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| Additional Non-GAAP Information EP Energy uses non-GAAP financial measures of Reported EBITDAX. Reported EBITDAX is defined as net income plus interest and debt expense, income taxes, depreciation, depletion and amortization and exploration expense. We also use the non-GAAP financial measure of Adjusted EBITDAX. Adjusted EBITDAX is defined as Reported EBITDAX adjusted as applicable in the relevant period for the impact of financial derivatives, ceiling test charges or other impairments, adjustments to reflect cash distributions of the earnings from our unconsolidated affiliates, non-cash compensation expenses, transition and restructuring costs we expect not to recur, losses or gains on extinguishment of debt, losses or gains on sale of assets and advisory fees paid to our sponsors. We believe that Adjusted EBITDAX is useful to investors as a measure of operating performance, and this measure allows them to understand how certain significant items impact the comparability of our results. These measures, however, should not be considered alternatives to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. We also use the non-GAAP measure of PV-10. PV-10 is considered a non-GAAP measure as it is derived from the standardized measure of discounted future net cash flows. PV-10 is defined as discounted future net cash flows attributable to our estimated net proved reserves prior to taking into account future income taxes, discounted at 10%. We believe that the presentation of PV-10 is relevant and useful to investors because it allows them to evaluate the relative monetary significance of our oil and natural gas properties regardless of our tax structure. Further, investors may utilize the measure as a basis for comparison of the relative size and value of our reserves to other companies. We use this measure when assessing the potential return on investment related to our oil and natural gas properties. PV-10, however, is not a substitute for the standardized measure of discounted future net cash flows. Our PV-10 measure and the standardized measure of discounted future net cash flows do not purport to present the fair value of our oil, natural gas and NGL reserves. Our PV-10 differs from our standardized measure because our standardized measure reflects discounted future income taxes for our international operations and income taxes related to our investment in Four Star. For our domestic operations we are not subject to federal income taxes. Below is a reconciliation of PV-10 to the standardized measure (in millions). $ 7,285 PV-10 (88) Income taxes, discounted at 10% $ 7,197 |