11. SUBSEQUENT EVENTS:

The Company has evaluated the period subsequent to March 31, 2018 for events that did not exist at the balance sheet date but arose after that date and determined that no subsequent events arose that should be disclosed in order to keep the financial statements from being misleading, except as set forth below.

Credit Agreement

As previously disclosed in the Company’s Current Report on Form 8-K filed on April 20, 2018, the Bank of Montreal, as administrative agent, and the other parties thereto, approved the Second Amendment to the Credit Agreement, which, among other things, included the following:

(i)

The Borrowing Base (as defined in the Credit Agreement) was reaffirmed at $1.4 billion.

(ii)

The Consolidated Net Leverage Ratio (the “Leverage Ratio”) covenant was amended to state that: (i) during the period beginning on the last day of the fiscal quarter ending June 30, 2018 and ending on the last day of the fiscal quarter ending June 30, 2019, the Company will not permit the Leverage Ratio to exceed 4.50 to 1.00; (ii) during the period beginning on the last day of the fiscal quarter ending September 30, 2019 and ending on the last day of the fiscal quarter ending December 31, 2019, the Company will not permit the Leverage Ratio to exceed 4.25 to 1.00; and (iii) beginning on the last day of the fiscal quarter ending March 31, 2020, the Company will not permit the Leverage Ratio to exceed 4.00 to 1.00. As part of the Second Amendment, the Company will be subject to certain minimum hedging requirements. During the period (i) beginning on June 30, 2018 and ending on September 29, 2019, the Company is required to hedge a minimum of 65% of the quarterly projected volume of natural gas from PDP reserves; and (ii) during the period beginning on September 30, 2019 and ending on March 30, 2020, the Company is required to hedge a minimum of 50% of the quarterly projected volume of natural gas from PDP reserves. Beginning on April 1, 2020, the Company will no longer be subject to a minimum hedging requirement.

(iii)

The Applicable Margin (as defined in the Credit Agreement) was modified to state that if borrowings are outstanding during a period that the Company’s Leverage Ratio exceeds 4.00 to 1.00 at the end of any fiscal quarter, the interest rate on such borrowings shall be at a per annum rate that is 0.25% higher than the rate that would otherwise apply until the Company has provided financial statements indicating that the Leverage Ratio no longer exceeds 4.00 to 1.00.

The summary of the Second Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Second Amendment, which was filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K on April 20, 2018 and is incorporated by reference herein.

Closing of Houston Office

On May 10, 2018, the Company announced the closing of the Houston, Texas office and the relocation of the Company’s corporate headquarters from Houston to Englewood, Colorado, effective September 30, 2018. The office closure is expected to result in a workforce reduction impacting up to 14 employees.