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Table of Contents


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )


Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

☐ Preliminary Proxy Statement
☐ Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material under §240.14a-12

Filed by the Registrantý

Filed by a Party other than the Registranto

Check the appropriate box:

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Preliminary Proxy Statement

o

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

Definitive Proxy Statement

o

Definitive Additional Materials

o

Soliciting Material under §240.14a-12


Extraction Oil & Gas, Inc.
(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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(1)Title of each class of securities to which transaction applies:
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(3)Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:

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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.



(1)

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(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed:

Table
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Filing Fee (Check the appropriate box):

☒ No fee required.
☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
GRAPHIC


(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0‑11 (set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
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☐ Fee paid previously with preliminary materials.
☐ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:




MESSAGE FROM THE CHAIRMAN AND CHIEF EXECUTIVE OFFICERCHAIRMAN

To our Stockholders:


We are pleased to invite you to attend the annual meeting of stockholders of Extraction Oil & Gas, Inc. on Tuesday, May 15, 2019Monday, June 8, 2020 at 8:30 a.m., Mountain Time. This year'syear’s annual meeting will be a virtual meeting of stockholders, conducted via live audio webcast. You will be able to attend the annual meeting of stockholders online and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/XOG2019.XOG2020. You will also be able to vote your shares electronically at the annual meeting.


We are embracinghave embraced the latest technology to provide expanded access, improved communication and cost savings for our stockholders and the Company. Hosting a virtual meeting enables increased stockholder attendance and participation from locations around the world.


Further details about how to attend the meeting online, submit questions before or during the meeting, and information on the business to be conducted at the annual meeting are included in the accompanying Notice of Annual Meeting and proxy statement.


We are providing access to our proxy materials online under the U.S. Securities and Exchange Commission's "noticeCommission’s “notice and access"access” rules. As a result, we are mailing to many of our stockholders a notice instead of a paper copy of this proxy statement and our 20182019 Annual Report. The notice contains instructions on how to access documents online. The notice also contains instructions on how stockholders can receive a paper copy of our materials, including this proxy statement, our 20182019 Annual Report, and a form of proxy card or voting instruction card. Those who do not receive a notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy by mail unless they have previously requested delivery of materials electronically. This distribution process is more resource- and cost-efficient.


Your vote is important. Regardless of whether you participate in the annual meeting, we hope you vote as soon as possible. You may vote by proxy online or by phone, or, if you received paper copies of the proxy materials by mail, you may also vote by mail by following the instructions on the proxy card or voting instruction card. Voting online or by phone, written proxy or voting instruction card ensures your representation at the annual meeting regardless of whether you attend the virtual meeting.


Thank you for your ongoing support of, and continued interest in, Extraction Oil & Gas, Inc.


Sincerely,


image4.jpg

Thomas B. Tyree, Jr.
Executive Chairman




Sincerely,



GRAPHIC

Mark A. Erickson
Chairman and Chief Executive Officer

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EXTRACTION OIL & GAS, INC.

370 17th Street, Suite 5300
Denver, Colorado 80202

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To the stockholders of Extraction Oil & Gas, Inc.:


Notice is hereby given that the 20192020 Annual Meeting of Stockholders of Extraction Oil & Gas, Inc. (the "Company"“Company”) will be held virtually, conducted via live audio webcast on May 15, 2019,June 8, 2020, at 8:30 a.m. Mountain Time (the "Annual Meeting"“Annual Meeting”). You will be able to attend the Annual Meeting online and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/XOG2019.XOG2020. You will also be able to vote your shares electronically at the Annual Meeting. We believe that a virtual shareholder meeting provides greater access to those who may want to attend and therefore have chosen a virtual meeting over an in-person meeting.


We have elected to deliver our proxy materials to our shareholdersstockholders over the Internet in accordance with the rules and regulations of the Securities and Exchange Commission (the "SEC"“SEC”). We believe that this delivery process reduces our environmental impact and lowers the costs of printing and distributing our proxy materials without impacting our shareholders'stockholders’ timely access to this important information. On April 5, 2019,24, 2020, we will send a Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”) to our shareholders,stockholders, which contains instructions on how to access our proxy statement for our 20192020 Annual Meeting and our 20182019 Annual Report on Form 10-K. The Notice also provides instructions on how to vote by telephone or through the Internet and includes instructions on how to receive a paper copy of the proxy materials by mail.


The Annual Meeting is being held for the following purposes:


1. To elect the three Class IIII directors, set forth in this proxy statement, each for a term of three years.


2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company'sCompany’s independent registered public accountants for the fiscal year ending December 31, 2019.

2020.


3.     To approve the amendment and restatement of our 2016 Long Term Incentive Plan, including to increase shares reserved for issuance.

        4. To consider an advisory vote on executive compensation.


4. To approve an amendment to our certificate of incorporation to permit us to effect a reverse stock split of our issued and outstanding common stock, par value $0.01 per share, at a ratio that will be determined by the Board and that will be within a range of 1-for-10 and 1-for-200 (the “Reverse Stock Split”), if the board of directors of the Company (the “Board”) determines, in its sole discretion, at any time prior to the first anniversary of the Annual Meeting, that the Reverse Stock Split is in the best interests of the Company and its stockholders.

5. To approve an amendment to our certificate of incorporation to reduce the number of authorized shares of common stock by a ratio equal to 1-for-two-thirds of the denominator of the Reverse Stock Split ratio determined by the Board.

6. To transact such other business as may properly come before the Annual Meeting or any adjournments or postponements thereof.


Each outstanding share of the Company'sCompany’s common stock (NASDAQ: XOG) entitles the holder of record at the close of business on March 18, 2019,April 13, 2020, to receive notice of and to vote at the Annual Meeting or any adjournment or postponement of the Annual Meeting.


WHETHER OR NOT YOU EXPECT TO VIRTUALLY ATTEND THE MEETING, WE URGE YOU TO VOTE YOUR SHARES BY INTERNET, TELEPHONE, OR BY SIGNING, DATING AND RETURNING THE PROXY CARD IN THE ENCLOSED ENVELOPE. IF YOU CHOOSE TO VIRTUALLY ATTEND THE ANNUAL MEETING, YOU MAY STILL VOTE YOUR SHARES ELECTRONICALLY AT THE ANNUAL MEETING, EVEN THOUGH YOU HAVE PREVIOUSLY VOTED OR RETURNED YOUR PROXY BY ANY OF THE METHODS DESCRIBED IN OUR PROXY STATEMENT. IF YOUR SHARES ARE HELD IN A




BANK OR BROKERAGE ACCOUNT, PLEASE REFER TO THE MATERIALS PROVIDED BY YOUR BANK OR BROKER FOR VOTING INSTRUCTIONS.

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All stockholders are extended a cordial invitation to attend the meeting.


By Order of the Board of Directors,



LOGO



Eric J. Christ
Vice President, General Counsel & Corporate Secretary
Denver, Colorado
April 5, 2019
By Order of the Board of Directors,             


image3.jpg

Eric J. Christ
Vice President, General Counsel & Corporate Secretary
Denver, Colorado
April 24, 2020

Important Notice Regarding the Availability of Proxy Materials for the 20192020 Annual Meeting of Stockholders to Be Held on May 15, 2019,June 8, 2020, at 8:30 a.m. Mountain Time. The proxy statement and 20182019 Annual Report are available at www.proxyvote.com. You will be asked to enter the control number located on your Notice.

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ABOUT THE ANNUAL MEETING

1

Purpose of the Annual Meeting

1

Proposals to be Voted Upon at the Annual Meeting

1

Recommendation of the Board

2

Voting at the Annual Meeting

2

Quorum Requirement for the Annual Meeting

3

Required Votes

3

Solicitation of Proxies

43

Default Voting

4

PROPOSAL ONE: ELECTION OF DIRECTORS


54

Vote Required

54

Recommendation

54

DIRECTORS AND EXECUTIVE OFFICERS


65

MEETINGS AND COMMITTEES OF DIRECTORS


98

PROPOSAL TWO: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS


1210

Audit and Other Fees

1210

Vote Required

1210

Recommendation

1311

COMPENSATION COMMITTEE REPORT


1412

COMPENSATION DISCUSSION AND ANALYSIS


1513

Named Executive Officers

1513

Executive Summary

1513

20182019 Company Performance

1513

Changes to Our Executive Compensation Program

1715

CEO Pay at a Glance

1715

Say-on-Pay and Say-on-Frequency

1816

EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES


1816

HOW WE MAKE COMPENSATION DECISIONS


1917

ELEMENTS OF COMPENSATION


2119

Base Salary

2119

Annual Incentive Bonus—20182019 Short-Term Cash Incentive Program

(STIP)		2219

20182019 Awards Underunder the LTIP

2622

Other Compensation Elements

2724

EMPLOYMENT AGREEMENTS


27

POST-EMPLOYMENT ARRANGEMENTS

EMPLOYMENT AGREEMENTS
2824

POST-EMPLOYMENT ARRANGEMENTS24
TAX AND ACCOUNTING CONSIDERATIONS


2825





RISK ASSESSMENT AND MITIGATION


2925

20182019 Summary Compensation Table


3127

Realized Compensation

3228

Grants of Plan-Based Awards

3328

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

3329

Outstanding Equity Awards at Fiscal Year-End

36

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30

Options ExercisedExercises and Stock Vested

3732

Potential Payments Uponupon Termination or Change in Control

3833

Director Compensation

Table Illustrating Potential Payments upon Termination or Change in Control		4135

Director Compensation

37
Narrative Disclosure to Director Compensation Table

4137

Director Stock Ownership Guidelines

4238

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION


4340

CORPORATE GOVERNANCE


43

CORPORATE GOVERNANCE

40
Corporate Governance Guidelines

4340

Board Leadership

4441

Classified Board Structure

4441

Communications with the Board of Directors

4441

Shareholder Outreach

Director Independence		4441

Director Independence

45

Financial Literacy of Audit Committee and Designation of Financial Experts

4542

Oversight of Risk Management

4542

Attendance at Annual Meetings

4642

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


4743

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE


5046

TRANSACTIONS WITH RELATED PERSONS


5047

Policies and Procedures for Review of Related Party Transactions

5047

Historical Transactions with Affiliates

5147

PROPOSAL THREE: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION49
Vote Required49
Recommendation50
PROPOSAL FOUR: TO APPROVE THE AMENDMENT AND RESTATEMENT TO OUR 2016 LONG TERM INCENTIVE PLAN, INCLUDING TO INCREASE THE AUTHORIZED SHARES

REVERSE STOCK SPLIT
5351

Purpose of VotingBackground and Reasons for the Proposal to ApproveReverse Stock Split; Potential Consequences of the 2016 Plan

Reverse Stock Split		5351

Material FeaturesCertain Risks Associated with the Reverse Stock Split

52
Determination of the 2016 Plan

Specific Reverse Stock Split Ratio		53

Eligibility underProcedure for Implementing the 2016 Plan; Award Limitation

Reverse Stock Split		5453

Administration

Amendment Effective Time		5453

NumberReservation of Shares

Right to Abandon Reverse Stock Split		5453

TypesEffect of Awards

the Reverse Stock Split on Holders of Outstanding Common Stock		5554

Effect of the Reverse Stock Options

Split on Holders of our Series A Preferred Stock		5554

Authorized Shares of Common Stock Appreciation Rights

55

RestrictedExchange of Stock

Certificates		55




55

Restricted Stock Units

Fractional Shares		5556

Bonus Stock and Awards in Lieu of Obligations

No Appraisal Rights		5556

Dividend Equivalents

Effect of the Reverse Stock Split on Equity Compensation Plans and Awards		56

Other Awards

Regulatory Effects		5657

Substitute Awards

Interests of Certain Persons in the Proposal		5657

Performance Awards

Accounting Matters		5657

Merger, Recapitalization, or Change in Control

56

Termination of Employment or Service

56

Tax Withholding

57

Modification, Amendment or Termination of the 2016 Plan

57

New Plan Benefits

57

Additional Information With Regard to Options

57

Material U.S. Federal Income Tax Consequences of Awards under the 2016 Plan

Reverse Stock Split		57

Section 162(m) Limitation

Vote Required		59

Section 409A

Recommendation		6059

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Current Outstanding Options

PROPOSAL FIVE: TO APPROVE THE AUTHORIZED SHARE REDUCTION		60

Equity Compensation Plan Information

General		60

Vote Required

Reasons for the Authorized Share Reduction		6160

Recommendation

Effects of the Authorized Share Reduction		6160

PROPOSAL FOUR: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION

Vote Required
6261

Vote Required

Recommendation		6261

Recommendation

63

AUDIT COMMITTEE REPORT


6462

STOCKHOLDER PROPOSALS; IDENTIFICATION OF DIRECTOR CANDIDATES


6563

SOLICITATION OF PROXIES


6664

STOCKHOLDER LIST


66

STOCKHOLDER LIST

64
AVAILABILITY OF CERTAIN DOCUMENTS


6664

OTHER MATTERS


67

OTHER MATTERS

65
LOCATION OF ANNUAL MEETING

65

67
APPENDIX A66

iii

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EXTRACTION OIL & GAS, INC.
370 17th Street, Suite 5300
Denver, Colorado 80202

PROXY STATEMENT
2019
2020 ANNUAL MEETING OF STOCKHOLDERS

The Board of Directors (the "Board“Board of Directors"Directors” or the "Board"“Board”) of Extraction Oil & Gas, Inc. (the "Company"“Company”) requests your proxy for the 20192020 Annual Meeting of Stockholders that will be held on May 15, 2019,June 8, 2020, which will be a virtual meeting of stockholders, conducted via live audio webcast, at 8:30 a.m. Mountain Time (the "Annual Meeting"“Annual Meeting”). You will be able to attend the annual meeting of stockholders online and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/XOG2019.XOG2020. You will also be able to vote your shares electronically at the annual meeting.


By granting the proxy, you authorize the persons named on the proxy to represent you and vote your shares at the Annual Meeting. Those persons will also be authorized to vote your shares to adjourn the Annual Meeting from time to time and to vote your shares at any adjournments or postponements of the Annual Meeting. The Board has made this proxy statement (the "Proxy Statement"“Proxy Statement”), proxy card, the accompanying Notice of Annual Meeting of Stockholders and the Company's 2018Company’s 2019 Annual Report on Form 10-K available on the Internet atwww.proxyvote.com. The date on which these proxy materials and the Company's 2018Company’s 2019 Annual Report are first being made available to stockholders is April 5, 2019.24, 2020.


ABOUT THE ANNUAL MEETING

Purpose of the Annual Meeting

The purpose of the Annual Meeting is for our stockholders to consider and act upon the proposals described in this Proxy Statement and any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof.


Proposals to be Voted Upon at the Annual Meeting

At the Annual Meeting, our stockholders will be asked to consider and vote upon the following four proposals:


•
Proposal ONE: To elect the three Class IIII directors to the Board set forth in this Proxy Statement, each of whom will hold office until the 20222023 Annual Meeting of Stockholders and until his successor is elected and qualified or until his earlier death, resignation or removal.


•
Proposal TWO: To ratify the appointment of PricewaterhouseCoopers LLP ("PwC"(“PwC”) as the Company'sCompany’s independent registered public accounting firm for the fiscal year ending December 31, 2019.2020.


•
Proposal THREE: To approve the amendment and restatement of our 2016 Long Term Incentive Plan, including to increase the number of authorized shares of common stock available and reserved for issuance under such plan by 12,000,000 shares to an aggregate of 32,200,000 shares.

•
Proposal FOUR: To approve, on an advisory basis, the compensation of our Named Executive Officers (as defined below).

Table•Proposal FOUR: To approve an amendment to our certificate of Contentsincorporation to permit us to effect a reverse stock split of our issued and outstanding common stock, par value $0.01 per share (the “Common Stock”), at a ratio that will be determined by the Board and that will be within a range of 1-for-10 and 1-for-200 (the “Reverse Stock Split”), if the Board determines, in its sole discretion, at any time prior to the first anniversary of the Annual Meeting, that the Reverse Stock Split is in the best interests of the Company and its stockholders.


•Proposal FIVE: To approve an amendment to our certificate of incorporation to reduce the number of authorized shares of Common Stock by a ratio equal to 1-for-two-thirds of the denominator of the Reverse Stock Split ratio determined by the Board (the “Authorized Share Reduction”).

1



In addition, any other matters that properly come before the Annual Meeting or any adjournment or postponement thereof will be considered. Management is presently aware of no other business to come before the Annual Meeting.


Recommendation of the Board

The Board unanimously recommends that you vote FOR the election of each of the nominees (Proposal ONE), FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the auditors of the Company for the fiscal year ending December 31, 20192020 (Proposal TWO), FOR the approval of the amendment and restatement of our 2016 Long Term Incentive Plan, including to increase the number of authorized shares of common stock available and reserved for issuance under such plan by 12,000,000 shares to an aggregate of 32,200,000 shares (Proposal THREE) and FOR the approval, on an advisory basis, of the executive compensation of the Named Executive Officers (Proposal THREE), FOR the approval of the Reverse Stock
Split (Proposal FOUR) and FOR the Authorized Share Reduction (Proposal FIVE).


Voting at the Annual Meeting

The Company's common stock, par value $0.01 per share (the "Common Stock"),Common Stock, is the only class of securities that entitles holders to vote generally at meetings of the Company'sCompany’s stockholders. Each stockholder of record at the close of business on March 18, 2019April 13, 2020 (the "Record Date"“Record Date”), is entitled to vote at the Annual Meeting. Holders of the Common Stock will vote together on all matters presented at the Annual Meeting. Each share of Common Stock outstanding on the Record Date entitles the holder to one vote at the Annual Meeting.


If on the Record Date you hold shares of our Common Stock that are represented by stock certificates or registered directly in your name with our transfer agent, American Stock Transfer & Trust Company (our “Transfer Agent”), you are considered the stockholder of record with respect to those shares. Broadridge Financial Solutions ("Broadridge"(“Broadridge”) is sending these proxy materials directly to you on our behalf. As a stockholder of record, you may vote at the Annual Meeting, which will be held virtually, or by proxy. Whether or not you plan to attend the virtual Annual Meeting, you may vote by Internet by following the instructions on the proxy card you received. You may also vote by signing and submitting your proxy card or by submitting your vote by telephone by calling the number provided on the proxy card you received. Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote by way of the Internet, by telephone or by filling out and returning the proxy card in the enclosed envelope. If you submit a proxy but do not give voting instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our Board stated in this Proxy Statement. Any proxy given pursuant to this solicitation may be revoked by the person giving it at any time before its use by (a) delivering a written notice of revocation addressed to Extraction Oil & Gas, Inc., Attn: General Counsel, 370 17th Street, Suite 5300, Denver, Colorado 80202, (b) a duly executed proxy bearing a later date, (c) voting again by Internet or by telephone or (d) attending the virtual Annual Meeting and voting during the meeting. Your last vote or proxy will be the vote or proxy that is counted. Attendance at the virtual Annual Meeting will not cause your previously granted proxy to be revoked unless you vote or specifically so request.


If on the Record Date you hold shares of our Common Stock in an account with a brokerage firm, bank or other nominee, then you are a beneficial owner of the shares and hold such shares in "street“street name,"” and these proxy materials will be provided to you by that organization. As a beneficial owner, you have the right to direct your broker, bank or other nominee on how to vote the shares held in their account, and the nominee has enclosed or provided voting instructions for you to use in directing it how to vote your shares. The nominee that holds your shares, however, is considered the stockholder of record for purposes of voting at the Annual Meeting. Because you are not the stockholder of record, you may not vote your shares at the virtual Annual Meeting and you would need to instruct your


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brokerage or bank as to your vote prior to the Annual Meeting. Whether or not you plan to attend the virtual Annual Meeting, we urge you to vote by following the voting instructions provided to you to ensure that your vote is counted.


If you are a beneficial owner and do not vote, and your broker, bank or other nominee does not have discretionary power to vote your shares, your shares may constitute "broker“broker non-votes."” Shares that constitute broker non-votes will be counted for the purpose of establishing a quorum at the Annual Meeting, but will only be taken into account in determining the outcome of a proposal for which brokers have discretionary authority, as discussed below. Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. If you receive more than one copy or notice of proxy materials, it is because your shares are registered in more than one name or are registered in different accounts. Please follow the instructions on the respective proxy card or voting instructions received to ensure that all of your shares are voted.


2



A complete list of the stockholders of record entitled to vote at the Annual Meeting will be open to the examination of any stockholder, for purposes germane to the Annual Meeting, during ordinary business hours for ten days before the Annual Meeting at our corporate offices at 370 17th Street, Suite 5300, Denver, Colorado 80202. The list of stockholders will also be available for stockholders during the Annual Meeting through the link www.virtualshareholdermeeting.com/XOG2019.

XOG2020.


Quorum Requirement for the Annual Meeting

The presence at the Annual Meeting, whether in person or by valid proxy, of the persons holding a majority of shares of Common Stock outstanding on the Record Date will constitute a quorum, permitting us to conduct our business at the Annual Meeting. On the Record Date, there were 169,314,622138,103,951 shares of Common Stock outstanding, held by 6056 stockholders of record. Abstentions (i.e., if you or your broker mark "ABSTAIN"“ABSTAIN” on a proxy) and broker non-votes will be considered to be shares present at the meeting for purposes of a quorum. Broker non-votes occur when shares held by a broker for a beneficial owner are not voted with respect to a particular proposal and generally occur because the broker (a) does not receive voting instructions from the beneficial owner and (b) lacks discretionary authority to vote the shares. Brokers and other nominees have discretionary authority to vote on ratification of our independent public accounting firm for clients who have not provided voting instructions. However, without voting instructions from their clients, they cannot vote on "non-routine"“non-routine” proposals, including the election of directors.


Required Votes

Election of Directors. Each director will be elected by the affirmative vote of the plurality of the votes cast by stockholders entitled to vote on the election of directors at the Annual Meeting. Abstentions and broker non-votes are not taken into account in determining the outcome of the election of directors.


Ratification of our Independent Public Accounting Firm. Approval of the proposal to ratify the Audit Committee'sCommittee’s appointment of PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2019,2020, requires the affirmative vote of the holders of at least a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Brokers have the discretion to vote on this proposal if they do not receive voting instructions from the beneficial owner, and abstentions will have the effect of a vote against this proposal.

        Amendment and Restatement of our 2016 Long Term Incentive Plan.
    Approval of the proposal to amend our 2016 Long Term Incentive Plan requires the affirmative vote of the holders of at least a majority of the shares of Common Stock present in person or represented by proxy at the Annual


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Meeting and entitled to vote. Abstentions and broker non-votes are not taken into account in determining the outcome of the proposal to amend and restate our 2016 Long Term Incentive Plan.

Advisory (Non-Binding) Vote on Executive Compensation.Compensation. Approval, on an advisory basis, of the compensation of our Named Executive Officers requires the affirmative vote of the holders of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Brokers have the discretion to vote on this proposal if they do not receive voting instructions from the beneficial owner, and abstentions will have the effect of a vote against this proposal.


Reverse Stock Split. Approval of this proposal requires the affirmative vote, either in person or by proxy, of
the holders of at least a majority of the issued and outstanding shares of Common Stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast.
Authorized Share Reduction. Approval of this proposal requires the affirmative vote, either in person or by
proxy, of the holders of at least a majority of the issued and outstanding shares of Common Stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast.

Solicitation of Proxies

We will bear the cost of solicitation of proxies. This includes the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of our outstanding Common Stock. We may solicit proxies by mail, personal interview, telephone or via the Internet through our officers, directors and other management employees, who will receive no additional compensation for their services.


3



Default Voting

A proxy that is properly completed and submitted will be voted at the Annual Meeting in accordance with the instructions on the proxy. If you properly complete and submit a proxy but do not indicate any voting instructions, your shares will be voted FOR each of the director nominees listed in Proposal ONE, FOR Proposal TWO FOR Proposal THREE and FOR Proposal FOUR.

THREE. Because brokers do not have discretionary authority to vote on Proposal FOUR or Proposal FIVE, broker non-votes will have the same effect as voting “AGAINST” Proposal FOUR and “AGAINST” Proposal FIVE.


If any other business properly comes before the stockholders for a vote at the meeting, your shares will be voted in accordance with the discretion of the holders of the proxy. The Board of Directors knows of no matters, other than those previously stated, to be presented for consideration at the Annual Meeting.

        Extraction Oil & Gas Holdings, LLC, a Delaware limited liability company and our accounting predecessor, was formed on May 29, 2014, by PRE Resources, LLC ("PRE"), as a holding company with no independent operations. Extraction Oil & Gas, LLC, was a wholly owned subsidiary of Extraction Oil & Gas Holdings, LLC. In connection with the consummation of our initial public offering (the "IPO"), Extraction Oil & Gas Holdings, LLC was merged with and into Extraction Oil & Gas, LLC, and Extraction Oil & Gas, LLC converted from a Delaware limited liability company into a Delaware corporation, Extraction Oil & Gas, Inc. On October 11, 2016, a registration statement filed on Form S-1 with the SEC relating to shares of our Common Stock was declared effective. The IPO closed on October 17, 2016.


In this Proxy Statement, the terms "the“the Company," "we," "us," "our"” “we,” “us,” “our” and similar terms when used in the present tense, prospectively or for historical periods since October 17, 2016, refer to Extraction Oil & Gas, Inc. and its subsidiaries, and for historical periods prior to October 17, 2016, refer to Extraction Oil & Gas Holdings, LLC, and its subsidiaries, unless the context indicates otherwise.


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PROPOSAL ONE:
ELECTION OF DIRECTORS

At the recommendation of the Nominating and Governance Committee, the Board of Directors has nominated the following individuals for election as Class IIII directors of the Company, to serve for three-year terms beginning at the Annual Meeting and expiring at the 20222023 Annual Meeting of the Stockholders, and until either they are re-elected or their successors are elected and qualified:

Mark A. Erickson


Donald L. Evans
John S. Gaensbauer
Wayne W. Murdy
Matthew R. Owens

Peter A. Leidel

Messrs. Erickson, EvansGaensbauer, Murdy and LeidelOwens are currently serving as directors of the Company. If Messrs. Erickson, EvansGaensbauer, Murdy and LeidelOwens are elected to the Board of Directors, the size of the Board will remain at eight members. Biographical information for each nominee is contained in the "Directors“Directors and Executive Officers"Officers” section below.


The Board of Directors has no reason to believe that its nominees will be unable or unwilling to serve if elected. If a nominee becomes unable or unwilling to accept nomination or election, either the number of the Company'sCompany’s directors will be reduced or the persons acting under the proxy will vote for the election of a substitute nominee that the Board of Directors recommends.


Vote Required

The election of directors in this Proposal ONE requires the affirmative vote of a plurality of the votes cast by stockholders entitled to vote on the election of directors. Neither abstentions nor broker non-votes will have any effect on the outcome of voting on director elections.


Recommendation
Recommendation

The Board of Directors unanimously recommends that stockholders vote FOR the election of each of the nominees.


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DIRECTORS AND EXECUTIVE OFFICERS

After the Annual Meeting, assuming the stockholders elect the nominees of the Board of Directors as set forth in "Proposal“Proposal ONE: Election of Directors"Directors” above, the Board of Directors of the Company will be, and the executive officers of the Company are:


Name
AgePosition
Mark A. Erickson(4)NameAgePosition
Thomas B. Tyree, Jr.59Chief Executive Officer and Chairman
Matthew R. Owens(4)Owens3332President, Chief Executive Officer and Director
Russell T. Kelley, Jr. 43Chief Financial Officer
Tom L. Brock4746Vice President, Chief Accounting Officer
Eric J. Christ4039Vice President, General Counsel and Corporate Secretary
Marianella Foschi32Vice President of Finance
Marvin M. Chronister(1)(2)(3)Chronister6968Director
Donald L. Evans(1)(4)72Independent Director
John S. Gaensbauer4948Independent Director
Peter A. Leidel(2)(3)(4)Leidel6362Independent Director
Wayne W. Murdy(1)(3)Murdy7574Lead Independent Director
Patrick D. O'Brien(2)(3)(4)O’Brien7170Independent Director
Audrey Robertson39Independent Director

(1)
Member of the Audit Committee

(2)
Member of the Compensation Committee

(3)
Member of the Nominating and Governance Committee

(4)
Member of the Executive Committee

The Company'sCompany’s Board of Directors currently consists of eight members, and if the stockholders elect Messrs. Erickson, EvansGaensbauer, Murdy and LeidelOwens to the Board, the Board will continue to consist of eight members. The Company'sCompany’s directors are divided into three classes serving staggered three-year terms. Each year, the directors of one class stand for re-election as their terms of office expire. Messrs. Owens, Murdy and Gaensbauer are designated as Class I directors, and, assuming the stockholders elect them to the Board as set forth in “Proposal ONE: Election of Directors” above, their terms of office will expire in 2020.2023. Messrs. O'BrienO’Brien and Chronister and Ms. Robertson are designated as Class II directors, and their terms of office will expire in 2021. Messrs. Erickson, EvansTyree and Leidel are designated as Class III directors, and assuming the stockholders elect them to the Board as set forth in "Proposal ONE: Election of Directors" above, their terms of office will expire in 2022.


Set forth below is biographical information about each of the Company'sCompany’s executive officers, directors and nominees for director.

        Mark A. Erickson—Chief
Thomas B. Tyree, Jr.—Executive Officer and Chairman.Mr. Erickson is our Chairman, CEO and co-founder. From 2010 to 2014, heTyree has served as our Executive Chairman since March 2020. Mr. Tyree also currently serves as a director of Antero Resources Corporation and CEO of Denver-based PRE Resources, LLC ("PRE"), a privately held oil and gas exploration and development company, where he remains as non-executive Chairman of the Board. From 2001 to 2010, Mr. Erickson served as CEO, President and DirectorBoard of publicly traded GascoNorthwoods Energy Inc. ("Gasco Energy"),LLC, a Uinta Basin-focused oil & gas company which he co-founded. Mr. Erickson served as President of Pannonian Energy Inc. from mid-1999 until it merged with Gasco Energy in February 2001. In late 1997, Mr. Erickson co-founded Pennaco Energy, Inc. ("Pennaco"), a publicly tradedprivate oil and gas company with propertiesassets in Wyoming'sWyoming’s Powder River Basin. HeMr. Tyree was previously Northwoods’ founder, CEO, and Executive Chairman, from January 2018 until April 2019. Mr. Tyree also served as a Director of Bonanza Creek Energy from April 2017 through March 2020. Before that, he served as President, Chief Financial Officer and member of the Board of Managers of Vantage Energy, LLC from 2006 to 2016 and as Chief Financial Officer of Bill Barrett Corporation from 2003 through 2006. Prior to Bill Barrett, from 1989 to 2003, Mr. Tyree was an officerinvestment banker at Goldman, Sachs & Co., ultimately serving as Managing Director in the Energy Group. Mr. Tyree earned a Bachelor of Arts degree from Colgate University, where he currently serves as a member of its Board of Trustees. He also holds a Master of Business Administration degree from the Wharton School at the University of Pennsylvania. Mr. Tyree's extensive experience as chairman and directorleadership roles with oil and gas companies and an investment banker, together with his knowledge of Pennaco from its inception until mid-1999. Mr. Erickson is currentlythe energy industry, has led the Board to conclude that he has the expertise necessary to serve as a director of Thunder Basin Resources, LLC ("Thunder Basin"), a position he has held since April 2017. Mr. Erickson began his career at North American Resources, which was the exploration and production subsidiary of Montana Power Company. A Helena, Montana native, Mr. Erickson has over 30 years of experience in business development, finance, strategic planning, marketing, project management and petroleum engineering. He holds an M.S. in mineral economics


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from the Colorado School of Mines and a BS in petroleum engineering from the Montana College of Mineral Science and Technology. We believe that Mr. Erickson's experience founding and leading our growth as ourMatthew R. Owens—President, Chief Executive Officer and his extensive experience leading various oil and gas companies qualify him to serve on our board of directors.

        Matthew R. Owens—President and Director. Mr. Owens is a founder of the Company and has been its President and Chief Executive Officer since February 2020. From our co-founderformation until April 2019, he served as our President and President.from April 2019 to March 2020 he served as our Acting Chief Executive Officer. Mr. Owens has also served as a director of Triple Crown Resources, LLC, a private producer in the Midland Basin, since April 2017. From 2008 to 2010, he served as Operations Engineer for Gasco Energy, working deep, high-pressured gas in the Uinta Basin. While at Gasco Energy, he drilled and completed over 50 wells in the Mancos, Blackhawk and Mesaverde formations. From 2010-2012, Mr. Owens worked at PDC Energy, Inc., an oil and gas exploration and development company with a primary focus on the Wattenberg Field, as an Operations

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Engineer, leading the horizontal completion and production activities in the Wattenberg Field. He completed over 45 horizontal Codell and Niobrara wells and was responsible for optimizing production for the program. Mr. Owens has been our President since our formation in 2012, which, at the time, was as a wholly owned subsidiary of PRE. Mr. Owens holds a BS degree in petroleum engineering from the Colorado School of Mines. We believe that Mr. Owens'Owens’ experience founding and leading our growth as our President and his background in completion and production activities qualify him to serve on our board of directors.

        Russell T. Kelley, Jr.—Chief Financial Officer.    Mr. Kelley has served as our Chief Financial Officer since July 2014. Prior to joining us, he ran the Oil & Gas practice of Moelis & Company, a global investment bank, from 2011 to 2014, where he was a partner and managing director covering upstream and integrated oil & gas companies. From 2005 to 2011, he worked at Goldman, Sachs & Co., a global investment bank, where he was a Senior Vice President. In such roles, Mr. Kelley has executed over $70 billion of M&A/advisory assignments and has led capital market transactions raising over $15 billion for clients. He has been in the energy and financial sector since 1998, with experience in commodities trading, corporate development and investment banking. He holds a MBA from The Wharton School at the University of Pennsylvania where he graduated as a Palmer Scholar and a BA from Vanderbilt University.

Tom L. Brock—Vice President, Chief Accounting Officer. Mr. Brock has served as our Vice President, Chief Accounting Officer since October 2016. Prior to that time, Mr. Brock served as our Senior Director of Accounting since August 2016. Prior to joining us, Mr. Brock served as Vice President, Chief Accounting Officer and Corporate Controller of the American Midstream GP, LLC and American Midstream Partners, LP from November 2013 until his resignation in August 2016. Mr. Brock had previously served as Vice President and Corporate Controller of American Midstream GP, LLC and American Midstream Partners LP from July 2012 until November 2013. Prior to that, Mr. Brock held the position of Director of Trading and Finance with BG Group in Houston, Texas, where he controlled accounting and other functions for its marketing and trading companies beginning in July 2010. Mr. Brock began his career with KPMG LLP, where he spent 13 years holding various positions serving clients in the energy industry. Mr. Brock holds a Bachelor of Accountancy from New Mexico State University and is a CPA licensed in the State of Texas.


Eric J. Christ—Vice President, General Counsel and Corporate Secretary. Mr. Christ has served as our Vice President, General Counsel and Corporate Secretary since November 2016. Prior to joining us, Mr. Christ served as Vice President, Corporate Secretary and General Counsel at VAALCO Energy Inc. from January 2015 to November 2016. Prior to joining VAALCO, Mr. Christ served as Vice President, General Counsel and Corporate Secretary of Midstates Petroleum Company, Inc. from November 2013 to January 2015 and as its Assistant Corporate Counsel from September 2012 to November 2013. Mr. Christ began his legal career at Porter Hedges, LLP in 2005 and continued on to practice corporate and securities law at Vinson & Elkins LLP from 2006 until 2010, where he represented a variety of energy companies. Mr. Christ holds a Bachelor of Arts, with honors, from Amherst College and a J.D., with honors, from the University of Texas School of Law.


TableMarianella Foschi—Vice President, Finance. Ms. Foschi has served as our Vice President, Finance since September 2019. She previously served as Director of ContentsFinance at Extraction from May 2015 until September 2019. Prior to joining Extraction, from 2012 to 2015 Ms. Foschi was an Associate at The Blackstone Group in Houston, focused on mezzanine debt and equity investments across the energy sector. While at The Blackstone Group, Ms. Foschi was responsible for investing $1.5 billion of private capital in the energy sector. From 2010 to 2012, Ms. Foschi was an energy investment banker at Credit Suisse where she developed her expertise in debt, equity and advisory assignments for exploration and production, midstream and oilfield services companies. Ms. Foschi holds a Bachelor in Business Administration (Finance), with highest honors, and a Bachelor of Arts in Economics, both from the University of Texas.


Marvin M. Chronister—Independent Director. Mr. Chronister has served on our board of directors since our IPO in October 2016. Mr. Chronister is currently the owner of Enfield Companies, which is engaged in consulting and investment activities in the oil and gas sector. Mr. Chronister previously served as Interim Chief Executive Officer and Interim President of Bonanza Creek Energy, Inc., a domestic energy exploration and production company, from January 2014 until November 2014 and as a director of Bonanza Creek Energy, Inc., from 2010 to June 2016. From September 2009 until December 2010, Mr. Chronister served as Chairman and interim CEO of Sonde Resources Corp., an oil and gas exploration and production company focused on Western Canada and North Africa, where he also served as a director from 2009 to 2012. Mr. Chronister'sChronister’s prior professional experience includes roles at Deloitte & Touche, LLP, Kidder Peabody, Merrill Lynch, Transwestern Investments, Kidde Corporation, and N.L. Industries. Mr. Chronister has previously served on the boards of Saratogo Resources, Inc., Harken Energy Corporation and the boards of several private companies and industry associations. Mr. Chronister holds a Bachelor of Business Administration degree from Stephen F. Austin State University. We believe that Mr. Chronister'sChronister’s experience in investing, corporate finance and corporate governance and his service on the board of various energy companies qualify him for service on our board of directors.

        Donald L. Evans—Director.
    Mr. Evans has served on our board of directors since December 2016. Mr. Evans currently serves as a Senior Partner and Principal at Quintana Capital Group, L.P., where he has served since December 2006, and as a Senior Advisor at Energy Capital Partners, where he has served since July 2006. From February 2010 to March 2014, Mr. Evans served as a director of Genesis Energy LLC. Prior to that, Mr. Evans served as Secretary of Commerce of the United States Department of Commerce from 2001 to 2005 and served as the Chief Executive Officer at the Financial Services Forum from June 2005 to 2007. Mr. Evans served as the Executive Chairman at Energy Future Holdings Corp. from October 2007 to March 2018, and as a director at Energy Future Intermediate Holding Company, LLC. Mr. Evans is currently the Chairman of the George W. Bush Foundation and the Permian Strategic Partnership and has previously served as the Chairman of the Board of Regents of the University of Texas System. Mr. Evans received his B.S. in Mechanical Engineering and M.B.A. from the University of Texas in Austin. We believe that Mr. Evans' extensive experience serving as a director and his extensive financial experience in both the public and private sector qualify him for service on our board of directors.

John S. Gaensbauer—Independent Director. Mr. Gaensbauer serves as a member of our board of directors, where he has served since our inception. Mr. Gaensbauer is currently a Managing Director in the Natural Resources Group at Capstone Headwaters LLC, a Denver-based investment banking firm ("(“Capstone Headwaters"Headwaters”). Prior to joining Capstone Headwaters in May 2016, Mr. Gaensbauer was a partner at Sierra Partners LLC, a Denver-based, private advisory group providing strategic advisory services to clients in the global resource industry ("(“Sierra Partners"

6



Partners”), a role he held since 2007. Prior to Sierra Partners, Mr. Gaensbauer served as Group Executive, Investor Relations for Newmont Mining Corporation ("Newmont"(“Newmont”). Prior to that, Mr. Gaensbauer served as in-house counsel to Newmont, managing the legal affairs and transactions for Newmont'sNewmont’s West African, Central Asian and European operations, as well as counsel to Newmont'sNewmont’s Treasury Group and Newmont Capital, Newmont'sNewmont’s in-house merchant banking group. Prior to joining Newmont, Mr. Gaensbauer practiced corporate and transactional law at Ballard Spahr LLP. Mr. Gaensbauer is currently a director of PRE, a position he has held since February 2011. Mr. Gaensbauer holds a B.A. degree from Cornell University and Masters of Finance and JDJ.D. degrees from the University of Denver. Mr. Gaensbauer has an extensive background in international mining and natural resource transactions and finance which we believe qualify him for service on our board of directors.

Peter A. Leidel—Independent Director. Mr. Leidel has served as a member of our board of directors since our inception and as a director of PRE since June 2012.inception. Mr. Leidel is a member of Yorktown Partners LLC ("Yorktown"(“Yorktown”), a position he has held since he co-founded it in September 1990.


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Previously, he was a partner of Dillon, Read & Co. Inc.'s’s venture capital group, an investment bank, held corporate treasury positions at Mobil Corporation, an oil and gas company, and worked for KPMG LLP, an accounting firm, and for the U.S. Patent and Trademark Office. Mr. Leidel is a director of Mid-Con Energy Partners L.P., Thunder Basin Resources, LLC and Carbon Natural Gas Company and is also a director of certain non-public companies in the energy industry in which Yorktown'sYorktown’s funds hold equity interests. He is also a director of the University of Wisconsin Foundation. He is a graduate of the University of Wisconsin, with a BBA degree in accounting and of the Wharton School at the University of Pennsylvania, with an MBA. We believe that Mr. Leidel'sLeidel’s strong accounting background and previous experience serving as director of various public companies engaged in the oil and natural gas industry qualify him for service on our board of directors.


Wayne W. Murdy—Lead Independent Director. Mr. Murdy has served on our board of directors since December 2016. Mr. Murdy previously served as Chief Executive Officer of Newmont Mining Corporation from 2001 to 2007, where he also served as Chairman from 2002 to 2007. Mr. Murdy is also a former Chairman of the International Council on Mining and Metals, a former Director of the U.S. Mining Association and a former member of the Manufacturing Council of the U.S. Department of Commerce. Mr. Murdy has previously served as a director of Weyerhaeuser Company, Qwest Communications International Inc., BHP Billiton Limited and BHP Billiton Plc. Mr. Murdy received his B.S. in Business Administration from California State University at Long Beach. We believe that Mr. Murdy'sMurdy’s extensive experience in the oil and gas industry as well as his financial and corporate finance experience qualify him for service on our board of directors.


Patrick D. O'Brien—O’Brien—Independent Director. Mr. O'Brien has served on our board of directors since our IPO in October 2016. Since September 2011, Mr. O'Brien has served as an advisor to PRE, since April 2017, Mr. O'Brien has served as an advisor to Thunder Basin and, since July 2012, Mr. O'Brien has served as a board member of, and advisor to, Elk Meadows Energy Corporation, a private oil and gas exploration and production company. From 2003 until 2010, Mr. O'Brien served as CEO of American Oil & Gas, which was acquired by Hess Corporation. Mr. O'Brien co-founded Tower Colombia Corporation in 1995 and served as its CEO and President. He co-founded Tower Energy Corporation in 1984 and Tower Drilling Company in 1980. In 1980, he joined Montana Power Company as Senior Petroleum Engineer with the responsibility for design, long-range planning and performance economics for its exploration and development programs. He joined the Colorado Interstate Gas Company in 1974, where he was responsible for the design, acquisition and development of company-owned gas storage fields. Mr. O'Brien began his career in the oil and gas industry with the Dowell Division of Dow Chemical Company, where he engineered and supervised all phases of well stimulation and cementing. He has over 30 years of experience working the DJ Basin and the Powder River Basin. Mr. O'Brien received his B.S. in Petroleum Engineering from Montana Tech. We believe that Mr. O'Brien's extensive experience in the oil and gas industry generally and in our geographic area of operation specifically qualifies him for service on our board of directors.


Audrey Robertson —Independent Director. Ms. Robertson has served on our board of directors since September 2019. She is a co-founder and Chief Financial Officer of Franklin Mountain Energy, LLC, a private oil and gas company operating in the core of the Delaware Basin in southeast New Mexico. Previously, Ms. Robertson was a co-founder and Managing Partner of Copper Trail Partners, LLC, a $50 million energy and private equity platform based in Denver and focused on direct ownership of mineral and working interests in the Rocky Mountain region. She spent 13 years as a Partner and Senior Managing Director at Kayne Anderson Capital Advisors, and prior to that, as an investment banker with Goldman Sachs & Co. Ms. Robertson is the co-founder of the Westside Women in Finance and former chairman of the board of advisors of ACE Scholarships. She is currently a trustee and board member of ACE Scholarships. Ms. Robertson remains an active member of the National Western Stock Show Association and is also involved with the Private Equity Women’s Investor Network, 85 Broads, YPO’s Rocky Mountain Chapter and the Women in Oil & Gas Association. She holds a degree in Applied Economics from Cornell University and a Master of Accounting from the University of Southern California. We believe that Ms.
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Robertson’s strong finance background and previous experience in leadership roles at oil and gas companies qualify her for service on our board of directors.

MEETINGS AND COMMITTEES OF DIRECTORS

The Board of Directors held nine13 meetings in 2018.2019. During 2018,2019, each of our directors attended at least 75% of the meetings of the Board of Directors and the meetings of the committees of the Board of Directors on which that director served.


Executive Sessions. The Board of Directors holds regular executive sessions in which the independent directors meet without any non-independent directors or other members of management. The purpose of these executive sessions is to promote open and candid discussion among the independent directors. The Lead Independent Director presides at these meetings and provides the Board of Directors'Directors’ guidance and feedback to our management team. The Board of Directors designated


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Peter A. Leidel as the Lead Director in March 2017, and Mr. Leidel served as Lead Director until the Board of Directors designated Wayne Murdy to serve as the Lead Independent Director in March 2018.


The Board of Directors has fivesix standing committees: the Audit Committee, the Compensation Committee, the Nominating and Governance Committee, the Executive Committee, the Hedging Committee and the HedgingFinance Committee.


The Board of Directors expects to meet a minimum of four times per calendar year in 20192020 and future years and the Board of Directors expects each Committee of the Board of Directors to meet between two and four times per calendar year in 20192020 and future years.


Audit Committee. The members of the Audit Committee are Messrs. Chronister, EvansGaensbauer and Murdy and Ms. Robertson, and Mr. Murdy serves as Chairman of the Audit Committee. Mr. Gaensbauer was appointed to the Audit Committee in July 2019 and Ms. Robertson was appointed to the Audit Committee when she joined the Board in September 2019. Donald Evans was a member of the Audit Committee until he departed the Board in July 2019. The Audit Committee held fourfive meetings in 2018.2019. Additional information regarding the functions performed by the Audit Committee and its membership is set forth in the "Audit“Audit Committee Report"Report” included herein and also in the "Audit“Audit Committee Charter"Charter” that is posted on the Company'sCompany’s website at www.extractionog.com.


Compensation Committee. Responsibilities of the Compensation Committee, which are discussed in detail in the "Compensation“Compensation Committee Charter"Charter” that is posted on the Company'sCompany’s website atwww.extractionog.com, include, among other duties, the responsibility to:


•
review, evaluate and approve the agreements, plans, policies and programs of the Company to compensate the Company'sCompany’s executive officers and directors;


•
review and discuss with the Company'sCompany’s management the Compensation Discussion and Analysis included in this Proxy Statement;


•
produce the Compensation Committee Report as required by Item 407(e)(5) of Regulation S-K included in this Proxy Statement;


•
otherwise discharge the Board'sBoard’s responsibilities relating to compensation of the Company'sCompany’s executive officers and directors; and


•
perform such other functions as the Board may assign to the Committee from time to time.


The Compensation Committee is delegated all authority of the Board of Directors as may be required or advisable to fulfill its purposes. The Compensation Committee may delegate to its Chairman, any one of its members or any subcommittee it may form the responsibility and authority for any particular matter as it deems appropriate from time to time under the circumstances. Meetings may, at the discretion of the Compensation Committee, include members of the Company'sCompany’s management, other members of the Board of Directors, consultants or advisors and such other persons as the Compensation Committee believes to be necessary or appropriate. The Compensation Committee will consult with the Company'sCompany’s Chief Executive Officer when evaluating the
8



performance of, and setting the compensation for, the Company'sCompany’s executive officers other than the Chief Executive Officer.


The Compensation Committee may, in its sole discretion, retain and determine funding for legal counsel, compensation consultants, as well as other experts and advisors (collectively, "Committee Advisors"“Committee Advisors”), including the authority to retain, approve the fees payable to, amend the engagement with and terminate any Committee Advisor, as it deems necessary or appropriate to fulfill its responsibilities.


The members of the Compensation Committee are Messrs. Chronister, Gaensbauer, Leidel and O'BrienO’Brien and Mr. Chronister serves as the Chairman of the Compensation Committee. Mr. Gaensbauer was appointed to the Compensation Committee in May 2019. The Compensation Committee held threesix meetings in 2018.

2019.


Nominating and Governance Committee. The Nominating and Governance Committee advises the Board, makes recommendations regarding appropriate corporate governance practices and assists the


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Board in implementing those practices. The Nominating and Governance Committee further assists the Board by identifying individuals qualified to become members of the Board, consistent with the criteria approved by the Board, and by recommending director nominees to the Board for election at the annual meetings of stockholders or for appointment to fill vacancies on the Board. Additional information regarding the functions performed by the Nominating and Governance Committee is set forth in the "Corporate Governance"“Corporate Governance” and "Stockholder“Stockholder Proposals; Identification of Director Candidates"Candidates” sections included herein and also in the "Nominating“Nominating and Governance Committee Charter"Charter” that is posted on the Company'sCompany’s website at www.extractionog.com.


The members of the Nominating and Governance Committee are Messrs. Chronister, Leidel, Murdy and O'Brien,O’Brien, and Mr. Leidel serves as Chairman of the Nominating and Governance Committee. The Nominating and Governance Committee held twothree meetings in 2018.

2019.


Executive Committee. The Executive Committee is responsible for assisting the Board and the Audit Committee in fulfilling their oversight responsibilities with respect to the annual review of the Company'sCompany’s oil and natural gas reserves and of any independent qualified reserves consultant; assisting the Board in the development, implementation and monitoring of the Company'sCompany’s health, safety and environment policies; and assisting the Board and the management of the Company in their oversight of the Company'sCompany’s long-term strategy development and implementation. The Executive Committee has adopted a charter that is posted on the Company'sCompany’s website at www.extractionog.com.


The members of the Executive Committee are Messrs. Erickson, Evans, Leidel, O'Brien andO’Brien, Owens and Tyree, and Mr. O'BrienO’Brien serves as Chairman of the Executive Committee.

Mr. Tyree was appointed to the Executive Committee when he joined the Board in March 2020. Mark Erickson and Donald Evans were members of the Executive Committee until they departed the Board in March 2020 and July 2019, respectively.


Hedging Committee.Committee. The Hedging Committee was established by the Board of Directors in December 2018 to assist the Board in providing oversight to the Company with respect to its commodity hedging activities. The Boardmembers of Directorsthe Hedging Committee are Messrs. Chronister and Gaensbauer, and Mr. Leidel serves as Chairman of the Hedging Committee. The Board expects the Hedging Committee to meet periodically as needed.


Finance Committee

Table. The Finance Committee was established by the Board of ContentsDirectors in December 2019 to assist the Board in providing oversight to the Company with respect to strategic initiatives to simplify and improve the Company’s capital structure and with respect to debt reduction efforts. The members of the Finance Committee are Mr. Leidel and Ms. Robertson, and Mr. Gaensbauer serves as Chairman of the Finance Committee. The Board expects the Finance Committee to meet periodically as needed.

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PROPOSAL TWO:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

The Audit Committee of the Board of Directors has appointed PwC as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2019.2020. The audit of the Company'sCompany’s consolidated financial statements for the fiscal year ended December 31, 2018,2019, was completed by PwC on February 21, 2019.

March 12, 2020.


The Board of Directors is submitting the appointment of PwC for ratification at the Annual Meeting. The submission of this matter for approval by stockholders is not legally required, but the Board of Directors and the Audit Committee believe the submission provides an opportunity for stockholders through their vote to communicate with the Board of Directors and the Audit Committee about an important aspect of corporate governance. If the stockholders do not ratify the appointment of PwC, the Audit Committee will reconsider the appointment of that firm as the Company'sCompany’s auditors.


However, the Audit Committee has the sole authority and responsibility to retain, evaluate and replace the Company'sCompany’s auditors. The stockholders'stockholders’ ratification of the appointment of PwC does not limit the authority of the Audit Committee to change auditors at any time.


Audit and Other Fees

The table below sets forth the aggregate fees billed by PwC, the Company'sCompany’s independent registered public accounting firm, for the last two fiscal years (in thousands):

 
 2018 2017 

Audit Fees(1)

  1,832,965  1,928,922 

Audit-Related Fees

  30,000  15,000 

Tax Fees

  108,569  46,122 

All Other Fees

  2,766  2,766 

Total

  1,974,300  1,992,810 
​​​ ​​​ ​ ​
​​​​​​​​
​​​ ​ ​​ ​ ​
20192018
Audit Fees(1)$1,848,275  $1,832,965  
Audit-Related Fees—  30,000  
Tax Fees159,180  108,569  
All Other Fees2,778  2,766  
Total$2,010,233  $1,974,300  
___________________________
(1)
Audit fees consist of the aggregate fees billed for professional services rendered for (a) the audit of our annual financial statements included in our Annual Report on Form 10-K and a review of financial statements included in our Quarterly Reports on Form 10-Q, (b) the filing of our registration statements for equity securities offerings, (c) the audit of the annual stand-alone financial statements of our subsidiary, (d) services that are normally provided in connection with statutory and regulatory filings or engagements for those years and (e) accounting consultations.


The charter of the Audit Committee and its pre-approval policy require that the Audit Committee review and pre-approve the plan and scope of PwC'sPwC’s audit, audit-related, tax and other services. For the year ended December 31, 2018,2019, the Audit Committee pre-approved 100% of the services described above.


The Company expects that representatives of PwC will be present at the Annual Meeting to respond to appropriate questions and to make a statement if they desire to do so.


Vote Required

Approval of Proposal TWO requires the affirmative vote of the holders of a majority of the shares present, in person or by proxy, and entitled to be voted at the Annual Meeting. Votes cast FOR or AGAINST and abstentions with respect to this Proposal TWO will be counted as shares entitled to vote on the Proposal. For these purposes, brokers have the discretion to vote if they do not receive


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voting instructions from the beneficial owner. A vote to ABSTAIN will have the effect of a vote AGAINST the Proposal.


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Recommendation

The Board of Directors unanimously recommends that stockholders vote FOR the ratification of the appointment of PricewaterhouseCoopers LLP as the auditors of the Company for the fiscal year ending December 31, 2019.2020.


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COMPENSATION COMMITTEE REPORT

The information contained in this Compensation Committee Report shall not be deemed to be "soliciting material"“soliciting material” or to be "filed"“filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates such information by reference in such filing.

The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402 of Regulation S-K promulgated by the SEC with management of the Company, and, based on such review and discussions, the Compensation Committee recommended to the Board of Directors that such Compensation Discussion and Analysis be included in this Proxy Statement and incorporated by reference into the Company'sCompany’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

2019.

Compensation Committee of the Board of Directors

Marvin M. Chronister, Chairman
John S. Gaensbauer, Member
Peter A. Leidel, Member
Patrick D. O’Brien, Member

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Compensation Committee of the Board of Directors



Marvin M. Chronister,Chairman
Peter A. Leidel,Member
Patrick D. O'Brien,Member

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COMPENSATION DISCUSSION AND ANALYSIS


Named Executive Officers

This Compensation Discussion and Analysis provides information about our rationale and policies with regard toregarding the compensation of the executive officers who arewere our "Named“Named Executive Officers"Officers” for 2018. Our Named Executive Officers include2019, including all individuals who served as our principal executive officer (Mr. Owens and Mr. Erickson), all individuals who served as our principal financial officer (Mr. Kelley and the threeMr. Brock), and our two most highly compensated executive officers other than our principal executive officerofficers and principal financial officer.officers who were serving at the end of 2019 (Mr. Christ and Ms. Foschi). Our Named Executive Officers for 2018 include:

2019 consist of:

NamePrincipal Position
Matthew R. OwensPresident, Chief Executive Officer and Director
Mark A. EricksonFormer Chief Executive Officer and Chairman
Matthew R. OwensPresident and Director
Russell T. Kelley, Jr.Former Chief Financial Officer
Tom L. BrockVice President, Chief Accounting Officer and Principal Financial Officer
Eric J. ChristVice President, General Counsel &and Corporate Secretary
Marianella FoschiVice President of Finance


Other than the individuals listed above, no other individuals served as executive officers for us in 2019. This Compensation Discussion and Analysis is intended to provide context for the tabular disclosure provided in the executive compensation tables below and to provide investors with the material information necessary to an understanding of our compensation policies and decisions.


Executive Summary

We are an independent oil and natural gas company operating in the DJ Basin, where we develop unconventional oil and natural gas reserves. As we efficiently and responsibly grow reserves, production, and cash flow by developing our liquids richliquids-rich resource base, we seek to create long-term value for our stockholders, employees, energy consumers, and the communities in which we work. With these goals in mind, our executive compensation program is designed to attract, retain, motivate, and appropriately reward talented and experienced executives while ensuring that the interests of the Named Executive Officers are aligned with the long-term interests of our stockholders.


 2018
2019 Company Performance

Despite the headwinds facing the exploration and production industry during the year, we accomplished a number of significant achievements in 2018,2019, including the following:


•
We grewgenerated $122 million and $36 million of free cash flow for the second half of 2019 on an upstream and fully consolidated basis, respectively;

•We reduced outstanding borrowings under our total net equivalent productionrevolving credit facility by 47% year-on-year, while$80 million during the fourth quarter of 2019;

•We began drilling under our Operating Agreement in the City and County of Broomfield, redefining “industry standard” and establishing a new, company record quarterly production ratehigher bar for operating above state and federal regulations;

•We reduced our “all-in” cycle times by 29% as compared to 2018, with our average cycle time on a two-mile well for drilling, clean-out, completion, and flow back to a total of over 85 thousand barrels of oil equivalent per day. Our crude oil production grew 53% year-on-year, while establishing a new quarterly record high production rate of 46,584 barrels per day.only 10.7 days;


•
We formed and funded Elevation Midstream,diversified our midstream subsidiarytakeaway options, mitigating the basin-wide capacity shortages that is currently building out oil, gas and water gathering systems in the southern portion ofsignificantly curtailed our acreage encompassing our Southwest Wattenberg and Hawkeye development areas, the first of which is scheduled to be in service in the third quarter of 2019.production during 2018;


•
We built on our impeccablestrong safety record, which has now eclipsed 1.32 million man-hoursemployee hours without a single, recordable employee incident.

13



•
We grew our before-tax SEC PV-10 of year-end 2018 reserves to $3.25 billion, an approximate 65% increase compared to year-end 2017. $1.88 billion is classified as proved developed.

•
We reduced lease operatingour cash general and administrative (“G&A”) expense from $3.19/$2.39/barrel of oil equivalent (“BOE”) in 2018 to $1.69/BOE in 2017 to $2.86/BOE in 2018,2019, a 10%29% decline year-over-year.

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    •
    We generated approximately $165$56 million of cash proceeds through the divestiture of non-strategic assets.

assets in a difficult divestiture market.


CEO Target Compensation vs. Realized Compensation

The Compensation Committee believes that the compensation actually received by our executive officersNamed Executive Officers should be strongly correlated with the Company'sCompany’s performance and also the overall shareholderstockholder experience. The CompanyCommittee believes that the compensation program in place accomplishes this, with a large portion of overall target compensation dependent on achieving specific pre-determined quantitative goals and the Company'sCompany’s long-term total shareholderstockholder return, both on an absolute basis and on a relative basis as compared to our peers. The chart below depicts, for the last three fiscal years, the amount of compensation targeted to be delivered to our CEO and the amount of compensation actually realized by him in those three years, along with the Company'sCompany’s average share price during those three year.

years. We have included Mr. Owens’s compensation in the chart below because he became our interim CEO in April 2019 when Mr. Erickson took a medical leave of absence, and the Compensation Committee recognized Mr. Owens’s service in this role when determining his compensation for 2019.


CEO 3-Year Target vs. Realized Compensation

image2.jpg
GRAPHIC

Target Compensation:Compensation:Target base salary rate, target STIPshort-term cash incentive program (“STIP”) bonus, and target LTIP grant under our 2016 Amended and Restated Long Term Incentive Plan (“LTIP”)


Realized Compensation:Compensation: Actual base salary received, actual STIP bonus awarded, and value of equity awards at the time of vesting. For more detail on "Realized“Realized Compensation,"” see page 29.28.


Stock Price:Price: Valued using the average closing price for each fiscal year, which was $21.26 for 2016, $15.41 for 2017, and $11.97 for 2018.2018, and $3.56 for 2019.


The realized compensation depicted here is significantly lower than the compensation indicated in the "Summary“Summary Compensation Table"Table” on page 27, largely due to the fact that the Summary Compensation Table utilizes the accounting value of equity awards as of the date of grant, rather than the actual value of those awards upon vesting. Additionally, some equity awards presented in the Summary Compensation Table as compensation, such as performance shareperformance-based equity awards, may only be partially earned or unearned altogether based on actual performance under the performance metrics of such awards. The chart above is not intended to replace the Summary
14



Compensation Table. Rather, the Summary Compensation Table and the information above each serves a different purpose and provides a different insight for investors.


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Changes to Our Executive Compensation Program

In light of the continuing moderation in oil prices and current industry conditions, and the impact they had on our performance during 20182019, and the expected ongoing impact on the price of our common stockCommon Stock during the year, ourthe Compensation Committee made the following executive compensation decisions for 2018,2019, in an effort to align executive compensation with the overall shareholderstockholder experience:


•
Maintained the base salaries of our Chief Executive Officer, President and Chief Financial Officer at existing levels in place since 2017. TheThrough the end of 2019, the base salaries for our President and Chief Financial Officer have remained unchanged since our initial public offering in 2016;2016. Additionally, effective April 1, 2020, the Company’s officers took a voluntary 10% reduction in their base salary and target bonus amount for the remainder of 2020.

•
In the third quarter of 2019, the Board amended the Company’s capital budget to execute upon a more measured pace of development to focus on generating free cash flow and to deemphasize the Company’s production growth. While the 2019 STIP would have allowed the Compensation Committee the ability to adjust the metrics in the program to account for the revised budget, due to the negative stock price performance of the Company during 2019, the Compensation Committee elected not to adjust the impacted metrics; and

•
The Compensation Committee used its discretiondesigned the performance-based long-term equity incentive awards issued in 2019 to reducebe a mix of both share-settled and cash-settled awards to mitigate potentially extensive dilution to the amount ofCompany’s Common Stock given the annual cash incentive bonuses paid to our Chief Executive Officer, President and Chief Financial Officer underdecline the formulaic terms of our 2018 short-term cash incentive program. The bonuses paid to our Chief Executive Officer, President and Chief Financial Officer were reduced by 25%, 16.5% and 16.5%, respectively.

Company’s stock price.


CEO Pay at a Glance

To ensure that the interests of the Named Executive Officers are aligned with stockholders, ourthe Compensation Committee has designed our executive compensation program to include a substantial amount of pay that is at-risk. At-risk pay may be performance-based, equity-based, or both. The first chart below shows that 91%85% of our current Chief Executive Officer's 2018Officer’s 2019 target compensation is comprised of at-risk pay, while his guaranteed base salary comprises only 9%15% of his target annual compensation. Similarly,We have included Mr. Owens’s compensation in the second chartcharts below shows that, on average, 83%because he became our interim CEO in April 2019 when Mr. Erickson took a medical leave of our Named Executive Officers' (excluding our Chief Executive Officer) 2018 targetabsence, and the Compensation Committee recognized Mr. Owens’s service in this role when determining his compensation is comprised of at-risk pay, while their average guaranteed base salary comprises only 17% of their average target annual compensation.

for 2019.


2018
2019 CEO Target Pay Mix

image1.jpg
2018 Target Pay Mix for Other NEOs

15
GRAPHIC



Say-on-Pay and Say-on-Frequency

As of December 31, 2017, the Company no longer qualified as an emerging growth company (as such term is defined in the Jumpstart Our Business Startups Act, also known as the JOBS Act). As such, the Company last yearin 2018 began offering stockholders the opportunity to vote, on a non-binding advisory basis, to approve the Company'sCompany’s executive compensation programs, colloquially known as "Say-on-Pay." Of shares voted, 95.7%“Say-on-Pay.” In 2019, 97.3% of the votes cast by our shareholders voted,stockholders approved, on a non-binding advisory basis, to approve the Company's executive compensation programs.

of our Named Executive Officers. The Compensation Committee viewed the results of the 2019 Say-on-Pay vote as supportive of our executive compensation programs for our Named Executive Officers. The Committee will continue to assess the results of Say-on-Pay votes with careful consideration of our stockholders’ preferences and will determine what, if any, changes should be made to our executive compensation programs currently in place.


In May 2018, we also offered stockholders the opportunity to vote, on a non-binding advisory basis, on the frequency of such Say-on-Pay votes, or "Say-on-Frequency."“Say-on-Frequency.” 99.7% of the votes cast by our shareholders voted thatstockholders were cast in favor of the Company should holdholding Say-on-Pay votes annually. The Board of Directors considered the results of this Say-on-Frequency advisory vote and, as such, the Company is again including a Say-on-Pay proposal in this Proxy Statement and intends to continue to do so annually. We again look forward to receiving feedback from our stockholders regarding the Company'sCompany’s executive pay practices, as we value our stockholders'stockholders’ evaluation of our executive compensation programs and policies. As discussed in more detail in Proposal FOURTHREE below, the Board has recommended that stockholders vote, on a non-binding advisory basis, to approve our executive compensation programs as described below.


EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES

Our executive compensation policies are designed to align managementNamed Executive Officer and stockholder interests and create value for investors while attracting and retaining talented executives with the skills and expertise to help us achieve our financial and operational goals. We have a strong interest in the retention of our current Named Executive Officers as their dedication and experience allows us to efficiently achieve our corporate objectives and create value for stockholders. We aim to provide effective retention mechanisms while preventing excessive payments or improper incentives. We strive to maintain competitive pay practices within our industry while ensuring that our stockholders receive maximumstrong returns and security for their investment. We aim to accomplish this through linking our executive compensation to several measures of the Company'sCompany’s short-term and long-term performance. A majority of our compensation program is structured based on pay that is at-risk.


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        Our

The Compensation Committee regularly reviews best compensation and governance practices in attempt to ensure that our executive compensation program is designed such that it is consistent with those practices while striving to achieve the compensation objectives described above. The following table provides a brief summary of some of our compensation practices.


What we do:What we don'tdon’t do:

•

Pay for performance, andincluding pay for sustained performance over multi-year periods

•

No single triggersingle-trigger change in control vesting or severance payments

•

Substantial portionMajority of pay at-risk

•

No gross-ups for severance or change in control payments

•

Equity awards subject to extendedmulti-year vesting periods

•

No guaranteed annual bonuses

•

Policy prohibiting hedging transactions

•

No excessive perquisites

•

Policy prohibiting pledging transactions subject to limited exceptions with Audit Committee approval

•

No payment of dividends on unvested restricted stock units and no payment of current dividends on unvested performance stock unitsequity awards

•

Independent Compensation Consultantcompensation consultant

•Representative and relevant peer group

•

Stock ownership guidelines for non-employee directors and executives


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HOW WE MAKE COMPENSATION DECISIONS

Role of the Compensation Committee

The Compensation Committee has the responsibility to review and approve the compensation policies, programs, and plans for the Company'sCompany’s officers and directors, including administering our 2016 Long Term Incentive Plan ("LTIP").LTIP. The Compensation Committee is also responsible for reviewing our Compensation Discussion and Analysis and producing the Compensation Committee Report with respect to our executive compensation disclosures. Finally, the Compensation Committee establishes our compensation objectives to maintain a competitive and effective compensation program. The Compensation Committee, in administering the compensation program for our directors and officers, employs several analytic tools and considers information from multiple resources. Subject in certain circumstances to Board approval, the Compensation Committee has the sole authority to make final decisions with respect to our executive compensation program, and the Compensation Committee is under no obligation to utilize the input of other parties.program. For more detailed information regarding the Compensation Committee, the current Compensation Committee Charter is posted on the Corporate Governance page of the investor relations section of the Company'sCompany’s website atwww.extractionog.com.


Role of Compensation Consultant in Compensation Decisions

The Compensation Committee has retained Frederic W. Cook & Company ("(“FW Cook"Cook”), as the committee'sCommittee’s independent compensation consultant. FW Cook provides advice to and works with the Compensation Committee in designing and implementing the structure and mechanics of the Company'sCompany’s executive compensation regime as well as other matters related to officer and director compensation. For example, FW Cook worked with the Compensation Committee to design the performance-based annual cash incentive programSTIP and long-term equity incentive programthe LTIP for executive officers first implemented in 2017. In addition, FW Cook provides the Compensation Committee with external context such as relevant market and peer-company data, trends in executive compensation, and developments in executive compensation practices. This information assists the Compensation


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Committee in making executive and director compensation decisions based on market pay levels and best practices.


The Compensation Committee made the decision to retain FW Cook again in 2019, and FW Cook reports directly and exclusively to the Compensation Committee. FW Cook does not have authority to make compensation-related decisions for the Compensation Committee or otherwise with respect to the Company, and the Compensation Committee is not required to utilize any of the information or advice provided by FW Cook. In addition, other than its services performed for the Compensation Committee, FW Cook does not provide additional services to management, the Company, or its affiliates. The Compensation Committee has the discretion to allow FW Cook to work with management in preparing or reviewing materials for the Compensation Committee'sCommittee’s consideration. During 2018,2019, and after taking into consideration the factors listed in NASDAQ Listed Company Rule 5605(d)(3)(D), the Compensation Committee concluded that neither it nor the Company have any conflicts of interest with FW Cook, and that FW Cook is independent from management. Other than FW Cook, no other compensation consultants provided services to the Compensation Committee during 2018.

2019.


Role of Executive Officers in Compensation Decisions

After reviewing the information and advice provided by FW Cook, our corporate goals, historic and projected performance, the current economic environment, and any other relevant factors, the Compensation Committee determines the compensation for our Executive Chairman and Chief Executive Officer. In making compensation determinations with respect to the other Named Executive Officers, the Compensation Committee may consider recommendations from our Executive Chairman or Chief Executive Officer but retains sole discretion over final compensation determinations. Additionally, the Compensation Committee requests that the Named Executive Officers provide recommendations on the appropriate goals when establishing the qualitative and quantitative performance metrics for the short-term cash incentive program. The Compensation Committee may disregard any such suggestions or observations made by our executive officers. In addition, thea Named Executive OfficersOfficer may attend Compensation Committee meetings upon invitation to report on the Company'sCompany’s progress with respect to the annual quantitative and qualitative performance metrics, but areis excluded from any discussions involving the officer'sofficer’s individual compensation.


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Determining Compensation Levels

As discussed above, the Compensation Committee has the overall responsibility for establishing the elements, terms, and target value of compensation delivered to our Named Executive Officers. The Compensation Committee strives to develop competitive, but not excessive, compensation programs for our employees and our Named Executive Officers in order to recruit, retain, and retain the best possible talentmotivate talented and experienced executives in our industry. An important element of the Compensation Committee's decision making isCommittee’s decision-making process includes the use of compensation data produced by our independent compensation consultant,FW Cook, including direct data from our peer group, other industry compensation surveys, and proprietary data developed by FW Cook. UsingThe Compensation Committee uses this data the Compensation Committee willto help evaluate each Named Executive Officer'sOfficer’s individual performance, the Company'sCompany’s overall performance, and market dataconditions to reach compensation decisions for individual officers.

Named Executive Officers.


Peer Group

        Our

The Compensation Committee, with input from FW Cook, chose our 20182019 peer group after reviewing the relative market capitalization, revenues, balance sheet strength, and location of assets of a number of similar companies in the upstream exploration and production business. In addition, the Compensation Committee attempted to select a sufficient number of peers to withstand possible attrition in the event of industry consolidation. After taking these considerations into account, the


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Compensation Committee removed Energen Corporation, EP Energy Corporation, Parsley Energy, Inc., Resolute Energy Corporation, RSP Permian, Inc., and WildHorse Resource Development Corporation from our peer group, and added Gulfport Energy Corporation, Jagged Peak Energy, Inc., Montage Resources Corporation, and Whiting Petroleum Corporation and determined that the companies included in the table below reflectreflected an appropriate peer group for 2018:

2019:

•

⋅Callon Petroleum Company

⋅Laredo Petroleum, Inc.

•

Matador Resources⋅SM Energy Company

•

RSP Permian,  Inc.

•

⋅Carrizo Oil & Gas, Inc.

⋅Matador Resources Company

•

⋅SRC Energy, Inc.

⋅Gulfport Energy Corporation⋅Montage Resources Corporation⋅Whiting Petroleum Corporation
⋅HighPoint Resources Corporation⋅Oasis Petroleum, Inc.

•

SM⋅WPX Energy, Company

Inc

•

Energen Corporation

•

Parsley⋅Jagged Peak Energy Inc.

•

SRC Energy,  Inc.

•

EP Energy Corporation

•

⋅PDC Energy, Inc.

•

WildHorse Resource Development Corporation

•

HighPoint Resources Corporation

•

Resolute Energy Corporation

•

WPX Energy,  Inc.

•

Laredo Petroleum,  Inc.


Compensation and total stockholder return data from the above peer group was used by ourthe Compensation Committee when making decisions regarding the compensation paid to our Named Executives Officers as well as for the relative total stockholder return comparison for the performance-based restricted stock unit awards ("2018 PSAs"(“2019 PSUs”) awarded to our Named Executive Officers in March 2018April 2019 for the three-year performance period covering January 1, 20182019 through December 31, 2020.2021. As described in "2018“2019 Awards under the LTIP"LTIP” below, at the end of the performance period, the Compensation Committee will certify the total stockholder return for our stock in comparison to our peer group, which will determine the payout level for the relative total shareholderstockholder return portion of the 2018 PSAs2019 PSUs granted to our Named Executive Officers. With respect to Energen Corporation, ResoluteCarrizo Oil & Gas, Inc., Jagged Peak Energy Corporation, RSP Permian, Inc., and WildHorse Resource Development Corporation,SRC Energy, Inc., those companies were acquired by a competitor since the grant date of the 2018 PSAs2019 PSUs and will no longer be considered as a part of the peer group when determining performance under the 2018 PSAs.

2019 PSUs.



18



ELEMENTS OF COMPENSATION

Base Salary

Each Named Executive Officer'sOfficer’s base salary is a fixed component of compensation each year for performing specific job duties and functions. Base salary is an integral component of our compensation and a crucial aspect of retaining top executive talent. Since our IPO, theThe Compensation Committee has workedworks together with our Chief Executive Officer to determine the amount, if any, of modifications to the base salary levels for each of our Named Executive Officers, except for Mr. Erickson'sthe base salary of the Executive Chairman and the Chief Executive Officer, which isare set directly by the Compensation Committee alone. Adjustments to the base salary rates for theour Named Executive Officers are made upon consideration of factors that ourthe Compensation Committee deems relevant, including, but not limited to: (a) any increase or decrease in the executive'sexecutive’s responsibilities, (b) the executive'sexecutive’s experience, (c) the executive'sexecutive’s job performance, and (d) the level of compensation paid to executives of other companies with which we compete for executive talent, as estimated based on publicly available information and the experience of the members of ourthe Compensation Committee. After considering each of these factors, the Compensation Committee made the following adjustments to base salaries for our Named Executive Officers, effective in May 2018.

March 2019.

Name
 2017
Base Salary		 2018
Base Salary		 

Tom L. Brock

  310,000  335,000 

Eric J. Christ

  310,000  335,000 
Name2018 Base Salary2019 Base Salary
Mark A. Erickson................................................................................$500,000  Unchanged  
Matthew R. Owens.............................................................................$450,000  Unchanged  
Russell T. Kelley, Jr...........................................................................$450,000  Unchanged  
Tom L. Brock......................................................................................$335,000  $345,050  
Eric J. Christ........................................................................................$335,000  $345,050  
Marianella Foschi...............................................................................$287,500  $300,000  


The base salaries for Messrs. Erickson, Owens, and Kelley were unchanged during 2018 and remain at $500,000, $450,000 and $450,000, respectively.2019. In
connection with his appointment to the Chief Executive Officer role in March 2020, Mr. Owens’s base salary was
increased to $500,000. The total base salary paid to each of our Named


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Executive Officers for services provided during 20182019 is reported below in the "Salary"“Salary” column of our Summary Compensation Table.


Effective April 1, 2020, the Company’s officers took a voluntary 10% reduction in their base salary and
target bonus amount for the remainder of 2020.

Annual Incentive Bonus—20182019 Short-Term Cash Incentive Program (STIP)

        Following our IPO we reviewed and evaluated all our compensation programs, including our short-term cash incentive program. During 2017, our Compensation Committee worked extensively with FW Cook, the Compensation Committee's independent compensation consultant, to design a new performance-based annual incentive program. This annual short-term cash incentive program

The STIP measures company-wideCompany-wide performance based upon both quantitative and qualitative metrics. The 2018 short-term cash incentive program2019 STIP was designed to provide pre-established objective performance criteria that could be communicated to our Named Executive Officers to motivate them to achieve specific short-term financial and operational goals. The 2018 short-term cash incentive program2019 STIP also provides for an established payout structure, with payout percentages that are calculated based upon actual performance as compared to quantitative and qualitative performance goals. The quantitative metrics allow the executives to strive towards very specific numerical performance goals, while the qualitative factors allow the Compensation Committee to evaluate more holistic companyCompany goals. Furthermore, the 2018 short-term cash incentive program still2019 STIP allows the Compensation Committee the flexibility to adjust the awardawards if necessary based on individual performance and any relevant market adjustments.


The quantitative performance metrics utilized in 2018,2019, which in the aggregate were weighted 80% of the total annual incentive opportunity, included both financial (50%(45% of the overall program)2019 STIP) and operational (30%(35% of the overall program)2019 STIP) performance goals.

All of the goals excluded the impacts associated with any of the Company’s unrestricted subsidiaries, such as Elevation Midstream, LLC, and the impact of any long-term incentive awards that are settled in cash.


The financial goals included:

    •
    Net debt at December 31, 2018, divided by the Company's last six months of EBITDAX, annualized ("Net Debt Metric");


•
Free cash flow per share,Cash Flow, calculated as the Company'sCompany’s 2019 cash flow from operations plus cash flow from investments as presented in the Company'sCompany’s audited financial statements excluding any impacts that are non-recourse to the Company and its restricted subsidiaries ("(“Free Cash Flow Metric"Metric”); and
19




•
Total internal rate of returnReturn on Invested Capital, which is the Company’s Adjusted EBITDAX for all2019, as disclosed in the wells brought online duringCompany’s filings with the year, measured on actual capital spent on drilling, completionSecurities and facilities against net revenue ("Rate of Return Metric"Exchange Commission, divided by the Company’s average gross cash invested (“ROIC Metric”).


The operational goals included:


•
Proved Developed Reserves growth per share,Growth, calculated as year-end 20182019 proved developed reserves divided by year-end 20172018 proved developed reserves ("(“Reserve Growth Metric"Metric”);


•
Production growth per share,Growth, calculated as production for 20182019 divided by production for 2017 ("2018, in each case measured by BOE (“Production Growth Metric"Metric”);

•Net Cash G&A, calculated as annual cash G&A less any cash reimbursements (“Cash G&A Metric”); and


•
Lease Operating cost per BOE produced, calculated as the sum of net cash general and administrative expense and direct operating costs (excludingExpenses, which excludes surface rental fees, transportation, and marketing expense and production taxes), divided by annual production as measured in BOE ("taxes (“Operating Cost Metric"Metric”).


The qualitative metrics that the Compensation Committee established (20%that 20% of the overall program) were2019 STIP would be associated with the execution on the Company’s strategic in nature and included:

    •
    Development and Board approval of an updated five-year business plan ("Long-Term Plan Metric");
goals.

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    •
    Development of an updated organizational plan to provide growth for the Company, including business performance processes and the attraction and retention of employees ("Organizational Metric");

    •
    Implementation of process safety measures to eliminate all significant health, safety & environmental incidents ("HSE Metric"); and

    •
    Community development initiatives ("Community Development Metric").

The chart below summarizes the metrics and performance levels established by the Compensation Committee for 2018.

2019.


WEIGHTINGTHRESHOLD
PERFORMANCE
LEVEL		TARGET
PERFORMANCE
LEVEL		MAXIMUM
PERFORMANCE
LEVEL

WEIGHTINGTHRESHOLD PERFORMANCE LEVELTARGET PERFORMANCE LEVELMAXIMUM PERFORMANCE LEVEL
Quantitative Metrics—80% Aggregate Weighting

Financial

•

Net Debt Metric

15%

2.00
Payout 7.5%

1.50
Payout 15%

1.25
Payout 30%

•

Free Cash Flow Metric

20%

25%

($10 million)
Payout 12.5%

$0
Payout 25%		$25 million
Payout 50%
($1.82)•ROIC Metric
20%23%
Payout 10%

($1.53)25%
Payout 20%

($1.24)27%
Payout 40%

•

Rate of Return Metric

Operational

15%

25%
Payout 7.5%

30%
Payout 15%

35%
Payout 30%

Operational

•

Reserve Growth Metric

9%

10%

2.5%12%
Payout 4.5%

5%

5.0%16.5%
Payout 9%

10%

10.0%20%
Payout 18%

20%

•

Production Growth Metric

10.5%

15%

60%15%
Payout 5.25%

7.5%

70%19%
Payout 10.5%

15%

75%23%
Payout 21%

30%

•

Cash G&A Metric

5%$71.5 million
Payout 2.5%		$65 million
Payout 5%		$58.5 million
Payout 10%
•Operating Cost Metric

10.5%

5%

$5.50104.5 million
Payout 5.25%

2.5%

$4.7595 million
Payout 10.5%

5%

$4.0085.5 million
Payout 21%

10%

Qualitative Factors—20% Aggregate Weighting

•

Long-Term Plan MetricStrategic Goals

5%

20%

The payout percentages for qualitative metrics are determined by theDetermined at Compensation Committee in itsCommittee’s discretion after considering the Company's qualitative performance in the listed areas and any other areas it deems important for the year.

•

Organizational Metric

based on execution of strategic goals

5%

•

HSE Metric

5%

•

Community Development Metric

5%


After the level of performance is determined, the payout percentage for each individual metric is added together to calculate the total payout percentage for each Named Executive Officer. The Compensation Committee may then further adjust the total payout percentage for each participantNamed Executive Officer either up or down to take into account individual performance or for other factors. The final payout percentage is


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then multiplied by the participant'sparticipant’s target bonus opportunity. For 2018,2019, the target bonus opportunities for our Named Executive Officers, as a percentage of their base salaries at year-end, were 150% for Mr. Erickson, 100% for Messrs. Owens and Kelley, and 75% for Messrs. Brock and Christ.

As Ms. Foschi was only designated an executive officer of the Company in 2019, she participated in the bonus program established for non-executive employees.

GRAPHIC

20



graphic1.gif

In March 2019,2020, the Compensation Committee met to determine the payout percentage for each metric based on the actual level of performance achieved for each of the qualitative and quantitative performance factors. The Compensation Committee reviewed and discussed the data regarding the Company'sCompany’s performance as compared to the targets for each quantitative performance metric established for 2019.

In the 2018 fiscal year. Duethird quarter of 2019, the Board amended the Company’s capital budget to execute upon a more measured pace of development to focus on generating free cash flow and to deemphasize the Company’s production growth. While the 2019 STIP would have allowed the Compensation Committee the ability to adjust the metrics in the program to account for the revised budget, due to the negative stock price performance of the Company during 2018,2019, the Compensation Committee used its discretionelected not to reduceadjust the amount of the annual incentive bonuses paid to our Chief Executive Officer, President and Chief Financial Officer under the formulaic terms of this program, as detailed below.

impacted metrics.


The Compensation Committee calculated the payout percentage for the financial quantitative metrics of 72.2%17.7% and the operational quantitative metrics of 25.8%34.6% by applying the actual results for each quantitative metric for the 2018 fiscal year2019 to the targets approved by the Compensation Committee.


With respect to the financial quantitative metrics, the Company achieved performance (i) betweenbelow the target and maximum levels for the Net Debt Metric, resulting in a 10.1% payout percentage for that metric, (ii) at the maximumthreshold level for the Free Cash Flow Metric, resulting in a 40%no payout percentage for that metric and (iii) achieved performance between(ii) slightly under the threshold and target levelslevel for the Rate of ReturnROIC Metric, resulting in a payout percentage of 22.2%17.7% for that measure.


With respect to the operational quantitative metrics, the Company achieved performance (i) at the maximumthreshold level for the Reserve Growth Metric, resulting in a 18%5% payout percentage for that measure, (ii) achieved performancebetween the target and maximum levels for the Production Growth Metric, resulting in a payout percentage of 15.2% for that measure, (iii) between the threshold and target levels for the Operating Cost Metric, resulting in a payout percentage of 7.8%4.4% for that measure, and (iii) failed to achieve(iv) at the threshold performancemaximum level for the Production GrowthCash G&A Metric, resulting in a 0% payout percentage of 10% for that metric.

measure.


With respect to the qualitative metrics, the Compensation Committee considered a variety of qualitative factors, including leadership through a transition of management, support of business development activities, provision of strategic and tactical advice to the Board, commitment to ethics and integrity and driving a culture of compliance, and successful development and management of external partnerships, in determining a payout percentage of 35.1%0% for the Long-Term Plan Metric, the Organizational Metric, the HSE MetricMr. Erickson, 30% for Mr. Owens, 40% for Mr. Christ, and the Community Development Metric.

20% for Mr. Brock.

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The following chart shows the Compensation Committee'sCommittee’s determination with respect to the 2018 short-term cash incentive program2019 STIP performance measures:


Quantitative Metrics

MetricThresholdTargetMaximumActual ResultPayout Percentage
Financial
Free Cash Flow($10 million)$0$25 million($69 million)0.0%
ROIC23%25%27%24.5%17.7%
Operational
Reserve Growth12%16.5%20%12%5.0%
Production Growth15%19%23%19.1%15.2%
Operating Cost$ 104.5 million$ 95 million$ 85.5 million$ 97.2 million4.4%
Cash G&A$ 71.5 million$ 65 million$ 58.5 million$ 49.3 million10.0%


21



Metric
 Threshold Target Maximum Actual
Result		 Payout
Percentage		 

Financial

                

Net Debt Ratio

  2.00  1.50  1.25  1.83  10.1%

Free Cash Flow per Share

 $(1.82)$(1.53)$(1.24)$(1.18) 40%

Rate of Return for Drilling & Completion

  25% 30% 35% 32.4% 22.2%

Operational

                

Reserve Growth per Share

  2.5% 5.0% 10.0% 11.2% 18%

Production Growth per Share

  60% 70% 75% 46.9% 0%

Operating Cost per Boe

 $5.50 $4.75 $4.00 $5.14  7.8%


Qualitative Metrics

MetricMinimumTargetMaximumPayout Percentage
Execution on Strategic Goals
Mark A. Erickson0%20%40%0%
Matthew R. Owens0%20%40%30%
Eric J. Christ0%20%40%40%
Tom L. Brock0%20%40%20%

Metric
ThresholdTargetMaximumActual ResultPayout
Percentage
Long-Term Plan
Organizational Development Health, Safety & Environmental Community DevelopmentThe payout percentage for qualitative metrics is determined by the Compensation Committee in its discretion after considering the Company's qualitative performance in the listed areas and any other areas it deems important for the year.35.1%
TOTAL 2018 PAYOUT PERCENTAGE133.1%

        The final payout percentage of 133.1%, as determined above, was then multiplied by the Named Executive Officer's target bonus opportunity in order to calculate the total bonus payable to each Named Executive Officer. Due to the negative stock price performance of the Company during 2018, the Compensation Committee used its discretion to reduce the amount of the annual incentive bonuses paid to our Chief Executive Officer, President and Chief Financial Officer under the formulaic terms of this program as set forth in the table below. The annual incentive bonus amount paid to each Named Executive Officer for the 2018 fiscal year under the 2018 short-term cash incentive program2019 STIP are outlined in the chart below and are reported in the Summary Compensation Table in the "Non-Equity“Non-Equity Incentive Plan Compensation"Compensation” column:


Name
 Base
Salary
as of 12/31/18		  
 Target
Bonus as %
of Base
Salary		  
 Payout
Percentage		  
 Individual
Adjustments		  
 Actual 2018
Bonus Award		 NameBase Salary as of 12/31/19Target Bonus as % of Base SalaryPayout Percentage2019 STIP Award

Mark A. Erickson

 $500,000 X 150%X 133.1%+ $(248,250)= $750,000 Mark A. Erickson$ 500,000X150%X52%=$390,000

Matthew R. Owens

 $450,000 X 100%X 133.1%+ $(99,146)= $500,000 Matthew R. Owens$ 450,000X100%X82%=$369,000

Russell T. Kelley, Jr.

 $450,000 X 100%X 133.1%+ $(99,146)= $500,000 

Tom L. Brock

 $335,000 X 75%X 133.1%+ $0 = $335,000 Tom L. Brock$ 345,050X75%X72%=$186,300

Eric J. Christ

 $335,000 X 75%X 133.1%+ $0 = $335,000 Eric J. Christ$ 345,050X75%X92%=$238,050

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        The actual amounts awarded to Messrs. Erickson, Owens and Kelley were 75.1%, 83.5% and 83.5% of the amounts, respectively, that would have been earned had the Committee not exercised its negative discretion and lowered the amounts of these awards.

2018

2019 Awards Underunder the LTIP

        In connection with the closing of our IPO, our Board of Directors adopted, and our stockholders approved, the

Our stockholder-approved LTIP is intended to attract, retain, and motivate our employees, directors, and consultants. Our Named Executive Officers are eligible to participate in the LTIP, which provides for the grant of cash and equity-based awards, including options to purchase shares of our Common Stock, stock appreciation rights, restricted stock, restricted stock units ("RSUs"(“RSUs”), bonus stock, dividend equivalents, other stock-based awards, performance awards and annual incentive awards. Since the adoption of our LTIP, we have awarded only time-basedtime-vesting RSUs, and performance-based shareperformance-vesting restricted stock awards (referred to as PSAs)(“PSAs”), performance-vesting RSUs (“PSUs”), and stock options pursuant to our LTIP. The amendmentunder the Plan.

2019 Restricted Stock Units and restatement of the 2016 Plan was adopted and approved by the Board on March 28, 2019, subject to stockholder approval. Unless otherwise specified, the remainder of this discussion refers to the amended and restated 2016 Plan as if this proposal is approved by our stockholders

2018 Performance Stock AwardsUnits under the LTIP


In March 2018,2019, the Compensation Committee granted PSAstime-vesting RSUs and performance-vesting PSUs to eachcertain of our Named Executive Officers. For Messrs. Erickson, Owens, and Kelley, 75% of the targeted award value was issued in PSUs and 25% of the targeted award value was issued in RSUs. For Messrs. Brock and Christ, 50% of the targeted award value was issued in PSUs and 50% of the targeted award value was issued in RSUs. For Ms. Foschi, 38% of her targeted award was issued in RSUs and 62% of her targeted award was issued in time-vesting restricted cash, which was granted to her before she was designated as an executive officer, and which vests 25% on the first and second anniversaries of the grant date and 50% on the third anniversary of the grant date, subject to her continued service. With respect to the PSUs issued, a portion were issued such that they would be settled in our Common Stock and a portion were issued such that they would be settled in cash. The Compensation Committee designed this to mitigate potentially extensive dilution to our Common Stock given the decline the Company’s stock price.

The Compensation Committee determined to award all PSAs for the 2018 compensation periodabove mix of awards granted in 2019 would help to ensure that a meaningful portion of our Named Executive Officers'Officers’ compensation is performance-based and variable based on the performance of our stock price, including stock price relative to our peers, as well as the Company's cash returnedCompany’s return on capital invested, thus incentivizing our Named Executive Officers to achieve long-term companyCompany performance goals and superior operational execution.


The RSUs granted to the Named Executive Officers in April 2019 are scheduled to vest, subject to continued employment with us and the terms of the LTIP, in equal amounts on April 1, 2020, 2021 and 2022.

For the 2018 PSAs,2019 PSUs, the performance metrics are (i) relative total stockholder return, which measures the Company'sCompany’s total stockholder return as compared to the total stockholder return of fifteen15 peer group companies ("RTSR"(“RTSR”), (ii) absolute total shareholderstockholder return, which ensuresprovides for payout of the PSAssuch PSUs only in the event of
22



positive shareholderstockholder return ("ATSR"(“ATSR”), and (iii) cash returnedreturn on capital invested ("CROCI"(“ROIC”), allin each case measured over the performance period from January 1, 20182019 through December 31, 2020.2021. The Compensation Committee determined that these metrics were appropriate performance measures over the performance period because they are intended to align the interests of our Named Executive Officers with those of stockholders. In addition, due to the sustained volatility in commodity prices, the Compensation Committee felt that the PSAsPSUs should also partially vest based on performance relative to peers in our industry.


At the end of the performance period, the 2018 PSAs2019 PSUs will vest based on the Compensation Committee'sCommittee’s certification of the Company'sCompany’s RTSR, ATSR, and CROCIROIC for the performance period. Following such certification of performance, the 2018 PSAs2019 PSUs will vest as follows:


Relative Total ShareholderStockholder Return (RTSR):

LevelPerformance (Percentile Rank vs. Peers)Payout (% of Target)% of Granted PSUs to Vest
Less than Threshold
< 30th Percentile
0%0%
Threshold
30th Percentile
50%15%
Target
55th Percentile
100%30%
Maximum
80th Percentile
200%60%
Level
 Performance
(Percentile
Rank vs. Peers)		 Payout
(% of Target)		 % of Granted
PSAs to Vest		 

Less than Threshold

 < 30th Percentile  0% 0%

Threshold

 30th Percentile  50% 7.5%

Target

 55th Percentile  100% 15%

Maximum

 80th Percentile  200% 30%


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Absolute Total ShareholderStockholder Return (ATSR):

LevelYearly Average ATSRPayout (% of Target)% of Granted PSUs to Vest
Less than Threshold< 5%0%0%
Threshold5%50%15%
Target10%100%30%
Maximum15% or more200%60%
Level
 ATSR Over the
Entire Performance
Period		 Payout
(% of Target)		 % of
Granted
PSAs to Vest		 

Less than Threshold

 < 15.8%  0% 0%

Threshold

 15.8%  50% 7.5%

Target

 33.1%  100% 15%

Maximum

 52.1% or more  200% 30%

Cash

Return on Capital Invested (CROCI)(ROIC):

LevelYearly Average ROICPayout (% of Target)% of Granted PSUs to Vest
Less than Threshold< 18%0%0%
Threshold18%50%20%
Target20.5%100%40%
Maximum23% or more200%80%
Level
 CROCI Over the
Entire Performance
Period		 Payout
(% of Target)		 % of
Granted
PSAs to Vest		 

Less than Threshold

 < 36%  0% 0%

Threshold

 36%  50% 10%

Target

 45%  100% 20%

Maximum

 55% or more  200% 40%

        The 2018 PSAs

A portion of the 2019 PSUs will be forfeited entirely if the Company does not achieve at least the threshold level of RTSR, ATSR, and CROCI.ROIC with respect to that portion. In the event that target performance is achieved for a particular metric, 50%100% of the number of PSAsPSUs granted associated with that metric will be forfeited. Only inearned. In the event that (i) maximum performance is achieved on each of the three metrics, will all200% of the 2018 PSAs2019 PSUs granted bewill become vested. Payout levels for performance between threshold, target, and maximum for a metric shallwill be calculated using straight line interpolation.



23



Other Compensation Elements

We have historically offered participation in broad-based retirement and health and welfare plans to all of our employees.employees, including our Named Executive Officers. We currently maintain a retirement plan intended to provide benefits under section 401(k) of the Internal Revenue Code of 1986 (as amended, the “Tax Code”) where employees, including our Named Executive Officers, are allowed to contribute portions of their base compensation to a tax-qualified retirement account. We provide matching contributions equal to 100% of the first 6% of employees'employees’ eligible compensation contributed to the plan. We also pay the premiums for life insurance coverage of $100,000 for each of our employees, including our Named Executive Officers on a non-discriminatory basis.


We have not in the past maintained, and do not currently maintain aor plan to maintain, any defined benefit pension planplans or nonqualified deferred compensation plan.

plans.


In addition, minimal perquisites have historically been provided to our Named Executive Officers, namely, with respect to Messrs. Owens and Kelley, a vehicle allowance. We expectIn February 2020, the Company ceased providing vehicle allowances for employees that each of these benefits will continue to be provided.


do not regularly work in field operations, such as our Named Executive Officers.

EMPLOYMENT AGREEMENTS

        We

Historically, we have entered into employment agreements with each of our Named Executive Officers. However, in 2019 the Compensation Committee began to design, and in 2020 the Company adopted, an Executive Severance Plan covering certain designated officers, including Messrs. Brock and Christ and Ms. Foschi. Upon entering into participation agreements under the Executive Severance Plan, the employment agreements between the Company and Messrs. Brock and Christ were terminated. Mr. Owens continues to have an employment agreement with the Company and Mr. Tyree, the Company’s Executive Chairman, entered into an employment agreement when he joined the Company in March 2020.

The Compensation Committee has determined that having employment agreements with these executive officersMr. Owens and Mr. Tyree is in the best interests of the Company and its stockholders. Many of the companies with which we compete for executive talent provide similarly situated executives with employment agreements and, as such, the agreements are an important recruiting and retention tool. We believe that the current executive officers have been integral to our success and are vital to the continuing performance of the Company. We believe that the terms of the employment agreements are fair to the Company and that the compensation under the employment agreements is competitive relative to our peer companies


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while not being excessive. For a description of the terms of the employment agreements with each of our Named Executive Officers, please see the section below entitled "Narrative“Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table."

”


POST-EMPLOYMENT ARRANGEMENTS

All of theour Named Executive Officers either have employment agreements with usor are participants under our Executive Severance Plan that provide for compensatory payments and benefits upon certain termination events, including a termination event in connection with a change in control. In addition, certain awards pursuant to our LTIP provide for termination and change in control payments.protection. For a discussion regarding the mechanics and amounts of these payments, please see the "Potential“Potential Payments Uponupon Termination or Change in Control"Control” discussion below. We do not have any single-trigger arrangements (i.e., arrangements that provide for payments to executives solely upon a change in control). In exchange for the severance benefits afforded to our Named Executive Officers in their employment agreements, the Named Executive Officers must execute (and not revoke) a general release and, in addition, are subject to certain ongoing obligations that accrue to the benefit of the Company, including certain confidentiality, non-competition, and non-solicitation obligations.


We provide these post-employment arrangements in order to retain our Named Executive Officers and to allow them to focus on enhancing the value of the Company without taking into account the personal impact of their business decisions. Our post-employment arrangements are intended to allow our Named Executive Officers to objectively manage the Company and provide a competitive benefit for attracting and retaining executives.



24



TAX AND ACCOUNTING CONSIDERATIONS

The Compensation Committee and the Company review and consider the tax, accounting, and securities law implications of our compensation programs.


Section 162(m)—. When setting executive compensation, we consider many factors, such as attracting and retaining executives and providing appropriate performance incentives. We also consider the after-tax cost to the Company in establishing executive compensation programs, both individually and in the aggregate, but tax deductibility is not our sole consideration. Section 162(m) of the Tax Code prohibits deductionsgenerally disallows a federal income tax deduction to public companies for annual compensation over $1 million (per individual) paid to their chief executive officer, chief financial officer, and the next three most highly compensated executive officers (as well as certain other officers who were covered employees in years after 2016). The 2017 Tax Act eliminated most of the exceptions from the $1 million deduction limit, except for certain arrangements in place as of November 2, 2017. As a result, most of the compensation payable to our Named Executive Officers in excess of $1 million duringper person in a single fiscal year to certain executive officers. Prior to implementation of the Tax Cuts and Jobs Act (the "Tax Act"), there was an exception to this prohibition for performance-based awards (as that term is defined in the Code), which exception (the "Performance-Based Exception") will continue with respect to compensation paid pursuant to certain written contracts in effect on November 2, 2017. We take the economic effects of Code Section 162(m) into consideration when determining the structure, implementation, and amount of awards paid to our executive officers, including the deductibility of our executive compensation programs. Prior to the implementation of the Tax Act, awards granted under our LTIP, including our annual cash bonuses and equity awards, were generally structured to not be subject to Code Section 162(m), but the elimination of the Performance-Based Exception will greatly reduce out flexibility in this regard. Accordingly, we reserve the right to pay non-deductible compensation to our executive officers.fully deductible.


Accounting for Executive Compensation—. Currently, we account for all equity-based compensation is accounted for under the rules of the Financial Accounting Standards Board Accounting Standards Codification Topic 718 ("(“FASB ASC Topic 718"718”). This rule requires us to estimate the expense of each equity award over the vesting period of the award and record it as such. We are also obligated to record cash-based awards as an expense at the time our payment obligation is accrued.


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RISK ASSESSMENT AND MITIGATION

The Compensation Committee has reviewed our executive and non-executive compensation programs and believes that they do not encourage excessive or unnecessary risk-taking. We believe that any risk inherent in our compensation programs is unlikely to have a material adverse effect on us. In designing and implementing our award structure, we worked closely with FW Cook to mitigate any risks and to design the program to minimize the creation of imprudent incentives for our executives. We believe that our performance-based compensation does not encourage unnecessary risks because the executive pay mix is sufficiently diversified over several performance metrics as well as over short-term and long-term compensation.


Our compensation program structure and policy includes the following features that are intended to prevent and safeguard against excessive risk-taking:


•
Payments under our short-term cash incentive programSTIP are based upon the Compensation Committee'sCommittee’s certification and review of a variety of performance metrics, thereby diversifyingwhich is intended to diversify the risk associated with any single performance indicator;


•
Our long-term equity compensation rewardsLTIP awards for executive officers generally have performance or vesting periods of at least three years, which encouragesis intended to encourage executives to focus on sustaining the performance of the Company and its stock price;


•
WeOur goal is to pay compensation that is competitive with the market and our industry peers, while not being excessive;


•
Our compensation mix is intended to be balanced among fixed and variable components, annual and long-term compensation, and cash- and equity-based awards that reward performance in the Company'sCompany’s and executive'sexecutive’s long-term best interests;


•
Our incentive compensation plans cap the maximum payout and implement design features that do not encourageare intended to discourage excessive risk-taking;


•
OurThe Compensation Committee has an appropriate level of discretion to reduce payments under the short-term cash incentive program;STIP;


•
Our insider trading policy contains a general anti-hedging and, subject to limited exceptions with Audit Committee approval, anti-pledging policy for all insiders; and

25



•
We do not have any agreements that provide for payments solely upon the occurrence of a change in control.

        We believe that our executive compensation program provides our executive officers with appropriate rewards for sustained performance without giving unnecessary weight to any one factor or type of compensation and avoiding excessive risk. Our structure is designed to encourage continual superior performance. Based on the foregoing, the Compensation Committee has concluded that the risks arising from our compensation policies and programs is not reasonably likely to have a material adverse effect on us.


Recoupment of Compensation

Our LTIP and all of our Named Executive Officers' employment agreements entered into with Messrs. Tyree and Owens are subject to deductions and clawbacks that may be required to be made pursuant to any law, government regulation, or stock exchange listing requirement or by any policy adopted by us. To date, the Board has not adopted a formal clawback policy to recoup incentive-based compensation upon the occurrence of a financial restatement, misconduct, or other specified events. The Sarbanes-Oxley Act of 2002 mandates that the Chief Executive Officer and Chief Financial Officer reimburse the Company for any bonus or other incentive-based or equity-based compensation paid to them in a year following the issuance of


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financial statements that are later required to be restated as a result of misconduct. In addition, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the "Dodd-Frank Act") requires the SEC to direct national securities exchanges to prohibit the listing of any security of an issuer that fails to develop and implement a clawback policy. The Compensation Committee is reviewing the SEC's proposed rules on incentive compensation clawbacks pursuant to the Dodd-Frank Act and evaluating the practical, administrative and other implications of adopting, implementing and enforcing a clawback policy, and intends to implement a more specific clawback policy once the SEC's rules are finalized.

Anti-Hedging and Anti-Pledging Policy

The Company maintains an insider trading policy that prohibits trading shares of our common stockCommon Stock when in possession of material non-public information. It also prohibits the hedging and, unless a waiver is obtained from our Audit Committee, the pledging of our shares. Since the adoption of our insider trading policy at the time of our initial public offering, the Audit Committee has not granted any waivers to the policy'spolicy’s general prohibition on pledging.


Stock Ownership Guidelines

        Upon the recommendation of the Nominating and Governance Committee, in March 2018 the Board adopted

We maintain stock ownership guidelines for non-employee directors and executives, including our Named Executive Officers. The details of the stock ownership guidelines applicable to our Named Executive Officers are outlined below. For information regarding the stock ownership guidelines applicable to our non-employee directors, please see the section of this Proxy Statement below entitled "Director“Director Stock Ownership Guidelines."

”

FeatureExecutives
Structure and AmountChief Executive Officer—5X Annual Base Salary
President and CFO—3X Annual Base Salary
Senior Vice Presidents—2X Annual Base Salary
Vice Presidents—1.5X Annual Base Salary

Shares that Count Towards Requirements

•

Vested and unvested RSUs

•

Shares purchased in the open market

•

Shares beneficially owned within the immediate family


Time Period to Meet Compliance

No set time period, but cannot sell stock until requirements are satisfied, other than (i) shares withheld to satisfy tax withholding obligations and (ii) shares disposed to satisfy the exercise price of Company stock options.

26

2018

2019 Summary Compensation Table

The following table summarizes the compensation awarded to, earned by, or paid to our Named Executive Officers for the fiscal years ended December 31,2019. Compensation information for 2018 and 2017 and 2016.

is presented for individuals who were also our Named Executive Officers in those years.
Name and Principal
Position
 Year Salary ($) Bonus ($) Stock
Awards(1)
($)		 Option
Awards(2)
($)		 Non-equity
Incentive
Plan
Compensation(3)
($)		 All Other
Compensation(4)
($)		 Total ($) 

Mark Erickson

  2018  500,000  —  3,009,286  —  750,000  88,500  4,347,786 

(Chief Executive Officer)

  2017  462,500  —  2,672,399  2,339,326  1,001,082  90,542  6,565,849 

  2016  417,339  1,012,500  14,891,303  10,125,000     —  26,446,142 

Matthew R. Owens

  2018  450,000  —  1,469,657  —  500,000  28,500  2,448,157 

(President)

  2017  450,000  —  1,305,127  1,142,462  600,649  12,000  3,510,238 

  2016  417,339  900,000  14,891,303  10,125,000     12,000  26,345,642 

Russell T. Kelley, Jr. 

  2018  450,000  —  1,469,657  —  500,000  12,000  2,431,657 

(Chief Financial Officer)

  2017  450,000  —  1,305,127  1,142,462  600,649  12,000  3,510,238 

  2016  417,339  900,000  11,426,600  10,125,000     12,000  22,880,939 

Tom L. Brock. 

  2018  335,000  —  699,836  —  335,000  16,500  1,386,336 

(Vice President, Chief Accounting Officer)

  2017  302,500  —  1,568,390  544,030  248,268  18,000  2,681,188 

Eric J. Christ. 

  2018  335,000  —  1,413,836  —  335,000  16,500  2,100,336 

(Vice President, General Counsel & Corporate Secretary)

  2017  302,500  —  1,588,574  544,030  248,268  18,000  2,701,372 
Name and Principal PositionYearSalary ($)Bonus ($)Stock Awards(1) ($)Option Awards(3) ($)Non-Equity Incentive Plan Compensation (4) ($)All Other Compensation (5) ($)Total ($)
Matthew R. Owens (President and Chief Executive Officer)2019450,000—2,283,845—369,00031,4003,134,245
2018450,000—1,469,657—500,00028,5002,448,157
2017450,000—1,305,1271,142,462600,64912,0003,510,238
Tom L. Brock (Vice President, Chief Accounting Officer)2019345,050—1,048,438—186,30016,8001,596,588
2018335,000—699,836—335,00016,5001,386,336
2017302,500—1,568,390544,030248,26818,0002,681,188
Eric J. Christ (Vice President, General Counsel & Corp. Secretary)2019345,050—1,048,438—238,05019,9501,651,488
2018335,000—1,413,836—335,00016,5002,100,336
2017302,500—1,588,574544,030248,26818,0002,701,372
Marianella Foschi (Vice President of Finance)2019300,000—151,472(2)—210,00016,800678,272
Mark Erickson (Former Chief Executive Officer)2019500,000—4,676,442—390,00016,8005,583,242
2018500,000—3,009,286—750,00088,5004,347,786
2017462,500—2,672,3992,339,3261,001,08290,5426,565,849
Russell T. Kelley, Jr. (Former Chief Financial Officer)2019318,750—2,283,845—165,7501,508,9874,277,332
2018450,000—1,469,657—500,00012,0002,431,657
2017450,000—1,305,1271,142,462600,64912,0003,510,238
___________________________
(1)
Amounts reported in this column represent the aggregate grant date fair value of all stock awards granted during the indicated fiscal year determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 ("FASB ASC Topic 718"),718, disregarding estimated forfeitures. The grant date fair value of each RSUtime-vesting restricted stock unit (“RSU”), performance-vesting restricted stock award (“PSA”), and performance-vesting restricted stock unit (“PSU”) is measured based on the closing price of our ordinary shares on the date of grant. These amounts do not necessarily correspond to the actual value recognized or that may be recognized by the Named Executive Officers. For 2016, for (i) restricted unit awards (RUAs) granted under the Holdings 2014 Membership Unit Incentive Plan, the amounts shown are based on the grant date fair value of an RUA on September 23, 2016, the date of grant, which was $5.84 and (ii) RSUs granted under the LTIP, the amounts shown are based on the closing price of our common stock on October 17, 2016, which was $21.51. All RUAs were directly or indirectly converted into Common Stock in connection with our IPO and, as such, no RUAs are currently outstanding. For 2017 and 2018, the amounts in this column represent the aggregate grant date fair value of the RSUs, if any, and PSAs granted to our Named Executive Officers. For additional information regarding the assumptions underlying this calculation, please see "Note 11—Unit and “Note 12—Stock-Based Compensation"Compensation” to the financial statements in our Annual Report on Form 10-K relating to fiscal year 20182019 for additional detail regarding assumptions underlying the value of these awards. See the section of our Compensation Discussion and Analysis above entitled "2018“2019 Awards under the LTIP"LTIP” above and the "Grants“Grants of Plan-Based Awards Table"Table” below for additional information regarding these awards.

(2)
Ms. Foschi also received a restricted cash award on April 5, 2019 in the amount of $248,528, which will vest, subject to continued employment with us, in amounts of 25% on April 1, 2020 and 2021, and 50% on April 1, 2022.
(3)Amounts in this column do not correspond to the actual value that will be recognized by the executive.Named Executive Officer. See "Note 11—Unit and “Note 12—Stock-Based Compensation"Compensation” to the financial statements in our Annual Report on Form 10-K relating to fiscal year 20182019 for additional detail regarding assumptions underlying the value of these awards and for a description of their accounting treatment under FASB ASC Topic 718. For 2017, and 2016, this column represents the aggregate grant date fair value of nonstatutory stock option awards granted during the year under the LTIP, calculated based on a per option value of $8.66, for 2017 and a per option value of $6.75 for 2016, as determined in accordance with FASB ASC Topic 718 using the Black-Scholes options pricing model.

(3)
Amounts in this column represent the
(4)Represents amounts earned under our STIP, which is an annual cash bonus awarded under the short-term cash incentive program for the indicated fiscal year. In 2017 and 2018, the Company implemented a short-term cash incentive program. This bonus programplan that is intended to incentivize our Named Executive Officers to achieve specific goals over the course of the year. As such, amounts earned under this program in 2017See the section of our Compensation Discussion and 2018 are reported inAnalysis above entitled “Annual Incentive Bonus—2019 Short-Term Cash Incentive Program (STIP)” for additional information regarding the "Non-Equity Incentive Plan Compensation" column rather than the "Bonus" column.2019 STIP.

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(4)
For 2018,2019, amounts reported in the "All“All Other Compensation"Compensation” column include Company contributions to the Named Executive Officers'Officers’ 401(k) plan retirement accounts, and a travel allowance or commuting reimbursementexecutive physical exams provided to certain of our Named Executive Officers, as shown in the following table.

27



Name
 401(k) Plan
Company
Matching
Contributions		 Travel
Allowance		 Commuting
Reimbursement		 Total Name401(k) Plan Company Matching ContributionsCar AllowanceExecutive PhysicalTotal

Mark A. Erickson

 $16,500 $— $72,000 $88,500 

Matthew R. Owens

 $16,500 $12,000 $— $28,500 Matthew R. Owens$16,800  $12,000  $2,600  $31,400  

Russell T. Kelley, Jr.

 $— $12,000 $— $12,000 

Tom L. Brock

 $16,500 $— $— $16,500 Tom L. Brock$16,800  $—  $—  $16,800  

Eric J. Christ

 $16,500 $— $— $16,500 Eric J. Christ$16,800  $—  $3,150  $19,950  
Marianella FoschiMarianella Foschi$16,800  $—  $—  $16,800  
Mark A. EricksonMark A. Erickson$16,800  $—  $—  $16,800  
Russell T. Kelley, JrRussell T. Kelley, Jr$—  $8,500  $—  $ 1,508,987(1) 

___________________________
(1) Mr. Kelley departed from the Company on September 4, 2019. Amounts paid in 2019 also include severance payments of $1,500,487.

Realized Compensation

The calculation of total compensation, as shown in the Summary Compensation Table on page 27, includes items driven by accounting assumptions as defined by the SEC. As a result, total compensation as defined by the SEC differs substantially from the compensation actually realized by our named executive officersNamed Executive Officers in a particular year. To supplement the SEC-required disclosure, the table below shows compensation actually realized by the named executive officers.Named Executive Officers that were employed by the Company for all of calendar year 2019. These amounts are not a substitute for the amounts reported as total compensation as defined byunder the SEC.“Total” column in the Summary Compensation Table above. Realized compensation includes each named executive officer'sthe Named Executive Officer’s earned salary, earned bonus under the Short-Term Cash Incentive Program,STIP award, value realized on vesting and settlement of stock awards, value realized on exercise of stock options, value realized on vesting of share-settled performance awards and all other compensation, which includes matching contributions to our 401(k) plan and travel allowances and commuting reimbursements.

amount under the “All Other Compensation” column in the Summary Compensation Table above.


The following table summarizes, with respect to our named executive officers,Named Executive Officers that were employed by the Company for all of calendar year 2019, information relating to the realized compensation earned for services rendered in all capacities during 2019 and the fiscal years ended December 31,amounts earned by those individuals that were also our Named Executive Officers in 2018 2017 and 2016.

2017.
 
 Realized Compensation 
Name
 2018 2017 2016(1) 

Mark A. Erickson

 $2,691,792 $3,546,624 $4,288,235 

Matthew R. Owens

 $2,313,250 $3,055,149 $4,288,235 

Russell T. Kelley, Jr. 

 $2,153,738 $2,584,728 $696,269 

Tom L. Brock

 $1,219,071 $1,178,254  N/A 

Eric J. Christ

 $979,505 $950,064  N/A 
NameRealized Compensation
201920182017
Matthew R. Owens$1,430,400  $2,313,250  $3,055,149  
Tom L. Brock$771,854  $1,219,071  $1,178,254  
Eric J. Christ$802,689  $979,505  $950,064  
Marianella Foschi$764,738  N/A  N/A  
Mark A. Erickson$1,486,800  $2,691,792  $3,546,624  
(1)
Amounts reported in this column represent the value realized on vesting of restricted unit awards (RUAs) granted under the Holdings 2014 Membership Unit Incentive Plan that vested during the year ended December 31, 2016, which were exchanged in connection with our corporate reorganization and initial public offering.


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Grants of Plan-Based Awards


The table below includes information about awards granted to our Named Executive Officers during 20182019 under our LTIP.

 
  
  
  
  
  
  
  
  
 Grant Date
Fair Value of
Stock and
Option
Awards		 
 
  
 Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards(1)		 Estimated Future Payouts
Under Equity Incentive Plan
Awards(2)		 All Other
Stock Awards		 
 
  
 Threshold
($)		 Target
($)		 Maximum
($)		 Threshold
(#)		 Target
(#)		 Maximum
(#)		 (# of Shares) 
Name
 Grant Date ($)(3) 

Mark Erickson

     375,000  750,000  1,500,000                

  3/1/2018           177,980  355,961  711,921     3,009,286 

Matthew R. Owens

     225,000  450,000  900,000                

  3/1/2018           86,921  173,841  347,682     1,469,657 

Russell T. Kelley, Jr. 

     225,000  450,000  900,000                

  3/1/2018           86,921  173,841  347,682     1,469,657 

Tom L. Brock

     125,625  251,250  502,500                

  3/1/2018           41,391  82,782  165,563     699,836 

Eric J. Christ

     125,625  251,250  502,500                

  3/1/2018           41,391  82,782  165,563     699,836 

  5/3/2018                    50,000  714,000 
28



Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)Estimated Future Payouts Under Equity Incentive Plan Awards(2)All Other Stock Awards(3)Grant Date Fair Value of Stock and Option Awards
NameGrant DateThreshold ($)Target
($)		Maximum ($)Threshold (#)Target
(#)		Maximum (#)(# of Shares)($)(4)
Matthew R. Owens225,000450,000900,000—————
4/5/2019———60,080120,160240,320—771,427
4/5/2019———100,963201,926403,852—987,418
4/5/2019——————107,362525,000
Tom L. Brock129,394258,787517,575—————
4/5/2019———15,82931,65763,314—203,238
4/5/2019———35,29770,593141,186—345,200
4/5/2019——————102,249500,000
Eric J. Christ129,394258,787517,575—————
4/5/2019———15,82931,65763,314—203,238
4/5/2019———35,29770,593141,186—345,200
4/5/2019——————102,249500,000
Marianella Foschi(5)4/5/2019——————30,976151,472
375,000750,0001,500,000—————
Mark Erickson4/5/2019———123,021246,042492,084—1,579,590
4/5/2019———206,734413,467826,934—2,021,854
4/5/2019——————219,8361,074,998
Russell T. Kelley, Jr.225,000450,000900,000—————
4/5/2019———60,080120,160240,320—771,427
4/5/2019———100,963201,926403,852—987,418
4/5/2019——————107,362525,000
___________________________
(1)
Amounts in these columns represent the threshold, target, and maximum estimated payouts for awards granted under our 2018 short-term cash incentive program.2019 STIP. The actual value of the bonuses paid to our Named Executive Officers for 2018 under this programthe 2019 STIP can be found in the "Non-Equity“Non-Equity Incentive Plan Compensation"Compensation” column of the Summary Compensation Table above.

(2)
Amounts in this column represent the number of PSAsPSUs granted in 20182019 that wouldare eligible to vest upon the achievement of a threshold (50%), target (100%), and maximum (200%) levellevels of performance. The actual number of PSAsPSUs that will vest will not be determinable until the close of the three-year vesting period on December 31, 20202021, and will depend on our (i) relative TSR performance, (ii) absolute TSR performance and (iii) cash returnedreturn on capital invested overduring that period.

(3)
Amounts in this column represent the number of RSUs granted in 2019 that are scheduled to vest, subject to continued employment with us, in equal amounts on April 1, 2020, 2021, and 2022.
(4)The amounts shown in this column represent the grant date fair value of each equity award computed in accordance with FASB ASC 718. For additional information regarding the assumptions underlying this calculation please see "Note 11—Unit and “Note 12—Stock-Based Compensation"Compensation” to the financial statements in our Annual Report on Form 10-K relating to fiscal year 20182019 for additional detail regarding assumptions underlying the value of these awards and for a description of their accounting treatment under FASB ASC Topic 718.

(5)Ms. Foschi also received a restricted cash award on April 5, 2019 in the amount of $248,528, which will vest, subject to continued employment with us, in amounts of 25% on April 1, 2020 and 2021, and 50% on April 1, 2022.

Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table

Employment Agreements

        In connection with the IPO or shortly thereafter, our Named Executive Officers entered into employment agreements with us, (for Messrs. Erickson, Owens and Kelley, effective as of October 11, 2016; for Mr. Brock, effective November 1, 2016; and for Mr. Christ, effective November 7, 2016) to reflect each executive's role with us going forward as a public company. Under these new employment agreements, each

Each of our Named Executive Officers isother than Ms. Foschi was party to an employment agreement with us during 2019. Under their respective employment agreements, each executive was entitled to a certainspecified level of base salary, a minimum target annual bonus, and an expected minimum target annual performance-based equity grants,grant, as well as certain severance benefits upon a qualifying termination of employment. The employment agreements includeincluded customary restrictive covenants, including those precluding the executives from soliciting employees or competing with us for a period of up to two years following termination of employment. As of the date of this Proxy Statement, only Mr. Owens is still party to an employment agreement with us (as well as our new Executive Chairman, Mr. Tyree, who entered into an employment agreement with us in early 2020). The employment agreements with Messrs. Erickson and Kelley terminated in connection with their respective employment terminations. The employment agreements with Messrs. Brock and Mr. Christ were terminated in early
29



2020 when they became covered, along with Ms. Foschi, under our Executive Severance Plan. See "Potential“Potential Payments Uponupon Termination or Change in Control"Control” below for further details regarding the payments that our employment agreements provide the Named Executive Officers are eligible to receive upon a termination of employment or a change in control.


Annual Bonus

        Prior to 2017, we maintained

See “Annual Incentive Bonus—2019 Short-Term Cash Incentive Program (STIP)” in the Compensation Discussion and Analysis section of this Proxy Statement for a fully discretionary bonus program where, following the close of a fiscal year, our board determined the amount, if any, of the discretionary annual bonuses awarded to eachdescription of our Named Executive Officers after careful review of our performance over the course of the preceding fiscal year. Items that were taken into account during this subjective assessment included, but were not limited to, reserves growth, production growth, and our financial performance as measured by


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EBITDA. There were no performance metrics or formulas used to calculate the amounts of bonuses paid although the bonus guideline percentage of salary was considered in the board's determination.

        Following our IPO we reviewed and evaluated all of our compensation programs, including our short-term cash incentive program. During 2017, our Compensation Committee worked extensively with FW Cook, the Compensation Committee's independent compensation consultant, to design and implement a new performance-based annual incentive program. Pursuant to this program, our Compensation Committee establishes specific quantitative and qualitative metrics at the beginning of each year. Actual performance with respect to each metric determines the value of the annual cash bonus, if any. The current annual non-equity incentive program, the 2018 short-term cash incentive program, measures company-wide performance based upon both quantitative and qualitative metrics. The 2018 short-term cash incentive program was administered in order to provide pre-established objective performance criteria that could be communicated to our Named Executive Officers in order to motivate them to achieve specific annual financial and operational goals. The 2018 short-term cash incentive program also provides for an established payout structure, with payout percentages that are calculated based upon actual performance as compared to quantitative and qualitative performance goals. The quantitative metrics allow the executives to strive towards very specific numerical performance goals, while the qualitative factors allow the Compensation Committee to evaluate more holistic company goals. Furthermore, the 2018 short-term cash incentive program still allows the Compensation Committee the flexibility to adjust the award if necessary based on individual performance and any relevant market adjustments. In March 2019, due to the negative stock price performance of the Company during 2018, the Compensation Committee used this discretion to reduce the amount of the annual incentive bonuses paid to our Chief Executive Officer, President and Chief Financial Officer under the formulaic terms of our performance-based cash bonus program.

plan.


Long-Term Incentive Compensation

2016 Restricted Unit Awards

        Prior to our IPO, long-term incentives were historically granted to our Named Executive Officers through grants of restricted unit awards ("RUAs"), pursuant to the Holdings 2014 Membership Unit Incentive Plan (the "Incentive Plan"). These equity-based awards were subject to time-based vesting requirements, as well as accelerated vesting upon the occurrence of a termination of employment in connection with a change in control. In 2016, our then Named Executive Officers were granted 1,531,542 RUAs (which consisted of 708,271 RUAs for each of Mr. EricksonAmended and Mr. Owens, and 115,000 RUAs for Mr. Kelley) in connection with the IPO (the "2016 RUAs").

Treatment of RUAs in Connection with the IPO

        In connection with the IPO, all outstanding Incentive Units and RUAs were accelerated and all of Holdings' outstanding equity interests, including the Incentive Units and the RUAs, but excluding the Series A Preferred Units (which were redeemed in connection with the IPO) and the Series B Preferred Units (which were converted into shares of our Series A Preferred Stock) were exchanged for shares of our common stock in connection with the merger of Holdings with and into us, calculated using an implied equity valuation for us based on the initial public offering price set forth on the cover of the IPO prospectus. The aggregate number of shares issued to the existing owners of Holdings were not contingent upon the IPO price; however, the allocation of shares of our common stock amongst our existing owners, including with respect to the outstanding RUAs and Incentive Units held by Messrs. Erickson, Owens and Kelley, was determined based on the 10-day volume weighted average price of our common stock immediately following the closing of the IPO. In accordance with the above allocation mechanism, Messrs. Erickson, Owens and Kelley each received 818,047; 518,576 and 478,947 shares of common stock, respectively, with respect to the RUAs they held in Holdings (including the


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2016 RUAs that were granted prior to the offering) and 3,261,566; 3,261,561 and 2,536,770 shares of our common stock, respectively, with respect to the Incentive Units they held in Holdings.

        Following the closing of the IPO, our executive officers no longer receive, pursuant to the Incentive Plan or the Holdings LLC Agreement, additional long-term incentive compensation for services rendered to us or our subsidiaries; rather, any such long-term incentive compensation will be awarded to our Named Executive Officers pursuant to the LTIP, as described in the succeeding paragraphs below.

2016Restated Long Term Incentive Plan


        Our board of directors has adopted, and our equityholders approved, the LTIP, pursuant to which employees, consultants, and directors of our company and its subsidiaries performing services for us, including our Named Executive Officers, are eligible to receive awards. The LTIP provides for the grant of stock options, stock appreciation rights, restricted stock, RSUs, bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards, and performance awards intended to align the interests of participants with those of our stockholders.

The following description of the LTIP is a summary of the material features of the LTIP as currently in effect. This summary is qualified in its entirety by reference to the LTIP, a copy of which was filed as Exhibit 4.4Appendix A to our 2019 Annual Proxy Statement.

Our stockholder-approved LTIP is intended to attract, retain, and motivate our employees, directors, and consultants. Our Named Executive Officers are eligible to participate in the Company's Registration Statement on Form S-8 filed withLTIP, which provides for the Securitiesgrant of cash and Exchange Commission on October 14, 2016. Following the approvalequity-based awards, including options to purchase shares of our equity holdersCommon Stock, stock appreciation rights, restricted stock, RSUs, bonus stock, dividend equivalents, other stock-based awards, performance awards and annual incentive awards. Since the adoption of Proposal Three, described below, specified terms ofour LTIP, we have awarded time-vesting RSUs, PSAs, PSUs, and stock options under the LTIP will be amended as described in Proposal Three.

LTIP.

        Administration.
The LTIP is administered by our Board, or a committee thereof (the "Plan Administrator"“Administrator”). The Plan Administrator has the authority to, among other things, designate eligible persons as participants under the LTIP, determine the type or types of awards to be granted to eligible persons, determine the number of shares of our common stockCommon Stock to be covered by awards, determine the terms and conditions applicable to awards, and interpret and administer the LTIP. The Plan Administrator may terminate or amend the LTIP at any time with respect to any shares of our common stockCommon Stock for which a grant has not yet been made. The Plan Administrator also has the right to alter or amend the LTIP or any part of the LTIP from time to time, including increasing the number of shares of our common stockCommon Stock that may be granted, subject to stockholder approval as required by any exchange upon which our common stockCommon Stock is listed at that time. However, no change in any outstanding award may be made that would materially and adversely affect the rights of thea participant under thean award without the consent of the participant.

        Number of Shares.

Subject to adjustment in the event of any distribution, recapitalization, split, merger, consolidation, or similar corporate event, the number of shares available for delivery pursuant to awards granted under the LTIP will not exceed 20,200,00032,200,000 shares of our common stock (unless shareholders approve Proposal Three, described below).Common Stock. There is no limit on the number of awards that may be granted and paid in cash. Shares subject to awards under the LTIP that are expired, canceled, forfeited, exchanged, settled in cash, or otherwise terminated, including shares withheld in payment of any exercise or purchase prices or tax withholding obligations, will again be available for awards under the LTIP. The shares of our common stock to be delivered under the LTIP will be made available from authorized but unissued shares, shares held in treasury, or previously issued shares reacquired by us, including by purchase on the open market.

        Stock Options.    A stock option, or option, is a right to purchase shares of our common stock at a specified price during specified time periods. It is anticipated that options will have an exercise price that may not be less than the fair market value of our common stock on the date of grant. Options granted under the LTIP can be either incentive stock options within the meaning of section 422 of the Code or non-qualified stock options. No option will have a term that exceeds ten years (or, five years for incentive stock options within the meaning of section 422 of the Code).


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Outstanding Equity Awards at Fiscal Year-End


The following table reflects information regarding outstanding equity-based awards that were held by our Named Executive Officers as of December 31, 2018.2019. The amounts shown in the following table for Stock Awards represent RSUs and PSAs and the amounts shown in the table for Option Awardsoption awards represent nonstatutory stock options, all granted to our Named Executive Officers pursuant to the LTIP. For additional information, see the discussion above under "2018“2019 Awards Underunder the LTIP"LTIP” and "Long-Term“Long-Term Incentive Compensation."

”

 
 Options Awards Stock Awards 
Name
 Date of
Grant		 Number of
Securities
Underlying
Unexercised
Options,
Exercisable
(1) (#)		 Number of
Securities
Underlying
Unexercised
Options,
Unexercisable
(1) (#)		 Option
Exercise
Price ($)		 Option
Expiration
Date		 Number of
Shares of
Units of Stock
That Have
Not Vested
(#)		 Market Value
of Shares or
Units of Stock
That Have
Not Vested(5)
($)		 Equity
incentive plan
awards:
number of
unearned
shares, units
or other
rights that
have not
vested (#)		 Equity
incentive plan
awards:
market or
payout value
of unearned
shares, units
or other
rights that
have not
vested ($)		 

Mark A. Erickson

 10/11/2016  1,000,000  500,000  19.00  10/11/2026             

 10/17/2016              250,000(2) 1,072,500       

 10/4/2017  180,087  90,043  15.53  10/4/2027             

 10/4/2017                    0(6) 0(6)

 3/1/2018                    0(7) 0(7)

Matthew R. Owens

 10/11/2016  1,000,000  500,000  19.00  10/11/2026             

 10/17/2016              250,000(2) 1,072,500       

 10/4/2017  87,950  43,974  15.53  10/4/2027             

 10/4/2017                    0(6) 0(6)

 3/1/2018                    0(7) 0(7)

Russell T. Kelley, Jr. 

 10/11/2016  816,675(8) 459,250(8) 19.00  10/11/2026             

 10/17/2016              230,325(2)(8) 988,094       

 10/4/2017  87,950  43,974  15.53  10/4/2027             

 10/4/2017                    0(6) 0(6)

 3/1/2018                    0(7) 0(7)

Tom L. Brock

 10/17/2016              62,500(2) 268,125       

 11/14/2016              1,125(3) 4,826       

 3/15/2017              28,148(4) 120,755       

 10/4/2017  41,880  20,941  15.53  10/4/2027             

 10/4/2017                    0(6) 0(6)

 3/1/2018                    0(7) 0(7)

Eric J. Christ

 11/16/2016              37,500(2) 160,875       

 3/15/2017              28,748(4) 123,328       

 10/4/2017  41,880  20,941  15.53  10/4/2027             

 10/4/2017                    0(6) 0(6)

 3/1/2018                    0(7) 0(7)

 5/3/2018              50,000(2) 214,500       
30



Options AwardsStock Awards
NameDate of GrantNumber of Securities Underlying Unexercised Options, Exercisable (1) (#)Option Exercise Price ($)Option Expiration DateNumber of Shares or Units of Stock That Have Not Vested (#)Market Value of Shares or Units of Stock That Have Not Vested(5) ($)Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Matthew R. Owens10/11/20161,500,00019.0010/11/2026————
10/4/2017131,92415.5310/4/2027————
3/1/2018—————173,841(6)368,543(6)
4/5/2019—————201,926(7)987,418(7)
4/5/2019—————120,160(7)254,739(7)
4/5/2019———107,362(2)227,607——
Tom L. Brock3/15/2017———14,074(4)29,837——
10/4/201762,82115.5310/4/2027————
3/1/2018—————82,781(6)175,497(6)
4/5/2019—————70,593(7)345,200(7)
4/5/2019—————31,657(7)67,113(7)
4/5/2019———102,249(2)216,768——
Eric J. Christ3/15/2017———14,374(4)30,473——
10/4/201762,82115.5310/4/2027————
3/1/2018—————82,781(6)175,497(6)
5/3/2018———37,500(2)79,500——
4/5/2019—————70,593(7)345,200(7)
4/5/2019—————31,657(7)67,113(7)
4/5/2019———102,249(2)216,768——
Marianella Foschi3/15/2017———7,500(4)15,900——
3/15/2018———22,500(2)47,700——
4/5/2019———30,976(2)65,669——
Mark A. Erickson10/11/20161,500,00019.0010/11/2026————
10/4/2017270,13015.5310/4/2027————
3/1/2018—————355,960(6)754,636(6)
4/5/2019—————413,467(7)2,021,853(7)
4/5/2019—————246,042(7)521,609(7)
4/5/2019———219,836(2)466,052——
Russell T. Kelley, Jr.10/11/20161,275,925(8)19.0010/11/2026————
10/4/2017131,92415.5310/4/2027————
3/1/2018—————173,841(6)368,543(6)
4/5/2019—————201,9267(7)987,418(7)
4/5/2019—————120,160(7)254,739(7)
___________________________
(1)
Amounts in this column represent nonstatutory stock options granted pursuant to the terms of the LTIP. The options become exercisable in equal annual installments on each of the first, second and third anniversaries of the date of grant. The treatment of these awards upon certain termination and change in control events is described below under "Potential“Potential Payments Uponupon a Termination or Change in Control."

”
(2)
These RSUs were granted pursuant to the terms of the LTIP and are subject to time-based vesting conditions, with 25% vesting on each of the first and second anniversaries of the date of grant, and the remaining 50% vesting on the third anniversary of the date of grant. The treatment of these awards upon certain termination and change in control events is described below under "Potential“Potential Payments Uponupon a Termination or Change in Control."

”
(3)
These restricted stock unitsRSUs were granted pursuant to the terms of the LTIP and are subject to time-based vesting conditions, with 25% vesting on each of July 17, 2017, January 17, 2018, July 17, 2018, and January 17, 2019. The treatment of these awards upon certain termination and change in control events is described below under "Potential“Potential Payments Uponupon a Termination or Change in Control."

”
(4)
These RSUs were granted pursuant to the terms of the LTIP and are subject to time-based vesting conditions, with 12.5% vesting after six, twelve, eighteen6, 12, 18, and twenty-four24 months and 25% vesting after thirty30 and thirty-six36 months from the date of grant. The treatment of these awards upon certain termination and change in control events is described below under "Potential“Potential Payments Uponupon a Termination or Change in Control."

”
(5)
Amounts in this column are calculated using a value of $4.29$2.12 per RSU, which was the closing price of one share of our common stockCommon Stock as of December 31, 2018,2019, the last trading day of the year.

(6)
These awards represent PSAs granted to our Named Executive Officers on October 4, 2017. The number of outstanding PSAs reported reflects the number of PSAs that would have been delivered under the awards based on our relative TSR ranking for the performance period as of December 31, 2018, and is not necessarily indicative of what the payout percent earned will be at the end of the performance period. However, if the performance

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    period had ended December 31, 2018, none of these PSAs would have been earned. These awards vest on December 31, 2019, subject to the attainment of certain performance criteria.

(7)
These awards represent PSAs granted to our Named Executive Officers on March 1, 2018. The number of outstanding PSAs reported reflects the target number of PSAs that would have been delivered under the awards based on our (i) relative TSR ranking, (ii) absolute TSR, and (iii) projected cash returned on capital invested for the performance period as of December 31, 2018,2019, and is not necessarily indicative of what the payout percent earned will be at the end of the
31



performance period. However, if the performance period had ended December 31, 2019, none of these PSAs would have been earned. These awards vest on December 31, 2020, subject to the attainment of certain performance criteria.
(7)These awards represent PSUs granted to our Named Executive Officers on April 5, 2019. The number of outstanding PSUs reported reflects the target number of PSUs that would have been delivered under the awards based on our (i) relative TSR ranking, (ii) absolute TSR, and (iii) return on capital invested for the performance period as of December 31, 2019, and is not necessarily indicative of what the payout percent earned will be at the end of the performance period. However, if the performance period had ended December 31, 2018,2019, none of these PSAsPSUs would have been earned. These awards vest on December 31, 2020,2021, subject to the attainment of certain performance criteria as discussed in the section of our Compensation Discussion and Analysis entitled "2018 Performance Stock“2019 Awards under the LTIP,"” above.

(8)
Amounts in this column do not reflect certain unvested RSUs and vested and unvested nonstatutory stock options granted pursuant to the terms of the LTIP for which beneficial ownership interest werewas transferred pursuant to a domestic relations order. Pursuant to a domestic relations order entered in 2017, Mr. Kelley transferred 224,075 number of options (exercise price of $19.00) and 63,943 RSUs to his ex-spouse.


Options ExercisedExercises and Stock Vested

 
 Stock Awards 
Name(1)
 Number of Shares
Acquired on
Vesting(2) (#)		 Value Realized on
Vesting(5) ($)		 

Mark A. Erickson

  125,000  1,351,250(2)

Matthew R. Owens

  125,000  1,351,250(2)

Russell T. Kelley, Jr. 

  110,244  1,191,738(2)(8)

Tom L. Brock

  31,250  337,813(2)

  1,125  16,211(3)

  1,125  15,548(4)

  7,037  89,370(5)

  7,037  72,129(6)

Eric J. Christ

  18,750  126,563(7)

  7,187  91,275(5)

  7,187  73,667(6)

Stock Awards
Name(1)Number of Shares Acquired on Vesting(#)Value Realized on Vesting($)
Matthew R. Owens250,000580,000(2)
Tom L. Brock1,1255,378(3)
7,03727,867(4)
14,07445,459(5)
62,500145,000(2)
Eric J. Christ7,18728,461(4)
12,50057,250(6)
14,37446,428(5)
37,50067,500(7)
Marianella Foschi16,87580,663(3)
7,50031,200(8)
3,75014,850(4)
7,50024,225(5)
37,50087,000(2)
Mark A. Erickson250,000580,000(2)
Russell T. Kelley, Jr230,325534,354(2)(9)
___________________________
(1)
There have been no options exercised by our Named Executive Officers to date.

(2)
This amount was calculated by multiplying the number of shares acquired on vesting by $10.81,$2.32, the closing price of our stockCommon Stock on the vesting date, October 17, 2018.

2019.
(3)
This amount was calculated by multiplying the number of shares acquired on vesting by $14.41,$4.78, the closing price of our stockCommon Stock on the vesting date, January 17, 2018.

2019.
(4)
This amount was calculated by multiplying the number of shares acquired on vesting by $13.82,$3.96, the closing price of our stockCommon Stock on the vesting date, July 17, 2018.

March 15, 2019.
(5)
This amount was calculated by multiplying the number of shares acquired on vesting by $12.70,$3.23, the closing price of our stockCommon Stock on the vesting date, March 15, 2018.

September 13, 2019.
(6)
This amount was calculated by multiplying the number of shares acquired on vesting by $10.25,$4.58, the closing price of our stockCommon Stock on the vesting date, September 14, 2018.

May 3, 2019.
(7)
This amount was calculated by multiplying the number of shares acquired on vesting by $6.75,$1.80, the closing price of our stockCommon Stock on the vesting date, November 16, 2018.

15, 2019.
(8)
This amount was calculated by multiplying the number of shares acquired on vesting by $4.16, the closing price of our Common Stock on the vesting date, March 1, 2019.
(9)This amount excludes 14,75619,675 shares attributable to RSUs that vested in 20182019 which were transferred to Mr. Kelley'sKelley’s ex-wife pursuant to a domestic relations order prior to their vesting.

32


Potential Payments Uponupon Termination or Change in Control

Employment Agreements

Each of our Named Executive Officers other than Ms. Foschi was party to an employment agreement with us during 2019. Under their respective employment agreements, each executive was entitled to certain severance benefits upon a qualifying termination of employment. The employment agreements included customary restrictive covenants, including those precluding the executives from soliciting employees or competing with us for a period of up to two years following termination of employment. As described aboveof the Record Date, only Mr. Owens is still party to an employment agreement with us (as well as our new Executive Chairman, Mr. Tyree, who entered into an employment agreement with us in "Narrative Disclosure to Summary Compensation Table and Outstanding Equity Awards at Fiscal Year-End—Employment Agreements," we entered intoMarch 2020). The employment agreements with Messrs. Erickson Owens and Kelley terminated in connection with their respective employment terminations. See “Erickson Transition Agreement” and “Kelley Separation Agreement” below for a description of the IPO andseverance benefits each received in connection with his respective termination. The employment agreements with Messrs. Brock and Mr. Christ shortly thereafter. Thewere terminated in early 2020 when they became covered, along with Ms. Foschi, under our Executive Severance Plan. See “Executive Severance Plan” below for a description of the employment agreements set forth below is a summary ofseverance benefits under the material features of the agreements regarding potential payments upon termination or a change in control. This summary, however, does not purport to be a complete description of all the provisions of the agreements that we have entered into with the executives. This summary is qualified in its entirety by reference to the employment agreements, which (i) for Messrs. Erickson, Owens and Kelley were filed as Exhibits 10.4, 10.5 and 10.6 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on October 14, 2016, (ii) for Mr. Brock was filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed on November 22, 2016 and (iii) for Mr. Christ was filed as Exhibit 10.11 to the Company's Annual Report on Form 10-K filed on February 27, 2018.

plan.


Under the terms of the employment agreements in effect in 2019 (and for Mr. Owens currently), each Named Executive Officer is entitledwas eligible to receive the following amounts uponseverance benefits described immediately below.

Upon a termination by the Company for "Cause" (as such term is defined below), upon a termination of employment by reason of death, disability, upon expiration of the term of the employment agreement, or upon the executive's termination without "Good Reason" (as such term is defined below): (a) payment of all accrued and unpaid base salary to the date of termination, (b) reimbursement of all incurred but unreimbursed business expenses to which the executive would have been entitled to reimbursement, and (c) benefits to which the executive is entitled under the terms of any applicable benefit plan or program (together, the "Accrued Rights"). If the termination is due to death or disability, Messrs. Erickson, Owens, and Kelley will, in addition to the Accrued Rights, alsowould be entitled to (x)(i) a severance payment equal to one1.0 times the sum of the applicable Named Executive Officer'sOfficer’s base salary on the date of termination and the average annual bonus for the two prior calendar years and (y)(ii) accelerated vesting of any outstanding time-based LTIP awards.


Each Named Executive Officer is alsowould be entitled to receive the following amountsseverance benefits upon a termination by the executive for Good Reason“good reason” or by the Company without Cause“cause” (each as defined in the employment agreement and each, a "Qualifying Termination"“Qualifying Termination”): (a) the Accrued Rights; (b) any earned but unpaid annual bonus for the prior year; (c)(b) a prorated annual bonus for the year of termination (excluding Messrs. Brock and Christ); (d)(c) a severance payment equal to the sum of (x) each Named Executive Officer'sOfficer’s annual base salary times a multiple (for Messrs. Brock and Christ, 0.5; for Mr. Kelley, 1.5; and for Messrs. Erickson and Owens, 2.0) and (y) for Messrs. Kelley, Erickson, and Owens, their respective average annual bonus for the two prior calendar years times the same multiple; (e)(d) accelerated vesting of any outstanding LTIP awards (including time- and performance-vesting awards) held by the Executiveexecutive as of the date of termination (except for Messrs. Brock and Christ); and (f)(e) continued coverage under our group health plan for any COBRA period (during the first 6 months for Messrs. Brock and Christ, and up to 18 months for Messrs. Erickson and Owens) elected for the executive and the executive'sexecutive’s spouse and eligible dependents, at no greater premium cost than that which applies to our active senior executive employees.


In addition, if such Qualifying Termination occursoccurred within the 12-month period followingafter a Changechange in Control,control of the Company, the above entitlements would be modified as follows: (1) the respective multiple would increase to 1.0 for Messrs. Brock and Christ, 2.0 for Mr. Kelley, and 3.0 for Messrs. Erickson and Owens; (2) the continued COBRA coverage for Messrs. Brock and Christ would increase to 12 months; and (3) Messrs. Brock and Christ would be entitled to accelerated vesting of any outstanding LTIP awards.


Executive Severance Plan

The Company has adopted an Executive Severance Plan and on March 4, 2020 entered into participation agreements thereunder (each, a “Participation Agreement”) with each of Mr. Christ, Mr. Brock, and Ms. Foschi. Pursuant to the Participation Agreements, effective March 4, 2020, the benefits under the Executive Severance Plan will replace the existing employment agreements between the Company and each of Mr. Christ and Mr. Brock, and the existing employment agreements were terminated. Ms. Foschi was not subject to a prior employment agreement.

The Executive Severance Plan provides that in the event that employment of a participating employee is terminated by the Company other than for “cause” (and not by reason of death or disability) or if the executive terminates his or her employment for “good reason” (the terms “cause” and “good reason,” as defined in the Executive Severance Plan), and subject to the employee’s execution of a general release of claims against the Company and compliance with restrictive covenants, the employee is entitled to receive severance benefits consisting of:
33




•a lump sum cash amount equal to a multiple of the participant’s annual base salary as in effect immediately before the termination, with the multiple varying by participant, but established at 1.33 for Messrs. Christ and Brock and Ms. Foschi;

•a pro-rated target annual cash bonus for the year of termination (based on the number of days employed during the year of termination);

•up to 18 months of Company-paid COBRA coverage;

•vesting of all outstanding and unvested time-based equity awards;

•pro-rated vesting of outstanding and unvested performance-based equity awards (based on the number of days employed during the applicable performance period); and

•each exercisable equity plan award (e.g., a stock option or a stock appreciation right) that is or becomes exercisable will remain exercisable until the latest date on which the award would have expired by its original terms.

Under the Executive Severance Plan, if such a termination of employment occurs within the 18-month period immediately following a change of control, the executive would be entitled to the benefits described in the preceding paragraph subject to the same release of claims and restrictive covenant requirements, except that the salary continuation discussed in the first bullet above would be replaced by a lump sum cash payment equal to a higher multiple of the executive’s base salary plus their target annual bonus in effect immediately prior to termination (with the multiple varying by participant, but established at 2.0 for Messrs. Christ and Brock and Ms. Foschi) and the vesting acceleration of outstanding and unvested performance-based equity awards would be 100% of the unvested performance-based equity awards based on the greater of target and actual level of performance through the date of the Company’s fiscal quarter end before the change in control, rather than a pro-rated portion.

The Executive Severance Plan also provides for a lump sum cash payment equal to the executive’s base salary and a pro-rated target annual bonus payment, along with full vesting acceleration of time-based and performance-based equity awards (based on actual level of performance through the date of the Company’s fiscal quarter end before the termination) in the event that a participating executive dies or becomes disabled while employed by the Company subject to the same release of claims and restrictive covenant requirements.

Erickson Transition Agreement

On March 5, 2020, Mr. Erickson’s service as our Chief Executive Officer and Chairman of our Board, and from all positions at the Company’s subsidiaries, was terminated effective March 4, 2020 (the “Transition Date”). As part of this termination, the Company and Mr. Erickson on March 18, 2020 entered into an Employment Transition Agreement (the “Transition Agreement”), effective as of the Transition Date, pursuant to which Mr. Erickson transitioned to Senior Advisor to assist in the smooth transition of his duties and responsibilities from the Transition Date until the fourth anniversary of the Transition Date (the “Transition Period”).

Pursuant to the Transition Agreement, Mr. Erickson will, as a non-executive Company employee, (i) receive an annualized base salary of $75,000 during the Transition Period, (ii) continue to be entitled to his annual bonus for 2019 and a prorated annual bonus for 2020 for service through the Transition Date, (iii) receive a cash transition payment of $1,840,000, (iv) continue to vest in outstanding equity-based awards subject to, and in accordance with, their respective terms, except that all time-based vesting conditions for outstanding equity-based awards will be deemed to have been satisfied as of the Transition Date, and (v) be allowed to participate in all benefit plans and programs of the Company during the Transition Period. The Transition Agreement also includes customary non-competition, non-solicitation and non-disparagement covenants in favor of the Company.

Kelley Separation Agreement

In connection with Mr. Kelley’s resignation, the Company and Mr. Kelley into a Separation and General Release Agreement (the “Kelley Separation Agreement”), providing for, among other things, compensation and benefits to Mr. Kelley as follows: (i) a pro-rated annual bonus for 2019, in the amount of $165,750, to be paid on or
34



before the date such annual bonuses are paid to executives who continue employment; (ii) a lump sum cash payment, in the amount of $1,500,487; (iii) immediate accelerated vesting of all Company equity awards that are subject to time-based vesting, continued vesting of any equity awards subject to performance-based vesting based on actual performance through the end of the respective performance period, and the ability to exercise all stock options for the full original term of the applicable award; and (iv) up to 18 months of continued Company-funded COBRA coverage. The Kelley Separation Agreement also contains customary releases and waivers of claims by Mr. Kelley and provides that Mr. Kelley will be reasonably available to the Company during mutually agreeable times to provide transition and consulting related support.

Table of ContentsIllustrating Potential Payments upon Termination or Change in Control

The following terms are defined undertable provides information regarding the employment agreements forpayments and benefits to which our Named Executive Officers would be entitled in the event of termination of such individual’s employment with the Company and under specified circumstances and in the event of a change in control of the Company. Except as otherwise noted, the amounts shown (i) are qualified by reference to each Executive's agreement, substantially similar to as described below:

    •
    "Cause" generally means a determination by our board of directors (the "Board") (or its delegate)estimates only and (ii) assume that the executive (a)applicable termination of employment was effective, or that the change in control occurred, as of December 31, 2019. As of the Record Date, each of Messrs. Erickson and Kelley has engaged in gross negligence, gross incompetence or willful misconductexperienced a termination of employment and the actual severance benefits they received are described immediately above, rather than being reflected in the performance oftable below. For Messrs. Brock and Christ and Ms. Foschi, the executive's duties with respect to us or any of our affiliates, (b) has failed without proper legal reason to substantially performamounts shown below reflect the executive's dutiespayments and responsibilities to us or any of our affiliates, (c) has materially breached any provision ofbenefits they would have received under the employment agreement, (d) has committed an act of theft, fraud, embezzlement, misappropriation or willful breach of a fiduciary duty to us or any of our affiliates, or (e) hasExecutive Severance Plan had they been convicted of, pleaded no contest to or received adjudicated probation or deferred adjudication in connection with a crime involving fraud, dishonesty or moral turpitude or any felony (or a crime of similar import in a foreign jurisdiction). In order to terminate the executive's employment for Cause, the Board (or its delegate) must provide the executive with a written notice providing in reasonable detail the specific circumstances alleged to constitute Cause and the executive must not have cured or remedied the alleged Cause event (if susceptible to cure)participants in the Board's (or its delegate) good faith judgment within thirty (30) days forplan as of December 31, 2019. As described above under Executive Severance Plan, Messrs. Erickson, OwensBrock and KelleyChrist and within ten (10) daysMs. Foschi became participants in our Executive Severance Plan in March 2020. The amounts shown below for Messrs. Brock and Christ after his receiptare consistent with their prior employment agreements, but provide for additional benefits under the Executive Severance Plan.

ExecutiveTermination of Employment by the Company without Cause or by Executive for Good Reason ($)Termination by Company Without Cause or by the Executive for Good Reason within 12-months following Change of Control ($)Termination of Employment by Death or Disability ($)Termination of Employment by the Company for Cause, by Executive without Good Reason or by Certain Notice of Non-Renewal ($)
Matthew R. Owens
Cash Payments2,630,0003,720,000884,500—
Accelerated Equity227,607(1)1,838,308227,607—
Reimbursement for COBRA premiums40,99140,991——
Total2,898,5985,599,2991,112,107—
Tom L. Brock
Cash Payments718,8541,207,675603,838—
Accelerated Equity227,078(1)864,887277,078—
Reimbursement for COBRA premiums40,99140,991——
Total1,036,9242,113,554880,916—
Eric J. Christ
Cash Payments718,8541,207,675603,838—
Accelerated Equity326,741(1)914,550326,741—
Reimbursement for COBRA premiums40,99140,991——
Total1,086,5872,163,217930,579—
Marianella Foschi
Cash Payments768,528(2)1,088,528(2)668,528(2)—
Accelerated Equity129,269129,269129,269—
Reimbursement for COBRA premiums13,40013,400——
Total911,1971,231,197797,797—
___________________________
35



(1)Does not include vesting of such notice.outstanding and unvested performance-based equity awards, which would only result based on actual performance through the end of the respective performance period. For Messrs. Brock and Christ, the amount of outstanding and unvested performance-based equity awards that would vest would be based on the number of days employed during the applicable performance period.
(2)

•
"Good Reason" generally means (a) a material diminutionIncludes accelerated vesting of an award of time-based restricted cash in the executive's base salary; (b) a material diminution in the executive's authority, duties, or responsibilities; (c) the involuntary relocationamount of the geographic location of the executive's principal place of employment by more than 50 miles from the location of the executive's principal place of employment as of the effective date of the employment agreement; or (d) a material breach by us of the employment agreement.$245,528.


•
"Change in Control" generally means (a) a merger with another entity, consolidation involving the Company, or sale of all or substantially all of our assets if (i) our stockholders or holders of equity securities immediately prior to such transaction or event do not continue to own at least 50% of the voting power of the resulting entity in substantially the same proportions that they owned our equity securities prior to the transaction or event or (ii) the members of our board immediately prior to the transaction or event do not constitute at least a majority of the board of directors of the resulting entity immediately after the transaction or event; (b) the dissolution or liquidation of the Company; (c) when any person, entity, or "group" (as contemplated by section 13(d)(3) of the Securities Exchange Act of 1934, as amended) acquires or gains ownership or control of more than 50% of the combined voting power of the outstanding securities of the Company; or (d) as a result of or in connection with a contested election of directors, the persons who were members of our board immediately before such election cease to constitute a majority of the board.

        As described above, prior to the IPO, our Board accelerated the vesting of all outstanding Incentive Units and RUAs of Messrs. Erickson, Owens and Kelley, including the 2016 RUAs, in light of the holders' efforts in accomplishing certain corporate transactions that occurred in connection with the IPO.

        The foregoing description is not intended to be a comprehensive summary of the employment agreements and is qualified in its entirety by reference to such agreements, which are on file with the SEC. The following table sets forth the payments and benefits that would be received by each named executive officer in the event a termination of employment or a Change in Control of the Company had occurred on December 31, 2018, over and above any payments or benefits he or she otherwise


Table of Contents

would already have been entitled to or vested in on such date under any employment contract or other plan of the Company.

Executive
 Termination of
Employment by the
Company without
Cause or by
Executive for Good
Reason ($)		 Termination by
Company Without
Cause or by the
Executive for Good
Reason within 12-
months following
Change of Control
($)		 Termination of
Employment by
Death or Disability
($)		 Termination of
Employment by the
Company for
Cause, by
Executive without
Good Reason or by
Certain Notice of
Non-Renewal ($)		 

Mark A. Erickson

             

Cash Payments

  2,751,082  4,126,623  1,375,541  — 

Accelerated Equity

  1,072,500  1,072,500  1,072,500  — 

Reimbursement for COBRA premiums

  23,217  23,217  —  — 

Total

  3,846,799  5,222,340  2,448,041  — 

Matthew R. Owens

             

Cash Payments

  2,000,649  3,000,974  1,000,325  — 

Accelerated Equity

  1,072,500  1,072,500  1,072,500  — 

Reimbursement for COBRA premiums

  23,217  23,217  —  — 

Total

  3,096,366  4,096,691  2,072,825  — 

Russell T. Kelley, Jr.

             

Cash Payments

  1,500,487  2,000,649  1,000,325  — 

Accelerated Equity

  988,094  988,094  988,094  — 

Reimbursement for COBRA premiums

  34,384  34,384  —  — 

Total

  2,522,965  3,332,627  1,988,419  — 

Tom L. Brock

             

Cash Payments

  167,500  335,000  —  — 

Accelerated Equity

  —  393,706  —  — 

Reimbursement for COBRA premiums

  11,461  22,923  —  — 

Total

  166,461  751,629  —  — 

Eric J. Christ

             

Cash Payments

  167,500  335,000  —  — 

Accelerated Equity

  —  498,703  —  — 

Reimbursement for COBRA premiums

  11,461  22,923  —  — 

Total

  166,461  856,626  —  — 

Pay Ratio


As required by Item 402(u) of SEC Regulation S-K, we are providing the following information about the ratio of the median annual total compensation of our employees and the annual total compensation of Mr. Erickson, our Chief Executive Officer.Officer at December 31, 2019. For the year ended December 31, 2018:

    2019:

•
The median of the annual total compensation of all employees of our companyCompany, except our former CEO, was reasonably estimated to be $166,747.$153,049.


•
•
The annual total compensation of Mr. Erickson was $4,347,786.$5,583,242.
•

•
Based on this information, the ratio of the annual total compensation of our chief executive officerformer CEO to the median of the annual total compensation of all other employees is estimated to be 26.136.5 to 1.

    Table

    We have determined that there were no changes in our employee population or employee compensation arrangements in 2019 that we reasonably believe would result in a significant change in our pay ratio disclosure. Thus, as permitted by SEC rules, we are using the same median employee that we identified for purposes of Contents

    last year’s pay ratio disclosure. We identified our median employee by examining base wages plus overtime and cash bonuses of all individuals employed by us on December 31, 2018 (other than Mr. Erickson), whether full-time, part-time, or on a seasonable basis. We annualized wages and salaries for all permanent employees who were hired after January 1, 2018, as permitted by SEC rules. Once we identified our median employee, we added together all of the elements of such employee'semployee’s compensation for 20182019 in the same way that we calculate the annual total compensation of our named executive officersNamed Executive Officers in the 2019 Summary Compensation Table. The following benefits were included in our median employee'semployee’s annual total compensation for 2018:2019: base salary, annual cash bonus, grant date fair value of equity and restricted cash awards, and matching contributions we made to the employee'semployee’s account under our 401(k) Employee Savings Plan.


    To calculate Mr. Erickson'sErickson’s annual total compensation, we used the amount reported in the "Total"“Total” column of our 20182019 Summary Compensation Table.


    The SEC’s rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.


    36



    Director Compensation

    Our non-employee directors received compensation in 2018for 2019 as reflected in the following table:

    Name
    		 Fees Earned or
    Paid in Cash(1) ($)    		 Stock
    Awards(2) ($)    		 Total ($) 

    Marvin M. Chronister

    		  106,500  129,991  236,491 

    Donald L. Evans

    		  95,000  129,991  224,991 

    John S. Gaensbauer

    		  80,000  129,991  209,991 

    Peter A. Leidel

    		  102,708  129,991  232,699 

    Wayne W. Murdy

    		  116,762  129,991  246,753 

    Patrick D. O'Brien

    		  104,000  129,991  233,991 

    NameFees Earned or Paid in Cash(1)
    ($)    		Stock Awards(2)
    ($)    		Total
    ($)
    Marvin M. Chronister106,500129,998236,498
    Donald L. Evans51,630129,998181,628
    John S. Gaensbauer87,364129,998217,362
    Peter A. Leidel100,887129,998230,885
    Wayne W. Murdy119,000129,998248,998
    Patrick D. O’Brien104,000129,998233,998
    Audrey Robertson25,829242,250268,079
    ___________________________
    (1)
    Reflects the aggregate of the pro-rated annual retainer, committee membership retainers, committee chair retainers, (as applicable) and lead independent director retainer (as(each, as applicable) earned by each of our directors pursuant to our non-employee director compensation program (as described below) for services performed during 2018.

    2019.
    (2)
    Amounts reported in this column represent the grant date fair value determined in accordance with FASB ASC Topic 718 of restricted stock units granted during 2018.2019. The amounts shown are based on the closing price of our common stockCommon Stock on the day prior to the grant, which was May 3, 2018.15, 2019 for all directors other than Ms. Robertson, who was granted RSUs on September 16, 2019. The value ultimately received by the director may or may not be equal to the values reflected above. Amounts in this column do not necessarily correspond to the actual value that will be recognized by the director. See "Note 11—Unit and “Note 12—Stock-Based Compensation"Compensation” to the financial statements in our Annual Report on Form 10-K relating to fiscal year 20182019 for additional detail regarding assumptions underlying the value of these awards. Pursuant to SEC rules, the amounts shown in the table above for the restricted stock units exclude the effect of estimated forfeitures. In 2018, 9,1032019, 31,553 restricted stock units were granted to each of our non-managementnon-employee directors (other than Ms. Robertson, who was granted 75,000 restricted stock units), all of which remained outstanding as of December 31, 2018.
    2019 (other than those granted to Mr. Evans, which were forfeited upon his departure from the Board in July 2019). The RSUs granted to Ms. Robertson are scheduled to vest ratably over three years from September 16, 2019, subject to her continuous service as a director. The RSUs granted to each of the other non-employee directors on May 15, 2019, are scheduled to vest on May 15, 2020, subject to continuous service as a director.


    Narrative Disclosure to Director Compensation Table

    Our board of directorsBoard believes that attracting and retaining qualified non-employee directors on a going-forward basis will be critical to the future value growth and governance of our company.Company. Our board of directorsBoard also believes that the compensation package for our non-employee directors should require a portion of the total compensation to be equity-based to align the interests of these directors with our stockholders. Under our current program, our non-employee directors receive the following:


    •
    An annual retainer of $80,000;

    Table of Contents•

      •
      No board or committee meeting fees;


    •
    •
    Committee membership retainers of:


    •
    •
    $7,500 for the audit committee,Audit Committee, Executive Committee, and Finance Committee,


    •
    •
    $7,500 for the executive committee,

    •
    $5,000 for the compensation committee,Compensation Committee, and


    •
    •
    $4,000 for the governance/nominating committee;Nominating and Governance Committee;


    •
    •
    Committee chair retainers of:


    •
    •
    $20,000 for the audit committee,Audit Committee,


    •
    •
    $15,000 for the compensation committee,

    •
    $15,000 for the executive committee,Compensation Committee, Executive Committee, and Finance Committee, and


    •
    •
    $8,000 for the governance/nominating committee;Nominating and Governance Committee;


    •
    •
    Annual equity grants of restricted stock units with a fair market value at grant of $130,000;$130,000, which are generally scheduled to vest over the course of a year; and


    •
    •
    Lead independent director retainer of $15,000.


    37



    Director Stock Ownership Guidelines


    		FeatureNon-Employee Director
    Structure and Amount3X Annual Cash Retainer

    Shares that Count Towards Requirements

    •

    Vested and unvested restricted stock unitsRSUs

    •

    Shares purchased in the open market

    •

    Shares beneficially owned within the immediate family


    Time Period to Meet Compliance

    No set time period, but cannot sell stock until requirements are satisfied, other than (i) shares withheld to satisfy tax withholding obligations and (ii) shares disposed to satisfy the exercise price of Company stock options.satisfied.

    38



    Equity Compensation Plan Information

    The following table sets forth the number of Contentsthe Company’s common shares subject to outstanding awards, the weighted-average exercise price of outstanding options, and the number of shares remaining available for future awards under our equity compensation plans, in each case, as of December 31, 2019.
    Plan CategoryNumber of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1) (a)Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
    Equity compensation plans approved by our stockholders8,463,571$18.5117,172,383
    Equity compensation plans not approved by our stockholders———
    Total8,463,571$18.5117,172,383
    ___________________________
    (1)

    Includes options, RSUs and PSUs outstanding under the LTIP, provided that the Weighted-Average Exercise Price in column (b) does not take into account the RSUs or PSUs.




    39



    COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

    During 2018,2019, our last completed fiscal year, none of our executive officers served on the board of directors or compensation committee of a company that had an executive officer that served on our Board or Compensation Committee. Further, no member of our Board was an executive officer of a company in which one of our executive officers served as a member of the board of directors or compensation committee of that company.


    CORPORATE GOVERNANCE

    Corporate Governance Guidelines

    The Board of Directors believes that sound governance practices and policies provide an important framework to assist it in fulfilling its duty to stockholders. The Company's "CorporateCompany’s “Corporate Governance Guidelines"Guidelines” cover the following principal subjects:


    •
    the size of the Board of Directors;


    •
    qualifications and independence standards for the Board of Directors;


    •
    director responsibilities;


    •
    service on other boards;


    •
    change in status;


    •
    the Chairman of the Board;


    •
    meetings of the Board and of independent directors;


    •
    Board interactions with external constituencies;


    •
    committee functions and independence of committee members;


    •
    compensation of the Board of Directors;


    •
    self-evaluation and succession planning;


    •
    director orientation and continuing education;


    •
    director attendance at the annual board meeting of stockholders;


    •
    ethics and conflicts of interest (a copy of the current "Corporate“Corporate Code of Business Conduct and Ethics"Ethics” is posted on the Company'sCompany’s website atwww.extractionog.com);


    •
    stockholder communications with directors; and


    •
    access to senior management and to independent advisors.


    The Corporate Governance Guidelines are posted on the Company'sCompany’s website atwww.extractionog.com. The Corporate Governance Guidelines will be reviewed periodically and as necessary by the Company'sCompany’s Nominating and Governance Committee, and any proposed additions to or amendments of the Corporate Governance Guidelines will be presented to the Board of Directors for its approval.


    The NASDAQ Global Select Market ("NASDAQ"(“NASDAQ”) has adopted rules that require listed companies to adopt governance guidelines covering certain matters. The Company believes that the Corporate Governance Guidelines comply with the NASDAQ rules.


    40


    Board Leadership

    The Board recognizes that one of its key responsibilities is to evaluate and determine its optimalDirectors’ leadership structure socurrently separates the CEO and Chairman of the Board positions. Mr. Owens currently serves as to provide independent oversight of management. our President and CEO, and Mr. Tyree serves as our Executive Chairman.

    The Board understandsbelieves that there is no single, generally accepted approach to providing board leadership and that each of the optimal Boardpossible leadership structures for a board must be considered in the context of the individuals involved and the specific circumstances facing a company, as the right leadership structure may vary as circumstances warrant. Consistentchange. The Board believes it is in the best interest of the Company and its stockholders at this time to have separate CEO and Executive Chairman positions, and have an independent director serve as Lead Independent Director working in conjunction with this understanding, independent directors consider the Board's leadership structure on an annual basis.

    Executive Chairman. The Board has determinedfound that this structure enables the optimal Board leadership structure for us was served by the role of ChairmanCEO to focus on operation of the Board being held by our Chief Executive Officer, Mr. Erickson. The Board determined that this leadership structure was optimal for us because it believed that having one leader serving as bothCompany’s business, while the Chairman ofand Lead Independent Director focus on leading the Board and Chief Executive Officer provides decisive, consistent and effective leadership. By meetingof Directors in executive sessions on a regular basis, the independent directors have the opportunity to identify and evaluate issues facing us, engaging in a frank and candid dialogue without management being present. In February 2017, the Nominating and Governance Committee, in connection with its annual review of the efficacy of the Board's leadership structure, determined to recommend to the Board that it designate Mr. Leidel as the independent lead director. The Board adopted the recommendation of the Nominating and Governance Committee at its March 2017 meeting and Mr. Leidel was appointed Lead Director of the Board. oversight role.


    In February 2018, the Nominating and Governance Committee recommended and the Board designated Mr. Murdy as the Lead Independent Director. The Lead Independent Director is responsible for preparing an agenda for the meetings of the independent directors in executive session and for providing the independent directors'directors’ guidance and feedback to our management team.


    Classified Board Structure

    In consultation with the Board, the Nominating and Governance Committee has determined that a classified board structure is appropriate for the Company. A classified board provides for stability, continuity and experience among our Board of Directors. In our industry in particular, long-term focus is critical. The time horizon required for successful exploration, development and production of oil and natural gas resources makes it vital that we have a Board that understands the implications of this process and has the ability to develop and implement long-term strategies while benefiting from an in-depth knowledge of the Company'sCompany’s business and operations. A classified board structure helps to ensure that there will be the continuity and stability of leadership required to navigate a challenging economic environment while resisting the pressure to focus on short-term results at the expense of the Company'sCompany’s long-term value and success. The future success of the Company depends in significant part on the ability to attract and retain capable and experienced directors. In this regard, we believe that longer terms for our directors will enhance director independence from both management and stockholder special interest groups.


    Communications with the Board of Directors

    Stockholders or other interested parties can contact any director, any committee of the Board or our independent directors as a group, by writing to them c/o General Counsel, Extraction Oil & Gas, Inc., 370 17th Street, Suite 5300, Denver, Colorado 80202. Comments or complaints relating to the Company'sCompany’s accounting, internal accounting controls or auditing matters will also be referred to members of the Audit Committee. All such communications will be forwarded to the appropriate member(s) of the Board.


     Shareholder Outreach

            We engaged with the majority of our shareholders in 2018, as gathering and incorporating shareholder feedback is a priority of both management and the Board. Over the course of the year, our


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    engagement team conducted 95 in-person meetings with our shareholders, including in-person meetings with 14 of our top 25 shareholders representing 64% of the Company's shares outstanding in aggregate.

    Director Independence


    The Company'sCompany’s standards for determining director independence require the assessment of directors'directors’ independence each year. A director cannot be considered independent unless the Board of Directors affirmatively determines that he or she does not have any relationship with management or the Company that may interfere with the exercise of his or her independent judgment, including any of the relationships that would disqualify the director from being independent under the rules of the NASDAQ.


    The Board of Directors has assessed the independence of each non-employee director under the Company'sCompany’s guidelines and the independence standards of the NASDAQ, and additionally considered transactions or relationships between such director and any members of the Company'sCompany’s senior management or their affiliates. The Board of Directors affirmatively determined that each of Messrs. Chronister, Evans, Gaensbauer, Leidel, Murdy, O’Brien and O'BrienMs. Robertson are independent.


    In connection with its assessment of the independence of each non-employee director, the Board of Directors also determined that (a) Messrs. Chronister, EvansGaensbauer and Murdy and Ms. Robertson are independent as defined in Section 10A of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”) and under the
    41



    standards set forth by the NASDAQ applicable to members of the Audit Committee and (b) Messrs. Chronister, Gaensbauer, Leidel and O'BrienO’Brien are independent under the Company'sCompany’s guidelines and standards set forth by the NASDAQ applicable to members of the Compensation Committee.


    Financial Literacy of Audit Committee and Designation of Financial Experts

    The Board of Directors most recently evaluated each of the members of the Audit Committee for financial literacy and the attributes of a financial expert in March 2019.2020. The Board of Directors determined that each of the Audit Committee members is financially literate and that Messrs.Mr. Chronister, Mr. Murdy and MurdyMs. Robertson are each an audit committee financial expert as defined by the SEC.


    Oversight of Risk Management

    The Board of Directors as a whole oversees the Company'sCompany’s assessment of major risks and the measures taken to manage such risks. For example, the Board of Directors:


    •
    oversees the long-term strategic plans of the Company and assesses risks and efforts to mitigate such risks that would cause the Company to fail to achieve its strategic goals;


    •
    reviews management'smanagement’s capital spending plans, approves the Company'sCompany’s capital budget and requires that management present for Board review significant departures from those plans;


    •
    oversees management of the Company'sCompany’s commodity price risk through regular review with executive management of the Company'sCompany’s derivatives strategy;


    •
    monitors the Company'sCompany’s liquidity profile and its compliance with the financial covenants contained in its borrowing arrangements; and


    •
    has established specific dollar limits on the commitment authority of members of senior management for certain transactions and requires Board approval of expenditures exceeding that authority and of other material contracts and transactions.


    The Company'sCompany’s Audit Committee is responsible for overseeing the Company'sCompany’s assessment and management of financial reporting and internal control risks, as well as other financial risks, such as the credit risks associated with counterparty exposure. The Audit Committee is responsible for


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    discussing with management the Company'sCompany’s significant financial risk exposures and the actions management has taken to monitor and control such exposures. Management and the Company'sCompany’s independent registered public accountants report regularly to the Audit Committee on those subjects. The Board of Directors does not consider its role in oversight of the Company'sCompany’s risk management function to be relevant to its choice of leadership structure.


    Attendance at Annual Meetings

    The Board of Directors encourages all directors to attend the Annual Meetings, if practicable. All of our directors attended the 20182019 Annual Meeting, and we anticipate that all of our directors will attend the 20192020 Annual Meeting.

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    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The following table sets forth certain information regarding the beneficial ownership of Common Stock as of March 18, 2019,April 13, 2020, by (a) each person who is known by the Company to own beneficially more than 5% of the outstanding shares of Common Stock, (b) each Named Executive Officer of the Company, (c) each director and director nominee of the Company and (d) all directors and executive officers as a group. Unless otherwise noted, the mailing address of each person or entity named below is 370 17th Street, Suite 5300, Denver, Colorado 80202.


    All information with respect to the beneficial ownership of Common Stock has been furnished by or on behalf of the stockholders and is as of March 18, 2019.16, 2020. For each entity included in the table below, percentage ownership is calculated by dividing the number of shares reported as beneficially owned by such entity by the 169,314,622138,103,951 shares of common stockCommon Stock outstanding on March 18, 2019.

    April 13, 2020.
     
    		 Beneficial Ownership of Common Stock 
     
    		 Number of Shares Percentage of Class 

    5% Stockholders

    		       

    YT Extraction Co Investment Partners, LP(1)

    		  20,340,747  12.0%

    Yorktown Energy Partners X, L.P.(2)

    		  17,554,262  10.4%

    Yorktown Energy Partners IX, L.P.(3)

    		  7,700,358  4.6%

    Yorktown Energy Partners XI, L.P.(4)

    		  4,309,079  2.6%

    Capital World Investors(5)

    		  11,649,000  6.9%

    Luminus Energy Partners Master Fund, Ltd.(6)

    		  11,183,995  6.6%

    Morgan Stanley(7)

    		  8,727,997  5.2%

    Directors and Named Executive Officers:

    		       

    Mark A. Erickson(8)

    		  6,249,147  3.7%

    Matthew R. Owens(9)

    		  4,491,208  2.7%

    Russell T. Kelley, Jr.(10)

    		  2,964,174  1.8%

    Tom L. Brock(11)

    		  436,574  0.3%

    Eric J. Christ(12)

    		  439,455  0.3%

    John S. Gaensbauer(13)

    		  192,300  0.1%

    Peter A. Leidel(13)

    		  143,019  * 

    Marvin M. Chronister(13)

    		  93,019  * 

    Patrick O'Brien(13)

    		  166,954  0.1%

    Wayne M. Murdy(13)

    		  143,019  * 

    Donald L. Evans(13)

    		  183,019  0.1%

    Executive Officers and Directors as a Group (11 total):

    		  15,501,888  9.2%

    Beneficial Ownership of Common Stock
    Number of SharesPercentage of Class
    5% Stockholders
    YT Extraction Co Investment Partners, LP(1)20,340,74714.7 %
    Yorktown Energy Partners X, L.P.(2)17,554,26212.7 %
    Yorktown Energy Partners IX, L.P.(3)7,700,3585.6 %
    Yorktown Energy Partners XI, L.P.(4)4,309,0793.1 %
    BlackRock, Inc.(5)12,531,9319.1 %
    Morgan Stanley(6)11,670,0228.5 %
    Goldman Sachs & Co. LLC(7)10,746,9547.8 %
    Dimensional Fund Advisors LP(8)7,903,1825.7 %
    Directors and Named Executive Officers:
    Thomas B. Tyree, Jr.(9)1,250,0000.9 %
    Matthew R. Owens(10)5,181,7983.8 %
    Tom L. Brock(11)452,9470.3 %
    Eric J. Christ(12)444,4590.3 %
    Marianella Foschi(13)89,450*  
    John S. Gaensbauer(14)153,8340.1 %
    Peter A. Leidel(14)174,5720.1 %
    Marvin M. Chronister(14)124,572*  
    Patrick O’Brien(14)198,5070.1 %
    Wayne M. Murdy(14)174,5720.1 %
    Audrey Robertson(14)75,000*  
    Mark A. Erickson(15)6,841,2365.0 %
    Russell T. Kelley, Jr.(16)3,178,9732.3 %
    Executive Officers and Directors as a Group (11 total):8,319,7116.0 %
    ___________________________
    (1)
    YT Extraction Company LP is the sole general partner of YT Extraction Co Investment Partners, LP. YT Extraction Associates LLC is the sole general partner of YT Extraction Company LP. As a result, YT Extraction Associates LLC may be deemed to share the power to vote or direct the vote or to dispose or direct the disposition of the common stockCommon Stock owned by YT Extraction Co Investment Partners, LP. YT Extraction Company LP and YT Extraction Associates LLC disclaim beneficial ownership of the common stockCommon Stock held by YT Extraction Co Investment Partners, LP in excess of their pecuniary interest therein. Peter A. Leidel is a manager of YT Extraction Associates LLC. Mr. Leidel disclaims beneficial ownership of the common stockCommon Stock held by YT Extraction Co Investment Partners, LP. The address for YT Extraction Co Investment Partners, LP is 410 Park Avenue, 19 Floor, New York, New York 10022.
    43


    (2)
    Yorktown X Company LP is the sole general partner of Yorktown Energy Partners X, L.P. Yorktown X Associates LLC is the sole general partner of Yorktown X Company LP. As a result, Yorktown X Associates LLC may be deemed to share the power to vote or direct the vote or to dispose or direct the disposition of the common stockCommon Stock owned by Yorktown Energy Partners X, L.P. Yorktown X Company LP and Yorktown X Associates LLC disclaim beneficial ownership of the common stockCommon Stock held by Yorktown Energy Partners X, L.P. in excess of their pecuniary interest therein. Mr. Leidel is a manager of Yorktown X Associates LLC. Mr. Leidel disclaims beneficial ownership of the common stockCommon Stock held by Yorktown Energy Partners X, L.P. The address for Yorktown Energy Partners X, L.P. is 410 Park Avenue, 19 Floor, New York, New York 10022.

    (3)
    Yorktown X Company LP is the sole general partner of Yorktown Energy Partners X, L.P. Yorktown X Associates LLC is the sole general partner of Yorktown X Company LP. As a result, Yorktown X Associates LLC may be deemed to share the power to vote or direct the vote or to dispose or direct the disposition of the common stockCommon Stock owned by Yorktown Energy Partners X, L.P. Yorktown X Company LP and Yorktown X Associates LLC disclaim beneficial ownership of the common stockCommon Stock held by Yorktown Energy Partners X, L.P. in excess of their pecuniary interest therein. Mr. Leidel is a manager of Yorktown X Associates LLC. Mr. Leidel disclaims beneficial ownership of the common stockCommon Stock held by Yorktown Energy Partners X, L.P. The address for Yorktown Energy Partners X, L.P. is 410 Park Avenue, 19 Floor, New York, New York 10022.

    (4)
    Yorktown IX Company LP is the sole general partner of Yorktown Energy Partners IX, L.P. Yorktown IX Associates LLC is the sole general partner of Yorktown IX Company LP. As a result, Yorktown IX Associates LLC may be deemed to share the power to vote or direct the vote or to dispose or direct the disposition of the common stockCommon Stock owned by Yorktown Energy Partners IX, L.P. Yorktown IX Company LP and Yorktown IX Associates LLC disclaim beneficial ownership of the common stockCommon Stock held by Yorktown Energy Partners IX, L.P. in excess of their pecuniary interest therein. Mr. Leidel is a manager of Yorktown IX Associates LLC. Mr. Leidel disclaims beneficial ownership of the common stockCommon Stock held by Yorktown Energy Partners IX, L.P. The address for Yorktown Energy Partners X, L.P. is 410 Park Avenue, 19 Floor, New York, New York 10022.

    (5)
    Pursuant to the Schedule 13G13G/A filed by Capital World InvestorsBlackRock, Inc. with the Securities and Exchange Commission on February 14, 2019, these shares are held by Capital World Investors, a division of Capital Research and Management Company and Capital World Investors10, 2020, BlackRock, Inc. has sole voting power with respect to 12,306,211 shares and sole dispositive power with respect to these12,531,931 shares. The principal address for Capital World Investorsof BlackRock, Inc. is 333 South Hope55 East 52nd Street, Los Angeles, California 90071.

    (6)
    Pursuant to the Schedule 13G filed by Luminus Management LLC with the Securities and Exchange Commission on February 14, 2019, these shares are held by Luminus Energy Partners Master Fund, Ltd. for which Luminus Management, LLC serves as the investment manager. Jonathan Barrett is the ultimate beneficial owner of Luminus Management, LLC. Luminus Energy Partners Master Fund, Ltd., Luminus Management, LLC and Jonathan Barrett have shared voting and dispositive power with respect to these shares and disclaim beneficial ownership of these shares except to the extent of its or his pecuniary interest therein. The address for Luminus Management LLC is 1700 Broadway, 26th Floor, New York, New York 10019.

    NY 10055.
    (7)
    (6)Pursuant to the Schedule 13G/A filed by Morgan Stanley with the Securities and Exchange Commission on February 12, 2019,13, 2020, Morgan Stanley has shared voting power with respect to 11,669,897 shares and

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      shared dispositive power with respect to these11,670,022 shares. The principal address of Morgan Stanley is 1585 Broadway, New York, New York 10036.

    (7)Pursuant to the Schedule 13G filed by Goldman Sachs & Co. LLC with the Securities and Exchange Commission on January 28, 2020, Goldman Sachs & Co. LLC has shared voting power with respect to 10,718,476 shares and shared dispositive power with respect to 10,746,954 shares. The principal address of Morgan Stanley is 200 West Street, New York, New York 10282.
    (8)
    Pursuant to the Schedule 13G filed by Dimensional Fund Advisors LP with the Securities and Exchange Commission on February 12, 2020, Dimensional Fund Advisors LP has sole voting and dispositive power with respect to these shares. The address for Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, TX 78746.
    (9)Includes 1,250,000 unvested RSUs.
    (10)Includes 1,837,755 shares of Common Stock held by OFI Properties LLC. Mr. Owens has voting and dispositive power over these shares but disclaims beneficial ownership over these shares in excess of his pecuniary interest in these shares. OFI Properties LLC is an entity owned by Mr. Owens. Includes (i) 80,522 unvested restricted stock units and (ii) 1,631,924 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $18.72. Includes 347,682 shares of restricted stock subject to performance vesting (the “PSAs”). The number of PSAs disclosed is the maximum number of shares of Common Stock that can be earned under the terms of the applicable award agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.
    (11)Includes (i) 76,687 unvested RSUs and (ii) 62,821 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $15.53. Includes 165,563 shares of restricted stock subject to performance vesting (the “PSAs”). The number of PSAs disclosed is the maximum number of shares of Common Stock that can be earned under the terms of the applicable award
    44



    agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.
    (12)Includes (i) 114,187 unvested RSUs and (ii) 62,821 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $15.53. Includes 165,563 shares of restricted stock subject to performance vesting (the “PSAs”). The number of PSAs disclosed is the maximum number of shares of Common Stock that can be earned under the terms of the applicable award agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.
    (13)Included 38,232 unvested RSUs.
    (14)Includes 31,553 unvested RSUs.
    (15)Includes 271,956 shares of common stockCommon Stock held by Jane M. Erickson, 2,046,449 shares of common stockCommon Stock held by MAE Investment Properties 2016, LLC, 271,957 shares of common stockCommon Stock held by JME Investment Properties 2016, LLC and 81 shares of common stockCommon Stock held by MAE Holdings 2011 LLC. Mr. Erickson has voting and dispositive power over these shares but disclaims beneficial ownership over these shares in excess of his pecuniary interest in these shares. MAE Investment Properties 2016, LLC, and MAE Holdings 2011 LLC are entities owned by Mr. Erickson. Does not reflect 755,995 shares of common stock held by Extraction Employee Incentive, LLC an entity in which Mr. Erickson owns a membership interest. Includes (i) 250,000219,836 unvested restricted stock units and (ii) 1,180,0871,770,130 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $18.47.$18.72. Includes 1,013,887711,921 shares of restricted stock subject to performance vesting (the "PSAs"“PSAs”). The number of PSAs disclosed is the maximum number of shares of Common Stock that can be earned under the terms of the applicable award agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.

    (9)
    (16)Includes 1,910,411 shares of common stock held by OFI Properties LLC. Mr. Owens has voting and dispositive power over these shares but disclaims beneficial ownership over these shares in excess of his pecuniary interest in these shares. OFI Properties LLC is an entity owned by Mr. Owens. Does not reflect 755,995 shares of common stock held by Extraction Employee Incentive, LLC, an entity in which Mr. Owens owns a membership interest. Includes (i) 250,000 unvested restricted stock units and (ii) 1,087,9501,407,849 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $18.72.$18.67. Includes 495,154347,682 shares of restricted stock subject to performance vesting (the "PSAs"“PSAs”). The number of PSAs disclosed is the maximum number of shares of Common Stock that can be earned under the terms of the applicable award agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.

    (10)
    Does not reflect 755,995 shares of common stock held by Extraction Employee Incentive, LLC, an entity in which Mr. Kelley owns a membership interest. Includes (i) 230,325 unvested RSUs and (ii) 904,625 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $18.66. Includes 495,154 shares of restricted stock subject to performance vesting (the "PSAs"). The number of PSAs disclosed is the maximum number of shares of Common Stock that can be earned under the terms of the applicable award agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.

    (11)
    Includes (i) 90,648 unvested RSUs and (ii) 41,880 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $15.53. Includes 235,788 shares of restricted stock subject to performance vesting (the "PSAs"). The number of PSAs disclosed is the maximum number of shares of Common Stock that can be earned under the terms of the applicable award agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.

    (12)
    Includes (i) 116,248 unvested RSUs and (ii) 41,880 shares that may be acquired subject to options exercisable within 60 days at a weighted-average exercise price of $15.53. Includes 235,788 shares of restricted stock subject to performance vesting (the "PSAs"). The number of PSAs disclosed is the maximum number of shares of Common Stock that can

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      be earned under the terms of the applicable award agreements and the final number of shares of Common Stock received by the executive officer is not determinable at this time.

    (13)
    Includes 9,103 unvested restricted stock units.

    *
    Less than 0.1%.

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    SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

    Section 16(a) of the Exchange Act, requires our directors and executive officers, and persons who beneficially own more than 10% of a registered class of our equity securities, to file initial reports of ownership of our equity securities and reports of changes in ownership of our equity securities with the SEC. Such persons are also required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that during the fiscal year ended December 31, 2018,2019, except for the Form 4 filings related to the annual grant of restricted stock units to our non-executive directors made on May 15, 2019, which were filed late due to administrative oversight, all Section 16(a) reporting persons complied with all applicable filing requirements in a timely manner.

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    TRANSACTIONS WITH RELATED PERSONS

    Policies and Procedures for Review of Related Party Transactions

    A "Related“Related Party Transaction"Transaction” is a transaction, arrangement or relationship in which we or any of our subsidiaries was, is or will be a participant, the amount of which involved exceeds $120,000, and in which any Related Person had, has or will have a direct or indirect material interest.

            "Related Person"


    “Related Person” means:


    •
    any person who is, or at any time during the applicable period was, one of our executive officers or one of our directors;


    •
    any person who is known by us to be the beneficial owner of more than 5% of any class of our voting securities;


    •
    any immediate family member of any of the foregoing persons, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of a director, executive officer or a beneficial owner of more than 5% of our Common Stock, and any person (other than a tenant or employee) sharing the household of such director, executive officer or beneficial owner of more than 5% of our Common Stock; and


    •
    any firm, corporation or other entity in which any of the foregoing persons is a partner or principal or in a similar position or in which such person has a 10% or greater beneficial ownership interest.


    Our board of directors adopted a written related party transactions policy in connection with the IPO. Pursuant to this policy, our Audit Committee will review all material facts of all Related Party Transactions. In determining whether to approve or ratify a transaction, the Audit Committee will take into account, among other factors it deems appropriate, (a) whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances, (b) the extent of the Related Person'sPerson’s interest in the transaction and (c) whether the transaction is material to the Company.


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    Historical Transactions with Affiliates

    Existing Owners Registration Rights Agreement

    In connection with the closing of the IPO, we entered into a registration rights agreement (the "Existing“Existing Owners Registration Rights Agreement"Agreement”) with Yorktown'sYorktown’s funds and certain of our existing equity holders. The Existing Owners Registration Rights Agreement provides for customary rights for these stockholders to demand that we file a resale shelf registration statement and certain piggyback rights in connection with the registration of securities. In addition, the agreement grants these stockholders customary rights to participate in certain underwritten offerings of our common stockCommon Stock that we may conduct.


    Demand Rights

    Subject to certain limitations, the equity holders party to the Existing Owners Registration Rights Agreement have the right to require us by written notice to prepare and file a registration statement registering the offer and sale of a certain number of their shares of our common stock.Common Stock. We are required to provide notice of the request to certain other holders of our common stockCommon Stock who may, in certain circumstances, participate in the registration. Subject to certain exceptions, we will not be obligated to effect a demand registration (a) on or before the date that is twelve months after the closing of the IPO, (b) on or before 180 days after any other registered underwritten offering of our equity securities, or (c) if we are not otherwise eligible at such time to file a registration statement on Form S-3 (or any applicable successor form).



    47



    Piggyback Rights

    Subject to certain exceptions, if at any time we propose to register an offering of equity securities or conduct an underwritten offering, whether or not for our own account and subject to the ability of the holders of 75% of the shares to waive such a right, then we must notify the equity holders party to the Existing Owners Registration Rights Agreement of such proposal to allow them to include a specified number of their shares of our common stockCommon Stock in that registration statement or underwritten offering, as applicable.


    Conditions and Limitations; Expenses

    These registration rights are subject to certain conditions and limitations, including the right of the underwriters to limit the number of shares to be included in a registration and our right to delay a registration statement under certain circumstances. We will generally pay all registration expenses in connection with our obligations under the Existing Owners Registration Rights Agreement, regardless of whether a registration statement is filed or becomes effective.


    Series A Preferred Registration Rights Agreement

    The Series B Preferred Units converted in connection with the closing of the IPO into 185,280 shares of Series A Convertible Preferred Stock (the "Series“Series A Preferred Stock"Stock”). In connection with the sale of the Series B Preferred Units, we entered into a Registration Rights Agreement (the "Registration“Registration Rights Agreement"Agreement”) with the holders of the Series A Preferred Stock (the "Series“Series A Preferred Holders"Holders”) pursuant to which we filed a shelf registration statement registering the sale of the shares of common stockCommon Stock issuable upon conversion of the Series A Preferred Stock. Additionally, subject to certain exceptions and limitations, the Series A Preferred Holders will have certain piggyback rights under such agreement, which will allow the holders the option to include a specified number of shares of common stockCommon Stock they receive following the conversion of their Series A Preferred Stock in any underwritten offering of our equity securities.


    Employees
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    Senior Notes

            Several lenders of our 2024 and 2026 Senior Notes are also 5% stockholders of the Company. As of the initial issuance in August 2017 of the $400.0 million principal amount on the 2024 Senior Notes, 5% stockholders had purchased $54.9 million of such notes. As of the initial issuance in January 2018 of the $750.0 million principal amount on the 2026 Senior Notes, 5% stockholders had purchased $56.2 million of such notes. In January 2018, we utilized net proceeds from the offering of the 2026 Senior Notes to tender for our 2021 Senior Notes and any 2021 Senior Notes not tendered were redeemed in February 2018; accordingly, the 2021 Senior Notes held by 5% stockholders were repurchased by the Company.

    Employees

    Mr. Troy Owens, brother of Mr. Matthew R. Owens, our President and a member of our Board of Directors, is employed by us as an engineer. Consistent with market compensation for his services, Mr. Troy Owens received approximately $0.2 million in aggregate cash compensation relating to the fiscal year ended December 31, 2018.2019. In addition, Mr. Troy Owens received certain long-term incentives during the same period in the form of restricted stock units that vest over a period of three years.


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    48



    PROPOSAL THREE: TO APPROVE THE AMENDMENT AND RESTATEMENT TO OUR 2016 LONG TERM INCENTIVE PLAN, INCLUDING TO INCREASE THE AUTHORIZED SHARES

            Our stockholders are requested to approve the 2016 Amended and Restated Long Term Incentive Plan, which we refer to as the "2016 Plan." Stockholder approval of the 2016 Plan is required to, among other things, increase the number of shares of our common stock available and reserved for issuance under the 2016 Plan by and additional 12,000,000 shares. In addition, the 2016 Plan includes certain updates to reflect the repeal of the performance-based compensation exception under Section 162(m) of the Code as in effect prior to the enactment of the Tax Cuts and Jobs Act ("Former 162(m)"), except that we have retained the 2016 Plan's limits on awards to individual employees and we have made it clear that the performance criteria or other criteria set forth under the 2016 Plan may be used to establish performance goals for awards that are not intended to comply with Former Section 162(m). The amendment and restatement of the 2016 Plan was adopted and approved by the Board on March 28, 2019, subject to stockholder approval. Unless otherwise specified, the remainder of this discussion refers to the amended and restated 2016 Plan as if this proposal is approved by our stockholders.

    Purpose of Voting for the Proposal to Approve the 2016 Plan

            The purpose of the Proposal THREE is to provide the Company with sufficient flexibility to continue to use the 2016 Plan to further the Company's compensation philosophy and programs. Absent an increase in the share reserve under the 2016 Plan, we do not expect to have sufficient shares to meet our anticipated equity compensation needs for the future, including fiscal year 2020. We rely on equity compensation to attract, retain and motivate key employees, link compensation with key business objectives and share price, and align interests with stockholders. The 2016 Plan is designed to attract and retain highly skilled quality personnel, upon whom the Company relies, to successfully administer and manage the Company and whose present and potential contributions to the welfare of the Company and its subsidiaries are of importance, by offering competitive incentive compensation opportunities intended to align the interests of participants with those of our stockholders. Approval of this Proposal THREE would further these objectives by allowing us to continue to grant equity awards to such individuals and to attract new talent.

            As of the record date hereof, a total of 10,809,912 shares of common stock were subject to awards that have been issued or granted under the 2016 Plan to eligible persons, and 5,728,717 shares of common stock are available for new future awards under the 2016 Plan before taking the proposed share increase into account.

            The Board has determined that it is in the best interests of the Company and our stockholders to approve the Proposal THREE. Absent such approval, the Board believes that the number of shares currently available for new award grants under the 2016 Plan does not give the Company sufficient flexibility to adequately provide for future incentives and, accordingly, recommends stockholders approve the Proposal THREE. If this Proposal THREE is not approved by our stockholders, we will continue to operate the 2016 Plan pursuant to its current provisions at the existing share limit.

    Material Features of the 2016 Plan

            The following is a summary of the principal material features of the 2016 Plan, which was adopted and approved by our Board, subject to approval by our stockholders, on March 28, 2019. This summary does not purport to be a complete description of all of the provisions of the 2016 Plan. It is qualified in its entirety by reference to the full text of the 2016 Plan, which has been attached hereto asAppendix A. For the avoidance of doubt, such description will also apply to the 2016 Plan as amended by this Proposal THREE, other than with respect to the share reserve section.


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    Eligibility under the 2016 Plan; Award Limitation

            The classes of persons eligible to receive awards under the 2016 Plan include our and our subsidiaries' officers (including our named executive officers), non-officer employees, and such other persons who provide services to the Company or any of its subsidiaries (including our non-employee directors). An employee on leave of absence may be considered still in the employ of the Company or its subsidiaries for purposes of participation in the 2016 Plan. As of the record date hereof, the Committee has determined that approximately six officers, including our named executive officers, 285 non-officer employees, and seven other persons providing services to the Company and our subsidiaries (including our six non-employee directors) are currently eligible for awards under the 2016 Plan. More generally, the basis for participation under the 2016 Plan is determined by the Committee at the time such awards are made, when eligibility to receive such an award is also determined.

            The maximum number of shares that may be subject to each award, in each calendar year, is limited as follows (subject to adjustment under the 2016 Plan): (i) no person may be granted awards relating to more than 10,000,000 shares and (ii) no person may be granted awards (cash-settled or otherwise not stock-settled) having a value in excess of $50,000,000. Furthermore, a non-employee member of the Board may not be granted any award having a cumulative value greater than $5,000,000 in any calendar year, provided, however, that the limits are without regard to grants made to non-employee members of the Board as compensation for services provided in the individual's capacity as a director of the Company.

    Administration

            The 2016 Plan is administered by a committee designated by our Board unless the Board elects to administer the 2016 Plan (the "Committee"). The Committee has the authority, in its sole discretion, to, among other things, administer and interpret the 2016 Plan, determine eligible persons as participants under the 2016 Plan, determine the type and amount of awards to be granted to eligible persons, and determine the terms and provisions applicable to each award. The Committee may also terminate or amend the 2016 Plan at any time, including increasing the number of authorized and reserved shares that may be granted, subject to stockholder approval. However, no Committee action may materially and adversely affect the rights of any participant under any previously granted and outstanding award without the consent of the affected participants.

    Number of Shares

            Subject to adjustment in the event of any distribution, recapitalization, split, merger, reorganization, consolidation or similar corporate event, the number of shares available for issuance under the term of the 2016 Plan is currently 5,728,717 shares of our common stock (excluding shares subject to an award that has been previously issued under the 2016 Plan, but including shares relating to any portion of any such award that has been canceled, forfeited, settled in cash, withheld to satisfy tax obligations or otherwise terminated without delivery of shares to the participant in accordance with Section 4 of the 2016 Plan), provided that pursuant to this Proposal THREE, the Board is seeking stockholder approval to increase the total number of authorized shares by 12,000,000 additional shares. Shares subject to awards under the 2016 Plan that expire or are canceled, forfeited, exchanged, settled in cash or otherwise terminated, including shares withheld to satisfy exercise prices or tax withholding obligations or taxes relating to awards, will again be available for awards under the 2016 Plan. The shares of our common stock to be delivered under the 2016 Plan will be made available from authorized but unissued shares, shares held in our treasury, or previously issued shares reacquired by us, including by purchase on the open market.


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    Types of Awards

            The 2016 Plan authorizes the Committee to award cash- and equity-based awards, including options, stock appreciation rights, restricted stock, restricted stock units, bonus stock, dividend equivalents, other stock-based wards, performance awards, annual incentive awards and other forms of awards granted or denominated in the Company's common shares or units of the Company's common stock. Any award may be structured to be paid or settled in cash. Since the adoption of the 2016 Plan, we have awarded only stock options, restricted stock units, and performance stock units pursuant to the 2016 Plan.

    Stock Options

            The Committee is authorized to grant stock options and incentive stock options to eligible persons. A stock option, or option, is a right to purchase shares of our common stock at a specified price during specified time periods. It is anticipated that options will have an exercise price that may not be less than the fair market value of our common stock on the date of grant. Options granted under the 2016 Plan can be either incentive stock options (within the meaning of section 422 of the Code), which have certain tax advantages for recipients, or nonqualified options. No option will have a term that exceeds ten (10) years (or, for incentive stock options granted to any greater than 10% stockholder, five (5) years).

    Stock Appreciation Rights

            The Committee is authorized to grant stock appreciation rights, which represent an award that, upon exercise, entitles a participant to receive the excess of the fair market value of our common stock on the exercise date over the grant price established for the stock appreciation right on the date of grant by the Committee. Such excess will be paid in a form (cash, shares of our common stock, etc.) determined by the Committee. It is anticipated that stock appreciation rights will have a grant price that may not be less than the fair market value of our common stock on the date of grant.

    Restricted Stock

            The Committee is authorized to award restricted stock, which is an award of common stock that may be subject to restrictions that may lapse, separately or in combination, over a specified period of time or through the satisfaction of conditions (including based on achievement of one or more performance goals and/or future service requirements) as determined by the Committee on the date of grant, in its discretion.

    Restricted Stock Units

            The Committee is authorized to grant restricted stock units, a notional share that entitles the grantee to receive shares of our common stock, cash, or a combination thereof, as determined by the Committee at the date of grant or at some future date if vesting criteria or other terms and conditions established by the Committee are met.

    Bonus Stock and Awards in Lieu of Obligations

            The Committee is authorized to grant stock as a bonus or to grant stock in lieu of obligations to pay cash or deliver other property. A bonus stock award is a transfer of unrestricted shares of our common stock on terms and conditions determined by the Committee.


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    Dividend Equivalents

            The Committee is authorized to grant dividend equivalents, which entitle a participant to receive cash, common stock, other awards, or other property equal in value to dividends paid with respect to a specified number of shares of our common stock, or other periodic payments. The Committee is authorized to grant dividend equivalents on a free-standing basis or in connection with another award (other than an award of restricted stock or stock award).

    Other Awards

            The Committee is authorized, subject to limitations under applicable law, to grant other awards, including stock-based awards, which are award denominated in or payable in, valued in whole or in part by reference to, or otherwise based on or related to, the value of our common stock.

    Substitute Awards

            The Committee is authorized to grant awards in substitution for similar awards held for individuals who become eligible persons as a result of a merger, consolidation, or acquisition of another entity (or the assets of another entity) by or with us or one of our affiliates. Except as specifically provided in the 2016 Plan, the terms of outstanding awards may not be amended to reduce the exercise or grant price of outstanding option or stock appreciation rights or to cancel such outstanding awards in exchange for cash or other awards or the same awards with an exercise or grant price that is less than the original option or stock appreciation right without the approval of the stockholders.

    Performance Awards

            The Committee is authorized to grant performance awards, a right to receive all or part of an award granted under the 2016 Plan contingent upon performance conditions as may be specified by the Committee in its discretion based upon specified levels of achievement of business or individual performance criteria or any other performance objectives or other basis as specified by the Committee. The Committee will determine the period over which certain specified performance goals or objectives must be met. The performance award may be paid in cash, common stock, other awards or other property, in the discretion of the Committee.

    Merger, Recapitalization, or Change in Control

            If any change is made to our capitalization, such as a stock split, stock combination, stock dividend, exchange of shares or other recapitalization, merger or otherwise, which results in an increase or decrease in the number of outstanding shares of common stock, appropriate adjustments will be made by the Plan Administrator to the shares available under the 2016 Plan and the shares subject to awards granted under the 2016 Plan. The Plan Administrator will also have the discretion to make certain adjustments to awards in the event of a change in control, such as accelerating the exercisability of options or SARs, requiring the surrender of an award, with or without consideration, or making any other adjustment or modification to the award that the Plan Administrator feels is appropriate in light of the transaction.

    Termination of Employment or Service

            The consequences of a termination of a participant's employment or service relationship will be determined by the Committee and specified in the terms of the relevant award agreement.


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    Tax Withholding

            The Committee has discretion and is authorized to withhold from any award granted or any payment relating to an award, the amount necessary to satisfy obligations for the payment of withholding and other taxes due or potentially payable involving an award.

    Modification, Amendment or Termination of the 2016 Plan

            Unless sooner terminated by the Board, the 2016 Plan will terminate on its tenth anniversary from the date of its approval by our stockholders on May 15, 2029.

            The Board may amend, alter, suspect, discontinue or terminate the 2016 Plan or the Committee's authority to grant awards under the 2016 Plan provided that any such amendment or alteration shall be subject to the approval of stockholders no later than the next annual meeting if such stockholder approval is required by applicable law or regulation.

    New Plan Benefits

            We cannot provide a new plan benefits table for the 2016 Plan and the benefits or amounts that would have been received by or allocated to participants for the last completed fiscal year under the 2016 Plan if the 2016 Plan, as amended, was then in effect, as described in the federal proxy rules, because all awards made under the 2016 Plan will be made at the Committee's discretion, subject to the terms of the 2016 Plan. Therefore, the benefits and amounts that will be received or allocated under the 2016 Plan are not determinable at this time.

    Additional Information With Regard to Options

            As described above, the 2016 Plan provides for the grant of options to purchase shares of our common stock. Such options have an exercise price per share of common stock that is generally not less than the greater of the par value per share of the common stock underlying such option, or 100% the fair market value per share of common stock as of the date of grant of the option award (or, 110% in the case of an incentive stock option granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of common stock of the Company or its parent or subsidiary).

            The exercise prices, expiration dates and other material conditions (including vesting) upon which the options may be exercised are stated in each option agreement, including the consideration received or to be received by the Company for the grant or extension of an option. Such consideration may include, without limitation, cash, stock, or other awards granted under other plans of the Company or any Subsidiary, or other property (including notes or other contractual obligations of the participants to make payment on a deferred basis). No option may be exercisable for a period of more than ten (10) years following the date of grant of the option (or in the case of an incentive stock option granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, for a period of more than five (5) years following the date of grant).

            The closing market price for a Company common share as of March 25, 2019 was $4.15 per share.

    U.S. Federal Income Tax Consequences of Awards under the 2016 Plan

            The following is a brief, general summary of certain federal income tax consequences applicable to awards based on current federal income tax laws, regulations (including proposed regulations), and judicial and administrative interpretations. Federal income tax laws and regulations are amended frequently, and such amendments may or may not be retroactive. Individual circumstances may vary these results. Further, employees and other award recipients may be subject to taxes other than federal


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    income taxes, such as federal employment taxes, state and local income taxes and estate or inheritance taxes. This summary is not intended as tax advice to plan participants.

    Incentive Stock Options

            The grant of an incentive stock option will not be a taxable event for the grantee until exercise (except that the alternative minimum tax may apply), and any gain realized upon a disposition of our common stock received pursuant to the exercise of an incentive stock option will be taxed as long-term capital gain if the grantee holds the shares of common stock for at least two (2) years after the date of grant and for one (1) year after the date of exercise (the "holding period requirement"). The Company will not be entitled to any business expense deduction with respect to the exercise of an incentive stock option, except as discussed below.

            If all of the foregoing requirements are met except the holding period requirement mentioned above, the grantee will recognize ordinary income upon the disposition of the common stock in an amount generally equal to the excess of the fair market value of the common stock at the time the option was exercised over the option exercise price (but not in excess of the gain realized on the sale). The balance of the realized gain, if any, will be capital gain. The Company will be allowed a business expense deduction to the extent the grantee recognizes ordinary income.

    Non-Qualified Options

            The grant of an option will not be a taxable event for the grantee or for the Company. Upon exercising a non-qualified option, a grantee will recognize ordinary income in an amount equal to the difference between the exercise price and the fair market value of the common stock on the date of exercise. Upon a subsequent sale or exchange of shares acquired pursuant to the exercise of a non-qualified option, the grantee will have taxable capital gain or loss, measured by the difference between the amount realized on the disposition and the tax basis of the shares of common stock (generally, the amount paid for the shares plus the amount treated as ordinary income at the time the option was exercised). The Company will generally be entitled to a business expense deduction in the same amount and generally at the same time as the grantee recognizes ordinary income.

    Restricted Stock Awards

            In the absence of a Section 83(b) election (as described below), a participant who receives a restricted stock award will recognize no income at the time of grant. When the restrictions lapse, a participant will recognize ordinary income equal to the fair market value of the stock when the restrictions lapse over the amount paid (if any) for the stock. As the restrictions applicable to a restricted stock award lapse, the participant will include the applicable portion of the shares that vests as ordinary income. The participant's basis in the common stock is equal to the amount included in income on the expiration of the restrictions and the amount paid (if any), and the holding period will begin when the restrictions end. Any disposition of the restricted stock will result in a long- or short-term capital gain or loss (depending on the time the common stock is held after the restrictions end). We generally will be entitled to a deduction equal to the fair market value of the common stock when it is included in the participant's income, and will also be entitled to a business expense deduction for dividends paid to the participant (if any) on common stock that remains subject to restrictions (in each case subject to the limits of Section 162(m)).

            If a Section 83(b) election is made within 30 days of the grant of the award, the participant must recognize the fair market value of the restricted stock on the date of grant as ordinary income as of the date of grant, and the holding period for long-term capital gains treatment would begin at the time the restricted stock award is granted. We generally would be entitled to a corresponding business expense deduction for the grant (subject to the limits of Section 162(m)), but dividends on the stock would not


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    be deductible. Any subsequent disposition of the stock by the participant, other than by forfeiture, would result in capital gain or loss, which would be long- or short-term, depending on the holding period. Upon a subsequent forfeiture of restricted stock with respect to which a Section 83(b) election has been made, no deduction will be allowed in respect of the amount included as income at the time the Section 83(b) election was made; however, the participant will generally be allowed a loss deduction equal to the amount (if any) the participant paid for the restricted stock over the amount (if any) we paid the participant for the restricted stock at the time it is forfeited.

            If required, income tax must be withheld from the participant on the income recognized by the participant at the time the restrictions on the restricted stock lapse (or grant of the restricted stock, in the event the participant makes a Section 83(b) election).

    Restricted Stock Units

            A participant will not recognize any income at the time an RSU is granted, nor will we be entitled to a deduction at that time. When payment on an RSU is made, the participant will recognize ordinary income in an amount equal to the fair market value of the common stock received (or if the RSU is settled in cash, the cash amount). If required, income tax must be withheld on the income recognized by the participant. We will receive a deduction for federal income tax purposes equal to the ordinary income recognized by the participant, subject to the limits of Section 162(m).

    Stock Appreciation Rights

            The grant of stock appreciation rights will not be a taxable event for the participant or for the Company. Upon exercise of a stock appreciation right, the participant will recognize ordinary income in an amount equal to the difference between the aggregate fair market value of the shares with respect to the number of shares that the stock appreciation right is exercised over the aggregate base price for such shares subject to the stock appreciation right. We generally will be entitled to a business expense deduction in the same amount and at the same time as the participant recognizes ordinary compensation income (subject to the limits of Section 162(m)).

            If required, income tax must be withheld from the participant on the income recognized by the participant upon exercise of a stock appreciation right.

    Dividend Equivalent Rights

            A recipient of dividend equivalent rights generally will recognize ordinary income at the time the dividend equivalent right is paid. If required, income tax must be withheld on the income recognized by the participant. We will receive a deduction for federal income tax purposes equal to the ordinary income recognized by the participant, subject to the limits of Section 162(m).

    Section 162(m) Limitation

            Section 162(m) of the Code generally provides that publicly held companies (as defined in Section 162(m)(2) of the Code) may not deduct compensation paid to certain of their top executive officers to the extent such compensation exceeds $1 million per covered officer in any year. For taxable years beginning prior to 2018, a limited exception to Section 162(m) has applied with respect to "performance-based compensation" that complies with conditions imposed by former Section 162(m) rules. However, this exception from Section 162(m)'s deduction limit for performance-based compensation has been repealed by the Tax Cuts and Jobs Act, effective for taxable years beginning after December 31, 2017, except with respect to certain grandfathered arrangements in effect as of November 2, 2017. Additionally, under a Section 162(m) transition rule for compensation plans or agreements of corporations which are privately held and which become publicly held in an IPO, compensation paid under a plan or agreement that existed prior to the IPO will not be subject to


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    Section 162(m) until the earliest of (1) the expiration of the plan or agreement, (2) a material modification of the plan or agreement, (3) the issuance of all employer stock and other compensation that has been allocated under the plan, or (4) the first meeting of stockholders at which directors are to be elected that occurs after the close of the third calendar year following the year of the IPO. Historically, awards granted under the 2016 Plan to our covered executive officers have been intended to qualify for one of the two exceptions from Section 162(m)'s $1 million deduction limit described above. However, going forward, to the extent that the above exceptions do not apply, compensation paid to our covered executive officers (as defined by current Section 162(m) rules) in excess of $1 million will not be deductible.

    Section 409A

            Section 409A of the Code imposes certain requirements on non-qualified deferred compensation arrangements. These include requirements on an individual's election to defer compensation and the individual's selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual's separation from service, a predetermined date, or the individual's death). Section 409A imposes restrictions on an individual's ability to change his or her distribution timing or form after the compensation has been deferred. For specified officers, Section 409A requires that such individual's distribution commence no earlier than six months after such officer's separation from service. Certain awards under the 2016 Plan may be designed to be subject to the requirements of Section 409A in form and in operation. For example, restricted stock units that provide for a settlement date following the vesting date may be subject to Section 409A. If an award under the 2016 Plan is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with the requirements of Section 409A, Section 409A imposes an additional 20% federal penalty tax on compensation recognized as ordinary income, as well as, in certain cases, interest on such deferred compensation.

    Current Outstanding Options

            The following table includes the amount of options received or to be received by the following persons.

    Name and position
    		Options (#)

    Mark A. Erickson, Chief Executive Officer and Chairman of the Board

    		1,770,130

    Matthew R. Owens, President and Director

    		1,631,924

    Russell T. Kelley, Jr., Chief Financial Officer

    		1,631,924

    Tom L. Brock, Vice President, Chief Accounting Officer

    		62,821

    Eric J. Christ, Vice President, General Counsel & Corporate Secretary

    		62,821

    Total for all current executive officers (including named executive officers)

    		5,159,620

    Total for all current directors who are non-executive officers

    		0

    Total for all employees (including current non-executive officers)

    		5,244,428

    Equity Compensation Plan Information

            The following table sets forth the number of the Company's common shares subject to outstanding awards, the weighted-average exercise price of outstanding options, and the number of shares


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    remaining available for future awards under our equity compensation plans, in each case, as of the end of the most recently completed fiscal year.

    Plan Category
    		 (a)
    Number of
    Common Shares to
    be Issued Upon
    Exercise of
    Outstanding
    Options and
    Rights    		 (b)
    Weighted-average
    Exercise Price of
    Outstanding Options
    and Rights    		 (c)
    Number of Common
    Shares Remaining
    Available for Future
    Issuance Under Equity
    Compensation Plans
    (Excluding Shares
    Reflected in Column (a))    		 

    Equity compensation plans approved by our stockholders

    		  5,244,428 $18.51  5,728,717 

    Equity compensation plans not approved by our stockholders

    		  0  —  — 

    Total

    		  5,244,428 $18.51  5,728,717 

    Vote Required

            The approval of this Proposal THREE requires the affirmative vote of a majority of votes cast by the holders of a majority of the shares represented at the annual meeting, in person or by proxy, and entitled to vote. Votes case FOR or AGAINST and abstentions will be counted as shares entitled to vote. As a result, abstentions will have the same effect as votes against this proposal. Because brokers do not have discretionary authority to vote on this proposal, broker non-votes will not affect the outcome of the vote on this proposal. All members of the Board and all of the Company's executive officers are eligible for awards under the 2016 Plan and thus have a personal interest in the approval of Proposal THREE to the 2016 Plan. For the approval of this Proposal THREE, you may vote "FOR" or "AGAINST" or abstain from voting.

    Recommendation

    The Board of Directors unanimously recommends that stockholders vote FOR the approval of the amendment and restatement of our 2016 Long Term Incentive Plan, including to increase the number of authorized shares of common stock available and reserved for issuance under such plan by 12,000,000 shares to an aggregate of 32,200,000 shares.


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    PROPOSAL FOUR: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION


    Under the Dodd-Frank Wall Street Reform and Consumer Protection Act enacted in July 2010 (the "Dodd-Frank Act"“Dodd-Frank Act”), the stockholders of the Company are entitled to vote at the annual meeting on the compensation of the Company'sCompany’s named executive officers, as disclosed in the Compensation Discussion and Analysis section and accompanying compensation tables contained in this Proxy Statement. Pursuant to the Dodd-Frank Act, the stockholder vote on executive compensation is an advisory vote only and is not binding on the Company or the Board of Directors.


    Although the vote is non-binding, the Compensation Committee and the Board of Directors value the opinions of the stockholders and will consider the outcome of the vote when making future compensation decisions.


    As described in detail under the heading "Compensation“Compensation Discussion and Analysis,"” our executive compensation program aligns with our business strategy, focuses on long-term value creation for our stockholders and delivers pay relative to our performance, which will attract and retain experienced, talented executives to ensure the Company'sCompany’s success. Please read the "Compensation“Compensation Discussion and Analysis"Analysis” beginning on page 13 for additional details about our executive compensation program, including information about the compensation of our Named Executive Officers during 2018.

    2019.


    During 2018,2019, the Compensation Committee administered an annual cash bonus program and long-term equity incentive program, in both cases to ensure that such programs are competitively structured, are aligned with our short and long-term strategic goals and reflect a strong pay-for-performance orientation.


    Below are the key actions taken and decisions made regarding the Company'sCompany’s executive compensation program in 2018,2019, as approved by the Compensation Committee with input from its independent compensation consultant:


    •
    administeredMaintained the base salaries of our Chief Executive Officer, President and Chief Financial Officer at existing levels in place since 2017. Through the end of 2019, the base salaries for our President and Chief Financial Officer have remained unchanged since our initial public offering in 2016;

    •In the third quarter of 2019, the Board amended the Company’s capital budget to execute upon a more measured pace of development to focus on generating free cash bonus program, pursuantflow and to which ourdeemphasize the Company’s production growth. While the 2019 Short-Term Cash Incentive Program would have allowed the Compensation Committee evaluated the Company's performanceability to adjust the metrics in the program to account for 2018 against pre-established qualitative and quantitative goals in order to determine the value of the cash bonuses paid to each of our Named Executive Officers;

    •
    revised budget, due to the negative stock price performance of the Company during 2018,2019, the Compensation Committee used its discretionelected not to reduceadjust the amount ofimpacted metrics; and

    •The Compensation Committee designed the annual incentive bonuses paid to our Chief Executive Officer, President and Chief Financial Officer under the formulaic terms of our performance-based cash bonus program; and

    •
    administered a long-term equity incentive award structure comprisedawards issued in 2019 to be a mix of PSAs that vest based onboth share-settled and cash-settled awards to mitigate potentially extensive dilution to the Company's (i) relative total shareholder return compared to a group of peer companies, (ii) absolute shareholder return and (iii) cash return on capital invested, all over a three-year performance period.

    Company’s Common Stock given the decline the Company’s stock price.


    Our Compensation Committee and our Board have determined that the Company'sCompany’s Named Executive Officer compensation aligns with our business strategy, focuses on long-term value creation for our stockholders and delivers competitive pay relative to our performance, and therefore the Board recommends that you vote "FOR"“FOR” the approval, on a non-binding advisory basis, of the Company'sCompany’s Named Executive Officer compensation as disclosed pursuant to the SEC'sSEC’s compensation disclosure rules (which disclosure shall include the Compensation Discussion and Analysis, the Summary Compensation Table, and the related tables and disclosure in this Proxy Statement).


    Vote Required

    The advisory vote on executive compensation in this Proposal FOURTHREE requires the affirmative vote of the holders of a majority of the shares present, in person or by proxy, and entitled to be voted at the Annual Meeting. Votes cast FOR or AGAINST and abstentions with respect to this Proposal FOUR


    Table of Contents

    THREE will be counted as shares entitled to vote on the Proposal. For these purposes, brokers have the discretion to vote if they do not receive voting instructions from the beneficial owner. A vote to ABSTAIN will have the effect of a vote AGAINST the Proposal.


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    Recommendation

    The Board of Directors unanimously recommends that stockholders vote FOR the approval, on an advisory basis, of the executive compensation of the Named Executive Officers.

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    PROPOSAL FOUR: TO APPROVE THE REVERSE STOCK SPLIT

    We are seeking stockholder approval for a proposal to adopt an amendment to our certificate of Contents

    incorporation to permit us to effect the Reverse Stock Split of our issued and outstanding Common Stock by a ratio that will be determined by the Board and that will be within a range of 1-for-10 and 1-for-200, if the Board determines, in its sole discretion, at any time prior to the first anniversary of the Annual Meeting, that the Reverse Stock Split is in the best interests of the Company and its stockholders.


    The form of the amendment to our certificate of incorporation to effect the Reverse Stock Split is set forth on Appendix A. Approval of the proposal would permit (but not require) the Board to effect the Reverse Stock Split by a ratio of not less than 1-for-10 and not more than 1-for-200, with the exact ratio to be determined by the Board in its sole discretion, provided that the Board must determine to effect the Reverse Stock Split and such amendment must be filed with the Secretary of State of the State of Delaware no later than the first anniversary of the Annual Meeting. The exact ratio of the Reverse Stock Split will be determined by the Board prior to the effective time of the split and will be publicly announced by the Company prior to the effective time of the split. We believe that enabling the Board to set the ratio of the Reverse Stock Split within the stated range will provide us with the flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for our stockholders. In determining a ratio of the Reverse Stock Split, if any, following the receipt of stockholder approval, the Board may consider, among other things, factors such as:

    •the existing and expected marketability and liquidity of our Common Stock;

    •the historical trading prices and trading volume of our Common Stock;

    •listing requirements of NASDAQ or other applicable exchange or trading venues;

    •the number of shares of our Common Stock outstanding;

    •the then-prevailing trading price and trading volume of our Common Stock and the anticipated or actual impact of the Reverse Stock Split on the trading price and trading volume for our Common Stock;

    •the anticipated impact of the Reverse Stock Split on our ability to raise additional financing;

    •the anticipated impact of a particular ratio on our ability to reduce administrative and transactional costs; and

    •the outlook for oil price volatility and other prevailing general market and economic conditions.

    The Board reserves the right to not effect a Reverse Stock Split if it determines, in its sole discretion, that the Reverse Stock Split is no longer in the best interests of the Company and its stockholders.

    Depending on the ratio for the Reverse Stock Split determined by the Board, no less than every 10 and no more than every 200 shares of Common Stock will be combined into one share of Common Stock. The amendment to our certificate of incorporation to effect the Reverse Stock Split will not change the authorized number of shares of preferred stock of the Company, or the par value of the Company’s Common Stock or preferred stock. Except for the shares issuable upon the exercise or conversion of our outstanding Series A Preferred Stock or the exercise of outstanding awards under our equity compensation plans, we do not currently have any plans, proposals or arrangement to issue any of our authorized but unissued shares of Common Stock.

    Background and Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split

    On March 30, 2020, we received a letter from the Listing Qualifications Department of The NASDAQ Stock Market LLC notifying us that for the 30 consecutive business days ending March 27, 2020, the bid price of our Common Stock had closed below $1.00 per share, the minimum closing bid price required by the continued listing requirements of NASDAQ Listing Rule 5450(a)(1) (the “Minimum Bid Requirement”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we have 180 calendar days, or until September 28, 2020, to regain compliance
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    with the Minimum Bid Requirement. To regain compliance, the closing bid price of our Common Stock must be at least $1.00 per share for a minimum of ten consecutive business days during this 180-day period.

    The Reverse Stock Split proposal is part of our plan to regain compliance with the Minimum Bid Requirement. If the price of our Common Stock remains below the threshold required by the Minimum Bid Requirement, and assuming stockholders have approved the Reverse Stock Split, we may implement the Reverse Stock Split, utilizing a ratio the Board believes will position us to maintain compliance with the Minimum Bid Requirement. If we are not able to regain compliance with the Minimum Bid Requirement in the applicable time period, our Common Stock will become subject to delisting from the NASDAQ Global Select Market.

    We believe that the Reverse Stock Split, by increasing our stock price, will make our Common Stock more attractive to a broader range of institutional and other investors, as we have been advised that the current market price of our Common Stock may affect its acceptability to certain institutional investors, professional investors and other members of the investing public. Many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. In addition, some of those policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers. Moreover, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price than commissions on higher-priced stocks, the current average price per share of Common Stock can result in individual stockholders paying transaction costs representing a higher percentage of their total share value than would be the case if the share price were substantially higher. We believe that the Reverse Stock Split will make our Common Stock a more attractive and cost effective investment for investors.

    In addition to increasing the price of our Common Stock, we believe that a Reverse Stock Split will provide the Company and its stockholders with other benefits. Currently, the fees that we pay to list our shares on the NASDAQ are based on the number of shares we have outstanding. Also, the fees that we pay for custody and clearing services, the fees that we pay to the SEC to register securities for issuance and the costs of our proxy solicitations are all based on or related to the number of shares being held, cleared or registered, as applicable. Reducing the number of shares that are outstanding and that will be issued in the future may reduce the amount of fees and taxes that we pay to these organizations and agencies, as well as other organizations and agencies that levy charges based on the number of shares rather than the value of the shares.

    Notwithstanding the decrease in the number of issued and outstanding shares following the Reverse Stock Split, the Board does not intend for this transaction to be the first step in a series of plans or proposals of a “going private transaction” within the meaning of Rule 13e-3 of the Exchange Act.

    Certain Risks Associated with the Reverse Stock Split

    There can be no assurance that the total market capitalization of our Common Stock after the implementation of the Reverse Stock Split will be equal to or greater than the total market capitalization before the Reverse Stock Split or that the per share market price of our common stock following the Reverse Stock Split will increase in proportion to the reduction in the number of shares of our Common Stock outstanding in connection with the Reverse Stock Split. Also, we cannot assure you that the Reverse Stock Split would lead to a sustained increase in the trading price of our Common Stock. The trading price of our Common Stock may change due to a variety of other factors, including our ability to successfully accomplish our business goals, market conditions and the market perception of our business. You should also keep in mind that the implementation of the Reverse Stock Split does not have an effect on the actual or intrinsic value of our business or a stockholder's proportional ownership in the Company (subject to the treatment of fractional shares). However, should the overall value of our Common Stock decline after the proposed Reverse Stock Split, then the actual or intrinsic value of the shares of our Common Stock held by you will also proportionately decrease as a result of the overall decline in value.

    Further, the liquidity of our Common Stock may be harmed by the proposed Reverse Stock Split given the reduced number of shares that would be outstanding after the Reverse Stock Split, particularly if the expected increase in stock price as a result of the Reverse Stock Split is not sustained. For instance, the proposed Reverse Stock Split may increase the number of stockholders who own odd lots (less than 100 shares) of our Common Stock,
    52



    creating the potential for such stockholders to experience an increase in the cost of selling their shares and greater difficulty effecting sales. If we effect the Reverse Stock Split, the resulting per-share stock price may nevertheless fail to attract institutional investors and may not satisfy the investing guidelines of such investors and, consequently, the trading liquidity of our Common Stock may not improve.

    While our Board of Directors has proposed the Reverse Stock Split to bring the average closing price of our Common Stock back above $1.00 per share in order to meet the requirements of the Minimum Bid Requirement, there is no guarantee that the price of our Common Stock will not decrease in the future, or that our Common Stock will remain in compliance with the NASDAQ continued listing standards. Additionally, there can be no guarantee that the average closing price per share of our Common Stock will remain at or above $1.00 for 30 consecutive trading days, whether following the Reverse Stock Split or otherwise, which is required to cure our current NASDAQ continued listing standard deficiency.

    Determination of the Specific Reverse Stock Split Ratio

    If the Board chooses to implement the Reverse Stock Split, the Board’s selection of the specific reverse stock split ratio will be based primarily on the price level of our Common Stock immediately prior to the Reverse Stock Split and the expected stability of the price level of our Common Stock going forward. We expect that the primary focus of the Board in determining the reverse stock split ratio will be to select a ratio that it believes is likely to result in increased marketability and liquidity of our Common Stock and may encourage interest and trading in our Common Stock for the reasons discussed under “Background and Reasons for the Reverse Stock Split; Potential Consequences of the Reverse Stock Split” above.

    We believe that granting the Board the authority to set the ratio for the Reverse Stock Split is essential because it provides the Board with the maximum flexibility to react to changing market conditions and to therefore act in the best interests of the Company and our stockholders. If the Board implements the Reverse Stock Split, the Company will make a public announcement regarding the determination of the exact reverse stock split ratio.

    Procedure for Implementing the Reverse Stock Split

    The Reverse Stock Split would become effective upon the filing of a certificate of amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. The exact timing of the filing of the certificate of amendment that will effect the Reverse Stock Split will be determined by the Board, in its sole discretion, provided that in no event shall the filling of the certificate of amendment effecting the Reverse Stock Split occur after the first anniversary of the Annual Meeting.

    Amendment Effective Time

    The effective date of the Reverse Stock Split will be the date on which the certificate of amendment to our certificate of incorporation to effect the amendment contemplated by this proposal is accepted and recorded by the Delaware Secretary of State (subject to any specific future time of effectiveness stated therein) in accordance with Section 103 of the Delaware General Corporation Law. The exact timing of the filing of the amendment will be determined by the Board based on its determination that such action will be in the best interests of the Company and its stockholders as described herein. Except as explained herein with respect to fractional shares, on the effective date of the amendment to effect the Reverse Stock Split, shares of the Common Stock issued and outstanding immediately prior thereto will be combined and converted, automatically and without any action on the part of the stockholders, into new shares of the Common Stock in accordance with the reverse stock split ratio determined by the Board within the limits set forth in this proposal.

    Reservation of Right to Abandon Reverse Stock Split

    The Board reserves the right, notwithstanding stockholder approval of this Proposal FOUR and without further action by the stockholders, to elect not to proceed with the Reverse Stock Split if, at any time prior to filing the amendment to our certificate of incorporation to effect the Reverse Stock Split, or, in the event that the amendment is not effective until a later time, such later time, the Board, in its sole discretion, determines that it is no
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    longer in the Company’s best interests and the best interests of our stockholders to proceed with the Reverse Stock Split. Such determination will be based upon factors the Board deems appropriate, including the Company’s then current stock price, the existing and expected marketability and liquidity of our Common Stock, prevailing market conditions and the likely effect on the market price of our Common Stock. If a certificate of amendment effecting the Reverse Stock Split has not been filed with the Secretary of State of the State of Delaware on or before the first anniversary of the Annual Meeting, the Board will be deemed to have abandoned the Reverse Stock Split.

    Effect of the Reverse Stock Split on Holders of Outstanding Common Stock

    After the effective date of the Reverse Stock Split, each holder of our Common Stock will own fewer shares of Common Stock and, if “Proposal FIVE—To Approve the Authorized Share Reduction” is approved by the stockholders, the total number of issued and outstanding shares of Common Stock will be reduced by a ratio equal to 1-for-two-thirds of the denominator of the reverse stock split ratio determined by the Board within the limits set forth in this proposal. See “Proposal FIVE—To Approve the Authorized Share Reduction—Effects of the Authorized Share Reduction” for an illustrative example of the effect of both the Reverse Stock Split and the Authorized Share Reduction on the number of authorized, issued and outstanding and available shares of Common Stock.

    The Reverse Stock Split will affect all holders of our Common Stock uniformly and will not affect any stockholder’s percentage ownership interest in the Company, except that, as described herein under “Fractional Shares,” record holders of Common Stock otherwise entitled to a fractional share as a result of the Reverse Stock Split will receive cash in lieu of such fractional share. In addition, the Reverse Stock Split will not affect any stockholder’s proportionate voting power (subject to the treatment of fractional shares). For example, a holder of 2% of the voting power of the outstanding shares of Common Stock immediately prior to the Reverse Stock Split would continue to hold 2% of the voting power of the outstanding shares of Common Stock immediately after the Reverse Stock Split (subject to adjustment for any payment of cash in lieu of fractional shares).

    The number of stockholders of record will not be affected by the Reverse Stock Split (except to the extent that any stockholders holds only a fractional share interest and receives cash for such interest after the Reverse Stock Split).

    The Reverse Stock Split may result in some stockholders owning “odd lots” of less than 100 shares of Common Stock. Odd lot shares may be more difficult to sell, and brokerage commissions and other costs of transactions in odd lots may be higher than the costs of transactions in “round lots” of even multiples of 100 shares.

    After the effective time of the Reverse Stock Split, our Common Stock will have a new Committee on Uniform Securities Identification Procedures (CUSIP) number, which is a number used to identify our equity securities, and stock certificates with the older CUSIP numbers will need to be exchanged for stock certificates with the new CUSIP numbers by following the procedures described below. After the Reverse Stock Split, we will continue to be subject to the periodic reporting and other requirements of the Exchange Act.

    Effect of the Reverse Stock Split on Holders of our Series A Preferred Stock

    Each share of Series A Preferred Stock is convertible, at the holder’s option at any time, into approximately 61.9195 shares of Common Stock, subject to adjustment. If the Board elects to proceed with the Reverse Stock Split, the conversion rate will be adjusted based on a ratio of the number of Common Stock outstanding immediately after the Reverse Stock Split to the number of Common Stock outstanding immediately before the Reverse Stock Split, with such adjustment to take effect immediately after 9:00 a.m., New York City time, on the effective date of the Reverse Stock Split. If the Board elects the 1-for-10 ratio and assuming the number of Common Stock outstanding on the Record Date does not change, the new conversion rate would be 6.1920 shares of Common Stock for each share of Series A Preferred Stock. If the Board elects the 1-for-200 ratio and assuming the number of Common Stock outstanding on the Record Date does not change, the new conversion rate would be 0.3096 shares of Common Stock for each share of Series A Preferred Stock. Any other ratio selected within such range would result in a conversion rate of between 6.1920 and 0.3096 shares of Common Stock for each share of Series A Preferred Stock.

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    Authorized Shares of Common Stock

    Unless “Proposal FIVE—To Approve the Authorized Share Reduction” is approved by the stockholders, the Reverse Stock Split will not change the number of authorized shares of our Common Stock under our amended certificate of incorporation. Because the number of issued Common Stock will decrease as a result of the Reverse Stock Split, the number of Common Stock available for issuance will increase. Currently, we are authorized to issue up to a total of 950,000,000 shares of capital stock, comprising 900,000,000 Common Stock and 50,000,000 shares of preferred stock. Except for the shares issuable upon the exercise or conversion of outstanding awards under our equity compensation plans and conversion of our preferred stock, we do not currently have any plans, proposals or arrangement to issue any of our authorized but unissued shares of Common Stock.

    By increasing the number of authorized but unissued shares of Common Stock, the Reverse Stock Split could, under certain circumstances, have an anti-takeover effect, although this is not the intent of the Board. For example, it may be possible for the Board to delay or impede a takeover or transfer of control of the Company by causing such additional authorized but unissued shares to be issued to holders who might side with the Board in opposing a takeover bid that the Board determines is not in the best interests of the Company or its stockholders. The Reverse Stock Split, therefore, may have the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover attempts the Reverse Stock Split may limit the opportunity for our stockholders to dispose of their shares at the higher price generally available in takeover attempts or that may be available under a merger proposal. The Reverse Stock Split may have the effect of permitting our current management, including the current Board, to retain its position, and place it in a better position to resist changes that stockholders may wish to make if they are dissatisfied with the conduct of the Company’s business. However, the Board is not aware of any attempt to take control of the Company, and the Board has not approved the Reverse Stock Split with the intent that it be utilized as a type of anti-takeover device.

    Exchange of Stock Certificates

    If the Reverse Stock Split is effected, stockholders holding certificated shares (i.e., shares represented by one or more physical stock certificates) will be requested to exchange their old stock certificate(s) (“Old Certificate(s)”) for shares held electronically in book-entry form through the Depository Trust Company’s Direct Registration System representing the appropriate number of whole shares of our Common Stock resulting from the Reverse Stock Split. This means that, instead of receiving a new stock certificate, stockholders holding certificated shares prior to the effective time of the Reverse Stock Split will receive a statement of holding indicating the number of shares held by them electronically in book-entry form after giving effect to the Reverse Stock Split. Stockholders of record upon the effective time of the Reverse Stock Split will be furnished the necessary materials and instructions for the surrender and exchange of their Old Certificate(s) at the appropriate time by our Transfer Agent. Stockholders will not have to pay any transfer fee or other fee in connection with such exchange. As soon as practicable after the effective time of the Reverse Stock Split, our Transfer Agent will send a transmittal letter to each stockholder advising such holder of the procedure for surrendering Old Certificate(s) in exchange for new shares held in book-entry form. Your Old Certificate(s) representing pre-split shares cannot be used for either transfers or deliveries. Accordingly, you must exchange your Old Certificate(s) in order to effect transfers or deliveries of your shares.

    YOU SHOULD NOT SEND YOUR OLD CERTIFICATES NOW. YOU SHOULD SEND THEM ONLY AFTER YOU RECEIVE THE LETTER OF TRANSMITTAL FROM OUR TRANSFER AGENT.

    As soon as practicable after the surrender to our Transfer Agent of any Old Certificate(s), together with a properly completed and duly executed transmittal letter and any other documents our Transfer Agent may specify, our Transfer Agent will have its records adjusted to reflect that the shares represented by such Old Certificate(s) are held in book-entry form in the name of such person.

    Until surrendered as contemplated herein, a stockholder’s Old Certificate(s) shall be deemed at and after the effective time of the Reverse Stock Split to represent the number of whole shares of our Common Stock resulting from the Reverse Stock Split.

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    Any stockholder whose Old Certificate(s) have been lost, destroyed or stolen will be entitled to new shares in book-entry form only after complying with the requirements that we and our Transfer Agent customarily apply in connection with lost, stolen or destroyed certificates.

    No service charges, brokerage commissions or transfer taxes shall be payable by any holder of any Old Certificate, except that if any book-entry shares are to be issued in a name other than that in which the Old Certificate(s) are registered, it will be a condition of such issuance that (1) the person requesting such issuance must pay to us any applicable transfer taxes or establish to our satisfaction that such taxes have been paid or are not payable, (2) the transfer complies with all applicable federal and state securities laws, and (3) the surrendered certificate is properly endorsed and otherwise in proper form for transfer.

    Any stockholder who wants to continue holding certificated shares may request new certificate(s) from our Transfer Agent.

    Stockholders who hold only uncertificated shares, either as direct or beneficial owners, will have their holdings electronically adjusted by our Transfer Agent and, for beneficial owners, by their brokers or banks which hold in “street name” for their benefit, as the case may be to give effect to the Reverse Stock Split.

    Fractional Shares

    Fractional shares will not be issued in connection with the Reverse Stock Split. Stockholders who would otherwise hold fractional shares of our Common Stock as a result of the Reverse Stock Split will be entitled to receive cash (without interest and subject to applicable withholding taxes) in lieu of such fractional shares equal to such fraction multiplied by the average of the closing sales price of the Common Stock during regular trading hours for the five consecutive days immediately preceding the effective date of the Reverse Stock Split (with such average closing sales prices being adjusted to give effect to the Reverse Stock Split). The Company will not receive any proceeds from any such sales. The ownership of a fractional interest will not give the holder any voting, dividend or other rights, except to receive the above-described cash payment.

    Stockholders should be aware that, under the escheat laws of the various jurisdictions where stockholders reside, where we are domiciled and where the funds will be deposited, sums due for fractional interests resulting from the Reverse Stock Split that are not timely claimed after the effective time in accordance with applicable law may be required to be paid to the designated agent for each such jurisdiction. Thereafter, if applicable, stockholders otherwise entitled to receive such funds, but who do not receive them due, for example, to their failure to timely comply with our Transfer Agent’s instructions (described herein), may have to seek to obtain them directly from the state to which they were paid.

    No Appraisal Rights

    No action is proposed herein for which the laws of the State of Delaware or our certificate of incorporation or bylaws provide a right to our stockholders to dissent and obtain appraisal of, or payment for, such stockholders' Common Stock.

    Effect of the Reverse Stock Split on Equity Compensation Plans and Awards

    As noted above under “Equity Compensation Plan Information,” all of our outstanding equity compensation plan awards have been issued pursuant to the LTIP.

    Under the LTIP, in connection with any Reverse Stock Split, the following adjustments will occur automatically, with the Compensation Committee to make all determinations, perform all acts, and exercise all powers and authority necessary or advisable to implement such adjustments: (i) the maximum number of shares of Common Stock available under the LTIP or in connection with LTIP awards will be decreased in proportion to the ratio of the Reverse Stock Split; (ii) the number of shares of Common Stock that may be acquired under any then outstanding LTIP award will be decreased in proportion to the ratio of the Reverse Stock Split; and (iii) the price (including the exercise price) for each share of Common Stock subject to then outstanding LTIP awards will be
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    increased in proportion to the ratio of the Reverse Stock Split, without changing the aggregate purchase price or value as to which outstanding LTIP awards remain exercisable or subject to restrictions, subject to any rounding as described below.

    No fractional interest will be issued under the LTIP on account of the Reverse Stock Split. In connection with the proportionate adjustments described in the preceding paragraph, the number of shares of Common Stock issuable upon exercise or conversion of outstanding LTIP awards will be rounded down to the nearest whole share and the exercise prices will be rounded up to the nearest cent, and no cash or other payments will be made in respect of such rounding.

    The Compensation Committee’s determination as to the implementation of the adjustments noted above will be final, binding, and conclusive. The Committee will promptly provide each LTIP participant with a notice setting forth, in reasonable detail, the event requiring adjustments (i.e., the Reverse Stock Split), the amount of the adjustments, the method by which the adjustments were calculated, and the change in price and the number of shares of Common Stock subject to each LTIP award after giving effect to the adjustments.

    Regulatory Effects

    The Common Stock is currently registered under Section 12(b) of the Exchange Act, and the Company is subject to the periodic reporting and other requirements of the Exchange Act. The Reverse Stock Split will not affect the registration of the Common Stock under the Exchange Act or the Company’s obligation to publicly file financial and other information with the SEC. If the Reverse Stock Split is implemented, the Common Stock will continue to trade on the NASDAQ under the symbol “XOG” (although the NASDAQ would likely add the letter “D” to the end of the trading symbol for a period of 20 trading days to indicate that the Reverse Stock Split has occurred).

    Interests of Certain Persons in the Proposal

    Certain of the Company’s officers and directors have an interest in this proposal as a result of their ownership of shares of stock of the Company, as set forth in the section entitled “Beneficial Ownership of Securities” below. However, the Company does not believe that its officers or directors have interests in the Reverse Stock Split that are different from or greater than those of any other stockholder of the Company.

    Accounting Matters

    The amendment to our certificate of incorporation will not affect the par value of our Common Stock per share, which will remain $0.01 per share. As a result, as of the effective time of the Reverse Stock Split, the stated capital attributable to Common Stock and the additional paid-in capital on our balance sheet will, in total, not change due to the Reverse Stock Split. However, the allocation between the stated capital attributable to Common Stock and the additional paid-in capital on our balance sheet will change because there will be fewer shares of Common Stock outstanding. The stated capital attributable to Common Stock will decrease, and in turn, the stated capital attributable to the additional paid-in capital will increase. Further, reported per share net income or loss will be higher because there will be fewer shares of Common Stock outstanding.

    Material U.S. Federal Income Tax Consequences of the Reverse Stock Split

    The following discussion is a summary of the material U.S. federal income tax consequences of the proposed Reverse Stock Split to U.S. Holders (as defined below) of our Common Stock. This discussion is based on the Tax Code, U.S. Treasury regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”) in each case in effect as of the date of this proxy statement. These authorities may change or be subject to differing interpretations. Any such change or differing interpretation may be applied retroactively in a manner that could adversely affect a U.S. Holder and affect the accuracy of this discussion.

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    We have not sought and will not seek any rulings from the IRS or an opinion from legal or tax counsel regarding the matters discussed below. There can be no assurance the IRS or a court will not take a contrary position to that discussed below regarding the tax consequences of the proposed Reverse Stock Split.

    For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our Common Stock that, for U.S. federal income tax purposes, is or is treated as:

    •an individual who is a citizen or resident of the United States;

    •a corporation (or any other entity or arrangement treated as a corporation for U.S. federal income tax purposes) created or organized under the laws of the United States, any state thereof, or the District of Columbia;

    •an estate, the income of which is subject to U.S. federal income tax regardless of its source; or

    •a trust if (1) its administration is subject to the primary supervision of a court within the United States and all of its substantial decisions are subject to the control of one or more “United States person” (within the meaning of Section 7701(a)(30) of the Tax Code) or (2) it has a valid election in effect under applicable U.S. Treasury regulations to be treated as a United States person.

    This discussion is limited to U.S. Holders who hold our Common Stock as a “capital asset” within the meaning of Section 1221 of the Tax Code (generally, property held for investment). This discussion does not address all U.S. federal income tax consequences relevant to the particular circumstances of a U.S. Holder, including the impact of the alternative minimum tax or the Medicare contribution surtax on net investment income. In addition, it does not address consequences relevant to U.S. Holders that are subject to special rules, including banks and other financial institutions, tax-exempt organizations, partnerships, S corporations, and other pass-through entities (and investors in such pass-through entities), insurance companies, controlled foreign corporations, passive foreign investment companies, real estate investment trusts, regulated investment companies, mutual funds, dealers, brokers, or traders in securities, commodities, or currencies, traders in securities that elect a mark-to-market method of accounting, holders subject to the alternative minimum tax, holders who acquired Common Stock pursuant to the exercise of employee stock options, through a qualified retirement plan, or otherwise as compensation, holders that actually or constructively own more than 5% of our outstanding stock, holders that hold Common Stock as part of a straddle, hedge, constructive sale, conversion, or integrated transaction for U.S. federal income tax purposes, holders that are not U.S. Holders, and U.S. Holders that have a functional currency other than the U.S. dollar.

    If a partnership (or other entity or arrangement treated as a partnership for U.S. federal income tax purposes) is the beneficial owner of Common Stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner, the activities of the partner and the partnership, and certain determinations made at the partner level. Accordingly, partnerships (and other entities or arrangements treated as partnerships for U.S. federal income tax purposes) holding Common Stock and the partners in such entities should consult their tax advisors regarding the U.S. federal income tax consequences of the proposed Reverse Stock Split to them.

    In addition, the following discussion does not address the U.S. federal estate and gift tax, or state, local and non-U.S. tax law consequences of the proposed Reverse Stock Split. Furthermore, the following discussion does not address any tax consequences of transactions effectuated before, after or at the same time as the proposed Reverse Stock Split, whether or not they are in connection with the proposed Reverse Stock Split.

    ALL HOLDERS OF COMMON STOCK SHOULD CONSULT THEIR TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX CONSEQUENCES OF THE PROPOSED REVERSE STOCK SPLIT ARISING UNDER THE U.S. FEDERAL ESTATE OR GIFT TAX LAWS OR UNDER THE LAWS OF ANY STATE, LOCAL OR NON-U.S. TAXING JURISDICTION OR UNDER ANY APPLICABLE INCOME TAX TREATY.

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    The proposed Reverse Stock Split should constitute a “recapitalization” for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Tax Code. As a result, a U.S. Holder generally should not recognize gain or loss upon the proposed Reverse Stock Split for U.S. federal income tax purposes, except with respect to cash received in lieu of a fractional share of our Common Stock, as discussed below. A U.S. Holder’s aggregate adjusted tax basis in the shares of Common Stock held immediately after the proposed Reverse Stock Split should equal the aggregate adjusted tax basis of the shares of Common Stock held immediately before the Reverse Stock Split (reduced by the amount of such basis that is allocated to any fractional share of our Common Stock). The U.S. Holder’s holding period in the shares of Common Stock held immediately after the Reverse Stock Split should include the holding period in the shares of Common Stock held immediately before the Reverse Stock Split. U.S. Treasury regulations provide detailed rules for allocating the tax basis and holding period among shares of Common Stock which were acquired by a shareholder on different dates and at different prices. U.S. Holders of shares of our Common Stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period among such shares.

    A U.S. Holder that, pursuant to the proposed Reverse Stock Split, receives cash in lieu of a fractional share of our Common Stock will be treated as having received the fractional share pursuant to the Reverse Stock Split and then as having exchanged the fractional share for cash. Accordingly, such U.S. Holder should recognize taxable gain or loss in an amount equal to the difference, if any, between the amount of cash received and the portion of such U.S. Holder’s aggregate adjusted tax basis in the shares of Common Stock surrendered that is allocated to such fractional share. Such capital gain or loss will be short-term with respect to shares of Common Stock that were held for one year or less at the effective time of the Reverse Stock Split and long-term with respect to shares of Common Stock that were held for more than one year at the effective time of the Reverse Stock Split.

    Payments of cash made in lieu of a fractional share of our Common Stock may, under certain circumstances, be subject to information reporting and backup withholding. To avoid backup withholding, each U.S. Holder of our Common Stock that does not otherwise establish an exemption should furnish on applicable IRS forms its taxpayer identification number and comply with the applicable certification procedures.

    Backup withholding is not an additional tax and amounts withheld will be allowed as a credit against the U.S. Holder’s U.S. federal income tax liability and may entitle such U.S. Holder to a refund, provided the required information is timely furnished to the IRS. U.S. Holders of our Common Stock should consult their own tax advisors regarding the application of the information reporting and backup withholding rules to them.

    Vote Required

    Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of Common Stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast.

    Recommendation

    The Board of Directors unanimously recommends that stockholders vote FOR the approval of the Reverse Stock Split.



    59



    PROPOSAL FIVE: TO APPROVE THE AUTHORIZED SHARE REDUCTION

    General

    The Board has authorized, and recommends for approval by the shareholders, an amendment to the Company’s certificate of incorporation that, if approved by the shareholders and filed with the Secretary of State of the State of Delaware, would reduce the number of authorized shares of Common Stock by a ratio equal to 1-for-two-thirds of the denominator of the ratio determined by the Board for the Reverse Stock Split described under “Proposal FOUR—To Approve the Reverse Stock Split.”

    This Proposal FIVE to approve the amendment to our certificate of incorporation to effect the Authorized Share Reduction is conditioned on the approval of the amendment to our certificate of incorporation to effect the Reverse Stock Split. Therefore, if Proposal FOUR is not approved, then this Proposal FIVE will automatically be deemed to not have been approved, regardless of the number of shares actually voted “FOR” Proposal FIVE.

    If both Proposal FOUR and Proposal FIVE are approved by our shareholders, the Authorized Share Reduction will become effective upon filing the amendment to our certificate of incorporation with the Secretary of State of the State of Delaware. However, notwithstanding approval of the Reverse Stock Split and the Authorized Share Reduction by the shareholders, the Board will have the sole authority to elect, at any time prior to the first anniversary of the Annual Meeting, whether or not to amend our certificate of incorporation to effect the Reverse Stock Split and the Authorized Share Reduction.

    The text of the proposed amendment to our certificate of incorporation to effect the Authorized Share Reduction is included as Appendix A to this Proxy Statement.

    Reasons for the Authorized Share Reduction

    We currently have 900,000,000 authorized shares of Common Stock. The Board believes that it is in our best interests to decrease the authorized number of shares of Common Stock in connection with the Reverse Stock Split by a ratio equal to 1-for-two-thirds of the denominator of the reverse stock split ratio determined by the Board.

    Effects of the Authorized Share Reduction

    The decrease in the number of authorized shares of Common Stock would result in fewer shares of authorized but unissued shares of Common Stock being available for future issuance. This would decrease the number of shares of Common Stock available for issuance for various purposes such as to raise capital or to make acquisitions. We believe, however, that after the proposed decrease, the number of authorized but unissued shares of Common Stock remaining will be sufficient for such purposes.


    60



    For illustrative purposes only, the following table shows the approximate effect on our Common Stock of a 1-for-10 and a 1-for-200 reverse stock split (as followed by the reduction in authorized shares), as of April 13, 2020:


    Number of Shares of Common Stock Prior to Reverse Stock SplitNumber of Shares of Common Stock After Reverse Stock Split and Authorized Share Reduction
    1:101:200
    Authorized900,000,000135,000,000  6,750,000  
    Issued and Outstanding(a)
    		138,103,95120,715,592  1,035,779  
    Authorized and Reserved for Issuance(b)
    		37,108,3995,566,259  278,312  
    Authorized and Unreserved and Available for Future Issuance724,787,650108,718,147  5,435,907  
    a.Subject to adjustment for fractional shares in connection with the Reverse Stock Split.
    b.  Includes shares of Common Stock reserved for issuance (i) upon the exercise of outstanding stock options and settlement of restricted stock units, (ii) remaining under the LTIP and (iii) upon the conversion of our outstanding Series A Preferred Stock.

    Vote Required

    Approval of this proposal requires the affirmative vote, either in person or by proxy, of the holders of a majority of the issued and outstanding shares of Common Stock. Abstentions, failing to vote, and “broker non-votes” will have the same effect as voting “AGAINST” the adoption of this proposal because the required vote is based on the number of shares outstanding rather than the number of votes cast.

    Recommendation

    The Board of Directors unanimously recommends that stockholders vote FOR the approval of the Authorized Share Reduction.



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    AUDIT COMMITTEE REPORT

    The information contained in this Audit Committee Report shall not be deemed to be "soliciting material"“soliciting material” or to be "filed"“filed” with the SEC, nor shall such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates such information by reference in such filing.

    The Board of Directors has determined that all current Audit Committee members are (i) independent, as defined in Section 10A of the Exchange Act, (ii) independent under the standards set forth under the NASDAQ Market Rules and (iii) financially literate. In addition, Messrs.Mr. Chronister, Mr. Murdy and MurdyMs. Robertson qualify as audit committee financial experts under the applicable rules promulgated pursuant to the Exchange Act. The Audit Committee is a separately designated standing committee of the Board established in accordance with Section 3(a)(58)(A) of the Exchange Act and operates under a written charter amended as of November 2, 2018, which is reviewed annually.


    Management is responsible for our system of internal controls and the financial reporting process. The independent accountants are responsible for performing an independent audit of our consolidated financial statements in accordance with auditing standards generally accepted in the United States of America and issuing a report thereon. The Audit Committee is responsible for monitoring (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements and (iii) the independence and performance of our auditors.


    The Audit Committee has reviewed and discussed with our management and the independent accountants the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, including a discussion of the quality, not just the acceptability, of the accounting principles applied, the reasonableness of significant judgments and the clarity of disclosures in the consolidated financial statements. Management represented to the Audit Committee that our consolidated financial statements were prepared in accordance with accounting principles generally accepted in the United States of America. The Audit Committee discussed with the independent accountants matters required to be discussed by standards of the Public Company Accounting Oversight Board ("PCAOB"(“PCAOB”).


    Our independent accountants also provided to the Audit Committee the written disclosure required by applicable requirements of the PCAOB regarding independent accountant'saccountant’s communications with the Audit Committee concerning independence. The Audit Committee discussed with the independent accountants that firm'sfirm’s independence.


    Based on the Audit Committee'sCommittee’s discussions with management and the independent accountants, and the Audit Committee'sCommittee’s review of the representations of management and the report of the independent accountants to the Audit Committee, the Audit Committee recommended that the Board include the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018,2019, filed with the SEC.


    Audit Committee of the Board of Directors

    Wayne W. Murdy, Chairman
    Marvin M. Chronister, Member
    John S. Gaensbauer, Member
    Audrey Robertson, Member




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    Audit Committee of the Board of Directors



    Wayne W. Murdy, Chairman
    Marvin M. Chronister, Member
    Donald L. Evans, Member

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    STOCKHOLDER PROPOSALS; IDENTIFICATION OF DIRECTOR CANDIDATES


    Any stockholder of the Company who desires to make a nomination of a director nominee or to submit any other proposal for inclusion in the Company's 2020Company’s 2021 proxy materials must submit such nomination or proposal in writing to the Company, at its principal executive offices at 370 17th Street, Suite 5300, Denver, Colorado 80202, no earlier than December 7, 2019February 8, 2021 and no later than January 6, 2020.March 10, 2021. However, if the annual meeting of stockholders to be held in 20202021 is scheduled for a date more than 30 days before or 60 days after the anniversary of the Annual Meeting, the proposal must be submitted to the Company at its principal executive offices no earlier than 120 before and not later than 90 days before the date of the annual meeting of stockholders to be held in 2020.2021. We will only consider nominations and proposals that meet the requirements of the applicable rules of the SEC and our Bylaws (the "Bylaws"“Bylaws”).


    It is the responsibility of the Nominating and Governance Committee to identify, evaluate and recommend to the Board of Directors nominees for election at the annual meeting of stockholders, as well as to fill vacancies or additions on the Board of Directors that may occur between annual meetings. The Nominating and Governance Committee endeavors to recommend only director candidates who possess the highest personal values and integrity; who have experience and have exhibited achievements in one or more of the key professional, business, financial, legal and other challenges that face a U.S. oil and gas company; who exhibit sound judgment, intelligence, personal character and the ability to make independent analytical inquiries; who demonstrate a willingness to devote adequate time to director duties; and who are likely to be able to serve on the Board of Directors for a sustained period.


    While the Board of Directors does not have a formal policy on diversity, the Nominating and Governance Committee endeavors to achieve an overall balance of diversity among our directors, and it is expected that the Nominating and Governance Committee will view diversity broadly to include diversity of backgrounds, skills and viewpoint as well as traditional diversity concepts such as race or gender, in order to achieve optimal enhancement of the current mix of talent and experience on the Board. The Nominating and Governance Committee believes it has achieved that balance through the representation on the Board of Directors of members having experience in the oil and gas industry, accounting and investment analysis and legal and corporate governance, among other areas; however,Additionally, in 2019, upon identifying the Nominatingvaluable expertise and Governance Committee is currently evaluating candidates withexperience that Ms. Robertson contributes, the Board appointed Ms. Robertson as a particular focus on increasingdirector, which increased the Board's gender diversity.diversity of the Board. The Nominating and Governance Committee does not discriminate based upon race, religion, sex, national origin, age, disability, citizenship or any other legally protected status.


    In identifying potential director candidates, the Nominating and Governance Committee solicits recommendations from existing directors and senior management, to be considered by the Nominating and Governance Committee along with any recommendations that have been received from stockholders as discussed in more detail below. The Nominating and Governance Committee may also, in its discretion, retain, and pay fees to, a search firm to provide additional candidates.


    The Nominating and Governance Committee will consider any nominee recommended by stockholders as described above. The Company will evaluate director nominees proposed by stockholders on the same basis as recommendations received from any other source. With respect to each such nominee, the following information must be provided to the Company with the written nomination:


    •
    the name and address of the nominating stockholder, as they appear on the Company'sCompany’s books and of such beneficial owner, if any;


    •
    the nominee'snominee’s name and address and other personal information;

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      •
      a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among the nominating stockholder or beneficial owner and each proposed nominee;


    •
    a completed and signed questionnaire, representation and agreement, pursuant to the Company'sCompany’s Bylaws, with respect to each nominee for election or re-election to the Board; and


    •
    all other information required to be disclosed pursuant to the Company'sCompany’s Bylaws and Regulation 14A of the Exchange Act.

    63




    Further, the Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as an independent director of the Board or that could be material to a reasonable stockholder'sstockholder’s understanding of the independence, or lack thereof, of such nominee.


    The Company suggests that any such proposal be sent by certified mail, return receipt requested.


    SOLICITATION OF PROXIES

    Solicitation of proxies may be made via the Internet, by mail, personal interview or telephone by officers, directors and regular employees of the Company. The Company may also request banking institutions, brokerage firms, custodians, nominees and fiduciaries to forward solicitation material to the beneficial owners of the Common Stock that those companies or persons hold of record, and the Company will reimburse the forwarding expenses. The Company will bear all costs of solicitation.


    STOCKHOLDER LIST

    In accordance with the Delaware General Corporation Law, the Company will maintain at its corporate offices in Denver, Colorado, a list of stockholders entitled to vote at the Annual Meeting. The list will be available for inspection during ordinary business hours for a period of ten days before the Annual Meeting at our offices located at 370 17th Street, Suite 5300, Denver, Colorado 80202. The list of stockholders will also be available to stockholders during the Annual Meeting through the link www.virtualshareholdermeeting.com/XOG2019.

    XOG2020.


    AVAILABILITY OF CERTAIN DOCUMENTS

    A copy of our 20182019 Annual Report on Form 10-K has been posted on the Internet atwww.proxyvote.com along with this Proxy Statement and our proxy materials. The Annual Report is not incorporated into this Proxy Statement and is not considered proxy-soliciting material. We will mail without charge, upon written request, a copy of our 20182019 Annual Report on Form 10-K, including exhibits, to any stockholder. Please send a written request to our General Counsel at:


    Extraction Oil & Gas, Inc.
    370 17th Street, Suite 5300
    Denver, Colorado 80202
    Attention: General Counsel
    Or by calling: 720-557-8300


    The charters for our Audit, Compensation, and Nominating and Governance Committees, as well as our Corporate Governance Guidelines, our Corporate Code of Business Conduct and Ethics and our Financial Code of Ethics are in the "Corporate Governance"“Corporate Governance” section of our corporate website, which iswww.extractionog.com, and are also available in print without charge upon written request to our General Counsel at the address above.


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    Stockholders residing in the same household who hold their stock through a bank or broker may receive only a single copy of the Notice and, if applicable, our proxy materials in accordance with a notice sent earlier by their bank or broker. This practice will continue unless instructions to the contrary are received by your bank or broker from one or more of the stockholders within the household. We will promptly deliver a separate copy of the Notice and, if applicable, our proxy materials to such stockholders upon receipt of a written or oral request to our General Counsel at the address above, or by calling (720) 557-8300.


    If you hold your shares in street name and reside in a household that received only one copy of the Notice and, if applicable, our proxy materials, you can request to receive a separate copy in the future by following the instructions sent by your bank or broker. If your household is receiving multiple copies of the Notice and, if applicable, our proxy materials, you may request that only a single set of materials be sent by following the instructions sent by your bank or broker.


    64



    OTHER MATTERS

    As of the date of this Proxy Statement, the Board does not intend to present any matters other than those described herein at the Annual Meeting and is unaware of any matters to be presented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in accordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy holder.


    LOCATION OF ANNUAL MEETING

    The 20192020 Annual Meeting of Stockholders will be held virtually, conducted via live audio webcast. You will be able to attend the annual meeting of stockholders online and submit questions during the meeting by visiting www.virtualshareholdermeeting.com/XOG2019.

    XOG2020.

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    65
    Appendix


    APPENDIX A


    2016 Amended and Restated Long Term Incentive Plan

    FORM OF
    CERTIFICATE OF AMENDMENT OF
    CERTIFICATE OF INCORPORATION OF
    EXTRACTION OIL & GAS, INC.
    2016 AMENDED AND RESTATED LONG TERM INCENTIVE PLAN

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    TABLE OF CONTENTS




    		Page

    1.

    		PurposeA-1

    2.

    		DefinitionsA-1

    3.

    		AdministrationA-4

    		(a)

    AuthorityThe undersigned, Eric J. Christ, Vice President, General Counsel and Corporate Secretary of the Committee

    		A-4

    		(b)

    Manner of Exercise of Committee Authority

    		A-5

    		(c)

    Limitation of Liability

    		A-5

    4.

    		Stock Subject to PlanA-6

    		(a)

    Overall Number of Shares Available for Delivery

    		A-6

    		(b)

    Application of Limitation to Grants of Awards

    		A-6

    		(c)

    Availability of Shares Not Issued under Awards

    		A-6

    		(d)

    Stock Offered

    		A-6

    5.

    		Eligibility; Per Person Award LimitationsA-6

    6.

    		Specific Terms of AwardsA-7

    		(a)

    General

    		A-7

    		(b)

    Options

    		A-7

    		(c)

    Stock Appreciation Rights

    		A-8

    		(d)

    Restricted Stock

    		A-9

    		(e)

    Restricted Stock Units

    		A-10

    		(f)

    Bonus Stock and Awards in Lieu of Obligations

    		A-10

    		(g)

    Dividend Equivalents

    		A-10

    		(h)

    Other Awards

    		A-11

    		(i)

    Substitute Awards; No Repricing

    		A-11

    7.

    		Certain Provisions Applicable to AwardsA-11

    		(a)

    Termination of Employment

    		A-11

    		(b)

    Stand-Alone, Additional, Tandem, and Substitute Awards

    		A-11

    		(c)

    Term of Awards

    		A-12

    		(d)

    Form and Timing of Payment under Awards; Deferrals

    		A-12

    		(e)

    Exemptions from Section 16(b) Liability

    		A-12

    		(f)

    Non-Competition Agreement

    		A-12

    8.

    		Performance and Annual Incentive AwardsA-12

    9.

    		Subdivision or Consolidation; Recapitalization; Change in Control; ReorganizationA-13

    		(a)

    Existence of Plans and Awards

    		A-13

    		(b)

    Subdivision or Consolidation of Shares

    		A-13

    		(c)

    Corporate Recapitalization

    		A-14

    		(d)

    Additional Issuances

    		A-14

    		(e)

    Change in Control

    		A-14

    		(f)

    Change in Control Price

    		A-15

    		(g)

    Impact of Corporate Events on Awards Generally

    		A-15

    10.

    		General ProvisionsA-16

    		(a)

    Transferability

    		A-16

    		(b)

    Taxes

    		A-17

    		(c)

    Changes to the Plan and Awards

    		A-17

    		(d)

    Limitation on Rights Conferred under Plan

    		A-17

    		(e)

    Unfunded Status of Awards; No Trust or Fund Created

    		A-17

    		(f)

    Nonexclusivity of the Plan

    		A-18

    		(g)

    Fractional Shares

    		A-18

    		(h)

    Severability

    		A-18

    		(i)

    Governing Law

    		A-18

    A-i

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    		Page

    		(j)

    Conditions to Delivery of Stock

    		A-18

    		(k)

    Section 409A of the Code

    		A-19

    		(l)

    Clawback

    		A-19

    		(m)

    Plan Effective Date and Term

    		A-19

    A-ii

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    EXTRACTION OIL & GAS, INC.
    Amended and Restated 2016 Long Term Incentive Plan

            1.    Purpose.    The purpose of the Extraction Oil & Gas, Inc. Amended(the “Corporation”), a corporation organized and Restated 2016 Long Term Incentive Planexisting under and by virtue of the General Corporation Law of the State of Delaware (the "“PlanDGCL"”), does hereby certify as follows:


    FIRST: The name of the Corporation is (a) to provide a means through which Extraction Oil & Gas, Inc., a Delaware corporation

    SECOND: This Amendment (the "“CompanyAmendment"”), and its Subsidiaries may attract and retain able persons as employees, directors, and consultants to the Certificate of Incorporation of the Company and its Subsidiaries and (b) to provide a means whereby those persons upon whomCorporation (the “Certificate”) was duly adopted in accordance with the responsibilities for the successful administration and managementprovisions of Section 242 of the Company and its Subsidiaries rest, and whose present and potential contributions to the welfare of the Company and its Subsidiaries are of importance, can acquire and maintain stock ownership, or awards the value of which is tied to the performance of the Company, thereby strengthening such persons' concern for the welfare of the Company and its Subsidiaries and their desire to remain employed. A further purpose of the Plan is to provide such employees, directors, and consultants with additional incentive and reward opportunities designed to enhance the profitable growth of the Company. Accordingly, the Plan primarily provides for the granting of Incentive Stock Options, options which do not constitute Incentive Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Dividend Equivalents, Bonus Stock, Other Stock-Based Awards, Annual Incentive Awards, Performance Awards, or any combination of the foregoing, as is best suited to the circumstances of the particular individual as provided herein.

            2.    Definitions.    For purposes of the Plan, the following terms shall be defined as set forth below, in addition to such terms defined in Section 1 hereof:

              (a)   "Annual Incentive Award" means a conditional right granted to an Eligible Person under Section 8(c) hereof to receive a cash payment, Stock, or other Award, unless otherwise determined by the Committee, after the end of a specified year.

              (b)   "Award" means any award of Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Dividend Equivalents, Bonus Stock, Other Stock-Based Awards, Annual Incentive Awards, or Performance Awards, together with any other right or interest granted to a Participant under the Plan.

              (c)   "Beneficiary" means one or more persons, trusts, or other entities which have been designated by a Participant, in his or her most recent written beneficiary designation filed with the Committee, to receive the benefits specified under the Plan upon such Participant's death or to which Awards or other rights are transferred if and to the extent permitted under Section 10(a) hereof. If, upon a Participant's death, there is no designated Beneficiary or surviving designated Beneficiary, then the term "Beneficiary" means the persons, trusts, or other entities entitled by will or the laws of descent and distribution to receive such benefits.

              (d)   "Board" means the Company'sDelaware General Corporation Law. The Board of Directors.

              (e)   "Bonus Stock" means Stock granted as a bonus pursuant to Section 6(f).

              (f)    "Change in Control" means, except as otherwise provided in an Award agreement,Directors has duly adopted resolutions setting forth and declaring advisable this Amendment and the occurrenceholders of any of the following events:

                  (i)  The consummation of an agreement to acquire or a tender offer for beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) by any Person of, 50% or more of either (x) the then outstanding shares of Stock (the "Outstanding Stock") or (y) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities");provided,however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit


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        plan (or related trust) sponsored or maintained by the Company or any entity controlled by the Company, or (D) any acquisition by any entity pursuant to a transaction that complies with clauses (A), (B), and (C) of paragraph (iii) below;

                 (ii)  Individuals who constitute the Incumbent Board cease for any reason to constitute at least a majority of the Board;

                (iii)  Consummation of a reorganization, merger, consolidation, sale, or other disposition of all or substantially alloutstanding stock of the assetsCorporation entitled to vote at the meeting of the Company, or an acquisitionstockholders called and held upon notice in accordance with Section 222 of assetsthe General Corporation Law of another entity (a "the State of Delaware for the purpose of voting on the Amendment have voted in favor of this Amendment.


    THIRDBusiness Combination: The Certificate is hereby amended by amending and restating the first sentence of Article Four to be and read as follows:
    "
    The total number of shares of stock which the Corporation shall have authority to issue is __________ shares of capital stock, which shall be divided into two classes, consisting of (i) 50,000,000 shares of preferred stock, par value $0.01 per share (“Preferred Stock”), in each case, unless, following such Business Combination, (A) the Outstanding Stock and Outstanding Company Voting Securities immediately prior to such Business Combination represent or are converted into or exchanged for securities which represent or are convertible into more than 50% of, respectively, the then outstanding(ii) __________ shares of common stock, or common equity interests and the combined voting powerpar value $0.01 per share (“Common Stock”).

    Each __________ shares of the thenCorporation’s common stock, par value $0.01 per share (the “Common Stock”) issued and outstanding voting securitieson the effective date of this Amendment shall automatically be combined into one validly issued, fully paid and non-assessable share of Common Stock, without any action by the holder thereof, subject to the treatment of fractional interests as described below (the “Reverse Stock Split”). No certificates representing fractional shares of Common Stock shall be issued in connection with the Reverse Stock Split. Stockholders who otherwise would be entitled to vote generally in the election of directors or other governing body, as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company, or all or substantially all of the Company's assets either directly or through one or more subsidiaries), (B) if any Person (excluding any employee benefit plan (or related trust) of the Company or the entity resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock or common equityreceive fractional share interests of Common Stock in connection with the entity resulting fromReverse Stock Split shall, with respect to such Business Combination or the combined voting power of the then outstanding voting securitiesfractional interest, be entitled to vote generally in the election of directors or other governing body of such entity, such ownership results solely from ownership of the Company that existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors or similar governing body of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or

            (iv)  Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.

    Notwithstanding the foregoing, for purposes of any Award that provides for a deferral of compensation under the Nonqualified Deferred Compensation Rules, to the extent the impact of a Change in Control on such an Award would subject a Participant to additional taxes under the Nonqualified Deferred Compensation Rules, a Change in Control for purposes of such Award will mean a Change in Control that is also a "change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation" within the meaning of the Nonqualified Deferred Compensation Rules.

            (g)   "Code" means the Internal Revenue Code of 1986, as amended from time to time, including regulations thereunder and successor provisions and regulations thereto.

            (h)   "Committee" means a committee of two or more directors of the Board designated by the Board to administer the Plan;provided,however, that unless otherwise determined by the Board, the Committee shall consist solely of two or more directors, each of whom shall be a Qualified Member.

            (i)    "Dividend Equivalent" means a right, granted to an Eligible Person under Section 6(g), to receive cash, Stock, other Awards or other property equalwithout interest, in value to dividends paid with respect to a specified numberlieu of fractional shares of Common Stock, or other periodic payments.

            (j)  �� "Effective Date" meansin an amount equal to such fraction multiplied by the dateaverage of the Plan's establishment, as described in Section 10(m), which is May 15, 2019.


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              (k)   "Eligible Person" means all officers and employees of the Company or of any of its Subsidiaries, and other persons who provide services to the Company or any of its Subsidiaries, including directors of the Company. An employee on leave of absence may be considered as still in the employ of the Company or any of its Subsidiaries for purposes of eligibility for participation in the Plan.

              (l)    "Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, including rules thereunder and successor provisions and rules thereto.

              (m)  "Fair Market Value" means, as of any specified date, (i) if the Stock is listed on a national securities exchange, the closing sales price of the Common Stock as reported onduring regular trading hours for the stock exchange composite tape on thefive consecutive trading days immediately preceding date (or if no sales occur on that date, on the last precedingeffective date on which such sales of the Reverse Stock are so reported); (ii) if the Stock is not traded on a national securities exchange but is traded over the counter at the time a determination of its fair market value is requiredSplit (with such average closing sales prices being adjusted to be made under the Plan, the average between the reported high and low bid and asked prices of Stock on the most recently preceding date on which Stock was publicly traded; (iii) in the event Stock is not publicly traded at the time a determination of its value is required to be made under the Plan, the amount determined by the Committee in its discretion in such manner as it deems appropriate, taking into account all factors the Committee deems appropriate, including, without limitation, the Nonqualified Deferred Compensation Rules; or (iv) on the date of a Qualifying Public Offering of Stock, the offering price under such Qualifying Public Offering.

              (n)   "Incentive Stock Option" or "ISO" means any Option intended to be and designated as an incentive stock option within the meaning of section 422 of the Code or any successor provision thereto.

              (o)   "Incumbent Board" means the portion of the Board constituted of the individuals who are members of the Board as of the Effective Date and any other individual who becomes a director of the Company after the Effective Date and whose election or appointment by the Board or nomination for election by the Company's stockholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respectgive effect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Incumbent Board.

              (p)   "Nonqualified Deferred Compensation Rules" means the limitations or requirements of section 409A of the Code and the guidance and regulations promulgated thereunder.

              (q)   "Option" means a right, grantedReverse Stock Split). Each certificate that prior to an Eligible Person under Section 6(b) hereof, to purchase Stock or other Awards at a specified price during specified time periods.

              (r)   "Other Stock-Based Awards" means Awards granted to an Eligible Person under Section 6(i) hereof.

              (s)   "Participant" means a person who has been granted an Award under the Plan which remains outstanding, including a person who is no longer an Eligible Person.

              (t)    "Performance Award" means an Award, granted to an Eligible Person under Section 8 hereof, the grant, vesting, exercisability and/or settlement of which (and/or the timing or amount thereof) is subject to the achievement of one or more performance goals specified by the Committee.

              (u)   "Person" means any person or entity of any nature whatsoever, specifically including an individual, a firm, a company, a corporation, a partnership, a limited liability company, a trust or other entity; a Person, together with that Person's Affiliates and Associates (as those terms are


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      defined in Rule 12b-2 under the Exchange Act, provided that "registrant" as used in Rule 12b-2 shall mean the Company), and any Persons acting as a partnership, limited partnership, joint venture, association, syndicate or other group (whether or not formally organized), or otherwise acting jointly or in concert or in a coordinated or consciously parallel manner (whether or not pursuant to any express agreement), for the purpose of acquiring, holding, voting or disposing of securities of the Company with such Person, shall be deemed a single "Person."

              (v)   "Qualifying Public Offering" means a firm commitment underwritten public offering of Stock for cash where thecombination represented shares of Stock registered under the Securities Act are listed on a national securities exchange.

              (w)  "Qualified Member" means a member of the Committee who is (i) a "nonemployee director" within the meaning of Rule 16b-3(b)(3) and (ii) "independent" under the listing standards or rules of the securities exchange upon which the Stock is traded, but only to the extent such independence is required in order to take the action at issue pursuant to such standards or rules.

              (x)   "Restricted Stock" means Stock granted to an Eligible Person under Section 6(d) hereof, that is subject to certain restrictions and to a risk of forfeiture.

              (y)   "Restricted Stock Unit" means a right, granted to an Eligible Person under Section 6(e) hereof, to receive Stock, cash or a combination thereof at the end of a specified period (which may or may not be coterminous with the vesting schedule of the award).

              (z)   "Rule 16b-3" means Rule 16b-3, promulgated by the Securities and Exchange Commission under section 16 of the Exchange Act, as from time to time in effect and applicable to the Plan and Participants.

              (aa) "Securities Act" means the Securities Act of 1933 and the rules and regulations promulgated thereunder, or any successor law, as it may be amended from time to time.

              (bb) "Stock" means the Company's Common Stock par value $ 0.01 per share, and such other securities as may be substituted (or resubstituted) for Stock pursuant to Section 9.

              (cc) "(“Stock Appreciation RightOld Certificates" or "SAR" means a right granted to an Eligible Person under Section 6(c) hereof.

              (dd) "Subsidiary" means with respect to the Company, any corporation or other entity of which a majority of the voting power of the voting equity securities or equity interest is owned, directly or indirectly, by the Company.

            3.    Administration.

              (a)    Authority of the Committee.    The Plan”) shall be administered by the Committee except to the extent the Board elects to administer the Plan, in which case references herein to the "Committee" shall be deemed to include references to the "Board." Subject to the express provisions of the Plan and Rule 16b-3, the Committee shall have the authority, in its sole and absolute discretion, to (i) adopt, amend, and rescind administrative and interpretive rules and regulations relating to the Plan; (ii) determine the Eligible Persons to whom, and the time or times at which, Awards shall be granted; (iii) determine the amount of cash and/or thethereafter represent that number of shares of Common Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Dividend Equivalents, Bonus Stock, Other Stock-Based Awards, Annual Incentive Awards, Performance Awards, as applicable, or any combination thereof, that shall be the subject of each Award; (iv) determine the terms and provisions of each Award agreement (which need not be identical), including provisions defining or otherwise relating to (A) the term and the period or periods and extent of exercisability of any Options, (B) the extent tointo which the transferability of shares of Stock


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      issued or transferred pursuant to any Award is restricted, (C) except as otherwise provided herein, the effect of termination of employment, or the service relationship with the Company, of a Participant on the Award, and (D) the effect of approved leaves of absence (consistent with any applicable regulations of the Internal Revenue Service); (v) accelerate the time of vesting or exercisability of any Award that has been granted; (vi) construe the respective Award agreements and the Plan; (vii) make determinations of the Fair Market Value of the Stock pursuant to the Plan; (viii) delegate its duties under the Plan (including, but not limited to, the authority to grant Awards) to such agents as it may appoint from time to time, provided that the Committee may not delegate its duties where such delegation would violate applicable state or foreign corporate law, or with respect to making Awards to, or otherwise with respect to Awards granted to, Eligible Persons who are subject to section 16(b) of the Exchange Act; (ix) subject to Section 10(f), terminate, modify or amend the Plan; and (x) make all other determinations, perform all other acts, and exercise all other powers and authority necessary or advisable for administering the Plan, including the delegation of those ministerial acts and responsibilities as the Committee deems appropriate. Subject to Rule 16b-3 and section 162(m) of the Code, the Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan, in any Award, or in any Award agreement in the manner and to the extent it deems necessary or desirable to carry the Plan into effect, and the Committee shall be the sole and final judge of that necessity or desirability. The determinations of the Committee on the matters referred to in this Section 3(a) shall be final and conclusive.

              (b)    Manner of Exercise of Committee Authority.    At any time that a member of the Committee is not a Qualified Member, any action of the Committee relating to an Award granted or to be granted to an Eligible Person who is then subject to section 16 of the Exchange Act in respect of the Company may be taken either (a) by the full Board, (b) by a subcommittee, designated by the Committee, composed solely of two or more Qualified Members, or (c) by the Committee but with each such member who is not a Qualified Member abstaining or recusing himself or herself from such action;provided,however, that, upon such abstention or recusal, the Committee remains composed solely of two or more Qualified Members. Such action, authorized by such a subcommittee or by the Committee upon the abstention or recusal of such non-Qualified Member(s), or authorized by the full Board (if required for purposes of the exemption under Rule 16b-3(d)(1)), shall be the action of the Committee for purposes of the Plan. Any action of the Committee shall be final, conclusive and binding on all Persons, including the Company, its Subsidiaries, stockholders, Participants, Beneficiaries, and transferees under Section 10(b) hereof or other persons claiming rights from or through a Participant. The express grant of any specific power to the Committee, and the taking of any action by the Committee, shall not be construed as limiting any power or authority of the Committee. The Committee may delegate to officers or managers of the Company or any of its Subsidiaries, or committees thereof, the authority, subject to such terms as the Committee shall determine, to perform such functions, including administrative functions, as the Committee may determine, to the extent that such delegation will not result in the loss of an exemption under Rule 16b-3(d)(1) for Awards granted to Participants subject to section 16 of the Exchange Act in respect of the Company. The Committee may appoint agents to assist it in administering the Plan.

              (c)    Limitation of Liability.    The Committee and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished to him or her by any officer or employee of the Company or any of its Subsidiaries, the Company's legal counsel, independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Committee and any officer or employee of the Company or any of its Subsidiaries acting at the direction or on behalf of the Committee shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the fullest extent


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      permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination.

            4.    Stock Subject to Plan.

              (a)    Overall Number of Shares Available for Delivery.    Subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9, the total number of shares of Stock reserved, authorized and available for issuance in connection with Awards under the Plan shall not exceed 32,200,000 shares (which reflects an increase of 12,000,000 shares of Stock in addition to the amount of shares of Stock reserved, authorized and remaining available under the Company's 2016 Long Term Incentive Plan as in effect immediately prior to the Effective Date), and such total will be available for the issuance of Incentive Stock Options. Such total number of shares shall also be available for issuance pursuant to any other awards of restricted stock granted to Eligible Persons that may be accounted for as compensation expense by the Company.

              (b)    Application of Limitation to Grants of Awards.    No Award may be granted if the number of shares of Stock to be delivered in connection with such Award exceeds the number of shares of Stock remaining available under the Plan minus the number of shares of Stock issuable in settlement of or relating to then-outstanding Awards. The Committee may adopt reasonable counting procedures to ensure appropriate counting, avoid double counting (as, for example, in the case of tandem or substitute awards) and make adjustments if the number of shares of Stock actually delivered differs from the number of shares previously counted in connection with an Award.

              (c)    Availability of Shares Not Issued under Awards.    Shares of Stock subject to an Award under the Plan that expire or are canceled, forfeited, exchanged, settled in cash or otherwise terminated, including (i) shares forfeited with respect to Restricted Stock, (ii) the number of shares withheld in payment of any exercise or purchase price of an Award or taxes relating to Awards, and (iii) the number of shares surrendered in payment of any exercise or purchase price of an Award or taxes relating to any Award, will again be available for Awards under the Plan, except that if any such shares could not again be available for Awards to a particular Participant under any applicable law or regulation, such shares shall be available exclusively for Awards to Participants who are not subject to such limitation.

              (d)    Stock Offered.    The shares of Stock to be delivered under the Plan shall be made available from (i) authorized but unissued shares of Stock, (ii) Stock held in the treasury of the Company, or (iii) previously issued shares of Stock reacquired by the Company, including shares purchased on the open market.

            5.    Eligibility; Per Person Award Limitations.    Awards may be granted under the Plan only to Persons who are Eligible Persons at the time of grant thereof. In each calendar year, during any part of which the Plan is in effect, an Eligible Person may not be granted (a) Awards (other than Awards designated to be paid only in cash or the settlement of which is not based on a number of shares of Stock) relating to more than 10,000,000 shares of Stock, subject to adjustment in a manner consistent with any adjustment made pursuant to Section 9 and (b) Awards designated to be paid only in cash, or the settlement of which is not based on a number of shares of Stock, having a value determined on the date of grant in excess of $50,000,000, in each case, multiplied by the number of full or partial calendar years in any performance period established with respect to the Award, if applicable. In each calendar year during any part of which the Plan is in effect a nonemployee member of the Board may not be granted Awards of any type under the Plan having a total cumulative value (determined, if applicable, pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718) greater than $5,000,000;provided that, the limits set forth in this Section 5 shall be without regard to grants of Awards, if any, made to a nonemployee member of the Board as compensation for services


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    provided by such individual to the Company or of any of its Subsidiaries other than in the individual's capacity as a director of the Company.

            6.    Specific Terms of Awards.

              (a)    General.    Awards may be granted on the terms and conditions set forth in this Section 6. In addition, the Committee may impose on any Award or the exercise thereof, at the date of grant or thereafter (subject to Section 10(f)), such additional terms and conditions, not inconsistent with the provisions of the Plan, as the Committee shall determine, including terms requiring forfeiture of Awards in the event of termination of employment by the Participant, or termination of the Participant's service relationship with the Company, and terms permitting a Participant to make elections relating to his or her Award. The Committee shall retain full power and discretion to accelerate, waive or modify, at any time, any term or condition of an Award that is not mandatory under the Plan;provided,however, that the Committee shall not have any discretion to accelerate the terms of payment of any Award that provides for a deferral of compensation under the Nonqualified Deferred Compensation Rules if such acceleration would subject a Participant to additional taxes under the Nonqualified Deferred Compensation Rules, in each case, unless the Committee makes an informed decision based on consultation with legal counsel to take such action and disqualify the Award from meeting such requirements of the Nonqualified Deferred Compensation Rules due to other considerations.

              (b)    Options.    The Committee is authorized to grant Options to Eligible Persons on the following terms and conditions:

                (i)    Exercise Price.    Each Option agreement shall state the exercise price per share of Stock (the "Exercise Price");provided,however, that except as provided in Section 9, the Exercise Price per share of Stock subject to an Option shall not be less than the greater of (A) the par value per share of the Stock or (B) 100% of the Fair Market Value per share of the Stock as of the date of grant of the Option (or in the case of an ISO granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any Subsidiary, 110% of the Fair Market Value per share of the Stock on the date of grant).

                (ii)    Time and Method of Exercise; Other Terms.    The Committee shall determine the time or times at which or the circumstances under which an Option may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the methods by which such Exercise Price may be paid or deemed to be paid, the form of such payment, including without limitation cash, Stock, other Awards or awards granted under other plans of the Company or any Subsidiary, or other property (including notes or other contractual obligations of Participants to make payment on a deferred basis), and the methods by or forms in which Stock will be delivered or deemed to be delivered to Participants, including, but not limited to, the delivery of Restricted Stock subject to Section 6(d), and any other terms and conditions of any Option. In the case of an exercise whereby the Exercise Price is paid with Stock, such Stock shall be valued as of the date of exercise. No Option may be exercisable for a period of more than ten (10) years following the date of grant of the Option (or in the case of an ISO granted to an individual who owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or its parent or any of its subsidiaries, for a period of more than five (5) years following the date of grant of the ISO).

                (iii)    ISOs.    The terms of any ISO granted under the Plan shall comply in all respects with the provisions of section 422 of the Code. ISOs may only be granted to Eligible Persons who are employees of the Company or employees of a parent or any subsidiary corporation of the Company. Except as otherwise provided in Section 9, no provision of the Plan relating to


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        ISOs (including any SAR in tandem therewith) shall be interpreted, amended or altered, nor shall any discretion or authority granted under the Plan be exercised, so as to disqualify either the Plan or any ISO under section 422 of the Code, unless the Participant has first requested the change that will result in such disqualification. ISOs shall not be granted more than ten years after the earlier of the adoption of the Plan or the approval of the Plan by the Company's stockholders. Notwithstanding the foregoing, the Fair Market Value of shares of Stock subject to an ISO and the aggregate Fair Market Value of shares of stock of any parent or subsidiary corporation (within the meaning of sections 424(e) and (f) of the Code) subject to any other ISO (within the meaning of section 422 of the Code) of the Company or a parent or subsidiary corporation (within the meaning of sections 424(e) and (f) of the Code) that first becomes purchasable by a Participant in any calendar year may not (with respect to that Participant) exceed $100,000, or such other amount as may be prescribed under section 422 of the Code or applicable regulations or rulings from time to time. As used in the previous sentence, Fair Market Value shall be determined as of the date the ISOs are granted. Failure to comply with this provision shall not impair the enforceability or exercisability of any Option, but shall cause the excess amount of shares to be reclassified in accordance with the Code.

              (c)    Stock Appreciation Rights.    The Committee is authorized to grant SARs to Eligible Persons on the following terms and conditions:

                (i)    Right to Payment.    An SAR shall confer on the Participant to whom it is granted a right to receive, upon exercise thereof, the excess of (A) the Fair Market Value of one share of Stock on the date of exercise over (B) the grant price of the SAR as determined by the Committee.

                (ii)    Rights Related to Options.    An SAR granted pursuant to an Option shall entitle a Participant, upon exercise, to surrender that Option or any portion thereof, to the extent unexercised, and to receive payment of an amount computed pursuant to Section 6(c)(ii)(B). That Option shall then cease to be exercisable to the extent surrendered. SARs granted in connection with an Option shall be subject to the terms of the Award agreement governing the Option, which shall comply with the following provisions in addition to those applicable to Options:

                  (A)  An SAR granted in connection with an Option shall be exercisable only at such time or times and only to the extent that the related Option is exercisable and shall not be transferable except to the extent that the related Option is transferable.

                  (B)  Upon the exercise of an SAR related to an Option, a Participant shall be entitled to receive payment from the Company of an amount determined by multiplying:

                    (1)   the difference obtained by subtracting the Exercise Price with respect to a share of Stock specified in the related Option from the Fair Market Value of a share of Stock on the date of exercise of the SAR, by

                    (2)   the number of shares as to which that SAR has been exercised.


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                  (iii)    Right Without Option.    An SAR granted independent of an Option shall be exercisable as determined by the Committee and set forth in the Award agreement governing the SAR, which Award agreement shall comply with the following provisions:

                    (A)  Each Award agreement shall state the total number of shares of Stock to which the SAR relates.

                    (B)  Each Award agreement shall state the time or periods in which the right to exercise the SAR or a portion thereof shall vest and the number of shares of Stock for which the right to exercise the SAR shall vest at each such time or period.

                    (C)  Each Award agreement shall state the date at which the SARs shall expire if not previously exercised.

                    (D)  Each SAR shall entitle a Participant, upon exercise thereof, to receive payment of an amount determined by multiplying:

                      (1)   the difference obtained by subtracting the Fair Market Value of a share of Stock on the date of grant of the SAR from the Fair Market Value of a share of Stock on the date of exercise of that SAR, by

                      (2)   the number of shares as to which the SAR has been exercised.

                  (iv)    Terms.    Except as otherwise provided herein, the Committee shall determine at the date of grant or thereafter, the time or times at which and the circumstances under which an SAR may be exercised in whole or in part (including based on achievement of performance goals and/or future service requirements), the method of exercise, method of settlement, form of consideration payable in settlement, method by or forms in which Stock will be delivered or deemed to be delivered to Participants, whether or not an SAR shall be in tandem or in combination with any other Award, and any other terms and conditions of any SAR. SARs may be either freestanding or in tandem with other Awards.

                (d)    Restricted Stock.    The Committee is authorized to grant Restricted Stock to Eligible Persons on the following terms and conditions:

                  (i)    Grant and Restrictions.    Restricted Stock shall be subject to such restrictions on transferability, risk of forfeiture and other restrictions, if any, as the Committee may impose, which restrictions may lapse separately or in combination at such times, under such circumstances (including based on achievement of one or more performance goals and/or future service requirements), in such installments or otherwise, as the Committee may determine at the date of grant or thereafter. During the restricted period applicable to the Restricted Stock, the Restricted Stock may not be sold, transferred, pledged, hedged, hypothecated, margined or otherwise encumbered by the Participant.

                  (ii)    Certificates for Stock.    Restricted Stock granted under the Plan may be evidenced in such manner as the Committee shall determine. If certificates representing Restricted Stock are registered in the name of the Participant, the Committee may require that such certificates bear an appropriate legend referring to the terms, conditions and restrictions applicable to such Restricted Stock, that the Company retain physical possession of the certificates, and that the Participant deliver a stock power to the Company, endorsed in blank, relating to the Restricted Stock.

                  (iii)    Dividends and Splits.    As a condition to the grant of an Award of Restricted Stock, the Committee may allow a Participant to elect, or may require, that any cash dividends paid on a share of Restricted Stock be automatically reinvested in additional shares of Restricted Stock, applied to the purchase of additional Awards under the Plan or deferred without


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          interest to the date of vesting of the associated Award of Restricted Stock;provided, that, to the extent applicable, any such election shall comply with the Nonqualified Deferred Compensation Rules. Unless otherwise determined by the Committee and specified in the applicable Award agreement, Stock distributed in connection with a Stock split or Stock dividend, and other property (other than cash) distributed as a dividend, shall be subject to restrictions and a risk of forfeiture to the same extent as the Restricted Stock with respect to which such Stock or other property has been distributed.

                (e)    Restricted Stock Units.    The Committee is authorized to grant Restricted Stock Units to Eligible Persons, subject to the following terms and conditions:

                  (i)    Award and Restrictions.    Restricted Stock Units shall be subject to such restrictions (which may include a risk of forfeiture) as the Committee may impose, if any, which restrictions may lapse at the expiration of the deferral period or at earlier specified times (including based on achievement of one or more performance goals and/or future service requirements), separately or in combination, in installments or otherwise, as the Committee may determine.

                  (ii)    Dividend Equivalents.    Unless otherwise determined by the Committee at date of grant, Dividend Equivalents on the specified number of shares of Stock covered by an Award of Restricted Stock Units shall be either (A) paid with respect to such Restricted Stock Units on the dividend payment date in cash or in shares of unrestricted Stock having a Fair Market Value equal to the amount of such dividends, or (B) deferred with respect to such Restricted Stock Units and the amount or value thereof automatically deemed reinvested in additional Restricted Stock Units.

                  (iii)    Settlement.    Settlement of vested Restricted Stock Units shall occur upon expiration of the deferral period specified for such Restricted Stock Units by the Committee (or, if permitted by the Committee, as elected by the Participant). Settlement of Restricted Stock Units shall be made by delivery of (A) a number of shares of Stock equal to the number of Restricted Stock Units for which settlement is due, (B) cash in an amount equal to the Fair Market Value of the specified number of shares of Stock covered by such Restricted Stock Units, or (C) a combination thereof, as determined by the Committee at the date of grant or thereafter.

                (f)    Bonus Stock and Awards in Lieu of Obligations.    The Committee is authorized to grant Stock as a bonus, or to grant Stock or other Awards in lieu of obligations to pay cash or deliver other property under the Plan or under other plans or compensatory arrangements, provided that, in the case of Participants subject to section 16 of the Exchange Act, the amount of such grants remains within the discretion of the Committee to the extent necessary to ensure that acquisitions of Stock or other Awards are exempt from liability under section 16(b) of the Exchange Act. Stock or Awards granted hereunder shall be subject to such other terms as shall be determined by the Committee. In the case of any grant of Stock to an officer of the Company or any of its Subsidiaries in lieu of salary or other cash compensation, the number of shares granted in place of such compensation shall be reasonable, as determined by the Committee.

                (g)    Dividend Equivalents.    The Committee is authorized to grant Dividend Equivalents to a Participant, entitling the Participant to receive cash, Stock, other Awards, or other property equal in value to dividends paid with respect to a specified number of shares of Stock, or other periodic payments. Dividend Equivalents may be awarded on a free-standing basis or in connection with another Award other than an Award of Restricted Stock or a Stock Award). The Committee may provide that Dividend Equivalents shall be paid or distributed when accrued or shall be deemed to have been reinvested in additional Stock, Awards, or other investment vehicles, and subject to such restrictions on transferability and risks of forfeiture, as the Committee may specify.


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                (h)    Other Awards.    The Committee is authorized, subject to limitations under applicable law, to grant to Participants such other Awards that may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, or related to, Stock, as deemed by the Committee to be consistent with the purposes of the Plan, including without limitation convertible or exchangeable debt securities, other rights convertible or exchangeable into Stock, purchase rights for Stock, Awards with value and payment contingent upon performance of the Company or any other factors designated by the Committee, and Awards valued by reference to the book value of Stock or the value of securities of or the performance of specified Subsidiaries of the Company. The Committee shall determine the terms and conditions of such other Stock-Based Awards. Stock delivered pursuant to an Award in the nature of a purchase right granted under this Section 6(h) shall be purchased for such consideration, paid for at such times, by such methods, and in such forms, including, without limitation, cash, Stock, other Awards, or other property, as the Committee shall determine. Cash awards, as an element of or supplement to any other Award under the Plan, may also be granted pursuant to this Section 6(h).

                (i)    Substitute Awards; No Repricing.    Awards may be granted under the Plan in substitution for similar awards held by individuals who become Eligible Persons as a result of a merger, consolidation or acquisition of another entity or the assets of another entity by or with the Company or an Affiliate of the Company. Such Substitute Awards referred to in the immediately preceding sentence that are Options or Stock Appreciation Rights may have an exercise price that is less than the Fair Market Value of a share of Stock on the date of the substitution if such substitution complies with the Nonqualified Deferred Compensation Rules and other applicable laws and exchange rules. Except as provided in this Section 6(i) or in Section 9, the terms of outstanding Awards may not be amended to reduce the Exercise Price or grant price of outstanding Options or SARs or to cancel outstanding Options and SARs in exchange for cash, other Awards or Options or SARs with an Exercise Price or grant price that is less than the Exercise Price or grant price of the original Options or SARs without the approval of the shareholders of the Company.

              7.    Certain Provisions Applicable to Awards.

                (a)    Termination of Employment.    Except as provided herein, the treatment of an Award upon a termination of employment or any other service relationship by and between a Participant and the Company or any Subsidiary shall be specified in the agreement controlling such Award.

                (b)    Stand-Alone, Additional, Tandem, and Substitute Awards.    Awards granted under the Plan may, in the discretion of the Committee, be granted either alone or in addition to, in tandem with, or in substitution or exchange for, any other Award or any award granted under another plan of the Company, or any of its Subsidiaries, or of any business entity to be acquired by the Company or any of its Subsidiaries, or any other right of an Eligible Person to receive payment from the Company or any of its Subsidiaries. Such additional, tandem and substitute or exchange Awards may be granted at any time. If an Award is granted in substitution or exchange for another Award, the Committee shall require the surrender of such other Award in consideration for the grant of the new Award. Awards under the Plan may be granted in lieu of cash compensation, including in lieu of cash amounts payable under other plans of the Company or any of its Subsidiaries, in which the value of Stock subject to the Award is equivalent in value to the cash compensation, or in which the exercise price, grant price or purchase price of the Award in the nature of a right that may be exercised is equal to the Fair Market Value of the underlying Stock minus the value of the cash compensation surrendered. Awards granted pursuant to the preceding sentence shall be designed, awarded and settled in a manner that does not result in additional taxes under the Nonqualified Deferred Compensation Rules.


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                (c)    Term of Awards.    Except as specified herein, the term of each Award shall be for such period as may be determined by the Committee;provided, that in no event shall the term of any Option or SAR exceed a period of ten years (or such shorter term as may be required in respect of an ISO under section 422 of the Code).

                (d)    Form and Timing of Payment under Awards; Deferrals.    Subject to the terms of the Plan and any applicable Award agreement, payments to be made by the Company or any of its Subsidiaries upon the exercise of an Option or other Award or settlement of an Award may be made in such forms as the Committee shall determine, including without limitation cash, Stock, other Awards or other property, and may be made in a single payment or transfer, in installments, or on a deferred basis;provided,however, that any such deferred payment will be set forth in the agreement evidencing such Award and/or otherwise made in a manner that will not result in additional taxes under the Nonqualified Deferred Compensation Rules. Except as otherwise provided herein, the settlement of any Award may be accelerated, and cash paid in lieu of Stock in connection with such settlement, in the discretion of the Committee or upon the occurrence of one or more specified events (in addition to a Change in Control). Installment or deferred payments may be required by the Committee (subject to Section 10(c) of the Plan, including the consent provisions thereof in the case of any deferral of an outstanding Award not provided for in the original Award agreement) or permitted at the election of the Participant on terms and conditions established by the Committee and in compliance with the Nonqualified Deferred Compensation Rules. Payments may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents or other amounts in respect of installment or deferred payments denominated in Stock. Any deferral shall only be allowed as is provided in a separate deferred compensation plan adopted by the Company (to the extent such separate plan is required for compliances the Nonqualified Deferred Compensation Rules) and shall further be made pursuant to the Nonqualified Deferred Compensation Rules. The Plan shall not constitute an "employee benefit plan" for purposes of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

                (e)    Exemptions from Section 16(b) Liability.    It is the intent of the Company that the grant of any Awards to or other transaction by a Participant who is subject to section 16 of the Exchange Act shall be exempt from such section pursuant to an applicable exemption (except for transactions acknowledged in writing to be non-exempt by such Participant). Accordingly, if any provision of the Plan or any Award agreement does not comply with the requirements of Rule 16b-3 as then applicable to any such transaction, such provision shall be construed or deemed amended to the extent necessary to conform to the applicable requirements of Rule 16b-3 so that such Participant shall avoid liability under section 16(b) of the Exchange Act.

                (f)    Non-Competition Agreement.    Each Participant to whom an Award is granted under the Plan may be required to agree in writing as a condition to the granting of such Award not to engage in conduct in competition with the Company or any of its Subsidiaries for a period after the termination of such Participant's employment with the Company and its Subsidiaries as determined by the Committee (a "Non-Competition Agreement"); provided, however, to the extent a legally binding right to an Award within the meaning of the Nonqualified Deferred Compensation Rules is created with respect to a Participant, the Non-Competition Agreement must be entered into by such Participant within 30 days following the creation of such legally binding right.

              8.    Performance Awards.    The right of an Eligible Person to receive a grant, and the right of a Participant to exercise or receive a grant or settlement of any Award, and the timing thereof, may be subject to such performance conditions as may be specified by the Committee in its discretion (any such Award, a "Performance Award"). The Committee may use such business criteria and other measures of performance as it may deem appropriate in establishing any performance conditions, and


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      may exercise its discretion to reduce or increase the amounts payable under any such Performance Award subject to performance conditions, which may include one or more of the following business criteria for the Company, on a consolidated basis, and/or for specified Subsidiaries or business or geographical units of the Company (except with respect to the total stockholder return, change in the Fair Market Value of the Stock, and earnings per share criteria): (1) earnings per share; (2) increase in revenues; (3) increase in cash flow; (4) increase in cash flow from operations; (5) increase in cash flow return; (6) return on net assets; (7) return on assets; (8) return on investment; (9) return on capital; (10) return on equity; (11) economic value added; (12) operating margin; (13) contribution margin; (14) net income; (15) net income per share; (16) pretax earnings; (17) pretax earnings before interest, depreciation and amortization; (18) pretax operating earnings after interest expense and before incentives, service fees, and extraordinary or special items; (19) total stockholder return; (20) debt reduction; (21) market share; (22) change in the Fair Market Value of the Stock; (23) operating income; (24) enterprise value; (25) reserve volumes, present value of reserves, or PV-10; (26) top level production volumes; (27) finding and development costs or production costs per BOE; (28) net production (BOE/d); (29) lease operating expenses; (30) number of drilling locations; (31) any other goal selected by the Committee in its discretion (which, for the avoidance of doubt, may be objective or subjective), and (32) any of the above goals determined on a basic or adjusted basis, or on an absolute or relative basis, or as compared to the performance of a published or special index deemed applicable by the Committee including, but not limited to, the Standard & Poor's 500 Stock Index or a group of comparable companies.

              9.    Subdivision or Consolidation; Recapitalization; Change in Control; Reorganization.

                (a)    Existence of Plans and Awards.    The existence of the Plan and the Awards granted hereunder shall not affect in any way the right or power of the Company, the Board or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities ahead of or affecting Stock or the rights thereof, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. In no event will any action taken by the Committee pursuant to this Section 9 result in the creation of deferred compensation within the meaning of the Nonqualified Deferred Compensation Rules.

                (b)    Subdivision or Consolidation of Shares.    The terms of an Award and the share limitations under the Plan shall be subject to adjustment by the Committee from time to time, in accordance with the following provisions:

                    (i)  If at any time, or from time to time, the Company shall subdivide as a whole (by reclassification, by a Stock split, by the issuance of a distribution on Stock payable in Stock, or otherwise) the number of shares of Stock then outstanding into a greater number of shares of Stock, then, as appropriate, (A) the maximum number of shares of Stock available for the Plan or in connection with Awards as provided in Sections 4 and 5 shall be increased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any then outstanding Award shall be increased proportionately, and (C) the price (including the exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be reduced proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.

                   (ii)  If at any time, or from time to time, the Company shall consolidate as a whole (by reclassification, by reverse Stock split, or otherwise) the number of shares of Stock then outstanding into a lesser number of shares of Stock, then, as appropriate, (A) the maximum


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          number of shares of Stock available for the Plan or in connection with Awards as provided in Sections 4 and 5 shall be decreased proportionately, and the kind of shares or other securities available for the Plan shall be appropriately adjusted, (B) the number of shares of Stock (or other kind of shares or securities) that may be acquired under any then outstanding Award shall be decreased proportionately, and (C) the price (including the exercise price) for each share of Stock (or other kind of shares or securities) subject to then outstanding Awards shall be increased proportionately, without changing the aggregate purchase price or value as to which outstanding Awards remain exercisable or subject to restrictions.

                  (iii)  Whenever the number of shares of Stock subject to outstanding Awards and the price for each share of Stock subject to outstanding Awards are required to be adjusted as provided in this Section 9(b), the Committee shall promptly prepare a notice setting forth, in reasonable detail, the event requiring adjustment, the amount of the adjustment, the method by which such adjustment was calculated, and the change in price and the number of shares of Stock, other securities, cash, or property purchasable subject to each Award after giving effect to the adjustments. The Committee shall promptly provide each affected Participant with such notice.

                  (iv)  Adjustments under Sections 9(b)(i) and 9(b)(ii) shall be made by the Committee, and its determination as to what adjustments shall be made and the extent thereof shall be final, binding, and conclusive. No fractional interest shall be issued under the Plan on account of any such adjustments.

                (c)    Corporate Recapitalization.    If the Company recapitalizes, reclassifies its capital stock, or otherwise changes its capital structure (a "recapitalization") without the occurrence of a Change in Control, the number and class of shares of Stock covered by an Option or an SAR theretofore granted shall be adjusted so that such Option or SAR shall thereafter cover the number and class of shares of stock and securities to which the holder would have been entitled pursuant to the terms of the recapitalization if, immediately prior to the recapitalization, the holder had been the holder of record of the number of shares of Stock then covered by such Option or SAR and the share limitations provided in Sections 4 and 5 shall be adjusted in a manner consistent with the recapitalization.

                (d)    Additional Issuances.    Except as expressly provided herein, the issuance by the Company of shares of stock of any class or securities convertible into shares of stock of any class, for cash, property, labor or services, upon direct sale, upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, and in any case whether or not for fair value, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number of shares of Stock subject to Awards theretofore granted or the purchase price per share of Stock, if applicable.

                (e)    Change in Control.    Upon a Change in Control the Committee, acting in its sole discretion without the consent or approval of any holder, may effect one or more of the following alternatives, which may vary among individual holders and which may vary among Options or SARs (collectively "Grants") held by any individual holder: (i) accelerate the time at which Grants then outstanding may be exercised so that such Grants may be exercised in full for a limited period of time on or before a specified date (before or after such Change in Control) fixed by the Committee, after which specified date all unexercised Grants and all rights of holders thereunder shall terminate, (ii) provide for a cash payment with respect to outstanding Grants by requiring the mandatory surrender to the Company by selected holders of some or all of the outstanding Grants held by such holders (irrespective of whether such Grants are then vested or exercisable under the provisions of the Plan) as of a date, before or after such Change in Control, specified by the Committee, in which event the Committee shall thereupon cancel such Grants and pay to each


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        holder an amount of cash (or other consideration including securities or other property) per share equal to the excess, if any, of the amount calculated in Section 9(f) (the "Change in Control Price") of the shares subject to such Grants over the Exercise Price(s) under such Grants for such shares (except that to the extent the Exercise Price under any such Grant is equal to or exceeds the Change in Control Price, in which case no amount shall be payable with respect to such Grant), or (iii) make such adjustments to Grants then outstanding as the Committee deems appropriate to reflect such Change in Control;provided,however, that the Committee may determine in its sole discretion that no adjustment is necessary to Grants then outstanding;provided, further, however, that the right to make such adjustments shall include, but not require or be limited to, the modification of Grants such that the holder of the Grant shall be entitled to purchase or receive (in lieu of the total number of shares of Stock as to which an Option or SAR is exercisable (the "Total Shares") or other consideration that the holder would otherwise be entitled to purchase or receive under the Grant (the "Total Consideration")), the number of shares of stock or other securities, or the amount of cash or property to which the Total Consideration relates that the holder would have been entitled to purchase or receive in connection with the Change in Control (A) (in the case of Options), at an aggregate exercise price equal to the exercise price that would have been payable if the Total Shares had been purchased upon the exercise of the Grant immediately before the consummation of the Change in Control and (B) in the case of SARs, if the SARs had been exercised immediately before the occurrence of the Change in Control.

                (f)    Change in Control Price.    The Change in Control Price shall equal the amount determined in the following clause (i), (ii), (iii), (iv) or (v), whichever is applicable, as follows: (i) the price per share offered to holders of Stock in any merger or consolidation, (ii) the per share Fair Market Value of the Stock immediately before the Change in Control without regard to assets sold in the Change in Control and assuming the Company has received the consideration paid for the assets in the case of a sale of the assets, (iii) the amount distributed per share of Stock in a dissolution transaction, (iv) the price per share offered to holders of Stock in any tender offer or exchange offer whereby a Change in Control takes place, or (v) if such Change in Control occurs other than pursuant to a transaction described in clauses (i), (ii), (iii), or (iv) of this Section 9(f), the Fair Market Value per share of the Stock that may otherwise be obtained with respect to such Grants or to which such Grants track, as determined by the Committee as of the date determined by the Committee to be the date of cancellation and surrender of such Grants. In the event that the consideration offered to stockholders of the Company in any transaction described in this Section 9(f) or in Section 9(e) consists of anything other than cash, the Committee shall determine the fair cash equivalent of the portion of the consideration offered which is other than cash and such determination shall be binding on all affected Participants to the extent applicable to Awards held by such Participants.

                (g)    Impact of Corporate Events on Awards Generally.    In the event of a Change in Control or changes in the outstanding Stock by reason of a recapitalization, reorganization, merger, consolidation, combination, exchange or other relevant change in capitalization (including an extraordinary repurchase of Stock by the Company) occurring after the date of the grant of any Award and not otherwise provided for by this Section 9, any outstanding Awards and any Award agreements evidencing such Awards shall be subject to adjustment by the Committee at its discretion, which adjustment may, in the Committee's discretion, be described in the Award agreement and may include, but not be limited to, adjustments as to the number and price of shares of Stock or other consideration subject to such Awards, accelerated vesting (in full or in part) of such Awards, conversion of such Awards into awards denominated in the securities or other interests of any successor Person, or the cash settlement of such Awards in exchange for the cancellation thereof. In the event of any such change in the outstanding Stock, the aggregate number of shares of Stock available under the Plan may be appropriately adjusted by the Committee, whose determination shall be conclusive.


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              10.    General Provisions.

                (a)    Transferability.

                  (i)    Permitted Transferees.    The Committee may, in its discretion, permit a Participant to transfer all or any portion of an Option or SAR, or authorize all or a portion of an Option or SAR to be granted to an Eligible Person to be on terms which permit transfer by such Participant;provided that, in either case the transferee or transferees must be any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, in each case with respect to the Participant, an individual sharing the Participant's household (other than a tenant or employee of the Company), a trust in which any of the foregoing individuals have more than fifty percent of the beneficial interest, a foundation in which any of the foregoing individuals (or the Participant) control the management of assets, and any other entity in which any of the foregoing individuals (or the Participant) owns more than fifty percent of the voting interests (collectively, "Permitted Transferees");provided further that, (A) there may be no consideration for any such transfer and (B) subsequent transfers of Options or SARs transferred as provided above shall be prohibited except subsequent transfers back to the original holder of the Option or SAR and transfers to other Permitted Transferees of the original holder. Agreements evidencing Options or SARs with respect to which such transferability is authorized at the time of grant must be approved by the Committee, and must expressly provide for transferability in a manner consistent with this Section 10(a)(i).

                  (ii)    Qualified Domestic Relations Orders.    An Option, Stock Appreciation Right, Restricted Stock Unit Award, Restricted Stock Award or other Award may be transferred to a Permitted Transferee, pursuant to a domestic relations order entered or approved by a court of competent jurisdiction upon delivery to the Company of written notice of such transfer and a certified copy of such order.

                  (iii)    Other Transfers.    Except as expressly permitted by Sections 10(a)(i) and 10(a)(ii), Awards shall not be transferable other than by will or the laws of descent and distribution. Notwithstanding anything to the contrary in this Section 10, an Incentive Stock Option shall not be transferable other than by will or the laws of descent and distribution.

                  (iv)    Effect of Transfer.    Following the transfer of any Award as contemplated by Sections 10(a)(i), 10(a)(ii) and 10(a)(iii), (A) such Award shall continue to be subject to the same terms and conditions as were applicable immediately prior to transfer, provided that the term "Participant" shall be deemed to refer to the Permitted Transferee, the recipient under a qualified domestic relations order, or the estate or heirs of a deceased Participant or other transferee, as applicable, to the extent appropriate to enable the Participant to exercise the transferred Award in accordance with the terms of the Plan and applicable law and (B) the provisions of the Award relating to exercisability shall continue to be applied with respect to the original Participant and, following the occurrence of any applicable events described therein the Awards shall be exercisable by the Permitted Transferee, the recipient under a qualified domestic relations order, or the estate or heirs of a deceased Participant, as applicable, only to the extent and for the periods that would have been applicable in the absence of the transfer.

                  (v)    Procedures and Restrictions.    Any Participant desiring to transfer an Award as permitted under Sections 10(a)(i), 10(a)(ii) or 10(a)(iii) shall make application therefor in the manner and time specified by the Committee and shall comply with such other requirements as the Committee may require to assure compliance with all applicable securities laws. The Committee shall not give permission for such a transfer if (A) it would give rise to short swing


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          liability under section 16(b) of the Exchange Act or (B) it may not be made in compliance with all applicable federal, state and foreign securities laws.

                  (vi)    Registration.    To the extent the issuance to any Permitted Transferee of any shares of Stock issuable pursuant to Awards transferred as permitted in this Section 10(b) is not registered pursuant to the effective registration statement of the Company generally covering the shares to be issued pursuant to the Plan to initial holders of Awards, the Company shall not have any obligation to register the issuance of any such shares of Stock to any such transferee.

                (b)    Taxes.    The Company and any of its Subsidiaries are authorized to withhold from any Award granted, or any payment relating to an Award under the Plan, including from a distribution of Stock, amounts of withholding and other taxes due or potentially payable in connection with any transaction involving an Award, and to take such other action as the Committee may deem advisable to enable the Company and Participants to satisfy obligations for the payment of withholding taxes and other tax obligations relating to any Award. This authority shall include authority to withhold or receive Stock or other property and to make cash payments in respect thereof in satisfaction of a Participant's tax obligations, either on a mandatory or elective basis, in the discretion of the Committee.

                (c)    Changes to the Plan and Awards.    The Board may amend, alter, suspend, discontinue or terminate the Plan or the Committee's authority to grant Awards under the Plan without the consent of stockholders or Participants, except that any amendment or alteration to the Plan, including any increase in any share limitation, shall be subject to the approval of the Company's stockholders not later than the annual meeting next following such Board action if such stockholder approval is required by any federal or state law or regulation or the rules of any stock exchange or automated quotation system on which the Stock may then be listed or quoted, and the Board may otherwise, in its discretion, determine to submit other such changes to the Plan to stockholders for approval;provided, that, without the consent of an affected Participant, no such Board action may materially and adversely affect the rights of such Participant under any previously granted and outstanding Award. The Committee may waive any conditions or rights under, or amend, alter, suspend, discontinue or terminate any Award theretofore granted and any Award agreement relating thereto, except as otherwise provided in the Plan;provided,however, that, without the consent of an affected Participant, no such Committee action may materially and adversely affect the rights of such Participant under such Award. For purposes of clarity, any adjustments made to Awards pursuant to Section 9 will be deemednot to materially and adversely affect the rights of any Participant under any previously granted and outstanding Award and therefore may be made without the consent of affected Participants.

                (d)    Limitation on Rights Conferred under Plan.    Neither the Plan nor any action taken hereunder shall be construed as (i) giving any Eligible Person or Participant the right to continue as an Eligible Person or Participant or in the employ or service of the Company or any of its Subsidiaries, (ii) interfering in any way with the right of the Company or any of its Subsidiaries to terminate any Eligible Person's or Participant's employment or service relationship at any time, (iii) giving an Eligible Person or Participant any claim to be granted any Award under the Plan or to be treated uniformly with other Participants and/or employees and/or other service providers, or (iv) conferring on a Participant any of the rights of a stockholder of the Company unless and until the Participant is duly issued or transferred shares of Stock in accordance with the terms of an Award.

                (e)    Unfunded Status of Awards; No Trust or Fund Created.    The Plan is intended to constitute an "unfunded" plan for certain incentive awards. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the


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        Company and a Participant or any other Person. To the extent that any Person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company.

                (f)    Nonexclusivity of the Plan.    Neither the adoption of the Plan by the Board nor its submission to the stockholders of the Company for approval shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable Nothing contained in the Plan shall be construed to prevent the Company or any of its Subsidiaries from taking any corporate action which is deemed by the Company or such Subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No employee, beneficiary or other person shall have any claim against the Company or any of its Subsidiaries as a result of any such action.

                (g)    Fractional Shares.    No fractional shares of Stock shall be issued or delivered pursuant to the Plan or any Award. The Committee shall determine whether cash, other Awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

                (h)    Severability.    If any provision of the Plan is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein. If any of the terms or provisions of the Plan or any Award agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Eligible Persons who are subject to section 16(b) of the Exchange Act) or section 422 of the Code (with respect to Incentive Stock Options), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3) or section 422 of the Code. With respect to Incentive Stock Options, if the Plan does not contain any provision required to be included herein under section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein;provided, further, that, to the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify, that Option (to that extent) shall be deemed an Option not subject to section 422 of the Code for all purposes of the Plan.

                (i)    Governing Law.    All questions arising with respect to the provisions of the Plan and Awards shall be determined by application of the laws of the State of Delaware, without giving effect to any conflict of law provisions thereof, except to the extent Delaware law is preempted by federal law. The obligation of the Company to sell and deliver Stock hereunder is subject to applicable federal and state laws and to the approval of any governmental authority required in connection with the authorization, issuance, sale, or delivery of such Stock.

                (j)    Conditions to Delivery of Stock.    Nothing herein or in any Award granted hereunder or any Award agreement shall require the Company to issue any shares with respect to any Award if that issuance would, in the opinion of counsel for the Company, constitute a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable statute or regulation, or the rules of any applicable securities exchange or securities association, as then in effect. In addition, each Participant who receives an Award under the Plan shall not sell or otherwise dispose of Stock that is acquired upon grant or vesting of an Award in any manner that would constitute a violation of any applicable federal or state securities laws, the Plan or the rules, regulations or other requirements of the Securities and Exchange Commission or any stock exchange upon which the Stock is then listed. At the time of any exercise of an Option or Stock


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        Appreciation Right, or at the time of any grant of a Restricted Stock Award, Restricted Stock Unit, or other Award the Company may, as a condition precedent to the exercise of such Option or Stock Appreciation Right or settlement of any Restricted Stock Award, Restricted Stock Unit or other Award, require from the Participant (or in the event of his or her death, his or her legal representatives, heirs, legatees, or distributees) such written representations, if any, concerning the holder's intentions with regard to the retention or disposition of the shares of Stock being acquired pursuant to the Award and such written covenants and agreements, if any, as to the manner of disposal of such shares as, in the opinion of counsel to the Company, may be necessary to ensure that any disposition by that holder (or in the event of the holder's death, his or her legal representatives, heirs, legatees, or distributees) will not involve a violation of the Securities Act or any similar or superseding statute or statutes, any other applicable state or federal statute or regulation, or any rule of any applicable securities exchange or securities association, as then in effect. No Option or Stock Appreciation Right shall be exercisable and no settlement of any Restricted Stock Award or Restricted Stock Unit shall occur with respect to a Participant unless and until the holder thereof shall have paid cash or property to, or performed services for, the Company or any of its Subsidiaries that the Committee believes is equal to or greater in value than the par value of the Stock subject to such Award.

                (k)    Section 409A of the Code.    In the event that any Award granted pursuant to the Plan provides for a deferral of compensation within the meaning of the Nonqualified Deferred Compensation Rules, it is the general intention, but not the obligation, of the Company to design such Award to be exempt from or otherwise comply with the Nonqualified Deferred Compensation Rules and such Award should be interpreted accordingly.

                (l)    Clawback.    To the extent required by (i) applicable law, including, without limitation, the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, any Securities Exchange Commission rule or any applicable securities exchange listing standards and/or (ii) any policy that may be adopted by the Board, Awards and amounts paid or payable pursuant to or with respect to Awards shall be subject to clawback to the extent necessary to comply with such law(s) and/or policy, which clawback may include forfeiture, repurchase and/or recoupment of Awards and amounts paid or payable pursuant to or with respect to Awards.

                (m)    Plan Effective Date and Term.    The Plan was adopted and established by the Board on March 28, 2019, and approved by the stockholders of the Company on May 15, 2019. Awards other than Options may be granted (or in the case of Options, may become exercisable) under this Plan no earlier than the effectiveness of the filing of a registration statement on Form S-8 for the offer, sale, and delivery of Stock under the Plan, and no Awards may be granted under the Plan on or after May 15, 2029 which is the tenth anniversary of the Effective Date. For the avoidance of doubt, any Awards granted under the 2016 Long Term Incentive Plan as in effect immediately prior to the Effective Date shall continue in full force and effect, including that the adoption of this Plan shall not affect the terms or conditions of any such Awards intended to constitute "performance-based compensation" within the meaning of section 162(m) of the Code as in effect prior to its amendment by the Tax Cuts and Jobs Act, P.L. 115-97.


      VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. EXTRACTION OIL & GAS, INC. 370 17TH STREET, SUITE 5300 DENVER, CO 80202 During The Meeting - Go to www.virtualshareholdermeeting.com/XOG2019 You may attend the Meeting via the Internet and vote during the Meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E70588-P18594 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. EXTRACTION OIL & GAS, INC The Board of Directors recommends you vote FOR the election of the following directors: For Withhold AllAll For AllTo withhold authority to vote for any individual Exceptnominee(s), mark "For All Except" and write the number(s) of the nominee(s) on the line below. ! ! ! 1. Election of Directors Nominees: 01) Mark A. Erickson 02) Donald L. Evans 03) Peter A. Leidel For Against Abstain The Board of Directors recommends you vote FOR Proposals 2, 3 and 4. ! ! ! ! ! ! ! ! ! 2. To ratify the appointment of PricewaterhouseCoopers LLP as the Company's independent registered public accountants for 2019. 3. To approve the amendment and restatement of our 2016 Long Term Incentive Plan, including to increase shares reserved for issuance. 4. To approve, on a non-binding advisory basis, the compensation of the Company's Named Executive Officers for the fiscal year ended December 31, 2018. ! For address changes and/or comments, please check this box and write them on the back where indicated. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date

      Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. E70589-P18594 EXTRACTION OIL & GAS, INC. Annual Meeting of Stockholders May 15, 2019, 8:30 AM MDT This proxy is solicited by the Board of Directors The undersigned hereby appoints Russell T. Kelley, Jr. and Eric J. Christ, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on this proxy, all of the shares of Common Stock represented by the Old Certificate shall have been combined, subject to the elimination of fractional share interests as described above.


      IN WITNESS WHEREOF, the undersigned has executed this amendment on behalf of the Corporation and has attested such execution and does verify and affirm, under penalty of perjury, that this amendment is the act and deed of the Corporation and that the facts stated herein are true as of this __________ day of __________, __________.

      EXTRACTION OIL & GAS, INC. held of record by the undersigned on the record date, March 18, 2019, at the Annual Meeting of Stockholders of the Company to be held on Wednesday, May 15, 2019 at 8:30 AM, MDT,INC.


      By:___________________________________
      Eric J. Christ
      Vice President, General Counsel and any adjournment thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted FOR the election of each of the nominees in Item 1 and FOR Items 2, 3 and 4. In his discretion, the proxy is authorized to vote upon such other business as may properly come before the meeting. (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side Address Changes/Comments:Corporate
      Secretary

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