Obbligazione Callon Energy 6.375% ( US13123XAZ50 ) in USD

Emittente Callon Energy
Prezzo di mercato refresh price now   100 USD  ▼ 
Paese  Stati Uniti
Codice isin  US13123XAZ50 ( in USD )
Tasso d'interesse 6.375% per anno ( pagato 2 volte l'anno)
Scadenza 30/06/2026



Prospetto opuscolo dell'obbligazione Callon Petroleum Company (CPE) US13123XAZ50 en USD 6.375%, scadenza 30/06/2026


Importo minimo 2 000 USD
Importo totale 400 000 000 USD
Cusip 13123XAZ5
Standard & Poor's ( S&P ) rating CCC+ ( Substantial risks )
Moody's rating Caa2 ( Extremely speculative
Coupon successivo 01/01/2026 ( In 179 giorni )
Descrizione dettagliata Callon Petroleum Company (CPE) č una societā di esplorazione e produzione di petrolio e gas naturale con sede negli Stati Uniti, focalizzata principalmente sul bacino permiano.

Le Callon Petroleum Company (CPE) ha emesso un'obbligazione (ISIN: US13123XAZ50, CUSIP: 13123XAZ5) da 400.000.000 USD al 6,375% con scadenza il 30/06/2026, negoziata attualmente al 100%, con tagli minimi di 2.000 USD, pagamenti semestrali, e rating S&P CCC+ e Moody's Caa2.







424B3
424B3 1 d603654d424b3.htm 424B3
Table of Contents
Filed Pursuant to Rule 424(b)(3)
Registration Nos. 333-226193 and 333-226193-01

PROSPECTUS

Callon Petroleum
Company
Offer to exchange its 6.375% Senior Notes due 2026, which have been registered under the Securities Act of 1933, for any and all of its
outstanding unregistered 6.375% Senior Notes due 2026
The exchange offer and withdrawal rights will expire at 5:00 p.m., New York City time, on August 23, 2018, unless extended.
We are offering to exchange up to $400,000,000 in aggregate principal amount of our new 6.375% Senior Notes due 2026, which have been registered
under the Securities Act of 1933, referred to in this prospectus as the "new notes," for any and all of our outstanding unregistered 6.375% Senior Notes due
2026 referred to in this prospectus as the "old notes." We issued the old notes on June 7, 2018 in a transaction not requiring registration under the
Securities Act of 1933, as amended (the "Securities Act"). We are offering you new notes, with terms identical in all material respects to those of the old
notes, in exchange for old notes in order to satisfy our registration obligations from that previous transaction. The new notes and the old notes are
collectively referred to in this prospectus as the "notes."
Material Terms of the Exchange Offer


· The exchange offer expires at 5:00 p.m., New York City time, on August 23, 2018, unless we extend it.


· All outstanding old notes that are validly tendered and not validly withdrawn before the exchange offer expires will be exchanged.


· You may withdraw your tender of old notes any time before the exchange offer expires.

· The terms of the new notes are identical in all material respects to those of the old notes, except that the new notes will not have securities law

transfer restrictions or registration rights and the new notes will not provide for the payment of additional interest under circumstances relating
to the timing of the exchange offer.


· We will not receive any proceeds from the exchange offer.

· No established trading market for the old notes or the new notes currently exists. The new notes will not be listed on any securities exchange or

included in any automated quotation system.


· The exchange of notes will not be a taxable event for U.S. federal income tax purposes.
Each broker-dealer that receives new notes for its own account pursuant to the exchange offer must acknowledge that it will deliver a prospectus in
connection with any resale of such new notes. The letter of transmittal for the exchange offer states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an "underwriter" within the meaning of the Securities Act. This prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in connection with resales of new notes received in exchange for old notes
where such old notes were acquired by such broker-dealer as a result of market-making activities or other trading activities. We have agreed to make this
prospectus available for a period of one year beginning when the new notes are issued to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."
See "Risk Factors" starting on page 8 of this prospectus for a discussion of risks associated with investing in the new
notes and with the exchange of old notes for the new notes offered hereby.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.
The date of this prospectus is July 27, 2018
https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
Table of Contents
This prospectus is part of a registration statement we filed with the Securities and Exchange Commission, or the SEC. In making your
investment decision, you should rely only on the information contained or incorporated by reference in this prospectus and in the accompanying
letter of transmittal. We have not authorized anyone to provide you with any other information. If you receive any unauthorized information, you
must not rely on it. We are not making an offer to sell these securities or soliciting an offer to buy these securities in any jurisdiction where an
offer or solicitation is not authorized or in which the person making that offer or solicitation is not qualified to do so or to anyone whom it is
unlawful to make an offer or solicitation. You should not assume that the information contained in this prospectus, or in the documents
incorporated by reference herein, is accurate as of any date other than the date on the front cover of this prospectus, or the date of such
incorporated documents, as the case may be.
TABLE OF CONTENTS

FORWARD-LOOKING STATEMENTS
ii
PROSPECTUS SUMMARY
1
RISK FACTORS
8
RATIO OF EARNINGS TO FIXED CHARGES
16
THE EXCHANGE OFFER
17
USE OF PROCEEDS
24
DESCRIPTION OF NEW NOTES
25
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
76
PLAN OF DISTRIBUTION
77
WHERE YOU CAN FIND MORE INFORMATION
79
LEGAL MATTERS
80
EXPERTS
80
ANNEX A--LETTER OF TRANSMITTAL
A-
1
This prospectus incorporates important business and financial information about us that is not included or delivered with this prospectus.
Such information is available without charge to holders of old notes upon written or oral request made to Callon Petroleum Company, 200 North
Canal Street, Natchez, Mississippi 39120, telephone: (601) 442-1601. To obtain timely delivery of any requested information, holders of old notes
must make any request no later than five business days prior to the expiration of the exchange offer.

i
Table of Contents
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference include "forward-looking statements." These statements involve known and unknown risks,
uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking statements. In some cases, you can identify forward-looking statements by
terms such as "anticipate," "project," "intend," "estimate," "expect," "believe," "predict," "budget," "projection," "goal," "plan," "forecast," "target" or
similar expressions intended to identify forward-looking statements.
All statements, other than statements of historical facts, included in this prospectus that address activities, events or developments that we expect or
anticipate will or may occur in the future are forward-looking statements, including such things as:


· our oil and gas reserve quantities, and the discounted present value of these reserves;


· the amount and nature of our capital expenditures;


· our ability to execute our 2018 capital plan;


· our future drilling and development plans and our potential drilling locations;


· the timing and amount of future production and operating costs;


· commodity price risk management activities and the impact on our average realized prices;


· business strategies and plans of management;
https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3

· our ability to close the pending acquisition, the anticipated timing and terms of the pending acquisition, our ability to realize the anticipated

benefits of our completed acquisitions and the pending acquisition, and our ability to manage the risks of the pending acquisition;


· our ability to efficiently integrate recently completed acquisitions;


· prospect development and property acquisitions; and


· the expected impact of the Tax Cuts and Jobs Act of 2017.
Some of the risks, which could affect our future results and could cause results to differ materially from those expressed in our forward-looking statements,
include:


· general economic conditions, including the availability of credit and access to existing lines of credit;


· the volatility of oil and natural gas prices, both globally and locally;


· the uncertainty of estimates of oil and natural gas reserves;


· impairments;


· the impact of competition;


· the availability and cost of seismic, drilling and other equipment, water, water disposal wells and personnel;


· operating hazards inherent in the exploration for and production of oil and natural gas;


· difficulties encountered during the exploration for and production of oil and natural gas;


· difficulties encountered in delivering oil and natural gas to commercial markets;


· changes in customer demand and producers' supply;


· the uncertainty of our ability to attract capital and obtain financing on favorable terms;

ii
Table of Contents
· compliance with, or the effect of changes in, the extensive governmental regulations regarding the oil and natural gas business including those

related to climate change and greenhouse gases;


· the impact of government regulation, including regulation of hydraulic fracturing and water disposal wells;


· litigation relating to hydraulic fracturing, the climate and over-the-counter derivatives;


· any increase in severance or similar taxes;


· the financial impact of accounting regulations and critical accounting policies;


· the comparative cost of alternative fuels;


· credit risk relating to the risk of loss as a result of non-performance by our counterparties;


· cyberattacks on the Company or on systems and infrastructure used by the oil and gas industry;


· weather conditions; and


· any other factors included as "Risk Factors" in this prospectus or listed in the reports we have filed and may file with the SEC.
Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the
statements in this section, to reflect events or circumstances after the date of this prospectus. The information contained in this prospectus, including the
information set forth under the heading "Risk Factors," identifies additional factors that could affect our operating results and performance. We urge you to
carefully consider these factors and the other cautionary statements in this prospectus. Our forward-looking statements speak only as of the date made, and
we have no obligation to update these forward-looking statements.

iii
Table of Contents
https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
PROSPECTUS SUMMARY
This summary highlights information included or incorporated by reference in this prospectus. Because this is a summary, it may not contain all of
the information that may be important to you and to your investment decision. The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto incorporated by reference in this prospectus. You should read this prospectus and the
information incorporated by reference in this prospectus carefully and should consider, among other things, the matters set forth in "Risk Factors"
beginning on page 8 of this prospectus and the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2017, and
any subsequently filed Quarterly Reports on Form 10-Q incorporated by reference in this prospectus, before deciding to exchange your old notes for
new notes.
In this prospectus, unless indicated otherwise, or the context otherwise requires references to the "Company," "Callon," "we," "our" and "us"
refer to Callon Petroleum Company and its consolidated subsidiaries. We are a publicly traded company under the ticker symbol NYSE: CPE.
Our Business
Callon Petroleum Company has been engaged in the exploration, development, acquisition and production of oil and natural gas properties since
1950. We are an independent oil and natural gas company focused on the acquisition and development of unconventional oil and natural gas reserves
in the Permian Basin. The Permian Basin is located in West Texas and southeastern New Mexico and is comprised of three primary sub-basins: the
Midland Basin, the Delaware Basin, and the Central Basin Platform. We have historically been focused on the Midland Basin and entered the
Delaware Basin through an acquisition completed in February 2017. Our drilling activity during 2017 was predominantly focused on the horizontal
development of several prospective intervals, including multiple levels of the Wolfcamp formation and the Lower Spraberry shales. As a result of our
horizontal development efforts and contributions from acquisitions, our net daily production for calendar year 2017 as compared to calendar year
2016 grew approximately 50% to 22,940 Boe/d (approximately 78% oil). At March 31, 2018, we had 553 gross (443.2 net) working interest oil wells,
three gross (0.1 net) royalty interest oil wells and no natural gas wells. For the three months ended March 31, 2018, we drilled 16 gross (13.2 net)
horizontal wells, completed eight gross (4.4 net) horizontal wells and had 12 gross (10.8 net) horizontal wells awaiting completion. Our net daily
production for the three months ended March 31, 2018 grew approximately 30% to 26,567 Boe/d (approximately 77% oil) as compared to the same
period in 2017.
We have assembled a multi-year inventory of potential horizontal well locations and intend to add to this inventory through delineation drilling of
emerging zones on our existing acreage and acquisition of additional locations through working interest acquisitions, acreage purchases, joint ventures
and asset swaps.
Our net proved reserves as of December 31, 2017 were 137.0 million Boe based on assumed benchmark prices of $51.34 per barrel of oil and $2.98
per Mcf of natural gas. This represented a 50% increase over 2016 year-end estimated net proved reserves of 91.6 million Boe. The increase was
primarily driven by acquisitions and the development of our properties in the Permian Basin, on which we drilled a total of 49 gross (38.2 net)
horizontal wells during 2017. This increase was partially offset by 2017 production and revisions. The decrease from revisions was primarily due to
the removal of 13 proved undeveloped locations as a result of a change in the development and drilling plans within our operating areas and the
removal of certain proved developed vertical well locations.
General Corporate Information
We are a Delaware corporation with our principal executive office located at 200 North Canal Street, Natchez, Mississippi 39120. Our telephone
number at that address is (601) 442-1601. We maintain a website on the Internet at www.callon.com. The information on, or accessible through, our
website is not part of this prospectus.

1
Table of Contents
THE EXCHANGE OFFER
On June 7, 2018, we completed the private placement of $400 million aggregate principal amount of 6.375% Senior Notes due 2026. As part of that
offering, we entered into a registration rights agreement with the initial purchasers of the old notes in which we agreed, among other things, to
deliver this prospectus to you and to complete an exchange offer for the old notes. Below is a summary of the exchange offer.

https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
Old Notes
6.375% Senior Notes due 2026

New Notes
Notes of the same series, the issuance of which has been registered under the Securities Act.
The terms of the new notes are identical in all material respects to those of the old notes,
except that the transfer restrictions, registration rights and additional interest provisions
relating to the old notes do not apply to the new notes.

Terms of the Offer
We are offering to exchange a like amount of new notes for our old notes in denominations
of $2,000 and integral multiples of $1,000 in excess thereof. In order to be exchanged, an old
note must be properly tendered and accepted. All old notes that are validly tendered and not
withdrawn before the exchange offer expires will be exchanged. As of the date of this
prospectus, there is $400 million aggregate principal amount of 6.375% Senior Notes due
2026 outstanding. We will issue new notes promptly after the expiration of the exchange
offer.

Expiration Date
The exchange offer will expire at 5:00 p.m., New York City time, on August 23, 2018,
unless extended.

Procedures for Tendering
All of the old notes are held in book-entry form through the facilities of The Depository
Trust Company, or DTC. To participate in the exchange offer, you must follow the automatic
tender offer program, or ATOP, procedures established by DTC for tendering notes held in
book-entry form. The ATOP procedures require that the exchange agent receive, prior to the
expiration date of the exchange offer, a computer-generated message known as an "agent's
message" that is transmitted through ATOP and that DTC confirm that:


· DTC has received instructions to exchange your notes; and


· you agree to be bound by the terms of the letter of transmittal in Annex A hereto.

For more details, please read "The Exchange Offer--Terms of the Exchange Offer" and

"The Exchange Offer--Procedures for Tendering."

Questions regarding how to tender old notes and requests for information should be directed

to the exchange agent. See "The Exchange Offer--Exchange Agent."

Guaranteed Delivery Procedures
None.

2
Table of Contents
Acceptance of Old Notes for Exchange; Delivery of
Subject to the conditions stated in "The Exchange Offer--Conditions to the Exchange
New Notes
Offer," we will accept for exchange any and all old notes which are properly tendered in the
exchange offer before the expiration date. The new notes will be delivered promptly after the
expiration date.

Interest Payments on the New Notes
The new notes will bear interest from the date of original issuance of the old notes or, if
interest has already been paid on the old notes, from the date interest was most recently paid.
If your old notes are accepted for exchange, then you will receive interest on the new notes
(including any accrued but unpaid additional interest on the old notes) and not on the old
notes.

Withdrawal Rights
You may withdraw your tender of old notes at any time before the expiration date. To
withdraw, you must submit a notice of withdrawal to the exchange agent using ATOP
procedures before 5:00 p.m., New York City time, on the expiration date of the exchange
offer. Please read "The Exchange Offer--Withdrawal of Tenders."

Conditions to the Exchange Offer
The registration rights agreement does not require us to accept old notes for exchange if the
https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
exchange offer or the making of any exchange by a holder of the old notes would violate any
applicable law or SEC policy. A minimum aggregate principal amount of old notes being
tendered is not a condition to the exchange offer. Please read "The Exchange Offer--
Conditions to the Exchange Offer" for more information about the conditions to the
exchange offer.

Resales of New Notes
Based on interpretations by the staff of the SEC in no-action letters issued to third parties, we
believe that you may transfer new notes issued under the exchange offer in exchange for the
old notes if:


· you acquire the new notes in the ordinary course of your business; and

· you are not engaged in, and do not intend to engage in, and have no arrangement or

understanding with any person to participate in, a distribution of such new notes.


You may not participate in the exchange offer if you are:


· an "affiliate" within the meaning of Rule 405 under the Securities Act of the Company; or


· a broker-dealer that acquired old notes directly from us.

If you fail to satisfy any of the foregoing conditions, you will not be permitted to tender your
old notes in the exchange offer and you must comply with the registration and prospectus

delivery requirements of the Securities Act in connection with any sale or other transfer of
your old notes unless such sale is made pursuant to an exemption from such requirements.

3
Table of Contents
Each broker or dealer that receives new notes for its own account in exchange for old notes
that were acquired as a result of market-making or other trading activities must acknowledge
that it will comply with the registration and prospectus delivery requirements of the

Securities Act in connection with any offer to resell, resale or other transfer of the new notes
issued in the exchange offer, including the delivery of a prospectus that contains information
with respect to any selling holder required by the Securities Act in connection with any
resale of the new notes. See "The Exchange Offer--Resales of New Notes."

Exchange Agent
U.S. Bank National Association is serving as the exchange agent in connection with the
exchange offer. The address and telephone and facsimile numbers of the exchange agent are
listed under the heading "The Exchange Offer--Exchange Agent."

Use of Proceeds
We will not receive any proceeds from the issuance of new notes in the exchange offer. We
will pay all expenses incident to the exchange offer. See "Use of Proceeds" and "The
Exchange Offer--Fees and Expenses."

4
Table of Contents
THE NEW NOTES
The following summary contains basic information about the new notes and is not intended to be complete. For a more complete understanding of the
new notes, please refer to the section entitled "Description of New Notes" in this prospectus. The term "notes" below includes both the new notes and
https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
the old notes.

Issuer
Callon Petroleum Company

Notes Offered
$400,000,000 aggregate principal amount of 6.375% senior notes due July 1, 2026.

Maturity
July 1, 2026.

Interest
6.375% per year (calculated using a 360-day year).

Interest Payment Dates
January 1 and July 1 of each year, beginning January 1, 2019.

Ranking
The notes will be the issuer's general unsecured, senior obligations. Accordingly, they will
rank:

· equal in right of payment to all of the issuer's existing and future senior indebtedness

(including the issuer's existing 6.125% Senior Notes due 2024 (the "existing notes"));

· effectively junior in right of payment to all of the issuer's existing and future secured

indebtedness (including the senior secured revolving credit facility) to the extent of the
value of the collateral securing such indebtedness;

· structurally subordinate in right of payment to all indebtedness and other liabilities,

including trade payables, of any existing and future subsidiaries that do not guarantee the
notes; and

· senior in right of payment to all of the issuer's existing and future subordinated

indebtedness.

As of June 30, 2018, we had $1.0 billion of outstanding indebtedness, consisting of $600

million of existing notes, $400 million of old notes and no borrowings under our senior
secured revolving credit facility.

Subsidiary Guarantee
Like the old notes, the new notes initially will be guaranteed by our only current material
domestic subsidiary, Callon Petroleum Operating Company, and may be guaranteed by
certain future subsidiaries. In the future, any guarantee may be released or terminated under
certain circumstances. See "Description of New Notes--Brief description of the notes and the
note guarantees" and "Description of New Notes--Certain covenants--Additional note
guarantees."


Each subsidiary guarantee will rank:

· equal in right of payment to all existing and future senior indebtedness of the guarantor

subsidiary;

5
Table of Contents
· effectively junior in right of payment to any existing and future secured indebtedness of

the guarantor subsidiary (including its indebtedness under our senior secured revolving
credit facility) to the extent of the value of the collateral securing such indebtedness;

· structurally subordinate in right of payment to all indebtedness and other liabilities

(including trade payables) of any current and future subsidiaries that do not guarantee the
notes; and


· senior in right of payment to any future subordinated indebtedness of the guarantor.

https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
Optional Redemption
At any time prior to July 1, 2021, we may, from time to time, redeem up to 35% of the
aggregate principal amount of the notes with an amount of cash not greater than the net
proceeds that we raise in certain equity offerings at a redemption price equal to 106.375% of
the principal amount of the notes being redeemed, plus accrued and unpaid interest, if any, to,
but excluding, the date of redemption, if at least 65% of the aggregate principal amount of the
notes issued under the indenture remains outstanding immediately after such redemption and
the redemption occurs within 180 days of the closing date of such equity offering.

At any time prior to July 1, 2021, we may, on any one or more occasions, redeem all or a part
of the notes at a redemption price equal to 100% of the principal amount of the notes

redeemed, plus the "make whole" premium set forth in this prospectus, and accrued and
unpaid interest, if any, to, but excluding, the date of redemption. See "Description of New
Notes--Optional redemption."

On and after July 1, 2021, we may redeem the notes, in whole or in part, at the redemption

prices set forth under "Description of New Notes--Optional redemption," plus accrued and
unpaid interest, if any, to, but excluding, the date of redemption.

Change of Control
If we experience certain kinds of change of control, each holder of the notes may require us
to repurchase all or a portion of its notes for cash at a price equal to 101% of the aggregate
principal amount of such notes, plus any accrued and unpaid interest, if any, to the date of
repurchase. See "Description of New Notes--Repurchase at the option of the holders--
Change of control."

Certain Covenants
The indenture governing the notes contains covenants that, among other things, limit our
ability and the ability of our restricted subsidiaries to:


· incur or guarantee additional indebtedness or issue certain types of preferred stock;

· pay dividends on capital stock or redeem, repurchase or retire our capital stock or

subordinated indebtedness;


· transfer or sell assets;

6
Table of Contents

· make investments;


· create certain liens;

· enter into agreements that restrict dividends or other payments from our restricted

subsidiaries to us;


· consolidate, merge or transfer all or substantially all of our assets;


· engage in transactions with affiliates; and


· create unrestricted subsidiaries.

The covenants set forth in the indenture are subject to important exceptions and
qualifications that are described under "Description of New Notes--Certain covenants." If

the notes achieve an investment grade rating from either Moody's Investors Service, Inc.
("Moody's") or S&P Global Inc. ("S&P"), many of these covenants will be suspended.

Transfer Restrictions
The new notes are registered under the Securities Act and have no restrictions on transfer.

Trustee
U.S. Bank National Association.

https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
Governing Law
The notes and the indenture will be governed by New York law.

Absence of Established Market for the New Notes
The new notes are a new issue of securities and will not be listed on any securities exchange
or included in any automated quotation system, and there is currently no established market
for the new notes. The initial purchasers have advised us that they intend to make a market
in the new notes. The initial purchasers are not obligated, however, to make a market in the
new notes, and any such market may be discontinued by the initial purchasers in their
discretion at any time without notice. See "Plan of Distribution."

Use of Proceeds
We will receive no cash proceeds for the new notes.

Risk Factors
You should consider carefully the information set forth in the section entitled "Risk Factors"
beginning on page 8 and all other information contained in this prospectus before deciding to
invest in the new notes.

7
Table of Contents
RISK FACTORS
Each of the risks described below should be carefully considered, together with the risk factors incorporated by reference herein from our Annual Report
on Form 10-K for the year ended December 31, 2017, which is incorporated by reference in this prospectus, and, to the extent applicable, any
subsequently filed Quarterly Reports on Form 10-Q or Current Reports on Form 8-K and all of the information contained in this prospectus, before
making an investment decision with respect to participating in the exchange offer of old notes for new notes. If any of the following risks develop into
actual events, our business, financial condition or results of operations could be materially and adversely affected, and you may lose all or part of your
investment. Please also read "Forward Looking Statements."
Risks Related to the Exchange Offer
You may have difficulty selling the old notes you do not exchange.
If you do not exchange your old notes for new notes in the exchange offer, you will continue to be subject to the restrictions on transfer of your old notes as
described in the legend on the global notes representing the old notes. There are restrictions on transfer of your old notes because we issued the old notes
under an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. In
general, you may only offer or sell the old notes if they are registered under the Securities Act and applicable state securities laws or offered and sold under
an exemption from, or in a transaction not subject to, these requirements. We do not intend to register any old notes not tendered in the exchange offer and,
upon consummation of the exchange offer, you will not be entitled to any rights to have your untendered old notes registered under the Securities Act.
You may be required to deliver prospectuses and comply with other requirements in connection with any resale of the new notes.
If you tender your old notes for the purpose of participating in a distribution of the new notes, you will be required to comply with the registration and
prospectus delivery requirements of the Securities Act in connection with any resale of the new notes. In addition, if you are a broker-dealer that receives
new notes for your own account in exchange for old notes that you acquired as a result of market-making activities or any other trading activities, you will
be required to acknowledge that you will deliver a prospectus in connection with any resale of such new notes.
You may not receive new notes in the Exchange Offer if the Exchange Offer procedure is not followed.
We will issue the new notes in exchange for your old notes only if you tender the old notes before expiration of the exchange offer in the manner required
herein. Neither the exchange agent nor we are under any duty to give notification of defects or irregularities with respect to the tenders of old notes for
exchange. If you are the beneficial holder of old notes that are registered in the name of your broker, dealer, commercial bank, trust company or other
nominee, and you wish to tender old notes in the exchange offer, you should promptly contact the person in whose name your old notes are registered and
instruct that person to tender your old notes on your behalf.
Risks Related to the Notes
We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations
under applicable debt instruments, which may not be successful.
https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


424B3
Our ability to make scheduled payments on or to refinance our indebtedness obligations, including our senior secured revolving credit facility, our existing
notes and the notes, depends on our financial condition and operating performance, which are subject to prevailing economic and competitive conditions
and certain

8
Table of Contents
financial, business and other factors beyond our control. We may not be able to maintain a level of cash flows from operating activities sufficient to permit
us to pay the principal, premium, if any, and interest on our indebtedness.
If our cash flows and capital resources are insufficient to fund debt service obligations, we may be forced to reduce or delay investments and capital
expenditures, sell assets, seek additional capital or restructure or refinance indebtedness. Our ability to restructure or refinance indebtedness will depend on
the condition of the capital markets and our financial condition at such time. Any refinancing of indebtedness could be at higher interest rates and may
require us to comply with more onerous covenants, which could further restrict business operations. The terms of existing or future debt instruments may
restrict us from adopting some of these alternatives. In addition, any failure to make payments of interest and principal on outstanding indebtedness on a
timely basis would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness. In the absence of
sufficient cash flows and capital resources, we could face substantial liquidity problems and might be required to dispose of material assets or operations to
meet debt service and other obligations. Our senior secured revolving credit facility, the indenture governing the existing notes and the indenture governing
the notes currently restrict our ability to dispose of assets and our use of the proceeds from such disposition. We may not be able to consummate those
dispositions, and the proceeds of any such disposition may not be adequate to meet any debt service obligations then due. These alternative measures may
not be successful and may not permit us to meet scheduled debt service obligations.
Our next scheduled borrowing base redetermination is expected to occur in November 2018. In the future, we may not be able to access adequate funding
under our senior secured revolving credit facility as a result of a decrease in borrowing base due to the issuance of new indebtedness, the outcome of a
subsequent borrowing base redetermination or an unwillingness or inability on the part of lending counterparties to meet their funding obligations and the
inability of other lenders to provide additional funding to cover the defaulting lender's portion. Declines in commodity prices could result in a
determination to lower the borrowing base in the future and, in such a case, we could be required to repay any indebtedness in excess of the redetermined
borrowing base. As a result, we may be unable to implement our drilling and development plan, make acquisitions or otherwise carry out business plans,
which would have a material adverse effect on our financial condition and results of operations and impair our ability to service our indebtedness.
Our leverage and debt service obligations may adversely affect our financial condition, results of operations, business prospects and our ability to make
payments on the notes.
As of June 30, 2018, we had $1.0 billion of unsecured indebtedness outstanding (including the notes), zero secured indebtedness outstanding (excluding an
additional $1.25 million in outstanding letters of credit thereunder) and up to an additional $648.75 million available for borrowing under the senior secured
revolving credit facility, subject to the borrowing base, to which the notes rank junior to the extent of the value of the collateral securing such obligations;
and our subsidiaries that will not be guarantors had no obligations (including trade payables but excluding intercompany obligations) outstanding, to which
the notes rank structurally junior.
Our amount of indebtedness could affect our operations in several ways, including the following:

· require us to dedicate a substantial portion of our cash flow from operations to service our existing debt, thereby reducing the cash available to

finance our operations and other business activities;

· limit management's discretion in operating our business and our flexibility in planning for, or reacting to, changes in our business and the industry in

which we operate;

· increase our vulnerability to downturns and adverse developments in our business and the economy;

· limit our ability to access the capital markets to raise capital on favorable terms or to obtain additional financing for working capital, capital

expenditures or acquisitions or to refinance existing indebtedness;

9
Table of Contents
· place restrictions on our ability to obtain additional financing, make investments, lease equipment, sell assets and engage in business combinations;

· make it more likely that a reduction in our borrowing base following a periodic redetermination could require us to repay a portion of our then-

outstanding bank borrowings;

https://www.sec.gov/Archives/edgar/data/928022/000119312518229098/d603654d424b3.htm[7/27/2018 4:04:59 PM]


Document Outline