October 1, 2018

Subash Chandra, CFA, Analyst

subash.chandra@guggenheimpartners.com
AMR 3Q EPS Preview: Back On Track
212 918 8771
Key Message: AMR may be back on-track after a difficult 2Q. The company has been
careful this quarter to plan pads that are not close to recent producers and in an
orientation that limits well interference. Well completions should have been within range
AMR BUY of our 45 well estimate. Oil cuts in 3Q could be materially higher than the 48% achieved
last quarter. While we are reducing our 3Q production estimate by 9%, we expect oil
Alta Mesa Resources, Inc.
volumes to be within range of our prior estimate of 16,000 bopd, representing 30%
Sector: Energy: Exploration and
Production sequential growth. We are reducing our PT to $8.20 from $8.70 to reflect lower upstream
and midstream growth than prior expectations.
Earnings Preview
Share Price $4.18 We are updating our estimates on AMR ahead of 3Q earnings. A brief discussion of our
Price Target $8.20 rationale can be found on the following pages.
Prior $8.70

EPS ($)
(FY DEC) 1Q 2Q 3Q 4Q FY
2017 — — — — 0.40
P/E 10.5x
2018 (0.01) (0.04) 0.06E 0.08E 0.09E
Prior — — 0.05E — 0.08E

P/E 46.4x
2019 0.09E 0.11E 0.13E 0.15E 0.49E
Prior 0.10E — 0.14E 0.17E 0.52E

P/E 8.5x
EBITDAX ( M)
(FY DEC) 1Q 2Q 3Q 4Q FY
2017 — — — — 156.2
2018 43.5 46.6 89.4E 105.5E 284.9E
Prior — — 88.4E 109.3E 287.7E

2019 118.5E 132.9E 151.6E 170.2E 573.2E

Prior 120.6E 136.9E 157.5E 178.3E 593.3E

E&P
52-Week Range $4.04 - $10.79
Market Cap (M) $1,605
Shares Out (M) 179.1
ADV (3 mo; 000) 1,563
Est. NAV 8.20

GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 1
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

In 3Q, AMR may be back on-track after a difficult second quarter, which we believe unfairly reflected on the STACK
resource logistical and planning deficiencies that have been addressed. AMR has been careful this quarter to plan
pads that are not close to recent producers and in an orientation that limits well interference. Well completions
should have been within range of our 45 well estimate. While we are reducing our 3Q production estimate by 9%,
we expect oil volumes to be within range of our prior estimate of 16,000 bopd, representing 30% sequential growth.
In our view, the market should appreciate the oil growth rate as it counters the interference and curtailments
experienced in 2Q. Oil cuts in 3Q could be materially higher than the 48% achieved last quarter. While we don’t
expect 2019 guidance until early January, the company could rely on fewer rigs to deliver growth than the 10 we
have currently assumed. We think a flat rig scenario of 9 is reasonable. We estimate 60% growth in 2019 and
44% in 2020.

Midstream (KFM) challenges likely lingered as third-party activity was moribund with the financial uncertainties of
a Gastar Exploration (GST, NC, $0.06), which has acreage dedicated to AMR. But other operators are showing
signs of life in 4Q, according to AMR. We estimate an improvement in midstream margins to $10mm from $3.8mm
sequentially. Our forecast for 2019 and 2020 is $81mm and $105mm, respectively, driven largely by operated
volumes. AMR could also drop water assets into KFM which typically generate stable margins.

We are reducing our PT to $8.20 from $8.70 to reflect lower upstream and midstream growth than prior
expectations. Our revised upstream growth rate for ’18, ’19 and ’20 is 42% / 60% / 44% which compares to our
prior 50% / 57% / 47%. The upside is still considerable. We expect the market will recognize the valuation deficit
as AMR delivers on oil growth and third party midstream growth opportunities emerge.

We are raising our 3Q estimate to $0.06 from $0.05 to reflect updated 3Q production, midstream volume and price
differential estimates. This compares to consensus estimates of $0.07. We are also updating our 2019 EPS
estimates to reflect updated 2019 production, midstream volume and price differential forecast.

Valuation and Investment Risks

Our $8.20 PT/NAV estimate, down from $8.70, for AMR is based on our 2020 estimate of proved reserves (net of
debt), midstream value and probable reserves. Proved reserves (net of debt) represent ~60% of our NAV estimate,
or $5.20 per share (up from $5.10), while the balance is midstream value and probable reserves. Proved reserves
are valued at $1.21 per mcfe (up from $1.20), or ~$3.4bn (down from $3.6bn), less ~$1,420mm of net debt (down
from $1,520mm). Our valuation for Kingfisher Midstream of $1.0bn (down from $1.3bn) is based on our estimate
of 2020 midstream EBITDA of $105mm (down from $134mm) and 10x of EBITDA multiple. We value the probable
reserves for ~$0.30/share, up from $0.1/share.

A prolonged period of lower oil and gas prices can be detrimental to growth and asset values. The inability to fund
development due to weak capital markets can also reduce growth rates. The regulation or prohibition of fracking
on state and federal lands can reduce resource potential. Regulation of product transport on pipe and rail can add
to costs, reduce realizations, and interrupt sales. In some areas, the Endangered Species Act can curtail drilling
activity if native species come under protection. Riverstone Holdings LLC, currently owns a large stake in the
company. Liquidation events from Riverstone could cause short-term price fluctuations on common stock shares.
As long as Riverstone controls a significant percentage of voting power, they will have the ability to strongly
influence all corporate actions which require stockholder approval, and their interests may conflict with the
interests of AMR’s other stockholders. The company’s STACK play properties remain largely undeveloped and
are in the very early innings of delineation. A lack of consistent results across the footprint could discredit the
potential “probable” reserve inventory. New development and exploration wells in the STACK play may not
produce hydrocarbons, may underperform expectations, or may not be commercially viable.

GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 2
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

Alta Mesa Resources Inc. (AMR)

Consolidated Statement of Operations
Guggenheim Securities, LLC

Fiscal Year Ends Dec 31

(data in thousands, except as indicated) FY17 FY18E FY19E FY20E 1Q18 2Q18 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E
Revenues
Natural gas $ 318,828 $ 36,656 $ 59,759 $ 82,213 $ 9,486 $ 7,980 $ 8,417 $ 10,772 $ 14,069 $ 12,880 $ 14,498 $ 18,312
Oil $ - $ 344,044 $ 538,424 $ 774,318 $ 71,250 $ 75,291 $ 92,570 $ 104,933 $ 111,402 $ 126,869 $ 142,805 $ 157,348
NGL $ - $ 52,604 $ 93,327 $ 134,215 $ 8,714 $ 10,241 $ 14,757 $ 18,892 $ 19,310 $ 21,991 $ 24,753 $ 27,274
Midstream Net $ (50,711) $ 43,376 $ 80,876 $ 104,739 $ 17,320 $ 3,982 $ 10,258 $ 11,816 $ 16,690 $ 18,674 $ 21,723 $ 23,789
Cash Derivatives $ 4,117 $ (8,088) $ - $ - $ 6,271 $ (14,359) $ - $ - $ - $ - $ - $ -
Other $ 7,420 $ 9,651 $ - $ - $ 7,422 $ 2,229 $ - $ - $ - $ - $ - $ -
Total Revenues $ 279,654 $ 478,243 $ 772,387 $ 1,095,485 $ 120,463 $ 85,364 $ 126,003 $ 146,413 $ 161,470 $ 180,413 $ 203,780 $ 226,723

Expenses
LOE $ 48,207 $ 64,434 $ 102,557 $ 147,489 $ 14,470 $ 13,012 $ 17,022 $ 19,930 $ 21,220 $ 24,165 $ 27,201 $ 29,971
Production taxes $ 6,935 $ 12,484 $ 20,745 $ 29,722 $ 2,368 $ 2,606 $ 3,472 $ 4,038 $ 4,343 $ 4,852 $ 5,462 $ 6,088
GP&T and other operating $ 5,014 $ 23,262 $ 35,895 $ 51,621 $ 4,746 $ 5,413 $ 6,128 $ 6,976 $ 7,427 $ 8,458 $ 9,520 $ 10,490
G&A $ 63,268 $ 101,365 $ 40,000 $ 40,000 $ 58,909 $ 22,456 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000 $ 10,000
DD&A $ 282,309 $ 149,819 $ 246,137 $ 353,974 $ 27,361 $ 33,773 $ 40,852 $ 47,833 $ 50,927 $ 57,997 $ 65,282 $ 71,931
Derivative (gain)/loss $ (4,170) $ 36,479 $ - $ - $ 21,619 $ 14,860 $ - $ - $ - $ - $ - $ -
Exploration $ 13,563 $ 28,671 $ 26,000 $ 26,000 $ 8,588 $ 8,083 $ 6,000 $ 6,000 $ 6,500 $ 6,500 $ 6,500 $ 6,500
Other $ 1,676 $ 365 $ - $ - $ 141 $ 224 $ - $ - $ - $ - $ - $ -
Interest expense $ 50,861 $ 46,970 $ 50,120 $ 50,000 $ 10,955 $ 10,955 $ 12,530 $ 12,530 $ 12,530 $ 12,530 $ 12,530 $ 12,530
Interest (income) $ - $ (718) $ - $ - $ (718) $ - $ - $ - $ - $ - $ - $ -
Total Expenses $ 467,663 $ 463,132 $ 521,454 $ 698,807 $ 148,439 $ 111,382 $ 96,004 $ 107,307 $ 112,947 $ 124,503 $ 136,496 $ 147,509

Pretax incom e $ (188,009) $ 15,111 $ 250,933 $ 396,678 $ (27,976) $ (26,018) $ 29,998 $ 39,107 $ 48,524 $ 55,911 $ 67,284 $ 79,214

Income tax expense (benefit) $ (30,849) $ 9,785 $ 62,733 $ 99,170 $ (3,813) $ (3,678) $ 7,500 $ 9,777 $ 12,131 $ 13,978 $ 16,821 $ 19,803
Net Incom e (loss) $ (157,160) $ 5,326 $ 188,199 $ 297,509 $ (24,163) $ (22,340) $ 22,499 $ 29,330 $ 36,393 $ 41,933 $ 50,463 $ 59,410
Income (loss) from Disc Ops $ - $ (7,593) $ - $ - $ (7,593) $ - $ - $ - $ - $ - $ - $ -
Preferred stock dividends $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Income to noncontrolling interests $ (87,619) $ (36,210) $ - $ - $ (20,314) $ (15,896) $ - $ - $ - $ - $ - $ -
Nonrecurring gain (charges) $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
NET INCOME (LOSS) - TO COMMON $ (157,160) $ 41,536 $ 188,199 $ 297,509 $ (3,849) $ (6,444) $ 22,499 $ 29,330 $ 36,393 $ 41,933 $ 50,463 $ 59,410

EPS, excl. non-recurring (basic) $ (0.41) $ 0.09 $ 0.49 $ 0.78 $ (0.01) $ (0.04) $ 0.06 $ 0.08 $ 0.09 $ 0.11 $ 0.13 $ 0.15
EPS, excl. non-recurring (diluted) $ (0.40) $ 0.09 $ 0.49 $ 0.78 $ (0.01) $ (0.04) $ 0.06 $ 0.08 $ 0.09 $ 0.11 $ 0.13 $ 0.15

Shares Outstanding (basic) 382,772 329,722 383,372 383,372 382,772 169,372 383,372 383,372 383,372 383,372 383,372 383,372
Shares Outstanding (diluted) 388,872 331,247 383,372 383,372 388,872 169,372 383,372 383,372 383,372 383,372 383,372 383,372

CASH FLOW: FY17 FY18E FY19E FY20E 1Q18 2Q18 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E
EBITDAX $ 156,230 $ 284,903 $ 573,189 $ 826,652 $ 43,470 $ 46,583 $ 89,381 $ 105,469 $ 118,481 $ 132,938 $ 151,597 $ 170,175
Cash Taxes $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Interest $ 60,884 $ 46,970 $ 50,120 $ 50,000 $ 10,955 $ 10,955 $ 12,530 $ 12,530 $ 12,530 $ 12,530 $ 12,530 $ 12,530
CFFO $ 95,346 $ 237,933 $ 523,069 $ 776,652 $ 32,515 $ 35,628 $ 76,851 $ 92,939 $ 105,951 $ 120,408 $ 139,067 $ 157,645

Cash flow per share $ 0.25 $ 0.74 $ 1.36 $ 2.03 $ 0.08 $ 0.21 $ 0.20 $ 0.24 $ 0.28 $ 0.31 $ 0.36 $ 0.41

Source: Company Reports, Guggenheim Securities, LLC estimates

GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 3
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

Alta Mesa Resources Inc. (AMR)

Consolidated Statement of Operations
Guggenheim Securities, LLC

PRODUCTION: FY17 FY18E FY19E FY20E 1Q18 2Q18 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E
Oil production (mbbls) 3,907 5,466 8,546 12,291 1,145 1,118 1,475 1,727 1,768 2,014 2,267 2,498
NGL production (mbbls) 1,277 2,473 4,102 5,900 374 559 709 830 849 967 1,088 1,199
Gas production(Mmcf) 13,973 16,270 26,665 38,347 3,857 3,914 3,915 4,584 5,517 6,283 7,072 7,792
Production (Mm cfe) 45,077 63,901 102,557 147,489 12,971 13,978 17,022 19,930 21,220 24,165 27,201 29,971
Mmboe 7,513 10,650 17,093 24,582 2,162 2,330 2,837 3,322 3,537 4,028 4,534 4,995

Daily oil production (mb/d) 10.7 15.0 23.4 33.6 12.7 12.3 16.0 18.8 19.6 22.1 24.6 27.1
Daily NGL production (mb/d) 3.5 6.8 11.2 16.1 4.2 6.1 7.7 9.0 9.4 10.6 11.8 13.0
Daily gas production (mmcf/d) 38.3 44.6 73.1 104.8 42.9 43.0 42.6 49.8 61.3 69.0 76.9 84.7
Daily equiv. production (Mm cfe) 123.5 175.1 281.0 403.0 144.1 153.6 185.0 216.6 235.8 265.6 295.7 325.8
Daily equiv. production (m boe) 20.6 29.2 46.8 67.2 24.0 25.6 30.8 36.1 39.3 44.3 49.3 54.3
Q-O-Q Production Growth 8% 7% 20% 17% 9% 13% 11% 10%
Y-O-Y Production Growth 58% 42% 60% 44% 24% 25% 51% 63% 64% 73% 60% 50%

% oil 52% 51% 50% 50% 53% 48% 52% 52% 50% 50% 50% 50%
% NGL 17% 23% 24% 24% 17% 24% 25% 25% 24% 24% 24% 24%
% gas 31% 25% 26% 26% 30% 28% 23% 23% 26% 26% 26% 26%
WTI oil price $ 50.82 $ 66.26 $ 65.00 $ 65.00 $ 62.91 $ 67.79 $ 69.36 $ 65.00 $ 65.00 $ 65.00 $ 65.00 $ 65.00
Mt Belvieu price $ 21.62 $ 26.51 $ 26.00 $ 26.00 $ 25.16 $ 27.12 $ 27.74 $ 26.00 $ 26.00 $ 26.00 $ 26.00 $ 26.00
Henry Hub gas price $ 3.09 $ 2.95 $ 2.95 $ 2.76 $ 3.08 $ 2.82 $ 2.90 $ 3.00 $ 3.25 $ 2.75 $ 2.80 $ 3.00
Oil price realized $ 49.13 $ 58.18 $ 63.00 $ 63.00 $ 54.92 $ 54.29 $ 62.75 $ 60.75 $ 63.00 $ 63.00 $ 63.00 $ 63.00
NGL price realized $ 23.31 $ 21.33 $ 22.75 $ 22.75 $ 23.30 $ 18.47 $ 20.81 $ 22.75 $ 22.75 $ 22.75 $ 22.75 $ 22.75
Gas price realized $ 3.01 $ 2.37 $ 2.25 $ 2.15 $ 2.96 $ 2.02 $ 2.15 $ 2.35 $ 2.55 $ 2.05 $ 2.05 $ 2.35
Gas Equivalent ($/m cf) $ 5.85 $ 6.41 $ 6.75 $ 6.72 $ 6.40 $ 5.65 $ 6.80 $ 6.75 $ 6.82 $ 6.69 $ 6.69 $ 6.77

Oil Premium/ Discount $ (1.69) $ (8.09) $ (2.00) $ (2.00) $ (7.99) $ (13.50) $ (6.61) $ (4.25) $ (2.00) $ (2.00) $ (2.00) $ (2.00)
NGL Premium/ Discount $ 1.69 $ (5.17) $ (3.25) $ (3.25) $ (1.86) $ (8.65) $ (6.94) $ (3.25) $ (3.25) $ (3.25) $ (3.25) $ (3.25)
Gas Premium/ Discount $ (0.08) $ (0.58) $ (0.70) $ (0.61) $ (0.12) $ (0.80) $ (0.75) $ (0.65) $ (0.70) $ (0.70) $ (0.75) $ (0.65)

MARGINS PER MCFE FY17 FY18E FY19E FY20E 1Q18 2Q18 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E
Revenue $ 7.16 $ 6.65 $ 6.74 $ 6.72 $ 6.40 $ 5.65 $ 6.80 $ 6.75 $ 6.82 $ 6.69 $ 6.69 $ 6.77
LOE $ 0.98 $ 1.01 $ 1.00 $ 1.00 $ 1.12 $ 0.93 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
GP&T $ 0.65 $ 0.36 $ 0.35 $ 0.35 $ 0.37 $ 0.39 $ 0.36 $ 0.35 $ 0.35 $ 0.35 $ 0.35 $ 0.35
Production Tax $ 0.12 $ 0.20 $ 0.20 $ 0.20 $ 0.18 $ 0.19 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20 $ 0.20
G&A $ 1.40 $ 1.59 $ 0.39 $ 0.27 $ 1.17 $ 1.30 $ 0.70 $ 0.70 $ 0.47 $ 0.41 $ 0.37 $ 0.33
Int Exp $ 1.35 $ 0.74 $ 0.49 $ 0.34 $ 0.84 $ 0.78 $ 0.74 $ 0.63 $ 0.59 $ 0.52 $ 0.46 $ 0.42
Income tax rate $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ -
Cash flow $ 4.01 $ 3.50 $ 4.80 $ 4.89 $ 2.72 $ 2.06 $ 3.80 $ 3.87 $ 4.21 $ 4.21 $ 4.31 $ 4.47
DD&A $ 6.26 $ 2.34 $ 2.40 $ 2.40 $ 2.11 $ 2.42 $ 2.40 $ 2.40 $ 2.40 $ 2.40 $ 2.40 $ 2.40
Earnings $ (2.25) $ 1.16 $ 2.40 $ 2.49 $ 0.61 $ (0.36) $ 1.40 $ 1.47 $ 1.81 $ 1.81 $ 1.91 $ 2.07
Income tax rate 16% 65% 25% 25% 14% 14% 25% 25% 25% 25% 25% 25%
% deferred 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

EBITDA Margins 56% 60% 74% 75% 36% 55% 71% 72% 73% 74% 74% 75%

Source: Company Reports, Guggenheim Securities, LLC estimates

GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 4
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

Alta Mesa Resources Inc. (AMR)

Consolidated Statement of Operations
Guggenheim Securities, LLC

CASH FLOW ANALYSIS FY17 FY18E FY19E FY20E 1Q18 2Q18 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E
Sources
Operating Cash Flow $ 95,346 $ 237,933 $ 523,069 $ 776,652 $ 32,515 $ 35,628 $ 76,851 $ 92,939 $ 105,951 $ 120,408 $ 139,067 $ 157,645
Working Capital (33,000) (203,000) - - $ (339,000) $ 136,000 $ - $ - $ - $ - $ - $ -
Asset Sales 25,205 - - - $ - $ - $ - $ - $ - $ - $ - $ -
Net Financing - Debt 76,443 223,935 395,000 158,000 $ (108,065) $ 40,000 $ 144,000 $ 148,000 $ 121,000 $ 109,000 $ 92,000 $ 73,000
- Equity 207,875 400,000 - - $ 400,000 $ - $ - $ - $ - $ - $ - $ -
Other 1,042,742 - - $ 1,042,742 $ - $ - $ - $ - $ - $ - $ -
TOTAL $ 371,869 $ 1,701,610 $ 918,069 $ 934,652 $ 1,028,192 $ 211,628 $ 220,851 $ 240,939 $ 226,951 $ 229,408 $ 231,067 $ 230,645

Uses
CAPEX $ 313,961 $ 844,160 $ 917,091 $ 938,800 $ 171,151 $ 211,100 $ 221,545 $ 240,364 $ 227,091 $ 228,836 $ 230,582 $ 230,582
Dividends - - - - $ - $ - $ - $ - $ - $ - $ - $ -
Asset Purchases 55,605 796,826 - - $ 796,826 $ - $ - $ - $ - $ - $ - $ -
Other 1,913 39,333 - - $ 39,333 $ - $ - $ - $ - $ - $ - $ -
TOTAL $ 371,479 $ 1,680,319 $ 917,091 $ 938,800 $ 1,007,310 $ 211,100 $ 221,545 $ 240,364 $ 227,091 $ 228,836 $ 230,582 $ 230,582

Excess / <deficiency> $ 390 $ 21,291 $ 978 $ (4,148) $ 20,882 $ 528 $ (695) $ 576 $ (140) $ 571 $ 485 $ 63

BALANCE SHEET ($,000) FY17 FY18E FY19E FY20E 1Q18 2Q18 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E
Cash $ 541,511 $ - $ - $ - $ 261,063 $ 82,398 $ - $ - $ - $ - $ - $ -
Working Capital 433,040 24,472 24,472 24,472 $ 196,239 $ 24,472 $ 24,472 $ 24,472 $ 24,472 $ 24,472 $ 24,472 $ 24,472
Asset Retirement Obligations 10,400 - - - $ 6,033 $ - $ - $ - $ - $ - $ - $ -
Other 36,415 - - - $ 4,850 $ - $ - $ - $ - $ - $ - $ -
Credit Facility $400 million BB - 387,084 782,084 940,084 $ 52,000 $ 95,084 $ 239,084 $ 387,084 $ 508,084 $ 617,084 $ 709,084 $ 782,084
Long-Term Debt 718,315 500,000 500,000 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000 $ 500,000
Total Debt 332,090 862,612 1,257,612 1,415,612 $ 366,644 $ 570,612 $ 714,612 $ 862,612 $ 983,612 $ 1,092,612 $ 1,184,612 $ 1,257,612
Equity 3,558,264 3,461,971 3,650,170 3,947,679 $ 3,419,898 $ 3,410,142 $ 3,432,641 $ 3,461,971 $ 3,498,364 $ 3,540,297 $ 3,590,760 $ 3,650,170
Total Capital $ 3,890,354 $ 4,324,583 $ 4,907,782 $ 5,363,291 $ 3,786,542 $ 3,980,754 $ 4,147,253 $ 4,324,583 $ 4,481,976 $ 4,632,909 $ 4,775,372 $ 4,907,782
Net Debt / EBITDA 1.8X 3.0X 2.2X 1.7X 2.0X 3.1X 2.7X 3.0X 2.7X 2.4X 2.3X 2.2X
EBITDA / Cash Int Exp (x) 2.6X 6.1X 11.4X 16.5X 4.0X 4.3X 7.1X 8.4X 9.5X 10.6X 12.1X 13.6X
Book Value $ 9.15 $ 10.45 $ 9.52 $ 10.30 $ 8.79 $ 20.13 $ 8.95 $ 9.03 $ 9.13 $ 9.23 $ 9.37 $ 9.52

Source: Company Reports, Guggenheim Securities, LLC estimates

GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 5
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

Alta Mesa Resources Inc. (AMR)

NAV Forecast
Guggenheim Securities, LLC

NAV Calculation (,000 except as indicated) 2017 2018E 2019E 2020E

PV-10 Value $ 1,034,151 $ 1,992,010 $ 2,723,182 $ 3,420,113
less long-term debt $ (718,315) $ (500,000) $ (500,000) $ (500,000)
bank debt $ - $ (387,084) $ (782,084) $ (940,084)
w orking capital (deficit) $ 433,040 $ 24,472 $ 24,472 $ 24,472
other assets $ - $ - $ - $ -
Net Asset Value $ 748,876 $ 1,129,398 $ 1,465,570 $ 2,004,501

Shares Outstanding 388,872 331,247 383,372 383,372

NAV per Share $ 1.93 $ 3.41 $ 3.82 $ 5.23

Kingfisher Midstream EBITDA $ 42,000 $ 37,662 $ 80,876 $ 104,739

Kingfisher Midstream Multiple 10.0x 10.0x 10.0x 10.0x
Kingfisher Midstream NAV $ 376,623 $ 808,762 $ 1,047,393
Kingfisher Midstream NAV per Share $ 1.08 $ 1.14 $ 2.11 $ 2.73

Probables (mcfe): 2,233,352 1,583,998 878,543 156,389

Probable value @ 50% of P1 ($/mcfe) $ 0.49 $ 0.61 $ 0.61 $ 0.61
Probable NAV per share $ 2.81 $ 2.90 $ 1.39 $ 0.25
NAV per Share (w / probables) $ 4.74 $ 6.31 $ 5.21 $ 8.21

Pre-tax PV-10 / m cfe $ 0.98 $ 1.21 $ 1.21 $ 1.21

Future Cash ($/mcfe) $ 5.33 $ 5.52 $ 5.52 $ 5.52

Future Op Costs ($/mcfe) $ (2.38) $ (2.10) $ (2.10) $ (2.10)
Future Dev Costs ($/mcfe) $ (1.31) $ (1.31) $ (1.31) $ (1.31)

Reference Price
Gas price $ 2.98 $ 2.75 $ 2.75 $ 2.75
NGL prices $ 15.40 $ 24.00 $ 24.00 $ 24.00
Oil price $ 51.34 $ 60.00 $ 60.00 $ 60.00
Weighted $/mcfe $ 5.17 $ 5.96 $ 5.96 $ 5.96

Differentials
Gas $ (0.26) $ (0.60) $ (0.60) $ (0.60)
NGL 51% 35% 35% 35%
Oil $ (1.58) $ (1.60) $ (1.60) $ (1.60)

Realized Price
Gas $ 2.72 $ 2.15 $ 2.15 $ 2.15
NGL $ 26.06 $ 21.00 $ 21.00 $ 21.00
Oil $ 49.76 $ 58.40 $ 58.40 $ 58.40
Weighted $/mcfe $ 5.33 $ 5.52 $ 5.52 $ 5.52

Source: Company Reports, Guggenheim Securities, LLC estimates

GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 6
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

Alta Mesa Resources Inc. (AMR)

NAV Forecast
Guggenheim Securities, LLC

PV-10 Calculation 2017 2018E 2019E 2020E

Future Cash Flow s $ 5,629,223 $ 9,065,868 $ 12,393,512 $ 15,565,326
Future Operating Costs $ (2,518,537) $ (3,449,335) $ (4,715,419) $ (5,922,215)
Future Development Costs $ (976,149) $ (1,506,209) $ (2,059,066) $ (2,586,034)
Future Cash Flow s (pre-tax) $ 2,134,537 $ 4,110,324 $ 5,619,026 $ 7,057,077

PV-10 (pre-tax) $ 1,034,151 $ 1,992,010 $ 2,723,182 $ 3,420,113

Economic Reserve Life (years) 7.6 7.6 7.6 7.6

Reserve/Production Ratio (years) 23.5 25.7 21.9 19.1

Dom estic Reserves (m m cfe) 2017 2018E 2019E 2020E

Beginning Reserves 777,499 1,057,087 1,642,540 2,245,438
Revisions - performance 33,408 0 0 0
- 5 year rule 0 0 0 0
- other 0 0 0 0
Extensions, Discoveries 279,642 649,354 705,455 722,154
Purchases 11,616 0 0 0
Sales 0 0 0 0
Production (45,078) (63,901) (102,557) (147,489)
Ending Reserves 1,057,087 1,642,540 2,245,438 2,820,102
% Reserve Growth 36% 36% 30% 25%

PDP 313,254 492,762 673,631 846,031

% Gas 39% 39% 39% 39%

% NGLs 21% 21% 21% 21%
% Oil 41% 41% 41% 41%
% PUD 70% 70% 70% 70%

Source: Company Reports, Guggenheim Securities, LLC estimates

GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 7
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

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Rating and Price Target History for: Alta Mesa Resources, Inc. (AMR) as of 09-28-2018
07/30/18 08/14/18
I:BUY:$10 BUY:$8.7
11
10
9
8
7
6
5
4
Q3 2016 Q1 Q2 Q3 2017 Q1 Q2 Q3 2018 Q1 Q2

Created by: BlueMatrix

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GUGGENHEIM SECURITIES, LLC See pages 8 - 9 for analyst certification and important disclosures. Page 8
ENERGY: EXPLORATION AND PRODUCTION
ALTA MESA RESOURCES, INC. October 1, 2018

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Guggenheim Securities Equity Research Team
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