Document:

EX-10.1

 Exhibit 10.1 

CHAPARRAL ENERGY, INC. 
  

 
 2019
LONG-TERM INCENTIVE PLAN 
  
  

ARTICLE I. 

ESTABLISHMENT AND PURPOSE 

1.1    Establishment. Chaparral Energy, Inc., a Delaware corporation (“Chaparral”), hereby
establishes the Chaparral Energy, Inc. 2019 Long-Term Incentive Plan for the benefit of certain officers, directors, employees, consultants and others performing services for Chaparral and its Affiliates, as set forth in this Plan. 

1.2    Purpose. The purposes of this Plan are to attract and retain highly qualified individuals to perform
services for Chaparral and its Affiliates, to further align the interests of those individuals with those of the stockholders of Chaparral, and to more closely link compensation with the performance of Chaparral and its Affiliates. Chaparral is
committed to creating long-term stockholder value. Chaparral’s compensation philosophy is based on the belief that Chaparral can best create stockholder value if employees, officers, directors, consultants and others performing services for
Chaparral and its Affiliates act and are rewarded as business owners. Chaparral believes that an equity stake through equity compensation programs effectively aligns service provider and stockholder interests by motivating and rewarding performance
that will enhance stockholder value. 
 1.3    Effectiveness and Term. This Plan shall become effective on
the later of (a) the date of its adoption by the Board and (b) the date it is approved by the stockholders of Chaparral in accordance with applicable law (the “Effective Date”). Unless terminated earlier by the Board
pursuant to Section 14.1, this Plan shall terminate on the day prior to the tenth anniversary of the earlier of (a) the date of its adoption by the Board and (b) the date it is approved by the stockholders of Chaparral. 

ARTICLE II. 
 DEFINITIONS

 2.1    “Affiliate” means (a) with respect to Incentive Stock Options, a “parent
corporation” or “subsidiary corporation” (as those terms are defined in Section 424 of the Code) of Chaparral, and (b) with respect to other Awards, any corporation or other type of entity in a chain of corporations or other
entities in which each corporation or other entity has a controlling interest in another corporation or other entity in the chain, starting with Chaparral and ending with the corporation or other entity that has a controlling interest in the
corporation or other entity for which the Employee, officer, director, consultant, or other individual provides direct services. For purposes of this Affiliate definition, the term “controlling interest” has the same meaning as provided in
Treasury Regulation § 1.414(c)-2(b)(2)(i), except that the phrase “at least 50 percent” shall be used instead of the phrase “at least 80 percent” in each place the phrase “at
least 80 percent” appears in Treasury Regulation § 1.414(c)-2(b)(2)(i). 

2.2    “Award” means an award granted to a Participant in the form of Options, SARs, Restricted
Stock, Restricted Stock Units, Performance Awards, Stock Awards or Other Incentive Awards, whether granted singly or in combination. 

2.3    “Award Agreement” means a written agreement that sets forth the terms, conditions,
restrictions and limitations applicable to an Award, and which, in the discretion of the Committee, need not be countersigned by the Participant. 

2.4    “Board” means the Board of Directors of Chaparral. 

2.5    “Cash Dividend Right” means a contingent right, granted in tandem with a specific
Restricted Stock Unit Award, to receive an amount in cash equal to the cash distributions made by Chaparral with respect to a share of Common Stock during the period such Award is outstanding. 

2.6    “Cause” means, unless otherwise defined in an Employee Agreement entered into by the
Participant, any of the following: (a) a Participant’s conviction of, or plea of nolo contendere to, any felony or to any crime or offense 

  
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causing substantial harm to the Company or involving acts of theft, fraud, embezzlement, moral turpitude or similar conduct; (b) a Participant’s repeated intoxication by alcohol or
drugs during the performance of his duties in a manner that materially and adversely affects the Participant’s performance of such duties; (c) malfeasance in the conduct of the Participant’s duties, including, but not limited to
(i) willful and intentional misuse or diversion of funds or assets of the Company, (ii) embezzlement or (iii) fraudulent or willful and material misrepresentations or concealments on any written reports submitted to the Company;
(d) a Participant’s material violation of any provision of any employment, nonsolicitation, noncompetition or other agreement with, or policy of, the Company; or (e) a Participant’s material failure to perform the duties of the
Participant’s employment or material failure to follow or comply with the reasonable and lawful written directives of the Board or senior officers of Chaparral, in any case under clause (d) or (e) only after the Participant shall have been
informed in writing of such material failure and given a period of not more than 30 days to remedy same. 

2.7      “Change in Control” means (a) any consolidation or merger of Chaparral in
which Chaparral is not the continuing or surviving corporation or pursuant to which shares of Chaparral’s Common Stock would be converted into cash, securities or other property, other than a merger of Chaparral in which the holders of
Chaparral’s Common Stock immediately prior to the merger have the same proportionate ownership of common stock of the surviving corporation immediately after the merger, (b) any sale, lease, exchange or other transfer (in one transaction
or a series of related transactions) of all or substantially all, of the assets of Chaparral and its subsidiaries to any other person or entity (other than an Affiliate of Chaparral), (c) the stockholders of Chaparral approve any plan or proposal
for liquidation or dissolution of Chaparral, (d) any person or entity, including a “group” as contemplated by section 13(d)(3) of the Exchange Act acquires or gains ownership or control (including, without limitation, power to vote)
of more than 50% of the outstanding shares of Chaparral’s voting stock (based upon voting power) or (e) as a result of or in connection with a contested election of directors, the persons who were directors of Chaparral before such
election shall cease to constitute a majority of the Board. 
 2.8      “Chaparral”
means Chaparral Energy, Inc., a Delaware corporation, or any successor thereto. 

2.9      “Code” means the Internal Revenue Code of 1986, as amended from time to time,
including regulations and other guidance thereunder and successor provisions, regulations and other guidance. 

2.10    “Committee” means the Compensation Committee of the Board or such other committee
of the Board as may be designated by the Board to administer the Plan, which committee shall consist of two or more members of the Board, each of whom must be an Independent Director. 

2.11    “Common Stock” means the Class A common stock of Chaparral, par value $0.01 per
share, or any stock or other securities hereafter issued or issuable in substitution or exchange for the Class A common stock. 

2.12    “Company” means Chaparral or any Affiliate. 

2.13    “Disability” means (a) the Participant is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months or (b) if the Company has an accident or health
plan covering its employees, the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an accident or health plan covering employees of the Company. 

2.14    “Dividend Unit Right” means a contingent right, granted in tandem with a specific
Restricted Stock Unit Award, to have an additional number of Restricted Stock Units credited to a Participant in respect of the Award equal to the number of shares of Common Stock that could be purchased at Fair Market Value with the amount of each
cash distribution made by Chaparral with respect to a share of Common Stock during the period such Award is outstanding. 

2.15    “Effective Date” means the date this Plan becomes effective as provided in
Section 1.3. 
 2.16    “Employee” means an employee of the Company; provided, however,
that the term “Employee” does not include a non-employee director or an individual performing services for the Company who is treated for federal tax purposes as an independent contractor at the time
of performance of services. 
 2.17    “Employee Agreement” means any agreement between the
Company and an Employee containing one or more of the following agreements or covenants by the Employee: (i) an employment agreement, (ii) an agreement by 

  
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the Employee to keep confidential certain information, (iii) an agreement or covenant to refrain from competing with the Company, (iv) an agreement or covenant to refrain from
soliciting employees, contractors, customers, vendors or suppliers of the Company, (v) an agreement to disclose and assign to the Company certain intellectual property, including without limitation, ideas, inventions, discoveries, processes,
designs, methods, substances, articles, computer programs, and improvements, or (vi) an agreement under which the Company agrees to indemnify an Employee for an alleged action or inaction by the Employee during the performance of his or her
duties to the Company. 
 2.18    “Exchange Act” means the Securities Exchange Act of 1934, as
amended. 
 2.19    “Fair Market Value” of a share of Common Stock means, as of any specified
date, (a) if the Common Stock is listed on a national securities exchange, the closing sales price per share of Common Stock, as reported on the stock exchange composite tape on that date (or if no sales occur on such date, on the last
preceding date for which sales of shares of Common Stock are so reported); (b) if the Common Stock is not traded on a national securities exchange but is traded over the counter on such date, the average between the reported high and low bid and
asked prices of shares of Common Stock on the most recent date on which Common Stock was publicly traded on or preceding the specified date; or (c) in the event Common 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 the requirements of Section 409A.
Notwithstanding this definition of Fair Market Value, with respect to one or more Award types, or for any other purpose for which the Committee must determine the Fair Market Value under the Plan, the Committee may elect to choose a different
measurement date or methodology for determining Fair Market Value so long as the determination is consistent with Section 409A and all other applicable laws and regulations. 

2.20    “Good Reason” means, unless otherwise defined in an Employee Agreement entered into by the
Participant, the occurrence without the written consent of Participant, of one of the following events: (a) a material diminution in Participant’s authority, duties or responsibilities combined with a demotion in Participant’s pay
grade ranking; (b) the reduction by Chaparral of Participant’s base salary by more than ten percent (10%) (unless done so for all executive officers of Chaparral); (c) the requirement that Participant be based at any office or location
that is more than 50 miles from Chaparral’s principal executive offices in Oklahoma City, Oklahoma, except for travel reasonably required in the performance of Participant’s responsibilities; or (d) any other action or inaction that
constitutes a material breach by Chaparral of an Employee Agreement entered into by the Participant. 

2.21    “Grant Date” means the date an Award is determined to be effective by the Committee upon
the grant of such Award. 
 2.22    “Incentive Stock Option” means an Option that is intended to
meet the requirements of Section 422(b) of the Code. 
 2.23    “Independent Director”
means a member of the Board who (a) meets the independence requirements of the principal exchange or quotation system upon which the shares of Common Stock are listed or quoted, (b) qualifies as a
“non-employee director” of Chaparral under Rule 16b-3, and (c) satisfies independence criteria under any other applicable laws or regulations relating to
the issuance of shares of Common Stock to Employees. 
 2.24    “Nonqualified Stock Option”
means an Option that is not an Incentive Stock Option. 
 2.25    “Option” means an option to
purchase shares of Common Stock granted to a Participant pursuant to Article VII. An Option may be either an Incentive Stock Option or a Nonqualified Stock Option, as determined by the Committee. 

2.26    “Other Incentive Award” means an incentive award granted to a Participant pursuant to
Article XII. 
 2.27    “Participant” means an individual who is an Employee, officer, director,
consultant or other individual performing services for the Company that has been granted an Award. 

2.28    “Performance Award” means an Award granted to a Participant pursuant to Article XI to
receive cash or Common Stock conditioned in whole or in part upon the satisfaction of specified performance criteria. 

2.29    “Permitted Transferee” shall have the meaning given such term in Section 15.4(c).

 2.30    “Plan” means the Chaparral Energy, Inc. 2019 Long-Term Incentive Plan, as in effect
from time to time. 

  
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 2.31    “Prior Plan” means the Chaparral Energy,
Inc. Management Incentive Plan, adopted effective August 9, 2017. The Prior Plan shall be frozen as of the Effective Date so that no further awards shall be granted under the MIP; provided, however, that outstanding awards under the Prior Plan
as of such date shall remain outstanding in accordance with the terms of the Prior Plan and the award agreements applicable to such outstanding awards. 

2.32    “Restricted Period” means the period established by the Committee with respect to an Award
of Restricted Stock or Restricted Stock Units during which the Award remains subject to forfeiture. 

2.33    “Restricted Stock” means a share of Common Stock granted to a Participant pursuant to
Article IX that is subject to such terms, conditions and restrictions as may be determined by the Committee. 

2.34    “Restricted Stock Unit” means a fictional share of Common Stock granted to a Participant
pursuant to Article X that is subject to such terms, conditions and restrictions as may be determined by the Committee. 

2.35    “Rule 16b-3” means Rule 16b-3 promulgated by the SEC under the Exchange Act, or any successor rule or regulation that may be in effect from time to time. 

2.36    “SEC” means the United States Securities and Exchange Commission, or any successor agency
or organization. 
 2.37    “Section 409A” means Section 409A of the
Code. 
 2.38    “Securities Act” means the Securities Act of 1933, as amended. 

2.39    “Stock Appreciation Right” or “SAR” means a right granted to a
Participant pursuant to Article VIII with respect to a share of Common Stock to receive upon exercise cash, Common Stock or a combination of cash and Common Stock, equal to the appreciation in value of a share of Common Stock. 

2.40    “Stock Award” means a share of Common Stock granted to a Participant pursuant to Article
XII that is not subject to vesting or forfeiture restrictions. 
 ARTICLE III. 

PLAN ADMINISTRATION 

3.1    Plan Administrator and Discretionary Authority. This Plan shall be administered by the Committee. The
Committee shall have total and exclusive responsibility to control, operate, manage and administer this Plan in accordance with its terms. The Committee shall have all the authority that may be necessary or helpful to enable it to discharge its
responsibilities with respect to this Plan. Without limiting the generality of the preceding sentence, the Committee shall have the exclusive right to (a) interpret this Plan and the Award Agreements executed hereunder, (b) decide all
questions concerning eligibility for, and the amount of, Awards granted under this Plan, (c) construe any ambiguous provision of this Plan or any Award Agreement, (d) prescribe the form of Award Agreements, (e) correct any defect,
supply any omission or reconcile any inconsistency in this Plan or any Award Agreement, (f) issue administrative guidelines as an aid in administering this Plan and make changes in such guidelines as the Committee from time to time deems
proper, (g) make regulations for carrying out this Plan and make changes in such regulations as the Committee from time to time deems proper, (h) determine whether Awards should be granted singly or in combination, (i) to the extent
permitted under this Plan, grant waivers of Plan terms, conditions, restrictions and limitations, (j) accelerate the exercise, vesting or payment of an Award, (k) require Participants to hold a stated number or percentage of shares of
Common Stock acquired pursuant to an Award for a stated period, and (l) take any and all other actions the Committee deems necessary or advisable for the proper operation or administration of this Plan. The Committee shall have authority in its
sole discretion with respect to all matters related to the discharge of its responsibilities and the exercise of its authority under this Plan, including without limitation its construction of the terms of this Plan and its determination of
eligibility for participation in, and the terms of Awards granted under, this Plan. The decisions of the Committee and its actions with respect to this Plan shall be final, conclusive and binding on all persons having or claiming to have any right
or interest in or under this Plan, including without limitation Participants and their respective Permitted Transferees, estates, beneficiaries and legal representatives. In the case of an Award intended to be exempt from or compliant with
Section 409A, the Committee shall exercise its discretion consistent with such intent. 

3.2    Delegation of Authority. The Committee shall have the authority, in its sole and absolute discretion,
to delegate its duties and functions under the Plan to the Chief Executive Officer or other officer of Chaparral, other members of or committees of the Board or such other agents as it may appoint from time to time, provided the Committee may not
delegate its duties where such delegation would violate state corporate law. 

  
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 3.3    Liability; Indemnification. 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 Chaparral or any of its subsidiaries, Chaparral’s legal counsel, independent auditors,
consultants or any other agents assisting in the administration of this Plan or grant of Awards hereunder. Members of the Committee and any officer or employee of Chaparral 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 this Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by Chaparral with respect to any such
action or determination. 
 ARTICLE IV. 

SHARES SUBJECT TO THE PLAN 

4.1    Available Shares. 

(a)    Subject to adjustment as provided in Section 4.2, the maximum number of shares of Common Stock that shall be
available for grant of Awards under this Plan shall be 3,500,000 shares of Common Stock, plus any shares of Common Stock subject to awards under the Prior Plan that, following the Effective Date, again become available under the Prior Plan as a
result of forfeiture or such other circumstance described in Section 4.3 of the Prior Plan. 
 (b)    Subject to
adjustment as provided in Section 4.2, the maximum aggregate number of shares of Common Stock that may be issued pursuant to Incentive Stock Options is 3,500,000 shares. 

(c)    Shares of Common Stock issued pursuant to this Plan may be original issue or treasury shares or any combination of
the foregoing, as the Committee, in its sole discretion, shall from time to time determine. During the term of this Plan, Chaparral will at all times reserve and keep available such number of shares of Common Stock as shall be sufficient to satisfy
the requirements of this Plan. If, after reasonable efforts, which efforts shall not include registration of the Plan or Awards under the Securities Act, Chaparral is unable to obtain authority from any applicable regulatory body, which
authorization is deemed necessary by legal counsel for Chaparral for the lawful issuance of shares under the Plan, Chaparral shall be relieved of any liability with respect to its failure to issue and sell the shares for which such requisite
authority was so deemed necessary unless and until such authority is obtained. 
 (d)    Notwithstanding any provision
of this Plan to the contrary, the Board or the Committee shall have the right to substitute or assume awards in connection with mergers, reorganizations, separations or other transactions to which Section 424(a) of the Code or Section 409A
applies, provided such substitutions or assumptions are permitted by Section 424 of the Code or Section 409A, as applicable. 

4.2    Adjustments for Recapitalizations and Reorganizations. Subject to Article XIII, if there is any
change in the number or kind of shares of Common Stock outstanding effected without Chaparral’s receipt of consideration (a) by reason of a stock dividend, spin-off, recapitalization, stock issuance,
stock split or combination or exchange of shares, (b) by reason of a merger, reorganization or consolidation, (c) by reason of a reclassification or change in par value or (d) by reason of any other extraordinary or unusual event
affecting the outstanding Common Stock as a class, or if the per share value of outstanding shares of Common Stock is reduced as a result of a spin-off or Chaparral’s payment of an extraordinary cash
dividend, or distribution, or dividend or distribution consisting of any assets of Chaparral other than cash, the maximum number and kind of shares of Common Stock available for issuance under this Plan, the maximum number and kind of shares of
Common Stock for which any individual may receive Awards in any fiscal year or under this Plan, the number and kind of shares of Common Stock covered by outstanding Awards, and the price per share or the applicable market value or performance target
of such Awards shall be appropriately adjusted by the Committee to reflect any increase or decrease in the number of, or change in the kind or value of, issued shares of Common Stock to preclude, to the extent practicable, the enlargement or
dilution of rights under such Awards; provided, however, that any fractional shares resulting from such adjustment shall be eliminated. Notwithstanding the provisions of this Section 4.2, (i) the number and kind of shares of Common Stock
available for issuance as Incentive Stock Options under this Plan shall be adjusted only in accordance with Sections 422 and 424 of the Code and the regulations thereunder, and (ii) outstanding Awards and Award Agreements shall be adjusted in
accordance with (A) Sections 422 and 424 of the Code and the regulations thereunder with respect to Incentive Stock Options and (B) Section 409A with respect to Nonqualified Stock Options, SARs and, to the extent applicable, other
Awards. 
 4.3    Adjustments for Awards. The following rules shall apply for the purpose of determining
the number of shares of Common Stock available for grant of Awards under this Plan: 
 (a)    Options, Restricted
Stock and Stock Awards. The grant of Options, Restricted Stock or Stock Awards shall reduce the number of shares of Common Stock available for grant of Awards under this Plan by the number of shares of Common Stock subject to such an Award. 

  
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 (b)    SARs. The grant of SARs that may be paid or settled
(i) only in Common Stock or (ii) in either cash or Common Stock shall reduce the number of shares available for grant of Awards under this Plan by the number of shares subject to such an Award. The grant of SARs that may be paid or settled
only for cash shall not affect the number of shares available for grant of Awards under this Plan. 

(c)    Restricted Stock Units. The grant of Restricted Stock Units (including those credited to a Participant in
respect of a Dividend Unit Right) that may be paid or settled (i) only in Common Stock or (ii) in either cash or Common Stock shall reduce the number of shares available for grant of Awards under this Plan by the number of shares subject
to such an Award. The grant of Restricted Stock Units that may be paid or settled only for cash shall not affect the number of shares available for grant of Awards under this Plan. 

(d)    Performance Awards and Other Incentive Awards. The grant of a Performance Award or Other Incentive Award in
the form of Common Stock or that may be paid or settled (i) only in Common Stock or (ii) in either Common Stock or cash shall reduce the number of shares available for grant of Awards under this Plan by the number of shares subject to such
an Award. The grant of a Performance Award or Other Incentive Award that may be paid or settled only for cash shall not affect the number of shares available for grant of Awards under this Plan. 

(e)    Cancellation, Forfeiture, Termination and Cash Settlement. If any Award referred to in Section 4.3(a),
(b), (c) or (d) (other than an Award that may be paid or settled only for cash) is canceled or forfeited, or the Award terminates, expires or lapses, for any reason, then the shares then subject to such Award shall again be available for grant of
any Awards under this Plan. If shares of Common Stock subject to any Award referred to in Section 4.3(a), (b), (c) or (d) (other than an Award that may be paid or settled only for cash) are settled for cash in lieu of shares, then such shares
shall again be available for grant of any Awards under this Plan.  
 (f)    Payment of Exercise Price and
Withholding Taxes; Option Proceeds. Notwithstanding any provision of this Plan to the contrary, shares (i) tendered (either actually or by attestation) or withheld to satisfy an exercise price or tax withholding obligation pertaining to an
Option or SAR, or (ii) repurchased by Chaparral using Option proceeds shall not be available for grant of any Awards under this Plan and shall not be added back to the number of shares available for grant under this Plan. If shares are used to
pay withholding taxes payable upon vesting or payment of an Award other than an Option or SAR, or shares that would be acquired upon vesting or payment of an Award other than an Option or SAR are withheld to pay withholding taxes payable upon
vesting or payment of such Award, the number of shares available for grant under this Plan shall be increased by the number of shares delivered or withheld as payment of such withholding taxes. 

ARTICLE V. 
 ELIGIBILITY

 The Committee shall select Participants from those Employees, officers, directors, consultants and other individuals providing
services for the Company that, in the opinion of the Committee, are in a position to make a significant contribution to the success of the Company. Once a Participant has been selected for an Award by the Committee, the Committee shall determine the
type and size of Award to be granted to the Participant and shall establish in the related Award Agreement the terms, conditions, restrictions and limitations applicable to the Award, in addition to those set forth in this Plan and the
administrative guidelines and regulations, if any, established by the Committee. 
 ARTICLE VI. 

FORM OF AWARDS 

6.1    Form of Awards. Awards may be granted under this Plan, in the Committee’s sole discretion, in
the form of Options pursuant to Article VII, SARs pursuant to Article VIII, Restricted Stock pursuant to Article IX, Restricted Stock Units pursuant to Article X, Performance Awards pursuant to Article XI and Stock Awards and Other Incentive Awards
pursuant to Article XII, or any combination thereof. All Awards shall be subject to the terms, conditions, restrictions and limitations of this Plan. The Committee may, in its sole discretion, subject any Award to such other terms, conditions,
restrictions and/or limitations (including without limitation the time and conditions of exercise, vesting or payment of an Award and restrictions on transferability of any shares of Common Stock issued or delivered pursuant to an Award), provided
they are not inconsistent with the terms of this Plan. Awards under a particular Article of this Plan need not be uniform, and Awards under more than one Article of this Plan may be combined in a single Award Agreement. Any combination of Awards may
be granted at one time and on more than one occasion to the same Participant. Subject to compliance with applicable tax law (including Section 409A), an Award Agreement may provide that a Participant may elect to defer receipt of income
attributable to the exercise or vesting of an Award. 

  
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 6.2    No Repricing or Reload Rights; No Buy-out of “Underwater” Awards. Except for adjustments made pursuant to Section 4.2, no Award may be repriced, replaced, regranted through cancellation or otherwise modified without stockholder
approval, if the effect would be to reduce the exercise price for the shares underlying such Award. The Committee may not cancel an outstanding Option or SAR having an exercise price that is known to be more than the Fair Market Value of the Common
Stock in exchange for a cash payment or for the purpose of granting a replacement Award of a different type. 

6.3    Dividends, Cash Dividend Rights and Dividend Unit Rights. No Award that provides for the payment or
accumulation of dividends, Cash Dividend Rights or Dividend Unit Rights shall allow such dividends, Cash Dividend Rights or Dividend Unit Rights to vest or otherwise become payable sooner than the date on which the underlying Award or portion
thereof with respect to which it was granted has vested. 
 6.4    Minimum Vesting Requirement. Except as
provided below, all Awards that are designated to be settled in shares of Common Stock shall be subject to a minimum vesting requirement of at least one year from the date the Award was granted, and no portion of any such Award may vest or become
exercisable earlier than the first anniversary of the date such Award was granted; provided, however, that the foregoing minimum vesting requirement shall not apply: (a) with respect to 5 percent of the number of shares of Common Stock
available for grant of Awards under this Plan as set forth in Section 4.1(a) (such 5 percent being the “Carve-Out Exception”), and (b) to the vesting of an Award that is
accelerated in the event of a Participant’s death, Disability, retirement, termination of employment, as a result of a Change in Control or such other events that the Committee determines pursuant to the exercise of its powers under this Plan.
For purposes of clarity and avoidance of doubt, to the extent Section 4.1(a) is amended to increase the number of shares of Common Stock available for grant of Awards under this Plan, then the number of shares of Common Stock subject to the Carve-Out Exception shall be 5 percent of the amended amount. 

6.5    Non-Employee Director Award Limitation. A non-employee director may not be granted Awards under this Plan during any calendar year that have a value (determined, if applicable, pursuant to ASC Topic 718) on the date of grant in excess of $400,000;
provided, however that the preceding limit shall be without regard to grants of Awards, if any, made to a non-employee director during any period in which such individual was an Employee or was
otherwise providing services to the Company other than in the capacity as a director. 
 ARTICLE VII. 

OPTIONS 

7.1    General. Awards may be granted in the form of Options that may be Incentive Stock Options or
Nonqualified Stock Options, or any combination of both; provided, however that Incentive Stock Options may be granted only to Employees. 

7.2    Terms and Conditions of Options. An Option shall be exercisable in whole or in such installments and
at such times as may be determined by the Committee. The price at which a share of Common Stock may be purchased upon exercise of an Option shall be determined by the Committee, but such exercise price shall not be less than 100% of the Fair Market
Value per share of Common Stock on the Grant Date unless the Option is granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became Employees (or other service providers) as a result of a
merger, consolidation, acquisition or other corporate transaction involving the Company in a manner that complies with Section 409A with respect to a Nonqualified Stock Option or Section 422 of the Code with respect to an Incentive Stock
Option. Except as otherwise provided in Section 7.3, the term of each Option shall be as specified by the Committee; provided, however, that no Options shall be exercisable later than 10 years after the Grant Date. Options may be granted
with respect to Restricted Stock or shares of Common Stock that are not Restricted Stock, as determined by the Committee in its sole discretion. 

7.3    Restrictions Relating to Incentive Stock Options. 

(a)    Options granted in the form of Incentive Stock Options shall, in addition to being subject to the terms and
conditions of Section 7.2, comply with Section 422(b) of the Code. To the extent the aggregate Fair Market Value (determined as of the dates the respective Incentive Stock Options are granted) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by an individual during any calendar year under all incentive stock option plans of Chaparral and its Affiliates exceeds $100,000, such excess Incentive Stock Options shall be treated as
options that do not constitute Incentive Stock Options. The Committee shall determine, in accordance with the applicable provisions of the Code, which of a Participant’s Incentive Stock Options will not constitute Incentive Stock Options
because of such limitation and shall notify the Participant of such determination as 

  
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soon as practicable after such determination. The price at which a share of Common Stock may be purchased upon exercise of an Incentive Stock Option shall be determined by the Committee, but such
exercise price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the Grant Date. No Incentive Stock Option shall be granted to an Employee under this Plan if, at the time such Option is granted, such Employee owns
stock possessing more than 10% of the total combined voting power of all classes of stock of Chaparral or of its Affiliates unless (i) on the Grant Date of such Option, the exercise price of such Option is at least 110% of the Fair Market Value
of the Common Stock subject to the Option and (ii) such Option by its terms is not exercisable after the expiration of five years from the Grant Date of the Option. 

(b)    Each Participant awarded an Incentive Stock Option shall notify Chaparral in writing immediately after the date he
or she makes a disqualifying disposition of any shares of Common Stock acquired pursuant to the exercise of such Incentive Stock Option. A disqualifying disposition is any disposition (including any sale) of such Common Stock before the later of
(i) two years after the Grant Date of the Incentive Stock Option or (ii) one year after the date of exercise of the Incentive Stock Option. 

7.4    Exercise of Options. 

(a)    Subject to the terms and conditions of this Plan, Options shall be exercised by the delivery of a written notice
of exercise to Chaparral, setting forth the number of whole shares of Common Stock with respect to which the Option is to be exercised, accompanied by full payment for such shares. 

(b)    Upon exercise of an Option, the exercise price of the Option shall be payable to Chaparral in full either
(i) in cash or an equivalent acceptable to the Committee, (ii) in the sole discretion of the Committee and in accordance with any applicable administrative guidelines established by the Committee, (A) by tendering (either actually or
by attestation) one or more previously acquired nonforfeitable, unrestricted shares of Common Stock having an aggregate Fair Market Value at the time of exercise equal to the total exercise price or (B) by surrendering a sufficient portion of
the shares with respect to which the Option is exercised having an aggregate Fair Market Value at the time of exercise equal to the total exercise price or (iii) in a combination of the forms specified in (i) or (ii) of this subsection.

 (c)    During such time as the Common Stock is registered under Section 12 of the Exchange Act, to the extent
permissible under applicable law, payment of the exercise price of an Option may also be made, in the absolute discretion of the Committee, by delivery to Chaparral or its designated agent of an executed irrevocable option exercise form together
with irrevocable instructions to a broker-dealer to sell or margin a sufficient portion of the shares with respect to which the Option is exercised and deliver the sale or margin loan proceeds directly to Chaparral to pay the exercise price and any
required withholding taxes. 
 (d)    As soon as reasonably practicable after receipt of written notification of
exercise of an Option and full payment of the exercise price and any required withholding taxes, Chaparral shall (i) deliver to the Participant, in the Participant’s name or the name of the Participant’s designee, a stock certificate
or certificates in an appropriate aggregate amount based upon the number of shares of Common Stock purchased under the Option or (ii) cause to be issued in the Participant’s name or the name of the Participant’s designee, in
book-entry form, an appropriate number of shares of Common Stock based upon the number of shares purchased under the Option. 

7.5    Termination of Employment or Service. Each Award Agreement embodying the Award of an Option may set
forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment or service with the Company. Such provisions shall be determined by the Committee in its absolute
discretion, need not be uniform among all Options granted under this Plan and may reflect distinctions based on the reasons for termination of employment or service. To the extent not provided otherwise in a Participant’s Award Agreement
embodying the Award of an Option, the following termination provisions shall be deemed to apply with respect to such Award: 

(a)    Termination For Cause. If the employment or service of a Participant shall terminate for Cause, each
outstanding Option held by the Participant shall automatically terminate as of the date of such termination of employment or service, and the right to exercise the Option shall immediately terminate. 

(b)    Termination By Reason of Death or Disability. In the event of a Participant’s death or Disability while
employed by or in the service of Chaparral or an Affiliate, each outstanding Option shall remain outstanding and may be exercised by the person who acquires the Option by will or the laws of descent and distribution, or by the Participant, as the
case may be, but only (i) within the one year period following the date of death or Disability (if otherwise prior to the date of expiration of the Option), and not thereafter, and (ii) to purchase the number of shares of Common Stock, if
any, that could be purchased upon exercise of the Option at the time of death or Disability. 

  
 8 

 (c)    Termination For Reasons Other Than Cause, Death or Disability.
If a Participant’s employment or service with the Company is terminated voluntarily by the Participant or by action of Chaparral or an Affiliate for reasons other than for Cause, an Option may be exercised, but only (i) within three
months after such termination (if otherwise prior to the date of expiration of the Option), and not thereafter, and (ii) to purchase the number of shares of Common Stock, if any, that could be purchased upon exercise of the Option at the date
of termination of the Participant’s employment or service. 
 Notwithstanding the foregoing, except in the case of a Participant’s death, an
Option will not be treated as an Incentive Stock Option unless at all times beginning on the Grant Date and ending on the day three months (one year in the case of a Participant who is “disabled” within the meaning of Section 22(e)(3)
of the Code) before the date of exercise of the Option, the Participant is an employee of Chaparral or a “parent corporation” or a “subsidiary corporation” of Chaparral, as those terms are defined in Sections 424(e) and
(f) of the Code, respectively (or a corporation or a parent or subsidiary corporation of such corporation issuing or assuming an option in a transaction to which Section 424(a) of the Code applies). 

ARTICLE VIII. 
 STOCK
APPRECIATION RIGHTS 
 8.1    General. The Committee may grant Awards in the form of SARs in such
numbers and at such times as it shall determine. SARs shall vest and be exercisable in whole or in such installments and at such times as may be determined by the Committee. The price at which SARs may be exercised shall be determined by the
Committee but shall not be less than 100% of the Fair Market Value per share of Common Stock on the Grant Date unless (i) the SARs are granted through the assumption of, or in substitution for, outstanding awards previously granted to
individuals who became Employees (or other service providers) as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company in a manner that complies with Section 409A. The term of each SAR shall be as
specified by the Committee; provided, however, that no SAR shall be exercisable later than 10 years after the Grant Date. At the time of an Award of SARs, the Committee may, in its sole discretion, prescribe additional terms, conditions,
restrictions and limitations applicable to the SARs as it determines are necessary or appropriate, provided they are not inconsistent with this Plan. 

8.2    Exercise of SARs. SARs shall be exercised by the delivery of a written notice of exercise to
Chaparral, setting forth the number of whole shares of Common Stock with respect to which the Award is being exercised. Upon the exercise of SARs, the Participant shall be entitled to receive an amount equal to the excess of the aggregate Fair
Market Value of the shares of Common Stock with respect to which the Award is exercised (determined as of the date of such exercise) over the aggregate exercise price of such shares. Such amount shall be payable to the Participant in cash or in
shares of Common Stock, as provided in the Award Agreement. 
 8.3    Termination of Employment or
Service. Each Award Agreement embodying the Award of SARs may set forth the extent to which the Participant shall have the right to exercise the SARs following termination of the Participant’s employment or service with the Company. Such
provisions shall be determined by the Committee in its absolute discretion, need not be uniform among all SARs granted under this Plan and may reflect distinctions based on the reasons for termination of employment or service. To the extent not
provided otherwise in a Participant’s Award Agreement embodying the Award of SARs, the following termination provisions shall be deemed to apply with respect to such Award: 

(a)    Termination For Cause. If the employment or service of a Participant shall terminate for Cause, each
outstanding SAR held by the Participant shall automatically terminate as of the date of such termination of employment or service, and the right to exercise the SAR shall immediately terminate. 

(b)    Termination By Reason of Death or Disability. In the event of a Participant’s death or Disability while
employed by or in the service of Chaparral or an Affiliate, each outstanding SAR shall remain outstanding and may be exercised by the person who acquires the SAR by will or the laws of descent and distribution, or by the Participant, as the case may
be, but only (i) within the one year period following the date of death or Disability (if otherwise prior to the date of expiration of the SAR), and not thereafter, and (ii) to the extent the SAR was vested and exercisable at the time of
such termination. 
 (c)    Termination For Reasons Other Than Cause, Death or Disability. If a Participant’s
employment or service with the Company is terminated voluntarily by the Participant or by action of Chaparral or an Affiliate for reasons other than for Cause or Disability or termination as a result of the Participant’s death, a SAR may be
exercised, but only (i) within three months after such termination (if otherwise prior to the date of expiration of the SAR), and not thereafter, and (ii) to the extent the SAR was vested and exercisable at the time of such termination.

  
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 ARTICLE IX. 

RESTRICTED STOCK 

9.1    General. Awards may be granted in the form of Restricted Stock in such numbers and at such times as
the Committee shall determine. The Committee shall impose such terms, conditions and restrictions on Restricted Stock as it may deem advisable, including without limitation prescribing the period over which and the conditions upon which the
Restricted Stock may become vested or be forfeited and/or providing for vesting upon the achievement of specified performance goals pursuant to a Performance Award. A Participant shall not be required to make any payment for Restricted Stock unless
required by the Committee pursuant to Section 9.2. 
 9.2    Purchased Restricted Stock. The
Committee may in its sole discretion require a Participant to pay a stipulated purchase price for each share of Restricted Stock. 

9.3    Restricted Period. At the time an Award of Restricted Stock is granted, the Committee shall establish
a Restricted Period applicable to such Restricted Stock. Each Award of Restricted Stock may have a different Restricted Period in the sole discretion of the Committee. 

9.4    Other Terms and Conditions. Restricted Stock shall constitute issued and outstanding shares of Common
Stock for all corporate purposes. Restricted Stock awarded to a Participant under this Plan shall be registered in the name of the Participant or, at the option of Chaparral, in the name of a nominee of Chaparral, and shall be issued in book-entry
form or represented by a stock certificate. Subject to the terms and conditions of the Award Agreement, a Participant to whom Restricted Stock has been awarded shall have the right to receive dividends thereon during the Restricted Period and to
enjoy all other stockholder rights with respect thereto, except that (a) no dividends or distributions made with respect to any share of Restricted Stock shall vest or be payable sooner than the date on which the underlying share of Restricted
Stock with respect to which it was made has vested, (b) Chaparral shall retain custody of any certificates evidencing the Restricted Stock during the Restricted Period and (c) the Participant may not sell, transfer, pledge, exchange,
hypothecate or otherwise dispose of the Restricted Stock during the Restricted Period. A breach of the terms and conditions established by the Committee pursuant to the Award of the Restricted Stock may result in a forfeiture of the Restricted
Stock. At the time of an Award of Restricted Stock, the Committee may, in its sole discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the Restricted Stock, including without limitation rules pertaining to
the termination of employment or service (by reason of death, Disability, retirement, Cause or otherwise) of a Participant prior to expiration of the Restricted Period. To the extent not provided otherwise in a Participant’s Award Agreement
embodying the Award of Restricted Stock and except as otherwise provided in the Plan, if the employment or service of a Participant shall terminate for any reason prior to the expiration of the Restricted Period, then on the date of such termination
of employment or service all of the shares of Restricted Stock still subject to restrictions shall be forfeited by the Participant.  

9.5    Miscellaneous. Nothing in this Article shall prohibit the exchange of shares of Restricted Stock
pursuant to a plan of merger or reorganization for stock or other securities of Chaparral or another corporation that is a party to the merger or reorganization, provided that the stock or securities so received in exchange for shares of Restricted
Stock shall, except as provided in Article XIII, become subject to the restrictions applicable to such Restricted Stock. Any shares of Common Stock received as a result of a stock split or stock dividend with respect to shares of Restricted Stock
shall also become subject to the restrictions applicable to such Restricted Stock. 
 ARTICLE X. 

RESTRICTED STOCK UNITS 

10.1    General. Awards may be granted in the form of Restricted Stock Units in such numbers and at such
times as the Committee shall determine. The Committee shall impose such terms, conditions and restrictions on Restricted Stock Units as it may deem advisable, including without limitation prescribing the period over which and the conditions upon
which a Restricted Stock Unit may become vested or be forfeited and/or providing for vesting upon the achievement of specified performance goals pursuant to a Performance Award. Upon the lapse of restrictions with respect to each Restricted Stock
Unit, the Participant shall be entitled to receive one share of Common Stock, an amount of cash equal to the Fair Market Value of one share of Common Stock, or any combination of cash and Common Stock that equals the Fair Market Value of one share
of Common Stock, as provided in the Award Agreement. A Participant shall not be required to make any payment for Restricted Stock Units. 

  
 10 

 10.2    Restricted Period. At the time an Award of
Restricted Stock Units is granted, the Committee shall establish a Restricted Period applicable to such Restricted Stock Units. Each Award of Restricted Stock Units may have a different Restricted Period in the sole discretion of the Committee. 

10.3    Cash Dividend Rights and Dividend Unit Rights. To the extent provided by the Committee in its sole
discretion, a grant of Restricted Stock Units may include a tandem Cash Dividend Right or Dividend Unit Right grant. A grant of Cash Dividend Rights may provide that such Cash Dividend Rights shall be paid directly to the Participant at the time of
payment of the related dividend, be credited to a bookkeeping account subject to the same vesting and payment provisions as the tandem Award (with or without interest in the sole discretion of the Committee), or be subject to such other provisions
or restrictions as determined by the Committee in its sole discretion. A grant of Dividend Unit Rights may provide that such Dividend Unit Rights shall be subject to the same vesting and payment provisions as the tandem Award or be subject to such
other provisions and restrictions as determined by the Committee in its sole discretion. Any provision of this Article X to the contrary notwithstanding, no Cash Dividend Right or Dividend Unit Right shall vest or be payable sooner than the date on
which the underlying Restricted Stock Unit with respect to which it was granted has vested. 
 10.4    Other
Terms and Conditions. At the time of an Award of Restricted Stock Units, the Committee may, in its sole discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the Restricted Stock Units, including without
limitation rules pertaining to the termination of employment or service (by reason of death, Disability, retirement, Cause or otherwise) of a Participant prior to expiration of the Restricted Period. To the extent not provided otherwise in a
Participant’s Award Agreement embodying the Award of Restricted Stock Units and except as otherwise provided in the Plan, if the employment or service of a Participant shall terminate for any reason prior to the expiration of the Restricted
Period, then on the date of such termination of employment or service all of the Restricted Stock Units still subject to restrictions shall be forfeited by the Participant. 

ARTICLE XI. 
 PERFORMANCE
AWARDS 
 11.1    General. Awards may be granted in the form of Performance Awards that may be payable
in the form of cash, shares of Common Stock or any combination of both, in such amounts and at such times as the Committee shall determine. Performance Awards shall be conditioned upon the level of achievement of one or more stated performance goals
over a specified performance period established by the Committee. Performance Awards may be combined with other Awards to impose performance criteria as part of the terms of such other Awards. 

11.2    Terms and Conditions. Each Award Agreement embodying a Performance Award shall set forth
(a) the amount, including a target and maximum amount if applicable, a Participant may earn in the form of cash or shares of Common Stock or a formula for determining such amount, (b) the performance criteria and level of achievement
versus such criteria that shall determine the amount payable or number of shares of Common Stock to be granted, issued, retained and/or vested, (c) the performance period over which performance is to be measured, (d) the timing of any
payments to be made, (e) restrictions on the transferability of the Award and (f) such other terms and conditions as the Committee may determine that are not inconsistent with this Plan. 

ARTICLE XII. 
 STOCK
AWARDS AND OTHER INCENTIVE AWARDS 
 12.1    Stock Awards. Stock Awards may be granted to Participants
upon such terms and conditions as the Committee may determine. Shares of Common Stock issued pursuant to Stock Awards may be issued for cash consideration or for no cash consideration. The Committee shall determine the number of shares of Common
Stock to be issued pursuant to a Stock Award. The Committee may in its sole discretion require a Participant to pay a stipulated purchase price for each share of Common Stock covered by a Stock Award. 

12.2    Other Incentive Awards. Other Incentive Awards may be granted in such amounts, upon such terms and
at such times as the Committee shall determine. Other Incentive Awards may be granted based upon, payable in or otherwise related to, in whole or in part, shares of Common Stock if the Committee, in its sole discretion, determines that such Other
Incentive Awards are consistent with the purposes of this Plan. Each grant of an Other Incentive Award shall be evidenced by an Award Agreement that shall specify the amount of the Other Incentive Award and the terms, conditions, restrictions and
limitations applicable to such Award. Payment of Other Incentive Awards shall be made at such times and in such form, which may be cash, shares of Common Stock or other property (or any combination thereof), as established by the Committee, subject
to the terms of this Plan. 

  
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 ARTICLE XIII. 

CHANGE IN CONTROL 

13.1    Vesting of Awards. Notwithstanding any provision of this Plan to the contrary, in the event of a
Change in Control, the Committee, in its sole discretion, may accelerate or waive any time periods, conditions or contingencies relating to the exercise or realization of, or lapse of restrictions under, an Award granted hereunder and then
outstanding (including treating any Performance Awards as if all performance criteria and other conditions were achieved or fulfilled to the maximum extent possible) so that: 

(a)    if no exercise of the Award is required, the Award may be realized in full at the time of the occurrence of the
Change in Control (the “Change Effective Time”), or 
 (b)    if exercise of the Award is required, the
Award may be exercised in full as of the Change Effective Time; 
 provided that any such action contemplated under this Section 13.1 shall be
effective only to the extent that such action will not cause any Award that is designed to satisfy Section 409A to fail to satisfy such section. 

13.2    Assumption of Awards. Upon a Change in Control where Chaparral is not the surviving entity (or
survives only as a subsidiary of another entity), the Committee, in its sole discretion, may determine that all outstanding Options and SARs that are not exercised at or before the Change Effective Time will be assumed by or replaced with comparable
options and rights in the surviving entity (or a parent of the surviving entity) in accordance with Section 424 of the Code or Section 409A, as applicable, and that other outstanding Awards will be converted into similar awards of the
surviving entity (or a parent of the surviving entity). 
 13.3    Cancellation of Awards. Notwithstanding
the foregoing, in the event of a Change in Control of Chaparral, then the Committee, in its sole discretion, may, no later than the Change Effective Time, require any Participant holding an Award to surrender such Award in exchange for (a) with
respect to each share of Common Stock subject to an Option or SAR (whether or not vested), payment by the Company (or a successor), in cash, of an amount equivalent to the excess of the value of the consideration received for each share of Common
Stock by holders of Common Stock in connection with such Change in Control (the “Change in Control Consideration”) over the exercise price or grant price per share, (b) with respect to each share of Common Stock subject to an
Award of Restricted Stock, Restricted Stock Units or Other Incentive Awards, and related Cash Dividend Rights and Dividend Unit Rights (if applicable), payment by the Company (or a successor), in cash, of an amount equivalent to the value of any
such Cash Dividend Rights and Dividend Unit Rights plus the value of the Change in Control Consideration for each share covered by the Award, assuming all restrictions or limitations (including risks of forfeiture) have lapsed and (c) with
respect to a Performance Award, payment by the Company (or a successor), in cash, of an amount equivalent to the value of such Award, as determined by the Committee, taking into account, to the extent applicable, the Change in Control Consideration,
and assuming all performance criteria and other conditions to payment of such Awards are achieved or fulfilled to the maximum extent possible. Payments made upon a Change in Control pursuant to this Section 13.3 shall be made no later than the
Change Effective Time. 
 13.4    Other Terms and Conditions. At the time an Award is granted, the
Committee may, in its sole discretion, prescribe additional terms, conditions, restrictions and limitations applicable to the Award, including without limitation rules pertaining to the termination of employment or service (by reason of death,
Disability, retirement, Cause or otherwise) of a Participant following a Change in Control. To the extent not provided otherwise in a Participant’s Award Agreement embodying an Award and notwithstanding anything in the Plan to the contrary,
(i) in the event of a Change in Control in which the acquiring or surviving entity in the transaction does not assume or continue an outstanding Award upon the Change in Control, then such Award shall become fully vested and fully exercisable,
and (ii) in the event of termination of the Participant’s employment or service by Chaparral or its Affiliate without Cause or by the Participant for Good Reason, in each case, within one year following the occurrence of a Change in
Control and provided the Participant is in the continuous employment or service of Chaparral or an Affiliate until such termination of employment, each outstanding Award shall become fully vested and fully exercisable; provided, however, that
notwithstanding the preceding, any Award that is a Performance Award with performance-based vesting shall vest upon such Change in Control or termination of employment or service, as applicable, based upon deemed achievement of target performance.

  
 12 

 ARTICLE XIV. 

AMENDMENT AND TERMINATION 

14.1    Plan Amendment and Termination. The Board may at any time suspend, terminate, amend or modify this
Plan, in whole or in part; provided, however, that no amendment or modification of this Plan shall become effective without the approval of such amendment or modification by the holders of at least a majority of the shares of Common Stock entitled
to vote on such matter if (a) such amendment or modification increases the maximum number of shares subject to this Plan (except as provided in Article IV) or changes the designation or class of persons eligible to receive Awards under this
Plan or (b) Chaparral determines that such approval is otherwise required by or necessary to comply with applicable law or the listing requirements of an exchange or association on which the Common Stock is then listed or quoted. An amendment
to this Plan generally will not require stockholder approval if it curtails rather than expands the scope of this Plan, nor if it is made to conform this Plan to statutory or regulatory requirements, such as, without limitation, Section 409A.
Upon termination of this Plan, the terms and provisions of this Plan shall, notwithstanding such termination, continue to apply to Awards granted prior to such termination. Except as otherwise provided herein, no suspension, termination, amendment
or modification of this Plan shall adversely affect in any material way any Award granted under this Plan prior to such suspension, termination, amendment or modification, without the consent of the Participant (or the Permitted Transferee) holding
such Award. 
 14.2    Award Amendment and Cancellation. The Committee may amend the terms of any
outstanding Award granted pursuant to this Plan, but except as otherwise provided herein, no such amendment shall adversely affect in any material way the Participant’s (or a Permitted Transferee’s) rights under an outstanding Award
without the consent of the Participant (or the Permitted Transferee) holding such Award. Notwithstanding the foregoing, Chaparral may amend any Award Agreement to be exempt from Section 409A or to comply with the requirements of
Section 409A or to modify any provision that causes an Award that is intended to be classified as an “equity instrument” under FASB Accounting Standards Codification, Topic 718 to be classified as a liability on Chaparral’s
financial statements. 
 ARTICLE XV. 

MISCELLANEOUS 

15.1    Award Agreements. After the Committee grants an Award under this Plan to a Participant, such Award
shall be evidenced by an Award Agreement setting forth the terms, conditions, restrictions and limitations applicable to the Award and such other matters as the Committee may determine to be appropriate. The Committee may permit or require a
Participant to defer receipt of the payment of cash or the delivery of shares of Common Stock that would otherwise be due to the Participant in connection with any Award; provided, however, that any permitted deferrals shall be structured to meet
the requirements of Section 409A. The terms and provisions of the respective Award Agreements need not be identical. All Award Agreements shall be subject to the provisions of this Plan, and in the event of any conflict between an Award
Agreement and this Plan, the terms of this Plan shall govern. All Awards under this Plan are intended to be structured in a manner that will either comply with or be exempt from Section 409A so that no tax will be owed under Section 409A.

 15.2    Listing; Suspension. 

(a)    If and as long as the Common Stock is listed on a national securities exchange or system sponsored by a national
securities association, the issuance of any shares of Common Stock pursuant to an Award shall be conditioned upon such shares being listed on such exchange or system. Chaparral shall have no obligation to issue such shares unless and until such
shares are so listed, and the right to exercise any Option or other Award with respect to such shares shall be suspended until such listing has been effected. 

(b)    If at any time counsel to Chaparral or its Affiliates shall be of the opinion that any sale or delivery of shares
of Common Stock pursuant to an Award is or may in the circumstances be unlawful or result in the imposition of excise taxes on Chaparral or its Affiliates under the laws of any applicable jurisdiction, Chaparral or its Affiliates shall have no
obligation to make such sale or delivery, or to make any application or to effect or to maintain any qualification or registration under the Securities Act, or otherwise, with respect to shares of Common Stock or Awards, and the right to exercise
any Option or other Award shall be suspended until, in the opinion of such counsel, such sale or delivery shall be lawful or will not result in the imposition of excise taxes on Chaparral or its Affiliates. 

(c)    Upon termination of any period of suspension under this Section 15.2, any Award affected by such suspension
that shall not then have expired or terminated shall be reinstated as to all shares available before such suspension and as to shares that would otherwise have become available during the period of such suspension, but no such suspension shall
extend the term of any Award unless otherwise determined by the Committee in its sole discretion. 

  
 13 

 15.3    Additional Conditions. Notwithstanding anything in
this Plan to the contrary (a) the Committee may, if it shall determine it necessary or desirable in its sole discretion, at the time of grant of any Award or the issuance of any shares of Common Stock pursuant to any Award, require the
recipient of the Award or such shares of Common Stock, as a condition to the receipt thereof, to deliver to Chaparral a written representation of present intention to acquire the Award or such shares of Common Stock for his own account for
investment and not for distribution, (b) any certificate for shares of Common Stock issued to a Participant may include any legend that the Committee deems appropriate to reflect any restrictions on transfer and (c) all certificates for
shares of Common Stock delivered under this Plan shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission,
any stock exchange or association upon which the Common Stock is then listed or quoted, any applicable federal or state securities law, and any applicable corporate law, and the Committee may cause a legend or legends to be placed on any such
certificates to make appropriate reference to such restrictions. 
 15.4    Transferability. 

(a)    All Awards granted to a Participant shall be exercisable during his lifetime only by such Participant, or if
applicable, a Permitted Transferee as provided in subsection (c) of this Section 15.4; provided, however, that in the event of a Participant’s legal incapacity, an Award may be exercised by his guardian or legal representative. When a
Participant dies, the personal representative, beneficiary, or other person entitled to succeed to the rights of the Participant may acquire the rights under an Award, subject to and in accordance with the conditions and limitations set forth in
this Plan and any applicable Award Agreement. Any such successor must furnish proof satisfactory to Chaparral of the successor’s entitlement to receive the rights under an Award under the Participant’s will or under the applicable laws of
descent and distribution. 
 (b)    Except as otherwise provided in this Section 15.4, no Award shall be subject
to execution, attachment or similar process, and no Award may be sold, transferred, pledged, exchanged, hypothecated or otherwise disposed of, other than by will or pursuant to the applicable laws of descent and distribution. Any attempted sale,
transfer, pledge, exchange, hypothecation or other disposition of an Award not specifically permitted by this Plan or the Award Agreement shall be null and void and without effect. 

(c)    If provided in the Award Agreement, Nonqualified Stock Options may be transferred by a Participant to a Permitted
Transferee. Any transfer of an Award to a Permitted Transferee shall be without consideration. For purposes of this Plan, “Permitted Transferee” means (i) a member of a Participant’s immediate family, (ii) trusts in
which a person listed in (i) above has more than 50% of the beneficial interest, (iii) a foundation in which the Participant or a person listed in (i) above controls the management of assets, (iv) any other entity in which the
Participant or a person listed in (i) above owns more than 50% of the voting interests, provided that in the case of the preceding clauses (i) through (iv), no consideration is provided for the transfer and (v) any transferee
permitted under applicable securities and tax laws as determined by counsel to Chaparral. In determining whether a person is a “Permitted Transferee,” immediate family members shall include a Participant’s 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. 

(d)    Incident to a Participant’s divorce, the Participant may request that Chaparral agree to observe the terms of
a domestic relations order which may or may not be part of a qualified domestic relations order (as defined in Section 414(p) of the Code) with respect to all or a part of one or more Awards made to the Participant under this Plan.
Chaparral’s decision regarding such a request shall be made by the Committee, in its sole and absolute discretion, based upon the best interests of Chaparral. The Committee’s decision need not be uniform among Participants. As a condition
of participation, a Participant agrees to hold Chaparral harmless from any claim that may arise out of Chaparral’s observance of the terms of any such domestic relations order. 

15.5    Withholding Taxes. The Company shall be entitled to deduct from any payment made under this Plan,
regardless of the form of such payment, the amount of all applicable income and employment taxes required by law to be withheld with respect to such payment, may require the Participant to pay or may allow the Participant to elect to pay to the
Company such withholding taxes prior to and as a condition of the making of any payment or the issuance or delivery of any shares of Common Stock under this Plan, and shall be entitled to deduct from any other compensation payable to the Participant
any withholding obligations with respect to Awards. In accordance with any applicable administrative guidelines it establishes, the Committee may allow a Participant to pay the amount of taxes required by law to be withheld from or with respect to
an Award by (a) withholding shares of Common Stock from any delivery of Common Stock due as a result of such Award, or (b) permitting the Participant to deliver to the Company (either 

  
 14 

 
actually or by attestation) previously acquired shares of Common Stock. If such tax withholding amounts are satisfied through net settlement or previously acquired shares, the maximum number of
shares of Common Stock that may be so withheld or surrendered shall be the number of shares of Common Stock that have an aggregate Fair Market Value on the date of withholding or surrender equal to the aggregate amount of such tax liabilities
determined based on the greatest withholding rates for federal, state and/or local tax purposes, including payroll taxes, that may be utilized without creating adverse accounting treatment for the Company with respect to such Award, as determined by
the Committee. No payment shall be made and no shares of Common Stock shall be issued pursuant to any Award unless and until the applicable tax withholding obligations have been satisfied. 

15.6    No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to
this Plan or any Award granted hereunder. If the application of any provision of the Plan or any Award Agreement would yield a fractional share of Common Stock, such fractional share shall be rounded down to the nearest whole share, provided that
the Committee in its sole discretion may settle fractional shares in cash. 
 15.7    Notices; Method of
Delivery. All notices required or permitted to be given or made under this Plan or pursuant to any Award Agreement (unless provided otherwise in such Award Agreement) shall be in writing and shall be deemed to have been duly given or made if
(a) delivered personally, (b) transmitted by first class registered or certified United States mail, postage prepaid, return receipt requested, (c) sent by prepaid overnight courier service or (d) sent by telecopy, facsimile or
electronic transmission, with confirmation receipt, to the person who is to receive it at the address that such person has theretofore specified by written notice delivered in accordance herewith. Such notices shall be effective (i) if
delivered personally or sent by courier service, upon actual receipt by the intended recipient, (ii) if mailed, upon the earlier of five days after deposit in the mail or the date of delivery as shown by the return receipt therefore or
(iii) if sent by telecopy, facsimile or electronic transmission, when the answer back is received. Chaparral or a Participant may change, at any time and from time to time, by written notice to the other, the address that it or such Participant
had theretofore specified for receiving notices. Until such address is changed in accordance herewith, notices hereunder or under an Award Agreement shall be delivered or sent (A) to a Participant at his address as set forth in the records of
the Company or (B) to Chaparral at the principal executive offices of Chaparral clearly marked “Attention: Chief Financial Officer.” Any provision of this Plan to the contrary notwithstanding, any provision in this Plan setting forth
a requirement for delivery of a written notice, agreement, consent, acknowledgement, or other documentation in writing, including a written signature, may be satisfied by electronic delivery of such notice, agreement, consent, acknowledgment, or
other documentation, in a manner that the Committee has prescribed or that is otherwise acceptable to the Committee, provided that evidence of the intended recipient’s receipt of the electronic delivery is available to the Committee and that
such delivery is not prohibited by applicable laws and regulations. 
 15.8    Compliance with Law and Stock
Exchange or Association Requirements. It is the intent of Chaparral that Options designated Incentive Stock Options comply with the applicable provisions of Section 422 of the Code and that all Awards either be exempt from Section 409A
or, if not exempt, comply with the requirements of Section 409A. Any provision of this Plan to the contrary notwithstanding, the Committee may revoke any Award if it is contrary to law, governmental regulation or stock exchange or association
requirements or modify an Award to bring it into compliance with any government regulation or stock exchange or association requirements. 

15.9    Binding Effect. The obligations of Chaparral under this Plan shall be binding upon any successor
corporation or organization resulting from the merger, consolidation or other reorganization of Chaparral, or upon any successor corporation or organization succeeding to all or substantially all of the assets and business of Chaparral. The terms
and conditions of this Plan shall be binding upon each Participant and his Permitted Transferees, heirs, legatees, distributees and legal representatives. 

15.10    Severability. If any provision of this Plan or any Award Agreement is held to be illegal or invalid
for any reason, the illegality or invalidity shall not affect the remaining provisions of this Plan or such agreement, as the case may be, but such provision shall be fully severable and this Plan or such agreement, as the case may be, shall be
construed and enforced as if the illegal or invalid provision had never been included herein or therein. 

15.11    No Restriction of Corporate Action. Nothing contained in this Plan shall be construed to prevent
Chaparral or any Affiliate from taking any corporate action (including any corporate action to suspend, terminate, amend or modify this Plan) that is deemed by Chaparral or such Affiliate to be appropriate or in its best interest, whether or not
such action would have an adverse effect on this Plan or any Awards made or to be made under this Plan. No Participant or other person shall have any claim against Chaparral or any Affiliate as a result of such action. 

15.12    Clawback. The Plan and all Awards granted hereunder are subject to any written clawback policies
that Chaparral, with the approval of the Board or an authorized committee thereof, may adopt either prior to or following the 

  
 15 

 
Effective Date, including any policy adopted to conform to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and rules promulgated thereunder by the SEC and that the Chaparral
determines should apply to Awards. Any such policy may subject a Participant’s Awards and amounts paid or realized with respect to Awards to reduction, cancelation, forfeiture or recoupment if certain specified events or wrongful conduct occur,
including an accounting restatement due to the Chaparral’s material noncompliance with financial reporting regulations or other events or wrongful conduct specified in any such clawback policy. 

15.13    Governing Law. This Plan shall be governed by and construed in accordance with the internal laws
(and not the principles relating to conflicts of laws) of the State of Delaware except as superseded by applicable federal law. 

15.14    No Right, Title or Interest in Company Assets. No Participant shall have any rights as a
stockholder of Chaparral as a result of participation in this Plan until the date of issuance of Common Stock in his name and, in the case of Restricted Stock, unless and until such rights are granted to the Participant pursuant to this Plan. To the
extent any person acquires a right to receive payments from the Company under this Plan, such rights shall be no greater than the rights of an unsecured general creditor of the Company, and such person shall not have any rights in or against any
specific assets of the Company. All Awards shall be unfunded. 
 15.15    Risk of Participation. Nothing
contained in this Plan shall be construed either as a guarantee by Chaparral or its Affiliates, or their respective stockholders, directors, officers or employees, of the value of any assets of this Plan or as an agreement by Chaparral or its
Affiliates, or their respective stockholders, directors, officers or employees, to indemnify anyone for any losses, damages, costs or expenses resulting from participation in this Plan. 

15.16    No Guarantee of Tax Consequences. No person connected with this Plan in any capacity, including
without limitation Chaparral and its Affiliates and their respective directors, officers, agents and employees, makes any representation, commitment or guarantee that any tax treatment, including without limitation federal, state and local income,
estate and gift tax treatment, will be applicable with respect to any Awards or payments thereunder made to or for the benefit of a Participant under this Plan or that such tax treatment will apply to or be available to a Participant on account of
participation in this Plan. 
 15.17    Continued Employment or Service. Nothing contained in this Plan or
in any Award Agreement shall confer upon any Participant the right to continue in the employ or service of the Company, or interfere in any way with the rights of the Company to terminate a Participant’s employment or service at any time, with
or without cause. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation of an obligation of Chaparral
or an Affiliate to the Participant. 
 15.18    Miscellaneous. Headings are given to the articles and
sections of this Plan solely as a convenience to facilitate reference. Such headings shall not be deemed in any way material or relevant to the construction of this Plan or any provisions hereof. The use of the masculine gender shall also include
within its meaning the feminine. Wherever the context of this Plan dictates, the use of the singular shall also include within its meaning the plural, and vice versa. 

IN WITNESS WHEREOF, this Plan has been executed on this 28th day of June, 2019. 

 

			
	CHAPARRAL ENERGY, INC.
		
	By:	 	/s/ K. Earl Reynolds
		 	K. Earl Reynolds
		 	President and Chief Executive Officer

  
 16EXHIBIT
A to Confidential Private Placement Memorandum • Regulation D Rule 506(c) • Foothills Production II, LLC

 

 

a
Wyoming Limited Liability Company

 

CONFIDENTIAL

BUSINESS

PLAN

 

July
1, 2019

 

FOOTHILLS
PRODUCTION II, LLC

10940
Wilshire Blvd., 23rd Floor

Los
Angeles, CA 90024

(424)
901-6655

 

    	 	 

    	 	 

    

 

EXHIBIT
A to Confidential Private Placement Memorandum • Regulation D Rule 506(c) • Foothills Production II, LLC

 

TABLE
OF CONTENTS

 

	CONFIDENTIALITY
    AND DISCLAIMER	3 
	BUSINESS
    OVERVIEW	4 
	About
    the Company	4 
	Investment
    Opportunity	4 
	Business
    Opportunity	5 
	1.
    Sumatra Field in Rosebud Co., MT:	5 
	2.
    Big Wall & Little Wall Field in Musselshell Co., MT	6 
	3.
    Shallow Gas Properties in Stillwater and Sweet Grass Co., MT	6 
	4.
    Emerging Horizontal Play	6 
	5.
    Potential Helium Exploration Play	6 
	OPERATIONS PLAN	7 
	Phase
    I	7 
	Big
    Wall / Little Wall and Sumatra Field Remedial Operations	7 
	Phase
    II	9 
	Shallow
    Gas Fields	9 
	Phase
    III	9 
	Turnkey
    Horizontal Well	9 
	BUSINESS
    STRATEGY	9 
	Membership
    Unit Structure	10 
	Transaction
    Structure Overview	10 
	FINANCIAL
    SUMMARY	11 
	Return
    on Investment Summary	11 
	Potential
    Returns Per Unit	11 
	Operator’s
    Call Option	13 
	USE
    OF PROCEEDS	14 
	ENERGY
    MARKET ENVIRONMENT	14 
	Market
    Opportunity	14 
	Crude
    Oil Outlook	14 
	Natural
    Gas Outlook	14 
	Crude
    Oil	15 
	Natural
    Gas	15 
	MONTANA
    OIL AND GAS	16 
	Sumatra
    Field	17 
	Lake
    Basin	17 
	RISK
    FACTORS	17 
	COMPANY
    MANAGEMENT	17 
	Manager	17 
	Secretary	18 
	OPERATOR
    MANAGEMENT	18 
	CEO,
    Interim CFO & Director	18 
	Executive
    Vice President of Finance & Director	18 
	Vice
    President of Business Development	19 
	Director	19 
	Executive
    Chairman and CEO/Director of Foothills Petroleum, Inc.	19 

 

    	July 1, 2019	Page 2 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

CONFIDENTIALITY
AND DISCLAIMER

 

This
Confidential Business Plan (this “Plan”) has been prepared by the management of Foothills Production II, LLC
(“Company” or “Foothills Production”) for informational purposes and contains confidential
information pertaining to the business and affairs of Foothills Production. This Plan is being made available to selected parties
as Exhibit A to the Confidential Private Placement Memorandum dated July 1, 2019 (the “Memorandum”); and the
Participation Agreement referenced herein is also being made available as Exhibit B to the Memorandum for the purpose of assisting
the recipients in deciding whether to proceed with an investment in the membership units of the Company (the “Units”).
This Plan and the Participation Agreement should both be read in conjunction with the Memorandum. By viewing the Plan each recipient
acknowledges that he, she, or it and his, her or its representatives are bound by the confidentiality agreement and that the confidentiality
agreement applies to the use, distribution and legal rights regarding the information contained herein. The information contained
herein has been prepared to assist interested parties in making their own evaluation of Foothills Production and does not purport
to contain all of the information that a prospective party may desire. In all cases, interested parties should conduct their own
investigation and analysis of the information and data set forth in this Plan and satisfy themselves as to the accuracy, reliability
and completeness of such information and data.

 

Foothills
Production II, LLC does not make any representations as to the accuracy or completeness of the information in this Plan or any
other information made available to recipients of this Plan. In particular, no representation or warranty is made as to the achievement
or reasonableness of any future projections, management estimates, prospects, returns or market data contained herein. Foothills
Production nor any of their respective shareholders, directors, officers, related bodies, corporate partners, affiliates, employees
or advisors (collectively, the “Associates”) has verified, nor will verify, any part of this Plan or any other
information made available to recipients of this Plan. Subject to any law to the contrary, and to the maximum extent permitted
by law, Foothills Production and their Associates disclaim and exclude all liability for any loss or damage (whether foreseeable
or not) suffered by recipient or any person or entity acting on, or refraining from acting because of, anything contained in or
omitted from this Plan, whether the loss or damage arises in connection with any negligence, default, lack of care or misrepresentation,
in contract or in equity, on the part of Foothills Production or their Associates or any other cause. Each recipient of this Plan
agrees that it shall not seek to sue or hold Foothills Production or their Associates liable in any respect related to this Plan
and the information contained herein. Only those agreements, representations and warranties which may be made to a party in a
definitive agreement executed by Foothills Production and such party shall have any legal effect.

 

This
Plan contains certain statements, financial data, projections, forecasts and estimates that are based upon assumptions and subjective
judgments that the management of Foothills Production II, LLC, believes to be appropriate given current facts and circumstances
existing in the markets in which the operating divisions of the Company conduct business. There will be differences between such
projections, forecasts and estimates and actual results since events and circumstances frequently do not occur as expected, and
such differences may be material. The estimated, forecasted and projected financial results contained in this Plan should not
be considered to be a presentation of actual results. There can be no assurance that any estimated, forecasted or projected results
are obtainable or will be realized. Foothills Production nor its Associates accepts any responsibility to inform the recipients
of this Plan of any matter arising or coming to any of their notice which may affect any matter referred to in this Plan (including
but not limited to any error or omission which may become apparent after this Plan has been issued).

 

This
Plan shall not be deemed an indication of the state of affairs of Foothills Production nor shall it constitute an indication that
there has been no change in the business or affairs of Foothills Production since the date of this Plan or since the date at which
any information contained herein is expressed to be stated. If further information in connection with the transaction is provided
by Foothills Production or its Associates or any other person or entity, recipients of this Plan acknowledge receipt of such information
as though it formed a part of this Plan. Foothills Production will arrange for appropriate due diligence by selected interested
parties. In furnishing the Plan, Foothills Production undertakes no obligation to provide the recipient with access to any additional
information.

 

Foothills
Production reserves the right to negotiate with one or more prospective parties at any time and to enter into a definitive agreement
at any time without prior notice to any prospective parties. Also, Foothills Production reserves the right to terminate, at any
time, further participation in the investigation and proposal process by any party and to modify the procedures without assigning
any reason therefor. No legal relationship shall be created by virtue of the issuance or delivery of this Plan.

 

ALL
INQUIRIES REGARDING THE PROPOSED TRANSACTION AND ANY REQUESTS FOR ADDITIONAL INFORMATION SHOULD BE DIRECTED TO THE FOLLOWING:

 

FOOTHILLS
PRODUCTION II, LLC

10940
Wilshire Blvd., 23rd Floor

Los
Angeles, CA 90024

(424)
901-6655

 

	Charles
    R. Cox	Manager	Office:
    (424) 901-6655	production2@foothillspetro.com

 

    	July 1, 2019	Page 3 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

BUSINESS
OVERVIEW

 

About
the Company

 

Foothills
Production II, LLC (“Foothills Production,” or the “Company”), was formed in 2019, for the
sole purpose of financing the acquisition and optimization of oil and gas assets located in Rosebud, Musselshell, Stillwater and
Sweet Grass Counties, Montana. The Company is a limited liability company formed under the laws of the State of Wyoming.

 

The
Company’s principal offices are located at 10940 Wilshire Boulevard, 23rd Floor, Los Angeles, CA 90024. The
Company’s telephone number is (424) 901-6655. The Company Manager is Charles R. Cox, (“Manager”) and
he manages the Company’s day-to-day operations. Foothills Exploration, LLC (“Operator”), a Wyoming
limited liability company and a wholly-owned indirect subsidiary of Foothills Exploration, Inc. (OTC.QB: FTXP), a Delaware
corporation, shall own and operate the oil and gas properties being acquired. The Company will acquire Net Profits Interest
in the oil and gas properties being acquired and optimized by the Operator through a Participation Agreement as described
below. The Participation Agreement is being provided to select parties as Exhibit B to the Memorandum and should be
read in conjunction with th Plan and the Memorandum.

 

Investment
Opportunity

 

The
Company seeks to raise $3,000,000, through the sale of Membership Units, to finance its Participation Agreement for the acquisition,
optimization and development of approximately 7,000 acres and 87 oil and gas wells in Montana. This is a unique investment
opportunity allowing accredited investors to get involved in a production play with optimization and development potential. Each
$50,000 Unit of Membership interest in the Company is projected to deliver cash-on-cash returns of approximately $211,395 over
an 8-year period (see graph below). Projected annual net income per unit below excludes any value attributable to FTXP
securities or future development growth of the Assets being acquired by the Operator, which Members will also be entitled to –
providing possible additional upside.

 

 

    	July 1, 2019	Page 4 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

The
Company forecasts a risk-adjusted return on investment, remitting monthly net income distributions from the Company’s net
profits interest in the Assets for a period of eight years in total.

 

Potential
benefits of investing in Membership Units are:

 

		Attractive
    Risk-Adjusted Returns	
	 	 
	 	Asset-level
    participation in net profits from producing Assets
	 	 
	 	Upside
    opportunity in a public equity

 

Business
Opportunity

 

Foothills
Production entered into a Participation Agreement for the acquisition, development and optimization of two operated waterflood
properties located in Rosebud and Musselshell counties, Montana and certain shallow gas properties located in Stillwater and Sweet
Grass counties, Montana (the “Assets”).

 

The
Assets are currently generating approximately $1.8 million in total annual gross revenues. The oil properties’ total gross
production during December 2018 was 106 barrels of oil per day (“BOpd”)
with net production of 72 BOPD (100% oil). The two operated waterfloods are currently producing from the Tyler and Amsden
formations. The shallow gas properties consist of 29 stripper wells in Stillwater and Sweet Grass counties. The gas wells produced
from stacked pay environment in the Cretaceous interval.

 

The
Assets provide promising remedial and rework opportunities including Proved-Developed Non-Producing (“PDNP”)
and Proved-Undeveloped (“PUD”) reserves.

 

	 		PDNP
    Projects: ~$500,000 Investment for potential 108 BOPD increase	
	 	 	 
	 	 	Numerous
    Low-cost Return-to-Production Candidates
	 	 	 
	 	 	Electric
    Submersible Pump (“ESP”) Replacements
	 	 	 
	 	 	Injection
    Conversions of Inactive Producers
	 	 	 
	 	 	Multi
    Ray Recompletions (Amsden Zone)
	 	 	 
	 	 	Deeper
    Frontier Play
	 	 	 
	 	 	Possible
    Horizontal Development (152 MBO)

 

Total
proved developed net reserves for the two fields are reported at 744 thousand barrels of oil (“MBO”), valued
at $4,836,000 PV-10 with an additional 152 MBO of undeveloped net reserves that may be obtained through horizontal development
of the Amsden formation in the Big Wall / Little Wall field.

 

1.
Sumatra Field in Rosebud Co., MT:

 

The
Tyler sand mature waterflood. 34-Total Wells (4-PDP, 15-PDNP, 13-Active Injectors, 1-Inactive Injector & 1-Water Supply Well)
with gross production of 44 BOPD (100% oil) and net production of 20 BOPD from the Tyler sands.

 

The
Assets include a 52% operated working interest (“WI”) and 45% net revenue interest (“NRI”)
in the Sumatra field. That field has 7-inactive wells in need of repair with the potential to increase daily production by ~73
BOPD. The Sumatra field also has a reported total proved developed net reserves of 468 MBO valued at ~$2,251,000 PV-10.

 

    	July 1, 2019	Page 5 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

2.
Big Wall & Little Wall Field in Musselshell Co., MT

 

The
Tyler sand and Amsden mature waterflood has 24-total Wells (8-PDP, 10-PDNP, 6-Active Injectors) with gross production of 62 BOPD
(100% oil) and net production of 52 BOPD from the Tyler and Amsden formations. The Assets include a 100% Operated WI & 85%
NRI in the Big Wall field (20-wells) and 82% operated WI & 70% NRI in the Little Wall field (4-wells). Both fields offer remedial
and maintenance upside.

 

Big
Wall/Little Wall has 10-inactive wells (4 in need of repair and 2 possible injector conversions) with the potential to increase
daily production by ~35 BOPD at an average net cost of ~$12,856/BOPD and total net investment of ~$305,000 (see Table 1).
The field has a reported total proved developed net reserves of 276 MBO valued at ~$2,585,000 PV10. We expect this field should
yield additional upside in the undeveloped horizontal Amsden formation, which has a reported 152 MBO net reserves valued at ~$1,502,000
PV10 after a ~$650,000 net investment to drill.

 

3.
Shallow Gas Properties in Stillwater and Sweet Grass Co., MT

 

Operated
Lake Basin and Six Shooter Dome Field

 

These
fields have 29 total wells, 19 shut-in and 10 producing from multiple formations. The Six Shooter Dome Field has the potential
to increase daily production through recompletion of the existing wells into the Big Elk and Dakota formations. The Lake Basin
Field has 25 wells that are the target of recompletions in different zones to increase production.

 

These
wells have behind-pipe potential in the Muddy, and Dakota formations. Deeper potential also exists in the Frontier formation.
A redesign of the water injection program and ongoing management has the potential materially to increase production by reinjecting
the produced water into the Stimpson or Copulous formations (into the downdip wells) to re-pressurize the reservoir updip.

 

4.
Emerging Horizontal Play

 

Using
a geology-based assessment methodology, the U.S. Geological Survey in 2016 estimated undiscovered, technically recoverable mean
resources of 637 million barrels of oil (MMBO) in the Heath Formation in the North-Central Montana AU. This is a 5,000-feet shallow,
fractured play that consists of a heterogenous mix of lithologies including black shales, limestone, sandstone, anhydrite and
coal. A new Mississippian commercial discovery was made in 2019, on the Sumatra Syncline, immediately west of the Sumatra Field.
The Rosebud County well will be a commercial lateral Heath Producer. The depth of the well is 5,100 feet.

 

Evidence
suggests that the Heath is source rock for the reservoir, some petroleum has migrated from the formation, and much of it has produced
from the overlying Tyler formation; however, the primary resource potential is within the Heath formation. Fields like the Sumatra
have produced 47.5 Million Barrels of oil from the Tyler formation.

 

5.
Potential Helium Exploration Play

 

The
Operator plans to actively test the hydrocarbons produced from the Assets being acquired and from offset acreage for economic
quantities of helium. If commercial quantities are found, the Operator will produce and sell its helium into the marketplace.
The Operator will have an active geological program aimed at the delineation and identification of helium sources from produced
gas. The Operator will also look into testing the Precambrian and other deeper formations for nitrogen and helium as byproducts
of natural gas production.

 

Helium
(“He”) is the second most abundant element in the universe, and yet here on earth it is a more limited commodity.
Supplies come from only four countries – USA, Russia, Algeria and Qatar – and the supply of He to the western world
is scarce and precarious. Substantially all current reserves of He were discovered as a by-catch from the search for petroleum.
Current prices for He have ranged from $300/Mcf to as high as $1,000/Mcf.

 

    	July 1, 2019	Page 6 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

In
the U.S., He was first discovered in economic quantities in Dexter, Kansas, in 1903. Markets developed and other helium discoveries
were made. Some fields contained up to 10% He by volume, which is significant when the economic concentration for extractable
He is 0.3% - at which level its value may be equivalent to the remaining 99.7% of the discovered gas volume (assuming this is
commercially saleable methane). Montana is one of only nine U.S. states where helium has been discovered in economic quantities.

 

Helium
reserves in the USA have declined significantly in recent years. It is anticipated that current global helium reserves are set
to decline to critically low levels in a few tens of years. The industry has been failing to replace what is being used. Recycling
is minimal and largely unfeasible.

 

OPERATIONS
PLAN

 

The
Operator has planned operations consisting of a field-wide well rework, offset drilling, and recompletion program designed to
optimize the properties and generate a combined projected increase of 200% or more in current oil production rates.

 

	The
    Operator intends to increase production from several marginal oil production wells and expects to complete workover operations
    in a three-phase program within 90-days post-closing.	 
	 
	The
    Assets are located in Rosebud, Musselshell, Stillwater and Sweet Grass counties, Montana.

 

Phase
I

 

Big
Wall / Little Wall and Sumatra Field Remedial Operations

 

The
Operator has targeted 11 of the Proved Developed Non-Producing wells (“PDNP”) being acquired for workover operations
designed to increase production rates through reworks. Workover projects range from electric submersible pump (“ESP”)
replacements of inactive producers as well as general surface equipment repairs. These projects are expected to unlock PDNP net
reserves of 466 MBO at a PV-10 value of $3,422,000.

 

    	July 1, 2019	Page 7 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

Significant
upside value can be found in 11 additional PDNP wells that have been identified as low-cost, return to production projects. The
Operator’s technical team estimates that a 108 BOPD increase can be obtained for a total net investment of approximately
$500,000 for an average ~$4,630/BOPD increase (see Table 1 below).

 

 

 

    	July 1, 2019	Page 8 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

 

Phase
II

 

Shallow
Gas Fields

 

Nineteen
(19) wells in the two fields are currently shut-in. The Operator plans to implement a program of soap and agitation sticks initially
to increase flow rates and reestablish production from these shut-in wells. The Operator has identified potential behind pipe
zones in several wells completed in the Big Elk, Dakota, and Muddy formations and plans to bring these wells back into production
through internal cashflows.

 

The
Operator will also quantify the potential for shallow, infill undrilled locations in and deeper frontier tests. The Operator proposes
testing several wells for associated Helium production from the natural gas reservoir. The Operator’s technical team intends
to complete a detailed analysis on the leases to identify potential drilling targets with stacked-pay and which can be drilled
to the Pre-Cambrian to test for potential Helium. The Operator further seeks bolt-on acquisitions in the area to add to its leasehold
position in Stillwater, Sweet Grass, and Hill Counties.

 

Phase
III

 

Turnkey
Horizontal Well

 

The
Big Wall/Little Wall Field also contains significant potential for horizontal development of the Amsden formation. The Operator
will drill a turnkey HZ well to the Tyler or Amsden formation, which has an estimated initial production (“IP”) rate
of 150 BOPD. One location has already been identified as having proven net reserves of 152 MBO (PV-10 of $1,500,000 with a $650,000
net investment) and at least 3 other similar structurally high locations in the field with potential to produce in commercial
quantities.

 

BUSINESS
STRATEGY

 

The
Company’s primary objective is to deliver a superior risk-adjusted return to its Members combined with field-level participation
in the net profits generated from the Assets (“Net Profits Interest” or “NPI”). An investment
in the Units of Foothills Production II, LLC, provides prospective Members with an opportunity to receive a pro-rata share of
Net Profits Interest payments generated from producing oil and gas wells with proved reserves, low decline rates and established
production history. This is accomplished through a Participation Agreement with the owner and Operator of the Assets, providing
the Company with a fifty percent (50%) NPI for the first four (4) years and a twenty-five percent (25%) NPI for the following
four (4) years in exchange for total consideration of three million U.S. Dollars (USD $3,000,000) (the “Participation
Funds”).

 

    	July 1, 2019	Page 9 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

Membership
Unit Structure

 

Sixty
(60) Units of Membership Interest (the “Units”) in Foothills Production II, LLC, at $50,000 per Unit are being
offered on behalf of the Company for total proceeds of $3,000,000. Units are being offered to ACCREDITED INVESTORS ONLY, as may
be permitted by the jurisdictions in which the Units are to be offered and sold. The purchase price of the Units has been arbitrarily
determined by the Manager. Subscriptions must be for at least one (1) Unit, unless an agreement is reached with the Manager to
subscribe for less than this minimum purchase in a manner permitted by federal and state securities laws. There is no established
public market for these Units, and it is probable that no such market will ever develop. Subscriptions for an investment in each
Membership Unit of the Company consists of the following:

 

	 	A.	Net
    Profits Interest

 

	(i)		50%
    Net Profits Interest in the Assets for Years 1-4; and
	 	 	 
	(ii)		25%
    Net Profits Interest in the Assets for Years 5-8; and

 

	 	B.	Common
    Stock – 50,000 shares of FTXP common stock;
	 	 	 
	 	C.	A-Warrant
    – warrants to buy an additional 50,000 shares of common stock in FTXP at $0.20 per share with an exercise term of
    18-months; and
	 	 	 
	 	D.	B-Warrant
    – warrants to buy an additional 50,000 shares of common stock in FTXP at $0.40 per share with an exercise term of
    24 months.

 

Transaction
Structure Overview

 

 

    	July 1, 2019	Page 10 of 19

    	FOOTHILLS PRODUCTION II, LLC	Confidential Business Plan

    

 

FINANCIAL
SUMMARY

 

A
total of 60 Membership Units for $50,000 per Unit are being offered to accredited investors only for total proceeds of $3,000,000.
100% of the Proceeds from the sale of Membership Units will fund the total consideration required under the Participation Agreement
(“PA” or “Participation Agreement”) between the Company and the Operator of the Assets.
Pursuant to the PA, the Company shall pay the Operator $3,000,000 (the “Participation Funds”) in exchange for
a fifty percent (50%) net profits interest in the field level net operating income generated from the producing oil and gas wells
being acquired (“NPI” or “Net Profits Interest”) for the first four (4) years and a twenty-five
percent (25%) NPI for the following four (4) years. This NPI shall be distributed to Members pro-rata to their total Membership
Interest in the Company. For additional details, please see Earned Interests section of the Memorandum and the Participation Agreement
attached to the Memorandum as Exhibit B.

 

An
investment in each Membership Unit also includes (i) 50,000 shares of FTXP common stock; (ii) A-Warrant – warrants to buy
50,000 shares of FTXP common stock at $0.20 per share with an exercise term of 18-months; and (iii) B-Warrant – warrants
to buy 50,000 shares of FTXP common stock at $0.40 per share with an exercise term of 24 months. For additional details on the
Warrants, see WARRANTS section of the Memorandum and Form of FTXP Warrant, attached to the Memorandum as Exhibit F.

 

Return
on Investment Summary

 

	 	 	Project
    is expected to reach payout in 24 months (>$3MM returned to the Company)
	 	 	 
	 	 	50%
    Net Profits Interest paid in Years 1-4: ~$7,373,596 ($122,893 per Unit)
	 	 	 
	 	 	25%
    Net Profits Interest paid in Years 5-8: ~$5,310,091 ($88,502 per Unit)
	 	 	 
	 	 	Total
    Cash on Cash Returned over 8 years: ~$12,683,687 ($211,395 per Unit)

 

Potential
Returns Per Unit

 

Members
also have the potential to achieve additional returns should FTXP’s stock price move upward from current prices in the months
following execution of this project.

 

 

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Examples
given in the table above are forward-looking statements. which are illustrative of prices that can result, but given the significant
risks and lack of liquidity in the market, no assurance can be given of future values on the FTXP common stock or the warrants
or of actual returns to investors from oil and gas production. Any of these risks could result in substantial or even complete
losses. See RISK FACTORS below.

 

The
table above illustrates a Member’s potential cash-on-cash return on investment for an investment in Membership Units of
the Company, based on potential future trading price/share of FTXP’s common stock and projected net profits interest on
a per unit basis. There are substantial risks to investing in the securities of FTXP, including FTXP’s need for additional
capital, its history of losses, its debt load and the illiquid nature of the market of FTXP’s stock. Please see risks and
other disclosures found in FTXP’s SEC filings, including its Annual Report on Form 10-K for the year-ended December 31,
2018, which was filed on April 16, 2019, and its most recent Quarterly Report on Form 10-Q for the three months ended March 31,
2019, filed on May 20, 2019.

 

 

 

The
pro-forma income statement below illustrates the Company’s projected financial performance based on the Asset’s forecasted
lease operating statement above. Results below will differ based on actual expenses and crude oil and gas pricing realized, but
management believes the forecast presented below represents a reasonable estimate of the properties’ future potential, given
current and expected future commodity prices.

 

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Operator’s
Call Option

 

After
such time as Company has received total payments, through the Net Profits Interest, equal to a sum amounting to at least 200%
of the Participation Funds, the Operator shall have the right, but not the obligation, to repurchase the remaining Net Profits
Interest of Company (the “Call Option”) for a total consideration equal to the sum of one (1) times the amount
of the total Net Profits Interest payments received by the Company during the preceding twelve (12) months (the “Call
Option Payment”). The Company shall be required to sell its remaining Net Profits Interest to the Operator upon exercise
of the right described herein.

 

The
Operator may only exercise this right after the Company has distributed at least two (2) times the amount of Participation Funds.
If the Operator desires to exercise its right described herein, the Operator shall submit to Company, in writing, a notice (the
“Call Notice”) indicating that it wishes to repurchase one hundred percent (100%) of the Net Profits Interest
described herein. The closing date of such repurchase shall be no more than thirty (30) days following the date of the Call Notice.
The Operator’s Call Option described herein shall be deemed exercised on the date upon which the Operator sends the Call
Notice. On the date designated by the Operator in the Call Notice, the Operator shall pay the Call Price to the Company by wire
transfer of immediately available funds to such account as is designated by the Company.

 

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USE
OF PROCEEDS

 

The
Company will use proceeds from the sale of Units to fund the consideration required for the Company’s Participation Agreement
with the Operator of the Assets, which provides the Company with a Net Profits Interest equal to fifty percent (50%) for the first
four (4) years and twenty-five percent (25%) for the following four (4) years. The Operator’s planned use of proceeds is
summarized below.

 

	Category	 	Total

    Proceeds	 	 	Percentage
    of Proceeds	 
	Wells, Leasehold, Equipment, Bonding and NPI Acquisition
    Costs	 	$	1,700,000	 	 	 	56.7	%
	Turnkey Shallow Horizontal Well	 	$	650,000	 	 	 	21.7	%
	Optimization of Sumatra and Big Wall / Little Wall Fields	 	$	500,000	 	 	 	16.7	%
	Natural Gas Assets Development	 	$	150,000	 	 	 	5.0	%
	TOTAL USE OF PROCEEDS	 	$	3,000,000	 	 	 	100.0	%

 

The
above table assumes no broker-dealer commissions will be paid in connection with the sale of Units. All offering related expenses
and all Company operating expenses, including but not limited to management fees, banking fees, accounting and bookkeeping expenses
will be paid by the Company (see Company proforma income statement in Financial Summary section above).

 

In
the event that less than the Total Offering Proceeds are raised, the Manager shall have the right to close the Offering at that
time and provide investors who are admitted as Members with their net income distributions, shares of FTXP common stock and FTXP
warrants in direct proportion to their investment made and number of Units purchased, in accordance with the other terms and conditions
described in this Memorandum. In such event, then the Company shall pay the Operator a sum that is less than the total $3,000,000
Participation Funds described herein, and the Operator shall provide the Company with a Net Profits Interest in pro-rata to the
amount of actual Participation Funds remitted by the Company to the Operator. The Operator reserves the right to raise funds necessary
to acquire and optimize the Assets from other sources and will do so, in the event less than the Total Offering Proceeds are raised.
For additional details, please see Earned Interests section of the Memorandum and the Participation Agreement attached to the
Memorandum as Exhibit B.

 

ENERGY
MARKET ENVIRONMENT

 

Market
Opportunity

 

Crude
Oil Outlook

 

In
May 2019, Brent crude oil prices averaged $71 per barrel, which was largely unchanged from April 2019. However, escalating global
tensions between the United States and China over uncertain tariffs on trade and other prevailing economic or political conditions
could weigh on global demand for oil over the near and intermediate-terms. In its June 11th short-term energy outlook, the EIA
lowered its forecast for Brent crude oil to $67 per barrel from $70 per barrel for 2019 and reiterated its 2020 Brent crude price
forecast of $67 a barrel.

 

Natural
Gas Outlook

 

Future
Natural Gas Price Increases Are Likely

 

For
the first time since 1957 the U.S. was a net exporter of natural gas in 2017. Looking ahead, U.S. LNG exports are forecasted to
quintuple by 2019 from 2017 levels to 9.6 billion cubic feet per day or 3.5 trillion cubic feet per year with the U.S. on track
to become the world’s 3rd largest natural gas exporter by 20201

 

Natural
gas prices are projected to increase as growing demand eclipses current and expected near-term supplies of U.S. natural gas production
coming online.

 

 

1 U.S. Energy Information Administration
(“EIA”) Annual Energy Outlook 2018

 

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Drivers
of natural gas demand growth are:

 

	 	1.	Pipeline
    exports to Mexico	
	 	 	 
	 	2.	LNG
    Exports
	 	 	 
	 	3.	Power
    Generation switching from coal to gas
	 	 	 
	“Gas
    to overtake coal as world’s second largest energy source by 2030,” says International Energy Agency (“IEA”)2.
    The IEA predicts that:

 

	 	●	Natural
    gas will be fastest growing fossil fuel
	 	 	 
	 	●	Global
    gas demand to rise by 1.6 percent a year to 2040
	 	 	 
	 	●	Coal
    to fall behind renewables in power generation mix

 

According
to the EIA, natural gas production will account for nearly 39% of U.S. energy production by 2050 in the Reference case3.

 

The
1Q2019 saw significant divergence between oil and natural gas prices as fundamentals turned bullish for oil while a moderate heating
season limited natural gas demand. West Texas Intermediate (“WTI”) prices rose by $13.12 from the previous
quarter’s close of $47.42 to $60.54 closing price in 1Q2019, representing a quarter-over-quarter increase of 27.7%.

 

The
flip side to oil’s story were natural gas prices as the Henry Hub natural gas price fell by $0.52/MMBtu from the previous
quarter’s close of $3.25/MMBtu to $2.73/MMBtu closing price in 1Q2019, representing a quarter-over-quarter decrease of 16.0%.
Heading into 2019, we continue to be moderately bullish from current levels for both WTI oil prices and natural gas prices as
strong global demand and supply disruptions are partially offset by rising U.S. oil and natural gas production from U.S. shale
formations.

 

Crude
Oil

 

Oil:
During the 1Q2019, oil prices rebounded to record its largest first quarter gains in nearly a decade. The catalysts for the strong
rebound for oil prices can be attributed to fears of a global economic slowdown dissipating and U.S. sanctions on Venezuela and
Iran are now limiting global oil supplies. The Energy Information Administration (“EIA”) in its Short-Term Energy
Outlook dated April 9, 2019 reiterated its forecast for WTI crude oil prices to average $61 per barrel in 2019 and $58 a barrel
in 2020.

 

Natural
Gas

 

	A moderate heating season limited residential and commercial heating demand, which lead to lower natural gas prices during 1Q2019. The Energy Information Administration (“EIA”) in its Short-Term Energy Outlook dated April 9, 2019 forecasts that natural gas storage injections will outpace the previous five-year average during the April-through-October 2019 injection season. The EIA expects Henry Hub natural gas spot prices will average $2.82/MMBtu in 2019, down 33 cents/MMBtu from 2018 and for 2020, the EIA expects Henry Hub spot price to average $2.77/MMBtu.	 
	 
	Atlas Research
    predicts a major gas supply shortage and says natural gas prices could double in 20194. From April 23rd
    through October 23rd 2018, spot natural gas prices are up nearly 20% from $2.74 to $3.22. Furthermore, since
    2012, five of the 10 largest U.S. gas producers have cut their total gas production in half (see Figure 1).

 

 

2
International Energy Agency World Energy Outlook 2018 

3 U.S. Energy Information Administration
Annual Energy Outlook 2018

4 How Natural Gas Prices Could
Double in 2019. Atlas Research Summary. SeekingAlpha.com, October 24, 2018. 

 

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Atlas
suggests that although natural gas production increased by 10.4% in 2018, that increase was largely driven by a temporary surge
in pipeline commitments. Based on the latest EIA data through July 2018, U.S. gas production has grown by 7.6 Bcf/d while demand
has grown by 8.9 Bcf/d, creating a supply-demand gap of 1.3 Bcf/d. In other words, despite 2018’s huge supply growth,
demand is growing even faster. The last time gas inventories fell this low back in 2005, gas traded for over $12.

 

By
far, the biggest source of new gas demand will come from the more than 150% increase in U.S. LNG export capacity next year. An
onslaught of new LNG projects coming online over the next 18 months will boost U.S. LNG export capacity by more than 150% to 8.4
Bcf/d, adding 5.2 Bcf/d of new gas demand (see Figure 2). And even with these new projects coming online, some
believe the world could still face an LNG shortage by mid-2020s due to booming global demand for natural gas. Within the next
decade,

 

 

		Atlas
    Research also predicts that the U.S. will become the Saudi Arabia of natural gas – a global swing producer with huge
    influence over the booming global natural gas market.
	 
	Mexico
    is also joining the rest of the world in moving towards natural gas as a power generation fuel but meanwhile the country’s
    gas fields have posted stunning declines of roughly 40%. As a result, the U.S. is meeting Mexico’s growing demand for
    natural gas through several major gas pipeline projects currently under construction to transport natural gas produced in
    the Permian Basin and South Texas down to Mexico. According to energy data firm Genscape, in July 2018, U.S. gas exports
    to Mexico hit a record of 5 Bcf/d – or 6% of U.S. supply. Between now and 2020 another six major pipelines are
    projected to come online that will grow U.S. exports beyond 8 Bcf/d.

 

	Along
    with record export volumes, U.S. natural gas demand for power generation just set a new record high in July, when the U.S.
    burned through 39.6 Bcf/d of gas. This year alone, U.S. utilities will add nearly 21 gigawatts (GW) of gas fired power
    generation – the largest annual increase in over a decade. Natural gas is the fastest growing fuel source for U.S.
    power generation, growing by 3.8 Bcf/d through July 2018 (see Figure 3).	

 

 

MONTANA
OIL AND GAS

 

Montana’s
complex and diverse geologic setting has long provided opportunities for successful exploration and development activities aided
by science and technology advancements. The oil and gas industry has explored virtually every geologic basin in state over the
last century, albeit some have been only lightly explored. The traditional producing areas include the Montana portions of the
Williston, Powder River in southeastern part of the state, and Big Horn Basins in the south-central Montana. The Sweet Grass Arch
and other central Montana areas contribute to the state’s production.

 

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Sumatra
Field

 

The
Northwest Sumatra oil field, located on the Central Montana uplift, was discovered in July, 1952. The discovery well, The Texas
Company’s Grebe No. 1, was located on the basis of seismic investigations by The Texas Company. This geophysical work indicated
slight seismic closure on one of the echelon folds characterizing the Central Montana uplift between Ragged Point Dome on the
west and Ingomar Dome on the east. The surface formation in the field is Upper Cretaceous in age. The stratigraphic section drilled
in the area consists of Cretaceous, Jurassic, Pennsylvanian, and Mississippian rocks. Oil is obtained from lenticular sands developed
in two zones in the Upper Heath transition zone of Upper Mississippian age. The origin of these lenticular sands is attributable
to sand-bar and dune development associated with estuarine and lagoonal conditions of deposition.

 

Lake
Basin

 

The
Lake Basin field is situated in south-central Montana and includes portions of Sweet Grass, Stillwater, Musselshell, and Yellowstone
counties. It embraces an area of about 1,000 square miles between the Chicago, Milwaukee and St. Paul Railway and the main line
of the Northern Pacific Railway.

 

RISK
FACTORS

 

An
investment in Membership Units in the Company bears numerous risks in addition to all of the usual risks associated with oil and
gas operations, all of which could render us unsuccessful. This Business Plan contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements as
a result of specific factors, including the risks described below.

 

For
a more complete description of all the Risk Factors associated with an investment in Units, please read “RISK FACTORS”
and “FORWARD-LOOKING INFORMATION” sections of the Memorandum. Also see FTXP’s public filings with the U.S. Securities
& Exchange Commission.

 

COMPANY
MANAGEMENT

 

Charles
Robert Cox, is the Company Manager and B.P. Allaire is the Company Secretary and serves at the pleasure of the Manager.

 

Manager

 

Charles
Robert Cox

 

Mr.
Cox manages the Company’s day-to-day operations. He has practiced law for over 44 years, during which he has principally
been involved with various facets of energy law. Mr. Cox has represented entities associated with drilling hundreds of oil and
gas wells throughout New Mexico, Kansas, Oklahoma, Illinois, Texas, Louisiana, Utah, Wyoming, and Pennsylvania. He previously
served as attorney for ONEOK, Inc., where he was involved with all of the natural gas regulatory and rate proceedings for the
largest natural gas public utility in Oklahoma over a 7-year period. His duties included serving as liaison with Oklahoma’s
United States Senators on energy policy related to the natural gas industry and drafting of federal legislation.

 

Mr.
Cox has also been involved with the formation of two major natural gas pipelines, Ozarka and ONG Western, the related oil and
gas leasehold positions, and related drilling and exploration agreements as well as acquisition of other positions in the basins
involved. One of his clients has been the inventor of some of the base technology and equipment involved with modern horizontal
drilling technologies, Les Bond of Delta Directional Drilling. Mr. Cox has a Juris Doctorate from the University of Oklahoma.
While in law school, he served as editor Oklahoma Law Review for three years and he also worked as a research assistant to Dean
Kuntz, author of Kuntz, A Treatise on the Law of Oil and Gas. Mr. Cox has a B.B.A. in Accounting, with a minor in Management
also from University of Oklahoma. Mr. Cox shall be paid an annual salary of $9,000 (or $750 per month), which salary shall be
paid directly by the Company.

 

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Secretary

 

B.P.
Allaire

 

As
Secretary, Mr. Allaire’s duties consist of assisting the Manager in administering the corporate affairs of the Company.
Mr. Allaire shall be paid an annual salary of $9,000 (or $750 per month), which salary shall be paid directly by the Company.
(See B.P. Allaire below).

 

OPERATOR
MANAGEMENT

 

Foothills
Exploration, LLC (the “Operator”), will acquire and operate the Assets. Foothills Exploration, LLC, is an indirect
wholly-owned subsidiary of Foothills Exploration, Inc. (“FTXP”). FTXP is publicly listed on the OTC.QB exchange
(www.otcmarkets.com). The officers and directors of FTXP are:

 

CEO,
Interim CFO & Director

 

B.P.
Allaire

 

Mr.
Allaire is Chief Executive Officer, Interim Chief Financial Officer and Director of FTXP and has served in these capacities since
March 2016. He also serves as an officer and director of FTXP subsidiaries. Mr. Allaire has over 26 years international work experience
in finance, sales, marketing, strategy, operations, business development, mergers & acquisitions and operations management
across a wide variety of industries. Mr. Allaire is the former Managing Partner of Versailles Capital Partners, LLC, a multi-discipline
strategic advisory and business development firm based in Los Angeles.

 

Since
2007, Mr. Allaire has provided business development, financial management and strategic advisory services to numerous clients
including various partnerships operating in the exploration and development of oil and gas in the Mid-Continent and Gulf-coast
regions of the U.S. Mr. Allaire graduated with a B.S. in Management, A.S. in Finance & Investments, and A.S. in Advertising
& Public Relations from Johnson & Wales University in Providence, RI. He earned his M.B.A. from Harvard University Graduate
School of Business.

 

Executive
Vice President of Finance & Director

 

Christopher
C. Jarvis

 

Mr.
Jarvis is Executive Vice President of Finance and Director for FTXP and Vice President of Risk Management and Director of Foothills
Petroleum Inc. (“FPI”). He assumed his Director roles in March 2016 and his Officer roles in March 2017. He has over
20 years of capital markets and investments experience covering the equity, commodity, and fixed-income markets. He engineered
and executed energy risk management hedges for large multi-national companies and as a publishing analyst, he was ranked #1 by
Bloomberg’s BARR analyst ranking system. He is a Certified Financial Analyst (CFA) and also a Certified Market Technician
(CMT). He routinely appears on CNBC, Fox Business News, and Reuters. He is a contributor to major print media outlets including
Reuters, Bloomberg and the Wall Street Journal as an oil and gas analyst.

 

Mr.
Jarvis earned a B.A. in Arts History from University of Massachusetts and an M.B.A. from the University of Connecticut, with a
concentration in finance. He is a member of the CFA Institute and also the Market Technicians Association (MTA). He was a member
of the University of Connecticut Financial Accelerator Advisory Board from 2003-2013 and previously served as the Vice President
of the Autism Society of New Hampshire (2004-09).

 

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Vice
President of Business Development

 

Tara
Roberts

 

Ms.
Roberts is Vice President of Business Development of Foothills Exploration, Inc. Ms. Roberts formerly spent over 7 years working
across a variety of disciplines within the U.S. oil and gas industry, including positions as landman, revenue accountant and business
development specialist. Ms Roberts began her career in 2012 at Chesapeake Energy Corporation (NYSE: CHK) – the second-largest
producer of natural gas and the 11th largest producer of oil and natural gas liquids in the United States – where she held
various positions over an almost four-year tenure. She also previously worked at Echo Energy as a Business Development Specialist.
In 2016, Ms. Roberts founded and established Eldorado Energy, Inc., an Oklahoma City-based company focused on acquisition of working
interests, mineral rights and leaseholds.

 

Ms.
Roberts earned a B.A. in Psychology from the University of Oklahoma and an M.S. in Law, with a concentration in Energy Law, from
Oklahoma City University, where she graduated with high honors. She is a member of the AAPL (American Association of Professional
Landmen) and Young Professionals in Energy. She was also the recipient of the 2017 Oklahoma Forty Under 40 award.

 

Director

 

Alex
M. Hemb

 

Mr.
Hemb is a Director of FTXP and has also served as a Director of FPI since its inception. He has over 25 years international experience
working as a petroleum engineer both onshore and offshore, having worked in Norway, Canada, Belize, Germany, and Scotland in addition
to the U.S. He engineered and developed technology for separating oil and water and commercialized this into a successful company
providing oil/water separation services to the oil and gas industry. Mr. Hemb is the former Vice President of Engineering for
Helmer Directional Drilling, where he worked for 15 years. He has provided petroleum engineering services to the Company, supporting
oil and gas field operations since 2016.

 

Mr.
Hemb spent nine years working across a variety of engineering, planning and sales roles with Baker Hughes both in the U.S. and
internationally. Mr. Hemb has a B.S. and M.Sc. in Petroleum Engineering from Montana Tech and he also holds certifications from
various oil and gas technical schools.

 

Executive
Chairman and CEO/Director of Foothills Petroleum, Inc.

 

Kevin
J. Sylla

 

Mr.
Sylla, since May 2017, is Executive Chairman of Foothills Exploration, Inc. (“FTXP”) and also serves as CEO and Director
of FPI, a wholly-owned key operating subsidiary of the Company. He assumed his CEO/Director roles in March 2017. Mr. Sylla was
formerly CEO of Northern Lynx Exploration, where he oversaw the acquisition of approximately 100 wells, 5,000 associated acres
and an oilfield services company all located in the Illinois Basin. His experience also extends to the Forest City and Cherokee
basins in Kansas, where he managed over 100 wells and the acquisition of over 10,000 associated acres.

 

Mr.
Sylla has over a decade of oil and gas industry experience with extensive knowledge in business development, mergers and acquisitions,
and management of oil and gas field operations. He is the managing member of Wilshire Energy Partners, LLC, a principal shareholder
of FTXP and has provided consulting services to FTXP and its subsidiaries since its formation. During his career, Mr. Sylla has
drilled, reworked and overseen the management of hundreds of wells. Mr. Sylla completed the Petroleum Land Management Program
at Texas Christian University and earned his Energy & Finance Management Certification from the University of Denver.

 

For
more information, please contact:

 

Charles
R. Cox, Manager

Foothills
Production II, LLC

10940
Wilshire Blvd., 23rd Floor

Los
Angeles, CA 90024

Office:
(424) 901-6655

Production2@foothillspetro.com

 

    	July 1, 2019	Page 19 of 19

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