Exploration and Production Activities (Unaudited)

In the second quarter of 2015, the Company began the marketing and sale process of Fidelity with an anticipated sale to occur within one year. Between September 2015 and March 2016, the Company entered into purchase and sale agreements to sell all of Fidelity's oil and natural gas assets. The completion of these sales occurred between October 2015 and April 2016. At the time the Company committed to a plan to sell Fidelity, the Company stopped the use of the full-cost method of accounting for its oil and natural gas production activities. The assets and liabilities have been classified as held for sale and the results of operations included in income (loss) from discontinued operations, other than certain general and administrative costs and interest expense which do not meet the criteria for income (loss) from discontinued operations. Prior to the asset sales, Fidelity was significantly involved in the development and production of oil and natural gas resources. For more information, see Note 2.

Previously, Fidelity shared revenues and expenses from the development of specified properties in proportion to its ownership interests. The information that follows includes Fidelity's proportionate share of all its previously owned oil and natural gas interests.

The following table sets forth capitalized costs and accumulated depreciation, depletion and amortization related to oil and natural gas producing activities, prior to Fidelity's assets being held for sale, at December 31:



	2014
	(In thousands)
Subject to amortization	$	3,205,036
Not subject to amortization	132,141
Total capitalized costs	3,337,177
Less accumulated depreciation, depletion and amortization	1,752,566
Net capitalized costs	$	1,584,611

Capital expenditures, including those not subject to amortization, related to oil and natural gas producing activities prior to Fidelity's assets being held for sale, excluding the years ended December 31, 2016 and 2015, due to no wells being drilled during that time, were as follows:



Year ended December 31,	2014		*
	(In thousands)
Acquisitions:
Proved properties	$	87,919
Unproved properties	138,683
Exploration	16,879
Development	331,400
Total capital expenditures	$	574,881


*	Excludes net reductions to property, plant and equipment related to the recognition of future liabilities for asset retirement obligations associated with the plugging and abandonment of oil and natural gas wells of $9.0 million for the year ended December 31, 2014.

Estimates of proved reserves were prepared in accordance with guidelines established by the industry and the SEC. The estimates are arrived at using actual historical wellhead production trends and/or standard reservoir engineering methods utilizing available geological, geophysical, engineering and economic data. The proved reserve estimates as of December 31, 2015 and 2014, were calculated using SEC Defined Prices. Other factors used in the proved reserve estimates were current estimates of well operating and future development costs (which include asset retirement costs), taxes, timing of operations, and the interests owned by the Company in the properties. These estimates are refined as new information becomes available.

The reserve estimates were prepared by internal engineers assigned to an asset team by geographic area. Senior management reviewed and approved the reserve estimates to ensure they were materially accurate.

Estimates of economically recoverable oil, NGL and natural gas reserves and future net revenues therefrom are based upon a number of variable factors and assumptions. For these reasons, estimates of economically recoverable reserves and future net revenues may vary from actual results.

The changes in the Company's estimated quantities of proved oil, NGL and natural gas reserves for the year ended December 31, 2016, were as follows:



	Oil (MBbls)		NGL (MBbls)		Natural Gas (MMcf)		Total (MBOE)
Proved developed and undeveloped reserves:
Balance at beginning of year	12,687		211		2,531		13,321
Production	—		—		—		—
Extensions and discoveries	—		—		—		—
Improved recovery	—		—		—		—
Purchases of proved reserves	—		—		—		—
Sales of proved reserves	(12,687	)	(211	)	(2,531	)	(13,321	)
Revisions of previous estimates	—		—		—		—
Balance at end of year	—		—		—		—

Significant changes in proved reserves for the year ended December 31, 2016, include:


•	Sales of proved reserves of (13.3) MMBOE, due to the Company's decision to sell Fidelity and exit the exploration and production business

The changes in the Company's estimated quantities of proved oil, NGL and natural gas reserves for the year ended December 31, 2015, were as follows:



	Oil (MBbls)		NGL (MBbls)		Natural Gas (MMcf)		Total (MBOE)
Proved developed and undeveloped reserves:
Balance at beginning of year	43,918		7,187		245,011		91,940
Production	(3,286	)	(393	)	(16,747	)	(6,471	)
Extensions and discoveries	744		29		681		888
Improved recovery	—		—		—		—
Purchases of proved reserves	—		—		—		—
Sales of proved reserves	(16,474	)	(6,864	)	(202,560	)	(57,097	)
Revisions of previous estimates	(12,215	)	252		(23,854	)	(15,939	)
Balance at end of year	12,687		211		2,531		13,321

Significant changes in proved reserves for the year ended December 31, 2015, include:


•	Sales of proved reserves of (57.1) MMBOE, primarily due to the Company's decision to sell Fidelity and exit the exploration and production business


•	Revisions of previous estimates of (15.9) MMBOE, largely the result of lower commodity prices

The changes in the Company's estimated quantities of proved oil, NGL and natural gas reserves for the year ended December 31, 2014, were as follows:



	Oil (MBbls)		NGL (MBbls)		Natural Gas (MMcf)		Total (MBOE)
Proved developed and undeveloped reserves:
Balance at beginning of year	41,019		6,602		198,445		80,695
Production	(4,919	)	(609	)	(20,822	)	(8,998	)
Extensions and discoveries	9,654		3,634		64,420		24,025
Improved recovery	—		—		—		—
Purchases of proved reserves	5,463		—		7,711		6,748
Sales of proved reserves	(4,945	)	(3,109	)	(40,451	)	(14,796	)
Revisions of previous estimates	(2,354	)	669		35,708		4,266
Balance at end of year	43,918		7,187		245,011		91,940

Significant changes in proved reserves for the year ended December 31, 2014, include:


•	Extensions and discoveries of 24.0 MMBOE, primarily due to drilling activity at the Company's East Texas, Bakken and Powder River Basin properties


•	Purchases of proved reserves of 6.7 MMBOE, primarily due to the purchase of working interests and leasehold positions in the Powder River Basin


•	Sales of proved reserves of (14.8) MMBOE, primarily at the Company's South Texas and Bakken properties


•	Revisions of previous estimates of 4.3 MMBOE, largely the result of higher natural gas prices and well performance revisions

The following table summarizes the breakdown of the Company's proved reserves between proved developed and PUD reserves at December 31:



	2016	2015	2014
Proved developed reserves:
Oil (MBbls)	—	11,380	30,130
NGL (MBbls)	—	144	4,217
Natural Gas (MMcf)	—	2,033	184,437
Total (MBOE)	—	11,865	65,086
PUD reserves:
Oil (MBbls)	—	1,307	13,788
NGL (MBbls)	—	67	2,970
Natural Gas (MMcf)	—	498	60,574
Total (MBOE)	—	1,456	26,854
Total proved reserves:
Oil (MBbls)	—	12,687	43,918
NGL (MBbls)	—	211	7,187
Natural Gas (MMcf)	—	2,531	245,011
Total (MBOE)	—	13,321	91,940

As of December 31, 2016, the Company had no PUD reserves, which is a decrease of 1.5 MMBOE from December 31, 2015. The decrease relates to the asset sales during 2016.