contingent, accrued or unaccrued, assessed or unassessed, liquidated or unliquidated,actual or potential, and due to or become due).

“Loss” or “Losses” – as defined in Section 16.03.

“Material Adverse Effect” – means any adverse effect on the ownership, operation or value of the Business, as currentlyoperated, which is material to the ownership, operation or value of the Business, taken as a whole; provided, however, that “MaterialAdverse Effect” shall not include general changes in oil and gas industry or economic conditions, changes resulting from a change incommodity prices, any reclassification or recalculation of reserves in the ordinary course of business, natural declines in wellperformance, changes in Laws or in regulatory policies, changes in accounting policies, changes or conditions resulting from civilunrest or terrorism or acts of God or natural disasters, change or conditions resulting from the failure of a Governmental Authority toact or omit to act pursuant to Law, changes resulting from any action taken by Buyer or its Affiliates, changes resulting from actionstaken by Sellers or their Affiliates with Buyer’s written consent or that are otherwise permitted hereunder, the commencement of theexecution and delivery of this Agreement and the consummation of the transactions contemplated hereby, or changes or conditionsthat are cured or eliminated without cost to Buyer by Closing.

“Material Agreements” – as defined in Section 7.11.

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“McElmo Unit” – means that certain unit as defined by the Bureau of Land Management Unit Agreement dated January 1,

1961 and as described by serial number UTU-068930A.

“MCF” – means one thousand cubic feet.

“Mineral Interest” – as defined in Section 1.03(b).

“MMBtu” – means one million British Thermal Units (BTU).

“Navajo Preferential Right” – as defined in Section 4.02(d)(x).

“Net Revenue Interest” or “NRI” – as defined in Section 4.02(c)(i).

“NNOGC” – means Navajo Nation Oil and Gas Company.

“NORM” – as defined in Section 5.07.

“Notice of Disagreement” – as defined in Section 14.02(a).

“Notified Party” – as defined in Section 10.04(g).

“Novation Instrument” – as defined in Section 9.07.

“Parent Guarantee” – as defined in Section 9.08.

“Parent Guarantor” – as defined in the first paragraph of this Agreement.

“Parties” – as defined in the first paragraph of this Agreement.

“Permitted Encumbrances” – as defined in Section 4.02(d).

“Person” – means an individual, corporation, partnership, limited liability company, association, trust, unincorporatedorganization or other entity.

“Personal Property” – as defined in Section 1.03(e).

“Plugging and Abandonment Obligations” – as defined in Section 16.02.

“Post-Closing Tax Period” – means, when used in reference to Income Taxes and payroll Taxes for general andadministrative personnel, all Taxable periods beginning after the Closing Date and the portion of any Straddle Period beginning afterthe Closing Date, and when used in reference to any other Taxes, all Taxable periods beginning on or after the Effective Date and theportion of any Straddle Period beginning on the Effective Date.

“Pre-Closing Tax Period” – means when used in reference to Income Taxes and payroll Taxes for general andadministrative personnel all Taxable periods ending on or before the Closing Date and the portion through the end of the Closing Datefor any Straddle Period, and when used in reference to any other Taxes all Taxable periods ending before the Effective Date and theportion through the end of the day immediately preceding the Effective Date for any Straddle Period.

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“Preferential Purchase Rights” – means preferential rights, preemptive rights or contracts, rights of first refusal or other

commitments or understandings of a similar nature to which a Seller is a party or to which the Assets are subject; provided, however,that the Navajo Preferential Right shall not constitute a Preferential Purchase Right for purposes of this Agreement.

“Purchase Price” – as defined in Section 3.01.

“Purchase Price Adjustments” – as defined in Section 12.02(c).

“Purchased Assets” – as defined in Section 2.02.

“Ratherford Unit” – means that certain unit as defined by the Bureau of Land Management Unit Agreement dated May 1,1961 and as described by serial number UTU-068931A.

“Real Property” – as defined in Section 1.03(f).

“Recipient Party” - as defined in Section 10.04(g).

“Records” – as defined in Section 1.03(r).

“Released Parties” – as defined in Section 9.03(b).

“Releasing Parties” – as defined in Section 9.03(b).

“Required Financial Statements” – as defined in Section 9.05.

“Resolute” – as defined in the first paragraph of this Agreement.

“Restrictive Covenants” – as defined in Section 9.04(m).

“Retained Obligations” – as defined in Section 16.01.

“RNR” – as defined in the first paragraph of this Agreement.

“Rules” – as defined in Section 18.01(d).

“Second Additional Consideration” – as defined in Section 3.04(b).

“Second Contingent Period” – means the period starting the first week day immediately following the first anniversary of theClosing Date and ending on the last week day immediately preceding the day that is the second anniversary of the Closing Date.

“Second Period Eligible Day” – as defined in Section 3.04(b).

“Seller Representative” – as defined in Section 16.06(a).

“Sellers” – as defined in the first paragraph of this Agreement.

“Sellers’ Indemnitees” – as defined in Section 15.02(b).

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“Specified Hedging Agreement” – as defined in Section 9.06(b).

“Straddle Period” – means in the case of Income Taxes any Taxable period that includes (but does not end on) the ClosingDate and in the case of all other Taxes any Taxable period that begins before and ends on or after the Effective Date.

“Subject Interest” or “Subject Interests” – as defined in Section 1.03(a).

“Subject Property” – as defined in Section 5.02(a).

“Tangible Property” – as defined in Section 17.03.

“Tax Controversy” – as defined in Section 10.04(g).

“Taxes” – means any and all taxes, including any interest, penalties or other additions to tax that may become payable inrespect of any tax, imposed by any Governmental Authority, which taxes shall include, without limiting the generality of the foregoing,all federal, state or local income taxes, gains taxes, surtaxes, remittance taxes, presumptive taxes, profits taxes, margin taxes,alternative minimum taxes, estimated taxes, payroll taxes, occupation taxes, employee withholding taxes, unemployment insurancetaxes, social security taxes, welfare taxes, disability taxes, severance taxes, license charges, sales taxes, use taxes, ad valoremtaxes, value added taxes, excise taxes, franchise taxes, gross receipts taxes, real or personal property taxes, stamp taxes, productiontaxes, pipeline transportation taxes, freehold mineral taxes, environmental taxes, transfer taxes, workers’ compensation taxes,windfall taxes, net worth taxes, utility taxes, goods and services taxes, motor vehicle taxes, entertainment taxes, insurance taxes,capital stock taxes, and other taxes, fees, duties, levies, customs, tariffs, imposts, assessments, obligations and charges of the sameor of a similar nature to any of the foregoing (including any liability in respect of any such taxes that arises by reason of a contract,assumption, transferee or successor Liability, operation of Law or otherwise).

“Tax Return” – means any return, declaration, report, claim for refund, or information return or statement relating to Taxes,including any schedule or attachment thereto, and including any amendment thereof.

“Termination Date” – as defined in Section 13.01(d).

“Third Additional Consideration” – as defined in Section 3.04(c).

“Third Contingent Period” – means the period starting the first week day immediately following the second anniversary ofthe Closing Date and ending on the last week day immediately preceding the day that is the third anniversary of the Closing Date.

“Third Party” – as defined in Section 4.02(d)(x).

“Third Party Interests” – as defined in Section 9.03(e)(ii).

“Third Party Interest Value” – as defined in Section 9.03(e)(ii).

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“Third Period Eligible Day” – as defined in Section 3.04(c).

“Title Benefit” – as defined in Section 4.07(a).

“Title Defect” – as defined in Section 4.03.

“Title Defect Notice” – as defined in Section 4.04(a).

“Title Defect Value” – as defined in Section 4.04(c).

“Title Indemnity Agreement” – as defined in Section 4.05(a)(ii).

“Transfer Taxes” – as defined in Section 10.02.

“Transferred Employee” – as defined in Section 9.04(a).

“Transition Date” – means, with respect to a Business Employee, the date and time specified under the Transition ServicesAgreement as the date and time on which such Business Employee’s employment with RNR will terminate.

“Transition Services Agreement” – as defined in Section 12.04(k).

“Treasury Regulations” – means the regulations promulgated by the United States Department of the Treasury pursuant toand in respect of provisions of the Code. All references herein to sections of the Treasury Regulations shall include any correspondingprovision or provisions of succeeding, similar, substitute, proposed or final Treasury Regulations.

“USW CBA” – means the collective bargaining agreement effective as of September 1, 2014, between RNR and UnitedSteel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union on behalf of itsLocal 8031-17.

“Unadjusted Purchase Price” – as defined in Section 3.01.

“Union” – means United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service WorkersInternational Union, Local 8031-17.

“Union Employee” means a Business Employee within the bargaining unit covered by the USW CBA.

“Unwinding Scenario” – as defined in Section 9.06(f).

“WARN Act” – means the Worker Adjustment and Retraining Notification Act of 1988, as amended.

“Wells” – as defined in Section 1.03(g).

“Working Interest” or “WI” – as defined in Section 4.02(c)(ii).

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“WTI Price” – means the daily closing spot price, in Dollars per barrel, reported by the U.S. Energy Information

Administration, on the “Spot Prices” chart, set for a daily period, in the row labeled “WTI – Cushing, Oklahoma,” which chart cancurrently be accessed at the following link: http://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm.

Section 1.02 Usage.

(a) In this Agreement, unless a clear contrary intention appears:

(i) the singular number includes the plural number and vice versa;

(ii) reference to any Person includes that Person’s successors and assigns but, if applicable, onlyif those successors and assigns are not prohibited by this Agreement, and reference to a Person in a particular capacityexcludes that Person in any other capacity or individually;

(iii) reference to any gender includes each other gender;

(iv) reference to any agreement, document or instrument means that agreement, document orinstrument as amended or modified and in effect from time to time in accordance with its terms;

(v) reference to any law, rule, regulation, order or decree of any Governmental Authority (“Law”)means that Law as amended, modified, codified, replaced or reenacted, in whole or in part, and in effect from time to time,including rules and regulations promulgated under it, and reference to any section or other provision of any Law means thatprovision of that Law from time to time in effect and constituting the amendment, modification, codification, replacement orreenactment of that section or other provision;

(vi) “hereunder,” “hereof,” “hereto,” and words of similar import shall be deemed references tothis Agreement as a whole and not to any particular Article, Section or other provision of this Agreement;

(vii) “including” (and with correlative meaning “include”) means including without limiting thegenerality of any description preceding that term;

(viii) “or” is used in the inclusive sense of “and/or”;

(ix) with respect to the determination of any period of time, “from” means “from and including” and“to” means “to but excluding”; and

(x) references to documents, instruments or agreements shall be deemed to refer as well to alladdenda, exhibits, schedules or amendments to them.

(b) Unless otherwise specified, all accounting terms used in this Agreement shall be interpreted, and allaccounting determinations under this Agreement shall be made, in accordance with GAAP.

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(c) This Agreement was negotiated by the Parties with the benefit of legal representation, and any rule of

construction or interpretation otherwise requiring this Agreement to be construed or interpreted against any Party shall not apply toany construction or interpretation of this Agreement.

Section 1.03 Assets. For purposes of this Agreement the term “Assets” (or the singular “Asset”) means (i) all of theCompany’s right, title, claim and interest in and to the following and (ii) all of RNR’s right, title, claim and interest in and to the followingto the extent the following are related to the Subject Interests or the Business, it being acknowledged that RNR holds no title to theSubject Interests:

(a) Hydrocarbon leases described in Exhibit A-1, only insofar as said leases cover the lands described inExhibit A-1, and any other Hydrocarbon lease on which any of the Wells described in Exhibit B are located or that are pooled orunitized with any of the Hydrocarbon leases described in Exhibit A-1 or any Wells described in Exhibit B (collectively, the “Leases”),and all interests, tenements, hereditaments, and appurtenances belonging to or derived from the Leases, including all leaseholdestates, royalty interests, overriding royalty interests, net revenue interests, executory interests, net profit interests, working interests,reversionary interests, mineral interests, production payments and other similar interests in the Leases, subject to any depthrestrictions described on Exhibit A-1 (collectively, the “Subject Interests” or, singularly, a “Subject Interest”);

(b) the fee mineral interests described in Exhibit A-2 (collectively, “Mineral Interests”);

(c) except to the extent as may be limited by the Subject Interests, all rights, privileges, benefits and powersconferred upon the Company as holder of the Subject Interests, with respect to (i) all rights of use and occupation of the surface ofand the subsurface depths under the Subject Interests; and (ii) all rights with respect to any pooled, communitized or unitized acreageby virtue of any Subject Interest being a part thereof, including all Hydrocarbon production after the Effective Time attributable to theSubject Interests or any such pool or unit allocated to any such Subject Interest;

(d) all easements, rights-of-way, surface leases, permits, licenses, surface estate interests, surface useagreements or other similar rights and privileges directly related to or used in connection with the Subject Interests, PersonalProperty, Real Property and Wells, including those described or referred to in Exhibit A-3 (the “Easements”);

(e) all tangible personal property, equipment, vehicles (excluding any leased vehicles), vessels, trailers,fixtures, inventory and improvements located on and used directly in connection with the Subject Interests or the Easements or withthe production, treatment, sale, or disposal of Hydrocarbons produced from or attributable to the Subject Interests, byproducts orwaste produced from or attributable to the foregoing, including the personal property, equipment, and inventory described in ExhibitA-4, all other spare parts, tools, wellhead equipment, pumps, pumping units, flowlines, gathering systems, piping, tanks, productionequipment, gas plants and facilities, treatment facilities, injection facilities, disposal facilities, dehydration facilities, compressionfacilities, radio towers, remote terminal units, SCADA equipment and other

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materials, supplies, equipment, facilities and machinery, and all software, computers and associated peripherals and all radio,telephone and other communication equipment, in each case, located on the Real Property or the Leases (collectively, “PersonalProperty”);

(f) all buildings, houses, offices, improvements, appurtenances, field offices and yards described on ExhibitA-5 (collectively, “Real Property”);

(g) all wells (and possible well locations and exploratory prospects) located on the lands covered by theSubject Interests or on lands with which the Subject Interests may have been pooled, communitized or unitized (whether producing,shut in or abandoned), including any oil, gas, water, disposal, injection, temporarily abandoned, permanently abandoned wells, anywells of every nature and kind, including the wells described in Exhibit B (the “Wells”);

(h) the Federal Unit Agreement Interests;

(i) all original contracts, agreements and instruments to the extent attributable to and affecting the Assets inexistence, including all Hydrocarbon sales, purchase, gathering, transportation, treating, marketing, exchange, processing, disposaland fractionating contracts, all unit, pooling and communization agreements, orders and decisions of Governmental Authoritiesestablishing units, participation agreements, exchange agreements, joint operating agreements, enhanced recovery and injectionagreements, farmout agreements and farmin agreements, options, drilling agreements, exploration agreements, assignments ofoperating rights, working interests, or subleases, including those described or referred to in Exhibit C (the “Contracts”);

(j) all Claims, rights and interests of the Company or RNR (i) under any policy or agreement of insurance orindemnity agreement, (ii) under any bond or security instrument, or (iii) to any insurance or condemnation proceeds or awards arising,in each case, from acts, omissions or events, or damage to or destruction of an Asset;

(k) all audit rights and Claims for reimbursements from Third Parties or under Law for any and all propertycosts, overhead or joint account reimbursements and revenues associated with all joint interest audits and other audits of propertycosts under any contracts or agreements applicable to the Assets;

(l) all trade credits, accounts receivable, notes receivable, take-or-pay amounts receivable, and otherreceivables and general intangibles, attributable to the Company with respect to periods of time from and after the Effective Time;

(m) all Claims of the Company, RNR or their respective Affiliates against any Third Party (including Claimsfor adjustments or refunds) relating to any item for which Buyer is liable for payment or required to indemnify the Company or RNRhereunder, whether relating to periods prior or after the Effective Time;

(n) all existing rights of indemnification held by the Company or RNR against Third Parties and otherClaims against Third Parties held by the Company or RNR relating to any item for which Buyer is liable for payment or required toindemnify the Company or RNR hereunder, whether relating to periods prior or after the Effective Time and all Claims of the

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Company Sellers or RNR against prior owners of the Assets or Third Parties associated with or relating to Assumed EnvironmentalObligations;

(o) the Company’s proportionate share of the Aneth Plant;

(p) all rights and benefits arising from or in connection with any Imbalances existing as of the EffectiveTime, to the extent set forth on Section 7.25 of the Disclosure Schedule;

(q) all Hydrocarbons produced from or attributable to the Leases (i) prior to the Effective Time which havenot been sold or used in the ordinary course of business by the Company and are in storage (exclusive of tank bottoms andmeasured from load lines) at the Effective Time, or (ii) after the Effective Time;

(r) all books, records, files, muniments of title, reports and similar documents and materials, including leaserecords, well records, and division order records, well files, well logs, maps, data, interpretations seismic data, geological andgeographic information, title records (including abstracts of title, title opinions and memoranda, and title curative documents related tothe Assets), contracts and contract files, and correspondence that relate to the foregoing interests in the possession of, andmaintained by, or under the control of the Company, RNR or Resolute (collectively, the “Records”);

(s) all deposits, cash, checks in the process of collection, cash equivalents and funds of the Company,including the Company’s proportionate share of funds held in the Exxon Escrow Account (subject to Section 2.03(q) andSection 9.02(c)), in each case, at and after the Effective Time;

(t) intellectual property and intellectual property rights used in or associated with developing or operatingthe Assets or the Business, including, without limitation, proprietary computer software, patents, pending patent applications, tradesecrets, copyrights;

(u) all corporate, partnership and limited liability company financial and income tax books, accounts,records and documents of the Company; and

(v) all proceeds, accretions and products of any of the foregoing.

It being the intention of the Parties that the definition of Assets includes all of each Seller’s respective rights, titlesand interests in the Company and the Assets located in or on the lands comprising the Aneth Field or otherwise associated with theFederal Unit Agreement Interests, other than the Excluded Assets and subject to any limitations and terms expressly set forth hereinand in Exhibits A-1, A-2, A-3, A-4, A-5 and B.

ARTICLE IIPURCHASE AND SALE OF COMPANY UNITS AND PURCHASED ASSETS

Section 2.01 Company Units. On the terms and subject to the conditions set forth herein, at the Closing, each of theCompany Sellers will sell, assign, transfer and deliver to Buyer, and Buyer will purchase, acquire and accept from each of theCompany Sellers, such Company Seller’s

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Company Units, free and clear of all options, pledges, security interests, liens, mortgages, deed of trust, charges, easements, claimsor other encumbrances or restrictions (“Encumbrances”).

Section 2.02 Purchased Assets. On the terms and subject to the conditions herein and the exclusions set forth inSection 2.03, at the Closing, RNR will sell, assign, transfer and deliver to Buyer, and Buyer will purchase, acquire and accept fromRNR all of the right, title and interest of RNR in and to the Assets which are owned, leased or licensed by RNR on the Closing Date(the “Purchased Assets”), in each case free and clear of all Encumbrances.

Section 2.03 Excluded Assets. Notwithstanding the foregoing, the Assets shall not include, and RNR and the CompanySellers, as applicable, excepts, reserves and excludes from the sale contemplated by this Agreement, the following (collectively, the“Excluded Assets”):

(a) all assets, properties, rights, contracts and claims, wherever located, whether tangible or intangible, realor personal, of RNR not included in the definition of Assets, including any master service agreements or similar service contracts,whether or not such master service agreements relate to the Assets;

(b) all trade credits, accounts receivable, notes receivable, take-or-pay amounts receivable, and other

receivables and general intangibles, attributable to the Purchased Assets with respect to periods of time prior to the Effective Time; (c) all proceeds, income, royalties or revenues (and any security or other deposits made) attributable to (i)

the Purchased Assets for any period prior to the Effective Time, or (ii) any other Excluded Assets; (d) all geophysical and other seismic and related technical data and information relating to the Assets to

the extent that such geophysical and other seismic and related technical data and information cannot be transferred to Buyerfollowing Closing without payment of a fee or other penalty and which Buyer has not separately agreed in writing to pay;

(e) all documents and instruments of Sellers (other than title opinions) that may be protected by an

attorney-client, work product or other privilege that cannot be waived by such Seller; (f) with respect to the transactions contemplated in this Agreement, all (i) agreements and correspondence

between Sellers or any of their Affiliates and any Advisor relating to such transactions; (ii) lists of prospective purchasers compiled bySellers or any of their Affiliates or any Advisor; (iii) bids submitted by other prospective purchasers of the Assets; (iv) analyses bySellers or any of their Affiliates or any Advisor of any bids submitted by any prospective purchaser; (v) correspondence betweenSellers or any of their Affiliates or any Advisor, or any of their respective representatives, and any prospective purchaser other thanBuyer; and (vi) correspondence between Sellers or any of their Affiliates or any Advisor or any of their respective representatives withrespect to any of the bids, the prospective purchasers, the engagement or activities of any Advisor;

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(g) all data and other information that may not be disclosed or assigned to Buyer as a result of

confidentiality or similar arrangements under agreements with Persons not Affiliates of Sellers, even if such data or other informationis inadvertently disclosed or provided to Buyer (in which case Buyer shall promptly return such data or information to Sellers);

(h) all audit rights of RNR arising under any of the Contracts owned by RNR with respect to any period

prior to the Effective Time or to any of the Excluded Assets; (i) all corporate, partnership and limited liability company financial and income tax books, accounts, records

and documents that relate to RNR’s, Resolute’s or HACI’s business generally; (j) all claims and causes of action of RNR (i) arising from acts, omissions or events related to, or damage to

or destruction of, the Purchased Assets, occurring prior to the Effective Time; (ii) arising under or with respect to any of the Contractsowned by RNR that are attributable to periods of time prior to the Effective Time (including claims for adjustments or refunds); or (iii)with respect to any of the Excluded Assets;

(k) all rights and interests of RNR (i) under any policy or agreement of insurance or indemnity; (ii) under

any bond; or (iii) to any insurance or condemnation proceeds or awards arising, in each case, from acts, omissions or events relatedto, or damage to or destruction of, the Purchased Assets prior to the Closing Date or the Excluded Assets;

(l) all amounts due or payable to RNR as adjustments to insurance premiums related to the Purchased

Assets with respect to any period prior to the Effective Time; (m) the Existing Hedging Agreements and all amounts resulting from derivative contracts or similar

agreements entered into by RNR for its own account or on behalf of the Company and used to manage oil, natural gas, products orother commodity prices whether deemed a hedge, non-hedge or ineffective hedge transaction;

(n) all proceeds, income, revenues or other benefits (including any benefit attributable to any future Laws

with respect to “royalty relief” or other similar measures) not otherwise enumerated above, as well as any security or other depositsmade, to the extent same are attributable to (i) the Purchased Assets for any period prior to the Effective Time; or (ii) the ExcludedAssets;

(o) all funds held in suspense accounts owned by RNR and related to the Assets for production prior to the

Effective Time; (p) all software or other intellectual property licenses, computers and associated peripherals and all radio,

telephone and other communication equipment, in each case, owned or leased by RNR and (i) not located on the Real Property orthe Leases, (ii) not assignable by RNR or (iii) used by RNR for purposes other than exclusively for the Business;

(q) the portion of the Exxon Escrow Refund attributable to the Company;

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(r) any revenue or distributions attributable to the Excluded Assets; and

(s) any assets excluded from the transactions contemplated hereby pursuant to the express terms of thisAgreement.

ARTICLE IIIPURCHASE PRICE

Section 3.01 Purchase Price. The aggregate consideration for the purchase, sale and conveyance of the Company Unitsand the Purchased Assets shall be the sum of (A) $160,000,000.00 (the “Unadjusted Purchase Price,” as adjusted in accordance withthe provisions of this Agreement, and the assumption by Buyer on and as of the Closing Date of the Assumed Obligations, the“Purchase Price”), and (B) the Additional Consideration, if any.

Section 3.02 Deposit.

(a) Within five (5) Business Days following the execution of this Agreement by the Parties, Buyer shallinitiate a wire transfer to deliver to Sellers a performance guarantee deposit in an amount equal to $8,000,000.00 (the “Deposit”). TheDeposit shall be paid by Buyer to Sellers by means of a completed federal funds transfer to an account designated by Sellers inwriting. If the Deposit is not paid to Sellers within such period, at Sellers’ sole option, this Agreement shall be null and void and noParty shall have any further rights or obligations under this Agreement or Sellers may seek damages from Buyer on account of suchnon-payment.

(b) If the Closing occurs, the Deposit and the Exclusivity Payment shall be retained by Sellers and shall beapplied as part of the payment of the Purchase Price, and the amount payable by Buyer at the Closing shall be reduced by thatamount in accordance with Section 12.03.

(c) If the Agreement is terminated without the Closing having occurred, the Deposit and the ExclusivityPayment shall be applied as provided in Article XIII.

Section 3.03 Effective Time. If the transactions contemplated by this Agreement are consummated in accordance withthe terms and provisions of this Agreement, the ownership of the Company Units and the Purchased Assets shall be transferred toBuyer on the Closing Date, and effective as of 7:00 a.m. local time in Denver, Colorado on October 1, 2017 (the “Effective Time”).

Section 3.04 Additional Consideration.

(a) First Contingent Payment. For each week day that the WTI Price is greater than $52.50 during the FirstContingent Period (each such day, a “First Period Eligible Day”), Parent Guarantor shall pay to Sellers an amount equal to $40,000.00for each First Period Eligible Day in the First Contingent Period (such aggregate amount, the “First Additional Consideration”), whichshall be calculated by Parent Guarantor on a monthly basis and reported to Sellers by no later than the fifth (5th) Business Day afterthe end of each month and paid to Sellers annually by wire transfer in immediately available funds no later than five (5) BusinessDays after the end of

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the First Contingent Period; provided, however, that the First Additional Consideration shall be capped at and shall not exceed$10,000,000.

(b) Second Contingent Payment. Independent of the First Additional Consideration, for each week day thatthe WTI Price is greater than $55.00 during the Second Contingent Period (each such day, a “Second Period Eligible Day”), ParentGuarantor shall pay to Sellers an amount equal to $50,000.00 for each Second Period Eligible Day in the Second Contingent Period(such aggregate amount, the “Second Additional Consideration”), which shall be calculated by Parent Guarantor on a monthly basisand reported to Sellers by no later than the fifth (5th) Business Day after the end of each month and paid to Sellers annually by wiretransfer in immediately available funds no later than five (5) Business Days after the end of the Second Contingent Period; provided,however, that the Second Additional Consideration shall be capped at and shall not exceed $10,000,000.

(c) Third Contingent Payment. Independent of the First Additional Consideration and the SecondAdditional Consideration, for each week day that the WTI Price is greater than $60.00 during the Third Contingent Period (each suchday, a “Third Period Eligible Day”), Parent Guarantor shall pay to Sellers an amount equal to $60,000.00 for each Third Period EligibleDay in the Third Contingent Period (such aggregate amount, the “Third Additional Consideration” and, together with the FirstAdditional Consideration and the Second Additional Consideration, the “Additional Consideration”), which shall be calculated byParent Guarantor on a monthly basis and reported to Sellers by no later than the fifth (5th) Business Day after the end of each monthand paid to Sellers annually by wire transfer in immediately available funds no later than five (5) Business Days after the end of theThird Contingent Period; provided, however, that the Third Additional Consideration shall be capped at and shall not exceed$15,000,000.

(d) General. The Additional Consideration shall be a part of the purchase price for, and shall constituteconsideration for, the Company Units and the Purchased Assets. The contingent right of Sellers to receive the AdditionalConsideration is solely a contractual right and is not a security for purposes of any federal or state securities laws. If there is no WTIPrice available for a week day during the First Contingent Period, Second Contingent Period or Third Contingent Period, the WTIPrice for that week day shall be the WTI Price for the first week day immediately preceding such week day for which the WTI Price isavailable.

ARTICLE IVTITLE MATTERS

Section 4.01 Examination Period. Buyer’s due diligence examination shall run from the Execution Date until the firstBusiness Day that is 30 days thereafter (October 16, 2017) at Noon, local time in Denver, Colorado (the “ExaminationPeriod”). During the Examination Period, Sellers shall permit Buyer or its authorized representatives to examine, during normalbusiness hours, (i) in the offices of Resolute, all Records, abstracts of title, title opinions, title files, ownership maps, lease files,contract files, assignments, division orders and royalty accounting records pertaining to the Assets insofar as same may now be inexistence and in the possession of Sellers or their Affiliates, subject to such restrictions on disclosure as may exist underconfidentiality agreements or other agreements with Third Parties binding on Sellers or the Company or such data and (ii) thephysical Assets to conduct, at Buyer’s sole risk, on-site

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inspections of the Assets. Such examination shall be upon reasonable notice and shall not unreasonably disrupt the personnel andoperations of Sellers or the Company or otherwise impede the efforts of Sellers or the Company to comply with its other obligationsunder this Agreement. Any such examination by Buyer shall be at Buyer’s sole cost and expense. All information made available toBuyer, whether disclosed pursuant to this Agreement or otherwise, shall be maintained confidential by Buyer as provided in theConfidentiality Agreement dated April 24, 2017, between Sellers and Buyer (the “Confidentiality Agreement”), the terms of which areincorporated into this Agreement by this reference and made a part of this Agreement. Buyer shall take whatever reasonable stepsas may be necessary to ensure that Buyer’s employees, consultants, representatives and agents comply with the provisions of theConfidentiality Agreement, and Buyer shall be responsible for any disclosure or other breach of such provisions by any suchPersons. Buyer shall not contact any of the customers or suppliers of Sellers or the Company or Sellers’ or the Company’s workinginterest co-owners or operators, in connection with the transactions contemplated by this Agreement, whether in person or bytelephone, mail or other means of communication, without the specific prior written consent of Resolute, which consent may bewithheld at Resolute’s sole discretion. For the purpose of this Agreement, the term “Business Day” means any calendar dayexcluding Saturdays, Sundays and other days on which national banks are closed for business in Denver, Colorado. Buyer releases,and shall defend, indemnify and hold harmless, Sellers’ Indemnitees from and against all Losses (REGARDLESS OF WHETHERCAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICTLIABILITY OF SELLERS INDEMNITEES) arising out of, related to, or caused by Buyer’s due diligence examination.

Section 4.02 Defensible Title and Permitted Encumbrances.

(a) Except for the special warranty of title as set forth in Section 4.02(b) and without limiting Buyer’sremedies for Title Defects set forth in this Article IV, the Company Sellers make no warranty or representation, express, implied,statutory or otherwise, with respect to the Company’s title to any of its Assets, and Buyer hereby acknowledges and agrees that(except for breaches of any of the covenants set forth in this Agreement, for which Buyer will have the remedies set forth in ArticleXIII), Buyer’s sole remedy for any Title Defect with respect to any of the Assets shall be as set forth in this Article IV.

(b) If the Closing occurs, then effective as of the Closing Date, the Company Sellers warrant DefensibleTitle to the Leases, Subject Interests, Mineral Interests, Federal Unit Agreement Interests and Wells of the Company against anyPerson whomsoever lawfully claiming or to claim the same or any part thereof by, through or under the Company, but not otherwise,subject, however, to the Permitted Encumbrances. If the Closing occurs, then effective as of the Closing Date, RNR warrants goodand marketable title to the Purchased Assets against any Person whomsoever lawfully claiming or to claim the same or any partthereof by, through or under the RNR, but not otherwise, subject, however, to the Permitted Encumbrances.

(c) For purposes of this Agreement, the term “Defensible Title” means, with respect to a given Asset, suchownership by the Company or RNR, as applicable, in that Asset that, subject to and except for Permitted Encumbrances:

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(i) with respect to each Federal Unit and throughout the duration of the productive life of such

Federal Unit, entitles the Company to receive, for all Hydrocarbons produced, saved or marketed from such Federal Unit,not less than the percentage or decimal interest set forth in Exhibit F as the Company’s “Net Revenue Interest” or “NRI” forsuch Federal Unit (except for (a) production from zones or formations other than those to which the applicable Federal Unitapplies (b) decreases in connection with any operation in which the owner of such Federal Unit may elect after the Closingto be a non-consenting co-owner, (c) decreases resulting from the establishment after the Execution Date of pooled,communitized, or unitized units, (d) decreases required to allow other working interest owners, pipelines, or plants to makeup any Imbalances, to the extent set forth on Section 7.25 of the Disclosure Schedule, or (e) decreases caused by theBuyer, the Company or their respective successors or assigns after the Closing Date);

(ii) with respect to each Federal Unit and throughout the duration of the productive life of suchFederal Unit, obligates the Company to bear costs and expenses relating to the maintenance, development and operation ofsuch Federal Unit not greater than the percentage or decimal interest set forth in Exhibit F as the Company’s “WorkingInterest” or “WI” for the Federal Unit (except to the extent any such increase is (a) for zones or formations other than thoseto which the applicable Federal Unit applies (b) accompanied by a proportionate increase in the applicable Net RevenueInterest, (c) caused by the establishment after the Execution Date of pooled, communitized or unitized units or (d) causedby the Buyer, the Company or their respective successors or assigns after the Closing Date); and

(iii) is free and clear of all Encumbrances and material defects in title.

(d) The term “Permitted Encumbrances” means any of the following matters to the extent the same arevalid and subsisting and affect the Assets:

(i) the terms and provisions of the Leases, Mineral Interests, Contracts, Easements and MaterialAgreements, provided that, in each case, such terms do not operate to reduce the Net Revenue Interests of the Companybelow those set forth in Exhibit F or increase the Working Interests of the Company above those set forth in Exhibit Fwithout a corresponding increase in the Net Revenue Interests;

(ii) any (A) undetermined or inchoate liens or charges constituting or securing the payment ofexpenses that were incurred incidental to the maintenance, development, production or operation of the Assets or for thepurpose of developing, producing or processing Hydrocarbons from or in them, and (B) materialman’s, mechanics’,repairman’s, employees’, contractors’, operators’ liens or other similar liens, privileges or charges for liquidated amounts notyet due or payable and arising in the ordinary course of business;

(iii) any Encumbrances for Taxes and assessments not yet delinquent;

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(iv) any Encumbrances for Taxes and assessments that are being contested in good faith, to the

extent such contested taxes are disclosed in Section 4.02(d)(iv) of the Disclosure Schedule;

(v) the terms, conditions, restrictions, exceptions, reservations, limitations and other matterscontained in (including any Encumbrances or security interests created by Law or reserved in Hydrocarbon leases forroyalty, bonus or rental, or created to secure compliance with the terms of) the agreements, instruments and documentsthat create or reserve to the Company or RNR its interests in the Assets, provided that, in each case, such matters do notoperate to reduce the Net Revenue Interests of the Company below those set forth in Exhibit F or increase the WorkingInterests of the Company above those set forth in Exhibit F without a corresponding increase in the Net Revenue Interests;

(vi) any obligations or duties affecting the Assets to any federal, state, tribal, municipal, domesticor foreign court, tribunal, administrative agency, legislative body, department, commission, board, bureau or othergovernmental authority or instrumentality, including the U.S. Bureau of Indian Affairs (BIA) and the Navajo Nation(collectively, “Governmental Authority”) with respect to any franchise, grant, license or permit and all applicable Law or anyGovernmental Authority;

(vii) any (A) easements, rights-of-way, servitudes, permits, surface leases and other rights inrespect of surface operations, pipelines, grazing, hunting, lodging, canals, ditches, reservoirs or the like, and (B) easementsfor streets, alleys, highways, pipelines, telephone lines, power lines, railways and other similar rights-of-way on, over or inrespect of property owned or leased by the Company or RNR or over which the Company or RNR owns rights-of-way,easements, permits or licenses, to the extent that they do not materially interfere with the operations currently conducted onthe Assets;

(viii) all royalties, overriding royalties, net profits interests, carried interests, production payments,reversionary interests and other burdens on or deductions from the proceeds of Hydrocarbon production created or inexistence as of the Effective Time, whether recorded or unrecorded, provided that such matters do not operate to reducethe Net Revenue Interests of the Company below those set forth in Exhibit F or increase the Working Interests of theCompany above those set forth in Exhibit F without a corresponding increase in the Net Revenue Interests;

(ix) Preferential Purchase Rights set forth in Section 7.21 of the Disclosure Schedule with respectto which (A) waivers or consents are obtained prior to Closing from the appropriate Persons for the transactioncontemplated by this Agreement, or (B) required notices have been given for the transaction contemplated by thisAgreement to the holders of such rights and the appropriate period for asserting such rights has expired without anexercise of such rights prior to Closing;

(x) the statutory Preferential Purchase Right granted by the Navajo Nation Tribal CouncilResolution CMY-38-85 dated May 7, 1985 to the Navajo Tribe, and codified at 18 Navajo Nation Code § 605 (the “NavajoPreferential Right”);

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(xi) required Third Party consents set forth in Section 7.05(a) of the Disclosure Schedule with

respect to which (A) waivers or consents are obtained prior to Closing from the appropriate Persons for the transactioncontemplated by this Agreement; (B) required notices have been given for the transaction contemplated by this Agreementto the holders of those rights and the appropriate period for asserting such rights has expired without an exercise of suchrights prior to Closing; or (C) there is no provision expressly stating that a conveyance in violation thereof (1) is void orvoidable, (2) triggers the payment, or the option to demand payment, of specified liquidated damages, or (3) causes atermination, or the option to terminate, of the Lease or other Asset to be conveyed; and for purposes of this Agreement, theterm “Third Party” means any Person or entity, Governmental Authority, or otherwise, other than Sellers, the Company,Buyer, and their respective Affiliates and includes other working interest owners, royalty owners, lease operators,landowners, service contractors and governmental agencies;

(xii) all rights to consent by, required notices to, filings with, or other actions by GovernmentalAuthorities in connection with the sale or conveyance of oil, gas or other mineral leases or interests in them that arecustomarily obtained or made subsequent to such sale or conveyance;

(xiii) the lack of production sales contracts; division orders; contracts for sale, purchase,exchange, refining or processing of Hydrocarbons; compression agreements; equipment leases; unitization and poolingdesignations, declarations, orders and agreements; operating agreements; agreements of development; area of mutualinterest agreements; gas balancing or deferred production agreements; processing agreements; plant agreements; pipeline,gathering and transportation agreements; injection, repressuring and recycling agreements; carbon dioxide purchase orsale agreements; salt water or other disposal agreements; seismic or geophysical permits or agreements; provided that, ineach case, such terms do not operate to reduce the Net Revenue Interests of the Company below those set forth in ExhibitF or increase the Working Interests of the Company above those set forth in Exhibit F without a corresponding increase inthe Net Revenue Interests;

(xiv) Encumbrances that will be released at Closing as provided in Section 12.04(f);

(xv) rights reserved to or vested in any Governmental Authority to control or regulate any of theAssets and the applicable Law; provided, however, Governmental Authority to consent to the transfer of the Assetspursuant to this Agreement shall not be a Permitted Encumbrance;

(xvi) all defects and irregularities affecting the Assets (including errors or omissions indocuments related to the Assets caused by oversights in drafting, executing or acknowledging) that, individually or in theaggregate, (A) do not operate to reduce the Net Revenue Interests of the Company below those set forth in Exhibit F, (B)do not operate to increase the proportionate share of costs and expenses of leasehold operations attributable to or to beborne by the Working Interests of the Company above those set forth in Exhibit F (without a corresponding increase in theNet Revenue Interests), or

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(C) do not operate to otherwise interfere materially with the operation, value or use of the Assets;

(xvii) rights of tenants-in-common in and to any Asset;

(xviii) Imbalances, whether resulting from overproduction or underproduction, and plugging andsurface restoration obligations, to the extent such Imbalances are set forth in Section 7.25 of the Disclosure Schedule;

(xix) defects based solely on a lack of information in Sellers’ or the Company’s files orreferences to a document that is not in such files;

(xx) any maintenance of uniform interest provision in an operating agreement if waived by theparty or parties having the right to enforce such provision or if the violation of such provision would not give rise to theunwinding of the sale of the affected Asset hereunder;

(xxi) all Title Defects expressly waived by Buyer in writing or that have been deemed to havebeen waived or not otherwise to be Title Defects under Section 4.04(a) or any other provision of this Agreement; and

(xxii) Title Defects that have been cured or remedied by possession under applicable statutes oflimitation for adverse possession or for prescription.

Section 4.03 Title Defect. The term “Title Defect,” as used in this Agreement, means any encumbrance, encroachment,irregularity, defect in or objection to the Company’s or RNR’s ownership of any Asset (excluding Permitted Encumbrances) thatcauses the Company or RNR not to have Defensible Title to that Asset. In evaluating whether a matter constitutes a Title Defect, dueconsideration shall be given to whether such matter is of the type expected to be encountered in the area involved as determined byreasonable and prudent operators and is customarily acceptable to reasonable and prudent operators in such area. Notwithstandingany other provision in this Agreement to the contrary, the following matters shall not constitute, and shall not be asserted as a TitleDefect: (a) defects or irregularities arising out of lack of corporate authorization or a variation in corporate name, unless Buyerprovides affirmative evidence that such corporate action or variation was not authorized and results in another Person’s superior claimof title to the relevant Asset; (b) defects that have been cured or remedied by possession under the applicable statutes of limitationand statutes for prescription or preemption; (c) defects or irregularities in the early chain of title consisting of the failure to recite maritalstatus in documents or omissions of heirship proceedings, unless Buyer provides affirmative evidence that such failure or omissionresults in another Person’s superior claim of title to the relevant Asset; (d) defects or irregularities resulting from or related to probateproceedings or the lack of probate proceedings if the defects or irregularities have been outstanding for five (5) years or more; or (f) tothe extent not exercised as of the Execution Date or the Closing Date, conventional rights or reassignment normally actuated by anintent to abandon or release a Lease and requiring notice to the holders of such rights and any defect or irregularity as would normallybe waived by Persons engaged in the oil and gas business when purchasing producing properties.

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Section 4.04 Notice of Title Defects.

(a) If Buyer discovers any Title Defect affecting any Asset, Buyer shall notify the Sellers of the alleged TitleDefect as promptly as possible but no later than the expiration of the Examination Period. To be effective, this notice (a “Title DefectNotice”) must (i) be in writing; (ii) be received by the Sellers prior to the expiration of the Examination Period; (iii) describe the TitleDefect in reasonably sufficient detail (including any alleged variance in the Net Revenue Interest or Working Interest); (iv) identify thespecific Asset or Assets affected by the Title Defect; and (v) include the value of the Title Defect as determined by Buyer. Any mattersthat otherwise may have constituted Title Defects, but that are not so described in a timely Title Defect Notice complying and deliveredin accordance with this Section 4.04(a), shall be deemed to have been waived by Buyer for all purposes and shall constitutePermitted Encumbrances.

(b) After receipt of an effective Title Defect Notice, the Sellers shall have the option, but not the obligation,to attempt to cure the Title Defect at any time prior to the Closing and to postpone the Closing Date (with respect to all of the Assets oronly those Assets affected by the Title Defect) up to thirty (30) days beyond the date set forth in Section 12.01 to facilitate the cure;provided however that the foregoing shall not limit the Sellers’ ability to elect remedies for Title Defects as provided in Section 4.05(a).

(c) The value attributable to each Title Defect (the “Title Defect Value”) that is asserted by Buyer in a TitleDefect Notice shall be determined in good faith based upon the criteria set forth below:

(i) If the Buyer and Sellers agree on the Title Defect Value, that amount shall be the Title DefectValue.

(ii) If the Title Defect is an Encumbrance on any Asset, the Title Defect Value is the amountnecessary to be paid to remove the Encumbrance from the affected Asset.

(iii) If the Title Defect asserted is that the NRI for a Federal Unit described on Exhibit F is lessthan the percentage or decimal interest set forth in Exhibit F as the Company’s NRI for such Federal Unit, then the TitleDefect Value will be the product of (A) the relative change from the NRI as shown in Exhibit F and (B) the Allocated Valuefor such Federal Unit.

(iv) If the Title Defect represents an obligation, Encumbrance, burden or charge on the affectedAsset (including an instance where the NRI for a Well is less than the NRI for the applicable Federal Unit or an instance ofan increase in a WI for a Well or Wells for which there is not a proportionate increase in NRI) for which the economicdetriment to Buyer is unliquidated, the amount of the Title Defect Value shall be determined by taking into account theportion of the Asset affected by the Title Defect, the legal effect of the Title Defect, the potential discounted economic effectof the Title Defect over the life of the affected Asset, the probability that a potential title failure will result in an actual titlefailure, the Title Defect Value placed upon the Title Defect by Buyer and the Sellers, and any such other reasonable factorsas are necessary to make a proper evaluation.

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(v) If a Title Defect is not in effect, affects only certain depths, or does not adversely affect an

Asset throughout the entire productive life of such Asset, the consequences of that fact shall be taken into account indetermining the Title Defect Value.

(vi) The Title Defect Value of a Title Defect shall be determined without duplication of any costsor losses included in another Title Defect Value.

(vii) Notwithstanding anything in this Agreement to the contrary, in no event shall a Title DefectValue exceed the proportional share of the Allocated Value of the Federal Unit affected by the Title Defect.

(viii) To give the Sellers an opportunity to commence reviewing possible Title Defects, Buyershall give the Sellers, on or before 5:00 p.m. Mountain Time each Friday prior to the expiration of the Examination Period,notice of all Title Defects discovered by Buyer during the preceding week, which notice may be preliminary in nature andsupplemented prior to the expiration of the Examination Period.

Section 4.05 Remedies for Title Defects.

(a) Subject to the continuing right of the Sellers to dispute the existence of an asserted Title Defect or theasserted Title Defect Value and subject to the rights of the Parties under Section 13.01(f), if any Title Defect timely asserted by Buyerin accordance with Section 4.04(a) is not waived in writing by Buyer or cured on or before Closing, the Sellers shall elect to:

(i) reduce the Purchase Price by the Title Defect Value for the Title Defect as determined inaccordance with Section 4.04(c) or Article XVIII (which shall cause such asserted Title Defect to become an AssumedObligation under Section 16.02); or

(ii) with Buyer’s consent, which consent shall be at Buyer’s sole discretion, indemnify Buyeragainst all claims resulting from the Title Defect (an “Indemnified Title Defect”) pursuant to an indemnity agreement (the“Title Indemnity Agreement”) in the form attached to this Agreement as Exhibit D; provided, however, that without Buyer’sconsent, the Sellers shall not be entitled to elect to indemnify Buyer under this Section 4.05(a)(ii) for any Title Defect that isa discrepancy in the Net Revenue Interest or Working Interest of a well, unit, well location or Lease (as compared to the NetRevenue Interest or Working Interest set forth in Exhibit F with respect to such Asset).

(b) If at or before the Closing Buyer and the Sellers have not agreed on the validity of any asserted TitleDefect or the Title Defect Value attributable to the Title Defect or on the remedy to be applied under Section 4.05(a), Buyer or theSellers shall have the right to elect to have the Dispute regarding the validity of the Title Defect or the Title Defect Value determinedby an Independent Expert in accordance with Article XVIII. In that event, the Purchase Price paid at Closing shall not be reduced byvirtue of the disputed Title Defect or Title Defect Value, but upon the final resolution of the Dispute, the Title Defect Value, if any, foundto be attributable to the Title Defect shall be refunded by the Sellers to Buyer within five (5) Business Days of the resolution of theDispute.

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(c) Notwithstanding anything to the contrary in this Agreement (i) if the value of a particular individual TitleDefect (or individual Title Benefit) does not exceed $50,000 (net to Sellers’ interest), then it shall be deemed to be a PermittedEncumbrance and no adjustment to the Purchase Price shall be made for the Title Defect (or Title Benefit), (ii) if the aggregateadjustment to the Purchase Price determined in accordance with this Agreement for Title Defects (or Title Benefits) for which anadjustment is to be made pursuant to clause (i) does not exceed two percent (2%) of the Unadjusted Purchase Price prior to any otheradjustments, then they shall be deemed to be Permitted Encumbrances and no adjustment of the Purchase Price shall be made onaccount of Title Defects (or Title Benefits), and (iii) if the aggregate adjustment to the Purchase Price determined in accordance withthis Agreement for Title Defects (or Title Benefits) for which an adjustment is to be made pursuant to clause (i) does exceed twopercent (2%) of the Unadjusted Purchase Price prior to any other adjustments, then the Purchase Price shall be adjusted only by theamount of the excess; provided, however, with respect to any Title Defect (or Title Benefit) that exceeds $50,000 in value (net toSellers’ interest), the entire Title Defect Value (or Title Benefit) (in each case, counting from the first dollar) shall be included forpurposes of the calculations made in Section 4.05(c)(ii) and (iii).

Section 4.06 Third Party Consents. Sellers shall use reasonable efforts to obtain all necessary consents from ThirdParties, including consents to assign the Purchased Assets prior to the Closing (other than approvals of any relevant GovernmentalAuthority that are customarily obtained after the Closing), and Buyer shall assist Sellers with those efforts. If the holder of anyconsent requires that the Buyer deliver proof of its creditworthiness for the approval of such consent, then the Buyer shall reasonablycooperate with Sellers and the holder of such consent and deliver to such holder any reasonably-requested credit or other informationconcerning the business, operations, property, condition (financial or otherwise), prospects or creditworthiness of Buyer.

Section 4.07 Title Benefits; Remedies.

(a) If either Party discovers any Title Benefit during the Examination Period affecting the Assets, it shallpromptly notify the other Party at or before the expiration of the Examination Period. Subject to Section 4.05(c), the Company Sellersshall be entitled to an upward adjustment to the Purchase Price pursuant to Section 12.02(a)(iv) with respect to the Title Benefit. Forpurposes of this Agreement, the term “Title Benefit” means the Company’s interest in any Asset that is greater than or in addition tothat set forth in Exhibit B, including a Net Revenue Interest that is greater than that set forth in Exhibit B or the Company’s WorkingInterest in any Asset that is less than the Working Interest set forth in Exhibit B (without a corresponding decrease in the NetRevenue Interest).

(b) If, with respect to a Title Benefit, Buyer and the Company Sellers have not agreed on the validity of anyasserted Title Benefit or the value of same at or prior to the Closing, the Company Sellers or Buyer shall have the right to elect tohave the Dispute regarding the validity of the Title Benefit or the value of same determined by an Independent Expert in accordancewith Article XVIII. In that event, Buyer shall pay the undisputed portion of the Purchase Price with respect to the Asset affected by theTitle Benefit at the Closing and upon resolution of the Dispute, the value of the Title Benefit, if any, Buyer shall pay to the CompanySellers any unpaid portion within five (5) Business Days of such determination.

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ARTICLE V

ENVIRONMENTAL MATTERS

Section 5.01 Environmental Review.

(a) Buyer shall have the right to conduct or cause a consultant reasonably acceptable to the Sellers(“Buyer’s Environmental Consultant”) to conduct an environmental review of the Assets prior to the expiration of the ExaminationPeriod (“Buyer’s Environmental Review”). The cost, risk and expense of Buyer’s Environmental Review, if any, shall be borne solelyby Buyer. The scope of work comprising Buyer’s Environmental Review shall be limited to a Phase I review and otherwise as may beagreed by Buyer and the Sellers prior to commencement. The Environmental Review shall not include any intrusive test, sampling,boring, or similar procedure without the prior written consent of the Sellers, which consent shall not be unreasonably withheld,conditioned or delayed. Any such Purchase Price reductions shall count toward Buyer’s termination threshold under Section 13.01(f).Buyer shall, and shall cause Buyer’s Environmental Consultant to, (i) consult with the Sellers before physically entering any Easementor Real Property to conduct any work comprising Buyer’s Environmental Review, (ii) perform all such work in a safe and workmanlikemanner and so as to not unreasonably interfere with the operation of the Assets and (iii) comply with all applicable Laws. Buyer shallbe solely responsible for obtaining any consents from a Third Party that are required to perform any work comprising Buyer’sEnvironmental Review, and the Sellers shall use commercially reasonable efforts to assist Buyer in obtaining any suchconsents. The Sellers shall have the right to have a representative or representatives accompany Buyer and Buyer’s EnvironmentalConsultant at all times during Buyer’s Environmental Review. With respect to any samples taken in connection with Buyer’sEnvironmental Review, the Sellers shall have the right to request split samples, at the Sellers expense. Buyer releases, and shalldefend, indemnify and hold harmless, Sellers’ Indemnitees from and against all Losses (REGARDLESS OF WHETHER CAUSED ORCONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY (BUT NOTGROSS NEGLIGENCE OR WILLFUL MISCONDUCT) OF SELLERS’ INDEMNITEES) arising out of, related to, or caused byBuyer’s Environmental Review.

(b) Unless otherwise required by applicable Law, Buyer shall, and shall cause Buyer’s EnvironmentalConsultant to, treat confidentially any matters revealed by Buyer’s Environmental Review and any reports or data generated fromsuch review (the “Environmental Information”), and Buyer shall not, and shall cause Buyer’s Environmental Consultant to not, discloseany Environmental Information to any Governmental Authority or other Third Party, other than Third Parties involved in thetransaction, without the prior written consent of the Sellers. Buyer may use the Environmental Information only in connection with thetransactions contemplated by this Agreement, which use may include disclosure to Buyer’s advisors, prospective lenders or investors,and prospective insurers. If Buyer, Buyer’s Environmental Consultant or any Third Party to which Buyer has provided anyEnvironmental Information become legally compelled to disclose any of the Environmental Information, Buyer shall provide the Sellerswith prompt notice sufficiently prior to any such disclosure so as to allow the Sellers to file any protective order or seek any otherremedy, as the Sellers deem appropriate under the circumstances. If this Agreement is terminated prior to the Closing, Buyer shalldeliver the

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Environmental Information to the Sellers, which Environmental Information shall become the sole property of the Sellers withoutcharge.

(c) Upon completion of Buyer’s Environmental Review, Buyer shall, at its sole cost and expense andwithout any cost or expense to Sellers’ Indemnitees (i) repair all damage done to the Assets in connection with any Buyer’sEnvironmental Review, (ii) restore the Assets to the same or better condition in existence prior to commencement of any Buyer’sEnvironmental Review, and (iii) remove all equipment, tools or other property brought onto the Assets in connection with any Buyer’sEnvironmental Review. Any disturbance to the Assets (including the real property associated with such Assets) resulting from Buyer’sEnvironmental Review will be promptly corrected by Buyer.

(d) During all periods that Buyer, or any of Buyer’s representatives are physically on-site the Assets(including for purposes of Buyer’s due diligence review described in Section 4.01), Buyer shall maintain, or cause its representativesto maintain, at Buyer or its representative’s sole expense and with insurers reasonably satisfactory to the Sellers, policies of insuranceof the types and in the amounts reasonably requested by the Sellers. Upon request by the Sellers, Buyer shall provide evidence ofsuch insurance to the Sellers prior to entering upon the Assets.

Section 5.02 Environmental Definitions.

(a) Assumed Environmental Obligations. For purposes of this Agreement, the term “AssumedEnvironmental Obligations” means, all Losses related to the operation of the Assets or the condition of the Assets and any surface orsubsurface depths used or affected in connection with the Assets, including any pooled, communitized or unitized acreage by virtueof the Assets being a part of the pooled, communitized or unitized area (collectively, the “Subject Property”), and arising from orrelating to the following: (i) any violation or alleged violation of, or non-compliance with applicable Environmental Law prior to, on, orafter the Effective Time, including the cost of correcting such violations or noncompliance and any fines or penalties arising out ofsuch violations or noncompliance; (ii) the release, discharge or disposal of Hazardous Substances prior to, on, or after the EffectiveTime, at, on, in, under, from or migrating to or from the Subject Property, including claims for property damage, loss, injury, damage tonatural resources, bodily injury or wrongful death, and any investigation, remediation or monitoring with respect to said HazardousSubstances; (iii) any Environmental Defects; (iv) those matters that would otherwise be Environmental Defects but for the provisionsof Section 5.04(c); and (v) those matters described on Section 5.02(a) of the Disclosure Schedule.

(b) Environmental Defects. For purposes of this Agreement, the term “Environmental Defect” means, withrespect to any given Asset, an individual environmental condition identified with specificity in Buyer’s Environmental Review thatconstitutes a material violation of Environmental Laws in effect as of the Execution Date in the jurisdiction in which the affected Assetis located, excluding, however (i) any environmental conditions that do not exceed the threshold and deductible values inSection 5.04(c), and (ii) any environmental conditions that are listed on Section 5.02(a) of the Disclosure Schedule, in each case,which environmental conditions shall be deemed not to constitute Environmental Defects, but which shall nonetheless be AssumedEnvironmental Obligations.

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(c) Environmental Defect Value. For purposes of this Agreement, the term “Environmental Defect Value”

means, with respect to any Environmental Defect, the value, as of the Closing Date, of the estimated Losses to resolve and to correctthe Environmental Defect in the most cost-effective manner reasonably available, taking into account (i) that non-permanent remedies(such as mechanisms to contain or stabilize Hazardous Substances, including monitoring site conditions, natural attenuation, risk-based corrective action, institutional controls or other appropriate restrictions on the use of property, caps, dikes, encapsulations,leachate collection systems, etc.) may be the most cost-effective manner reasonably available, (ii) the continuing long-term need tooperate the Asset, (iii) customary industry practices, (iv) the net present value of such Environmental Condition, and (v) therequirements of Environmental Laws. An Environmental Defect caused by or arising from the same event or occurrence or series ofrelated events or occurrences may affect more than one Asset, in which case the Environmental Defect Value for each such Assetwill be aggregated with the other Assets affected by such Environmental Defect caused by or arising from the same event oroccurrence or series of related events or occurrences; provided that, for purposes of this aggregation clause only, the definition ofEnvironmental Defect in Section 5.02(b) is amended to mean, with respect to any given Asset, an individual environmental conditionmaterially affecting such Asset.

(d) “Environmental Laws” means all Laws pertaining to health (as relates to exposure to HazardousSubstances), the environment, wildlife, historic or natural resources, or the use, storage, emission, discharge, clean-up, release, orthreatened release of Hazardous Substances on or into the environment or otherwise relating to the manufacture, processing,distribution, use, treatment, storage, disposal, transportation or handling of Hazardous Materials, including the ComprehensiveEnvironmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. and the Navajo Nation analog to such law; theResource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. § 1251 etseq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. § 1471 et seq.; the ToxicSubstances Control Act, 15 U.S.C. §§ 2601 through 2629; the Oil Pollution Act, 33 U.S.C. § 2701 et seq.; the Emergency Planningand Community Right-to-Know Act, 42 U.S.C. § 11001 et seq.; the Occupational Safety and Health Act (“OSH Act”), 29 U.S.C. §§651-678 (as the OSH Act relates to exposure to Hazardous Substances); the Safe Drinking Water Act, 42 U.S.C. §§ 300f through300j-26; the Endangered Species Act, 16 U.S.C. §§ 1531-1544; the Migratory Bird Treaty Act, 16 U.S.C. §§ 703-712; the Bald andGolden Eagle Protection Act, 16 U.S.C. §§ 668-668c; the National Historic Preservation Act, 16 U.S.C. §§ 470-470w-6, all regulationsimplementing these Laws; and all similar Laws entered, issued or made by any Governmental Authority having jurisdiction over theAssets or the operation thereof, and all amendments to such Laws.

(e) Hazardous Substances. For purposes of this Agreement, the term “Hazardous Substances” means (i)any petrochemical or petroleum products, oil or coal ash, radioactive materials, radon gas, asbestos in any form that is or couldbecome friable, urea formaldehyde foam insulation and transformers or other equipment that contain dielectric fluid which may containlevels of polychlorinated biphenyls, (ii) any chemicals, materials, or substances defined as or included in the definition of “hazardoussubstances,” “hazardous wastes,” “restricted hazardous materials,” “extremely hazardous substances,” “toxic substances,”“contaminants” or “pollutants” or words of similar meaning and regulatory effect or (iii) any other chemical, material

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or substance, exposure to which is prohibited, limited or regulated by any applicable Environmental Law.

(f) Indemnified Environmental Defects. For purposes of this Agreement, the term “IndemnifiedEnvironmental Defect” means an Environmental Defect as to which the Sellers have elected to indemnify Buyer in accordance withSection 5.04(a)(ii).

Section 5.03 Notice of Environmental Defects. If Buyer discovers any Environmental Defect affecting any Asset, Buyershall notify the Sellers of the alleged Environmental Defect as promptly as possible but no later than the expiration of the ExaminationPeriod. To be effective, such notice (an “Environmental Defect Notice”) must (i) be in writing; (ii) be received by the Sellers prior tothe expiration of the Examination Period; (iii) describe the Environmental Defect in reasonably sufficient detail, including (A) thewritten conclusion of Buyer’s Environmental Consultant that an Environmental Defect exists, which conclusion shall be reasonablysubstantiated by the factual data gathered in Buyer’s Environmental Review; and (B) a separate specific citation of the provisions ofEnvironmental Laws alleged to be violated; (iv) identify the specific Asset or Assets affected by the Environmental Defect; (v) if Buyercollected environmental samples, include a site plan showing the location of such sampling events, boring logs and other field notesdescribing the sampling methods utilized and the field conditions observed, chain-of-custody documentation and laboratory reports;(vi) identify the procedures recommended to correct the Environmental Defect, together with any related recommendations fromBuyer’s Environmental Consultant; and (vii) state Buyer’s estimate of the Environmental Defect Value, including the basis for suchestimate, for which Buyer would agree to adjust the Purchase Price to accept such Environmental Defect if the Sellers electedSection 5.04(a)(i) as the remedy for it. Any matters that may otherwise have constituted Environmental Defects, but that are not sodescribed in a timely Environmental Defect Notice complying with this Section 5.03, together with any environmental matter that doesnot constitute an Environmental Defect, shall be deemed to have been waived by Buyer for all purposes and constitute an AssumedObligation. After receipt of an effective Environmental Defect Notice, the Sellers shall have the option, but not the obligation, toattempt to cure the Environmental Defect at any time prior to the Closing and to postpone the Closing Date (with respect to all of theAssets or only those Assets affected by the Environmental Defect) up to thirty (30) days beyond the date set forth in Section 12.01 tofacilitate the cure.

Section 5.04 Remedies for Environmental Defects.

(a) Subject to the continuing right of the Sellers to dispute the existence of an asserted EnvironmentalDefect or the asserted Environmental Defect Value and subject to the rights of the Parties under Section 13.01(f), if anyEnvironmental Defect timely asserted by Buyer in accordance with Section 5.03 is not waived in writing by Buyer or cured on orbefore Closing, the Sellers shall elect to:

(i) subject to Section 5.04(c), reduce the Purchase Price by the Environmental Defect Value forthe Environmental Defect as determined in accordance with Section 5.02(c) or Article XVI (which shall cause such allegedEnvironmental Defect to become an Assumed Obligation under Section 16.02); or

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(ii) with Buyer’s consent, in Buyer’s sole discretion, indemnify Buyer against all claims resulting

from the Environmental Defect pursuant to an indemnity agreement (the “Environmental Indemnity Agreement”) in the formattached to this Agreement as Exhibit E.

(b) If at or before the Closing Buyer and the Sellers have not agreed on the validity of any assertedEnvironmental Defect or the Environmental Defect Value attributable to the Environmental Defect or on the remedy to be appliedunder Section 5.04(a), Buyer or the Sellers shall have the right to elect to have the Dispute regarding the validity of the EnvironmentalDefect or the Environmental Defect Value determined by an Independent Expert in accordance with Article XVIII. In that event, thePurchase Price paid at Closing shall not be reduced by virtue of the disputed Environmental Defect or Environmental Defect Value,but on the final resolution of the Dispute, the Environmental Defect Value, if any, found to be attributable to the Environmental Defectshall, subject to Section 5.04(c), be refunded by the Sellers to Buyer within five (5) Business Days of the resolution of the Dispute.

(c) Notwithstanding anything to the contrary in this Agreement (i) if the Environmental DefectValue (net to Sellers’ interest) for a particular individual Environmental Defect does not exceed $50,000, then no adjustment to thePurchase Price shall be made for the Environmental Defect, (ii) if the aggregate adjustment to the Purchase Price determined inaccordance with this Agreement for Environmental Defects for which an adjustment is to be made pursuant to clause (i) does notexceed two percent (2%) of the Unadjusted Purchase Price prior to any other adjustments, then no adjustment of the Purchase Priceshall be made on account of Environmental Defects, and (iii) if the aggregate adjustment to the Purchase Price determined inaccordance with this Agreement for Environmental Defects for which an adjustment is to be made pursuant to clause (i) does exceedtwo percent (2%) of the Unadjusted Purchase Price prior to any other adjustments, then the Purchase Price shall be adjusted only bythe amount of the excess; provided, however, with respect to any Environmental Defect Value that exceeds $50,000, the entire valueof such Environmental Defect (counting from the first dollar) shall be included for purposes of the calculations made in Section 5.04(c)(ii) and (iii).

Section 5.05 No Warranty Regarding Environmental Matters. EXCEPT WITH RESPECT TO THEREPRESENTATIONS AND WARRANTIES IN SECTION 7.14, EACH COMPANY SELLER WILL CONVEY ITS RESPECTIVECOMPANY UNITS AND RNR WILL CONVEY THE PURCHASED ASSETS TO BUYER WITHOUT ANY WARRANTY OF ANY KINDWITH RESPECT TO ENVIRONMENTAL MATTERS OR ENVIRONMENTAL DEFECTS, EXPRESS, STATUTORY OR IMPLIED,NOT EVEN FOR RETURN OF THE PURCHASE PRICE. BUYER’S SOLE REMEDY FOR ENVIRONMENTAL DEFECTS OROTHER ENVIRONMENTAL MATTERS (OTHER THAN A BREACH OF THE REPRESENTATIONS AND WARRANTIES INSECTION 7.14) IS THE ENVIRONMENTAL DEFECT PROCEDURE UNDER THIS Article V.

Section 5.06 Physical Condition of the Assets. Buyer acknowledges that the Assets have been used by the Companyfor Hydrocarbon drilling, enhanced recovery and production operations and related field operations, and that physical changes in theAssets (or adjacent lands) may have occurred as a result of those uses. In this regard, the Assets may also contain unplugged orimproperly plugged wells, wellbores or buried pipelines or other equipment, whether or not of

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a similar nature, the locations of which may not now be known by Sellers or be readily apparent by a physical inspection of theproperty. Buyer understands that Sellers may not have the requisite information with which to determine the exact condition of theAssets or the effect that any such use has had on the physical condition of the Assets, and Sellers do not make any representation orwarranty with respect to those matters and, except pursuant to the Environmental Defect procedures in Section 5.04, Buyer expresslyassumes all Liabilities for those matters (REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT,COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF SELLERS’ INDEMNITEES).

Section 5.07 NORM. Buyer acknowledges that some oilfield production equipment comprising the Assets may containasbestos or naturally occurring radioactive material (“NORM”). In this regard, Buyer specifically acknowledges that NORM may affixor attach itself to the inside of wellbores, materials and equipment as scale or in other forms, and that wells, materials and equipmentcomprising the Assets or located on a Lease may contain NORM and that NORM containing materials may have been disposed of ona Lease. Buyer expressly understands that special procedures may be required for the removal and disposal of asbestos and NORMfrom the Assets if and where they may be found, and, except pursuant to the Environmental Defect procedures in Section 5.04, Buyerassumes Sellers’ and the Company’s liability for or in connection with the assessment, remediation, removal, transportation ordisposal of any such materials present on the Assets at or after the Effective Time in accordance with all requirements of anyGovernmental Authority (REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVEOR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF SELLERS’ INDEMNITEES).

ARTICLE VIREPRESENTATIONS AND WARRANTIES OF SELLERS

Except as set forth in the disclosure schedule attached to this Agreement (the “Disclosure Schedule”), each Seller jointlyand severally represents and warrants to Buyer on the Execution Date and on the Closing Date that:

Section 6.01 Existence. Each of Resolute and HACI is a corporation, and RNR is a limited liability company, duly formed,validly existing and in good standing under the Laws of its jurisdiction of organization, and each has full legal power, right andauthority to carry on its business as such is now being conducted and as contemplated to be conducted. Each of Resolute, HACI andRNR is duly qualified to do business and in good standing in each jurisdiction where required to do so, except where the failure to beso duly qualified would not, individually or in the aggregate, have a Material Adverse Effect.

Section 6.02 Legal Power. Each of Resolute, HACI and RNR has the legal power and right to enter into and perform thisAgreement and the transactions it contemplates for itself. The consummation of the transactions contemplated by this Agreement willnot violate, or be in conflict with:

(a) any provision of Resolute’s, HACI’s or RNR’s governing documents, as applicable; or

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(b) any judgment, order, ruling or decree applicable to Resolute, HACI or RNR as a party in interest or any

Law applicable to Resolute, HACI or RNR.

Section 6.03 Execution. The execution, delivery and performance of this Agreement and the transactions it contemplatesfor Sellers are duly and validly authorized by the requisite corporate or limited liability company action, as applicable, on the part ofSellers. This Agreement has been duly executed and delivered by Sellers (and all documents this Agreement requires be executedand delivered by Sellers at Closing will be duly executed and delivered by Sellers) and this Agreement constitutes (assuming dueauthorization, execution and delivery by Buyer), and at the Closing those other documents will constitute (assuming due authorization,execution and delivery by Buyer), the valid and binding obligations of Sellers, enforceable against Sellers in accordance with theirterms except as such enforceability may be limited by applicable bankruptcy or other similar Laws affecting the rights and remedies ofcreditors generally as well as to general principles of equity (regardless of whether such enforceability is considered in a proceeding inequity or at law).

Section 6.04 Ownership of Company Units. Except as set forth in Section 6.04 of the Disclosure Schedule, at theClosing Date, each of Resolute and HACI will hold and deliver to Buyer all of its respective Company Units, free and clear of allEncumbrances. Resolute and HACI are the sole owners of the Company and pursuant to this Agreement, on the Closing Date, Buyerwill own all of the issued and outstanding Company Units. There are no Company Units in certificated form. Except for thisAgreement, there are no existing options, warrants, calls, subscriptions or other rights, convertible securities, trusts or commitmentsof any character obligating Resolute or HACI to sell the Company or any portion thereof or limiting its ability to sell the Company Unitsto Buyer. There are no agreements, arrangements or commitments of any character (contingent or otherwise) pursuant to which anyPerson is or may be entitled to receive any payment based on the revenues or earnings, or calculated in accordance therewith, of theCompany. There are no voting trusts, proxies or other agreements or understandings to which the Company or any Company Selleris a party or by which the Company or any Company Seller is bound with respect to the voting of any equity interests in the Company.

Section 6.05 Charter Documents of the Company. Company Sellers have furnished to Buyer true and correct copies ofthe certificate of formation and limited liability company agreement of the Company, and all amendments thereto.

Section 6.06 Brokers. Except as set forth in Section 6.06 of the Disclosure Schedule, no broker or finder is entitled to anybrokerage or finder’s fee, or to any commission, based in any way on agreements, arrangements or understandings made by or onbehalf of Sellers or any Affiliate of Sellers for which Buyer has or will have any Liabilities.

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ARTICLE VII

REPRESENTATIONS AND WARRANTIES AS TO THE BUSINESS

Except as set forth in the Disclosure Schedule, each Seller jointly and severally represents and warrants to Buyer on theExecution Date and on the Closing Date that:

Section 7.01 Existence. The Company is a limited liability company duly formed, validly existing and in good standingunder the Laws of its jurisdiction of organization, and has full legal power, right and authority to carry on its business as such is nowbeing conducted and as contemplated to be conducted. The Company is duly qualified to do business and in good standing in eachjurisdiction where required to do so, except where the failure to be so duly qualified would not, individually or in the aggregate, have aMaterial Adverse Effect.

Section 7.02 Legal Power. The Company has the legal power and right to enter into and perform this Agreement and thetransactions it contemplates for itself. The consummation of the transactions contemplated by this Agreement will not violate, or be inconflict with:

(a) any provision of the Company’s governing documents; or

(b) any judgment, order, ruling or decree applicable to the Company as a party in interest or any Lawapplicable to the Company.

Section 7.03 Execution. The execution, delivery and performance of this Agreement and the transactions it contemplatesfor the Company are duly and validly authorized by the requisite limited liability company action, as applicable, on the part of theCompany. This Agreement has been duly executed and delivered by the Company (and all documents this Agreement requires beexecuted and delivered by the Company at Closing will be duly executed and delivered by the Company) and this Agreementconstitutes (assuming due authorization, execution and delivery by Buyer), and at the Closing those other documents will constitute(assuming due authorization, execution and delivery by Buyer), the valid and binding obligations of the Company, enforceable againstthe Company in accordance with their terms except as such enforceability may be limited by applicable bankruptcy or other similarLaws affecting the rights and remedies of creditors generally as well as to general principles of equity (regardless of whether suchenforceability is considered in a proceeding in equity or at law).

Section 7.04 Capital Structure of the Company; Subsidiaries.

(a) Section 7.04 of the Disclosure Schedule sets forth the authorized issued and outstanding units of theCompany. The Company Units have been duly authorized and validly issued in compliance with applicable Laws, and are fully paidand nonassessable, are not subject to any preemptive or subscription rights and were not issued in violation of any preemptive orsubscription rights. The Company does not hold any of its equity interests in treasury, nor are any membership interests reserved forissuance.

(b) The Company has no subsidiaries and does not own an interest in or control, directly or indirectly, anyPerson.

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Section 7.05 Required Approvals; No Conflict or Violation.

(a) No consent of any Governmental Authority or other Person is required in connection with the execution,delivery and performance by Sellers and the Company of this Agreement and the consummation by Sellers and the Company of thetransactions contemplated by this Agreement, except for such consents (i) set forth on Section 7.05(a) of the Disclosure Schedule or(ii) the failure of which to obtain would not have, individually or in the aggregate, a Material Adverse Effect.

(b) Except as set forth on Section 7.05(b) of the Disclosure Schedule, the execution, delivery,consummation and performance of this Agreement do not and shall not violate or result in a breach of, or constitute (with or withoutdue notice or lapse of time or both) a default under, result in the acceleration of, create in any party the right to accelerate, terminate,modify or cancel or receive benefits under, result in the loss of a material benefit under, result in the imposition of any Encumbranceon any of the Assets or the Company Units under, or require any notice under, any Material Agreement to which the Company orRNR is a party or by which such Party is bound.

Section 7.06 Financial Statements. As of the Execution Date, Sellers have delivered to Buyer true and complete copiesof a lease operating expense schedule and revenue statement of the Business and unaudited financial statements (income statement,balance sheet and statement of cash flow) of the Company, in each case dated as of July 31, 2017. As of the Closing Date, Sellershave delivered to Buyer true and complete copies of a lease operating expense schedule and revenue statement of the Business andunaudited financial statements (income statement, balance sheet and statement of cash flow) of the Company, in each case as of thefinal day of the first month immediately preceding the Closing Date for which such statements are available. Company Sellers havedelivered to Buyer true and complete copies of Tax Returns for the Company for Tax years 2014 and 2015, and when delivered (on orbefore September 15, 2017), the Tax Return for the Company for Tax year 2016 shall be true and complete.

Section 7.07 No Undisclosed Liabilities. Except as set forth on Section 7.07 of the Disclosure Schedule or in thefinancial statements provided pursuant to Section 7.06, the Business has not incurred Indebtedness or Liabilities, other than(a) liabilities incurred or accrued in the ordinary course of business consistent with past practice, (b) liabilities that would not have,individually or in the aggregate, a Material Adverse Effect or (c) any Title Defect or Environmental Defect. For purposes hereof,“ordinary course” Liabilities include only liabilities and obligations incurred in the normal course of the Business consistent in allmaterial respects with past practice and amounts, and do not include any Liabilities under any agreement or otherwise that resultfrom any breach or default (or event that with notice or lapse of time would constitute a breach or default), tort, infringement orviolation of Law by the Company or any Company Seller.

Section 7.08 Insurance. Section 7.08 of the Disclosure Schedule sets forth all current policies of insurance owned or heldby or maintained for the benefit of the Company or RNR which relate to the Business. Such policies are in full force and effect andsatisfy all requirements of applicable Laws and any agreements relating to the Business to which the Company or RNR is a party,except for such failures as would not have, individually or in the aggregate, a Material Adverse Effect.

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Section 7.09 Employees and Employee Benefit Plans.

(a) Prior to the date hereof, Sellers have delivered to Buyer a list of all Business Employees (the “BusinessEmployee List”), as of a date not earlier than ten (10) days prior to the date of this Agreement, setting forth each Business Employee’s(i) name; (ii) department/function; (iii) title or job/position; (iv) Union or non-Union status; (v) salaried or hourly status; (vi) location ofemployment; (vii) annual base salary or base rate of pay; and (viii) target bonus amount, if any, for the current fiscal year. Not earlierthan five (5) days prior to the Closing Date, Sellers shall provide an updated Business Employee List to Buyer.

(b) Except as set forth in Section 7.09(b) of the Disclosure Schedule, none of the Business Employees arecovered by a collective bargaining agreement with respect to their employment in the Business. There is, to the Knowledge of Sellers,no strike or other labor dispute involving the Business Employees pending or threatened, nor to the Knowledge of the Sellers, is thereany labor organization activity involving the Business Employees. The Company does not employ any of the Business Employeesand has no employees.

(c) Section 7.09(c) of the Disclosure Schedule sets forth a list of each material Business Employee BenefitPlan. Sellers have heretofore delivered or made available to Buyer copies of the material Business Employee Benefit Plans ordescriptions thereof and the most recent summary plan descriptions for such Business Employee Benefit Plans, if applicable. TheCompany does not sponsor, maintain, or administer any Employee Benefit Plan, and the Company will not have any Liability withrespect to any Business Employee Benefit Plan after the Closing.

(d) No liability under Title IV of ERISA has been incurred by any of the Sellers or any of their respectiveERISA Affiliates that has not been satisfied in full, and no condition exists that could reasonably be expected to result in any of theSellers or any of their respective ERISA Affiliates incurring any liability under such Title. None of the assets of the Sellers or any oftheir respective ERISA Affiliates are subject to any lien arising under ERISA or Subchapter D of Chapter 1 of the Code, and nocondition exists that presents a material risk of any such lien arising.

(e) None of the Sellers nor any of their respective ERISA Affiliates has incurred any withdrawal liability withrespect to any multiemployer plan (as defined in Section 3(37) of ERISA) that has not been satisfied in full, and no condition existsthat could reasonably be expect to result in any of the Sellers or any of their respective ERISA Affiliates incurring any such withdrawalliability.

Section 7.10 Litigation. Except as provided on Section 7.10 of the Disclosure Schedule, there are no actions, suits orproceedings pending against the Company or the Business or, to Sellers’ Knowledge, threatened, in any court, arbitration proceedingor other dispute resolution venue or by or before any Governmental Authority that would have a Material Adverse Effect.

Section 7.11 Material Agreements. Other than the Leases, Section 7.11 of the Disclosure Schedule lists all of thefollowing types of contracts, agreements and other documents relating to the Business to which the Company or RNR is a party or bywhich the Company or any of the Assets are bound as of the date hereof (the “Material Agreements”):

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(a) any agreement with any Affiliate of Resolute;

(b) any agreement or contract for the sale, exchange, or other disposition of Hydrocarbons produced fromor attributable to the Company’s interest in the Assets or for the purchase, sale, processing, transportation or other disposal of anyHydrocarbons, in each case that is not cancelable without penalty or other payment on not more than thirty (30) days prior writtennotice, other than terms of operating agreements or gas balancing agreements which permit an operator or other co-owner to take ormarket production of a non-taking co-owner;

(c) any agreement to sell, lease, farmout, or otherwise dispose of any interest in any of the Assets after thedate hereof, other than non-consent penalties for nonparticipation in operations under operating agreements, conventional rights ofreassignment arising in connection with the Company’s surrender or release of any of the Assets;

(d) any tax partnership agreement affecting any of the Assets;

(e) any agreement that creates any area of mutual interest or similar provision with respect to theacquisition by the Company or its assigns of any interest in any Hydrocarbons, land or asset or contains any restrictions on the abilityof the Company or its assigns to compete with any other Person;

(f) any agreement that can reasonably be expected to result in aggregate payments by, or revenues to, theCompany of more than $250,000 during the current or any subsequent fiscal year or $250,000 in the aggregate over the term of suchagreement;

(g) any agreement with respect to any swap, forward, future or derivative transaction or option or othersimilar hedge agreement;

(h) any agreement for Indebtedness;

(i) any drilling contract, joint operating agreement, exploration agreement, development agreement,participation agreement or similar agreement;

(j) any agreement with the Navajo Tribe or the Navajo Nation Oil & Gas Company affecting the Assets orSellers interest therein;

(k) any agreement that is a seismic or other geophysical acquisition agreement or license; and

(l) any agreement that contains any rights allowing a third party to participate in any sales or purchases ofany of the Assets that are triggered by or applicable to the transactions contemplated by this Agreement.

Neither the Company nor RNR is (and to Sellers’ Knowledge, no other Person is) in default (or with the giving of notice orthe lapse of time or both, would not be in default) under any Material Agreement. Prior to execution of this Agreement, Sellers shallhave provided Buyer or made available to Buyer, true, correct and complete copies of the Material Agreements. The MaterialAgreements are in full force and effect in accordance with their terms, and constitute the

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valid and binding obligation of the Company or RNR, as applicable, and to Sellers’ Knowledge, of each of the other parties thereto,and enforceable in accordance with its terms.

Section 7.12 Taxes and Assessments.

(a) Each material Tax Return required to be filed by the Company or RNR relating to or in connection withthe Company’s or RNR’s acquisition, ownership or operation of the Assets has been timely and properly filed and the Company orRNR, as applicable, has paid all Taxes shown thereon as owing and all such Tax Returns are correct and complete in all materialrespects.

(b) Income Tax and any other material Taxes relating to or in connection with the Company or RNR’sacquisition, ownership or operation of the Assets that are or have become due have been timely and properly paid (whether or notshown on any Tax return), and neither the Company nor RNR are delinquent in the payment of such Taxes.

(c) Except for Taxes not yet due and payable, neither the Company nor RNR has received written notice ofany claim from any applicable Governmental Authority for the assessment of any Taxes with respect to the Company or RNR’sAssets.

(d) There is not currently in effect any extension or waiver of any statute of limitation of any jurisdictionregarding the assessment or collection of Taxes from the Company or RNR relating to or in connection with the Company’s or RNR’sacquisition, ownership or operation of the Assets.

(e) Except as disclosed in Section 7.12(e) of the Disclosure Schedule, there are no audits, administrativeproceedings or lawsuits pending against the Assets or against the Company or RNR by any applicable Governmental Authority withrespect to Taxes, relating to the ownership or operation of the acquisition, ownership, or operation of the Assets.

(f) All Tax withholding and deposit requirements imposed by applicable Law have been timely and properlysatisfied in all respects by the Company or RNR.

(g) Neither the Company nor RNR is a party to any Income Tax allocation or sharing agreement.

(h) No Encumbrance exists (whether or not filed in the real property records of any applicableGovernmental Authority) on or with respect to any Asset as a result of a failure to pay any Tax other than a Permitted Encumbrance.

(i) None of the Assets are subject to any tax partnership agreement requiring a partnership income TaxReturn to be filed under Subchapter K of Chapter 1 of Subtitle A of the Code (other than the Company’s partnership tax return).

(j) There are no unpaid Taxes with respect to the Company or RNR’s acquisition, ownership andoperations of the Assets that could give rise to any material Encumbrance against the Assets on or after the Closing Date.

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(k) All of the Assets have been properly listed and described on the property Tax rolls for all periods prior to

and including the Closing Date, except for such failures to properly list and describe that would not have, individually or in theaggregate, a Material Adverse Effect.

(l) There is no agreement as to indemnification for, contribution to, or payment of Taxes related to theCompany or the Company’s or RNR’s Assets or its operations between the Company or RNR (or a Seller with respect to the Assets)and any other Person, including pursuant to a tax sharing agreement, lease agreement, or buy/sale agreement.

(m) From its inception until August 1, 2009, the Company was treated as a disregarded entity for federalincome tax purposes. Since August 1, 2009, the Company has been and, through the Closing Date, will be classified as a partnershipfor federal income tax purposes. The Company has not filed, and will not file, an election under Treasury Regulation Section301.7701-3 or comparable state or local Law to be taxable as an association. The Company has not been a member of an affiliatedgroup filing consolidated income Tax Returns under Section 1501 of the Code or any similar provision of state, local or foreignLaw. The Company has no liability for Taxes of any Person (other than itself) under Treasury Regulations Section 1.1502-6 or anysimilar provision of state, local or foreign Law. The Company for any period that it was a disregarded entity for U.S. federal tax (andstate and local Tax law as applicable) purposes had no Tax liabilities described in Treasury Regulation Section 301.7701-2(c)(2)(iii).

(n) Neither the Company nor RNR has participated in a “listed transaction” within the meaning of TreasuryRegulations Section 1.6011-4(c)(3)(i)(A).

Section 7.13 Compliance with Law And Government Authorizations.

(a) Except as would not, individually or in the aggregate, have a Material Adverse Effect: (i) the Companyand RNR have obtained and are maintaining all tribal, federal, state and local governmental licenses, permits, franchises, orders,exemptions, variances, waivers, authorizations, certificates, consents, rights, privileges and applications therefore (the “GovernmentalAuthorizations”) that are presently necessary or required to conduct the Business as it is presently conducted and (ii) no writtennotices of violation have been received by the Company or RNR from a Governmental Authority, and no proceedings are pending or,to Sellers’ Knowledge, threatened that might result in any modification, revocation, termination or suspension of any suchGovernmental Authorizations.

(b) The Company and the Business are in compliance with all applicable Laws except for suchnoncompliance that would not have, individually or in the aggregate, a Material Adverse Effect. Notwithstanding the foregoing, thisSection 7.13(b) does not relate to Taxes and Environmental Laws, which are addressed in Article V, Section 7.12, Section 7.14 andSection 7.17, respectively.

Section 7.14 Environmental Matters Except as set forth on Section 7.14 of the Disclosure Schedule:

(a) The Company is and, since January 1, 2014, has been in compliance with applicable EnvironmentalLaws in all respects, except for such non-compliance that would not, individually or in the aggregate, have a Material Adverse Effect;

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(b) Except as would not, individually or in the aggregate, have a Material Adverse Effect, all permits,

approvals, and licenses required from Governmental Authority pursuant to Environmental Laws with respect to the ownership oroperation of the Assets (the “Environmental Permits”) have been obtained and are in full force and effect, the Assets are incompliance with all Environmental Permits and there are no conditions or circumstances that would reasonably be expected to resultin revocation, termination or modification of any Environmental Permit;

(c) Except as would not, individually or in the aggregate, have a Material Adverse Effect, the Company (i)has not received from any Governmental Authority any written notice of violation of, alleged violation of, or non-compliance with, orliability or potential or alleged liability pursuant to, any Environmental Law involving the operations of the Assets other than noticeswith respect to matters that have been resolved to the satisfaction of any relevant Governmental Authority and for which the Companyhas no obligations outstanding and (ii) is not subject to any outstanding governmental order, “consent order”, schedule, decree orother agreement issued or entered by a Governmental Authority pursuant to Environmental Laws concerning the Assets;

(d) (i) Except as would not, individually or in the aggregate, have a Material Adverse Effect, there has beenno release of Hazardous Substances on or from any of the Assets in violation of any applicable Environmental Laws or that requiresany remedial action or corrective action pursuant to applicable Environmental Laws, and (ii) to the Knowledge of Sellers, there are noHazardous Substances at, on or from the Assets in concentrations that would reasonably be expected to result in any materialremedial action or material corrective action;

(e) Except as would not, individually or in the aggregate, have a Material Adverse Effect, the Company hasnot transported or arranged for the transportation of Hazardous Substances in connection with Sellers’ ownership, use, operation ormaintenance of the Assets in a manner that may lead to claims for clean-up costs, remedial work, damages to natural resources or forpersonal injury claims, nor do Sellers have any Knowledge of any other person who has undertaken such activities which may lead tosuch claims against Buyer; and

(f) The Company has made available for inspection by Buyer a copy of the April 2017 environmentalassessment report of the Assets.

Section 7.15 Lease Status/Rentals/Royalties. Except as set forth on Section 7.15 of the Disclosure Schedule, (i) allbonuses, rentals, royalties and operating expenses payable with respect to the Assets prior to the Effective Time have been duly andproperly paid by the Company in accordance with the Material Agreements, the Leases and applicable Law, except as would not,individually or in the aggregate, have a Material Adverse Effect, (ii) there are no currently pending requests or demands for payments,adjustments of payments or performance pursuant to obligations under the Leases, to the extent that non-compliance with theforegoing by the Company would have a Material Adverse Effect and (iii) the Company has not received a written notice of defaultwith respect to the payment or calculation of any rentals or royalties attributable to the Assets.

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Section 7.16 Calls on Production. Except as set forth on Section 7.16 of the Disclosure Schedule, the Company has not

(i) received any advance, “take-or-pay” or other similar payments under production sales contracts that entitle the purchasers to“make up” or otherwise receive deliveries of Hydrocarbons without paying at such time the contract price therefor, (ii) taken orreceived any amount of Hydrocarbons under any gas balancing agreements, gas transportation, gathering or processing agreementsor other arrangements not accounted for in a Purchase Price adjustment hereunder that permit any Person thereafter to receive anyportion of the interest of the Company or its Hydrocarbons, or permit the Company to receive any portion of the interest or theHydrocarbons of another Person, to “balance” any disproportionate allocation of Hydrocarbons, or (iii) received any advance paymentor other similar payment to deliver Hydrocarbons, or proceeds from the sale thereof, attributable to the Assets at some future timewithout receiving payment therefor at or after the time of delivery. Except as set forth on Section 7.16 of the Disclosure Schedule, noHydrocarbons attributable to the Assets are subject to a sales contract (other than contracts terminable on no more than thirty (30)days’ notice) and no Person has any call upon, option to purchase or similar rights with respect to the production from the Assets;production from the Assets is not bound by any gas dedications or subject to any monetary or in kind through-put fees or charges inconnection with gathering or transportation; and the Assets are not bound by futures, hedge, swap, collar, put, call, floor, cap, optionor other contracts that are intended to benefit from, relate to or reduce or eliminate the risk of fluctuations in the price of commodities,including Hydrocarbons, securities, foreign exchange rates or interest rates that will continue after Closing.

Section 7.17 Well Abandonments. Except as set forth on Section 7.17 of the Disclosure Schedule, all wells involving theAssets which have been permanently abandoned by the Company or by the Company Sellers were abandoned in accordance with allapplicable Laws and Material Agreements; there are no Wells included in the Assets that are presently required by applicable Law orany Material Agreement to be permanently plugged and abandoned during the two (2) years following the Closing Date; and theCompany Sellers and the Company have not received any written notices from any applicable Governmental Authorities or otherPersons that: (a) any such permanently abandoned wells were not abandoned in accordance with all applicable Laws or MaterialAgreements; or (b) any current action is required with regard to any previously-abandoned wells.

Section 7.18 Title to and Sufficiency of Assets. RNR has good and valid title to, or an enforceable leasehold interestin, the Purchased Assets, free and clear of Encumbrances other than Permitted Encumbrances and, upon Closing, Buyer shallacquire good and marketable title thereto. The assets and rights owned by the Company together with the assets and rights includedin the Purchased Assets constitute all of the material assets held for use or used in connection with the Business (except for theExcluded Assets), and are, in the aggregate, sufficient to operate the Business as conducted as of the date hereof and ascontemplated to be operated as of the Closing Date.

Section 7.19 Bankruptcy. There are no bankruptcy, reorganization or arrangement proceedings pending, beingcontemplated by or, to Sellers’ Knowledge, threatened against the Company or the Business.

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Section 7.20 Suspense. Section 7.20 of the Disclosure Schedule lists all funds held in suspense (including funds held in

suspense for unleased interests) and prepaid expenses held by the Company as of August 31, 2017 that are attributable to theAssets.

Section 7.21 Preferential Rights. Section 7.21 of the Disclosure Schedule sets forth all Preferential Purchase Rights thatare applicable to the transactions contemplated hereby.

Section 7.22 Bank Accounts and Powers of Attorney. Except for the Exxon Escrow Account, the Company maintainsno bank accounts or investment accounts. For and through the 2017 calendar year, before and after giving effect to the ExxonEscrow Refund, the Exxon Escrow Account is fully funded in accordance with (i) the Purchase and Sale Agreement and Assignmentand Bill of Sale, each dated effective January 1, 2005, among Exxon (and its affiliates), the Company and NNOGC, and (ii) theEscrow Agreement, and as of the Execution Date and, as applicable, the Closing Date, no additional payments are due by theCompany thereunder. Section 7.22 of the Disclosure Schedule sets forth a list of all valid powers of attorney issued by the Companyor RNR that affect the Assets and will remain in effect after the Closing.

Section 7.23 Bonds and Credit Support. Section 7.23 of the Disclosure Schedule lists all bonds, letters of credit andother similar credit support instruments maintained by the Sellers and the Company with respect to the Assets.

Section 7.24 Intellectual Property Rights. As of the Execution Date and, as applicable, the Closing Date, the Companyhas the right to use all intellectual property used by the Company or necessary in connection with the operation of the Businesswithout infringing on or otherwise acting adversely to the rights or claimed rights of any Person. To the Knowledge of the CompanySellers, no other Person is infringing the rights of the Company in any of its intellectual property.

Section 7.25 Imbalances. To Sellers’ Knowledge, except as set forth on Section 7.25 of the Disclosure Schedule, as ofthe date or dates reflected thereon, (i) there are no Hydrocarbon production, pipeline, transportation or processing imbalancesexisting with respect to the Assets, and (ii) Sellers have not received prepayments (including payments for gas not taken pursuant to“take-or-pay” arrangements) for any of Sellers’ share of the Hydrocarbons produced from the Assets as a result of which a materialobligation exists to deliver Hydrocarbons produced from the Assets after the Closing Date without then or thereafter receiving fullpayment.

Section 7.26 Capital Projects. Section 7.26 of the Disclosure Schedule lists a description of all Wells or other capitalprojects in progress for which Sellers have issued or received, as the case may be, an authority for expenditure, and associated costsor estimates thereof to the extent such costs or estimates exceed $50,000 per Well net to Sellers’ interest.

Section 7.27 No Other Representations or Warranties; Disclosed Materials. Except for the representations andwarranties contained in this Agreement (as qualified by the Disclosure Schedule), neither Sellers nor any other Person makes (andBuyer is not relying upon) any other express or implied representation or warranty with respect to the Business (including the value,condition or use of any Asset) or the transactions contemplated by this Agreement, and Sellers disclaim any other representations orwarranties not contained in this Agreement, whether made by Sellers, any Affiliate of Sellers or any of their respective officers,directors, managers,

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employees or agents. Except for the representations and warranties contained in this Agreement (as qualified by the DisclosureSchedule) and the warranty under the Assignment and Bill of Sale, Sellers disclaim all liability and responsibility for anyrepresentation, warranty, projection, forecast, statement or information made, communicated or furnished (orally or in writing) toBuyer or any of its Affiliates or any of its officers, directors, managers, employees or agents (including any opinion, information,projection or advice that may have been or may be provided to Buyer by any director, officer, employee, agent, consultant orrepresentative of Sellers or any of their Affiliates). The disclosure of any matter or item in the Disclosure Schedule shall not bedeemed to constitute an acknowledgment that any such matter is required to be disclosed or is material or that such matter would orwould reasonably be expected to result in a Material Adverse Effect.

ARTICLE VIIIREPRESENTATIONS AND WARRANTIES OF BUYER

Buyer and Parent Guarantor each represents and warrants to Sellers on the Execution Date and the Closing Date that:

Section 8.01 Buyer’s Existence. Buyer is a limited liability company duly formed, validly existing and in good standingunder the Laws of the State of Delaware, and on or before the Closing Date will be qualified to conduct business and in good standingin the States of Colorado and Utah. Parent Guarantor is an Australian company limited by shares duly formed, validly existing and ingood standing under the Laws of Australia. Each of Buyer and Parent Guarantor has full legal power, right and authority to carry onits business as such is now being conducted and as contemplated to be conducted.

Section 8.02 Legal Power. Each of Buyer and Parent Guarantor has the legal power and right to enter into and performthis Agreement and the transactions it contemplates for Buyer and Parent Guarantor, respectively. The consummation of thetransactions contemplated by this Agreement will not violate, or be in conflict with:

(i) any provision of Buyer’s or Parent Guarantor’s governing documents, respectively;

(ii) any material agreement or instrument to which Buyer or Parent Guarantor is a party or bywhich Buyer or Parent Guarantor is bound, respectively; or

(iii) any judgment, order, ruling or decree applicable to Buyer or Parent Guarantor as a party ininterest or any Law applicable to Buyer or Parent Guarantor, respectively.

Section 8.03 Execution. The execution, delivery and performance of this Agreement and the transactions it contemplatesfor Buyer and Parent Guarantor are duly and validly authorized by all requisite corporate or other action on the part of Buyer andParent Guarantor. This Agreement has been duly executed and delivered by Buyer and Parent Guarantor (and all documents thisAgreement requires be executed and delivered by Buyer or Parent Guarantor at Closing will be duly executed and delivered by Buyeror Parent Guarantor, as applicable) and this Agreement constitutes, and at the Closing those other documents will constitute, thelegal, valid and binding obligation of Buyer or Parent Guarantor, as applicable, enforceable against Buyer or Parent

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Guarantor, as applicable, in accordance with their terms, except as such enforceability may be limited by applicable bankruptcy orother similar Laws affecting the rights and remedies of creditors generally as well as to general principles of equity (regardless ofwhether such enforceability is considered in a proceeding in equity or at law).

Section 8.04 Brokers. No broker or finder is entitled to any brokerage or finder’s fee, or to any commission, based in anyway on agreements, arrangements or understandings made by or on behalf of Buyer or Parent Guarantor or any of their Affiliates forwhich any Seller has or will have any Liabilities.

Section 8.05 Bankruptcy. There are no bankruptcy, reorganization or arrangement proceedings pending, beingcontemplated by or, to Buyer’s or Parent Guarantor’s knowledge, threatened against Buyer or Parent Guarantor or any of theirAffiliates.

Section 8.06 Litigation. There is no suit, action, claim, investigation or inquiry by any Person or entity or by anyadministrative agency or Governmental Authority and no legal, administrative or arbitration proceeding pending or, to Buyer’s orParent Guarantor’s knowledge, threatened against Buyer or Parent Guarantor or any of their Affiliates that has materially affected orwill materially affect Buyer’s or Parent Guarantor’s ability to consummate the transactions contemplated by this Agreement.

Section 8.07 Qualifications. Buyer is now, and after the Closing shall continue to be, qualified to own federal, tribal andstate oil, gas and mineral leases in all jurisdictions to the extent applicable where the Assets are located, and the consummation of thetransactions contemplated in this Agreement will not cause Buyer to be disqualified as such an owner or operator. To the extentrequired by the applicable Governmental Authorities, Buyer shall maintain lease bonds, area-wide bonds or any other surety bonds asmay be required by, and in accordance with, such regulations of Governmental Entities governing the ownership and operation ofsuch leases.

Section 8.08 Investment. Buyer is an “accredited investor,” as that term is defined in Regulation D of the Securities Actof 1933, as amended, and will acquire the Assets and the Company Units for its own account and not with a view to a sale ordistribution in violation of the Securities Act of 1933, as amended, and the rules and regulations under that statute, any applicablestate blue sky Laws or any other applicable securities Laws. Buyer understands and acknowledges that if any of the Assets and theCompany Units were held to be securities, they would be restricted securities and could not be transferred without registration underapplicable state and federal securities Laws or the availability of an exemption from such registration.

Section 8.09 Funds. Buyer shall arrange to have available by the Closing Date sufficient funds to enable Buyer to pay infull the Purchase Price as provided in this Agreement and otherwise to perform its obligations under this Agreement.

Section 8.10 Independent Investigation. Buyer and Parent Guarantor are experienced and knowledgeable investors inthe oil, gas and mineral resources industry that have previously expended substantial amounts in the acquisition and development ofoil, gas and mineral properties. Prior to entering into this Agreement, Buyer and Parent Guarantor were advised by and have reliedsolely on their own legal, tax and other professional counsel concerning this

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Agreement, the Assets, the Purchased Assets, the Company Units and their value. Buyer and Parent Guarantor are knowledgeableof the usual and customary practices of producers such as Sellers, including reliance on the advice of experts (e.g., reservoir andfacility engineers, attorneys, tax advisors, accountants, valuation specialists and environmental consultants), and they have had (orwill have prior to the Closing) access to the Assets, the officers and employees of the Business, and the books, records and files ofSellers relating the Business, and in making the decision to enter into this Agreement and consummate the transactions contemplatedby this Agreement, Buyer and Parent Guarantor have relied solely on the basis of their own independent due diligence investigation ofthe Business, upon the representations and warranties in Article VI and Article VII and upon the covenants of Sellers’ in thisAgreement, and not on any other representations, warranties or covenants of Sellers’ or any other Person.

ARTICLE IXCOVENANTS AND AGREEMENTS

Section 9.01 Covenants and Agreements of Sellers. Sellers covenant and agree with Buyer as follows:

(a) Status. Sellers shall use their reasonable efforts to assure that as of the Closing Date they will not beunder any material legal, contractual or other restriction that would prohibit or delay the timely consummation of the transactionscontemplated hereby.

(b) Notices of Claims. Sellers shall promptly notify Buyer if, between the Execution Date and the ClosingDate, Sellers or the Company receive written notice of any claim, suit, action or other proceeding or written notice of any default underany Material Agreements affecting the Business, and promptly notify Buyer of any other event that would have a Material AdverseEffect on the Business or the transactions contemplated hereby.

(c) Compliance with Laws. During the period from the Execution Date through the Closing Date (inclusiveof both dates), Sellers shall cause the Company and the Assets to be operated in compliance in all material respects with allapplicable Laws.

(d) Technical and Operational Cooperation. From the Execution Date and continuing until Closing, Sellersshall make those senior and field-level operational and technical employees directly associated with the Aneth Field reasonablyavailable during business hours to meet at their regular business location with Buyer and its representatives for the purpose ofassisting Buyer in gathering and developing information to be furnished to Buyer’s independent petroleum engineer. Sellers shallcause their respective operational and technical employees directly associated with the Aneth Field to provide, commerciallyreasonable assistance in gathering and developing the customary due diligence information, including such information as iscustomarily required to prepare a reserve report, reasonably requested by Buyer and its representatives and independent petroleumengineer. Notwithstanding anything to the contrary, the assistance to be provided by Sellers’ employees hereunder shall only beprovided to the extent such assistance does not unreasonably disrupt such employee’s job performance and the operations of Sellersin the ordinary course of business.

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(e) Master Service Agreements. After the Closing Date and prior to the Transition Date, if requested by

Buyer, RNR shall use commercially reasonable efforts to assign to Buyer or its Affiliate any master service agreements to which RNRis a party and which relate solely to the Assets. For the avoidance of doubt, Buyer acknowledges that this covenant does not apply toany master service agreements which relate to assets that do not constitute Assets, even if such master service agreement alsorelates to Assets.

Section 9.02 Covenants and Agreements of Buyers. Buyer covenants and agrees with Sellers as follows:

(a) Status. Buyer shall use reasonable efforts to assure that as of the Execution Date it will not be underany material legal, contractual or other restriction that would prohibit or delay the timely consummation of the transactionscontemplated hereby.

(b) Change of Name. As soon as reasonably possible after the Closing (i) but in no event later than thirty(30) days after Closing, Buyer shall change the name of the Company to remove the names of Sellers and their Affiliates or anyvariations on them, including “Resolute”, and Buyer shall make the requisite filings with, and provide the requisite notices to, theappropriate Governmental Authorities to accomplish the foregoing and (ii) but in no event later than sixty (60) days after Closing,unless prohibited by Governmental Authorities or applicable Laws, Buyer shall remove the names of Sellers and their Affiliates or anyvariations on them, including “Resolute”, from any signage located in the Aneth Field.

(c) Exxon Escrow Refund. If after the Closing Buyer receives the Exxon Escrow Refund attributable to theCompany as contemplated by the First Escrow Amendment, Buyer shall immediately notify Sellers of the receipt of the Exxon EscrowRefund and pay the full amount of the Exxon Escrow Refund received by Buyer to Sellers within five (5) Business Days of receipt ofthe Exxon Escrow Refund. For the avoidance of doubt, the Parties acknowledge that the portion of the Exxon Escrow Refundattributable to NNOGC will be paid directly by Exxon to NNOGC. If the final executed First Escrow Amendment contains terms andconditions which render Buyer unable to fulfill its obligation under this Section 9.02(c) or which are not consistent with the definition ofExxon Escrow Refund hereunder, the Parties shall negotiate in good faith to modify this Agreement so as to effect their original intentunder this Section 9.02(c) as closely as possible in an acceptable manner to the end that the transactions contemplated under thisSection 9.02(c) are fulfilled to the extent possible; provided that, any modification to this Agreement will be in accordance withSection 10.01(b) and Section 10.03(c).

Section 9.03 Covenants and Agreements of the Parties.

(a) Communication Between the Parties Regarding Breach. Until the Closing:

(i) Buyer shall notify Sellers promptly after Buyer obtains knowledge that any representation orwarranty of Sellers or Buyer contained in this Agreement is untrue in any material respect or will be untrue in any materialrespect as of the Closing Date or that any covenant or agreement to be performed or observed by Sellers or Buyer prior toor on the Closing Date has not been so performed or observed in any material respect.

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(ii) Sellers shall notify Buyer promptly after Sellers obtain Knowledge that any representation or

warranty of Buyer or Sellers contained in this Agreement is untrue in any material respect or will be untrue in any materialrespect as of the Closing Date or that any covenant or agreement to be performed or observed by Buyer or Sellers prior toor on the Closing Date has not been so performed or observed in any material respect;

(iii) If any of Buyer’s or Sellers’ representations or warranties is untrue or shall become untrue inany material respect between the date of execution of this Agreement and the Closing Date, or if any of Buyer’s or Sellers’covenants or agreements to be performed or observed prior to or on the Closing Date shall not have been so performed orobserved in any material respect, but if such breach of representation, warranty, covenant or agreement shall (if curable) becured in its entirety by the Closing (or, if the Closing does not occur, by the date set forth in Section 12.01), then suchbreach shall be considered not to have occurred for all purposes of this Agreement.

(b) Release of Managers, Directors and Officers. Buyer, on its own behalf and on the behalf of theCompany (collectively, the “Releasing Parties”), effective as of Closing, hereby releases, acquits and forever discharges each presentand former manager, director and officer of the Company, and each present and former manager, director and officer of RNR whoperformed services for the Company, who is an individual (collectively, the “Released Parties”), from any and all claims, causes ofaction, demands, costs, debts, damages, obligations and liabilities, whether known or unknown, which the Releasing Parties have ormay come to have against the Released Parties, whether directly, indirectly or derivatively, in each case relating to the ReleasedParties’ services to the Company, except for such claims, causes of action, demands, costs, debits, damages, obligations or liabilitiescaused by the fraud or willful misconduct of any Released Party.

(c) Cooperation and Good Faith. Upon the terms and subject to the conditions set forth in this Agreement,Buyer and Sellers will use their respective reasonable efforts to take, or cause to be taken, all actions, and to do, or cause to be done,and to assist and cooperate with the other Party or Parties in doing, all things reasonably necessary, proper or advisable toconsummate and make effective, in the most expeditious manner practicable, the transactions, including using reasonable efforts to:(i) cause the conditions set forth in Article XI to be satisfied and (ii) execute or deliver any additional instruments reasonablynecessary to consummate the transactions contemplated by this Agreement and to fully carry out the purposes of this Agreement;provided, however, that the foregoing provisions of this Section 9.03(c) will not require any Party to perform, satisfy or discharge anyobligations of any other Party under this Agreement or otherwise.

(d) Governmental Consents. Promptly following the execution of this Agreement, the Parties will proceed toprepare and file with the appropriate Governmental Authorities such consents and other state, tribal and federal transfer documents,including any environmental permits, licenses, registrations and authorizations, that are necessary in order to consummate thetransactions contemplated by this Agreement and will diligently and expeditiously prosecute, and will cooperate fully with each otherin the prosecution of, such matters.

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(e) Other Actions and Consents.

(i) Within five (5) Business Days following the Execution Date, the Company Sellers and RNRshall notify all holders of (i) Preferential Purchase Rights relating to the Assets or (ii) rights of consent or approval relating tothe transactions contemplated by this Agreement. Sellers shall promptly (but not less than five (5) Business Days prior toClosing) notify Buyer if any Preferential Purchase Rights are exercised, any consents or approvals denied, or if the requisiteperiod has elapsed without said rights having been exercised or consents or approvals having been received.Notwithstanding anything set forth in this Section 9.03(e), if prior to Closing, any such Preferential Purchase Rights aretimely and properly exercised, the interest or part thereof so affected shall be eliminated from the Assets and the PurchasePrice reduced by the portion of the Purchase Price allocated to such interest or part thereof.

(ii) With respect to any portion of the Assets for which a Preferential Purchase Right has notbeen asserted or waived prior to Closing, or a consent or other approval has not been granted and, in each case, for whichthe time for election to exercise such Preferential Purchase Right or to grant such consent or approval has not expired (andBuyer is unwilling to assume the Liability associated with the failure to obtain such consent or approval), Closing withrespect to the specific portion of the Assets subject to such outstanding obligations will be deferred (the “Third PartyInterests”). The Purchase Price delivered to Sellers at Closing will be reduced by the value of the Third Party Interests asdetermined in good faith by the Parties (the “Third Party Interest Value”). In the event that after Closing any suchPreferential Purchase Right is waived or consent or approval is obtained or the time for election to purchase or to deliver aconsent or approval passes (such that under the applicable documents the Sellers may sell the affected Third Party Interestto Buyer), then subject to the terms and conditions hereof, the Closing with respect to the applicable portion of the ThirdParty Interests will proceed promptly. If such waivers, consents or approvals as are necessary are not received by Sellerswithin one (1) year following Closing, Sellers shall retain such Third Party Interests, and the Parties shall have no furtherLiability or obligation to each other with respect thereto.

(iii) If at or before the Closing Buyer and the Sellers have not agreed on the Third Party InterestValue attributable to the Third Party Interests, Buyer or the Sellers shall have the right to elect to have the Disputeregarding the Third Party Interest Value determined by an Independent Expert in accordance with Article XVIII. In thatevent, the Purchase Price paid at Closing shall not be reduced by virtue of the disputed the Third Party Interest Value, butupon the final resolution of the Dispute, the Third Party Interest Value found to be attributable to the Third Party Interestsshall be refunded by the Sellers to Buyer within five (5) Business Days of the resolution of the Dispute.

(iv) If any additional Preferential Purchase Rights are discovered after Closing, or if aPreferential Purchase Rights holder alleges improper notice, Buyer agrees to cooperate with Sellers in giving effect to anysuch valid Preferential Purchase Rights. In the event any such valid Preferential Purchase Rights are validly exercised afterClosing, Buyer’s sole remedy against Sellers shall be the return by Sellers to Buyer of that portion of the Purchase Priceallocated to the portion of the Assets on which such rights are

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exercised and lost by Buyer to such third Person and an unwinding of the transactions contemplated by this Agreement withrespect to such Assets. This provision shall survive the expiration provisions otherwise applicable to the representation andwarranty and indemnification provisions of this Agreement.

(f) Release of Encumbrances. At the Closing, Sellers shall provide Buyer evidence reasonably satisfactoryto Buyer of the removal and release of all Encumbrances on the Assets.

Section 9.04 Certain Employee Matters.

(a) No later than thirty (30) days prior to the Transition Date, Buyer or one or more of its Affiliates shall offeremployment commencing effective as of the Transition Date, to each Business Employee who remains a Business Employeeimmediately prior to the Transition Date. With respect to each Business Employee who is not an Excluded Employee or a UnionEmployee, such offer of employment shall be (i) at a base salary or base hourly wage that is not less than the base salary or basehourly wage that such Business Employee was receiving immediately prior to the Transition Date and (ii) on other terms andconditions (including participation in retirement and welfare plans and programs) that are at least as substantially comparable, in theaggregate, to those provided by RNR and its Affiliates to such Business Employee immediately prior to the Transition Date(the “Employment Offers”). Each Business Employee who accepts Buyer’s offer of employment and becomes employed by Buyer orone of its Affiliates on the Transition Date is herein referred to as a “Transferred Employee.” Until the first anniversary of the TransitionDate, each Transferred Employee who is not an Excluded Employee or Union Employee shall, while employed by Buyer and/or itsAffiliates, be employed on terms and conditions not less favorable, in the aggregate, to those set forth in such Transferred Employee’sEmployment Offer. Without limiting the immediately preceding sentence, Buyer shall provide (or cause one or more of its Affiliates toprovide) each Transferred Employee (other than an Excluded Employee or Union Employee) whose employment is terminated byBuyer or any of its Affiliates without “cause” during the period commencing on the Transition Date and ending on the first anniversaryof the Transition Date with severance benefits that are not less favorable than those set forth in Section 9.04(a) of the DisclosureSchedule.

(b) No later than thirty (30) days prior to the Transition Date, Buyer or one or more of its Affiliates shall offeremployment commencing effective as of the Transition Date, to each Union Employee who remains a Business Employeeimmediately prior to the Transition Date. Such offer of employment shall be at a base salary or base hourly wage that is not less thanthe base salary or base hourly wage that such Union Employee was receiving immediately prior to the Transition Date and on otherterms and conditions in compliance with the USW CBA and in no event, no less favorable, in the aggregate, to those provided byRNR and its Affiliates to such Business Employee immediately prior to the Transition Date except as such terms and conditions aremodified or amended pursuant to any modification or amendment of the USW CBA negotiated between Buyer and the Union followingClosing. Each Union Employee who accepts Buyer’s offer of employment and becomes employed by Buyer or one of its Affiliates onthe Transition Date shall be considered a Transferred Employee for all purposes of this Agreement with the sole exception ofSection 9.04(a).

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(c) Each of the Sellers shall permit, and cause their Affiliates to permit, Buyer to contact and

make arrangements with the Business Employees regarding employment or prospective employment by Buyer after the Closing andfor the purpose of ensuring the continuity of the Business, and each Seller agrees not to discourage, and to cause their Affiliates not todiscourage, any Business Employees from consulting with Buyer.

(d) The Sellers shall retain responsibility for the payment of any employee benefits or entitlement, includingseverance pay, deferred compensation, equity-based or cash incentive compensation, accrued vacation, sick or holiday pay to anyTransferred Employee or any other Business Employee pursuant to any Business Employee Benefit Plan as a result of or inconnection with the consummation of the transactions contemplated hereby. Without limiting the foregoing, with respect to any annualcash bonuses that may be payable to the Transferred Employees under any short-term incentive plan of RNR or any of its Affiliates inrespect of 2017 performance: (i) the Transferred Employees shall be deemed to have satisfied all applicable employment conditionsnotwithstanding their termination of employment with RNR immediately prior to the Transition Date; and (ii) subject to the allocation ofcosts in the Transition Services Agreement and Section 12.02, RNR or one of its Affiliates shall pay such bonuses in the ordinarycourse during 2018, subject to any applicable performance requirements and the other terms and conditions (other than employmentor service conditions) of the short-term incentive plan.

(e) The Parties acknowledge that the transactions provided for in this Agreement may result in obligationson the part of the Sellers or their Affiliates and one or more of the Business Employee Benefit Plans that is an employee welfarebenefit plan (within the meaning of Section 3(1) of ERISA) to comply with the health care continuation requirements of COBRA orstate law, as applicable. The Parties expressly agree that Buyer and Buyer’s Employee Benefit Plans shall have no responsibility forthe compliance with such health care continuation requirements (i) for qualified beneficiaries who previously elected to receivecontinuation coverage under the Business Employee Benefit Plans or who between the date of this Agreement and the TransitionDate elect to receive continuation coverage, or (ii) with respect to those employees and former employees of the Sellers and theirAffiliates who may become eligible to receive such continuation coverage on or prior to the Transition Date or in connection with thetransactions provided for in this Agreement.

(f) For the applicable plan year that includes the Transition Date, the Transferred Employeesshall not be required to satisfy any deductible or out-of-pocket maximum requirements under the benefit plans, programs and policiesmaintained by Buyer or its Affiliates (the “Buyer Plans”) that provide medical (including prescription drug), dental and vision benefits(collectively, the “Buyer Health Plans”) to the extent such requirements were satisfied for the portion of the current plan year under theBusiness Employee Benefit Plans that provide medical, dental and vision benefits (the “Business Employee Health Plans”). Anywaiting periods, pre-existing condition exclusions and requirements to show evidence of good health contained in Buyer Health Plansshall be waived with respect to the Transferred Employees (except to the extent that any such waiting period, pre-existing conditionexclusion, or requirement of showing evidence of good health applied under the applicable the Business Employee Health Plans inwhich the Business Employee participates or is otherwise eligible to participate as of immediately prior to the Transition Date).

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(g) Buyer shall cause the Buyer Plans that cover the Transferred Employees after the

Transition Date to credit service with Sellers and their Affiliates and any formerly affiliated predecessor employers to the extentcredited by Sellers and their Affiliates as service with Buyer under the corresponding or comparable Business Employee BenefitPlans prior to the Transition Date for purposes of (i) accruing annual vacation time and paid time off, (ii) calculating severance benefitsunder Buyer’s severance plan(s), and (iii) eligibility and vesting (but not for benefit accrual purposes under any defined benefit pensionplan) under the Buyer Plans.

(h) From and after the Transition Date, Buyer or one of its Affiliates shall assume and honorthe USW CBA. RNR and Buyer shall cooperate in connection with any engagement in any type of bargaining required in connectionwith the transactions contemplated by this Agreement (including, for avoidance of doubt, the Transition Services Agreement) or underapplicable Law (including “effects” bargaining) with the collective bargaining representative of the Union between the date of thisAgreement and the Transition Date.

(i) Subject to the terms of the Transition Services Agreement, Buyer and its Affiliates shall have soleresponsibility for all Liabilities relating to or arising from Buyer’s and its Affiliates’ employment of the Transferred Employees on andfollowing the Transition Date. Buyer and its Affiliates shall be solely responsible for any obligations or liabilities arising under theWARN Act with respect to or as a result, in whole or in part, of the actions or omissions of Buyer or any of its Affiliates on or after theTransition Date. Prior to the Transition Date, Sellers will provide to Buyer a list of employees and former employees of Sellers andtheir Affiliates who were employed in the Business who have incurred an “employment loss” (within the meaning of the WARN Act)(by date and location) during the ninety (90) day period preceding the Closing Date. Buyer releases, and shall defend, indemnify andhold harmless, Sellers’ Indemnitees from and against all Losses (REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TOBY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF SELLERS INDEMNITEES)arising out of, related to, or caused by Buyer’s and its Affiliates’ employment of the Transferred Employees following the TransitionDate or the terms and conditions of any Transferred Employee’s employment following the Transition Date.

(j) From and after the date hereof until the earlier of the termination of this Agreement in accordance withits terms or the Transition Date, except in the ordinary course of business or as required under applicable Law or the terms of anyBusiness Employee Benefit Plan as of the date hereof, Sellers shall not, except with Buyer’s prior written consent (which consentshall not be unreasonably withheld), (i) increase the compensation or benefits payable to any Business Employee, (ii) terminate theemployment of any Business Employee whose annual base compensation is greater than $150,000, other than for cause, or (iii) hireany Business Employee whose annual base compensation is greater than $150,000.

(k) No provision of this Section 9.04 shall create any Third-Party beneficiary rights under this Agreement inany Business Employee (including any beneficiary or dependent thereof).

(l) From and after the date hereof until the earlier of the termination of this Agreement in accordance withits terms or the one-year anniversary of the Closing Date, Buyer

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may not (i) employ, hire or otherwise retain any employee (or person who was previously an employee in the 180-day period prior tosuch employment, hiring or retention) of RNR or any of its Affiliates or (ii) solicit, raid, entice or induce, directly or indirectly, anyemployee (or person who was previously an employee in the 180-day period prior to such solicitation, raid, enticement, orinducement) of RNR or any of its Affiliates or any other person who is under contract with or rendering services to RNR or any of itsAffiliates in an employee-like capacity in the day-to-day business operations of RNR or any of its Affiliates, to (A) terminate his or heremployment by, or contractual relationship with, RNR or its Affiliates, (B) refrain from extending or renewing the same (upon the sameor new terms), (C) refrain from rendering services to or for RNR or its Affiliates, or (D) become employed by or to enter into contractualrelations with any persons other than RNR or its Affiliates; provided, however, that the foregoing restrictions shall not apply toBusiness Employees and any other employees for which Sellers have given their specific written consent for Buyer to employ orsolicit. Notwithstanding the foregoing, the publication of classified advertisements in newspapers, periodicals, internet bulletin boardsor websites, or other publications of general availability or circulation not directly or indirectly targeted at any employees of RNR or itsAffiliates and the hiring of any employees of RNR or its Affiliates who were not previously an employee in the 180-day period prior tothe date of such hiring who respond to such advertisements in his or her own volition shall not be deemed a breach of this provisionunless the advertisement is undertaken as a means to circumvent or conceal a violation of this provision.

(m) As of and effective upon the Transition Date, Sellers shall or shall cause their Affiliates to (i) assign toBuyer and its Affiliates, to the extent permitted by applicable Law and the applicable agreement, any and all nondisclosure agreementsor covenants, noncompetition agreements or covenants, non-solicitation agreements or covenants or other restrictive covenants (the“Restrictive Covenants”) between Sellers or their Affiliates, as applicable, on the one hand, and any Transferred Employee (otherthan any Excluded Employees), on the other hand, and (ii) waive such Restrictive Covenants, and any related claims against Buyerand its Affiliates and the Transferred Employees, with respect to the Transferred Employees’ employment by Sellers or their Affiliatesand activities for or on behalf of Buyer or its Affiliates following the Closing.

Section 9.05 Required Financial Statements. Sellers acknowledge that Buyer and its Affiliates may be required toinclude financial statements and other financial information relating to the Assets (“Required Financial Statements”) in documents filedwith the U.S. Securities and Exchange Commission or other similar securities commissions by Buyer and its Affiliates, and that suchRequired Financial Statements may be required to be audited. In that regard, prior to the Closing and subsequent to the Closing untilDecember 31, 2019 to the extent Sellers are then in existence, Sellers hereby covenant and agree (i) to provide reasonable andcustomary assistance to Buyer in connection with the preparation of the Required Financial Statements and (ii) to provide Buyerreasonable access to such records (to the extent Sellers have such information) and personnel of Sellers as Buyer may reasonablyrequest to enable Buyer, and its representatives and accountants, at Buyer’s sole cost and expense, to prepare and have audited suchRequired Financial Statements. Buyer shall reimburse Sellers for any out of pocket expenses incurred by Sellers in providing suchassistance and access, provided that such expenses were incurred with Buyer’s prior written consent.

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Section 9.06 Hedging Program.

(a) Prior to the Closing Date, Sellers shall elect to unwind, terminate or novate all of the Existing HedgingAgreements and the transactions contemplated thereby in accordance with the terms of the confirmations contained in each of theExisting Hedging Agreements.

(b) After the Execution Date and upon Buyer’s payment of the Deposit, the Sellers, in consultation withBuyer, shall use their commercially reasonable efforts to implement as promptly as practicable (but within seven (7) Business Days) aproduction hedging program for the volumes of crude oil production set out in items (i) to (iii) below (each such transaction initiated inaccordance with this Section 9.06, a “Specified Hedging Agreement,” it being understood that the Existing Hedging Agreements donot constitute Specified Hedging Agreements); provided, however, neither the Company nor Sellers shall be obligated to (x) pay toany counterparty any fee to authorize the initiation of any Specified Hedging Agreement (unless Buyer agrees to reimburse Sellers forsuch fee) or (y) enter into any Specified Hedging Agreement until it has received Buyer’s approval of such Specified HedgingAgreement and the counterparty’s fees in connection therewith (including any novation or transfer fees to the extent such fees areavailable at that time). For the avoidance of doubt, Buyer is obligated to reimburse Sellers for any novation or transfer fees underSection 9.07 even if the amount of such fees are unable to be provided by the applicable counterparties at the time of entry into aSpecified Hedging Agreement under this Section 9.06(b).

(i) For calendar year 2018, no less than 4,200 barrels of oil per day of Sellers’ daily production ofoil from the Assets (it being understood that the 4,000 barrels of oil previously hedged by Sellers in consultation with Buyerapplies towards this Specified Hedging Agreement);

(ii) For calendar year 2019, no less than 4,000 barrels of oil per day of Sellers’ daily production ofoil from the Assets; and

(iii) For calendar year 2020, no less than 3,750 barrels of oil per day of Sellers’ daily productionof oil from the Assets.

(c) If Sellers and/or the Company have authorized the initiation of any Specified Hedging Agreement inaccordance with this Section 9.06 and the proposed counterparty thereto fails to initiate such Specified Hedging Agreement, neitherSellers nor the Company shall be in breach of this Section 9.06 for such counterparty’s failure to initiate such Specified HedgingAgreement; provided, however, Sellers shall have the continuing obligation to use their commercially reasonable efforts to implementthe Specified Hedging Agreements as soon as reasonably practicable.

(d) Prior to the earlier of novation of a Specified Hedging Agreement to Buyer at Closing or the unwindingof such Specified Hedging Agreement after the occurrence of an Unwinding Scenario, Sellers and the Company shall (i) comply withsuch Specified Hedging Agreement and (ii) not (without the prior written consent of Buyer) execute or deliver any amendment ormodification of, or waiver of any right under, such Specified Hedging Agreement, transfer any right or obligation under such SpecifiedHedging Agreement or (absent mutual agreement of Sellers and Buyer) terminate such Specified Hedging Agreement.

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(e) Whether or not the Closing occurs, Buyer shall pay, be responsible for, defend, indemnify, hold

harmless and forever release Sellers’ Indemnitees from and against any and all (i) payments made by Sellers or payable by Sellers toany counterparty to a Specified Hedging Agreement related to entering into the Specified Hedging Agreements or any amendments,waivers, transfers or terminations of Specified Hedging Agreements pursuant to Section 9.06(d), (ii) payments made by Sellers orpayable by Sellers related to transferring to, or novating in favor of, Buyer the Specified Hedging Agreements, (iii) payments made bySellers or payable by Sellers related to any monthly settlement of a Specified Hedging Agreement and (iv) payments made by Sellersor payable by Sellers under any Specified Hedging Agreement pursuant to an Unwinding Scenario (as defined below), in each case,without duplication of the Purchase Price adjustments pursuant to Section 12.02(a)(viii) or Section 12.02(b)(vii) (the “HedgingIndemnities”).

(f) If this Agreement is terminated prior to Closing or Buyer fails to assume the Specified HedgingAgreements or the transactions contemplated thereby at Closing for any reason whatsoever (other than a default by a counterparty toa Specified Hedging Agreement) (in either case, an “Unwinding Scenario”), then Sellers shall, at the sole cost and expense of Buyer,use their reasonable efforts to unwind all of the Specified Hedging Agreements and the transactions contemplated thereby within five(5) Business Days following the occurrence of the Unwinding Scenario in accordance with the terms of the confirmations contained ineach of the Specified Hedging Agreements. In the event of an Unwinding Scenario, the following shall apply:

(i) Within three (3) Business Days after the occurrence of the Unwinding Scenario, Buyerand Sellers shall endeavor in good faith to agree on the net aggregate value of all Specified Hedging Agreements toSellers as of the date of the Unwinding Scenario. If Buyer and Sellers are unable to so agree, then within two (2)Business Days thereafter Sellers shall, with respect to each Specified Hedging Agreement, obtain a written quotefrom the applicable counterparty for the amount that such counterparty would pay (expressed as a positive number)or require to be paid (expressed as a negative number) in order to terminate such Specified Hedging Agreement as ofthe date such quotation is provided and promptly provide a copy thereof to Buyer and such quote shall be deemed tobe agreed to by Buyer and Sellers. The aggregate net value agreed between Buyer and Sellers or the sum of allsuch quotations, as applicable, shall be referred to herein as the “Aggregate Net Hedge Value”.

(ii) If this Agreement is terminated by Sellers pursuant to Section 13.01(b) because theconditions set forth in Section 11.02(a) and Section 11.02(b) have not been satisfied or waived, then (A) if theAggregate Net Hedge Value is positive, no payment shall be owing by Sellers to the Buyer with respect to theSpecified Hedging Agreements and (B) if the Aggregate Net Hedge Value is negative, Buyer shall pay the absolutevalue of such amount to Sellers within five (5) Business Days of receipt of such quotations.

(iii) If this Agreement is terminated by Buyer pursuant to Section 13.01(c) because theconditions set forth in Section 11.03(a) and Section 11.03(b) have not been satisfied or waived or pursuant toSection 13.01(f), then (A) if the Aggregate Net Hedge Value is positive, Sellers shall pay the absolute value of suchamount to Buyer

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within five (5) Business Days of receipt of such quotations and (B) if the Aggregate Net Hedge Value is negative, nopayment shall be owing by Buyer to Sellers with respect to the Specified Hedging Agreements.

(iv) If this Agreement is terminated by Buyer or Sellers pursuant to Section 13.01(a),Section 13.01(d) or Section 13.01(e), then (A) if the Aggregate Net Hedge Value is positive, Sellers shall pay one-half(1/2) of such amount to Buyer within five (5) Business Days of receipt of such quotations and (B) if the Aggregate NetHedge Value is negative, Buyer shall pay one-half (1/2) of such amount to Sellers within five (5) Business Days ofreceipt of such quotations.

(v) If an Unwinding Scenario occurs due to Buyer’s failure to assume the SpecifiedHedging Agreements or the transactions contemplated thereby at Closing for any reason whatsoever ((x) includingdue to the failure of Buyer to engage a counterparty to a Specified Hedging Agreement and (y) other than a default bya counterparty to a Specified Hedging Agreement), then (A) if the Aggregate Net Hedge Value is positive, Sellersshall pay such amount to Buyer within five (5) Business Days of receipt of such quotations and (B) if the AggregateNet Hedge Value is negative, Buyer shall pay such amount to Sellers within five (5) Business Days of receipt of suchquotations.

(g) Following the Closing Date or the earlier termination of this Agreement, Buyer shall make any requiredpayments pursuant to the Hedging Indemnities to Sellers within ten (10) Business Days after receipt of a reasonably detailed invoicewith respect thereto.

(h) For the avoidance of doubt and subject to Section 9.06(f), Buyer shall be entitled to and responsible for,as applicable, all revenues, gains, proceeds, losses, costs and expenses related to the Specified Hedging Agreements and thetransactions contemplated thereby (whether or not Closing occurs), including all revenues, gains, proceeds, losses, costs andexpenses in an Unwinding Scenario, it being understood that all such revenues, gains and proceeds shall be the property of Buyerand that all such losses, costs and expenses shall be limited to the Hedging Indemnities.

(i) Notwithstanding anything to the contrary in this Agreement, the Specified Hedging Agreements and thetransactions contemplated thereby and the actions to be taken by the Parties in accordance with this Section 9.06 and Section 9.07are an exception to, and will under no circumstance constitute a breach of, any of (A) the representations and warranties atSection 7.11, or in the corresponding certificate to be delivered at Closing and (B) the covenants contained in Section 15.01(b).

Section 9.07 Novations. Prior to the Closing, Sellers and Buyer agree to use commercially reasonable, good faith effortsto negotiate mutually acceptable, definitive novation instruments with the applicable counterparties to the Specified HedgingAgreements (the “Novation Instruments”), including any transferee financial institution that, with Buyer, will be party to the SpecifiedHedging Agreements following the Closing. Sellers and Buyer shall execute and deliver such Novation Instruments to the SpecifiedHedging Agreement counterparties at the Closing. Buyer shall execute an ISDA agreement with each applicable counterparty of theSpecified Hedging Agreements at the Closing and immediately prior to such novation and pay to Sellers any

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fees paid by Sellers to a trade counterparty that was necessary to effect any novation contemplated by this Section 9.07, providedthat Buyer shall not be liable for any such fees that are directly attributable to novating hedges other than Specified HedgingAgreements. Without limiting Buyer’s obligation to pay such fees, Sellers shall consult with Buyer regarding any fees to be paid to atrade counterparty other than those agreed to pursuant to Section 9.06(b)(x) and (y) and shall also consult with Buyer prior to agreeingto incur or pay such fees. If Sellers have executed and delivered any Novation Instrument in accordance with this Section 9.07 andthe proposed counterparty thereto fails to execute and deliver such Novation Instrument, neither Seller nor Buyer shall be in breachof this Section 9.07 for such counterparty’s failure to execute and deliver such Novation Instrument.

Section 9.08 Parent Guarantee. It is acknowledged and agreed that Parent Guarantor’s guarantee of Buyer’sperformance of Buyer’s obligations hereunder is a material inducement for Sellers to proceed with the execution of this Agreementand the consummation of the transactions contemplated herein. In light of the foregoing, Parent Guarantor shall execute and deliver toSellers the parent guarantee in the form of Exhibit H hereto (the “Parent Guarantee”).

ARTICLE XPURCHASE PRICE ALLOCATION AND TAX MATTERS

Section 10.01 Purchase Price Allocation.

(a) The Unadjusted Purchase Price has been allocated among the Federal Unit Agreement Interests as setforth in Exhibit F. Sellers and Buyer agree that the Allocated Values shall be used to compute any adjustments to the UnadjustedPurchase Price pursuant to this Agreement.

(b) Buyer and Sellers acknowledge that the Purchase Price (as adjusted by the Purchase PriceAdjustments) shall be allocated among the Assets under Section 1060 of the Code and the Treasury Regulations thereunder. Prior tothe Closing, Buyer and Sellers will mutually agree regarding allocation of the Purchase Price (the “Allocation Schedule”) and shallprepare their respective Tax Returns with respect to transactions contemplated by this Agreement in a manner consistent with theAllocation Schedule. The Allocation Schedule shall be prepared consistent with the Allocated Values set forth in Exhibit F and shallbe revised to take into account the Purchase Price Adjustments and any payment of Additional Consideration (exclusive of anyimputed interest required under the Code) consistent with the provisions set forth in this Section 10.01. Neither Buyer nor Sellersshall take any position inconsistent with such allocation, as updated by the Parties to reflect any adjustments pursuant to thisAgreement and any Assumed Obligations or other items treated as consideration for U.S. federal income tax purposes, on anyincome Tax Return or otherwise, unless required to do so by applicable Law or a “determination,” within the meaning of Section1313(a)(1) of the Code; provided, however, that nothing contained herein shall prevent Buyer or Sellers from settling any proposeddeficiency or adjustment by any taxing authority based upon or arising out of such allocation, and neither Buyer nor Sellers shall berequired to litigate before any court any proposed deficiency or adjustment by any taxing authority challenging such allocation. Anyindemnity payments made by a Party (including for the avoidance of doubt payments made to Sellers of the Exxon Escrow Refund)pursuant to this

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Agreement shall be treated as an adjustment to the Purchase Price for federal, state and local income tax purposes unless otherwiserequired by applicable Law.

(c) For U.S. federal income Tax purposes (and applicable state and local income Tax purposes to theextent it follows the federal treatment), the Parties shall treat the sale of the Company as a sale governed by Rev. Rul. 99-6, Situation2, with Sellers treated as selling the Company in a fully taxable transaction to Buyer pursuant to Code Section 741, Buyer treated asacquiring all of the assets of the Company in a fully taxable transaction, and the Company treated as terminating and becoming adisregarded entity pursuant to Code Section 708(b)(1)(A). The Parties shall report, act and file Tax Returns in all respects and for allpurposes consistent with the foregoing treatment and no Party shall take any position (whether in audits, Tax Return or otherwise)that is inconsistent with the foregoing treatment, in each case, unless required to do so by a change in applicable Law or pursuant tothe good faith resolution of a Tax contest.

Section 10.02 Transfer Taxes. Buyer shall be responsible for the timely payment of, and shall indemnify, defend and holdharmless Sellers (and its members, managers, officers, employees and agents) from and against, all Transfer Taxes, if any. Buyershall prepare and file when due all necessary documentation and Tax Returns with respect to any such Transfer Taxes; provided,however, that Sellers shall cooperate with Buyer and take any action reasonably requested by Buyer to minimize any such TransferTaxes, provided Buyer promptly reimburses Sellers for any costs incurred in connection with any such action taken by Sellers. AnyTransfer Taxes imposed on or paid by Sellers shall be promptly reimbursed to Sellers by Buyer upon written demandtherefor. “Transfer Taxes” means any and all Taxes (excluding Income Taxes or Asset Taxes), for sales, use, excise, stock,conveyance, registration, securities transactions, real estate, stamp, documentary, notarial, filing, recording, and similar Taxes, arisingout of or in connection with the transactions contemplated by this Agreement.

Section 10.03 Allocation of Taxes. The following provisions shall govern the allocation of responsibility as betweenBuyer, the Company and Sellers for certain tax matters following the Closing Date:

(a) Sellers shall be responsible for the payment of all Taxes of the Company or with respect to the Assets,and shall be entitled to any refunds with respect thereto, for all Pre-Closing Tax Periods, and Buyer shall be responsible for thepayment of all Taxes of the Company or with respect to the Assets, and shall be entitled to any refunds with respect thereto, for allPost-Closing Tax Periods.

(b) Taxes (other than Income Taxes) that are attributable to the severance or production of Hydrocarbons,or that are imposed on a transactional basis, shall be deemed attributable to the period during which the production of theHydrocarbons or the transaction with respect to such Taxes occurred, as applicable, and payroll Taxes shall be deemed attributableto the period for which the payroll accrues.

(c) Income Taxes shall be determined based on an interim closing of the books as of the close of businesson the Closing Date. For the avoidance of doubt, all Income Taxes on any taxable income attributable to the Exxon Escrow Accountthrough and including the Closing Date shall be allocated to Sellers.

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(d) Any Taxes (other than Taxes described in Section 10.03(b) or Section 10.03(c) above) assessed with

respect to a period which begins before, and ends on or after, the Effective Date shall be prorated based on the number of days insuch period up to and including the day before the Effective Date and the number of days in such period that occur on or after theEffective Date.

(e) If a Tax other than an Income Tax for a period that includes the Effective Date has not been levied as ofthe Closing, the amount of such Tax shall be estimated at the Closing utilizing the most recent information available regarding suchTax. If any Asset Tax is estimated for purposes of Section 12.02, upon determination of the actual amount of such Taxes, to theextent not taken into account under Section 12.02, prompt payments will be made between the Parties to cause the appropriate Partyto bear such Taxes allocable to such Person under this Section 10.03.

Section 10.04 Post-Closing Tax Matters. After Closing:

(a) Seller Representative shall prepare (or cause to be prepared) all Tax Returns of the Company due onor after the Closing Date for Pre-Closing Tax Periods:

(i) Seller Representative shall provide a draft to Buyer of each such Tax Return no later thanfifteen (15) days prior to the date on which such Tax Return is required to be filed. Buyer shall provide written comments toany Tax Return described in the preceding sentence no later than ten (10) days prior to the date on which such Tax Returnis required to be filed and Seller Representative will consider Buyer’s comments in good faith;

(ii) Seller Representative shall pay any Taxes due in respect of such Tax Returns subject toreimbursement for any Taxes allocated to Buyer under Section 10.03 and not otherwise adjusted under Section 12.02 orSection 10.03.

(b) Buyer shall prepare (or cause to be prepared) all Tax Returns of the Company due after the ClosingDate other than Tax Returns described in Section 10.04(a) above. With respect to any such Tax Returns that include a StraddlePeriod:

(i) All such Tax Returns shall be prepared by Buyer in a manner consistent with past practice ofthe Company relating to the same Taxes (unless otherwise required by Law);

(ii) Buyer shall provide a draft to Seller Representative of each such Tax Return no later thanfifteen (15) days prior to the date on which such Tax Return is required to be filed. Seller Representative shall providewritten comments to any Tax Return described in the preceding sentence no later than ten (10) days prior to the date onwhich such Tax Return is required to be filed and Buyer will consider Seller Representative’s comments in good faith;

(iii) If the Parties are unable to agree to any matter reflected on any such Tax Return the mattershall be submitted to the Independent Expert, who shall determine the appropriate manner for reporting the item(s) inquestion;

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(iv) If the disagreement between Buyer and Seller Representative regarding a Tax Return

prepared by Seller Representative under this Section 10.04(b) is not resolved by the due date of the Tax Return, such TaxReturn shall be filed as prepared by Buyer as modified for any adjustments mutually agreed to by Buyer and SellerRepresentative. Any such Tax Return shall be amended as necessary to reflect the appropriate reporting determined by theIndependent Accountants; and

(v) Buyer shall cause the Company to pay any Taxes due in respect of such Tax Returns subjectto prompt reimbursement for any Taxes allocated to Sellers under Section 10.03 and not otherwise adjusted underSection 12.02 or Section 10.03.

(c) All tax sharing agreements between the Company and Sellers or any affiliated entities of Sellers will beterminated as of the Closing Date.

(d) Buyer and Seller Representative shall reasonably cooperate and assist the other (i) in preparing anyTax Return relating to any Tax imposed with respect to the Assets or the transactions contemplated by this Agreement, and (ii) inqualifying for any exemption or reduction in Tax that may be available with respect to the Assets or the transactions contemplated bythis Agreement;

(e) Buyer and Seller Representative shall reasonably cooperate in preparing for any audits, examinationsor other tax proceedings by, or disputes with, taxing authorities regarding any Tax with respect to the Assets or the transactionscontemplated by this Agreement;

(f) Buyer and Seller Representative shall make available to the other, and to any taxing authority asreasonably requested, any information, records, and documents relating to a Tax incurred or imposed with respect to the Assets orthe transactions contemplated by this Agreement; and

(g) Buyer and Seller Representative (in either case, the “Recipient Party”) shall provide timely notice to theother (the “Notified Party”) in writing of any pending or threatened Tax audit, examination, or assessment that could reasonably beexpected to affect the Notified Party’s Tax liability under applicable Law or this Agreement (a “Tax Controversy”), and promptly furnishthe Notified Party with copies of all correspondence with respect to the Tax Controversy.

(i) If the Notified Party admits its payment or indemnification responsibility under this Agreement,the Notified Party shall have the right and obligation to conduct and control, at its own expense, the Tax Controversy, andthe Recipient Party shall not settle any such Tax Controversy without the prior written consent of the Notified Party, whichmay not be unreasonably withheld, conditioned, or delayed; and, the Notified Party may, at its own expense, initiate anyclaim for refund or amended return; provided, however, that without the consent of the Recipient Party, the Notified Partyshall not settle any such Tax Controversy or file any claim for refund or amended return that may materially and adverselyaffect the Recipient Party (other than as a result of the payment of Taxes for which the Notified Party has a payment orindemnification obligation under this Agreement).

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(ii) If the Notified Party does not admit to its payment or indemnification responsibility under this

Agreement or admits to its payment or indemnification responsibility under this Agreement but fails to diligently pursue theconduct of the Tax Controversy, the Recipient Party shall have the right to conduct, at the expense of the Notified Party, theTax Controversy and shall have the right to settle any such Tax Controversy.

(iii) Notwithstanding clauses (i) and (ii) above, however, in the event of a Tax Controversyinvolving a Straddle Period with respect to which both Buyer and Sellers are liable for Taxes under Section 10.03, theRecipient Party shall have the right and obligation to conduct the Tax Controversy, but shall allow the Notified Party toparticipate in the Tax Controversy at its own expense and shall not settle the Tax Controversy in a manner that maymaterially and adversely affect the Notified Party without the prior written consent of the Notified Party, which may not beunreasonably withheld, conditioned or delayed.

Section 10.05 Refunds. Any Tax refunds that are received by Buyer or the Company, and any amounts credited againstTax to which Buyer or the Company become entitled, with respect to Taxes that are allocated to Sellers under Section 10.03 shall befor the account of Sellers to the extent that Sellers or the Company paid such Taxes or such Taxes were borne by Sellers underSection 12.02. Any Tax refunds that are received by Sellers, and any amounts credited against Tax to which Sellers become entitled,with respect to Taxes that are allocated to Buyer under Section 10.03 shall be for the account of Buyer to the extent that Buyer or theCompany paid such Taxes or such Taxes were borne by Buyer under Section 12.02.

ARTICLE XICONDITIONS PRECEDENT TO CLOSING

Section 11.01 Conditions to Obligations of All Parties. The obligations of each Party at the Closing are subject to thesatisfaction (or waiver by the Parties) at or prior to the Closing of the following conditions precedent:

(a) Consents and Approvals. All authorizations, consents, orders, or approvals of, or declarations or filingswith, or expirations of waiting periods imposed by, any Governmental Authority necessary for the consummation of the transactionscontemplated by this Agreement will have been filed, occurred, or been obtained.

(b) No Injunctions or Restraints. No temporary restraining order, preliminary or permanent injunction, orother order, judgment or decree issued by any court of competent jurisdiction or Governmental Authority or other legal restraint orprohibition or any other action challenging, delaying, restraining, enjoining, prohibiting, invalidating or preventing the consummation ofthe transactions contemplated by this Agreement will be in effect.

(c) Conduct of Business. No action will have been taken, nor any statute, rule, regulation, executive order,decree, injunction or other order (whether temporary, preliminary or permanent) will have been enacted, by any court of competentjurisdiction or Governmental Authority that has the effect of limiting or restricting Buyer’s, Sellers’ or the Company’s conduct

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or operation of their business in any material respect following the Closing, nor will any proceeding seeking any of the foregoing bepending or threatened in writing.

(d) No Action. No action will have been taken, nor any statute, rule, or regulation will have been enacted,by any Governmental Authority nor any judgment, order, ruling or other directive will have been issued by any court of competentjurisdiction that makes the consummation of the transactions contemplated by this Agreement illegal.

Section 11.02 Sellers’ and the Company’s Conditions to Close. The obligations of Sellers and the Company toconsummate the transactions provided for in this Agreement are subject, at the option of Sellers and the Company, to the fulfillmenton or prior to the Closing Date of each of the following conditions:

(a) Representations. All of the representations and warranties of Buyer and Parent Guarantor contained inthis Agreement shall be true and correct at and as of the Closing in accordance with their terms as if such representations andwarranties were remade at and as of the Closing (except to the extent such representations and warranties are made as of a specifieddate, in which case such representations and warranties shall be true and correct as of such specified date) except where the failureto be so true and correct (without giving effect to any limitation or qualification as to materiality or “material adverse effect”),individually or in the aggregate has not had, and would not reasonably be expected to materially delay or have, an adverse effect onthe Buyer’s and Parent Guarantor’s ability to consummate the transactions contemplated by this Agreement.

(b) Performance. Buyer and Parent Guarantor shall have performed in all material respects all obligations,covenants and agreements contained in this Agreement to be performed or complied with by it at or prior to the Closing.

(c) Novation of Hedges. The Specified Hedging Agreements shall have been novated in favor of Buyer atno cost to Sellers that is not covered by the Hedging Indemnities.

(d) Pending Matters. No suit, action or other proceeding shall be pending or threatened against any Partythat seeks to restrain, enjoin or otherwise prohibit the consummation of the transactions contemplated by this Agreement.

Section 11.03 Buyer’s Conditions to Close. The obligations of Buyer and Parent Guarantor to consummate thetransactions provided for in this Agreement are subject, at the option of Buyer and Parent Guarantor, to the fulfillment on or prior tothe Closing Date of each of the following conditions:

(a) Representations. (i) All of the Fundamental Representations and Section 7.12 (Taxes andAssessments) shall be true and correct in all respects at and as of the Closing in accordance with their terms as if suchrepresentations and warranties were remade at and as of the Closing, and (ii) all other representations and warranties of Sellerscontained in this Agreement shall be true and correct at and as of the Closing in accordance with their terms as if suchrepresentations and warranties were remade at and as of the Closing (except to the extent such representations and warranties aremade as of a specified date, in which case such representations and warranties shall be true and correct as of such specified date)except where the

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failure to be so true and correct (without giving effect to any limitation or qualification as to materiality or “Material Adverse Effect”),individually or in the aggregate has not had and would not reasonably be expected to have a Material Adverse Effect.

(b) Performance. Sellers and the Company shall have performed in all material respects all obligations,covenants and agreements contained in this Agreement to be performed or complied with by them at or prior to the Closing.

(c) Pending Matters. No suit, action or other proceeding shall be pending or threatened against any Partythat seeks to restrain, enjoin, or otherwise prohibit the consummation of the transactions contemplated by this Agreement.

ARTICLE XIITHE CLOSING

Section 12.01 Time and Place of the Closing. If the conditions referred to in Article XI of this Agreement have beensatisfied or waived in writing, and subject to any extensions pursuant to Section 4.04(b), Section 5.03 or Section 13.01(f) or by writtenagreement of the Parties or as the Parties otherwise may agree in writing, the transactions contemplated by this Agreement (the“Closing”) shall take place at the offices of Resolute, whose address is 1700 Lincoln Street, Suite 2800, Denver, Colorado 80203, or atsuch other place reasonably designated by Sellers, on October 27, 2017, at 9:00 a.m. local time in Denver, Colorado (the “ClosingDate”).

Section 12.02 Adjustments to Purchase Price at the Closing.

(a) At the Closing, the Purchase Price shall be increased by the following amounts (without duplication):

(i) an amount equal to all Asset Taxes and assessments based upon or measured by theownership of the Assets and any prepaid costs, including rentals and insurance premiums, insofar as such Asset Taxes andcosts were paid prior to the Closing Date and relate to periods of time including or after the Effective Date under theprinciples of Section 10.03;

(ii) an amount equal to all operating and capital costs and expenses (including rentals, royalties,drilling costs, capital expenditures, lease operating expenses, expenses incurred under applicable operating agreementsand overhead charges allowable under applicable accounting procedures (COPAS), and including any charges incurred bythe Company as non-operator, or in the absence of an operating agreement, those customarily billed under suchagreements) previously paid by the Company (and not reimbursed by Buyer) that are attributable to the Assets andattributable to the period of time from and after the Effective Time;

(iii) an amount equal to all costs and expenses incurred and paid by the Company Sellersfollowing the Effective Time to drill, complete, sidetrack, deepen, recomplete, plug back or rework any well included in theAssets;

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(iv) all increases to the Purchase Price for Title Benefits provided in Section 4.07;

(v) the value of all merchantable Hydrocarbons produced prior to the Effective Time but instorage upstream of the applicable sales meter as of the Effective Time, such value to be the contract price as of theEffective Time, less all applicable royalties, production or severance Taxes, gravity adjustments and transportationexpenses necessary to market such production;

(vi) all proceeds actually paid to Buyer from sales of Hydrocarbons that are produced and savedprior to the Effective Time and any other revenues paid to Buyer that arise out of the ownership or operation of the Assetsprior to the Effective Time;

(vii) if applicable, the amount the Company underproduced times $2.98 per MMBtu, less theapplicable differential (or, with respect to oil Imbalances, $47.60 per barrel, less the applicable differential), or, to the extentthat the applicable Contracts provide for cash balancing, the actual cash balance amount determined to be due to theCompany as of the Effective Time, in each case, to the extent any such Imbalance is set forth on Section 7.25 of theDisclosure Schedule;

(viii) if applicable and to the extent not reimbursed by Buyer, the amounts actually paid by Sellersunder any settled Specified Hedging Agreements in the event Closing occurs after the date on which the Specified HedgingAgreements and the transactions contemplated thereby are settled; and

(ix) any other amounts provided for in this Agreement or agreed by Buyer and Sellers.

(b) At the Closing, the Purchase Price shall be decreased by the following amounts (without duplication):

(i) an amount equal to all unpaid Asset Taxes and assessments based upon or measured by theownership of the Assets insofar as such Asset Taxes were not paid prior to the Closing Date and relate to periods of timeprior to the Effective Date under the principles of Section 10.03;

(ii) all proceeds actually paid to the Company Sellers from sales of Hydrocarbons that areproduced and saved from and after the Effective Time and any other cash receipts of Sellers arising out of the ownership oroperation of the Assets from and after the Effective Time;

(iii) an amount equal to all operating and capital costs and expenses (including rentals, royalties,drilling costs, capital expenditures, lease operating expenses, expenses incurred under applicable operating agreementsand overhead charges allowable under applicable accounting procedures (COPAS), and including any charges incurred bythe Company as non-operator, or in the absence of an operating agreement, those customarily billed under suchagreements) previously paid by Buyer (and not reimbursed

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by the Company) that are attributable to the Assets and attributable to the period of time prior to the Effective Time;

(iv) all reductions in the Purchase Price for Title Defects provided in Article IV and forEnvironmental Defects provided in Article V or for any Assets as to which the Company Sellers have elected to postponeClosing under Article IV or Article V;

(v) an amount equal to all cash in, or attributable to, suspense accounts relative to the Assets forwhich Buyer has assumed responsibility under Section 16.02;

(vi) if applicable, the amount the Company overproduced times $2.98 per MMBtu, less theapplicable differential (or, with respect to oil Imbalances, $47.60 per barrel, less the applicable differential), or, to the extentthat the applicable Contracts provide for cash balancing, the actual cash balance amount determined to be owed by theCompany as of the Effective Time, in each case, to the extent any such Imbalance is set forth on Section 7.25 of theDisclosure Schedule;

(vii) if applicable and to the extent not paid to Buyer, the amounts actually received by Sellersunder any settled Specified Hedging Agreements in the event Closing occurs after the date on which the Specified HedgingAgreements and the transactions contemplated thereby are settled; and

(viii) any other amount provided for in this Agreement or agreed by Buyer and Sellers.

(c) The adjustments described in Section 12.02(a) and Section 12.02(b) above are referred to as the“Purchase Price Adjustments.” To the extent that the amount of any Purchase Price Adjustment is not determinable with certainty bySellers prior to the Closing, the amount of such Purchase Price Adjustment shall be determined by Sellers based upon Sellers’ goodfaith estimate.

Section 12.03 Closing Statement. Not later than the third (3rd) Business Day prior to the Closing Date, Sellers shallprepare and deliver to Buyer a statement (the “Closing Statement”) of (a) Sellers’ good-faith estimate of the Purchase PriceAdjustments, and (b) a credit for the Deposit and the Exclusivity Payment as described in Section 3.02(b). Buyer shall have the rightto review and comment on the draft Closing Statement, and if the Parties cannot agree on the Purchase Price Adjustments, if any,that should be made thereto, the draft Closing Statement presented by Sellers shall be used to establish the Purchase Price, andthereafter, the Purchase Price shall be adjusted in the Final Settlement Statement pursuant to Section 14.02. At the Closing, Buyershall pay the Purchase Price as so estimated to Sellers in immediately available federal funds, as adjusted by the Purchase PriceAdjustments and the credit for the Deposit and Exclusivity Payment reflected on the Closing Statement.

Section 12.04 Actions of Sellers at the Closing. At the Closing, Sellers shall:

(a) execute and deliver to Buyer the Closing Statement;

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(b) deliver to Buyer an assignment of the Company Units to Buyer in the form of Exhibit G

(the “Assignment”), duly executed by each of the Company Sellers;

(c) deliver to Buyer possession of the Purchased Assets;

(d) deliver to Buyer an Assignment, Bill of Sale and Assumption Agreement in form of Exhibit J (the“Assignment and Bill of Sale”) and such other instruments as may be reasonably necessary or desirable to vest in Buyer all of RNR’sright, title and interest in and to the Purchased Assets, duly executed by RNR;

(e) deliver to Buyer a certificate in the form set forth in the Treasury Regulations under Section 1445(b)(2)of the Code executed by each Seller, certifying that such Seller is not a foreign Person;

(f) deliver to Buyer recorded or recordable releases of all guarantees, mortgage liens, security interests andfinancing statements granted by the Company or the Sellers, as applicable, that encumber the Assets, if any;

(g) deliver to Buyer a Closing Certificate dated as of the Closing Date, executed by an executive officer ofResolute, HACI and RNR, certifying that all of the conditions set forth in Section 11.03(a) and Section 11.03(b) have been satisfied;

(h) if applicable, execute and deliver to Buyer a Title Indemnity Agreement in the form of Exhibit D;

(i) if applicable, execute and deliver to Buyer an Environmental Indemnity Agreement in the form of ExhibitE;

(j) execute and deliver to Buyer the Parent Guarantee;

(k) execute and deliver to Buyer a Transition Services Agreement in the form of Exhibit I (the “TransitionServices Agreement”);

(l) execute and deliver to the Specified Hedging Agreement counterparties for counter signature theNovation Instruments as may be required to novate each Specified Hedging Agreement to Buyer; and

(m) execute, acknowledge and deliver any other agreements provided for in this Agreement or necessaryor desirable to effectuate the transactions contemplated by this Agreement as may be reasonably requested by Buyer.

Section 12.05 Actions of Buyer at the Closing. At the Closing, Buyer and Parent Guarantor, as applicable, shall:

(a) deliver to Sellers the Purchase Price in immediately available federal funds (with the adjustments andcredits provided in Section 12.03) by wire transfer to accounts designated by notice to Buyer from Sellers on or before the secondBusiness Day before the Closing;

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(b) execute and deliver to Sellers the Closing Statement;

(c) execute and deliver to Sellers the Assignment;

(d) execute and deliver to Sellers the Assignment and Bill of Sale;

(e) take possession of the Purchased Assets;

(f) deliver to Sellers evidence of Buyer’s compliance with the requirements of Section 8.07 (Qualifications);

(g) deliver to Sellers a Closing Certificate dated as of the Closing Date, executed by an executive officer ofBuyer, certifying that all of the conditions set forth in Section 11.02(a) and Section 11.02(b) have been satisfied;

(h) if applicable, execute and deliver to Sellers a Title Indemnity Agreement in the form of Exhibit D;

(i) if applicable, execute and deliver to Sellers an Environmental Indemnity Agreement in the form of ExhibitE;

(j) execute and deliver to Sellers the Parent Guarantee;

(k) execute and deliver to Sellers the Transition Services Agreement; and

(l) execute, acknowledge and deliver any agreements provided for in this Agreement or necessary ordesirable to effectuate the transactions contemplated by this Agreement as may reasonably be requested by Sellers.

Section 12.06 Tax Withholdings. If Sellers have provided the certificate described in Section 12.04(e) and Buyer isotherwise entitled to rely on such certificate under Treasury Regulations § 1.1445-2, Buyer shall not deduct or withhold any amountunder Section 1445 of the Code with respect to any payment to Sellers. Buyer represents that it is not required to deduct or withhold,and covenants that it shall not withhold or deduct, any amount under any other Tax Law from any payment made to Sellers under thisAgreement.

ARTICLE XIIITERMINATION

Section 13.01 Right of Termination. This Agreement may be terminated at any time at or prior to the Closing:

(a) by written consent of Buyer and Sellers;

(b) by Sellers on the Closing Date if the conditions set forth in Section 11.01 and Section 11.02 have notbeen satisfied or waived by Sellers;

(c) by Buyer on the Closing Date if the conditions set forth in Section 11.01 and Section 11.03 have notbeen satisfied or waived by Buyer;

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(d) by Buyer or Sellers, upon notice to the other Party on or after November 30, 2017 (the “Termination

Date”), if the Closing shall not have occurred;

(e) by Buyer or Sellers if any Governmental Authority shall have issued an order, judgment or decree ortaken any other action challenging, delaying, restraining, enjoining, prohibiting or invalidating the consummation of any of thetransactions contemplated by this Agreement; or

(f) by Buyer or Sellers if the sum of (i) the aggregate amount of the Purchase Price Adjustments agreed bythe Parties or otherwise finally determined pursuant to this Agreement with respect to Title Defect Values attributable to all uncuredTitle Defects (net of the aggregate amount of the Purchase Price Adjustments for all Title Benefits) determined in accordance withArticle IV, (ii) the aggregate amount of the Purchase Price Adjustments agreed to by the Parties or otherwise finally determinedpursuant to this Agreement with respect to Environmental Defect Values attributable to all uncured Environmental Defects determinedin accordance with Article V, (iii) the aggregate value of Assets subject to Preferential Purchase Rights or Third Party consents andthat are not conveyed to Buyer at Closing due to the rights holder exercising its Preferential Purchase Right or withholding consent,and (iv) the aggregate Losses attributable to casualty losses, or the aggregate value of Assets taken in condemnation or under theright of eminent domain, in each case under this subpart (iv) that occur after the Execution Date but prior to Closing, exceedsseventeen and one-half percent (17.5%) of the Unadjusted Purchase Price; provided, however, that if a Dispute regarding theexistence or value of any of the foregoing is subject to resolution in accordance with Article XVIII, Sellers or Buyer shall have the rightand option to postpone the Closing Date until each such Dispute is resolved;

provided, however, that no Party shall have the right to terminate this Agreement pursuant to clause Section 13.01(b),Section 13.01(c), Section 13.01(d) or Section 13.01(f) above if that Party is at the time in material breach of any provision of thisAgreement.

Section 13.02 Effect of Termination. If the Closing does not occur as a result of any Party exercising its right toterminate pursuant to Section 13.01, then except as provided in Section 13.02, Section 13.04 and Section 13.05, this Agreement shallbe null and void and no Party shall have any further rights or obligations under this Agreement, except that a Party shall continue to beliable for any breach of this Agreement or any Liability that has accrued prior to the date of termination or results from any eventoccurring prior to termination. Notwithstanding anything to the contrary contained in this Agreement, upon any termination of thisAgreement pursuant to this Article XIII, Sellers shall be free immediately to enjoy all rights of ownership of the Assets, the PurchasedAssets and the Company Units and to sell, transfer, encumber or otherwise dispose of the Assets, the Purchased Assets and theCompany Units to any person without any restriction under this Agreement or claim by Buyer hereunder.

Section 13.03 Remedies.

(a) If this Agreement is terminated by Sellers as provided in Section 13.01(b), then Sellers shall retain theDeposit and the Exclusivity Payment as liquidated damages on account of such termination, which remedy upon such a terminationby Sellers shall be the sole and exclusive remedy available to Sellers, except that Sellers shall continue to be entitled to recover fromBuyer any and all damages and Liabilities suffered by Sellers in connection with the

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Specified Hedging Agreements or the transactions contemplated thereby pursuant to the Hedging Indemnities. Buyer and Sellersacknowledge and agree that (i) Sellers’ actual damages upon such a termination are difficult to ascertain with any certainty, (ii) theDeposit and the Exclusivity Payment is a reasonable estimate of such actual damages and (iii) such liquidated damages do notconstitute a penalty.

(b) If Buyer has the right to terminate this Agreement pursuant to Section 13.01(c), then Buyer, at its soleoption, may either (i) terminate this Agreement and receive a return of the Deposit and the Exclusivity Payment as its sole andexclusive remedy; or (ii) pursue the remedy of specific performance of this Agreement.

(c) If this Agreement is terminated as provided in Section 13.01(a), Section 13.01(d) or Section 13.01(e),then within five (5) Business Days after termination (i) Sellers shall return to Buyer in immediately available funds the Deposit and theExclusivity Payment; and (ii) Sellers and Buyer shall each be liable for and/or pay one-half (1/2) of the damages and Liabilitiessuffered by Sellers in connection with the Specified Hedging Agreements or the transactions contemplated thereby pursuant to theHedging Indemnities.

(d) If this Agreement is terminated as provided in Section 13.01(f), then within five (5) Business Days aftertermination (i) Seller shall return to Buyer in immediately available funds the Deposit and Exclusivity Payment, and (ii) Buyer shallhave no liability under the Specified Hedging Agreements and shall be automatically released from all obligations under the SpecifiedHedging Agreements.

Section 13.04 Return of Documents and Confidentiality. On termination of this Agreement, Buyer shall return toSellers all title, engineering and other data, reports, maps and other information furnished by Sellers or any Affiliates or Advisors ofSellers to Buyer or prepared by or on behalf of Buyer in connection with its due diligence investigation of the Assets, together with allcopies of the foregoing, and an officer of Buyer shall certify same to Sellers in writing.

Section 13.05 Damages. Notwithstanding anything to the contrary in this Agreement, in no event shall any Party beentitled to receive any punitive, indirect or consequential damages unless they are a part of a Third Party claim for which a Party isseeking indemnification under this Agreement, REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE,JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF THE OTHER PARTY.

ARTICLE XIVPOST-CLOSING OBLIGATIONS

Section 14.01 Imbalances. For purposes of this Agreement, “Imbalances” means over-production or under-productionsubject to an imbalance or make-up obligation with respect to Hydrocarbons produced from or allocated to the Subject Interests,regardless of whether such over-production or under-production, imbalance or make-up obligation arises at the wellhead, pipeline,gathering system, transportation or other location and regardless of whether the same arises under contract or by operation ofLaw. Buyer and the Company Sellers shall jointly verify the actual net imbalances as of the Effective Time in the Closing Statement(as set out in Section 7.25 of the

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Disclosure Schedule) and the Accounting Statement and any Imbalances shall be accounted for between the Parties in the ClosingStatement and the Accounting Statement at the New York Mercantile Exchange (NYMEX) closing price per MCF (or, with respect tooil Imbalances, per barrel) on the third (3rd) Business Day preceding the Effective Time. This settlement under the AccountingStatement shall be final and neither Party afterwards shall make claim upon the other Party concerning the Imbalances. BUYERASSUMES ALL RIGHTS AND LIABILITIES RELATING TO IMBALANCES DISCOVERED AFTER THE ACCOUNTINGSTATEMENT INCLUDING ANY REVENUE ADJUSTMENT CAUSED BY SUCH SUBSEQUENTLY DISCOVERED IMBALANCESAND SHALL DEFEND AND INDEMNIFY SELLERS’ INDEMNITEES FROM AND AGAINST ANY LOSSES, BY ANY PERSON,ARISING OUT OF SUCH IMBALANCES REGARDLESS OF SELLERS’ NEGLIGENCE OR FAULT (INCLUDING STRICTLIABILITY).

Section 14.02 Final Accounting Statement.

(a) On or before the ninetieth (90th) day after the Closing Date, Sellers shall prepare and deliver to Buyer arevised Closing Statement setting forth a detailed calculation of the actual Purchase Price Adjustments (the “AccountingStatement”). The Accounting Statement shall include any adjustment or payment which was not finally determined as of the ClosingDate, including any Imbalances, and the allocation of revenues and expenses as determined in accordance withSection 12.02. Sellers shall provide Buyer such data and information as Buyer reasonably may request supporting the amountsreflected on the Accounting Statement to permit Buyer to agree to the Accounting Statement. The Accounting Statement shallbecome final and binding on the Parties on the thirty-first (31st) day following receipt by Buyer (the “Final Settlement Date”) unlessBuyer gives written notice of its disagreement (a “Notice of Disagreement”) to Sellers prior to that date, and upon such Notice ofDisagreement, the Accounting Statement will be final and binding with respect to all matters other than those specified in the Notice ofDisagreement. Any Notice of Disagreement shall specify in detail the dollar amount, nature and basis of any disagreement soasserted. If a Notice of Disagreement is received by Sellers in a timely manner, then the Parties shall resolve the Dispute evidencedby the Notice of Disagreement in accordance with Article XVIII.

(b) If the amount of the Purchase Price as set forth on the Final Statement exceeds the amount of theestimated Purchase Price paid at the Closing, then Buyer shall pay to Sellers the amount by which the Purchase Price as set forth onthe Final Statement exceeds the amount of the estimated Purchase Price paid at the Closing on or before the third (3rd) BusinessDay after the Final Settlement Date (or within the third (3rd) Business Day of resolution of the Final Statement by an IndependentExpert, if applicable). If the amount of the Purchase Price as set forth on the Final Statement is less than the amount of the estimatedPurchase Price paid at the Closing, then Sellers shall refund to Buyer the amount by which the Purchase Price as set forth on theFinal Statement is less than the amount of the estimated Purchase Price paid at the Closing on or before the third (3rd) Business Dayafter the Final Settlement Date (or within the third (3rd) Business Day of resolution of the Final Statement by an Independent Expert, ifapplicable). For purposes of this Agreement, the term “Final Statement” means (i) the final Accounting Statement as finalizedpursuant to Section 14.02, or (ii) upon resolution of any Dispute regarding a Notice of Disagreement, the final Accounting Statementreflecting those resolutions.

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(c) The Parties agree that any and all payments pursuant to this Agreement shall, to the maximum extent

permitted by applicable Law, be treated for all Tax purposes as an adjustment to the Purchase Price.

Section 14.03 Further Cooperation. Sellers shall make the Records available to be picked up by Buyer at the offices ofResolute during normal business hours within ten (10) Business Days after the Closing to the extent the Records are in thepossession of Sellers and are not subject to contractual restrictions on transferability. Sellers shall have the right to retain copies ofany of the Records and the rights granted under Section 19.03.

Section 14.04 After the Closing. After the Closing Date, Sellers and Buyer, at the request of the other and withoutadditional consideration, shall execute and deliver, or shall cause to be executed and delivered, from time to time such furtherinstruments of conveyance and transfer and shall take such other action as the other reasonably may request to convey and deliverthe Assets and the Company Units to Buyer and to accomplish the orderly transfer of the Assets and the Company Units to Buyer inthe manner contemplated by this Agreement.

ARTICLE XVOPERATION OF THE BUSINESS

Section 15.01 Operations. From and after the Execution Date until the earlier of the Closing or the termination of thisAgreement, except as expressly contemplated by this Agreement, as expressly consented to in writing by Buyer (which consent willbe conclusively presumed to have been given as of 5:00 p.m. Denver time on the third (3rd) Business Day following notice to Buyerrequesting the consent unless Buyer has notified Sellers that it does not consent), or in situations in which emergency action is takenin the face of risk to life, property or the environment, Sellers and the Company shall:

(a) operate and maintain the Business and the Subject Interests operated by the Company in the usual,regular and ordinary manner consistent with past practice, including, without limitation, the payments of costs, expenses and taxes;

(b) except to the extent necessary to maintain the Leases, not enter into a material Contract, or materiallyamend or change the terms of any such Contract that would involve individual commitments of more than $250,000, net to theWorking Interest of the Company;

(c) except to the extent necessary or advisable to avoid forfeiture or penalties, and except for workoveroperations and temporary abandonment operations in the ordinary course of business consistent with past practice, not enter intoagreements to drill new wells or to rework, plug back, deepen, plug or abandon any well located on the Leases, nor commence anydrilling, reworking or completing or other operations on the Leases which requires estimated expenditures exceeding $200,000, net tothe Working Interest of the Company, for each operation (except for emergency operations and those operations identified onSection 15.01(c) of the Disclosure Schedule) without obtaining the prior written consent of Buyer (which consent shall not beunreasonably withheld, delayed or conditioned); provided that the terms of this paragraph (c) shall not apply to any expenditures of theCompany which will not be charged to Buyer;

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(d) unless required by Law or a Governmental Authority, not permanently plug or abandon any well located

on the Subject Interests that is identified on Exhibit B as producing;

(e) not transfer, sell, mortgage, farmout, hypothecate, pledge or otherwise dispose of any material portionof the Subject Interests or Assets of the Company other than the sale or disposal of Hydrocarbons in the ordinary course of businessand sales of equipment that is no longer necessary in the operation of the Subject Interests or for which replacement equipment hasbeen obtained;

(f) not release, terminate or materially amend any material Lease, or any Easement, Material Agreement orthe Federal Unit Agreements;

(g) not voluntarily relinquish its position as operator to any Person other than Buyer with respect to any ofthe operated Assets;

(h) to the extent Sellers have Knowledge thereof, provide Buyer with written notice of (i) any claims,demands, suits or actions made against Sellers which materially affect the Assets; or (ii) any proposal from a Third Party to engage inany material transaction (e.g., a farmout) with respect to the Assets;

(i) not amend, renew, or modify any agreement with the Navajo Tribe or the Navajo Nation Oil & GasCompany affecting the Assets or Sellers’ interest therein;

(j) not let lapse any insurance now in force with respect to the Assets;

(k) not violate, breach or default in any material respect under any Material Agreement or Lease;

(l) not waive, release, assign, settle or compromise any claim, action or proceeding relating to the Assets,other than waivers, releases, assignments, settlements or compromises that involve only the payment of monetary damages not inexcess of $50,000 individually or in the aggregate;

(m) use commercially reasonable efforts to keep Buyer reasonably apprised of any drilling, re-drilling orcompletion operations proposed or conducted by Sellers and the Company with respect to the Assets;

(n) use commercially reasonable efforts to maintain in full force and effect all Leases that are presentlyproducing in paying quantities;

(o) notify Buyer if any Lease terminates promptly upon learning of such termination;

(p) not: (i) enter into any collective bargaining agreement or other contract, agreement or understandingwith any labor union that relates to any Business Employee; (ii) transfer the employment of any Business Employee; (iii) enter intoany new employment agreements or amend, renew or release any such agreement with respect to any Business Employee; or (iv)establish or amend any Employee Benefit Plan with respect to a Business

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Employee, except as required by Law or as necessary to retain intended Tax benefits or treatment and provided that written notice ofsuch requirement or necessity is delivered to Buyer promptly after Sellers become aware of same; and

(q) not take any action or make any election to classify the Company for federal income tax purposes asan association.

Section 15.02 Limitations on the Operational Obligations and Liabilities of Sellers.

(a) Buyer acknowledges that the Company owns undivided interests in some or all of the Assets, andBuyer agrees that, as long as the Company has voted its interests in a manner that complies with the provisions of this Article XV, theacts or omissions of the other working interest owners shall not constitute a violation of the provisions of this Article XV, nor shall anyaction required by a vote of working interest owners constitute such a violation. To the extent that the Company or an Affiliate of theCompany is not the operator of an Asset, the obligations of Sellers in this Article XV shall be construed to require that Sellers usereasonable efforts (without being obligated to incur any material expense or institute any cause of action) to cause the operator of thatAsset to take such actions or render such performance within the constraints of the applicable operating agreements and otherapplicable agreements.

(b) Notwithstanding anything to the contrary in this Article XV, Sellers shall have no liability to Buyer for,Buyer hereby releases, and Buyer shall defend, indemnify and hold harmless Sellers and the Company, and their respectivemembers, managers, Affiliates, co-lessees, co-venturers and its and their respective officers, directors, managers, employees,agents, partners, representatives, members, shareholders, Affiliates, subsidiaries, successors and assigns (collectively, “Sellers’Indemnitees”) from, the incorrect payment of delay rentals, royalties, shut-in royalties or similar payments or for any failure to pay anysuch payments through mistake or oversight (REGARDLESS OF WHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE,JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF SELLERS’ INDEMNITEES) to the extentthat such payments relate to periods after the Effective Time. In no event shall Buyer’s remedy for Sellers’ breach of its obligationsunder this Article XV exceed the value of the interest affected by such breach.

Section 15.03 Operation of the Assets after the Closing. Except as provided in the Transition Services Agreement, it isexpressly understood and agreed that the Sellers shall not be obligated to continue operating any of the operated Assets following theClosing and Buyer assumes full responsibility for operating (or causing the operation of) all such Assets following the Closing. TheSellers do not warrant or guarantee that Buyer will become the operator of the operated Assets or any portion of the Assets, as suchmatter will be controlled by the applicable joint operating agreement(s). Without implying any obligation on the Sellers’ part tocontinue operating any operated Assets after the Closing, if the Sellers elect to continue to operate any such Assets following theClosing at the request of Buyer or any Third Party working interest owner, due to constraints of applicable joint operatingagreement(s), failure of a successor operator to take over operations or other reasonable cause, the continued operation by theSellers shall be for the account of Buyer, at the sole risk, cost and expense of Buyer. Buyer releases and shall indemnify, defend, andhold harmless Sellers’ Indemnitees, as a part of the Assumed Obligations, from all Losses (REGARDLESS OF WHETHER CAUSEDOR CONTRIBUTED TO BY THE

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SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OR STRICT LIABILITY OF SELLERS’ INDEMNITEES) withrespect to (a) continued operations by the Sellers, (b) Buyer’s assumption of operations from the Sellers, and (c) compliance with theterms of any applicable joint operating agreement related to the election of a successor operator. Buyer shall conduct or cause to beconducted all operations on the Assets after Closing in a good and workmanlike manner and in compliance with all applicable Law andagreements.

Section 15.04 Change in Circumstances; Casualty Loss.

(a) Buyer shall assume all risk of loss with respect to, and any change in the condition of, the Assets fromthe Effective Time until the Closing with respect to the depletion of Hydrocarbons, the watering-out of any well, the collapse of casing,sand infiltration of wells and damage to and depreciation of property, including normal wear and tear.

(b) If after the Execution Date and prior to the Closing any part of the Assets shall be damaged ordestroyed by fire or other casualty or if any part of the Assets shall be taken in condemnation or under the right of eminent domain orif proceedings for such purposes shall be pending or threatened, this Agreement shall remain in full force and effect notwithstandingany such destruction, taking or proceeding, or the threat of any such destruction, taking or proceeding, and the Parties shall proceedwith the transactions contemplated by this Agreement notwithstanding such destruction or taking without reduction of the PurchasePrice, but subject to Section 13.01(f) and Section 16.04. Sellers and/or the Company shall maintain its existing insurance coveragewith respect to the Assets from the Execution Date until Closing.

(c) Notwithstanding Section 15.04, in the event of any loss described in Section 15.04(b), and the Closingoccurs, then at the Closing, Sellers shall pay to Buyer all sums paid to Sellers by Third Parties by reason of the destruction or takingof such Assets and representing the value of such Assets, including any sums paid pursuant to any policy or agreement of insuranceor indemnity, and shall assign, transfer and set over unto Buyer all of the rights, title and interest of Sellers in and to any claims,causes of action, unpaid proceeds or other payments from Third Parties for the value of such Assets, including any policy oragreement of insurance or indemnity, arising out of such destruction or taking.

ARTICLE XVIOBLIGATIONS AND INDEMNIFICATION

Section 16.01 Retained Obligations. Provided that the Closing occurs and subject to Buyer’s indemnification obligationsset forth in Section 16.03, Sellers shall retain (but only to the extent the same do not constitute Assumed Obligations, PermittedEncumbrances, Indemnified Title Defects, Assumed Environmental Obligations or Indemnified Environmental Defects) all Lossesrelated to (a) the payment or improper payment by the Company Sellers of royalties accruing under the Leases prior to the EffectiveTime, including, but not limited to, the matters disclosed on Section 7.15 of the Disclosure Schedule; (b) any Taxes of the Company orwith respect to the Assets not allocated to Buyers under Section 10.03; (c) any contamination or condition that is a result of any off-site disposal by the Company Sellers of any Hazardous Substances produced from the Leases on, in or below any properties notincluded in the Assets prior to the Effective Time, for which, and to the extent, that remediation of such contamination

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or condition is required by any Environmental Law; (d) any Excluded Assets; and (e) all matters disclosed on Section 7.10 andSection 7.12(e) of the Disclosure Schedule, provided, with respect to clause (a) and (c), only to the extent that Buyer has provided theCompany Sellers with a timely Claim Notice in accordance with Section 16.04 and not otherwise (collectively, the “RetainedObligations”).

Section 16.02 Assumed Obligations. Provided that the Closing occurs and subject to Sellers’ indemnification obligationsset forth in Section 16.04, Buyer hereby assumes all duties, obligations and liabilities of every kind and character with respect to theAssets or the ownership or operation of the Assets (but only to the extent such duties, obligations and liabilities do not constitute orcease to constitute Retained Obligations), whether attributable to periods before, at or after the Effective Time, REGARDLESS OFWHETHER CAUSED OR CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE ORSTRICT LIABILITY OF SELLERS’ INDEMNITEES, including those arising out of (a) the terms of the Easements, Contracts, Leases,Personal Property, Real Property or Subject Interests comprising part of the Assets; (b) Imbalances; (c) suspense accounts set forthin Section 7.20 of the Disclosure Schedule; (d) the condition of the Assets, regardless of whether such condition arose before or afterthe Effective Time; (e) the Plugging and Abandonment Obligations; (f) the Assumed Environmental Obligations; (g) alleged TitleDefects that are deemed to constitute Assumed Obligations under Article IV; (h) the obligations and liabilities described inSection 16.01(a) or Section 16.01(c) to the extent Buyer does not provide the Company Sellers with a Claim Notice complying withSection 16.05 on or before the day occurring nine (9) months after the Closing; (i) all unpaid ad valorem, property, severance, andproduction Taxes and assessments based upon or measured by the ownership of the Assets allocated to Buyer under Section 10.03;(j) the duties, obligations, events, conditions or Liabilities expressly and unequivocally assumed by Buyer under the terms of thisAgreement; (k) any Retained Obligation as to which Sellers do not have, or no longer have, an obligation to indemnify Buyer inaccordance with the terms of this Agreement; (l) all Liabilities for any permitted operations described on Section 15.01(c) of theDisclosure Schedule to the extent such Liabilities are charged after the Effective Date; (m) all obligations, including indemnityobligations, of the purchasers of the Assets under: (i) the Asset Sale Agreement by and between Chevron U.S.A. Inc., as Seller, andRNR and Navajo Nation Oil & Gas Company, Inc., as Buyers, dated October 22, 2004, (ii) the Purchase and Sale Agreement betweenExxon Mobil Corporation, ExxonMobil Exploration and Producing North America Inc., Mobil Producing Texas & New Mexico Inc. andMobil Exploration & Producing U.S. Inc. and the Company and Navajo Nation Oil and Gas Company dated March 7, 2006 andeffective January 1, 2005, (iii) the Purchase and Sale Agreement by and between Denbury Offshore, LLC and Encore Operating, L.P.,as Sellers, and the Company and Navajo Nation Oil & Gas Company, Inc., as Buyers, dated April 9, 2012 and effective January 1,2012 and (iv) the Purchase and Sale Agreement by and between the Company, as Seller, and Navajo Nation Oil & Gas Company,Inc., as Buyer, dated April 9, 2012 and effective January 1, 2012; and (n) the Navajo Preferential Right, including any exercise orpurported exercise thereof (collectively, the “Assumed Obligations”). The term “Plugging and Abandonment Obligations” means anyand all responsibility and liability for the following, arising out of or relating to the Assets, whether before, on or after the EffectiveTime: (i) the necessary and proper plugging, replugging, abandonment, re-abandonment, or burying of the Wells; (ii) the necessaryand proper removal, abandonment, re-abandonment, and disposal of all structures, pipelines, gathering lines, flow lines, equipment,operating inventory, abandoned property, trash, refuse, and junk located on

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or comprising part of the Assets; (iii) the necessary and proper capping and burying of all associated flow lines or gathering lineslocated on or comprising part of the Assets in connection with any plugging, replugging, abandonment, re-abandonment, or burying ofthe Wells; (iv) to the extent not covered by clause (ii) above, the necessary and proper removal, removal, abandonment, re-abandonment, disposal, and decommissioning of any facilities comprising part of the Assets; and (v) the necessary and properrestoration of the surface and subsurface of the Assets (including any required reclamation) to the condition required by applicableLaws and Contracts.

Section 16.03 Buyer’s Indemnification. PROVIDED THAT THE CLOSING OCCURS, BUYER HEREBY RELEASESAND SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS SELLERS’ INDEMNITEES FROM AND AGAINST ANY AND ALLCLAIMS, DAMAGES, LIABILITIES, LOSSES, CAUSES OF ACTION, COSTS AND EXPENSES (INCLUDING THOSE INVOLVINGTHEORIES OF NEGLIGENCE (OF ANY DEGREE), STRICT LIABILITY, OR OTHER LEGAL FAULT OR PRE-EXISTING DEFECTSAND INCLUDING COURT COSTS AND ATTORNEYS’ FEES) (COLLECTIVELY, THE “LOSSES” OR IN THE SINGULAR, A “LOSS”),EVEN IF SUCH LOSSES WERE CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCEOR STRICT LIABILITY OF ANY OF SELLERS’ INDEMNITEES, AS A RESULT OF, ARISING OUT OF, OR RELATED TO:

(a) THE ASSUMED OBLIGATIONS;

(b) ANY BREACH OF REPRESENTATIONS OR WARRANTIES MADE BY BUYER IN THISAGREEMENT;

(c) ANY BREACH OF ANY COVENANTS OR AGREEMENTS OF BUYER UNDER THIS AGREEMENT;AND

(d) ANY MATTER FOR WHICH BUYER HAS SPECIFICALLY AGREED TO INDEMNIFY SELLERS ORSELLERS’ INDEMNITEES UNDER THIS AGREEMENT.

Section 16.04 Sellers’ Indemnification. PROVIDED THAT THE CLOSING OCCURS, SELLERS HEREBY JOINTLYAND SEVERALLY RELEASE AND SHALL, DEFEND, INDEMNIFY AND HOLD HARMLESS BUYER, ITS PARTNERS, AND THEIRRESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, REPRESENTATIVES, MEMBERS, SHAREHOLDERS,AFFILIATES AND SUBSIDIARIES (COLLECTIVELY, THE “BUYER INDEMNITEES”) FROM AND AGAINST ANY AND ALLLOSSES, EVEN IF SUCH LOSSES WERE CONTRIBUTED TO BY THE SOLE, JOINT, COMPARATIVE OR CONCURRENTNEGLIGENCE OR STRICT LIABILITY OF ANY OF THE BUYER INDEMNITEES, AS A RESULT OF, ARISING OUT OF, ORRELATED TO:

(a) THE RETAINED OBLIGATIONS;

(b) ANY BREACH OF REPRESENTATIONS OR WARRANTIES MADE BY SELLERS IN THISAGREEMENT;

(c) ANY BREACH OF ANY COVENANTS OR AGREEMENTS OF SELLERS UNDER THIS AGREEMENT;AND

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(d) ANY MATTER FOR WHICH SELLERS HAVE SPECIFICALLY AGREED TO INDEMNIFY BUYER OR

BUYER INDEMNITEES UNDER THIS AGREEMENT;

provided, however, notwithstanding anything to the contrary contained in this Agreement, (i) excluding any claims for indemnificationarising from a breach of a Fundamental Representation and the representations and warranties in Section 7.12, Sellers’indemnification obligation under this Section 16.04 shall apply only if and to the extent Buyer provides Sellers with a Claim Noticecomplying with Section 16.05 on or before the day occurring nine (9) months after the Closing, and (ii) excluding any claims forindemnification arising from a breach of a Fundamental Representation and the representations and warranties in Section 7.12, Buyershall bear sole responsibility for the aggregate costs associated with all such claims up to a threshold percentage of five percent (5%)of the Unadjusted Purchase Price, it being intended by the Parties that Sellers be obligated only to the extent of those costsexceeding five percent (5%) of the Unadjusted Purchase Price, and (iii) excluding any claims for indemnification arising from a breachof a Fundamental Representation and the representations and warranties in Section 7.12, Sellers’ aggregate indemnification liability islimited to an amount equal to fifteen percent (15%) of the Unadjusted Purchase Price. Sellers shall have no liability pursuant to thisSection 16.04 for any Loss to the extent there has been a downward adjustment to the Purchase Price for such loss pursuant toSection 12.02. INDEMNIFICATION UNDER THIS SECTION 16.04 SHALL BE BUYER’S SOLE AND EXCLUSIVE REMEDY WITHRESPECT TO ANY LOSS OR CLAIM OF LOSSES ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THEDOCUMENTS EXECUTED AS PART OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

Section 16.05 Notices and Defense of Indemnified Matters.

(a) For purposes of this Section 16.05, the term “Indemnifying Party” when used in connection withparticular Losses shall mean the Party having an obligation to indemnify another Person with respect to such Losses pursuant to thisAgreement, and the term “Indemnified Party” when used in connection with particular Losses shall mean the Persons having the rightto be indemnified with respect to such Losses by the Indemnifying Party pursuant to this Agreement. In the event that Buyer is theIndemnified Party, Resolute, as the Seller Representative, shall be deemed the Indemnifying Party with sole authority to act on behalfof the Sellers on all matters under Article X and this Article XVI.

(b) To make claim for indemnification under any of Section 16.03 or Section 16.04, an Indemnified Partymust notify the Indemnifying Party of its claim under this Section 16.05, including the specific details of and specific basis under thisAgreement for its claim (the “Claim Notice”). In the event that the claim for indemnification is based upon a claim by a Third Partyagainst the Indemnified Party (a “Claim”), the Indemnified Party shall provide its Claim Notice promptly after the Indemnified Party hasactual knowledge of the Claim and shall enclose a copy of all papers (if any) served with respect to the Claim; provided, however, thatthe failure of any Indemnified Party to give timely notice of a Claim as provided in this Section 16.05 shall relieve the IndemnifyingParty of its obligations under Section 16.03 or Section 16.04 (as applicable) only to the extent that failure results in insufficient timebeing available to permit the

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Indemnifying Party to defend effectively against the Claim or otherwise materially prejudices the Indemnifying Party’s ability to defendagainst the Claim.

(c) In the case of a claim for indemnification based upon a Claim, the Indemnifying Party, on or before the30th day after its receipt of the Claim Notice, shall notify the Indemnified Party whether it admits or denies its liability to defend theIndemnified Party against the Claim at the sole cost and expense of the Indemnifying Party. The Indemnified Party is authorized, priorto and before the expiration of this 30-day period, to file any motion, answer or other pleading that it shall deem necessary orappropriate to protect its interests or those of the Indemnifying Party and that is not prejudicial to the Indemnifying Party.

(d) If the Indemnifying Party admits its liability to defend the Indemnified Party, the Indemnifying Party shallhave the right and obligation to diligently defend, at its sole cost and expense, the Claim. The Indemnifying Party shall have fullcontrol of such defense and proceedings, including any compromise or settlement of the Claim. If requested by the IndemnifyingParty, the Indemnified Party agrees to cooperate in contesting any Claim which the Indemnifying Party elects to contest. TheIndemnified Party may participate in, but not control, any defense or settlement of any Claim controlled by the Indemnifying Partypursuant to this Section 16.05. Without the written consent of the Indemnified Party, an Indemnifying Party shall not (i) settle anyClaim or consent to the entry of any judgment with respect to any Claim which does not include an unconditional written release of theIndemnified Party from all liability in respect of such Claim or (ii) settle any Claim or consent to the entry of any judgment with respectany Claim in any manner that may materially and adversely affect the Indemnified Party (other than as a result of money damagescovered by the indemnity).

(e) If the Indemnifying Party does not admit its liability to defend the Indemnified Party or admits its liabilityto defend the Indemnified Party but fails diligently to prosecute or settle the Claim, then the Indemnified Party shall have the right todefend against the Claim at the sole cost and expense of the Indemnifying Party, with counsel of the Indemnified Party’s choosing,subject to the right of the Indemnifying Party to admit its liability to defend the Indemnified Party and assume the defense of the Claimat any time prior to its settlement or final determination. If the Indemnifying Party has not yet admitted its liability to defend theIndemnified Party for a Claim, the Indemnified Party shall notify the Indemnifying Party of any proposed settlement and theIndemnifying Party shall have the option, on or before the tenth (10th) day following receipt of that notice (i) to admit in writing itsliability to defend the Indemnified Party for the Claim, and (ii) if its liability to defend the Indemnified Party is so admitted, to reject, in itsreasonable judgment, the proposed settlement.

(f) In the case of a claim for indemnification not based upon a Claim, the Indemnifying Party shall have thirty(30) days from its receipt of the Claim Notice (i) to cure the Losses complained of, (ii) to admit its liability for those Losses, or (iii) todispute the claim for those Losses. If the Indemnifying Party does not notify the Indemnified Party within this 30-day period that it hascured the Losses or that it disputes the claim for those Losses, the amount of those Losses shall conclusively be deemed a Liability ofthe Indemnifying Party.

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Section 16.06 Seller Representative for Tax and Indemnification Matters.

(a) Each Seller hereby irrevocably constitutes and appoints Resolute (the “Seller Representative”) as suchSellers’ true and lawful attorney‑in‑fact and agent and authorizes the Seller Representative to act exclusively for such Seller and insuch Seller’s name, place and stead in any and all capacities under Article X and Article XVI and to do and perform every act andthing required or permitted to be done by the Seller Representative in connection therewith. Each Seller grants unto the SellerRepresentative full and exclusive power and authority to do and perform each and every act and thing necessary or desirable to bedone by such Seller in connection with the obligations under Article X and Article XVI, hereby ratifying and confirming all the SellerRepresentative may lawfully do or cause to be done by virtue hereof. Each Seller acknowledges and agree that, by executing thisAgreement and without any further action by such Seller, such Seller hereby ratifies and approves any delivery by the SellerRepresentative of any waiver, amendment, agreement, opinion, certificate or other document contemplated hereby that is executedby the Seller Representative, and such Seller shall be bound by such documents or action as fully as if such Seller had executed anddelivered such documents. All decisions of the Seller Representative shall be binding upon all Sellers, and no Seller shall have theright to object, dissent, protest or otherwise contest the same.

(b) Each Seller agrees that Buyer and the Buyer Indemnitees shall be entitled to rely on any action takenby the Seller Representative, on behalf of the Sellers, pursuant to Article X and Article XVI (each, an “Authorized Action”), without anyobligation to inquire of the Sellers, and that each Authorized Action shall be binding on each Seller as fully as if such Seller had takensuch Authorized Action. Buyer and the Buyer Indemnitees are expressly authorized to rely on the genuineness of the signature of theSeller Representative and, upon receipt of any writing which reasonably appears to have been signed by the Seller Representative,Buyer and the Buyer Indemnitees may act upon the same without any further duty of inquiry as to the genuineness of the writing.

ARTICLE XVIILIMITATIONS ON REPRESENTATIONS AND WARRANTIES

Section 17.01 Disclaimers of Representations and Warranties. The express representations and warranties of Sellerscontained in this Agreement are exclusive and are in lieu of all other representations and warranties, express, implied or statutory.

Section 17.02 Sale “As Is” “Where Is”. BUYER REPRESENTS THAT IT HAS INSPECTED, OR WILL HAVE THEOPPORTUNITY TO INSPECT, THE ASSETS AND IF CLOSING OCCURS, WILL ACCEPT THE PHYSICAL ANDENVIRONMENTAL CONDITION OF SAME ON AN “AS IS-WHERE IS” BASIS, AND EXCEPT AS EXPRESSLY WARRANTED,REPRESENTED OR COVENANTED OTHERWISE BY SELLERS IN THIS AGREEMENT OR THE ASSIGNMENT AND BILL OFSALE, BUYER FOREVER RELEASES SELLERS FROM ANY LIABILITY WITH RESPECT TO THE PHYSICAL ANDENVIRONMENTAL CONDITION OF THE ASSETS AT THE CLOSING, REGARDLESS OF WHETHER CAUSED BY ORATTRIBUTABLE TO SELLERS’ SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE, FAULT, OR STRICT LIABILITY,AND REGARDLESS OF WHETHER ARISING DURING THE PERIOD OF, OR FROM, OR

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IN CONNECTION WITH SUCH SELLER’S OWNERSHIP OF THE ASSETS OR USE OF THE PROPERTY DESCRIBED IN THELEASES BEFORE OR AT THE CLOSING. WITHOUT LIMITING THE FOREGOING, EXCEPT AS EXPRESSLY WARRANTED,REPRESENTED OR COVENANTED OTHERWISE BY SELLERS IN THIS AGREEMENT OR THE ASSIGNMENT AND BILL OFSALE, BUYER WAIVES ANY RIGHT TO RECOVER FROM SELLERS AND FOREVER RELEASES AND DISCHARGES SELLERSAND AGREES TO RELEASE, INDEMNIFY, DEFEND AND HOLD SELLERS’ INDEMNITEES HARMLESS FROM ANY AND ALLLOSSES, WHETHER DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN OR UNFORESEEN, THAT MAY ARISE ONACCOUNT OF OR IN ANY WAY BE CONNECTED WITH THE PHYSICAL AND ENVIRONMENTAL CONDITION OF THE ASSETSAT THE CLOSING OR ANY LAW OR REGULATION APPLICABLE TO THE ASSETS, INCLUDING THE COMPREHENSIVEENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (42 U.S.C. § 9601 et. seq.), THERESOURCE CONSERVATION AND RECOVERY ACT OF 1976 (42 U.S.C. § 6901 et. seq.), THE CLEAN WATER ACT (33 U.S.C.§§ 466 et. seq.), THE SAFE DRINKING WATER ACT (14 U.S.C. §§ 1401-1450), THE HAZARDOUS MATERIALSTRANSPORTATION ACT (49 U.S.C. § 7401 et. seq.), AS AMENDED, THE CLEAN AIR ACT AMENDMENTS OF 1990, AND ANYOTHER APPLICABLE FEDERAL, STATE OR LOCAL LAW, REGARDLESS OF WHETHER ARISING DURING THE PERIOD OF,OR FROM, OR IN CONNECTION WITH, SUCH SELLER’S OWNERSHIP OF THE ASSETS OR USE OF THE PROPERTYDESCRIBED IN THE LEASES AT OR PRIOR TO THE CLOSING, AND REGARDLESS OF WHETHER ATTRIBUTABLE TO THESTRICT LIABILITY OF SUCH SELLER OR TO THE SOLE, JOINT, COMPARATIVE OR CONCURRENT NEGLIGENCE OF SUCHSELLER, EVEN IF CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH SELLER PRIOR TOCLOSING. NOTWITHSTANDING THE FOREGOING, EXCEPT AS EXPRESSLY WARRANTED, REPRESENTED ORCOVENANTED OTHERWISE BY SELLERS IN THIS AGREEMENT OR THE ASSIGNMENT AND BILL OF SALE, BUYER ANDSELLERS AGREE THAT THE PROVISIONS OF THIS Section 17.02 ARE ALSO SUBJECT TO AND LIMITED BY THE EXPRESSOBLIGATIONS OF SELLERS CONTAINED IN THIS AGREEMENT TO THE EXTENT THAT ANY OF THE FOREGOING RELATETO THE PHYSICAL OR ENVIRONMENTAL CONDITION OF THE ASSETS AT THE CLOSING.

Section 17.03 DISCLAIMER REGARDING THE ASSETS. EXCEPT AS EXPRESSLY WARRANTED, REPRESENTEDOR COVENANTED OTHERWISE BY SELLERS IN THIS AGREEMENT OR THE ASSIGNMENT AND BILL OF SALE, BUYERACKNOWLEDGES THAT SELLERS HAVE NOT MADE, AND SELLERS HEREBY EXPRESSLY DISCLAIM AND NEGATE (ANDBUYER ACKNOWLEDGES IT IS NOT RELYING ON), ANY COVENANT, REPRESENTATION OR WARRANTY, EXPRESS ORIMPLIED, RELATING TO THE CONDITION OF ANY BUILDINGS, FACILITIES, EQUIPMENT, INVENTORY, MACHINERY,FIXTURES AND PERSONAL/MOVABLE PROPERTY CONSTITUTING PART OF THE ASSETS (COLLECTIVELY, THE “TANGIBLEPROPERTY”), INCLUDING (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY IMPLIED OREXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY IMPLIED OR EXPRESS WARRANTY OFCONFORMITY TO MODELS OR SAMPLES OF MATERIALS, (d) ANY RIGHTS OF BUYER UNDER APPROPRIATE STATUTESTO CLAIM DIMINUTION OF CONSIDERATION OR

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RETURN OF THE PURCHASE PRICE, (e) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM PATENT ORTRADEMARK INFRINGEMENT, (f) ANY IMPLIED OR EXPRESS WARRANTY OF FREEDOM FROM HIDDEN DEFECTS OROTHER DEFECTS, WHETHER KNOWN OR UNKNOWN, AND (g) ANY AND ALL IMPLIED WARRANTIES EXISTING UNDERAPPLICABLE LAW IN EFFECT NOW OR IN THE FUTURE, IT BEING THE EXPRESS INTENTION OF SELLERS AND BUYERTHAT THE TANGIBLE PROPERTY SHALL BE CONVEYED TO BUYER AS IS AND IN THEIR PRESENT CONDITION AND STATEOF REPAIR. EXCEPT AS EXPRESSLY WARRANTED, REPRESENTED OR COVENANTED OTHERWISE BY SELLERS IN THISAGREEMENT OR THE ASSIGNMENT AND BILL OF SALE, BUYER REPRESENTS TO SELLERS THAT BUYER HAS MADE ORCAUSED TO BE MADE SUCH INSPECTIONS WITH RESPECT TO THE TANGIBLE PROPERTY AS BUYER DEEMSAPPROPRIATE AND BUYER WILL ACCEPT THE TANGIBLE PROPERTY AS IS, WHERE IS, IN THEIR PRESENT CONDITIONAND STATE OF REPAIR.

Section 17.04 DISCLAIMER REGARDING INFORMATION. EXCEPT AS EXPRESSLY WARRANTED, REPRESENTEDOR COVENANTED OTHERWISE IN THIS AGREEMENT OR THE ASSIGNMENT, WITHOUT LIMITING THE GENERALITY OF THEFOREGOING AND WITHOUT LIMITING IN ANY RESPECT BUYER’S INDEMNIFIED PARTIES’ RIGHTS TO DEFENSE ANDINDEMNIFICATION UNDER THIS AGREEMENT, BUYER ACKNOWLEDGES THAT SELLERS HAVE NOT MADE, AND SELLERSHEREBY EXPRESSLY DISCLAIM AND NEGATE (AND BUYER ACKNOWLEDGES IT IS NOT RELYING ON), ANY COVENANT,REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO (a) THE CONTENTS, CHARACTER, NATURE, ACCURACY,COMPLETENESS OR MATERIALITY OF ANY DESCRIPTIVE MEMORANDUM, REPORT, INFORMATION, DATA OR OTHERMATERIALS (WRITTEN, ELECTRONIC OR ORAL) NOW, IN THE PAST OR IN THE FUTURE FURNISHED TO BUYER BY OR ONBEHALF OF SELLERS (INCLUDING THAT PROVIDED BY PETROLEUM ENGINEERING CONSULTANTS, ANY GEOLOGICAL,GEOPHYSICAL OR SEISMIC DATA OR INTERPRETATION, OR ANY INFORMATION CONTAINED IN TITLE OPINIONSPROVIDED BY SELLERS), (b) THE QUANTITY, QUALITY, RECOVERABILITY OR COST OF RECOVERY OF HYDROCARBONSIN OR FROM THE ASSETS, RECOMPELTION OPPORTUNITIES OR DECLINE RATES, (c) ANY ESTIMATES OF THE VALUE OFTHE ASSETS, PRODUCT PRICING ASSUMPTIONS OR FUTURE REVENUES GENERATED BY THE ASSETS, (d) THEPRODUCTION OF HYDROCARBONS FROM THE ASSETS, OR WHETHER PRODUCTION HAS BEEN CONTINUOUS OR INPAYING QUANTITIES, (e) THE MAINTENANCE, REPAIR, CONDITION, QUALITY, SUITABILITY, DESIGN OR MARKETABILITYOF THE ASSETS, OR (f) ANY OTHER MATERIALS OR INFORMATION THAT MAY HAVE BEEN MADE AVAILABLE ORCOMMUNICATED TO BUYER OR ITS AFFILIATES, OR ITS OR THEIR EMPLOYEES, AGENTS, CONSULTANTS,REPRESENTATIVES OR ADVISORS IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENTOR ANY DISCUSSION OR PRESENTATION RELATING THERETO.

Section 17.05 Compliance With Express Negligence Rule. THE PARTIES AGREE THAT THE OBLIGATIONS OFTHE INDEMNIFYING PARTY TO INDEMNIFY THE INDEMNIFIED PARTY SHALL BE WITHOUT REGARD TO THE NEGLIGENCEOR

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STRICT LIABILITY OF THE INDEMNIFIED PARTY, WHETHER THE NEGLIGENCE OR STRICT LIABILITY IS ACTIVE, PASSIVE,JOINT, CONCURRENT OR SOLE, EXCEPT TO THE EXTENT SUCH LOSSES WERE OCCASIONED BY THE GROSSNEGLIGENCE OR WILLFUL MISCONDUCT OF THE INDEMNIFIED PARTY OR ANY OFFICER, DIRECTOR, EMPLOYEE ORAGENT THEREOF, IT BEING THE PARTIES’ INTENT THAT LOSSES ARISING FROM THE GROSS NEGLIGENCE OR WILLFULMISCONDUCT OF THE INDEMNIFIED PARTY OR ANY OFFICERS, DIRECTORS, EMPLOYEES OR AGENTS THEREOF NOT BECOVERED BY THE INDEMNIFICATIONS SET FORTH IN THIS AGREEMENT. The foregoing is a specifically bargained forallocation of risk between the Parties, which the Parties agree and acknowledge satisfies the express negligence rule andconspicuousness requirements under applicable Laws.

ARTICLE XVIIIDISPUTE RESOLUTION

Section 18.01 Scope; Appointment of Independent Expert. All disputes among the Parties regarding Title Defects,Title Defect Values, Environmental Defects, Environmental Defect Values, Title Benefits, Third Party Interest Values or calculation ofthe Final Statement or revisions thereto (“Disputes”) shall be exclusively and finally resolved pursuant to this Article XVIII. If theParties are unable to reach resolution as to any such outstanding Dispute within five (5) days following delivery of a written notice fromeither Buyer or Sellers to the other Party that Buyer or Sellers, as applicable, intends to submit such Dispute to the IndependentExpert for resolution pursuant to this Article XVIII, then either Party may, by written notice to the other Party (an “Election Notice”),elect to submit such Dispute to a single arbitrator (the “Independent Expert”), who shall be selected by mutual agreement of Buyerand Sellers within fifteen (15) days after the delivery of such Election Notice in accordance with following:

(a) in the case of any Dispute regarding Title Defects, Title Defect Values, Title Benefits or Third PartyInterest Values, the Independent Expert shall be a title attorney with at least twenty (20) years’ experience in oil and gas titlesinvolving properties in the regional area in which the Assets with respect to which such Title Defects, Title Benefits or Third PartyInterest are alleged or with respect to which such Title Defect Values or Third Party Interest Values in dispute are located and who islicensed to practice law in the state in which such Assets are located;

(b) in the case of any Dispute regarding Environmental Defects or Environmental Defect Values, theIndependent Expert shall be an environmental consultant with at least 20 years’ experience involving properties in the regional areain which the Assets with respect to which such Environmental Defects are alleged or with respect to which such Environmental DefectValues in dispute are located;

(c) in the case of any Dispute regarding the calculation of the Final Statement or revisions thereto or theParties’ inability to agree to any matter under Section 10.04 (Post-Closing Tax Matters), the Independent Expert shall be a seniorpartner of an independent accounting firm mutually acceptable to Buyer and Sellers; and

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(d) in the case of any Dispute, the Independent Expert shall not have had a substantial relationship with

any Party or any Affiliate of any Party during the two (2) years prior to such selection;

provided that, in any case, in the absence of such agreement within fifteen (15) days of the delivery of the Election Notice, theIndependent Expert shall be selected as would a single arbitrator in accordance with the Commercial Arbitration Rules of theAmerican Arbitration Association (the “Rules”) notwithstanding the selection method and criteria set forth in clauses (a)-(d) above. Ifany Independent Expert should die, withdraw or otherwise become incapable of serving or refuse to serve, a successor arbitratorshall be selected in the same manner as the Independent Expert.

Section 18.02 Additional Procedures. All proceedings under this Article XVIII shall be held in Denver, Colorado, andshall be conducted in accordance with the Rules, to the extent such Rules do not conflict with the terms of this Article XVIII. TheIndependent Expert’s final determination shall be made within twenty-one (21) days after submission of the matters in dispute to theIndependent Expert, shall be in writing, and shall set forth findings and conclusions upon which the Independent Expert based theaward. In the case of any Dispute regarding Title Defect Values, Environmental Defect Values or Third Party Interest Values, whichwhen aggregated with all other amounts claimed or agreed that would be eligible to be counted under Section 13.01(f), the amount ofwhich would exceed seventeen and one-half percent (17.5%) of the Unadjusted Purchase Price, the Termination Date shall beextended by the amount of days taken by the Independent Expert to make its final determination (counting from the day the matter issubmitted to the Independent Expert and ending on the day the Independent Expert submits its findings in writing to the Parties). TheIndependent Expert shall agree to comply with the provisions set forth in this Section 18.02 before accepting appointment. In makingits determination, the Independent Expert shall be bound by terms of this Agreement, to the extent applicable, and, subject to theforegoing, may consider such other matters as in the opinion of the Independent Expert are necessary to make a properdetermination. The Independent Expert, however, may not determine that (a) a Title Defect Value of a Title Defect is greater than theTitle Defect Value claimed by Buyer in its applicable Title Defect Notice or less than the amount claimed by Sellers in response tosuch notice, or (b) an Environmental Defect Value is greater than the Environmental Defect Value claimed by Buyer in its applicableEnvironmental Defect Notice or less than the amount claimed by Sellers in response to such notice, (c) the value of a Title Benefit isgreater than the amount claimed by Sellers or less than the amount claimed by Buyer, (d) a Third Party Interest Value is greater thanthe amount claimed by Buyer or less than the amount claimed by Sellers, (e) the value of an upward adjustment to the PurchasePrice is greater than the amount claimed by Sellers, or (f) the value of a downward adjustment to the Purchase Price is greater thanthe amount claimed by Buyer. The Independent Expert shall act as an expert for the limited purpose of determining the specificdisputed Title Defects, Title Defect Values, Title Benefits, Environmental Defects, Environmental Defect Values, Third Party InterestValues or calculation of the Final Statement or revisions thereto submitted by either Party and may not award damages, interest orpenalties to either Party with respect to any matter nor may the Independent Expert determine the enforceability of a PreferentialPurchase Right or Third Party consent right. Sellers and Buyer shall each bear their own legal fees and other costs. Sellers andBuyer shall each bear one-half (1/2) of the costs and expenses of the Independent Expert.

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Section 18.03 Waiver. Notwithstanding anything to the contrary in this Agreement, at any time Buyer may waive any Title

Defect, Title Defect Value, Environmental Defect or Environmental Defect Value previously asserted by Buyer.

Section 18.04 Binding Nature. The decision and award of the Independent Expert with respect to any arbitration underthis Article XVIII shall be binding upon the Parties and final and nonappealable to the maximum extent permitted by Law, andjudgment thereon may be entered in a court of competent jurisdiction and enforced by either Party as a final judgment of such court.

Section 18.05 Confidentiality. Except to the extent necessary to enforce a decision and award of the IndependentExpert, to enforce other rights of the Parties hereunder, or as required by applicable Law or the rules of any stock exchange on whichthe securities of either Party or any of its Affiliates are listed or are in the process of being listed, the Independent Expert and Parties,and their counsel, consultants and other representatives, shall maintain as confidential the fact any proceedings are ongoing, or havebeen completed, under this Article XVIII, any decision and award of the Independent Expert and all documents prepared andsubmitted by any Party, or its counsel, consultants and other agents and representatives, in connection with any proceedings underthis Article XVIII.

ARTICLE XIXMISCELLANEOUS

Section 19.01 Expenses. Except as otherwise provided in this Agreement, each Party shall be solely responsible for allexpenses, including due diligence expenses, incurred by it in connection with this transaction, and neither Party shall be entitled toany reimbursement for such expenses from the other Party.

Section 19.02 Announcements. Prior to making any press release or public announcement with respect to thisAgreement or the transaction represented herein, the Party desiring to make such press release or public announcement shall consultin good faith with the other Party and seek comments from such other Party with respect to the press release or public announcement(which such comments shall be considered in good faith by the proposing Party); provided, however, the foregoing shall not beconstrued as preventing a Party from making any public announcement or statement with respect to this Agreement or the transactionrepresented herein; provided further, however, that nothing contained in this Section 19.02 shall be construed to require either Party toobtain approval of the other Party to disclose information with respect to this Agreement or the transaction represented herein(including the names of the parties to this Agreement) to any Governmental Authority to the extent required by applicable Law ornecessary to comply with disclosure requirements of the Securities and Exchange Commission, New York Stock Exchange, or anyother regulated stock exchange.

Section 19.03 Document Retention. As used in this Section 19.03, the term “Documents” means all files, documents,books, Records and other data delivered to Buyer by Sellers pursuant to the provisions of this Agreement (other than those thatSellers retained either the original or a copy of), including financial accounting and Tax records; land, title and division of interest files;contracts; engineering and well files; and books and records related to the operation of the Assets prior to the Closing Date. Buyershall retain and preserve the Documents

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for a period of no less than seven (7) years following the Closing Date (or for such longer period as may be required by Law), andshall allow Sellers or their representatives to inspect the Documents at reasonable times and upon reasonable notice during regularbusiness hours during such time period. Sellers shall have the right during such period to make copies of the Documents at itsexpense.

Section 19.04 Entire Agreement. This Agreement, the Confidentiality Agreement and the documents to be executedunder this Agreement constitute the entire agreement between the Parties pertaining to the subject matter of this Agreement andsupersede all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties pertaining to thesubject matter of this Agreement, the Confidentiality Agreement and the documents to be entered into under this Agreement. Anysupplement, amendment, alteration, modification or waiver of this Agreement shall be binding only if executed in writing by the Partiesand specifically referencing this Agreement.

Section 19.05 Waiver. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiverof any other of its provisions (whether or not similar), nor shall such waiver constitute a continuing waiver unless otherwise expresslyprovided.

Section 19.06 Construction. The captions in this Agreement are for convenience only and shall not be considered a partof or affect the construction or interpretation of any provision of this Agreement. The Parties acknowledge that they have participatedjointly in the negotiation and drafting of this Agreement and as such the Parties agree that if an ambiguity or question of intent orinterpretation arises under this Agreement, this Agreement shall not be construed more strictly against one Party than another on thegrounds of authorship.

Section 19.07 No Third Party Beneficiaries. Except for the Buyer Indemnitees and Sellers’ Indemnitees, each of whichare Third Party beneficiaries of this Agreement (other than as provided in Section 9.04(k)), nothing in this Agreement shall provideany benefit to any Third Party or entitle any Third Party to any claim, cause of action, remedy or right of any kind, it being the intent ofthe Parties that this Agreement shall otherwise not be construed as a Third Party beneficiary contract.

Section 19.08 Replacement of Bonds, Letters of Credit and Guarantees. The Parties understand that none of thebonds, letters of credit and guarantees, if any, posted by the Sellers with Governmental Authorities and relating to the Assets may betransferable to Buyer. Within fifteen (15) Business Days following Closing, Buyer shall obtain, or cause to be obtained in the name ofBuyer, replacements for such bonds, letters of credit and guarantees, to the extent such replacements are necessary to permit thecancellation of the bonds, letters of credit and guarantees posted by Seller or to consummate the transactions contemplated by thisAgreement.

Section 19.09 Assignment. Any Party may assign or delegate any of its rights or duties under this Agreement only withthe prior written consent of the other Parties, which consent may be withheld for any or no reason, and any assignment made withoutsuch consent shall be void. Except as otherwise provided in this Agreement, this Agreement shall be binding upon and inure to thebenefit of the Parties and their respective successors and permitted assigns, and legal representatives.

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Section 19.10 Governing Law. THIS AGREEMENT, ANY DOCUMENTS DELIVERED AS PART OF THE

TRANSACTION CONTEMPLATED BY THIS AGREEMENT (EXCEPT AS OTHERWISE SET FORTH IN THE REMAINDER OF THISSECTION 19.10), AND THE LEGAL RELATIONS AMONG THE PARTIES SHALL BE GOVERNED AND CONSTRUED INACCORDANCE WITH THE LAW OF THE STATE OF COLORADO, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLETHAT MIGHT REFER CONSTRUCTION OF SUCH PROVISIONS TO THE LAWS OF ANOTHER JURISDICTION. THEASSIGNMENT AND ANY OTHER INSTRUMENTS OF CONVEYANCE EXECUTED PURSUANT TO THIS AGREEMENT SHALL BEGOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE WHERE THE ASSETS TO WHICHTHEY PERTAIN ARE LOCATED, EXCLUDING ANY CONFLICT OF LAWS RULE OR PRINCIPLE THAT MIGHT APPLY THE LAWSOF ANOTHER JURISDICTION.

Section 19.11 Jurisdiction; Waiver of Jury Trial. THE PARTIES CONSENT TO THE EXERCISE OF JURISDICTIONIN PERSONAM BY THE COURTS OF THE STATE OF COLORADO FOR ANY ACTION ARISING OUT OF THIS AGREEMENT ORTHE OTHER DOCUMENTS EXECUTED PURSUANT TO OR IN CONNECTION WITH THIS AGREEMENT. SUBJECT TOARTICLE XVIII, ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTIONWITH, OUT OF, RELATED TO, OR FROM THIS AGREEMENT OR THE OTHER DOCUMENTS EXECUTED PURSUANT TO OR INCONNECTION WITH THIS AGREEMENT SHALL BE LITIGATED (IF AT ALL) ONLY IN THE DISTRICT COURTS OF COLORADOIN DENVER COUNTY OR (IF IT HAS JURISDICTION) THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OFCOLORADO. EACH PARTY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAYHAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THISAGREEMENT. EACH PARTY ALSO WAIVES ANY BOND OR SURETY (OR OTHER SECURITY UPON SUCH BOND) WHICHMIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF ANY OTHER PARTY.

Section 19.12 Notices. Any notice, communication, request, instruction or other document required or permitted underthis Agreement shall be given in writing and delivered in person or by mail, overnight courier service or e-mail (with read receiptrequested) to the addresses of Sellers and Buyer set forth below; provided that any notice or report to be delivered by Buyer to Sellersunder Section 3.04 shall be sent to the attention of “Accounting Department.” Any such notice shall be effective only uponreceipt. Notice given by e-mail shall be deemed to have been received by a Party when receipt is confirmed by the applicabletransmitting device (with the receiving Party being obligated to respond affirmatively to any read receipt requests delivered by theother Party).

Sellers: Resolute Energy Corporation1700 Lincoln Street, Suite 2800Denver, CO 80203Attention: General CounselFax: 303-623-3628Email: [email protected]

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with a copy to:

Arnold & Porter Kaye Scholer LLP 370 Seventeenth Street, Suite 4400

Denver, CO 80202Attention: Ron LevineFax: 303-832-0428E-mail: [email protected]

Buyer: Elk Petroleum Aneth, LLC1600 Broadway, Suite 1720Denver, CO 80202Attention: J. Scott HornafiusFax: 720-744-4890E-mail: [email protected]

with a copy to:

Norton Rose Fulbright2200 Ross Avenue, Suite 3600Dallas, Texas 75201Attention: Jorge GutierrezFax: 214-855-8200E-mail: [email protected]

Parent Guarantor: Elk Petroleum Limited

Exchange HouseSuite 101, Level 110 Bridge StreetSydney NSW 2000Attention: Bradley W. LingoE-mail: [email protected]

Any Party may, by written notice so delivered to the other Party, change its address for notice purposes under this Agreement.

Section 19.13 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of beingenforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in fullforce and effect and the Parties shall negotiate in good faith to modify this Agreement so as to effect their original intent as closely aspossible in an acceptable manner to the end that the transactions contemplated by this Agreement are fulfilled to the extent possible.

Section 19.14 Survival. The representations and warranties of Sellers set forth in Article VI and Article VII shall survivethe Closing for a period of nine (9) months following the Closing Date; provided however that the Fundamental Representations andSection 7.12 (Taxes

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and Assessments) shall survive the Closing indefinitely. The covenants and agreements of Sellers and Buyer to be performed prior toor at the Closing shall survive until fully performed. The representations and warranties of Buyer set forth in Article VIII shall survivethe Closing for a period of nine (9) months following the Closing Date. The obligations and covenants of Buyer under this Agreementthat survive the Closing shall be deemed covenants running with the land.

Section 19.15 Time of the Essence. Time shall be of the essence with respect to all time periods and notice periods setforth in this Agreement.

Section 19.16 Counterpart Execution. This Agreement may be executed in any number of counterparts (including byfacsimile or email transmission), and each such counterpart shall be effective as to each Party that executes the same whether or notall of Parties execute the same counterpart. If counterparts of this Agreement are executed, the signature pages from variouscounterparts may be combined into one composite instrument for all purposes. All counterparts together shall constitute only oneAgreement, but each counterpart shall be considered an original.

Section 19.17 Knowledge. Whenever a statement in this Agreement is qualified by a phrase such as to Sellers’“Knowledge,” the Parties intend that the only information to be attributed to Sellers is information actually known by James M.Piccone, Jeff Roedell, Pat Flynn, Bill Alleman, Theodore Gazulis, or Michael N. Stefanoudakis after due inquiry.

Section 19.18 Relationship of the Parties. This Agreement shall not create and it is not the purpose or intention of theParties to create any partnership, mining partnership, joint venture, general partnership, or other partnership relationship and noneshall be inferred, and nothing in this Agreement shall be construed to establish a fiduciary relationship between the Parties for anypurpose.

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

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IN WITNESS WHEREOF, the Parties have executed and delivered this Agreement as of the Execution Date.

SELLERS: RESOLUTE ENERGY CORPORATION

By: /s/ Richard F. Betz Name: Richard F. Betz Title: Chief Executive Officer

HICKS ACQUISITION COMPANY I, INC.


RESOLUTE NATURAL RESOURCES COMPANY, LLC By: /s/ Richard F. Betz Name: Richard F. Betz Title: Chief Executive Officer

THE COMPANY: RESOLUTE ANETH, LLC


Signature Page to Membership Interest and Asset Purchase Agreement


BUYER: ELK PETROLEUM ANETH, LLC

By: /s/ J. Scott Hornafius Name: J. Scott Hornafius Title: President



PARENT GUARANTOR: ELK PETROLEUM LIMITEDCAN 112 566 499 in accordance with Section 127 of the CorporationsAct 2001 (Cth)

By: /s/ Bradley W. Lingo Name: Bradley W. Lingo Title: Chief Executive Officer



Exhibit 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICERPURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Richard F. Betz, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Resolute Energy Corporation;

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 the financialcondition, 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct 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 theregistrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, 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;

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth 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; and

5. The registrant’s other certifying officers 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; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.

/s/ Richard F. BetzRichard F. BetzChief Executive OfficerNovember 6, 2017


Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICERPURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Theodore Gazulis, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Resolute Energy Corporation;

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 the financialcondition, 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 and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in ExchangeAct 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 theregistrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under oursupervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us byothers within those entities, 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;

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s mostrecent fiscal quarter (the registrant’s fourth 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; and

5. The registrant’s other certifying officers 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; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internalcontrol over financial reporting.

/s/ Theodore GazulisTheodore GazulisChief Financial OfficerNovember 6, 2017


Exhibit 32.1

CERTIFICATION PURSUANT TO18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TOSECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Resolute Energy Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2017, asfiled with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned hereby certifies, pursuant to 18 U.S.C. Section 1350, asadopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.

/s/ Richard F. BetzRichard F. BetzChief Executive OfficerNovember 6, 2017 /s/ Theodore GazulisTheodore GazulisChief Financial OfficerNovember 6, 2017


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