The adjustments included in the following condensed consolidated balance sheet reflect the effect of the transactions contemplated by the Plan (reflected in the column “Reorganization Adjustments”) as well as fair value and other required accounting adjustments resulting from the adoption of fresh start accounting (reflected in the column “Fresh Start Adjustments”). The explanatory notes provide additional information with regard to the adjustments recorded, the methods used to determine the fair values and significant assumptions.


	As of May 31, 2018
			Reorganization			Fresh Start
	Predecessor		Adjustments (1)			Adjustments			Successor
ASSETS
Current assets:
Cash and cash equivalents	$	35,020	$	(13,938)	(2)	$	—		$	21,082
Restricted cash		—		7,650	(3)		—			7,650
Accounts receivable:
Oil, natural gas and natural gas liquids revenues		48,986		1,261	(4)		—			50,247
Related party		1,503		(1,503)	(4)		—			—
Other		800		—			—			800
Other current assets		4,580		(527)	(5)		(1,791)	(12)		2,262
Total current assets		90,889		(7,057)			(1,791)			82,041
Oil and natural gas properties, net		1,355,504		—			(739,486)	(13)		616,018
Other assets		4,507		1,941	(6)		(1,001)	(14)		5,447
Total assets	$	1,450,900	$	(5,116)		$	(742,278)		$	703,506

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	34,922	$	2,177	(7)	$	(312)	(15)	$	36,787
Current portion of long-term debt		297,000		(297,000)	(8)		—			—
Total current liabilities		331,922		(294,823)			(312)			36,787
Liabilities subject to compromise		356,066		(356,066)	(9)		—			—
Asset retirement obligations		161,661		—			(41,641)	(15)		120,020
Long–term debt, net		—		297,000	(8)		—			297,000
Other long–term liabilities		1,021		—			—			1,021
Total liabilities		850,670		(353,889)			(41,953)			454,828
Commitments and contingencies (Note 14)
Stockholders’ / owners’ equity:
Predecessor common unitholders		621,144		65,175	(10)		(686,319)	(16)		—
Predecessor general partner interest		(20,914)		34,920	(10)		(14,006)	(16)		—
Successor common stock		—		100	(11)		—			100
Successor additional paid-in capital		—		248,578	(11)		—			248,578
Total stockholders’ / owners’ equity		600,230		348,773			(700,325)			248,678
Total liabilities and equity	$	1,450,900	$	(5,116)		$	(742,278)		$	703,506

_____________

Reorganization Adjustments

(1)Reflects amounts recorded as of the Effective Date for the implementation of the Plan, including among other items, settlement of the Predecessor’s liabilities subject to compromise, cancellation of the Predecessor’s equity, issuance of the Successor New Common Shares and the Warrants, repayment of certain of Predecessor’s liabilities and settlement with holders of the Senior Notes.

(2)Reflects the changes in cash and cash equivalents, including the following:


Funding of the professional fees escrow account	$	(7,650)
Payment of debt issuance costs on the Successor Exit Credit Facility		(2,813)
Payment of professional fees		(1,591)
Payment of success fees		(1,573)
Payment of derivative settlement		(216)
Payment of accrued interest payable under the Predecessor credit facility		(135)
Transfer of funds from Predecessor’s general partner		40
Changes in cash and cash equivalents	$	(13,938)

(3)Reflects the transfer of restricted cash to fund the professional fees escrow account.

(4)Primarily reflects the reclassification of the related party net receivable from EnerVest to a third party receivable as EnerVest is no longer a related party as result of the Restructuring. Also, reflects the cancellation of related party claims of $0.2 million with the general partner of EVEP as a result of the Debtor’s emergence from Chapter 11 bankruptcy proceedings.

(5)Represents the expense of certain prepaid professional fees as a result of the Debtor’s emergence from Chapter 11 bankruptcy proceedings.

(6)Reflects the capitalization of the deferred financing costs of $2.8 million related to the Successor’s Exit Credit Facility, offset by the write-off of $0.8 million of deferred financing costs related to the Predecessor’s credit facility.

(7)Net increase in accounts payable and accrued liabilities reflects the following:


Recognition of payables for success fees	$	4,086
Recognition of payables for professional fees		32
Payment of professional fees		(1,590)
Payment of derivative settlement		(216)
Payment of accrued interest payable under the Predecessor credit facility		(135)
Net increase in accounts payable and accrued liabilities	$	2,177

(8)Reflects the reclassification of $297.0 million in borrowings under the Exit Credit Facility to long-term debt.

(9)Settlement of liabilities subject to compromise and the resulting net gain were determined as follows:


Senior Notes	$	343,348
Accrued interest payable		12,718
Total liabilities subject to compromise of Predecessor		356,066
Issuance of common stock to holders of the Senior Notes		(227,366)
Gain on settlement of liabilities subject to compromise	$	128,700

The amount of disallowed interest during the period from the Petition Date through the Effective Date of emergence not included in the accrued interest payable in the table above was $4.7 million.

(10)Reflects the cancellation of the Predecessor company common unitholders and general partner interest.


			General
	Common		Partner
	Unitholders		Interest
Net gain from reorganization adjustments	$	118,940	$	2,426
Contribution from general partner		—		40
Issuance of common stock to Predecessor common unitholders		(11,967)		—
Issuance of warrants to Predecessor common unitholders		(9,345)		—
Cancellation of Predecessor common unitholders / general partner interest		(32,453)		32,454
Predecessor equity reorganization adjustments	$	65,175	$	34,920

(11)Reflects the issuance of 10,000,016 shares of common stock at a par value of $0.01 per share in accordance with the Plan, and the issuance of 800,000 warrants in accordance with the Plan. The fair value of the Warrants was determined by using the Black-Scholes model and were reasonably estimated to be approximately $11.68 per share. See Note 15 for additional information on the issuance of the Successor’s Warrants.


Issuance of shares of Successor common stock at par value of $0.01 per share	$	100
Additional paid-in capital from issuance of Successor common stock		239,233
Additional paid-in capital from issuance of Successor warrants		9,345
Fair value of Successor equity	$	248,678

See Note 15 for additional information on the issuances of the Successor’s equity.

Fresh Start Adjustments

(12)Reflects the adjustment to write-down certain other current assets to fair value.

(13)Reflects a decrease of oil and natural gas properties, net. In determining the fair value of the oil and gas properties both the income and market approach were utilized and the accumulated depreciation, depletion and impairment was eliminated. The following table summarizes the components of oil and natural gas properties as of the Effective Date: based on the methodology discussed above and the elimination of accumulated depreciation, depletion and impairment. The fresh start adjustments to oil and natural gas properties, net are as follows:


	Successor		Predecessor
	Fair Value		Historical Book Value
Proved oil and natural gas properties	$	547,136	$	2,593,249
Unproved oil and natural gas properties		68,882		—
		616,018		2,593,249
Accumulated depreciation, depletion and amortization		—		(1,237,745)
Net capitalized costs	$	616,018	$	1,355,504

(14)Reflects the write-off of immaterial other assets not anticipated to have value to Harvest.

(15)Reflects a decrease of $42.0 million for asset retirement obligations. The fair value of asset retirement obligations was estimated using valuation techniques that convert future cash flows to a single discounted amount. Significant inputs to the valuation include estimates of: (i) plugging and abandonment costs per well based on existing regulatory requirements, (ii) remaining life per well, (iii) future inflation factors and (iv) a credit-adjusted risk free rate.

(16)Reflects the cumulative impact of the fresh start adjustments discussed above.