10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2013

or

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to              

Commission File Number: 001-36026

ATHLON ENERGY INC.

(Exact name of registrant as specified in its charter)

Delaware	46-2549833
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

420 Throckmorton Street, Suite 1200, Fort Worth, Texas	76102
(Address of principal executive offices)	(Zip Code)

(817) 984-8200

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes o  No x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer x (Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 13, 2013, we had 82,129,089 outstanding shares of common stock, $0.01 par value, excluding Athlon Holdings LP units exchangeable for 1,855,563 shares of our common stock.

ATHLON ENERGY INC.

INDEX

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012	1
	Consolidated Statements of Operations for the three and six months ended June 30, 2013 and 2012	2
	Consolidated Statement of Changes in Equity for the six months ended June 30, 2013	3
	Consolidated Statements of Cash Flows for the six months ended June 30, 2013 and 2012	4
	Notes to Consolidated Financial Statements	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	34
Item 4.	Controls and Procedures	36
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	37
Item 1A.	Risk Factors	37
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	37

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Certain information included in this Quarterly Report on Form 10-Q (the “Report”) and our other materials filed with the United States Securities and Exchange Commission (“SEC”), or in other written or oral statements made or to be made by us, other than statements of historical fact, are forward-looking statements.  These forward-looking statements give our current expectations or forecasts of future events.  Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts.  These statements may include words such as “may”, “will”, “could”, “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe”, “should”, “predict”, “potential”, “pursue”, “target”, “continue”, and other words and terms of similar meaning.  You are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date of this Report.  Our actual results may differ significantly from the results discussed in the forward-looking statements.  Such statements involve risks and uncertainties, including, but not limited to, the matters discussed in “Risk Factors” in our final prospectus dated August 1, 2013 and filed with the SEC pursuant to Rule 424(b)(4) of the Securities Act of 1933 on August 5, 2013.  If one or more of these risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected.  We undertake no responsibility to update forward-looking statements for changes related to these or any other factors that may occur subsequent to this filing for any reason.

i

GLOSSARY

The following are abbreviations and definitions of certain terms used in this Report:

·Basin.  A large natural depression on the earth’s surface in which sediments generally brought by water accumulate.

·Bbl.  One stock tank barrel, of 42 U.S. gallons liquid volume, used in reference to crude oil, condensate, or natural gas liquids.

·Bbl/D.  One Bbl per day.

·BOE.  One barrel of oil equivalent, with 6,000 cubic feet of natural gas being equivalent to one barrel of oil.

·BOE/D.  One barrel of oil equivalent per day.

·Completion.  The process of treating a drilled well followed by the installation of permanent equipment for the production of oil or natural gas, or in the case of a dry hole, the reporting of abandonment to the appropriate agency.

·Condensate.  A mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that, when produced, is in the liquid phase at surface pressure and temperature.

·Developed acreage.  The number of acres that are allocated or assignable to productive wells or wells capable of production.

·Development capital.  Expenditures to obtain access to proved reserves and to construct facilities for producing, treating, and storing hydrocarbons.

·Dry hole.  A well found to be incapable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of such production exceed production expenses and taxes.

·Economically producible.  A resource that generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation.  For a complete definition of economically producible, refer to the SEC’s Regulation S-X, Rule 4-10(a)(10).

·Exploratory well.  A well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or natural gas in another reservoir.

·FASB.  Financial Accounting Standards Board.

·Field.  An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition.  The field name refers to the surface area, although it may refer to both the surface and the underground productive formations.  For a complete definition of field, refer to the SEC’s Regulation S-X, Rule 4-10(a)(15).

·Formation.  A layer of rock which has distinct characteristics that differ from nearby rock.

·GAAP.  Accounting principles generally accepted in the United States.

·Gross acres or Gross wells.  The total acres or wells, as the case may be, in which an entity owns a working interest.

·Holdings.  Athlon Holdings LP, our accounting predecessor.

·Horizontal drilling.  A drilling technique used in certain formations where a well is drilled vertically to a certain depth and then drilled at a right angle within a specified interval.

·Infill wells.  Wells drilled into the same pool as known producing wells so that oil or natural gas does not have to travel as far through the formation.

·Lease operating expense (“LOE”).  All direct and allocated indirect costs of lifting hydrocarbons from a producing formation to the surface constituting part of the current operating expenses of a working interest.  Such costs include labor, superintendence, supplies, repairs, maintenance, allocated overhead charges, workover, insurance, and other expenses incidental to production, but exclude lease acquisition or drilling or completion expenses.

·LIBOR.  London Interbank Offered Rate.

·MBbl.  One thousand barrels of crude oil, condensate, or NGLs.

·MBOE.  One thousand barrels of oil equivalent.

·Mcf.  One thousand cubic feet of natural gas.

·MMBOE.  One million barrels of oil equivalent.

·MMcf.  One million cubic feet of natural gas.

·MMcf/D.  One million cubic feet of natural gas per day.

·MMcfe/D.  One million cubic feet of natural gas equivalent per day.

·Natural gas liquids (“NGLs”).  The combination of ethane, propane, butane, isobutane, and natural gasolines that when removed from natural gas become liquid under various levels of higher pressure and lower temperature.

·Net acres or Net wells.  The percentage of total acres or wells, as the case may be, an owner has out of a particular number of gross acres or wells.  For example, an owner who has 50% interest in 100 gross acres owns 50 net acres.

·NYMEX.  The New York Mercantile Exchange.

·Operator.  The entity responsible for the exploration, development, and production of a well or lease.

ii

·Production margin.  Total wellhead revenues less total production costs.

·Productive well.  A well that is found to be capable of producing hydrocarbons in sufficient quantities such that proceeds from the sale of the production exceed production expenses and taxes.

·Proved developed reserves.  Proved reserves that can be expected to be recovered:

i.Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well; or

ii.Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

·Proved reserves.  Those quantities of oil and natural gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation.  The project to extract the hydrocarbons must have commenced, or the operator must be reasonably certain that it will commence, the project within a reasonable time.  For a complete definition of proved oil and natural gas reserves, refer to the SEC’s Regulation S-X, Rule 4-10(a)(22).

·Proved undeveloped reserves (PUDs).  Proved reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances justify a longer time.

Under no circumstances shall estimates for proved undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, or by other evidence using reliable technology establishing reasonable certainty.

·Reasonable certainty.  A high degree of confidence.  For a complete definition of reasonable certainty, refer to the SEC’s Regulation S-X, Rule 4-10(a)(24).

·Recompletion.  The process of re-entering an existing wellbore that is either producing or not producing and completing new reservoirs in an attempt to establish or increase existing production.

·Reliable technology.  A grouping of one or more technologies (including computational methods) that have been field tested and have been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

·Reserves.  Estimated remaining quantities of oil and natural gas and related substances anticipated to be economically producible, as of a given date, by application of development prospects to known accumulations.  In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and natural gas or related substances to market, and all permits and financing required to implement the project.

·Reservoir.  A porous and permeable underground formation containing a natural accumulation of producible hydrocarbons that is confined by impermeable rock or water barriers and is separate from other reservoirs.

·Spacing.  The distance between wells producing from the same reservoir.  Spacing is often expressed in terms of acres, e.g., 40-acre spacing, and is often established by regulatory agencies.

·Stacked pay.  Multiple geological zones that potentially contain hydrocarbons and are arranged in a vertical stack.

·Undeveloped acreage.  Lease acreage on which wells have not been drilled or completed to a point that would permit the production of economic quantities of oil or natural gas regardless of whether such acreage contains proved reserves.

·Wellbore.  The hole drilled by the bit that is equipped for oil or gas production on a completed well.  Also called well or borehole.

·Working interest.  The right granted to the lessee of a property to explore for and to produce and own oil, natural gas, or other minerals.  The working interest owners bear the exploration, development, and operating costs on either a cash, penalty, or carried basis.

·Workover.  Operations on a producing well to restore or increase production.

·WTI.  West Texas Intermediate crude oil, which is a light, sweet crude oil, characterized by an American Petroleum Institute gravity, or API gravity, between 39 and 41 and a sulfur content of approximately 0.4 weight percent that is used as a benchmark for other crude oils.

iii

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

ATHLON ENERGY INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and par value amounts)

	June 30,			December 31,
	2013			2012
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	2,547		$	8,871
Accounts receivable	37,124			24,501
Derivatives	3,022			2,246
Inventory	999			1,022
Other	600			2,486
Total current assets	44,292			39,126
Properties and equipment, at cost - full cost method:
Proved properties, including wells and related equipment	971,092			788,571
Unproved properties	95,523			89,860
Accumulated depletion, depreciation, and amortization	(112,131		)	(73,824		)
	954,484			804,607
Derivatives	7,392			2,854
Debt issuance costs	15,148			4,418
Other	2,837			1,293
Total assets	$	1,024,153		$	852,298
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable:
Trade	$	369		$	3,170
Affiliate	214			935
Accrued liabilities:
Lease operating	4,761			3,858
Production, severance, and ad valorem taxes	3,762			1,307
Development capital	49,345			39,483
Interest	7,732			834
Derivatives	299			592
Revenue payable	15,555			9,330
Deferred taxes	2,777			58
Other	2,412			1,808
Total current liabilities	87,226			61,375
Derivatives	—			519
Asset retirement obligations, net of current portion	5,877			5,049
Long-term debt	543,500			362,000
Deferred taxes	77,696			2,340
Other	119			138
Total liabilities	714,418			431,421
Commitments and contingencies
Equity:
Partners’ equity	—			420,877
Preferred stock, $.01 par value, 50,000,000 shares authorized, none issued and outstanding	—			—
Common stock, $.01 par value, 500,000,000 shares authorized, 66,339,615 and none issued and outstanding, respectively	663			—
Additional paid-in capital	278,450			—
Retained earnings	20,362			—
Total stockholders’ equity	299,475			—
Noncontrolling interest	10,260			—
Total equity	309,735			420,877
Total liabilities and equity	$	1,024,153		$	852,298

The accompanying notes are an integral part of these consolidated financial statements.

1

ATHLON ENERGY INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Revenues:
Oil	$	54,609		$	29,617		$	100,268		$	57,050
Natural gas	4,363			1,492			7,730			2,940
Natural gas liquids	6,193			4,682			11,913			9,033
Total revenues	65,165			35,791			119,911			69,023
Expenses:
Production:
Lease operating	7,775			5,942			15,012			10,641
Production, severance, and ad valorem taxes	4,247			2,461			7,941			4,811
Depletion, depreciation, and amortization	20,358			13,065			38,411			22,679
General and administrative	3,659			2,481			6,998			5,078
Derivative fair value gain	(12,555		)	(46,569		)	(5,706		)	(23,858		)
Other operating	227			116			421			246
Total expenses	23,711			(22,504		)	63,077			19,597
Operating income	41,454			58,295			56,834			49,426
Interest expense	12,082			1,705			16,556			3,200
Income before income taxes	29,372			56,590			40,278			46,226
Income tax provision	4,844			1,986			4,871			1,622
Consolidated net income	24,528			54,604			35,407			44,604
Less: net income attributable to noncontrolling interest	831			—			831			—
Net income attributable to stockholders	$	23,697		$	54,604		$	34,576		$	44,604
Net income per common share:
Basic	$	0.36		$	0.82		$	0.52		$	0.67
Diluted	$	0.36		$	0.80		$	0.52		$	0.65
Weighted average common shares outstanding:
Basic	66,340			66,340			66,340			66,340
Diluted	68,196			68,196			68,196			68,196

The accompanying notes are an integral part of these consolidated financial statements.

2

ATHLON ENERGY INC.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(in thousands)

(unaudited)

				Athlon Stockholders
				Issued
				Shares of			Additional					Total
	Partners’			Common	Common		Paid-in			Retained		Stockholders’			Noncontrolling		Total
	Equity			Stock	Stock		Capital			Earnings		Equity			Interest		Equity
Balance at December 31, 2012	$	420,877		—	$	—	$	—		$	—	$	—		$	—	$	420,877
Capital contributions	1,500			—	—		—			—		—			—		1,500
Equity-based compensation prior to corporate reorganization	89			—	—		—			—		—			—		89
Net income prior to corporate reorganization	14,214			—	—		—			—		—			—		14,214
Distributions to Athlon Holdings LP Class A limited partners	(75,000		)	—	—		—			—		—			—		(75,000		)
Common stock issued in corporate reorganization	(361,680		)	66,340	663		351,588			—		352,251			9,429		—
Tax impact of corporate reorganization	—			—	—		(73,204		)	—		(73,204		)	—		(73,204		)
Equity-based compensation subsequent to corporate reorganization	—			—	—		66			—		66			—		66
Consolidated net income subsequent to corporate reorganization	—			—	—		—			20,362		20,362			831		21,193
Balance at June 30, 2013	$	—		66,340	$	663	$	278,450		$	20,362	$	299,475		$	10,260	$	309,735

The accompanying notes are an integral part of these consolidated financial statements.

3

ATHLON ENERGY INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six months ended June 30,
	2013			2012
Cash flows from operating activities:
Consolidated net income	$	35,407		$	44,604
Adjustments to reconcile consolidated net income to net cash provided by operating activities:
Depletion, depreciation, and amortization	38,411			22,679
Deferred taxes	4,871			1,622
Non-cash derivative gain	(6,127		)	(26,424		)
Equity-based compensation	113			91
Other	3,979			550
Changes in operating assets and liabilities, net of effects from acquisitions:
Accounts receivable	(12,623		)	(3,012		)
Other current assets	424			(348		)
Accounts payable	(2,503		)	1,714
Revenue payable	5,723			1,251
Other current liabilities	11,549			(552		)
Net cash provided by operating activities	79,224			42,175
Cash flows from investing activities:
Acquisitions of oil and natural gas properties	(16,482		)	(3,142		)
Development of oil and natural gas properties	(161,514		)	(121,968		)
Other	(336		)	(189		)
Net cash used in investing activities	(178,332		)	(125,299		)
Cash flows from financing activities:
Proceeds from long-term debt, net of issuance costs	594,647			275,944
Payments on long-term debt	(427,426		)	(220,000		)
Distributions to Athlon Holdings LP Class A limited partners	(75,000		)	—
Other	563			166
Net cash provided by financing activities	92,784			56,110
Decrease in cash and cash equivalents	(6,324		)	(27,014		)
Cash and cash equivalents, beginning of period	8,871			32,030
Cash and cash equivalents, end of period	$	2,547		$	5,016

The accompanying notes are an integral part of these consolidated financial statements.

4

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 1.   Formation of the Company and Description of Business

Athlon Energy Inc. (together with its subsidiaries, “Athlon”), a Delaware corporation, was formed on April 1, 2013 and is an independent exploration and production company focused on the acquisition, development, and exploitation of unconventional oil and liquids-rich natural gas reserves in the Permian Basin.

On April 26, 2013, Athlon Holdings LP (“Holdings”), a Delaware limited partnership, underwent a corporate reorganization and as a result, Holdings became a majority-owned subsidiary of Athlon.  Holdings is considered Athlon’s accounting predecessor.  Athlon operates and controls all of the business and affairs of Holdings and consolidates its financial results.  Holdings is not subject to federal income taxes.  On the date of the corporate reorganization, a corresponding “first day” tax expense of approximately $73.2 million was recorded to establish a net deferred tax liability for differences between the tax and book basis of Athlon’s assets and liabilities.  The offset of the deferred tax liability was recorded to additional paid-in capital.

Prior to the corporate reorganization, Holdings was a party to a limited partnership agreement with its management group and Apollo Athlon Holdings LLC (“Apollo”), which is an affiliate of Apollo Global Management, LLC.  Prior to the corporate reorganization, Apollo Investment Fund VII, L.P. and its parallel funds (the “Apollo Funds”), members of Holdings’ management team, and certain employees owned all of the Class A limited partner interests in Holdings and members of Holdings’ management team and certain employees owned all of the Class B limited partner interests in Holdings.

In the corporate reorganization, the Apollo Funds entered into a number of distribution and contribution transactions pursuant to which the Apollo Funds exchanged their Class A limited partner interests in Holdings for common stock of Athlon.  The remaining holders of Class A limited partner interests in Holdings have not exchanged their interests in the reorganization transactions.  In addition, the holders of the Class B limited partner interests in Holdings exchanged their interests for common stock of Athlon subject to the same conditions and vesting terms.

Initial Public Offering

On August 7, 2013, Athlon completed its initial public offering (“IPO”) of 15,789,474 shares of its common stock at $20.00 per share and received net proceeds of approximately $293.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.  Upon closing of the IPO, the limited partnership agreement of Holdings was amended and restated to, among other things, modify Holdings’ capital structure by replacing its different classes of interests with a single new class of units, the “New Holdings Units”.  The members of Holdings’ management team and certain employees that held Class A limited partner interests now own 1,855,563 New Holdings Units and entered into an exchange agreement under which (subject to the terms of the exchange agreement) they have the right to exchange their New Holdings Units for shares of common stock of Athlon on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications.  All other New Holdings Units are held by Athlon.  Athlon used the net proceeds from the IPO to purchase New Holdings Units from Holdings.  Holdings used the proceeds it received as a result of Athlon’s purchase of New Holdings Units (i) to reduce outstanding borrowings under its credit agreement, (ii) to provide additional liquidity for use in its drilling program, and (iii) for general corporate purposes.

Note 2.   Basis of Presentation

Athlon’s consolidated financial statements include the accounts of its wholly owned and majority-owned subsidiaries.  All material intercompany balances and transactions have been eliminated in consolidation.

In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly, in all material respects, Athlon’s financial position as of June 30, 2013, results of operations for the three and six months ended June 30, 2013 and 2012, and cash flows for the six months ended June 30, 2013 and 2012.  All adjustments are of a normal recurring nature.  These interim results are not necessarily indicative of results for an entire year.

5

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

Certain amounts and disclosures have been condensed and omitted from the unaudited consolidated financial statements pursuant to the rules and regulations of the United States Securities and Exchange Commission (the “SEC”).  Therefore, these unaudited consolidated financial statements should be read in conjunction with Holdings’ audited consolidated financial statements and related notes thereto included in Athlon’s final prospectus dated August 1, 2013 and filed with the SEC pursuant to Rule 424(b)(4) of the Securities Act of 1933 on August 5, 2013.

Income Taxes

Athlon accounts for income taxes using the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

Athlon periodically assesses whether it is more likely than not that it will generate sufficient taxable income to realize its deferred income tax assets, including net operating losses.  In making this determination, Athlon considers all available positive and negative evidence and makes certain assumptions.  Athlon considers, among other things, its deferred tax liabilities, the overall business environment, its historical earnings and losses, current industry trends, and its outlook for future years.  Athlon believes it is more likely than not that certain net operating losses can be carried forward and utilized.

In April 2013, Athlon had a corporate reorganization to effectuate its IPO.  Holdings, Athlon’s accounting predecessor, is a partnership not subject to federal income tax.  Pursuant to the steps of the corporate reorganization, certain Class A limited partners and the Class B limited partners of Holdings exchanged their interests for shares of Athlon’s common stock.  Athlon’s operations are now subject to federal income tax.  The tax implications of the corporate reorganization and the tax impact of the conversion to operating as a taxable entity have been reflected in the accompanying consolidated financial statements.

Noncontrolling Interest

As of June 30, 2013, management and employees owned approximately 3.2% of Holdings.  Athlon owns 100% of Athlon Holdings GP LLC, which is Holdings’ general partner.  Considering the presumption of control, Athlon has fully consolidated the financial position, results of operations, and cash flows of Holdings.

As presented in the accompanying Consolidated Balance Sheets, “Noncontrolling interest” as of June 30, 2013 of approximately $10.3 million represents management and employees’ 1,855,563 New Holdings Units that are exchangeable for shares of Athlon’s common stock on a one-for-one basis.  As presented in the accompanying Consolidated Statements of Operations, “Net income attributable to noncontrolling interest” for each of the three and six months ended June 30, 2013 of approximately $0.8 million represents the net income of Holdings attributable to management and employees since April 26, 2013.

New Accounting Pronouncements

In December 2011, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) 2011-11, “Disclosures about Offsetting Assets and Liabilities” and in January 2013 issued ASU 2013-01, “Clarifying the Scope of Disclosures About Offsetting Assets and Liabilities”.  These ASUs created new disclosure requirements regarding the nature of an entity’s rights of setoff and related arrangements associated with its derivative instruments, repurchase agreements, and securities lending transactions. Certain disclosures of the amounts of certain instruments subject to enforceable master netting arrangements are required, irrespective of whether the entity has elected to offset those instruments in the statement of financial position. These ASUs were effective retrospectively for annual reporting periods beginning on or after January 1, 2013. The adoption of these ASUs did not impact Athlon’s financial position, results of operations, or liquidity.

No other new accounting pronouncements issued or effective from January 1, 2013 through the date of this Report, had or are expected to have a material impact on Athlon’s unaudited consolidated financial statements.

6

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

Note 3. Proved Properties

Amounts shown in the accompanying Consolidated Balance Sheets as “Proved properties, including wells and related equipment” consisted of the following as of the dates indicated:

	June 30,		December 31,
	2013		2012
	(in thousands)
Proved leasehold costs	$	408,791	$	376,271
Wells and related equipment - Completed	532,259		379,036
Wells and related equipment - In process	30,042		33,264
Total proved properties	$	971,092	$	788,571

Note 4.  Fair Value Measurements

The book values of cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments.  The book value of the credit agreement approximates fair value as the interest rate is variable.  Athlon considers debt with variable interest rates to have a fair value equal to its carrying value (“Level 1” input).  Commodity derivative contracts are marked-to-market each quarter and are thus stated at fair value in the accompanying Consolidated Balance Sheets.  As of June 30, 2013, the fair value of the senior notes was approximately $497.6 million using open market quotes (“Level 1” input).

Derivative Policy

Athlon uses various financial instruments for non-trading purposes to manage and reduce price volatility and other market risks associated with its oil production.  These arrangements are structured to reduce Athlon’s exposure to commodity price decreases, but they can also limit the benefit Athlon might otherwise receive from commodity price increases.  Athlon’s risk management activity is generally accomplished through over-the-counter commodity derivative contracts with large financial institutions, most of which are lenders underwriting the Holdings Credit Agreement.

Athlon applies the provisions of the “Derivatives and Hedging” topic of the Accounting Standards Codification, which requires each derivative instrument to be recorded in the accompanying Consolidated Balance Sheets at fair value.  If a derivative has not been designated as a hedge or does not otherwise qualify for hedge accounting, it must be adjusted to fair value through earnings.  Athlon elected not to designate its current portfolio of commodity derivative contracts as hedges for accounting purposes.  Therefore, changes in fair value of these derivative instruments are recognized in earnings and included in “Derivative fair value gain” in the accompanying Consolidated Statements of Operations.

Athlon enters into commodity derivative contracts for the purpose of economically fixing the price of its anticipated oil production even though Athlon does not designate the derivatives as hedges for accounting purposes.  Athlon classifies cash flows related to derivative contracts based on the nature and purpose of the derivative.  As the derivative cash flows are considered an integral part of Athlon’s oil and natural gas operations, they are classified as cash flows from operating activities in the accompanying Consolidated Statements of Cash Flows.

Commodity Derivative Contracts

Commodity prices are often subject to significant volatility due to many factors that are beyond Athlon’s control, including but not limited to: prevailing economic conditions, supply and demand of hydrocarbons in the marketplace, actions by speculators, and geopolitical events such as wars or natural disasters.  Athlon manages oil price risk with swaps, puts, and collars.  Swaps provide a fixed price for a notional amount of sales volumes.  Collars provide a floor price on a notional amount of sales volumes while allowing some additional price participation if the relevant index price closes above the floor price.  This participation is limited by a ceiling price specified in the contract.

7

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

The following table summarizes Athlon’s open commodity derivative contracts as of June 30, 2013:

	Average	Weighted -		Average	Weighted -		Average		Weighted -		Asset
	Daily	Average		Daily	Average		Daily		Average		(Liability)
	Floor	Floor		Cap	Cap		Swap		Swap		Fair Market
Period	Volume	Price		Volume	Price		Volume		Price		Value
	(Bbl)	(per Bbl)		(Bbl)	(per Bbl)		(Bbl)		(per Bbl)		(in thousands)
July - Dec. 2013	150	$	75.00	150	$	105.95	6,750	(a)	$	94.93	$	(208	)
2014	—	—		—	—		7,950		92.67		7,711
2015	—	—		—	—		1,300		93.18		3,536
											$	11,039

(a)Includes 6,500 Bbls/D at $94.85 per Bbl for the third quarter of 2013 and 7,000 Bbls/D at $95.01 per Bbl for the fourth quarter of 2013.

Athlon is also a party to Midland-Cushing basis differential swaps for 5,000 Bbls/D at $1.20/Bbl for July through December 2013.  At June 30, 2013, the fair value of these contracts was a liability of approximately $0.9 million.

Counterparty Risk.  At June 30, 2013, Athlon had committed 10% or greater (in terms of fair market value) of its oil derivative contracts in asset positions from the following counterparties, or their affiliates:

	Fair Market Value of
	Oil Derivative
	Contracts
Counterparty	Committed
	(in thousands)
BNP Paribas	$	3,825
Wells Fargo	2,318
Scotiabank	1,474
Barclays PLC	1,350
Royal Bank of Canada	1,192

Athlon does not require collateral from its counterparties for entering into financial instruments, so in order to mitigate the credit risk associated with financial instruments, Athlon enters into master netting agreements with its counterparties.  The master netting agreement is a standardized, bilateral contract between a given counterparty and Athlon.  Instead of treating each financial transaction between the counterparty and Athlon separately, the master netting agreement enables the counterparty and Athlon to aggregate all financial trades and treat them as a single agreement.  This arrangement is intended to benefit Athlon in two ways: (i) default by a counterparty under one financial trade can trigger rights to terminate all financial trades with such counterparty; and (ii) netting of settlement amounts reduces Athlon’s credit exposure to a given counterparty in the event of close-out.  Athlon’s accounting policy is to not offset fair value amounts between different counterparties for derivative instruments in the accompanying Consolidated Balance Sheets.

8

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

Tabular Disclosures of Fair Value Measurements

The following table summarizes the fair value of Athlon’s derivative instruments not designated as hedging instruments as of the dates indicated:

	Oil			Commodity			Total
Balance Sheet	Commodity			Derivatives			Commodity
Location	Derivatives			Netting (a)			Derivatives
As of June 30, 2013
Assets
Derivatives - current	$	5,335		$	(2,313	)	$	3,022
Derivatives - noncurrent	7,392			—			7,392
Total assets	12,727			(2,313		)	10,414
Liabilities
Derivatives - current	(2,612		)	2,313			(299		)
Derivatives - noncurrent	—			—			—
Total liabilities	(2,612		)	2,313			(299		)
Net assets	$	10,115		$	—		$	10,115
As of December 31, 2012
Assets
Derivatives - current	$	3,386		$	(1,140	)	$	2,246
Derivatives - noncurrent	3,265			(411		)	2,854
Total assets	6,651			(1,551		)	5,100
Liabilities
Derivatives - current	(1,732		)	1,140			(592		)
Derivatives - noncurrent	(930		)	411			(519		)
Total liabilities	(2,662		)	1,551			(1,111		)
Net assets	$	3,989		$	—		$	3,989

(a)Represents counterparty netting under master netting agreements, which allow for netting of commodity derivative contracts.  These derivative instruments are reflected net on the accompanying Consolidated Balance Sheets.

The following table summarizes the effect of derivative instruments not designated as hedges on the accompanying Consolidated Statements of Operations for the periods indicated (in thousands):

		Amount of Gain Recognized in Income
	Location of Gain	Three months ended June 30,				Six months ended June 30,
Derivatives Not Designated as Hedges	Recognized in Income	2013		2012		2013		2012
Commodity derivative contracts	Derivative fair value gain	$	12,555	$	46,569	$	5,706	$	23,858

Fair Value Hierarchy

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy are defined as follows:

·      Level 1 — Inputs such as unadjusted, quoted prices that are available in active markets for identical assets or liabilities.

·      Level 2 — Inputs, other than quoted prices within Level 1, that are either directly or indirectly observable.

·      Level 3 — Inputs that are unobservable for use when little or no market data exists requiring the use of valuation methodologies that result in management’s best estimate of fair value.

9

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

As required by GAAP, Athlon utilizes the most observable inputs available for the valuation technique used.  The financial assets and liabilities are classified in their entirety based on the lowest level of input that is of significance to the fair value measurement.  Athlon’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the financial assets and liabilities and their placement within the fair value hierarchy levels.  The following methods and assumptions were used to estimate the fair values of Athlon’s assets and liabilities that are accounted for at fair value on a recurring basis:

·      Level 2 — Fair values of swaps are estimated using a combined income-based and market-based valuation methodology based upon forward commodity price curves obtained from independent pricing services.  Athlon’s collars and puts are average value options.  Settlement is determined by the average underlying price over a predetermined period of time.  Athlon uses observable inputs in an option pricing valuation model to determine fair value such as: (1) current market and contractual prices for the underlying instruments; (2) quoted forward prices for oil and natural gas; (3) interest rates, such as a LIBOR curve for a term similar to the commodity derivative contract; and (4) appropriate volatilities.

Athlon adjusts the valuations from the valuation model for nonperformance risk.  For commodity derivative contracts which are in an asset position, Athlon adds the counterparty’s credit default swap spread to the risk-free rate.  If a counterparty does not have a credit default swap spread, Athlon uses other companies with similar credit ratings to determine the applicable spread.  For commodity derivative contracts which are in a liability position, Athlon uses the yield on its senior notes less the risk-free rate.  All fair values have been adjusted for nonperformance risk resulting in a decrease in the net commodity derivative asset of approximately $111,000 as of June 30, 2013 and an increase in the net commodity derivative asset of approximately $125,000 as of December 31, 2012.

The following table sets forth Athlon’s assets and liabilities that were accounted for at fair value on a recurring basis as of the dates indicated:

				Fair Value Measurements at Reporting Date Using
				Quoted Prices in
				Active Markets for		Significant Other			Significant
				Identical Assets		Observable Inputs			Unobservable Inputs
Description	Asset (liability), net			(Level 1)		(Level 2)			(Level 3)
	(in thousands)
As of June 30, 2013
Oil derivative contracts - swaps	$	11,049		$	—	$	11,049		$	—
Oil derivative contracts - basis differential swaps	(924		)	—		(924		)	—
Oil derivative contracts - collars	(10		)	—		(10		)	—
Total	$	10,115		$	—	$	10,115		$	—
As of December 31, 2012
Oil derivative contracts - swaps	$	4,069		$	—	$	4,069		$	—
Oil derivative contracts - collars	(80		)	—		(80		)	—
Total	$	3,989		$	—	$	3,989		$	—

10

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

Note 5. Asset Retirement Obligations

Asset retirement obligations relate to future plugging and abandonment expenses on oil and natural gas properties and related facilities disposal.  The following table summarizes the changes in Athlon’s asset retirement obligations for the six months ended June 30, 2013 (in thousands):

Balance at January 1	$	5,049
Acquisition of properties	265
Wells drilled	418
Accretion of discount	311
Revisions of previous estimates	2
Plugging and abandonment costs incurred	(66		)
Balance at June 30	$	5,979

As of June 30, 2013, $5.9 million of Athlon’s asset retirement obligations were long-term and recorded in “Asset retirement obligations, net of current portion” and $102,000 were current and included in “Other current liabilities” in the accompanying Consolidated Balance Sheets.

Note 6. Long-Term Debt

Senior Notes

In April 2013, Holdings issued $500 million aggregate principal amount of 7 3/8% senior notes due 2021 (the “Notes”).  The net proceeds from the Notes were used to repay a portion of the outstanding borrowings under Holdings credit agreement, to repay in full and terminate Holdings former second lien term loan, to make a $75 million distribution to Holdings’ Class A limited partners, and for general partnership purposes.  The indenture governing the Notes contains covenants, including, among other things, covenants that restrict Holdings’ ability to:

·make distributions, investments, or other restricted payments if Holdings’ fixed charge coverage ratio is less than 2.0 to 1.0;

·incur additional indebtedness if Holdings’ fixed charge coverage ratio would be less than 2.0 to 1.0; and

·create liens, sell assets, consolidate or merge with any other person, or engage in transactions with affiliates.

These covenants are subject to a number of important qualifications, limitations, and exceptions.  In addition, the indenture contains other customary terms, including certain events of default upon the occurrence of which the senior notes may be declared immediately due and payable.

Under the indenture, starting on April 15, 2016, Holdings will be able to redeem some or all of the Notes at a premium that will decrease over time, plus accrued and unpaid interest to the date of redemption.  Prior to April 15, 2016, Holdings will be able, at its option, to redeem up to 35% of the aggregate principal amount of the Notes at a price of 107.375% of the principal thereof, plus accrued and unpaid interest to the date of redemption, with an amount equal to the net proceeds from certain equity offerings.  In addition, at Holdings’ option, prior to April 15, 2016, Holdings may redeem some or all of the Notes at a redemption price equal to 100% of the principal amount of the Notes, plus an “applicable premium”, plus accrued and unpaid interest to the date of redemption.  If a change of control occurs on or prior to July 15, 2014, Holdings may redeem all, but not less than all, of the notes at 110% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date.  Certain asset dispositions will be triggering events that may require Holdings to repurchase all or any part of a noteholder’s Notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to but excluding the date of repurchase.  Interest on the Notes is payable in cash semi-annually in arrears, commencing on October 15, 2013, through maturity.

As a result of the issuance of the Notes, Athlon’s former second lien term loan was paid off and retired and the borrowing base of the credit agreement was reduced resulting in a write off of unamortized debt issuance costs of approximately $2.8 million, which is included in “Interest expense” in the accompanying Consolidated Statements of Operations and “Other” in the operating activities section of the accompanying Consolidated Statements of Cash Flows.

Credit Agreement

Holdings is a party to an amended and restated credit agreement dated March 19, 2013 (the “Holdings Credit Agreement”), which matures on March 19, 2018.  The Holdings Credit Agreement provides for revolving credit loans to be made to Holdings from time to

11

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

time and letters of credit to be issued from time to time for the account of Holdings or any of its restricted subsidiaries.  The aggregate amount of the commitments of the lenders under the Holdings Credit Agreement is $1.0 billion.  Availability under the Holdings Credit Agreement is subject to a borrowing base, which is redetermined semi-annually and upon requested special redeterminations.

As of June 30, 2013, the borrowing base was $320 million and there were $43.5 million of outstanding borrowings, $276.5 million of borrowing capacity, and no outstanding letters of credit under the Holdings Credit Agreement.  In conjunction with the offering of the Notes in April 2013 as discussed above, the borrowing base under the Holdings Credit Agreement was reduced to $267.5 million.  In May 2013, Holdings amended the Holdings Credit Agreement to, among other things, increase the borrowing base to $320 million.

Obligations under the Holdings Credit Agreement are secured by a first-priority security interest in substantially all of Holdings’ proved reserves and in the equity interests of its operating subsidiaries.  In addition, obligations under the Holdings Credit Agreement are guaranteed by Athlon and Holdings’ operating subsidiaries.

Loans under the Holdings Credit Agreement are subject to varying rates of interest based on (1) outstanding borrowings in relation to the borrowing base and (2) whether the loan is a Eurodollar loan or a base rate loan.  Eurodollar loans under the Holdings Credit Agreement bear interest at the Eurodollar rate plus the applicable margin indicated in the following table, and base rate loans under the Holdings Credit Agreement bear interest at the base rate plus the applicable margin indicated in the following table.  Holdings also incurs a quarterly commitment fee on the unused portion of the Holdings Credit Agreement indicated in the following table:

Ratio of Outstanding Borrowings to Borrowing Base	Unused Commitment Fee		Applicable Margin for Eurodollar Loans		Applicable Margin for Base Rate Loans
Less than or equal to .30 to 1	0.375	%	1.50	%	0.50	%
Greater than .30 to 1 but less than or equal to .60 to 1	0.375	%	1.75	%	0.75	%
Greater than .60 to 1 but less than or equal to .80 to 1	0.50	%	2.00	%	1.00	%
Greater than .80 to 1 but less than or equal to .90 to 1	0.50	%	2.25	%	1.25	%
Greater than .90 to 1	0.50	%	2.50	%	1.50	%

The “Eurodollar rate” for any interest period (either one, two, three, or six months, as selected by Holdings) is the rate equal to the British Bankers Association London Interbank Offered Rate (“LIBOR”) for deposits in dollars for a similar interest period.  The “Base Rate” is calculated as the highest of: (1) the annual rate of interest announced by Bank of America, N.A. as its “prime rate”; (2) the federal funds effective rate plus 0.5%; or (3) except during a “LIBOR Unavailability Period”, the Eurodollar rate (for dollar deposits for a one-month term) for such day plus 1.0%.

Any outstanding letters of credit reduce the availability under the Holdings Credit Agreement.  Borrowings under the Holdings Credit Agreement may be repaid from time to time without penalty.

The Holdings Credit Agreement contains covenants including, among others, the following:

·a prohibition against incurring debt, subject to permitted exceptions;

·a restriction on creating liens on Holdings’ assets and the assets of its operating subsidiaries, subject to permitted exceptions;

·restrictions on merging and selling assets outside the ordinary course of business;

·restrictions on use of proceeds, investments, transactions with affiliates, or change of principal business;

·a requirement that Holdings maintain a ratio of consolidated total debt to EBITDAX (as defined in the Holdings Credit Agreement) of not more than 4.75 to 1.0 beginning with the quarter ended June 30, 2013 (which ratio changes to 4.5 to 1.0 beginning with the quarter ended June 30, 2014); and

·a provision limiting commodity derivative contracts to a volume not exceeding 85% of projected production from proved reserves for a period not exceeding 66 months from the date the commodity derivative contract is entered into.

The Holdings Credit Agreement contains customary events of default, including our failure to comply with the financial ratios described above, which would permit the lenders to accelerate the debt if not cured within applicable grace periods.  If an event of

12

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

default occurs and is continuing, lenders with a majority of the aggregate commitments may require Bank of America, N.A. to declare all amounts outstanding under the Holdings Credit Agreement to be immediately due and payable.

Note 7. Stockholders’ Equity

In connection with Athlon’s incorporation on April 1, 2013 under the laws of the State of Delaware, it issued 1,000 shares of its common stock to Athlon Holdings GP LLC for an aggregate purchase price of $10.00.  On April 26, 2013, in connection with Athlon’s reorganization transactions, certain holders of limited partner interests in Holdings exchanged their Class A interests and Class B interests for an aggregate of 960,907 shares of Athlon’s common stock.  In connection with the effectiveness of Athlon’s IPO, these shares were subject to an adjustment based on Athlon’s IPO price of $20.00 per share and a 65.266-for-1 stock split resulting in 66,339,615 shares of Athlon’s common stock to be outstanding prior to the closing of the IPO.

Note 8. Earnings Per Share

Prior to the consummation of Athlon’s IPO, Athlon had 960,907 shares of outstanding common stock.  In conjunction with the closing of the IPO, certain Class A limited partners and Class B limited partners of Holdings that exchanged their interests for shares of Athlon’s common stock were subject to an adjustment based on Athlon’s IPO price of $20.00 per share and an actual 65.266-for-1 stock split.  Following this adjustment and stock split, the number of outstanding shares of Athlon’s common stock increased from 960,907 shares to 66,339,615 shares.  The one-to-one conversion of the Holdings interests in April 2013 to 960,907 shares of Athlon common stock that occurred in connection with the IPO is akin to a stock split and has been treated as such in Athlon’s earnings per share (“EPS”) calculations.  Accordingly, Athlon assumes that 66,339,615 shares of common stock were outstanding during periods prior to Athlon’s IPO for purposes of calculating EPS.

The following table reflects the allocation of net income to common stockholders and EPS computations for the periods indicated:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(in thousands, except per share amounts)
Basic EPS
Numerator:
Basic net income attributable to stockholders	$	23,697	$	54,604	$	34,576	$	44,604
Denominator:
Basic weighted average shares outstanding	66,340		66,340		66,340		66,340
Basic EPS attributable to stockholders	$	0.36	$	0.82	$	0.52	$	0.67
Diluted EPS
Numerator:
Basic net income attributable to stockholders	$	23,697	$	54,604	$	34,576	$	44,604
Effect of conversion of New Holdings Units to shares of Athlon’s common stock	831		—		831		—
Diluted net income attributable to stockholders	$	24,528	$	54,604	$	35,407	$	44,604
Denominator:
Basic weighted average shares outstanding	66,340		66,340		66,340		66,340
Effect of conversion of New Holdings Units to shares of Athlon’s common stock	1,856		1,856		1,856		1,856
Diluted weighted average shares outstanding	68,196		68,196		68,196		68,196
Diluted EPS attributable to stockholders	$	0.36	$	0.80	$	0.52	$	0.65

Note 9.  Incentive Stock Plans

Class B Interests

Holdings’ limited partnership agreement provides for the issuance of Class B limited partner interests.  The Class B interests entitle the holder to participate in the net profits of Holdings, but are subject to various performance criteria.  Class A limited partners are entitled to a return of their initial investment plus interest compounded at 8% annually (the “Class A Preference Amount”).  Upon the occurrence of a liquidity event and after the Class A Preference Amount has been satisfied, 80% and 20% of the remaining net profits will be distributed to holders of Class A interests and Class B interests, respectively.  The Class B interests vest over four or

13

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

five years or upon certain performance thresholds being met by Holdings.  Class B interests can also vest on the occurrence of certain events such as a change in control or in some cases upon termination of employment with Holdings.  As discussed in “Note 1. Formation of the Company and Description of Business”, in connection with Holdings’ corporate reorganization, the holders of the Class B limited partner interests in Holdings exchanged their interests for common stock of Athlon subject to the same conditions and vesting terms.

Management had independent valuations prepared for its grants of Class B limited partner interests.  During the three months ended June 30, 2013 and 2012, Athlon recorded approximately $65,000 and $32,000, respectively, of non-cash equity-based compensation expense.  During the six months ended June 30, 2013 and 2012, Athlon recorded approximately $113,000 and $91,000, respectively, of non-cash equity-based compensation expense.  Non-cash equity-based compensation expense is allocated to lease operating expense and general and administrative expenses in the accompanying Consolidated Statements of Operations based on the allocation of the respective employees’ compensation.  During the three and six months ended June 30, 2013, Athlon capitalized approximately $17,000 and $42,000, respectively, of non-cash stock-based compensation expense.  During each of the three and six months ended June 30, 2012, Athlon capitalized approximately $43,000 of non-cash stock-based compensation expense.  Capitalized non-cash stock-based compensation expense is included as a component of “Proved properties, including wells and related equipment” in the accompanying Consolidated Balance Sheets.

The fair value of Class B interests granted was estimated on the grant date using an option pricing model based on the following assumptions for the periods indicated:

	Six months ended June 30,
	2013			2012
Expected volatility	34.1		%	46.3		%
Expected dividend yield	0		%	0		%
Expected term (in years)	0.53			1.63
Risk-free interest rate	0.11		%	0.24		%
Weighted-average grant date fair value per interest	$	1.09		$	1.41

The expected volatility was calculated based on the average historical volatility of each company in Athlon’s peer group based on historical stock price data.  The expected term of the Class B interests was based on expected payout date from a triggering event.  The risk-free interest rate was based on the U.S. Treasury yield curve in effect at the grant date for a period of time commensurate with the expected term of the Class B interests.

The following table summarizes the changes in Athlon’s unvested common stock awards which were formerly Class B interests in Holdings for the six months ended June 30, 2013:

			Weighted -
			Average
	Number of		Grant Date
	Shares		Fair Value
Outstanding at January 1	5,021,200		$	0.22
Granted	652,500		1.09
Vested	(1,034,800	)	0.13
Forfeited	(41,000	)	1.18
Outstanding at June 30	4,597,900		0.36

As of June 30, 2013, Athlon had approximately $1.6 million of total unrecognized compensation cost related to unvested common stock awards which were formerly Class B interests in Holdings, which is expected to be recognized over a weighted-average period of approximately 3.3 years.  During the six months ended June 30, 2013 and 2012, there were 1,034,800 and 1,015,500, respectively, Class B interests that vested, the total grant date fair value of which was approximately $136,000 and $111,000, respectively.

Upon the consummation of Athlon’s IPO on August 1, 2013, the remaining unvested common stock awards, which were formerly Class B interests in Holdings, vested and Athlon recognized non-cash equity-based compensation expense of approximately $1.6 million.

14

ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

Note 10. Commitments and Contingencies

Athlon is a party to ongoing legal proceedings in the ordinary course of business.  Management does not believe the results of these proceedings, individually or in the aggregate, will have a material adverse effect on Athlon’s business, financial position, results of operations, or liquidity.

Additionally, Holdings has contractual obligations related to future plugging and abandonment expenses on oil and natural gas properties and related facilities disposal, long-term debt, commodity derivative contracts, operating leases, and development commitments.

Note 11. Related Party Transactions

Transaction Fee Agreement

Holdings is a party to a Transaction Fee Agreement, dated August 23, 2010, which requires Holdings to pay a fee to Apollo equal to 2% of the total equity contributed to Holdings, as defined in the agreement, in exchange for consulting and advisory services provided by Apollo.  In October 2012, Apollo assigned its rights and obligations under the Transaction Fee Agreement to an affiliate, Apollo Global Securities, LLC.  Since Holdings’ inception through June 30, 2013, it has incurred transaction fees under the Transaction Fee Agreement of approximately $7.5 million in total.  Upon the consummation of Athlon’s IPO, Holdings terminated the Transaction Fee Agreement.

Services Agreement

Holdings is a party to a Services Agreement, dated August 23, 2010, which requires Holdings to compensate Apollo for consulting and advisory services equal to the higher of (i) 1% of earnings before interest, income taxes, DD&A, and exploration expense per quarter and (ii) $62,500 per quarter (the “Advisory Fee”); provided, however, that such Advisory Fee for any calendar year shall not exceed $500,000.  The Services Agreement also provides for reimbursement to Apollo for any reasonable out-of-pocket expenses incurred while performing services under the Services Agreement.  During the three months ended June 30, 2013 and 2012, Holdings incurred approximately $95,000 and $280,000, respectively, of Advisory Fees.  During the six months ended June 30, 2013 and 2012, Holdings incurred approximately $500,000 and $493,000, respectively, of Advisory Fees.  All fees incurred under the Services Agreement are included in “General and administrative expenses” in the accompanying Consolidated Statements of Operations.

The Services Agreement provides that Apollo will provide advisory services until the earliest of (i) August 23, 2020, (ii) such time as Apollo owns in the aggregate less than 5% of the beneficial economic interest of Holdings, and (iii) such date as is mutually agreed upon by Holdings and Apollo.  Upon the consummation of Athlon’s IPO, Holdings terminated the Services Agreement and, in connection with the termination, Apollo received $2.5 million (plus $132,000 of unreimbursed fees) from Holdings.  Such payment corresponds to the present value as of the date of termination of the aggregate annual fees that would have been payable during the remainder of the term of the Services Agreement (assuming a term ending on August 23, 2020).  Under the Services Agreement, Holdings also agreed to indemnify Apollo and its affiliates and their respective limited partners, general partners, directors, members, officers, managers, employees, agents, advisors, their directors, officers, and representatives for potential losses relating to the services contemplated under the Services Agreement.

Participation of Apollo Global Securities, LLC in Senior Notes Offering and IPO

Apollo Global Securities, LLC is an affiliate of the Apollo Funds and received a portion of the gross spread as an initial purchaser of the Notes of $0.5 million.  Apollo Global Securities, LLC was also an underwriter in Athlon’s IPO and received a portion of the discounts and commissions paid to the underwriters in the IPO of approximately $0.9 million.

Distribution

Holdings used a portion of the net proceeds from the Notes to make a distribution to its Class A limited partners, including the Apollo Funds and its management team and employees.  The Apollo Funds received approximately $73 million of the distribution and the remaining Class A limited partners received approximately $2 million, in the aggregate.

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ATHLON ENERGY INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — Continued

(unaudited)

Exchange Agreement

Upon the consummation of its IPO, Athlon entered into an exchange agreement with certain members of its management team and employees who hold New Holdings Units after the closing of the IPO.  Under the exchange agreement, each such holder (and certain permitted transferees thereof) may, under certain circumstances after the date of the closing of the IPO (subject to the terms of the exchange agreement), exchange their New Holdings Units for shares of Athlon’s common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications.  As a holder exchanges its New Holdings Units, Athlon’s interest in Holdings will be correspondingly increased.

Tax Receivable Agreement

Upon the consummation of Athlon’s IPO, it entered into a tax receivable agreement with certain members of its management team and employees who hold New Holdings Units after the closing of the IPO that provides for the payment from time to time by Athlon to such unitholders of Holdings of 85% of the amount of the benefits, if any, that Athlon is deemed to realize as a result of increases in tax basis and certain other tax benefits related to exchanges of New Holdings Units pursuant to the exchange agreement, including tax benefits attributable to payments under the tax receivable agreement.  These payment obligations are obligations of Athlon and not of Holdings.  For purposes of the tax receivable agreement, the benefit deemed realized by Athlon will be computed by comparing its actual income tax liability (calculated with certain assumptions) to the amount of such taxes that Athlon would have been required to pay had there been no increase to the tax basis of the assets of Holdings as a result of the exchanges and had Athlon not entered into the tax receivable agreement.

The step-up in basis will depend on the fair value of the New Holdings Units at conversion.  There is no intent of the holders of New Holdings Units to exchange their units for shares of Athlon’s common stock in the foreseeable future.  In addition, Athlon does not expect to be in a tax paying position before 2019.  Therefore, Athlon cannot presently estimate what the benefit or payments under the tax receivable agreement will be on a factually supportable basis.  If the tax receivable agreement had been terminated immediately after the closing of the IPO, Athlon estimates it would have been required to make an early termination payment of approximately $5.3 million to the holders of the New Holdings Units.

Note 12. Subsequent Events

As discussed in “Note 1. Formation of the Company and Description of Business”, on August 7, 2013, Athlon completed its IPO of 15,789,474 shares of its common stock at $20.00 per share and received net proceeds of approximately $293.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.  Athlon used the net proceeds from the IPO to purchase New Holdings Units from Holdings.  Holdings used the proceeds it received as a result of Athlon’s purchase of New Holdings Units (i) to reduce outstanding borrowings under the Holdings Credit Agreement, (ii) to provide additional liquidity for use in its drilling program, and (iii) for general corporate purposes.

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ATHLON ENERGY INC.

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes in “Item 1. Financial Statements”.  The following discussion and analysis contains forward-looking statements, including, without limitation, statements relating to our plans, strategies, objectives, expectations, intentions, and resources.  Actual results could differ materially from those discussed in these forward-looking statements.  We do not undertake to update, revise, or correct any of the forward-looking information unless required to do so under law.  Readers are cautioned that such forward-looking statements should be read in conjunction with our disclosures under “Cautionary Note Regarding Forward-Looking Information “ and “Risk Factors” in our final prospectus dated August 1, 2013 and filed with the SEC pursuant to Rule 424(b)(4) of the Securities Act of 1933 on August 5, 2013.

Overview

We are an independent exploration and production company focused on the acquisition, development, and exploitation of unconventional oil and liquids-rich natural gas reserves in the Permian Basin.  The Permian Basin spans portions of Texas and New Mexico and consists of three primary sub-basins: the Delaware Basin, the Central Basin Platform, and the Midland Basin.  All of our properties are located in the Midland Basin.  Our drilling activity is currently focused on the low-risk vertical development of stacked pay zones, including the Spraberry, Wolfcamp, Cline, Strawn, Atoka, and Mississippian formations, which we refer to collectively as the Wolfberry play.  We are a returns-focused organization and have targeted the Wolfberry play in the Midland Basin because of its favorable operating environment, consistent reservoir quality across multiple target horizons, long-lived reserve characteristics and high drilling success rates.

We were founded in August 2010 by a group of executives from Encore Acquisition Company following its acquisition by Denbury Resources, Inc.  With an average of approximately 20 years of industry experience and 10 years of history working together, our founding management has a proven track record of working as a team to acquire, develop, and exploit oil and natural gas reserves in the Permian Basin as well as other resource plays in North America.

Initial Public Offering

On August 7, 2013, we completed our initial public offering (“IPO”) of 15,789,474 shares of our common stock at $20.00 per share and received net proceeds of approximately $293.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.  Upon closing of the IPO, the limited partnership agreement of Holdings was amended and restated to, among other things, modify Holdings’ capital structure by replacing its different classes of interests with a single new class of units, the “New Holdings Units”.  The members of Holdings’ management team and certain employees who held Class A limited partner interests now own New Holdings Units and entered into an exchange agreement under which (subject to the terms of the exchange agreement) they have the right to exchange their New Holdings Units for shares of our common stock on a one-for-one basis, subject to customary conversion rate adjustments for stock splits, stock dividends, and reclassifications.  All other New Holdings Units are held by us.  We used the net proceeds from the IPO to purchase New Holdings Units from Holdings.  Holdings used the proceeds it received as a result of our purchase of New Holdings Units (i) to reduce outstanding borrowings under its credit agreement, (ii) to provide additional liquidity for use in its drilling program, and (iii) for general corporate purposes.

Factors That Significantly Affect Our Financial Condition and Results of Operations

Our revenues, cash flow from operations, and future growth depend substantially on factors beyond our control, such as economic, political, and regulatory developments and competition from other sources of energy.  Oil and natural gas prices have historically been volatile and may fluctuate widely in the future due to a variety of factors, including but not limited to, prevailing economic conditions, supply and demand of hydrocarbons in the marketplace, actions by speculators, and geopolitical events such as wars or natural disasters.  Sustained periods of low prices for oil, natural gas, or NGLs could materially and adversely affect our financial condition, our results of operations, the quantities of oil and natural gas that we can economically produce, and our ability to access capital.

We use commodity derivative instruments, such as swaps, puts, and collars to manage and reduce price volatility and other market risks associated with our oil production.  These arrangements are structured to reduce our exposure to commodity price decreases, but they can also limit the benefit we might otherwise receive from commodity price increases.  Our risk management activity is generally accomplished through over-the-counter commodity derivative contracts with large financial institutions.  We elected not to designate our current portfolio of commodity derivative contracts as hedges for accounting purposes.  Therefore,

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changes in fair value of these derivative instruments are recognized in earnings.  Please read “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for additional discussion of our commodity derivative contracts.

The prices we realize on the oil we produce are affected by the ability to transport crude oil to the Cushing, Oklahoma transport hub and the Gulf Coast refineries.  Periodically, logistical and infrastructure constraints at the Cushing, Oklahoma transport hub have resulted in an oversupply of crude oil at Midland, Texas and thus lower prices for Midland WTI.  These lower prices have adversely affected the prices we realize on oil sales and increased our differential to NYMEX WTI.  However, several projects have recently been implemented and several more are underway to ease these transportation difficulties which we believe could reduce our differentials to NYMEX in the future.  We have also entered into Midland-Cushing differential swaps for 2013 to mitigate the adverse effects of any further widening of the Midland-Cushing WTI differential (the difference between Midland WTI and Cushing WTI).

Like all businesses engaged in the exploration and production of oil and natural gas, we face the challenge of natural production declines.  As initial reservoir pressures are depleted, oil and natural gas production from a given well naturally decreases.  Thus, an oil and natural gas exploration and production company depletes part of its asset base with each unit of oil or natural gas it produces.  We attempt to overcome this natural decline by drilling to find additional reserves and acquiring more reserves than we produce.  Our future growth will depend on our ability to enhance production levels from our existing reserves and to continue to add reserves in excess of production in a cost effective manner.  Our ability to make capital expenditures to increase production from our existing reserves and to add reserves through drilling is dependent on our capital resources and can be limited by many factors, including our ability to access capital in a cost-effective manner and to timely obtain drilling permits and regulatory approvals.

As with our historical acquisitions, any future acquisitions could have a substantial impact on our financial condition and results of operations. In addition, funding future acquisitions may require us to incur additional indebtedness or issue additional equity.

The volumes of oil and natural gas that we produce are driven by several factors, including:

·success in drilling wells, including exploratory wells, and the recompletion of existing wells;

·the amount of capital we invest in the leasing and development of our oil and natural gas properties;

·facility or equipment availability and unexpected downtime;

·delays imposed by or resulting from compliance with regulatory requirements; and

·the rate at which production volumes on our wells naturally decline.

Factors That Significantly Affect Comparability of Our Financial Condition and Results of Operations

Our historical financial condition and results of operations for the periods presented may not be comparable, either from period to period or going forward, for the following reasons:

Corporate Reorganization.  We were formed on April 1, 2013.  On April 26, 2013, Athlon Holdings LP (“Holdings”) underwent a corporate reorganization and as a result, Holdings became a majority-owned subsidiary of ours.  We operate and control all of Holdings’ business and affairs and consolidate its financial results.  The historical consolidated financial statements included herein for periods prior to the reorganization transactions are based on Holdings consolidated financial statements.  As a result, the historical financial data may not give you an accurate indication of what our actual results would have been if the reorganization transactions had been completed at the beginning of the periods presented or what our future results of operations are likely to be.

Public Company Expenses.  Upon completion of our IPO, we will incur direct, incremental general and administrative (“G&A”) expenses as a result of being a publicly traded company, including, but not limited to, costs associated with annual and quarterly reports to stockholders, tax return preparation, independent auditor fees, investor relations activities, registrar and transfer agent fees, incremental director and officer liability insurance costs, and independent director compensation.  We estimate these direct, incremental G&A expenses initially to total approximately $2.0 million per year.  These direct, incremental G&A expenses are not included in our historical results of operations.

Income Taxes.  Holdings, our accounting predecessor, is a limited partnership not subject to federal income taxes.  Accordingly, no provision for federal income taxes has been provided for in our historical results of operations for periods prior to the reorganization transactions because taxable income was passed through to Holdings partners.  However, we are a corporation under the Internal Revenue Code, subject to federal income taxes at a statutory rate of 35% of pretax earnings.

Increased Drilling Activity.  We began operations in January 2011 and gradually added operated vertical drilling rigs.  At June 30, 2013, we operated seven vertical drilling rigs on our properties, and we have operated between five and eight drilling rigs since

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October 2011.  Our 2013 drilling capital expenditures are expected to be between $340 million and $350 million, plus an additional $15 million for infrastructure, leasing, and capitalized workovers.  We expect to drill 161 gross vertical Wolfberry wells and 4 gross horizontal Wolfcamp wells.  We expect to take delivery of our first horizontal rig in the third quarter of 2013 and our second horizontal rig in the second quarter of 2014.  In 2014, we intend to expand to an eight-rig vertical drilling program.  The ultimate amount of capital that we expend may fluctuate materially based on market conditions and our drilling results in each particular year.

Senior Notes.  In April 2013, Holdings issued $500 million in aggregate principal amount of 7 3/8% senior notes due 2021 (the “Notes”).  We used the proceeds from the Notes offering to repay a portion of the amounts outstanding under our credit agreement, to repay in full and terminate our second lien term loan, to make a $75 million distribution to our Class A limited partners, and for general partnership purposes.  The Notes bear interest at a rate significantly higher than the rates under our credit agreement which resulted in higher interest expense in the second quarter of 2013 as compared to our historical interest expense.  In the future, we may incur additional indebtedness to fund our acquisition and development activities.  Please read “—Capital Commitments, Capital Resources, and Liquidity—Liquidity” for additional discussion of our financing arrangements.

Sources of Our Revenues

Our revenues are derived from the sale of oil, natural gas, and NGLs within the continental United States and do not include the effects of derivatives.  For the second quarter of 2013, oil and NGLs represented approximately 81% of our total production volumes.  Our revenues may vary significantly from period to period as a result of changes in volumes of production sold or changes in commodity prices.

NYMEX WTI and Henry Hub prompt month contract prices are widely-used benchmarks in the pricing of oil and natural gas.  The following table provides the high and low prices for NYMEX WTI and Henry Hub prompt month contract prices and our differential to the average of those benchmark prices for the periods indicated:

	Three months ended June 30,						Six months ended June 30,
	2013			2012			2013			2012
Oil
NYMEX WTI High	$	98.44		$	106.16		$	98.44		$	109.77
NYMEX WTI Low	86.68			77.69			86.68			77.69
Differential to Average NYMEX WTI	(2.43		)	(7.66		)	(6.09		)	(9.53		)
Natural Gas
NYMEX Henry Hub High	4.41			2.82			4.41			3.10
NYMEX Henry Hub Low	3.57			1.91			3.11			1.91
Differential to Average NYMEX Henry Hub	(0.37		)	(0.19		)	(0.21		)	(0.18		)

We normally sell production to a relatively small number of customers.  In 2012, three purchasers individually accounted for more than 10% of our revenues: Pecos Gathering & Marketing (43%); Occidental Petroleum Corporation (29%); and DCP Midstream (12%). If any significant customer decided to stop purchasing oil and natural gas from us, our revenues could decline and our operating results and financial condition could be harmed.  However, based on the current demand for oil and natural gas, and the availability of other purchasers, we believe that the loss of any one or all of our significant customers would not have a material adverse effect on our financial condition and results of operations, as crude oil and natural gas are fungible products with well-established markets and numerous purchasers.

Principal Components of Our Cost Structure

Lease Operating Expense.  LOE includes the daily costs incurred to bring crude oil and natural gas out of the ground and to the market, together with the daily costs incurred to maintain our producing properties.  Such costs include field personnel compensation, utilities, maintenance, and workover expenses related to our oil and natural gas properties.

Production, Severance, and Ad Valorem Taxes.  Production and severance taxes are paid on produced oil, natural gas, and NGLs based on a percentage of revenues from production sold at fixed rates established by federal, state, or local taxing authorities.  In general, the production and severance taxes we pay correlate to the changes in oil and natural gas revenues.  We are also subject to ad valorem taxes primarily in the counties where our production is located.  Ad valorem taxes are generally based on the valuation of our oil and natural gas properties and are assessed annually.

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Depreciation, Depletion, and Amortization.  Depreciation, depletion, and amortization (“DD&A”) is the expensing of the capitalized costs incurred to acquire, explore, and develop oil and natural gas.  We use the full cost method of accounting for oil and natural gas activities.

General and Administrative Expense.  G&A expense consists of company overhead, including payroll and benefits for our corporate staff, costs of maintaining our headquarters, costs of managing our production and development operations, audit and other professional fees, and legal compliance costs.  Upon completion of our IPO, G&A expense will also include public company expenses as described above under “—Factors That Significantly Affect Comparability of Our Financial Condition and Results of Operations—Public Company Expenses”.

Interest Expense.  We finance a portion of our working capital requirements, capital expenditures, and acquisitions with borrowings under our credit agreement.  As a result, we incur interest expense that is affected by both fluctuations in interest rates and our financing decisions.  Interest incurred under our debt agreements, the amortization of deferred financing costs (including origination and amendment fees), commitment fees, and annual agency fees are included in interest expense.  Interest expense is net of capitalized interest on expenditures made in connection with exploration and development projects that are not subject to current amortization.

Derivative Fair Value Gain.  We utilize commodity derivative contracts to reduce our exposure to fluctuations in the price of oil.  We recognize gains and losses associated with our open commodity derivative contracts as commodity prices and the associated fair value of our commodity derivative contracts change.  The commodity derivative contracts we have in place are not designated as hedges for accounting purposes.  Consequently, these commodity derivative contracts are marked-to-market each quarter with fair value gains and losses recognized currently as a gain or loss in our results of operations.  Cash flow is only impacted to the extent the actual settlements under the contracts result in making a payment to or receiving a payment from the counterparty.

How We Evaluate Our Operations

In evaluating our financial results, we focus on the mix of our revenues from oil, natural gas, and NGLs, the average realized price from sales of our production, our production margins, and our net income.  Below are highlights of our financial and operating results for the second quarter of 2013:

·Our oil, natural gas, and NGLs revenues increased 82% to $65.2 million in the second quarter of 2013 as compared to $35.8 million in the second quarter of 2012.

·Our average daily production volumes increased 68% to 11,183 BOE/D in the second quarter of 2013 as compared to 6,641 BOE/D in the second quarter of 2012.  Oil and NGLs represented approximately 81% of our total production volumes in the second quarter of 2013.

·Our average realized oil price increased 7% to $91.80 per Bbl in the second quarter of 2013 as compared to $85.84 per Bbl in the second quarter of 2012.  Our average realized natural gas price increased 83% to $3.72 per Mcf in the second quarter of 2013 as compared to $2.03 per Mcf in the second quarter of 2012.  Our average realized NGL price decreased 20% to $27.27 per Bbl in the second quarter of 2013 as compared to $34.29 per Bbl in the second quarter of 2012.

·Our production margin increased 94% to $53.1 million in the second quarter of 2013 as compared to $27.4 million in the second quarter of 2012.  Total wellhead revenues per BOE increased 8% and total production expenses per BOE decreased 15%.  On a per BOE basis, our production margin increased 15% to $52.16 per BOE in the second quarter of 2013 as compared to $45.31 per BOE for the second quarter of 2012.

·We invested $106.4 million in oil and natural gas activities, of which $98.7 million was invested in development and exploration activities, yielding 44 gross (42 net) productive wells, and $7.7 million was invested in acquisitions of oil and natural gas properties.

We also evaluate our rates of return on invested capital in our wells.  We believe the quality of our assets combined with the technical capabilities of our management team can generate attractive rates of return as we develop our extensive resource base.  Additionally, by focusing on concentrated acreage positions, we can build and own centralized production infrastructure, including saltwater disposal facilities, which enable us to reduce reliance on outside service companies, minimize costs, and increase our returns.

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Results of Operations

Comparison of Quarter Ended June 30, 2013 to Quarter Ended June 30, 2012

Revenues.The following table provides the components of our revenues for the periods indicated, as well as each period’s respective production volumes and average prices:

	Three months ended June 30,				Increase / (Decrease)
	2013		2012		$			%
Revenues (in thousands):
Oil	$	54,609	$	29,617	$	24,992		84	%
Natural gas	4,363		1,492		2,871			192	%
NGLs	6,193		4,682		1,511			32	%
Total revenues	$	65,165	$	35,791	$	29,374		82	%
Average realized prices:
Oil ($/Bbl) (excluding impact of cash settled derivatives)	$	91.80	$	85.84	$	5.96		7	%
Oil ($/Bbl) (after impact of cash settled derivatives)	$	91.03	$	85.61	$	5.42		6	%
Natural gas ($/Mcf)	$	3.72	$	2.03	$	1.69		83	%
NGLs ($/Bbl)	$	27.27	$	34.29	$	(7.02	)	-20	%
Combined ($/BOE) (excluding impact of cash settled derivatives)	$	64.04	$	59.22	$	4.82		8	%
Combined ($/BOE) (after impact of cash settled derivatives)	$	63.59	$	59.09	$	4.50		8	%
Total production volumes:
Oil (MBbls)	595		345		250			72	%
Natural gas (MMcf)	1,174		736		438			60	%
NGLs (MBbls)	227		137		90			66	%
Combined (MBOE)	1,018		604		414			69	%
Average daily production volumes:
Oil (Bbls/D)	6,537		3,792		2,745			72	%
Natural gas (Mcf/D)	12,897		8,093		4,804			59	%
NGLs (Bbls/D)	2,496		1,501		995			66	%
Combined (BOE/D)	11,183		6,641		4,542			68	%

The following table shows the relationship between our average oil and natural gas realized prices as a percentage of average NYMEX prices for the periods indicated.  Management uses the realized price to NYMEX margin analysis to analyze trends in our oil and natural gas revenues.

	Three months ended June 30,
	2013			2012
Average realized oil price ($/Bbl)	$	91.80		$	85.84
Average NYMEX ($/Bbl)	$	94.23		$	93.50
Differential to NYMEX	$	(2.43	)	$	(7.66	)
Average realized oil price to NYMEX percentage	97		%	92		%
Average realized natural gas price ($/Mcf)	$	3.72		$	2.03
Average NYMEX ($/Mcf)	$	4.09		$	2.22
Differential to NYMEX	$	(0.37	)	$	(0.19	)
Average realized natural gas price to NYMEX percentage	91		%	91		%

Our average realized oil price as a percentage of the average NYMEX price improved to 97% for the second quarter of 2013 as compared to 92% for the second quarter of 2012.  All of our oil contracts are impacted by the Midland-Cushing differential, which narrowed to a negative $0.15 per Bbl in the second quarter of 2013 as compared to a negative $4.90 per Bbl in the second quarter of 2012 primarily due to the implementation of several infrastructure projects which have eased difficulties experienced during 2012 transporting oil from the Permian Basin to Gulf Coast refineries.  Our average realized natural gas price as a percentage of the average NYMEX price remained constant at 91%.

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Oil revenues increased 84% from $29.6 million in the second quarter of 2012 to $54.6 million in the second quarter of 2013 as a result of an increase in our oil production volumes of 250 MBbls and a $5.96 per Bbl increase in our average realized oil price.  Our higher oil production increased oil revenues by $21.4 million and was primarily the result of our development program in the Permian Basin.  Our higher average realized oil price increased oil revenues by $3.5 million and was primarily due to a higher average NYMEX price, which increased from $93.50 per Bbl in the second quarter of 2012 to $94.23 per Bbl in the second quarter of 2013, and the tightening of our oil differentials as previously discussed.

Natural gas revenues increased 192% from $1.5 million in the second quarter of 2012 to $4.4 million in the second quarter of 2013 as a result of an increase in our natural gas production volumes of 438 MMcf and a $1.69 per Mcf increase in our average realized natural gas price.  Our higher average realized natural gas price increased natural gas revenues by $2.0 million and was primarily due to a higher average NYMEX price, which increased from $2.22 per Mcf in the second quarter of 2012 to $4.09 per Mcf in the second quarter of 2013.  Our higher natural gas production increased natural gas revenues by $0.9 million and was primarily the result of our development program in the Permian Basin, partially offset by flaring a portion of our natural gas production as either (1) our well is not yet tied into the third-party gathering system, (2) the pressures on the third-party gathering system are too high to allow additional production from our well to be transported, or (3) our production is prorated due to high demand on the third-party gathering system.  During the second quarter of 2013, we estimate that we flared approximately 3.9 MMcfe/D net, which included both residue gas and NGL production.  We expect to continue flaring until further improvements can be made to various third-party gathering systems, which are scheduled to occur late in the third quarter of 2013.

NGL revenues increased 32% from $4.7 million in the second quarter of 2012 to $6.2 million in the second quarter of 2013 as a result of an increase in our NGL production volumes of 90 MBbls, partially offset by a $7.02 per Bbl decrease in our average realized NGL price.  Our higher NGL production increased NGL revenues by $3.1 million and was primarily the result of our development program in the Permian Basin, partially offset by flaring as described above.  Our lower average realized NGL price decreased NGL revenues by $1.6 million and was primarily due to increased supplies of NGLs from NGL-rich shales in the Permian Basin and other basins including the Eagle Ford and the Williston.

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Expenses.The following table summarizes our expenses for the periods indicated:

	Three months ended June 30,						Increase / (Decrease)
	2013			2012			$			%
Expenses (in thousands):
Production:
Lease operating	$	7,775		$	5,942		$	1,833		31	%
Production, severance, and ad valorem taxes	4,247			2,461			1,786			73	%
Processing, gathering, and overhead	65			2			63			3150	%
Total production expenses	12,087			8,405			3,682			44	%
Other:
Depletion, depreciation, and amortization	20,358			13,065			7,293			56	%
General and administrative	3,659			2,481			1,178			47	%
Derivative fair value gain	(12,555		)	(46,569		)	34,014			-73	%
Accretion	162			114			48			42	%
Total operating	23,711			(22,504		)	46,215			-205	%
Interest	12,082			1,705			10,377			609	%
Income tax provision	4,844			1,986			2,858			144	%
Total expenses	$	40,637		$	(18,813	)	$	59,450		-316	%
Expenses (per BOE):
Production:
Lease operating	$	7.64		$	9.83		$	(2.19	)	-22	%
Production, severance, and ad valorem taxes	4.18			4.07			0.11			3	%
Processing, gathering, and overhead	0.06			—			0.06			0	%
Total production expenses	11.88			13.90			(2.02		)	-15	%
Other:
Depletion, depreciation, and amortization	20.01			21.62			(1.61		)	-7	%
General and administrative	3.60			4.11			(0.51		)	-12	%
Derivative fair value gain	(12.34		)	(77.06		)	64.72			-84	%
Accretion	0.16			0.19			(0.03		)	-16	%
Total operating	23.31			(37.24		)	60.55			-163	%
Interest	11.87			2.82			9.05			321	%
Income tax provision	4.76			3.29			1.47			45	%
Total expenses	$	39.94		$	(31.13	)	$	71.07		-228	%

Production expenses.  Production expenses attributable to LOE increased 31% from $5.9 million in the second quarter of 2012 to $7.8 million in the second quarter of 2013 as a result of an increase in production volumes from wells drilled, which contributed $4.1 million of additional LOE, partially offset by a $2.19 decrease in the average per BOE rate, which would have reduced LOE by $2.2 million if production had been unchanged.  The decrease in our average LOE per BOE rate was attributable to wells we successfully drilled and completed in 2012 and the first half of 2013 where we are experiencing economies of scale from our drilling program and from savings achieved through 2012 infrastructure projects that have resulted in material efficiencies in our field operations and, in particular, our disposal of saltwater.

Production expenses attributable to production, severance, and ad valorem taxes increased 73% from $2.5 million in the second quarter of 2012 to $4.2 million in the second quarter of 2013 primarily due to higher wellhead revenues resulting from increased production from our drilling activity.  As a percentage of wellhead revenues, production, severance, and ad valorem taxes decreased to 6.5% in the second quarter of 2013 as compared to 6.9% in the second quarter of 2012 primarily due to an increase in the number of wells brought on production in the second quarter of 2013 as compared to the second quarter of 2012 as we had an additional rig and continue to utilize more efficient drilling rigs and reduce our time from spud to rig release.

DD&A expense.  DD&A expense increased 56% from $13.1 million in the second quarter of 2012 to $20.4 million in the second quarter of 2013 primarily due to an increase in production volumes and an increase in our asset base subject to amortization as a result of our drilling activity in 2012 and the first half of 2013.

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G&A expense.  G&A expense increased 47% from $2.5 million in the second quarter of 2012 to $3.7 million in the second quarter of 2013 primarily due to (i) higher payroll and payroll-related costs as we continue to add employees in order to manage our growing asset base and (ii) nonrecurring corporate reorganization costs related to the transition from a partnership to a corporation of $0.5 million.

Derivative fair value gain.  During the second quarter of 2013, we recorded a $12.6 million derivative fair value gain as compared to $46.6 million in the second quarter of 2012.  Since we do not use hedge accounting, changes in fair value of our derivatives are recognized as gains and losses in the current period.  Included in these amounts were total cash settlements paid on derivatives adjusted for recovered premiums during the second quarter of 2013 were $457,000 as compared to $78,000 during the second quarter of 2012.

Interest expense.  Interest expense increased from $1.7 million in the second quarter of 2012 to $12.1 million in the second quarter of 2013 due to higher long-term debt balances and higher borrowing costs in the second quarter of 2013 when compared to the second quarter of 2012.  Our weighted-average total debt was $517.0 million for the second quarter of 2013 as compared to $207.4 million for the second quarter of 2012.  This increase in total debt was due to (1) funding requirements to develop our oil and natural gas properties that are not covered by our operating cash flows and (2) a $75 million distribution to Holdings Class A limited partners in April 2013.  Also, as a result of the issuance of the Notes, our former second lien term loan was paid off and retired and the borrowing base of our credit agreement was reduced resulting in a write off of unamortized debt issuance costs of approximately $2.8 million to interest expense.

Our weighted-average interest rate increased to 9.3% for the second quarter of 2013 as compared to 3.3% for the second quarter of 2012.  This increase in borrowing cost is primarily due to the issuance of the Notes, a portion of the net proceeds from which were used to substantially pay down outstanding borrowings on our credit agreement that were subject to lower interest rates than borrowings on the Notes.  The 9.3% weighted-average interest expense for the second quarter of 2013 includes the impact of the write off of unamortized debt issuance costs and is expected to decline in future periods as we are not anticipating a need for a similar write off and as borrowings on the credit agreement increase relative to the Notes resulting in a lower average interest rate.

The following table provides the components of our interest expense for the periods indicated:

	Three months ended June 30,					Increase /
	2013			2012		(Decrease)
	(in thousands)
Credit agreement	$	687		$	1,562	$	(875	)
Senior notes	7,708			—		7,708
Former second lien term loan	427			—		427
Write off of debt issuance costs	2,838			—		2,838
Amortization of debt issuance costs	491			143		348
Less: interest capitalized	(69		)	—		(69		)
Total	$	12,082		$	1,705	$	10,377

Income taxes.  In the second quarter of 2013, we recorded an income tax provision of $4.8 million as compared to $2.0 million in the second quarter of 2012.  In the second quarter of 2013, we had income before income taxes and noncontrolling interest of $29.4 million as compared to $56.6 million in the second quarter of 2012.  Our effective tax rate increased to 16.5% in the second quarter of 2013 as compared to 3.5% in the second quarter of 2012 as a result of our corporate reorganization on April 26, 2013 in which Athlon (a C-corporation) obtained most of the interests in Holdings.  Prior to April 26, 2013, Holdings, our accounting predecessor, was a limited partnership not subject to federal income taxes.

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Comparison of Six Months Ended June 30, 2013 to Six Months Ended June 30, 2012

Revenues.The following table provides the components of our revenues for the periods indicated, as well as each period’s respective production volumes and average prices:

	Six months ended June 30,				Increase / (Decrease)
	2013		2012		$			%
Revenues (in thousands):
Oil	$	100,268	$	57,050	$	43,218		76	%
Natural gas	7,730		2,940		4,790			163	%
NGLs	11,913		9,033		2,880			32	%
Total revenues	$	119,911	$	69,023	$	50,888		74	%
Average realized prices:
Oil ($/Bbl) (excluding impact of cash settled derivatives)	$	88.19	$	91.82	$	(3.63	)	-4	%
Oil ($/Bbl) (after impact of cash settled derivatives)	$	87.51	$	87.35	$	0.16		0	%
Natural gas ($/Mcf)	$	3.51	$	2.31	$	1.20		52	%
NGLs ($/Bbl)	$	29.08	$	37.80	$	(8.72	)	-23	%
Combined ($/BOE) (excluding impact of cash settled derivatives)	$	62.65	$	64.38	$	(1.73	)	-3	%
Combined ($/BOE) (after impact of cash settled derivatives)	$	62.25	$	61.79	$	0.46		1	%
Total production volumes:
Oil (MBbls)	1,137		621		516			83	%
Natural gas (MMcf)	2,204		1,271		933			73	%
NGLs (MBbls)	410		239		171			72	%
Combined (MBOE)	1,914		1,072		842			79	%
Average daily production volumes:
Oil (Bbls/D)	6,281		3,414		2,867			84	%
Natural gas (Mcf/D)	12,176		6,982		5,194			74	%
NGLs (Bbls/D)	2,263		1,313		950			72	%
Combined (BOE/D)	10,574		5,891		4,683			79	%

The following table shows the relationship between our average oil and natural gas realized prices as a percentage of average NYMEX prices for the periods indicated.  Management uses the realized price to NYMEX margin analysis to analyze trends in our oil and natural gas revenues.

	Six months ended June 30,
	2013			2012
Average realized oil price ($/Bbl)	$	88.19		$	91.82
Average NYMEX ($/Bbl)	$	94.28		$	101.35
Differential to NYMEX	$	(6.09	)	$	(9.53	)
Average realized oil price to NYMEX percentage	94		%	91		%
Average realized natural gas price ($/Mcf)	$	3.51		$	2.31
Average NYMEX ($/Mcf)	$	3.72		$	2.49
Differential to NYMEX	$	(0.21	)	$	(0.18	)
Average realized natural gas price to NYMEX percentage	94		%	93		%

Our average realized oil price as a percentage of the average NYMEX price improved to 94% for the first six months of 2013 as compared to 91% for the first six months of 2012, primarily due to the alleviation of certain capacity constraints between the Midland Basin, Cushing, Oklahoma, and Gulf Coast refineries.  Our average realized natural gas price as a percentage of the average NYMEX price remained relatively constant at 94% for the first six months of 2013 as compared to 93% for the first six months of 2012.

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Oil revenues increased 76% from $57.1 million in the first six months of 2012 to $100.3 million in the first six months of 2013 as a result of an increase in our oil production volumes of 516 MBbls, partially offset by a $3.63 per Bbl decrease in our average realized oil price.  Our higher oil production increased oil revenues by $47.3 million and was primarily the result of our development program in the Permian Basin.  Our lower average realized oil price decreased oil revenues by $4.1 million and was primarily due to a lower average NYMEX price, which decreased from $101.35 per Bbl in the first six months of 2012 to $94.28 per Bbl in the first six months of 2013, partially offset by the narrowing of our oil differentials as previously discussed.

Natural gas revenues increased 163% from $2.9 million in the first six months of 2012 to $7.7 million in the first six months of 2013 as a result of an increase in our natural gas production volumes of 933 MMcf and a $1.20 per Mcf increase in our average realized natural gas price.  Our higher average realized natural gas price increased natural gas revenues by $2.6 million and was primarily due to a higher average NYMEX price, which increased from $2.49 per Mcf in the first six months of 2012 to $3.72 per Mcf in the first six months of 2013.  Our higher natural gas production increased natural gas revenues by $2.2 million and was primarily the result of our development program in the Permian Basin, partially offset by flaring a portion of our natural gas production as either (1) our well is not yet tied into the third-party gathering system, (2) the pressures on the third-party gathering system are too high to allow additional production from our well to be transported, or (3) our production is prorated due to high demand on the third-party gathering system.  During the first six months of 2013, we estimate that we flared approximately 2.9 MMcfe/D net, which included both residue gas and NGL production.  We expect to continue flaring until further improvements can be made to various third-party gathering systems, which are scheduled to occur late in the third quarter of 2013.

NGL revenues increased 32% from $9.0 million in the first six months of 2012 to $11.9 million in the first six months of 2013 as a result of an increase in our NGL production volumes of 171 MBbls, partially offset by an $8.72 per Bbl decrease in our average realized NGL price.  Our higher NGL production increased NGL revenues by $6.5 million and was primarily the result of our development program in the Permian Basin, partially offset by flaring as described above.  Our lower average realized NGL price decreased NGL revenues by $3.6 million and was primarily due to increased supplies of NGLs from NGL-rich shales in the Permian Basin and other basins including the Eagle Ford and the Williston.

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Expenses.The following table summarizes our expenses for the periods indicated:

	Six months ended June 30,						Increase / (Decrease)
	2013			2012			$			%
Expenses (in thousands):
Production:
Lease operating	$	15,012		$	10,641		$	4,371		41	%
Production, severance, and ad valorem taxes	7,941			4,811			3,130			65	%
Processing, gathering, and overhead	110			26			84			323	%
Total production expenses	23,063			15,478			7,585			49	%
Other:
Depletion, depreciation, and amortization	38,411			22,679			15,732			69	%
General and administrative	6,998			5,078			1,920			38	%
Derivative fair value gain	(5,706		)	(23,858		)	18,152			-76	%
Accretion	311			220			91			41	%
Total operating	63,077			19,597			43,480			222	%
Interest	16,556			3,200			13,356			417	%
Income tax provision	4,871			1,622			3,249			200	%
Total expenses	$	84,504		$	24,419		$	60,085		246	%
Expenses (per BOE):
Production:
Lease operating	$	7.84		$	9.93		$	(2.09	)	-21	%
Production, severance, and ad valorem taxes	4.15			4.48			(0.33		)	-7	%
Processing, gathering, and overhead	0.06			0.02			0.04			200	%
Total production expenses	12.05			14.43			(2.38		)	-16	%
Other:
Depletion, depreciation, and amortization	20.07			21.15			(1.08		)	-5	%
General and administrative	3.66			4.74			(1.08		)	-23	%
Derivative fair value gain	(2.98		)	(22.25		)	19.27			-87	%
Accretion	0.16			0.21			(0.05		)	-24	%
Total operating	32.96			18.28			14.68			80	%
Interest	8.65			2.98			5.67			190	%
Income tax provision	2.55			1.51			1.04			69	%
Total expenses	$	44.16		$	22.77		$	21.39		94	%

Production expenses.  Production expenses attributable to LOE increased 41% from $10.6 million in the first six months of 2012 to $15.0 million in the first six months of 2013 as a result of an increase in production volumes from wells drilled, which contributed $8.4 million of additional LOE, partially offset by a $2.09 decrease in the average per BOE rate, which would have reduced LOE by $4.0 million if production had been unchanged. The decrease in our average LOE per BOE rate was attributable to wells we successfully drilled and completed in 2012 and the first half of 2013 where we are experiencing economies of scale from our drilling program and from savings achieved through 2012 infrastructure projects that have resulted in material efficiencies in our field operations and, in particular, our disposal of saltwater.

Production expenses attributable to production, severance, and ad valorem taxes increased 65% from $4.8 million in the first six months of 2012 to $7.9 million in the first six months of 2013 primarily due to higher wellhead revenues resulting from increased production from our drilling activity.  As a percentage of wellhead revenues, production, severance, and ad valorem taxes decreased to 6.6% in the first six months of 2013 as compared to 7.0% in the first six months of 2012 primarily due to an increase in the number of wells brought on production in the first six months of 2013 as compared to the first six months of 2012 as we continue to utilize more efficient drilling rigs and reduce our time from spud to rig release.

DD&A expense.  DD&A expense increased 69% from $22.7 million in the first six months of 2012 to $38.4 million in the first six months of 2013 primarily due to an increase in production volumes and an increase in our asset base subject to amortization as a result of our drilling activity in 2012 and the first half of 2013.

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G&A expense.  G&A expense increased 38% from $5.1 million in the first six months of 2012 to $7.0 million in the first six months of 2013 primarily due to (i) higher payroll and payroll-related costs as we continue to add employees in order to manage our growing asset base and (ii) nonrecurring corporate reorganization costs related to the transition from a partnership to a corporation of $0.5 million.

Derivative fair value gain.  During the first six months of 2013, we recorded a $5.7 million derivative fair value gain as compared to a gain of $23.9 million in the first six months of 2012.  Since we do not use hedge accounting, changes in fair value of our derivatives are recognized as gains and losses in the current period.  Included in these amounts were total cash settlements paid on derivatives adjusted for recovered premiums during the first six months of 2013 were $775,000 as compared to $2.8 million during the first six months of 2012.

Interest expense.  Interest expense increased from $3.2 million in the first six months of 2012 to $16.6 million in the first six months of 2013 due to higher long-term debt balances and higher borrowing costs in the first six months of 2013 when compared to the first six months of 2012.  Our weighted-average total debt was $457.4 million for the first six months of 2013 as compared to $188.4 million for the first six months of 2012.  This increase in total debt was due to (1) funding requirements to develop our oil and natural gas properties that are not covered by our operating cash flows and (2) a $75 million distribution to Holdings Class A limited partners in April 2013.  Also, as a result of the issuance of the Notes, our former second lien term loan was paid off and retired and the borrowing base of our credit agreement was reduced resulting in a write off of unamortized debt issuance costs of approximately $2.8 million to interest expense.

Our weighted-average interest rate increased to 7.2% for the first six months of 2013 as compared to 3.4% for the first six months of 2012.  This increase in borrowing cost is primarily due to the issuance of the Notes, a portion of the net proceeds from which were used to substantially pay down outstanding borrowings on our credit agreement that were subject to lower interest rates than borrowings on the Notes.  The 7.2% weighted-average interest expense for the first six months of 2013 includes the impact of the write off of unamortized debt issuance costs and is expected to decline in future periods as we are not anticipating a need for a similar write off and as borrowings on the credit agreement increase relative to the Notes resulting in a lower average interest rate.

The following table provides the components of our interest expense for the periods indicated:

	Six months ended June 30,					Increase /
	2013			2012		(Decrease)
	(in thousands)
Credit agreement	$	2,610		$	2,921	$	(311	)
Senior notes	7,708			—		7,708
Former second lien term loan	2,777			—		2,777
Write off of debt issuance costs	2,838			—		2,838
Amortization of debt issuance costs	734			279		455
Less: interest capitalized	(111		)	—		(111		)
Total	$	16,556		$	3,200	$	13,356

Income taxes.  In the first six months of 2013, we recorded an income tax provision of $4.9 million as compared to $1.6 million in the first six months 2012.  In the first six months of 2013, we had income before income taxes and noncontrolling interest of $40.3 million as compared to $46.2 million in the first six months of 2012.  Our effective tax rate increased to 12.1% in the first six months of 2013 as compared to 3.5% in the first six months of 2012 as a result of our corporate reorganization on April 26, 2013 in which Athlon (a C-corporation) obtained most of the interests in Holdings.  Prior to April 26, 2013, Holdings, our accounting predecessor, was a limited partnership not subject to federal income taxes.

Capital Commitments, Capital Resources, and Liquidity

Capital commitments

Our primary uses of cash are:

·Development and exploration of oil and natural gas properties;

·Acquisitions of oil and natural gas properties;

·Funding of working capital; and

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·Contractual obligations.

Development and exploration of oil and natural gas properties.  The following table summarizes our costs incurred related to development and exploration activities for the periods indicated:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
	(in thousands)
Development (a)	$	41,215	$	36,330	$	90,453	$	60,700
Exploration (b)	57,479		32,356		80,032		57,227
Total	$	98,694	$	68,686	$	170,485	$	117,927

(a)Includes asset retirement obligations incurred of $67,000 and $89,000 during the three months ended June 30, 2013 and 2012, respectively, and $226,000 and $163,000 during the six months ended June 30, 2013 and 2012, respectively.

(b)Includes asset retirement obligations incurred of $100,000 and $89,000 during the three months ended June 30, 2013 and 2012, respectively, and $194,000 and $161,000 during the six months ended June 30, 2013 and 2012, respectively.

Our development capital primarily relates to the drilling of development and infill wells, workovers of existing wells, and the construction of field related facilities.  Our development capital for the second quarter of 2013 yielded 14 gross (14 net) productive wells and no dry holes.  Our development capital for the first six months of 2013 yielded 33 gross (33 net) productive wells and no dry holes.

Our exploration expenditures primarily relate to the drilling of exploratory wells, seismic costs, delay rentals, and geological and geophysical costs.  Our exploration capital for the second quarter of 2013 yielded 30 gross (28 net) productive wells and no dry holes.  Our exploration capital for the first six months of 2013 yielded 46 gross (43 net) productive wells and no dry holes.

Our development and exploration activities in the second quarter and first six months of 2013 were higher than in the comparable periods of 2012 primarily due to our utilization of more efficient vertical drilling rigs that have significantly reduced the time from spud to rig release allowing us to drill more wells.

In 2013, we expect our drilling capital expenditures to be between $340 million to $350 million, plus an additional $15 million for leasing, infrastructure, and capital workovers, and drill 161 gross vertical Wolfberry wells and 4 gross horizontal Wolfcamp wells.

Acquisitions of oil and natural gas properties.  We did not have any significant acquisitions of oil and natural gas properties in either the first six months of 2013 or the first six months of 2012.

Funding of working capital.  As of June 30, 2013 and December 31, 2012, our working capital deficit (defined as total current assets less total current liabilities) was $42.9 million and $22.2 million, respectively.  Since our principal source of operating cash flows comes from proved reserves to be produced in future periods, which cannot be reported as working capital, we often have negative working capital.  For the remainder of 2013, we expect to continue to have working capital deficits primarily due to amounts accrued related to our extensive development activities.  We expect that our cash flows from operating activities and availability under our credit agreement after application of the net proceeds from our IPO will be sufficient to fund our working capital needs, capital expenditures, and other obligations for at least the next 12 months.  We expect that our production volumes, commodity prices, and differentials to NYMEX prices for our oil and natural gas production will be the largest variables affecting our working capital.

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Contractual obligations.  The following table provides our contractual obligations and commitments as of June 30, 2013:

	Payments Due by Period
Contractual Obligations and Commitments	Total		Six Months Ending December 31, 2013		Years Ending December 31, 2014 - 2015		Years Ending December 31, 2016 - 2017		Thereafter
	(in thousands)
Credit agreement (1)	$	46,971	$	368	$	1,473	$	1,473	$	43,657
Senior notes (1)	787,271		18,437		73,750		73,750		621,334
Commodity derivative contracts (2)	1,133		1,133		—		—		—
Development commitments (3)	49,345		49,345		—		—		—
Operating leases and commitments (4)	1,551		235		938		378		—
Asset retirement obligations (5)	35,970		102		—		—		35,868
Total	$	922,241	$	69,620	$	76,161	$	75,601	$	700,859

(1)Includes principal and projected interest payments.  Please read “—Liquidity” for additional information regarding our long-term debt.

(2)Represents net liabilities for our commodity derivative contracts, the ultimate settlement of which are unknown because they are subject to continuing market risk.  As of June 30, 2013, the fair value of our 2014 and 2015 commodity derivative contracts was a net asset of $11.2 million.  Please read “Item 3. Quantitative and Qualitative Disclosures about Market Risk” for additional information regarding our commodity derivative contracts.

(3)Represents authorized purchases for work in process related to our drilling activities.

(4)Represents operating leases that have non-cancelable lease terms in excess of one year.

(5)Represents the undiscounted future plugging and abandonment expenses on oil and natural gas properties and related facilities disposal at the end of field life. Because these costs typically extend many years into the future, estimating these future costs requires management to make estimates and judgments that are subject to future revisions based upon numerous factors.

Off-balance sheet arrangements.  We have no investments in unconsolidated entities or persons that could materially affect our liquidity or the availability of capital resources.  We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition or results of operations.

Capital resources

The following table summarizes our cash flows for the periods indicated:

	Six months ended June 30,						Increase /
	2013			2012			(Decrease)
	(in thousands)
Net cash provided by operating activities	$	79,224		$	42,175		$	37,049
Net cash used in investing activities	(178,332		)	(125,299		)	(53,033		)
Net cash provided by financing activities	92,784			56,110			36,674
Net decrease in cash	$	(6,324	)	$	(27,014	)	$	20,690

Cash flows from operating activities.  Cash provided by operating activities increased $37.0 million from $42.2 million in the first six months of 2012 to $79.2 million in the first six months of 2013, primarily due to an increase in our production margin due to a 79% increase in our total production volumes as a result of wells drilled, partially offset by increased expenses as a result of having more producing wells in the first six months of 2013 as compared to the first six months of 2012.

Cash flows used in investing activities.  Cash used in investing activities increased $53.0 million from $125.3 million in the first six months of 2012 to $178.3 million in the first six months of 2013, primarily due to a $39.5 million increase in amounts paid to develop oil and natural gas properties as we utilized more efficient vertical drilling rigs that have significantly reduced the time from spud to rig release allowing us to drill and complete more wells over the same time period.

Cash flows from financing activities.  Our cash flows from financing activities have historically consisted of net proceeds from and payments on long-term debt and contributions from partners.  We periodically draw on our credit agreement and seek funding from partners to fund acquisitions and other capital commitments.

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During the first six months of 2013, we received net cash of $92.8 million from financing activities, including $500 million from the issuance of our senior notes, partially offset by $125 million used to repay in full and terminate our former second lien term loan, net repayments of $193.5 million under our credit agreement, and a $75 million distribution to Holdings’ Class A limited partners.  Net repayments reduced the outstanding borrowings under our credit agreement from $237 million at December 31, 2012 to $43.5 million at June 30, 2013.

During the first six months of 2012, we received net cash of $56.0 million from financing activities, consisting primarily of net borrowings under our credit agreement.

Liquidity

Our primary sources of liquidity historically have been internally generated cash flows, the borrowing capacity under our credit agreement, and partner contributions, including partner contributions from our equity sponsor, the Apollo Funds.  Since we operate a majority of our wells, we also have the ability to adjust our capital expenditures as economic conditions change.  We may use other sources of capital, including the issuance of debt or equity securities, to fund acquisitions or maintain our financial flexibility.  We believe that our internally generated cash flows and expected future availability under our credit agreement after application of the net proceeds from our IPO will be sufficient to fund our operations and planned capital expenditures for at least the next 12 months.  However, should commodity prices decline for an extended period of time or the capital/credit markets become constrained, the borrowing capacity under our credit agreement could be adversely affected.  In the event of a reduction in the borrowing base under our credit agreement, we may be required to prepay some or all of our indebtedness, which would adversely affect our capital expenditure program.  In addition, because wells funded in the next 12 months represent only a small percentage of our identified net drilling locations, we will be required to generate or raise additional capital to develop our entire inventory of identified drilling locations should we elect to do so.

In 2013, we expect our drilling capital expenditures to be between $340 million to $350 million, plus an additional $15 million for leasing, infrastructure, and capital workovers.  The level of these and other future expenditures is largely discretionary, and the amount of funds devoted to any particular activity may increase or decrease significantly, depending on available opportunities, timing of projects, and market conditions.  We plan to finance our ongoing expenditures using internally generated cash flow and availability under our credit agreement.

Internally generated cash flows.  Our internally generated cash flows, results of operations, and financing for our operations are largely dependent on oil, natural gas, and NGL prices.  During the first six months of 2013, our average realized oil and NGL prices decreased by 4% and 23%, respectively, as compared to the first six months of 2012, while our average realized natural gas price increased by 52%.  Realized commodity prices fluctuate widely in response to changing market forces.  If commodity prices decline or we experience a significant widening of our differentials to NYMEX prices, then our results of operations, cash flows from operations, and borrowing base under our credit agreement may be adversely impacted.  Prolonged periods of lower commodity prices or sustained wider differentials to NYMEX prices could cause us to not be in compliance with financial covenants under our credit agreement and thereby affect our liquidity.  To offset reduced cash flows in a lower commodity price environment, we have established a portfolio of commodity derivative contracts consisting primarily of oil swaps that will provide stable cash flows on a portion of our oil production.  As of June 30, 2013, our hedged oil volumes for the remainder of 2013, 2014, and 2015 represent 104%, 115%, and 19%, respectively, of our June 2013 oil production at weighted average prices of $94.93, $92.67, and $93.18, respectively.  An increase in oil prices above the ceiling prices in our commodity derivative contracts limits cash inflows because we would be required to pay our counterparties for the difference between the market price for oil and the ceiling price of the commodity derivative contract resulting in a loss.  Please read “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for additional information regarding our commodity derivative contracts.

Credit agreement.  We are a party to an amended and restated credit agreement dated March 19, 2013, which we refer to as our credit agreement, which matures on March 19, 2018.  Our credit agreement provides for revolving credit loans to be made to us from time to time and letters of credit to be issued from time to time for the account of us or any of our restricted subsidiaries.  The aggregate amount of the commitments of the lenders under our credit agreement is $1.0 billion.  Availability under our credit agreement is subject to a borrowing base, which is redetermined semi-annually and upon requested special redeterminations.

As of June 30, 2013, the borrowing base was $320 million and there were $43.5 million of outstanding borrowings, $276.5 million of borrowing capacity, and no outstanding letters of credit under our credit agreement.  In conjunction with the offering of our senior notes in April 2013 as discussed below, the borrowing base under our credit agreement was reduced to $267.5 million.  We used a portion of the net proceeds from the offering of the senior notes to reduce the outstanding borrowings under our credit

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agreement.   In May 2013, we amended our credit agreement to, among other things, increase the borrowing base to $320 million.  As of August 13, 2013, there were no outstanding borrowings under our credit agreement.

Obligations under our credit agreement are secured by a first-priority security interest in substantially all of our proved reserves and in the equity interests of our operating subsidiaries.  In addition, obligations under our credit agreement are guaranteed by our operating subsidiaries.

Loans under our credit agreement are subject to varying rates of interest based on (1) outstanding borrowings in relation to the borrowing base and (2) whether the loan is a Eurodollar loan or a base rate loan. Eurodollar loans under our credit agreement bear interest at the Eurodollar rate plus the applicable margin indicated in the following table, and base rate loans under our credit agreement bear interest at the base rate plus the applicable margin indicated in the following table.  We also incur a quarterly commitment fee on the unused portion of our credit agreement indicated in the following table:

Ratio of Outstanding Borrowings to Borrowing Base	Unused Commitment Fee		Applicable Margin for Eurodollar Loans		Applicable Margin for Base Rate Loans
Less than or equal to .30 to 1	0.375	%	1.50	%	0.50	%
Greater than .30 to 1 but less than or equal to .60 to 1	0.375	%	1.75	%	0.75	%
Greater than .60 to 1 but less than or equal to .80 to 1	0.50	%	2.00	%	1.00	%
Greater than .80 to 1 but less than or equal to .90 to 1	0.50	%	2.25	%	1.25	%
Greater than .90 to 1	0.50	%	2.50	%	1.50	%

The “Eurodollar rate” for any interest period (either one, two, three, or six months, as selected by us) is the rate equal to the LIBOR for deposits in dollars for a similar interest period.  The “Base Rate” is calculated as the highest of: (1) the annual rate of interest announced by Bank of America, N.A. as its “prime rate”; (2) the federal funds effective rate plus 0.5%; or (3) except during a “LIBOR Unavailability Period”, the Eurodollar rate (for dollar deposits for a one-month term) for such day plus 1.0%.

Any outstanding letters of credit reduce the availability under our credit agreement.  Borrowings under our credit agreement may be repaid from time to time without penalty.

Our credit agreement contains covenants including, among others, the following:

·a prohibition against incurring debt, subject to permitted exceptions;

·a restriction on creating liens on our assets and the assets of our operating subsidiaries, subject to permitted exceptions;

·restrictions on merging and selling assets outside the ordinary course of business;

·restrictions on use of proceeds, investments, transactions with affiliates, or change of principal business;

·a requirement that we maintain a ratio of consolidated total debt to EBITDAX (as defined in our credit agreement) of not more than 4.75 to 1.0 (which ratio changes to 4.5 to 1.0 beginning with the quarter ended June 30, 2014); and

·a provision limiting commodity derivative contracts to a volume not exceeding 85% of projected production from proved reserves for a period not exceeding 66 months from the date the commodity derivative contract is entered into.

Our credit agreement contains customary events of default, including our failure to comply with our financial ratios described above, which would permit the lenders to accelerate the debt if not cured within applicable grace periods.  If an event of default occurs and is continuing, lenders with a majority of the aggregate commitments may require Bank of America, N.A. to declare all amounts outstanding under our credit agreement to be immediately due and payable, which would materially and adversely affect our financial condition and liquidity.

Certain of the lenders underwriting our credit agreement are also counterparties to our commodity derivative contracts. Please read “Item 3. Quantitative and Qualitative Disclosures About Market Risk” for additional discussion.

Senior notes.  In April 2013, we issued $500 million aggregate principal amount of 7 3/8% senior notes due 2021.  The net proceeds from the senior notes offering were used to repay a portion of the outstanding borrowings under our credit agreement, to repay in full and terminate our former second lien term loan, to make a $75 million distribution to Holdings Class A limited partners,

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and for general partnership purposes.  The indenture governing the senior notes contains covenants, including, among other things, covenants that restrict our ability to:

·make distributions, investments, or other restricted payments if our fixed charge coverage ratio is less than 2.0 to 1.0;

·incur additional indebtedness if our fixed charge coverage ratio would be less than 2.0 to 1.0; and

·create liens, sell assets, consolidate or merge with any other person, or engage in transactions with affiliates.

These covenants are subject to a number of important qualifications, limitations, and exceptions.  In addition, the indenture contains other customary terms, including certain events of default upon the occurrence of which the senior notes may be declared immediately due and payable.

Under the indenture, starting on April 15, 2016, we will be able to redeem some or all of the senior notes at a premium that will decrease over time, plus accrued and unpaid interest to the date of redemption.  Prior to April 15, 2016, we will be able, at our option, to redeem up to 35% of the aggregate principal amount of the senior notes at a price of 107.375% of the principal thereof, plus accrued and unpaid interest to the date of redemption, with an amount equal to the net proceeds from certain equity offerings.  In addition, at our option, prior to April 15, 2016, we may redeem some or all of the senior notes at a redemption price equal to 100% of the principal amount of the senior notes, plus an “applicable premium”, plus accrued and unpaid interest to the date of redemption.  If a change of control occurs on or prior to July 15, 2014, we may redeem all, but not less than all, of the notes at 110% of the principal amount thereof plus accrued and unpaid interest to, but not including, the redemption date.  Certain asset dispositions will be triggering events that may require us to repurchase all or any part of a noteholder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to but excluding the date of repurchase. Interest on the senior notes is payable in cash semi-annually in arrears, commencing on October 15, 2013, through maturity.

Capitalization.  At June 30, 2013, we had total assets of $1.0 billion and total capitalization of $853.2 million, of which 36% was represented by equity and 64% by long-term debt.  At December 31, 2012, we had total assets of $852.3 million and total capitalization of $782.9 million, of which 54% was represented by equity and 46% by long-term debt.  The percentages of our capitalization represented by equity and long-term debt could vary in the future if debt or equity is used to finance capital projects or acquisitions.

On August 7, 2013, we completed our IPO of 15,789,474 shares of our common stock at $20.00 per share and received net proceeds of approximately $293.4 million, after deducting underwriting discounts and commissions and estimated offering expenses.  We used the net proceeds from the IPO to purchase New Holdings Units from Holdings.  Holdings used the proceeds it received as a result of our purchase of New Holdings Units (i) to reduce outstanding borrowings under the our credit agreement, (ii) to provide additional liquidity for use in our drilling program, and (iii) for general corporate purposes.  Following the closing of the IPO and repayment of all outstanding borrowings under our credit agreement, we had $233.5 million in cash on hand as of August 7, 2013.  Including the $320 million of undrawn borrowing capacity under our credit agreement, our total liquidity was $553.5 million as of August 7, 2013.

Changes in Prices

Our revenues, the value of our assets, and our ability to obtain bank loans or additional capital on attractive terms are affected by changes in commodity prices, which can fluctuate significantly.  The following table provides our average realized prices for the periods indicated:

	Three months ended June 30,				Six months ended June 30,
	2013		2012		2013		2012
Average realized prices:
Oil ($/Bbl) (excluding impact of cash settled derivatives)	$	91.80	$	85.84	$	88.19	$	91.82
Oil ($/Bbl) (after impact of cash settled derivatives)	91.03		85.61		87.51		87.35
Natural gas ($/Mcf)	3.72		2.03		3.51		2.31
NGLs ($/Bbl)	27.27		34.29		29.08		37.80
Combined ($/BOE) (excluding impact of cash settled derivatives)	64.04		59.22		62.65		64.38
Combined ($/BOE) (after impact of cash settled derivatives)	63.59		59.09		62.25		61.79

Increases in commodity prices may be accompanied by or result in: (i) increased development costs, as the demand for drilling operations increases; (ii) increased severance taxes, as we are subject to higher severance taxes due to the increased value of hydrocarbons extracted from our wells; and (iii) increased LOE, such as electricity costs, as the demand for services related to the operation of our wells increases.  Decreases in commodity prices can have the opposite impact of those listed above and can result in an impairment charge to our oil and natural gas properties.

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Critical Accounting Policies and Estimates

Please read “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies and Estimates” in our final prospectus dated August 1, 2013 and filed with the SEC on August 5, 2013.

Income Taxes

We account for income taxes using the asset and liability method.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards.  Deferred tax assets and liabilities are measured using enacted tax laws and rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect of a change in tax rates on deferred tax assets and liabilities is recognized in income in the period that includes the enactment date.

We periodically assess whether it is more likely than not that we will generate sufficient taxable income to realize our deferred income tax assets, including net operating losses.  In making this determination, we consider all available positive and negative evidence and make certain assumptions.  We consider, among other things, our deferred tax liabilities, the overall business environment, our historical earnings and losses, current industry trends, and our outlook for future years.  We believe it is more likely than not that certain net operating losses can be carried forward and utilized.

In April 2013, we had a corporate reorganization to effectuate our IPO.  Holdings, our accounting predecessor, is a partnership structure not subject to federal income tax.  Pursuant to the steps of the corporate reorganization, the Apollo Funds’ Class A limited partner interests and the Class B limited partner interests of Holdings were exchanged for shares of our common stock.  Our operations are now subject to federal income tax.  The tax implications of the corporate reorganization and the tax impact of the conversion to operating as a taxable entity have been reflected in our consolidated financial statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

The primary objective of the following information is to provide quantitative and qualitative information about our potential exposure to market risks.  The term “market risk” refers to the risk of loss arising from adverse changes in oil and natural gas prices and interest rates.  The disclosures are not meant to be precise indicators of exposure, but rather indicators of potential exposure.  This information provides indicators of how we view and manage our ongoing market risk exposures.  We do not enter into market risk sensitive instruments for speculative trading purposes.

Derivative policy

Due to the volatility of commodity prices, we enter into various derivative instruments to manage and reduce our exposure to price changes.  We primarily utilize WTI crude oil swaps that establish a fixed price for the production covered by the swaps.  We also have employed WTI crude oil options (including puts and collars) to further mitigate our commodity price risk.  All contracts are settled with cash and do not require the delivery of physical volumes to satisfy settlement.  While this strategy may result in lower net cash inflows in times of higher oil prices than we would otherwise have, had we not utilized these instruments, management believes that the resulting reduced volatility of cash flow resulting from use of derivatives is beneficial.

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Counterparties

At June 30, 2013, we had committed 10% or greater (in terms of fair market value) of our oil derivative contracts in asset positions to the following counterparties, or one of their affiliates:

	Fair Market Value of
	Oil Derivative
	Contracts
Counterparty	Committed
	(in thousands)
BNP Paribas	$	3,825
Wells Fargo	2,318
Scotiabank	1,474
Barclays PLC	1,350
Royal Bank of Canada	1,192

We do not require collateral from our counterparties for entering into financial instruments, so in order to mitigate the credit risk of financial instruments, we enter into master netting agreements with our counterparties.  The master netting agreement is a standardized, bilateral contract between a given counterparty and us.  Instead of treating each financial transaction between the counterparty and us separately, the master netting agreement enables the counterparty and us to aggregate all financial trades and treat them as a single agreement.  This arrangement is intended to benefit us in two ways: (i) default by a counterparty under one financial trade can trigger rights to terminate all financial trades with such counterparty; and (ii) netting of settlement amounts reduces our credit exposure to a given counterparty in the event of close-out.

The counterparties to our commodity derivative contracts are composed of six institutions, all of which are rated A- or better by Standard & Poor’s and Baa2 or better by Moody’s and five of which are lenders under our credit agreement.

Commodity price sensitivity

Commodity prices are often subject to significant volatility due to many factors that are beyond our control, including but not limited to: prevailing economic conditions, supply and demand of hydrocarbons in the marketplace, actions by speculators, and geopolitical events such as wars or natural disasters.  We manage oil price risk with swaps, puts, and collars. Swaps provide a fixed price for a notional amount of sales volumes.  Puts provide a fixed floor price on a notional amount of sales volumes while allowing full price participation if the relevant index price closes above the floor price.  Collars provide a floor price on a notional amount of sales volumes while allowing some additional price participation if the relevant index price closes above the floor price.  This participation is limited by a ceiling price specified in the contract.

The following table summarizes our open commodity derivative contracts as of June 30, 2013:

	Average	Weighted -		Average	Weighted -		Average		Weighted -		Asset
	Daily	Average		Daily	Average		Daily		Average		(Liability)
	Floor	Floor		Cap	Cap		Swap		Swap		Fair Market
Period	Volume	Price		Volume	Price		Volume		Price		Value
	(Bbl)	(per Bbl)		(Bbl)	(per Bbl)		(Bbl)		(per Bbl)		(in thousands)
July - Dec. 2013	150	$	75.00	150	$	105.95	6,750	(a)	$	94.93	$	(208	)
2014	—	—		—	—		7,950		92.67		7,711
2015	—	—		—	—		1,300		93.18		3,536
											$	11,039

(a)Includes 6,500 Bbls/D at $94.85 per Bbl for the third quarter of 2013 and 7,000 Bbls/D at $95.01 per Bbl for the fourth quarter of 2013.

We are also a party to Midland-Cushing basis differential swaps for 5,000 Bbls/D at $1.20/Bbl for July through December 2013.  At June 30, 2013, the fair value of these contracts was a liability of approximately $0.9 million.

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As of June 30, 2013, the fair market value of our oil derivative contracts was a net asset of $10.1 million.  Based on our open commodity derivative positions at June 30, 2013, a 10% increase in NYMEX prices for oil would change our net commodity derivative asset to a net commodity derivative liability of approximately $31.5 million, while a 10% decrease in NYMEX prices for oil would increase our net commodity derivative asset by approximately $41.5 million.

Interest rate sensitivity

At June 30, 2013, we had outstanding debt of $543.5 million, $500 million of which bears interest at a fixed rate of 7 3/8% and $43.5 million of which consisted of outstanding borrowings under our credit agreement and is subject to floating market rates of interest that are linked to the Eurodollar rate.  At this level of floating rate debt, if the Eurodollar rate increased 10%, we would incur an additional $74,000 of interest expense per year, and if the Eurodollar rate decreased 10%, we would incur $74,000 less.  Additionally, if the market price of our senior notes increased by 10%, the fair value at June 30, 2013 would increase from approximately $497.6 million to approximately $547.3 million, and if the market price decreased by 10%, the fair value would decrease to approximately $447.8 million.

Item 4.  Controls and Procedures

In accordance with the Securities Exchange Act of 1934 (the “Exchange Act”) Rules 13a-15 and 15d-15, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.  Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of June 30, 2013 to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

We are not currently required to comply with the SEC’s rules implementing Section 404 of the Sarbanes Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose.  However, we are required to comply with the SEC’s rules implementing Section 302 of the Sarbanes-Oxley Act, which requires our management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of its internal control over financial reporting.  We will not be required to make our first assessment of internal control over financial reporting under Section 404 until the year following our first annual report required to be filed with the SEC.

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PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time, we are a party to ongoing legal proceedings in the ordinary course of business, including workers’ compensation claims and employment related disputes.  We do not believe the results of these proceedings, individually or in the aggregate, will have a material adverse effect on our business, financial condition, results of operations, or liquidity.

Item 1A.  Risk Factors

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in “Risk Factors” in our final prospectus dated August 1, 2013 and filed with the SEC pursuant to Rule 424(b)(4) of the Securities Act of 1933 on August 5, 2013, which could materially affect our business, financial condition, and/or future results.  The risks described in our final prospectus are not the only risks we face.  Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition, or results of operations.

Item 2.  Unregistered Sales of Securities and Use of Proceeds

Unregistered Sales of Securities

In connection with our incorporation on April 1, 2013 under the laws of the State of Delaware, we issued 1,000 shares of our common stock to Athlon Holdings GP LLC for an aggregate purchase price of $10.00.  These securities were offered and sold by us in reliance upon the exemption from the registration requirements provided by Section 4(2) of the Securities Act.

On April 26, 2013, in connection with our reorganization transactions, certain holders of interests in Holdings exchanged their Class A limited partner interests and Class B interests of Holdings for an aggregate of 960,907 shares of our common stock.  These securities were issued by us in reliance upon the exemption from the registration requirements provided by Section 4(2) of the Securities Act.

Use of Proceeds

On August 1, 2013, we priced our IPO of 15,789,474 shares of common stock at a price to the public of $20.00 per share.  The IPO was made pursuant to a registration statement on Form S-1 (File No. 333-189109) that was declared effective by the SEC on August 1, 2013.  Citigroup Global Markets Inc., Goldman, Sachs & Co., Merrill Lynch, Pierce, Fenner & Smith, Inc., UBS Securities LLC, Wells Fargo Securities, LLC, Apollo Global Securities, LLC, RBC Capital Markets, LLC, Scotia Capital (USA) Inc., Barclays Capital Inc., Credit Suisse Securities (USA) LLC, Tudor, Pickering, Holt & Co. Securities, Inc., Credit Agricole Securities (USA) Inc., Mitsubishi UFJ Securities (USA), Inc., Simmons & Company International, Stephens Inc., CIBC World Markets Corp., FBR Capital Markets & Co., and Lebenthal & Co. served as the underwriters to our IPO.

Net proceeds from the sale of the shares of common stock were approximately $293.4 million, after deducting the underwriters’ discounts and commissions of $17.4 million, in the aggregate, and estimated offering expenses of approximately $5.0 million.  We used the net proceeds from the IPO to purchase newly issued New Holdings Units from Holdings, which subsequently used the net proceeds to repay outstanding indebtedness under our credit agreement, provide additional liquidity for use in our drilling program, and for general corporate purposes.

Item 6.  Exhibits

Exhibit No.	Description
3.1*	Amended and Restated Certificate of Incorporation of Athlon Energy Inc.
3.2*	Amended and Restated Bylaws of Athlon Energy Inc.
31.1*	Rule 13a-14(a)/15d-14(a) Certification (Principal Executive Officer).
31.2*	Rule 13a-14(a)/15d-14(a) Certification (Principal Financial Officer).
32.1*	Section 1350 Certification (Principal Executive Officer).
32.2*	Section 1350 Certification (Principal Financial Officer).
101.INS**	XBRL Instance Document.

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101.SCH**	XBRL Taxonomy Extension Schema Document.
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase.
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB**	XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document.

*Filed herewith.

**To be filed by amendment during the 30-day grace period provided by Rule 405(a)(2) of Regulation S-T.  Pursuant to Rule 406T of Regulation S-T, these interactive data files will be furnished and will not be deemed filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, will not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under these sections.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ATHLON ENERGY INC.
	/s/ William B. D. Butler
	William B. D. Butler
	Vice President—Chief Financial Officer and
	Principal Financial Officer
	/s/ John C. Souders
	John C. Souders
	Vice President—Controller and
	Principal Accounting Officer
Date: August 14, 2013

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ATHLON ENERGY INC.

Athlon Energy Inc. (the “Corporation”), a corporation organized and existing under the laws and by virtue of the General Corporation Law of the State of Delaware,

DOES HEREBY CERTIFY:

1.             The name of the Corporation is Athlon Energy Inc.

2.             The original Certificate of Incorporation of the Corporation (the “Original Certificate of Incorporation”) was filed with the Secretary of State of the State of Delaware on April 1, 2013.

3.             This Amended and Restated Certificate of Incorporation (this “Amended and Restated Certificate of Incorporation”) amends and restates the Original Certificate of Incorporation, as amended, in its entirety and has been duly adopted by the Board of Directors of the Corporation by unanimous written consent in lieu of a meeting in accordance with Sections 141(f), 242, and 245 of the General Corporation Law of the State of Delaware (the “DGCL”) and by the stockholders of the Corporation by written consent in lieu of a meeting thereof in accordance with Sections 228, 242 and 245 of the DGCL.

4.             The Certificate of Incorporation of the Corporation, as amended hereby, shall, upon the effectiveness hereof, read in its entirety, as follows:

ARTICLE I

NAME

The name of the Corporation is (hereinafter called the “Corporation”):

Athlon Energy Inc.

ARTICLE II

REGISTERED OFFICE AND AGENT

The address of the Corporation’s registered office in the State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street, in the City of Wilmington, County of New Castle, 19801.  The name of the Corporation’s registered agent at such address is The Corporation Trust Company.

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ARTICLE III

PURPOSE

The purpose of the Corporation shall be to engage in any lawful act and activity for which corporations may be organized and incorporated under the General Corporation Law of the State of Delaware (the “DGCL”), as the same may be amended and supplemented.

ARTICLE IV

CAPITAL STOCK

Section 1. Authorized Shares.  The total number of shares of all classes of stock that the Corporation shall have authority to issue is 550,000,000 shares, of which 500,000,000 shares shall be common stock, $0.01 par value (“Common Stock”), and 50,000,000 shares shall be preferred stock, $0.01 par value (“Preferred Stock”).

Section 2. Common Stock.  Except as otherwise required by applicable law, all shares of Common Stock shall be identical in all respects and shall entitle the holders thereof to the same rights, subject to the same qualifications, limitations and restrictions.  The terms of the Common Stock set forth below shall be subject to the express terms of any series of Preferred Stock.

(a)           Voting Rights.  Except as otherwise required by applicable law, the holders of Common Stock shall be entitled to one vote per share on all matters to be voted on by the Corporation’s stockholders.  No stockholder of the Corporation shall be entitled to exercise any right of cumulative voting.

(b)           Dividends.  Subject to the rights of the holders of Preferred Stock, and subject to any other provisions of this Amended and Restated Certificate of Incorporation, as it may be amended from time to time, the holders of Common Stock shall be entitled to receive, as, if and when declared by the Board of Directors of the Corporation (the “Board”) out of the funds of the Corporation legally available therefor, such dividends (payable in cash, stock or otherwise) as the Board may from time to time determine, payable to stockholders of record on such dates, not exceeding 60 days preceding the dividend payment dates, as shall be fixed for such purpose by the Board in advance of payment of each particular dividend.

(c)           No Preemptive or Subscription Rights.  No holder of Common Stock shall be entitled to preemptive or subscription rights.

(d)           Liquidation.  In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after the distribution or payment of any liabilities and accrued but unpaid dividends and any liquidation preferences on any outstanding Preferred Stock, the remaining assets of the Corporation available for distribution to stockholders shall be distributed among and paid to the holders of Common Stock ratably in proportion to the number of shares of Common Stock held by them respectively.

Section 3. Preferred Stock.  The Board is authorized to provide for the issuance from time to time of shares of Preferred Stock in one or more series by filing a certificate of the voting

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powers, designations, preferences and relative, participating, optional or other rights, if any, and the qualifications, limitations or restrictions thereof, if any, (a “Preferred Stock Certificate of Designation”) pursuant to the applicable provisions of the DGCL, as are stated and expressed in the resolution or resolutions providing for the issuance thereof adopted by the Board (as such resolutions may be amended by a resolution or resolutions subsequently adopted by the Board), and as are not stated and expressed in this Amended and Restated Certificate of Incorporation, including, but not limited to, determination of any of the following:

(a)           the distinctive designation of the series, whether by number, letter or title, and the number of shares which will constitute the series, which number may be increased or decreased (but not below the number of shares then outstanding and except to the extent otherwise provided in the applicable Preferred Stock Certificate of Designation) from time to time by action of the Board;

(b)           the dividend rate, if any, and the times of payment of dividends, if any, on the shares of the series, whether such dividends will be cumulative and, if so, from what date or dates, and the relation which such dividends, if any, shall bear to the dividends payable on any other class or classes of stock;

(c)           the price or prices at which, and the terms and conditions on which, the shares of the series may be redeemed at the option of the Corporation;

(d)           whether or not the shares of the series will be entitled to the benefit of a retirement or sinking fund to be applied to the purchase or redemption of such shares and, if so entitled, the amount of such fund and the terms and provisions relative to the operation thereof;

(e)           the amounts payable on, and the preferences, if any, of the shares of the series in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation;

(f)            whether or not the shares of the series will be convertible into, or exchangeable for, any other shares of stock of the Corporation or other securities and, if so convertible or exchangeable, the conversion price or prices, or the rates of exchange, and any adjustments thereof, at which such conversion or exchange may be made, and any other terms and conditions of such conversion or exchange;

(g)           whether or not the shares of the series will have priority over or be on a parity with or be junior to the shares of any other series or class of stock in any respect, or will be entitled to the benefit of limitations restricting the issuance of shares of any other series or class of stock, restricting the payment of dividends on or the making of other distributions in respect of shares of any other series or class of stock ranking junior to the shares of the series as to dividends or assets, or restricting the purchase or redemption of the shares of any such junior series or class, and the terms of any such restriction;

(h)           whether or not the shares of the series will have voting rights in addition to any voting rights provided and, if so, the terms of such voting rights; and

(i)            any other terms of the shares of the series.

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ARTICLE V

DIRECTORS

Section 1. General Powers.  Except as otherwise provided by applicable law or this Amended and Restated Certificate of Incorporation, in each case as the same may be amended and supplemented, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

Section 2. Number of Directors.  The number of directors that shall constitute the whole Board shall be as determined from time to time by a majority of the Board; provided, that in no event shall the total number of directors constituting the entire Board be less than three (3) nor more than fifteen (15).  Election of directors need not be by written ballot.

Section 3. Classes of Directors; Term of Office.  The Board shall be and is divided into three classes, as nearly equal in number as possible, designated:  Class I, Class II and Class III.  In case of any increase or decrease, from time to time, in the number of directors, the number of directors in each class shall be apportioned as nearly equal as possible.  No decrease in the number of directors shall shorten the term of any incumbent director.

Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided, that each director initially appointed to Class I shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2014; each director initially appointed to Class II shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2015; and each director initially appointed to Class III shall serve for a term expiring at the Corporation’s annual meeting of stockholders held in 2016; provided, further, that the term of each director shall continue until the election and qualification of his successor and be subject to his earlier death, resignation or removal.

Section 4. Quorum.  Except as otherwise provided by law, this Amended and Restated Certificate of Incorporation or the bylaws of the Corporation (the “Bylaws”), a majority of the total number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board, but in no event shall less than one-third of the directors constitute a quorum.  A majority of the directors present (though less than such quorum) may adjourn the meeting from time to time without further notice.

Section 5. Manner of Acting.  Every act or decision done or made by the majority of the directors present at a meeting at which a quorum is present shall be regarded as the act of the Board, unless the act of a greater number is required by law, this Amended and Restated Certificate of Incorporation or the Bylaws, in each case as the same may be amended and supplemented.

Section 6. Vacancies.  Any vacancy or newly created directorships in the Board, however occurring, shall be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director, except as otherwise provided by law, and shall not be filled by the stockholders of the Corporation.  A director elected to fill a vacancy shall hold

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office until the next election of the class for which such director shall have been chosen, subject to the election and qualification of a successor and to such director’s earlier death, resignation or removal.

If any applicable provision of the DGCL expressly confers power on stockholders to fill such a directorship at a special meeting of stockholders, such a directorship may be filled at such meeting only by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors.

Section 7. Removal and Resignation of Directors.  Directors may be removed only for cause, and only by the affirmative vote of the holders of at least 66 2/3% of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors, provided, however, that for so long as Apollo Athlon Holdings, L.P. and any of its Affiliates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended) (collectively, “Apollo”) beneficially owns at least 33 1/3% of the voting power of all the shares of the Corporation and casts its votes associated with such shares in favor of the proposed action, directors may be removed by the affirmative vote of the holders of a majority of the votes which all the stockholders would be entitled to cast in any annual election of directors or class of directors.  A director may resign at any time by filing his written resignation with the secretary of the Corporation.

Section 8. Voting Rights of Preferred Stock.  Notwithstanding the foregoing, whenever the holders of any one or more series of Preferred Stock issued by the Corporation shall have the right, voting separately as a series or separately as a class with one or more such other series, to elect directors at an annual or special meeting of stockholders, the election, term of office, removal, filling of vacancies and other features of such directorships shall be governed by the terms of this Amended and Restated Certificate of Incorporation (including any certificate of designations relating to any series of Preferred Stock) applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article unless expressly provided by such terms.

ARTICLE VI

POWERS OF THE BOARD OF DIRECTORS

In furtherance and not in limitation of the rights, powers, privileges and discretionary authority granted or conferred by statute, the Board is expressly authorized to:

(a)           make, alter, amend or repeal the Bylaws, without any action on the part of the stockholders of the Corporation and subject to any limitations that may be contained in such Bylaws, but any Bylaws adopted by the Board may be amended, modified or repealed by the stockholders entitled to vote thereon; and

(b)           from time to time to determine whether and to what extent, and at what times and places, and under what conditions and regulations, the accounts and books of the Corporation, or any of them, shall be open to inspection of stockholders; and, except as so determined or as expressly provided in this Amended and Restated Certificate of Incorporation

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or in any Preferred Stock Certificate of Designation, no stockholder shall have any right to inspect any account, book or document of the Corporation other than such rights as may be conferred by applicable law.

ARTICLE VII

ACTION BY WRITTEN CONSENT

Any action required or permitted to be taken by the holders of the Common Stock of the Corporation must be effected at a duly called annual or special meeting of such holders and, subject to the next sentence, may not be effected by any consent or consents in writing by stockholders.  Notwithstanding the foregoing, until such time as Apollo no longer beneficially owns a majority of the voting power of all the shares of the Corporation, any action required or permitted to be taken at any annual or special meeting of stockholders of the Corporation may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding Common Stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares of Common Stock were present and voted and shall be delivered to the Corporation by delivery to its registered office in Delaware, its principal place of business, or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.

ARTICLE VIII

SPECIAL MEETINGS

Except as otherwise required by law and subject to the rights of the holders of any series of Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Chairman of the Board or a majority of the members of the Board pursuant to a resolution approved by the Board, and special meetings may not be called by any other person or persons.  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

ARTICLE IX

LIMITED LIABILITY

To the extent permitted by the DGCL, a director of the Corporation will not be liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL (or any successor provision thereto), or (iv) for any transaction from which the director derived any improper personal benefit.  Any repeal or amendment or modification of this Article IX by the stockholders of the Corporation or by changes in applicable law, or the adoption of any provision of this Amended and Restated Certificate of Incorporation inconsistent with this Article IX, will, to the extent permitted by applicable law, be prospective only (except to the extent such

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amendment or change in applicable law permits the Corporation to provide a broader limitation on a retroactive basis than permitted prior thereto), and will not adversely affect any limitation on the personal liability of any director of the Corporation at the time of such repeal or amendment or modification or adoption of such inconsistent provision.  If any provision of the DGCL is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of our directors will be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

ARTICLE X

INDEMNIFICATION

(a)           Each person who was or is made a party or is threatened to be made a party to or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was, at any time during which this Amended and Restated Certificate of Incorporation is in effect (whether or not such person continues to serve in such capacity at the time any indemnification or payment of expenses pursuant hereto is sought or at the time any proceeding relating thereto exists or is brought), a director or officer of the Corporation or is or was at any such time serving at the request of the Corporation as a director, officer, trustee, employee or agent of another corporation or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans maintained or sponsored by the Corporation (hereinafter, an “indemnitee”), whether the basis of such proceeding is alleged action in an official capacity as a director, officer, trustee, employee or agent or in any other capacity while serving as a director, officer, trustee, employee or agent, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor of the Corporation by merger or otherwise) to the fullest extent authorized by the DGCL as the same exists or may hereafter be amended or modified from time to time (but, in the case of any such amendment or modification, only to the extent that such amendment or modification permits the Corporation to provide greater indemnification rights than said law permitted the Corporation to provide prior to such amendment or modification), against all expense, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement) incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director, officer, trustee, employee or agent and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that except as provided in paragraph (c) of this Article X, the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person only if such proceeding (or part thereof) was authorized by the Board.  The right to indemnification conferred in this Article X shall include the right, without the need for any action by the Board, to be paid by the Corporation (and any successor of the Corporation by merger or otherwise) the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the Corporation within twenty (20) days after the receipt by the Corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the DGCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a

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director or officer, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter, the “undertaking”) by or on behalf of such director or officer, to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right of appeal (a “final disposition”) that such director or officer is not entitled to be indemnified for such expenses under this Article X or otherwise.  The rights conferred upon indemnitees in this Article X shall be contract rights between the Corporation and each indemnitee to whom such rights are extended that vest at the commencement of such person’s service to or at the request of the Corporation and all such rights shall continue as to an indemnitee who has ceased to be a director or officer of the Corporation or ceased to serve at the Corporation’s request as a director, officer, trustee, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, as described herein, and shall inure to the benefit of the indemnitee’s heirs, executors and administrators.

(b)           To obtain indemnification under this Article X, a claimant shall submit to the Corporation a written request, including therein or therewith such documentation and information as is reasonably available to the claimant and is reasonably necessary to determine whether and to what extent the claimant is entitled to indemnification.  Upon written request by a claimant for indemnification pursuant to the first sentence of this paragraph (b), a determination, if required by applicable law, with respect to the claimant’s entitlement thereto shall be made as follows if there is a dispute between the Corporation and the claimant with respect to the claimant’s rights to indemnification hereunder:  (i) if requested by the claimant, by Independent Counsel (as hereinafter defined), or (ii) if no request is made by the claimant for a determination by Independent Counsel, (A) by the Board by a majority vote of a quorum consisting of Disinterested Directors (as hereinafter defined), (B) if a quorum of the Board consisting of Disinterested Directors is not obtainable or, even if obtainable, such quorum of Disinterested Directors so directs, by Independent Counsel (as hereinafter defined) in a written opinion to the Board, a copy of which shall be delivered to the claimant, or (C) if a quorum of Disinterested Directors so directs, by a majority of the stockholders of the Corporation by Independent Counsel.  In the event the determination of entitlement to indemnification is to be made by Independent Counsel, the Independent Counsel shall be selected by the Board unless there shall have occurred within two years prior to the date of the commencement of the action, suit or proceeding for which indemnification is claimed a “Change of Control” as defined in the Athlon Energy Inc. 2013 Incentive Award Plan in which case the Independent Counsel shall be selected by the claimant unless the claimant shall request that such selection be made by the Board.  If it is so determined that the claimant is entitled to indemnification, payment to the claimant shall be made within ten (10) days after such determination.

(c)           If a claim under paragraph (a) of this Article X is not paid in full by the Corporation within thirty (30) days after a written claim pursuant to paragraph (b) of this Article X has been received by the Corporation (except in the case of a claim for advancement of expenses, for which the applicable period is twenty (20) days), the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such claim.  It shall be a defense to any such action that the claimant has not met the standard of conduct which makes it permissible under the DGCL for the Corporation to indemnify the claimant for the amount claimed or that the claimant is not entitled to the

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requested advancement of expenses, but (except where the required undertaking, if any, has not been tendered to the Corporation) the burden of proving such defense shall be on the Corporation.  Neither the failure of the Corporation (including its Board, Independent Counsel or stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, nor an actual determination by the Corporation (including its Board, Independent Counsel or stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

(d)           If a determination shall have been made pursuant to paragraph (b) of this Article X that the claimant is entitled to indemnification, the Corporation shall be bound by such determination in any judicial proceeding commenced pursuant to paragraph (c) of this Article X.

(e)           The Corporation shall be precluded from asserting in any judicial proceeding commenced pursuant to paragraph (c) of this Article X that the procedures and presumptions of this Article X are not valid, binding and enforceable and shall stipulate in such proceeding that the Corporation is bound by all the provisions of this Article X.

(f)            The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article X:  (i) shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, provision of this Amended and Restated Certificate of Incorporation, Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise and (ii) cannot be terminated by the Corporation, the Board or the stockholders of the Corporation with respect to a person’s service prior to the date of such termination.  Any amendment, modification, alteration or repeal of this Article X that in any way diminishes, limits, restricts, adversely affects or eliminates any right of an indemnitee or his or her successors to indemnification, advancement of expenses or otherwise shall be prospective only and shall not, without the written consent of the indemnitee, in any way diminish, limit, restrict, adversely affect or eliminate any such right with respect to any actual or alleged state of facts, occurrence, action or omission then or previously existing, or any action, suit or proceeding previously or thereafter brought or threatened based in whole or in part upon any such actual or alleged state of facts, occurrence, action or omission.

(g)           The Corporation may maintain insurance, at its expense, to protect itself and any current or former director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.  To the extent that the Corporation maintains any policy or policies providing such insurance, each such current or former director or officer, and each such agent or employee to which rights to indemnification have been granted as provided in paragraph (h) of this Article X, shall be covered by such policy or policies in accordance with its or their terms to the maximum extent of the coverage thereunder for any such current or former director, officer, employee or agent.

(h)           The Corporation may, to the extent authorized from time to time by the Board or the Chief Executive Officer, grant rights to indemnification, and rights to be paid by the

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Corporation the expenses incurred in connection with any proceeding in advance of its final disposition, to any current or former employee or agent of the Corporation to the fullest extent of the provisions of this Article X with respect to the indemnification and advancement of expenses of current or former directors and officers of the Corporation.

(i)            If any provision or provisions of this Article X shall be held to be invalid, illegal or unenforceable for any reason whatsoever:  (i) the validity, legality and enforceability of the remaining provisions of this Article X (including, without limitation, each portion of any paragraph of this Article X containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (ii) to the fullest extent possible, the provisions of this Article X (including, without limitation, each such portion of any paragraph of this Article X containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

(j)            For purposes of this Article X:

(i)            “Disinterested Director” means a director of the Corporation who is not and was not a party to the matter in respect of which indemnification is sought by the claimant.

(ii)           “Independent Counsel” means a law firm, a member of a law firm, or an independent practitioner, that is experienced in matters of corporate law and shall include any person who, under the applicable standards of professional conduct then prevailing, would not have a conflict of interest in representing either the Corporation or the claimant in an action to determine the claimant’s rights under this Article X.

(k)           Any notice, request or other communication required or permitted to be given to the Corporation under this Article X shall be in writing and either delivered in person or sent by telecopy, telex, telegram, overnight mail or courier service, or certified or registered mail, postage prepaid, return receipt requested, to the Secretary of the Corporation and shall be effective only upon receipt by the Secretary.

ARTICLE XI

RELATED PERSONS; CORPORATE OPPORTUNITY

Neither any contract or other transaction between the Corporation and any other corporation, partnership, limited liability company, joint venture, firm, association, or other entity (an “Entity”), nor any other acts of the Corporation with relation to any other Entity will, in the absence of fraud, in any way be invalidated or otherwise affected by the fact that any one or more of the directors or officers of the Corporation are pecuniarily or otherwise interested in, or are directors, officers, partners, or members of, such other Entity (such directors, officers, and Entities, each a “Related Person”).  Any Related Person may be a party to, or may be pecuniarily or otherwise interested in, any contract or transaction of the Corporation, provided, that the fact that such person is a Related Person is disclosed or is known to the Board or a majority of directors present at any meeting of the Board at which action upon any such contract or

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transaction is taken; and any director of the Corporation who is also a Related Person may be counted in determining the existence of a quorum at any meeting of the Board during which any such contract or transaction is authorized and may vote thereat to authorize any such contract or transaction, with like force and effect as if such person were not a Related Person.  Any director of the Corporation may vote upon any contract or any other transaction between the Corporation and any subsidiary or affiliated corporation without regard to the fact that such person is also a director or officer of such subsidiary or affiliated corporation.

Any contract, transaction or act of the Corporation or of the directors that is ratified at any annual meeting of the stockholders of the Corporation, or at any special meeting of the stockholders of the Corporation called for such purpose, will, insofar as permitted by applicable law, be as valid and as binding as though ratified by every stockholder of the Corporation; provided, however, that any failure of the stockholders to approve or ratify any such contract, transaction or act, when and if submitted, will not be deemed in any way to invalidate the same or deprive the Corporation, its directors, officers or employees, of its or their right to proceed with such contract, transaction or act.

Subject to any express agreement that may from time to time be in effect, (x) any director or officer of the Corporation who is also an officer, director, employee, managing director or other affiliate of Apollo and (y) Apollo, may, and shall have no duty not to, in each case on behalf of Apollo (the persons and entities in clauses (x) and (y), each a “Covered Apollo Person”), (i) carry on and conduct, whether directly, or as a partner in any partnership, or as a joint venturer in any joint venture, or as an officer, director or stockholder of any corporation, or as a participant in any syndicate, pool, trust or association, any business of any kind, nature or description, whether or not such business is competitive with or in the same or similar lines of business as the Corporation, (ii) do business with any client, customer, vendor or lessor of any of the Corporation or its affiliates, and (iii) make investments in any kind of property in which the Corporation may make investments.  To the fullest extent permitted by Section 122 (17) of the DGCL, the Corporation hereby renounces any interest or expectancy of the Corporation to participate in any business of Apollo, and waives any claim against a Covered Apollo Person and shall indemnify a Covered Apollo Person against any claim that such Covered Apollo Person is liable to the Corporation or its stockholders for breach of any fiduciary duty solely by reason of such person’s or entity’s participation in any such business.  The Corporation shall pay in advance any expenses incurred in defense of such claim as provided in Article X.  In the event that a Covered Apollo Person acquires knowledge of a potential transaction or matter which may constitute a corporate opportunity for both (x) the Covered Apollo Person, in his or her Apollo-related capacity, or Apollo and (y) the Corporation, the Covered Apollo Person shall not have any duty to offer or communicate information regarding such corporate opportunity to the Corporation.  To the fullest extent permitted by Section 122 (17) of the DGCL, the Corporation hereby renounces any interest or expectancy of the Corporation in such corporate opportunity and waives any claim against each Covered Apollo Person and shall indemnify a Covered Apollo Person against any claim, that such Covered Apollo Person is liable to the Corporation or its stockholders for breach of any fiduciary duty solely by reason of the fact that such Covered Apollo Person (i) pursues or acquires any corporate opportunity for its own account or the account of any affiliate, (ii) directs, recommends, sells, assigns, or otherwise transfers such corporate opportunity to another person or (iii) does not communicate information regarding such corporate opportunity to the Corporation, provided, however, in each case, that any

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corporate opportunity which is expressly offered to a Covered Apollo Person in writing solely in his or her capacity as an officer or director of the Corporation shall belong to the Corporation.  The Corporation shall pay in advance any expenses incurred in defense of such claim as provided in Article X.

Any person or entity purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article XI.

This Article XI may not be amended, modified or repealed without the prior written consent of Apollo.

ARTICLE XII

SECTION 203 OF THE DGCL

The Corporation elects not to be governed by Section 203 of the DGCL.

ARTICLE XIII

AMENDMENT

The Corporation reserves the right at any time from time to time to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, and any other provisions authorized by the laws of the State of Delaware at the time in force may be added or inserted, in the manner now or hereafter prescribed by law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Amended and Restated Certificate of Incorporation in its present form or as hereafter amended are granted subject to the right reserved in this Article.

Notwithstanding anything to the contrary contained in this Amended and Restated Certificate of Incorporation, the affirmative vote of the holders of at least 66 2/3% in voting power of all the shares of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to modify, amend or repeal, this Amended and Restated Certificate of Incorporation; provided, however, that for so long as Apollo beneficially owns at least 33 1/3% of the voting power of all the shares of the Corporation and casts its votes associated with such shares in favor of the proposed action, this Amended and Restated Certificate of Incorporation may be modified, amended or repealed by the affirmative vote of the holders of a majority of all the shares entitled to vote thereon, provided, further, for so long as any Covered Apollo Person serves on the Board any modification, amendment or repeal to Article XI shall require the prior written approval of Apollo.

In furtherance and not in limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power to adopt, amend, alter or repeal the Bylaws.  The Bylaws may be adopted, amended, altered or repealed by the affirmative vote of the holders of at least 66 2/3% of the total number of shares of Common Stock outstanding, provided, however, that for so long as Apollo beneficially owns at least 33 1/3% of the voting power of all the shares of the Corporation and casts its votes associated with such shares in favor

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of the proposed action, the Bylaws also may be adopted, amended, altered or repealed by the affirmative vote of the holders of a majority of all the shares entitled to vote thereon.

ARTICLE XIV

SEVERABILITY

If any provision or provisions of this Amended and Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever:  (i) the validity, legality and enforceability of such provisions in any other circumstance and of the remaining provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law.

ARTICLE XV

FORUM SELECTION

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (a) any derivative action or proceeding brought on behalf of the Corporation, (b) any action asserting a claim of breach of a fiduciary duty owed by any director, officer, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders, (c) any action asserting a claim arising pursuant to any provision of the DGCL, or (d) any action asserting a claim governed by the internal affairs doctrine, in each such case subject to such Court of Chancery having personal jurisdiction over the indispensable parties named as defendants therein.  Any person or entity purchasing or otherwise acquiring any interest in any share of capital stock of the Corporation shall be deemed to have notice of and consent to the provisions of this Article XV.

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be duly executed this 1st day of August, 2013.

ATHLON ENERGY INC.
By:	/s/ Robert C. Reeves
Name:	Robert C. Reeves
Title:	President and Chief Executive Officer

Signature Page to the Amended and Restated Certificate of Incorporation of Athlon Energy Inc.

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

ATHLON ENERGY INC.

ARTICLE I.
OFFICES AND RECORDS

SECTION 1.1               Delaware Office.  The registered office of Athlon Energy Inc. (the “Corporation”) in the State of Delaware shall be located in the City of Wilmington, County of New Castle, and the name and address of its registered agent is c/o Corporation Service Company, 2711 Centerville Road, Suite 400, in Wilmington, Delaware, 19808.

SECTION 1.2               Other Offices.  The Corporation may have such other offices, either within or without the State of Delaware, as the Board of Directors of the Corporation (the “Board of Directors”) may designate or as the business of the Corporation may from time to time require.

SECTION 1.3               Books and Records.  The books and records of the Corporation may be kept outside the State of Delaware at such place or places as may from time to time be designated by the Board of Directors.

ARTICLE II.
STOCKHOLDERS

SECTION 2.1               Annual Meeting.  The annual meeting of the stockholders of the Corporation shall be held on such date and at such place and time as may be fixed by resolution of the Board of Directors.

SECTION 2.2               Special Meeting.  Subject to the rights of the holders of any series of stock having a preference over the Common Stock of the Corporation as to dividends or upon liquidation (“Preferred Stock”) with respect to such series of Preferred Stock, special meetings of the stockholders may be called only by the Chairman of the Board or by a majority of the total number of directors which the Corporation would have if there were no vacancies (the “Whole Board”) pursuant to a resolution approved by the Board of Directors.  Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

SECTION 2.3               Place of Meeting.  The Board of Directors or the Chairman of the Board, as the case may be, may designate the place of meeting for any annual meeting or for any special meeting of the stockholders called by the Board of Directors or the Chairman of the Board.  If no designation is so made, the place of meeting shall be the principal office of the Corporation.

SECTION 2.4               Notice of Meeting.  Written or printed notice, stating the place, date and time of the meeting and the purpose or purposes for which the meeting is called, shall be delivered by the Corporation not less than ten (10) days nor more than sixty (60) days before the

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date of the meeting, either personally, by electronic transmission in the manner provided in Section 232 of the General Corporation Law of the State of Delaware (the “DGCL”)(except to the extent prohibited by Section 232(e) of the DGCL) or by mail, to each stockholder of record entitled to vote at such meeting.  If mailed, such notice shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid, addressed to the stockholder at his or her address as it appears on the stock transfer books of the Corporation.  If notice is given by electronic transmission, such notice shall be deemed to be given at the times provided in the DGCL.  Such further notice shall be given as may be required by law.  Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting.  Meetings may be held without notice if all stockholders entitled to vote are present, or if notice is waived by those not present in accordance with Section 6.4 of these Bylaws.  Any previously scheduled meeting of the stockholders may be postponed, and (unless otherwise provided in the Amended and Restated Certificate of Incorporation, as may be amended from time to time (the “Certificate of Incorporation”)) any special meeting of the stockholders may be cancelled, by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting of stockholders.

SECTION 2.5               Quorum and Adjournment.  Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the outstanding shares of the Corporation entitled to vote generally in the election of directors (the “Voting Stock”), represented in person or by proxy, shall constitute a quorum at a meeting of stockholders, except that when specified business is to be voted on by a class or series of stock voting as a class, the holders of a majority of the shares of such class or series shall constitute a quorum of such class or series for the transaction of such business.  The Chairman of the meeting, the Chief Executive Officer or a President may adjourn the meeting from time to time, whether or not there is such a quorum.  No notice of the time and place of adjourned meetings need be given except as required by law.  At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted that might have been transacted at the meeting as originally noticed; but only those stockholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof.  The stockholders present at a duly called meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

SECTION 2.6               Proxies.  At all meetings of stockholders, a stockholder may vote by proxy executed in writing (or in such manner prescribed by the DGCL) by the stockholder, or by his or her duly authorized attorney in fact.

SECTION 2.7               Notice of Stockholder Business and Nominations.

(A)          Annual Meetings of Stockholders.

(1)           At any annual meeting of the stockholders, only such nominations of persons for election to the Board of Directors and only other business shall be considered or conducted, as shall have been properly brought before the meeting.  For nominations to be properly made at an annual meeting, and proposals of

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other business to be properly brought before an annual meeting, nominations and proposals of other business must be:  (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who (i) was a stockholder of record at the time of giving of notice provided for in this Bylaw and at the time of the annual meeting, (ii) is entitled to vote at the meeting and (iii) complies with the notice procedures set forth in this Bylaw as to such business or nomination; clause (c) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and included in the Corporation’s notice of meeting) before an annual meeting of stockholders.

(2)           Without qualification or limitation, for any nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to paragraph (A)(1)(c) of this Bylaw, the stockholder must have given timely notice thereof in writing to the Secretary and such other business must otherwise be a proper matter for stockholder action.  To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 90th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the Corporation.  In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.  In addition, to be timely, a stockholder’s notice shall further be updated and supplemented, if necessary, so that the information provided or required to be provided in such notice shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting in the case of the update and supplement required to be made as of the record date, and not later than eight (8) business days prior to the date for the meeting, any adjournment or postponement thereof in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof.  To be in proper form, a stockholder’s notice (whether given pursuant to this paragraph (A)(2) or paragraph (B)) to the Secretary must:  (a) set forth, as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such stockholder, as they appear on the Corporation’s books, of such beneficial owner, if any, and of their

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respective affiliates or associates or others acting in concert therewith, (ii) (A) the class or series and number of shares of the Corporation which are, directly or indirectly, owned beneficially and of record by such stockholder, such beneficial owner, and of their respective affiliates or associates or others acting in concert therewith, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, any derivative or synthetic arrangement having the characteristics of a long position in any class or series of shares of the Corporation, or any contract, derivative, swap or other transaction or series of transactions designed to produce economic benefits and risks that correspond substantially to the ownership of any class or series of shares of the Corporation, including due to the fact that the value of such contract, derivative, swap or other transaction or series of transactions is determined by reference to the price, value or volatility of any class or series of shares of the Corporation, whether or not such instrument, contract or right shall be subject to settlement in the underlying class or series of capital stock of the Corporation or otherwise, through the delivery of cash or other property, or otherwise, and without regard of whether the stockholder of record, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith, may have entered into transactions that hedge or mitigate the economic effect of such instrument, contract or right (any of the foregoing, a “Derivative Instrument”) directly or indirectly owned beneficially by such stockholder, the beneficial owner, if any, or any affiliates or associates or others acting in concert therewith and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the Corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right to vote any shares of any security of the Corporation, (D) any contract, arrangement, understanding, relationship or otherwise, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such stockholder, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of any class or series of the shares of the Corporation by, manage the risk of share price changes for, or increase or decrease the voting power of, such stockholder with respect to any class or series of the shares of the Corporation, or which provides, directly or indirectly, the opportunity to profit or share in any profit derived from any decrease in the price or value of any security of the Corporation (any of the foregoing, a “Short Interest”), (E) any rights to dividends on the shares of the Corporation owned beneficially by such stockholder that are separated or separable from the underlying shares of the Corporation, (F) any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership, (G) any performance-related fees (other than an asset-based fee) that such stockholder is entitled to based on any increase or decrease in the value of shares of the Corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such stockholder’s immediate family sharing the same household, (H) any significant equity interests or any Derivative Instruments or Short Interests in any principal competitor of the

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Corporation held by such stockholder, and (I) any direct or indirect interest of such stockholder in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), and (iii) any other information relating to such stockholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement and form of proxy or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder; (b) if the notice relates to any business other than a nomination of a director or directors that the stockholder proposes to bring before the meeting, set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such stockholder and beneficial owner, if any, in such business, (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration) and (ii) a description of all agreements, arrangements and understandings between such stockholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such stockholder; (c) set forth, as to each person, if any, whom the stockholder proposes to nominate for election or reelection to the Board of Directors (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such stockholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the stockholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and (d) with respect to each nominee for election or reelection to the Board of Directors, include a completed and signed questionnaire, representation and agreement required by Section 2.8 of these Bylaws.  The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such nominee.

(3)           Notwithstanding anything in the second sentence of paragraph (A)(2) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a stockholder’s notice required by this Bylaw shall also

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be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.

(B)          Special Meetings of Stockholders.  Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting or otherwise by or at the direction of the Board of Directors.  Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (a) by or at the direction of the Board of Directors or (b) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who (i) is a stockholder of record at the time of giving of notice provided for in this Bylaw and at the time of the special meeting, (ii) is entitled to vote at the meeting, and (iii) complies with the notice procedures set forth in this Bylaw as to such nomination.  The immediately preceding sentence shall be the exclusive means for a stockholder to make nominations (other than matters properly brought under Rule 14a-8 under the Exchange Act and included in the Corporation’s notice of meeting) before a special meeting of stockholders.  In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by paragraph (A)(2) of this Bylaw with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 2.8 of this Bylaw) shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 90th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting.  In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

(C)          General.

(1)           Only such persons who are nominated in accordance with the procedures set forth in this Bylaw shall be eligible to serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw.  Except as otherwise provided by law, the Certificate of Incorporation or these Bylaws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in compliance with this Bylaw, to

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declare that such defective proposal or nomination shall be disregarded.  Unless otherwise required by law, if the stockholder (or a qualified representative of the stockholder) does not appear at the annual or special meeting of stockholders of the Corporation to make a nomination or present a proposal of other business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.  For purposes of this Bylaw, to be considered a qualified representative of the stockholder, a person must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction of the writing or electronic transmission, at the meeting of stockholders.

(2)           For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

(3)           Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw; provided, however, that any references in these Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to paragraph (A)(1)(c) or paragraph (B) of this Bylaw.  Nothing in this Bylaw shall be deemed to affect any rights (i) of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) of the holders of any series of Preferred Stock if and to the extent provided for under law, the Certificate of Incorporation or these Bylaws.  Subject to Rule 14a-8 under the Exchange Act, nothing in these Bylaws shall be construed to permit any stockholder, or give any stockholder the right, to include or have disseminated or described in the Corporation’s proxy statement any nomination of director or directors or any other business proposal.

SECTION 2.8               Submission of Questionnaire, Representation and Agreement.  To be eligible to be a nominee for election or reelection as a director of the Corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under Section 2.7 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (A) is not and will not become a party to (1) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (2) any

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Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (B) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein and (C) in such person’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

SECTION 2.9               Procedure for Election of Directors; Required Vote.  Election of directors at all meetings of the stockholders at which directors are to be elected shall be by ballot, and, subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, a plurality of the votes cast at any meeting for the election of directors at which a quorum is present shall elect directors.  Except as otherwise provided by law, the Certificate of Incorporation, or these Bylaws, in all matters other than the election of directors, the affirmative vote of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote on the matter shall be the act of the stockholders.

SECTION 2.10             Inspectors of Elections; Opening and Closing the Polls.  The Board of Directors by resolution shall appoint one or more inspectors, which inspector or inspectors may include individuals who serve the Corporation in other capacities, including, without limitation, as officers, employees, agents or representatives, to act at the meetings of stockholders and make a written report thereof.  One or more persons may be designated as alternate inspectors to replace any inspector who fails to act.  If no inspector or alternate has been appointed to act or is able to act at a meeting of stockholders, the Chairman of the meeting shall appoint one or more inspectors to act at the meeting.  Each inspector, before discharging his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.  The inspectors shall have the duties prescribed by law.

The Chairman of the meeting shall fix and announce at the meeting the date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting.

SECTION 2.11             Action Without Meeting.  Only to the extent permitted under the Certificate of Incorporation, any action permitted or required to be taken at a meeting of stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed by or on behalf of the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the state of incorporation, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded.  Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested.  An electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxyholder, or by a person or

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persons authorized to act for a stockholder or proxyholder, shall be deemed to be written, signed, and dated for the purposes of these Bylaws, provided that any such electronic transmission sets forth or is delivered with information from which the Corporation can determine (A) that the electronic transmission was transmitted by the stockholder or proxyholder or by a person or persons authorized to act for the stockholder or proxyholder and (B) the date on which such stockholder or proxyholder or authorized person or persons transmitted such electronic transmission.  Any consent by means of electronic transmission shall be deemed to have been signed on the date on which such electronic transmission was transmitted.  No consent given by electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book or books in which proceedings of meetings of stockholders are recorded.  Delivery of a consent given by electronic transmission made to the Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested.  Notwithstanding the foregoing limitations on delivery, consents given by electronic transmission may be otherwise delivered to the principal place of business of the Corporation or to an officer or agent of the Corporation having custody of the book or books in which proceedings of meetings of stockholders are recorded if, to the extent, and in the manner provided by resolution of the Board of Directors of the Corporation.  Any copy, facsimile, or other reliable reproduction of a consent in writing (or reproduction in paper form of a consent by electronic transmission) may be substituted or used in lieu of the original writing (or original reproduction in paper form of a consent by electronic transmission) for any and all purposes for which the original consent could be used, provided that such copy, facsimile, or other reproduction shall be a complete reproduction of the entire original writing (or original reproduction in paper form of a consent by electronic transmission).  Prompt notice of the taking of corporate action without a meeting by less than a unanimous written consent shall be given by the Secretary to those stockholders who have not consented in writing and who, if the action had been taken at a meeting, would have been entitled to notice of the meeting if the record date for such meeting had been the date that written consents signed by a sufficient number of the holders to take the action were delivered to the Corporation.

SECTION 2.12             Effectiveness of Written Consent.  Every written consent shall bear the date of signature of each stockholder who signs the consent and no written consent shall be effective to take the corporate action referred to therein unless, within 60 days of the earliest dated written consent received in accordance with Section 2.11, a written consent or consents signed by a sufficient number of holders to take such action are delivered to the Corporation in the manner prescribed in Section 2.11.

SECTION 2.13             Remote Meetings.  If authorized by the Board of Directors in its sole discretion, and subject to such guidelines and procedures as the Board of Directors may adopt, stockholders and proxyholders not physically present at a meeting of stockholders may, by means of remote communication:

(A)          participate in a meeting of stockholders; and

(B)          be deemed present in person and vote at a meeting of stockholders whether such meeting is to be held at a designated place or solely by means of remote

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communication; provided, that (i) the Corporation shall implement reasonable measures to verify that each person deemed present and permitted to vote at the meeting by means of remote communication is a stockholder or proxyholder, (ii) the Corporation shall implement reasonable measures to provide such stockholders and proxyholders a reasonable opportunity to participate in the meeting and to vote on matters submitted to the stockholders, including an opportunity to read or hear the proceedings of the meeting substantially concurrently with such proceedings, and (iii) if any stockholder or proxyholder votes or takes other action at the meeting by means of remote communication, a record of such vote or other action shall be maintained by the Corporation.

In the case of any annual meeting of stockholders or any special meeting of stockholders called upon order of the Board of Directors, the Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communications as authorized by this Section 2.13.

ARTICLE III.
BOARD OF DIRECTORS

SECTION 3.1               General Powers.  The business and affairs of the Corporation shall be managed under the direction of the Board of Directors.  In addition to the powers and authorities by these Bylaws expressly conferred upon them, the Board of Directors may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these Bylaws required to be exercised or done by the stockholders.

SECTION 3.2               Number, Tenure and Qualifications.  Subject to the rights of the holders of any series of Preferred Stock to elect directors under specified circumstances, the number of directors shall be fixed from time to time exclusively pursuant to a resolution adopted by a majority of the Whole Board.  Commencing with the date of these Bylaws, the directors, other than those who may be elected by the holders of any series of Preferred Stock under specified circumstances, shall be divided, with respect to the time for which they severally hold office, into three classes, as nearly equal in number as is reasonably possible, with the term of office of the first class to expire at the 2014 annual meeting of stockholders, the term of office of the second class to expire at the 2015 annual meeting of stockholders and the term of office of the third class to expire at the 2016 annual meeting of stockholders, with each director to hold office until his or her successor shall have been duly elected and qualified.  At each annual meeting of stockholders, commencing with the 2014 annual meeting, (i) directors elected to succeed those directors whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election, with each director to hold office until his or her successor shall have been duly elected and qualified, and (ii) if authorized by a resolution of the Board of Directors, directors may be elected to fill any vacancy on the Board of Directors, regardless of how such vacancy shall have been created.

SECTION 3.3               Regular Meetings.  A regular meeting of the Board of Directors shall be held without other notice than this Bylaw immediately after, and at the same place as, the Annual Meeting of Stockholders.  The Board of Directors may, by resolution, provide the time

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and place for the holding of additional regular meetings without other notice than such resolution.

SECTION 3.4               Special Meetings.  Subject to the notice requirements in Section 3.5, special meetings of the Board of Directors shall be called at the request of the Chairman of the Board or a majority of the Board of Directors then in office.  The person or persons authorized to call special meetings of the Board of Directors may fix the place and time of the meetings.

SECTION 3.5               Notice.  Notice of any special meeting of directors shall be given to each director at his or her business or residence in writing by hand delivery, first-class or overnight mail or courier service, facsimile or electronic transmission, or orally by telephone.  If mailed by first-class mail, such notice shall be deemed adequately delivered when deposited in the United States mails so addressed, with postage thereon prepaid, at least five (5) days before such meeting.  If by overnight mail or courier service, such notice shall be deemed adequately delivered when the notice is delivered to the overnight mail or courier service company at least twenty-four (24) hours before such meeting.  If by facsimile or electronic transmission, such notice shall be deemed adequately delivered when the notice is transmitted at least twelve (12) hours before such meeting.  If by telephone or by hand delivery, the notice shall be given at least twelve (12) hours prior to the time set for the meeting.  Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice of such meeting, except for amendments to these Bylaws, as provided under Section 8.1.  A meeting may be held at any time without notice if all the directors are present or if those not present waive notice of the meeting in accordance with Section 6.4 of these Bylaws.

SECTION 3.6               Action by Consent of Board of Directors.  Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee.  Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

SECTION 3.7               Conference Telephone Meetings.  Members of the Board of Directors, or any committee thereof, may participate in a meeting of the Board of Directors or such committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at such meeting.

SECTION 3.8               Quorum.  A majority of the members of the Whole Board shall constitute a quorum for the transaction of business.  If at any meeting of the Board of Directors there shall be less than a quorum present, a majority of those present may adjourn the meeting without further notice.  The vote of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Certificate of Incorporation or these Bylaws shall require the vote of a greater number.  The directors present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough directors to leave less than a quorum.

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SECTION 3.9               Vacancies.  Subject to applicable law and the rights of the holders of any series of Preferred Stock with respect to such series of Preferred Stock, and unless the Board of Directors otherwise determines, vacancies resulting from death, resignation, retirement, disqualification, removal from office or other cause, and newly created directorships resulting from any increase in the authorized number of directors, may be filled only by the affirmative vote of a majority of the remaining directors, though less than a quorum of the Board of Directors, and directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which they have been elected expires and until such director’s successor shall have been duly elected and qualified.  No decrease in the number of authorized directors constituting the Whole Board shall shorten the term of any incumbent director.

SECTION 3.10             Executive and Other Committees.  The Board of Directors may, by resolution adopted by a majority of the Whole Board, designate an Executive Committee to exercise, subject to applicable provisions of law, all the powers of the Board in the management of the business and affairs of the Corporation when the Board is not in session, including without limitation the power to declare dividends, to authorize the issuance of the Corporation’s capital stock and to adopt a certificate of ownership and merger pursuant to Section 253 of the DGCL, and may, by resolution similarly adopted, designate one or more other committees.  The Executive Committee and each such other committee shall consist of two or more directors of the Corporation.  The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee.  Any such committee, other than the Executive Committee (the powers of which are expressly provided for herein), may to the extent permitted by law exercise such powers and shall have such responsibilities as shall be specified in the designating resolution.  In the absence or disqualification of any member of such committee or committees, the member or members thereof present at any meeting and not disqualified from voting, whether or not constituting a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member.  Each committee shall keep written minutes of its proceedings and shall report such proceedings to the Board when required.

A majority of any committee may determine its action and fix the time and place of its meetings, unless the Board shall otherwise provide.  Notice of such meetings shall be given to each member of the committee in the manner provided for in Section 3.5 of these Bylaws.  The Board shall have power at any time to fill vacancies in, to change the membership of, or to dissolve any such committee.  Nothing herein shall be deemed to prevent the Board from appointing one or more committees consisting in whole or in part of persons who are not directors of the Corporation; provided, however, that no such committee shall have or may exercise any authority of the Board.

SECTION 3.11             Records.  The Board of Directors shall cause to be kept a record containing the minutes of the proceedings of the meetings of the Board and of the stockholders, appropriate stock books and registers and such books of records and accounts as may be necessary for the proper conduct of the business of the Corporation.

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ARTICLE IV.
OFFICERS

SECTION 4.1               Officers.  The elected officers of the Corporation shall be a Chairman of the Board, a Chief Executive Officer, a President, a Chief Financial Officer, a Chief Accounting Officer, a Treasurer, a Secretary and any other officers of the Corporation that report directly to the Chief Executive Officer, all of whom shall be elected by the Board of Directors and shall hold office until their successors are duly elected and qualified.  The Chairman of the Board shall be chosen from among the directors.  All officers elected by the Board of Directors shall each have such powers and duties as generally pertain to their respective offices, subject to the specific provisions of this ARTICLE IV.  Such officers shall also have such powers and duties as from time to time may be conferred by the Board of Directors or by any committee thereof.  In addition, the Board of Directors or any committee thereof may from time to time elect, or the Chief Executive Officer may appoint, such other officers (including one or more Vice Presidents, Assistant Secretaries, Assistant Treasurers, and Assistant Controllers) and such agents, as may be necessary or desirable for the conduct of the business of the Corporation.  Any number of offices may be held by the same person.  Such other officers and agents shall have such duties and shall hold their offices for such terms as shall be provided in these Bylaws or as may be prescribed by the Board of Directors or such committee or by the Chief Executive Officer, as the case may be.

SECTION 4.2               Election and Term of Office.  The elected officers of the Corporation shall be elected by the Board of Directors and shall hold office until such officer’s successor shall have been duly elected and qualified or until such officer’s death, resignation or removal.

SECTION 4.3               Chairman of the Board.  The Chairman of the Board shall preside at all meetings of the Board of Directors and shall have and perform such other duties as may be assigned to him or her by the Board of Directors.

SECTION 4.4               Chief Executive Officer.  The Chief Executive Officer of the Corporation shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation.  The Chief Executive Officer shall preside at all meetings of the stockholders and, in the absence of the Chairman of the Board, at all meetings of the Board of Directors.  Unless there shall have been elected one or more Presidents of the Corporation, the Chief Executive Officer shall be the President of the Corporation.

SECTION 4.5               President.  The President shall have such general powers and duties of supervision and management as shall be assigned to him or her by the Board of Directors.

SECTION 4.6               Vice-Presidents.  Each Vice President, if any, shall have such powers and shall perform such duties as shall be assigned to him or her by the Board of Directors or by the Chief Executive Officer, as the case may be.

SECTION 4.7               Chief Financial Officer.  The Chief Financial Officer shall have the custody of the corporate funds and securities and shall keep full and accurate account of receipts and disbursements in books belonging to the Corporation.  He or she shall deposit all moneys

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and other valuables in the name and to the credit of the Corporation in such depositaries as may be designated by the Board of Directors.  He or she shall disburse the funds of the Corporation as may be ordered by the Board of Directors, the Chairman of the Board, or a President, taking proper vouchers for such disbursements.  He or she shall render to the Chairman of the Board, the President and the Board of Directors at the regular meetings of the Board of Directors, or whenever they may request it, an account of all his or her transactions as Chief Financial Officer and of the financial condition of the Corporation.  The Chief Executive Officer may direct the Treasurer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and the Treasurer shall perform other duties commonly incident to his or her office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer shall designate from time to time; provided, however, that if the offices of the Chief Financial Officer and the Treasurer are held by the same person, then the Chief Executive Officer may direct the Chief Accounting Officer to assume and perform the duties of the Chief Financial Officer.

SECTION 4.8               Chief Accounting Officer.  The Chief Accounting Officer shall have such general powers and duties of supervision and management as shall be assigned to him or her by the Board of Directors.  The Chief Accounting Officer shall perform such other duties commonly incident to his or her office and shall have such other powers as the Board of Directors shall designate from time to time.  In addition, the Board of Directors may direct the Chief Accounting Officer to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer.

SECTION 4.9               Treasurer.  The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors.  The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all transactions as Treasurer and of the financial condition of the Corporation.  In case of the Treasurer’s death, resignation, retirement or removal from office, all books, papers, vouchers, money and other property of whatever kind in the Treasurer’s possession or under the Treasurer’s control belonging to the Corporation shall be restored to the Corporation.

SECTION 4.10             Secretary.  The Secretary shall keep or cause to be kept in one or more books provided for that purpose, the minutes of all meetings of the Board, the committees of the Board and the stockholders; he or she shall see that all notices are duly given in accordance with the provisions of these Bylaws and as required by law; he or she shall be custodian of the records and the seal of the Corporation and affix and attest the seal to all stock certificates of the Corporation (unless the seal of the Corporation on such certificates shall be a facsimile, as hereinafter provided) and affix and attest the seal to all other documents to be executed on behalf of the Corporation under its seal; and he or she shall see that the books, reports, statements, certificates and other documents and records required by law to be kept and filed are properly kept and filed; and in general, he or she shall perform all the duties incident to the office of

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Secretary and such other duties as from time to time may be assigned to him by the Board, the Chairman of the Board or a President.

SECTION 4.11             Removal.  Any officer elected, or agent appointed, by the Board of Directors may be removed by the affirmative vote of a majority of the Whole Board whenever, in their judgment, the best interests of the Corporation would be served thereby.  Any officer or agent appointed by the Chief Executive Officer may be removed by him or her whenever, in his or her judgment, the best interests of the Corporation would be served thereby.  No elected officer shall have any contractual rights against the Corporation for compensation by virtue of such election beyond the date of the election of his or her successor or his or her death, resignation or removal, whichever event shall first occur, except as otherwise provided in any incentive plan, including but not limited to, any employment contract or under an employee deferred compensation plan.

SECTION 4.12             Vacancies.  A newly created elected office and a vacancy in any elected office because of death, resignation, or removal may be filled by the Board of Directors.  Any vacancy in an office appointed by the Chief Executive Officer because of death, resignation, or removal may be filled by the Chief Executive Officer.

ARTICLE V.
STOCK CERTIFICATES AND TRANSFERS

SECTION 5.1               Certificated and Uncertificated Stock; Transfers.  The interest of each stockholder of the Corporation may be evidenced by certificates for shares of stock in such form as the appropriate officers of the Corporation may from time to time prescribe or be uncertificated.

The shares of the stock of the Corporation shall be transferred on the books of the Corporation, in the case of certificated shares of stock, by the holder thereof in person or by his attorney duly authorized in writing, upon surrender for cancellation of certificates for at least the same number of shares, with an assignment and power of transfer endorsed thereon or attached thereto, duly executed, with such proof of the authenticity of the signature as the Corporation or its agents may reasonably require; and, in the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares or by such person’s attorney duly authorized in writing, and upon compliance with appropriate procedures for transferring shares in uncertificated form.  No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing from and to whom transferred.

The certificates of stock shall be signed, countersigned and registered in such manner as the Board of Directors may by resolution prescribe, which resolution may permit all or any of the signatures on such certificates to be in facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the date of issue.

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Notwithstanding anything to the contrary in these Bylaws, at all times that the Corporation’s stock is listed on a stock exchange, the shares of the stock of the Corporation shall comply with all direct registration system eligibility requirements established by such exchange, including any requirement that shares of the Corporation’s stock be eligible for issue in book-entry form.  All issuances and transfers of shares of the Corporation’s stock shall be entered on the books of the Corporation with all information necessary to comply with such direct registration system eligibility requirements, including the name and address of the person to whom the shares of stock are issued, the number of shares of stock issued and the date of issue.  The Board of Directors shall have the power and authority to make such rules and regulations as it may deem necessary or proper concerning the issue, transfer and registration of shares of stock of the Corporation in both the certificated and uncertificated form.

SECTION 5.2               Lost, Stolen or Destroyed Certificates.  No certificate for shares of stock in the Corporation shall be issued in place of any certificate alleged to have been lost, destroyed or stolen, except on production of such evidence of such loss, destruction or theft and on delivery to the Corporation a bond of indemnity in such amount, upon such terms and secured by such surety, as the Board of Directors or any financial officer may in its or his or her discretion require.

SECTION 5.3               Record Owners.  The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise required by law.

SECTION 5.4               Transfer and Registry Agents.  The Corporation may from time to time maintain one or more transfer offices or agencies and registry offices or agencies at such place or places as may be determined from time to time by the Board of Directors.

ARTICLE VI.
MISCELLANEOUS PROVISIONS

SECTION 6.1               Fiscal Year.  The fiscal year of the Corporation shall be determined by resolution of the Board of Directors.

SECTION 6.2               Dividends.  The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law and the Certificate of Incorporation.

SECTION 6.3               Seal.  The corporate seal shall be in such form as shall be determined by resolution of the Board of Directors.  Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise imprinted upon the subject document or paper.

SECTION 6.4               Waiver of Notice.  Whenever any notice is required to be given to any stockholder or director of the Corporation under the provisions of the DGCL or these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before

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or after the time stated therein, shall be deemed equivalent to the giving of such notice.  Neither the business to be transacted at, nor the purpose of, any annual or special meeting of the stockholders or the Board of Directors or committee thereof need be specified in any waiver of notice of such meeting.

SECTION 6.5               Audits.  The accounts, books and records of the Corporation shall be audited upon the conclusion of each fiscal year by an independent certified public accountant selected by the Board of Directors, and it shall be the duty of the Board of Directors to cause such audit to be done annually.

SECTION 6.6               Resignations.  Any director or any officer, whether elected or appointed, may resign at any time by giving written notice of such resignation to the Chairman of the Board, the Chief Executive Officer or the Secretary, and such resignation shall be deemed to be effective as of the close of business on the date said notice is received by the Chairman of the Board, the Chief Executive Officer or the Secretary, or at such later time as is specified therein.  No formal action shall be required of the Board of Directors or the stockholders to make any such resignation effective.

ARTICLE VII.
CONTRACTS, PROXIES, ETC.

SECTION 7.1               Contracts.  Except as otherwise required by law, the Certificate of Incorporation or these Bylaws, any contracts or other instruments may be executed and delivered in the name and on the behalf of the Corporation by such officer or officers of the Corporation as the Board of Directors may from time to time direct.  Such authority may be general or confined to specific instances as the Board may determine.  The Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President may execute bonds, contracts, deeds, leases and other instruments to be made or executed for or on behalf of the Corporation.  Subject to any restrictions imposed by the Board of Directors or the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President of the Corporation may delegate contractual powers to others under his or her jurisdiction, it being understood, however, that any such delegation of power shall not relieve such officer of responsibility with respect to the exercise of such delegated power.

SECTION 7.2               Proxies.  Unless otherwise provided by resolution adopted by the Board of Directors, the Chairman of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or any Vice President may from time to time appoint an attorney or attorneys or agent or agents of the Corporation, in the name and on behalf of the Corporation, to cast the votes which the Corporation may be entitled to cast as the holder of stock or other securities in any other corporation, any of whose stock or other securities may be held by the Corporation, at meetings of the holders of the stock or other securities of such other corporation, or to consent in writing, in the name of the Corporation as such holder, to any action by such other corporation, and may instruct the person or persons so appointed as to the manner of casting such votes or giving such consent, and may execute or cause to be executed in the name and on behalf of the Corporation and under its corporate seal or otherwise, all such written proxies or other instruments as he or she may deem necessary or proper in the premises.

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ARTICLE VIII.
AMENDMENTS

SECTION 8.1               Amendments.  These Bylaws may be altered, amended, or repealed at any meeting of the Board of Directors or of the stockholders, provided notice of the proposed change was given in the notice of the meeting and, in the case of a meeting of the Board of Directors, in a notice given not less than two days prior to the meeting.

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EX-31.1

Exhibit 31.1

Rule 13a-14(a)/15d-14(a) Certification

I, Robert C. Reeves, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Athlon Energy Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2013	/s/ Robert C. Reeves
	Robert C. Reeves
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Rule 13a-14(a)/15d-14(a) Certification

I, William B. D. Butler, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Athlon Energy Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2013	/s/ William B. D. Butler
	William B. D. Butler
	Vice President—Chief Financial Officer

EX-32.1

Exhibit 32.1

Section 1350 Certification

In connection with the Quarterly Report of Athlon Energy Inc. (“Athlon”) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission (“SEC”) on the date hereof (the “Report”), I, Robert C. Reeves, Chief Executive Officer Athlon, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;

and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Athlon.

Date: August 14, 2013	/s/ Robert C. Reeves
	Robert C. Reeves
	President and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Athlon and will be retained by Athlon and furnished to the SEC or its staff upon request.

Note:  The certification of the registrant furnished in this exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section.  Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.

EX-32.2

Exhibit 32.2

Section 1350 Certification

In connection with the Quarterly Report of Athlon Energy Inc. (“Athlon”) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission (“SEC”) on the date hereof (the “Report”), I, William B. D. Butler, Chief Financial Officer of Athlon, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;

and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Athlon.

Date: August 14, 2013	/s/ William B. D. Butler
	William B. D. Butler
	Vice President—Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Athlon and will be retained by Athlon and furnished to the SEC or its staff upon request.

Note:  The certification of the registrant furnished in this exhibit is not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that Section.  Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.