Breaking New Ground in Technically Familiar Areas

Since the acquisition of the Segundo assets in August 2016, the Company has sought an opportunity to expand its de-watering expertise to another productive formation. For more than nine months, the Company evaluated seismic, geologic, and other technical data provided by the Texas Railroad Commission and other industry sources and, in January 2017, acquired a leasehold position in an area of mutual interest (AMI) with a privately-held independent oil and gas company ("Partner"). Multiple acreage targets in the AMI have already been mutually identified, and the Company and the Partner plan to secure additional leases over the term of the agreement.

The San Andres is found at relatively shallow depths and has similar attributes to the Company's de-watering Hunton play in Oklahoma. Camber Energy believes it has certain advantages in initiating a development program in the San Andres. Both the Hunton and San Andres are carbonates with relatively high initial water saturations where the production profile appears to be optimized by a de‑watering process which slowly de‑pressurizes the formation allowing fuller depletion of the reservoir. Camber Energy will apply its twenty plus year technical evolution and knowledge of the Hunton to its development and production of the San Andres. The play is lesser known than the nearby Spraberry and Wolfcamp formations in the Midland Basin, largely because the horizontal development of the San Andres has been dominated by private E&P companies to date, many of which are backed by leading private equity firms.

Since its discovery in the mid-1950s, the San Andres formation in the Central Basin Platform has produced approximately 1.9 billion of cumulative equivalent barrels of oil at depths averaging 4,500 feet, according to the Bureau of Economic Geology. Recent wells drilled in the horizontal San Andres have averaged approximately 400 to 700 BOE per day, with the estimated potential to deliver returns ranging 45% to 95% under a WTI oil price scenario of $50/bbl to $60/bbl, respectively.

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