8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

 Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):  April 8, 2014

ATHLON ENERGY INC.

(Exact name of registrant as specified in its charter)

Delaware	001-36026	46-2549833
(State or other jurisdiction	(Commission	(IRS Employer
of incorporation)	File Number)	Identification No.)

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

Registrant’s telephone number, including area code:  (817) 984-8200

Not applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

oPre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01. Entry into a Material Definitive Agreement.

Athlon Energy Inc., a Delaware corporation (the “Company”), has entered into three purchase and sale agreements with five unrelated third-party sellers to acquire certain producing properties and undeveloped acreage for an aggregate purchase price of $873 million in cash, subject to customary purchase price adjustments in the oil and natural gas industry.   The properties are 100% operated and are concentrated primarily on the western side of the northern Midland Basin in Martin, Upton, Andrews and Glasscock counties, in proximity to the Company’s existing properties.

On April 8, 2014, the Company entered into a purchase and sale agreement with Hibernia Holdings, LLC, pursuant to which the Company will acquire certain producing properties and undeveloped acreage for approximately $377 million, subject to customary purchase price adjustments in the oil and natural gas industry.  This purchase and sale agreement contains customary representations and warranties, covenants, indemnification provisions and conditions to closing.  The Company expects that this acquisition will close by or before June 2014, although there can be no assurance that all closing conditions will be satisfied.

On April 8, 2014, the Company entered into a purchase and sale agreement with Piedra Energy II, LLC and the other sellers party thereto, pursuant to which the Company will acquire certain producing properties and undeveloped acreage for approximately $291 million, subject to customary purchase price adjustments in the oil and natural gas industry.  This purchase and sale agreement contains customary representations and warranties, covenants, indemnification provisions and conditions to closing.  The Company expects that this acquisition will close by or before June 2014, although there can be no assurance that all closing conditions will be satisfied.

On April 8, 2014, the Company entered into a purchase and sale agreement with a group of sellers, pursuant to which the Company will acquire certain producing properties and undeveloped acreage for approximately $198 million, subject to customary purchase price adjustments in the oil and natural gas industry.  This purchase and sale agreement contains customary representations and warranties, covenants, indemnification provisions and conditions to closing.  The Company expects that this acquisition will close by or before June 2014, although there can be no assurance that all closing conditions will be satisfied.

Certain statements contained in this report on Form 8-K constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements included in this report that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future are forward-looking statements. Such forward-looking statements include, but are not limited to, statements about the expectations as to the purchase price and completion of the acquisitions. The Company can give no assurance that such expectations will prove to have been correct. These forward-looking statements represent the Company’s expectations or beliefs concerning future events, and it is possible that the results described in this this report will not be achieved. These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of the Company’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements.

Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, the Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. New factors emerge from time to time, and it is not possible for the Company to predict all such factors. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in the Company’s filings with the United States Securities and Exchange Commission. The risk factors and other factors noted in the Company’s filings could cause the Company’s actual results to differ materially from those contained in any forward-looking statement.

Item 7.01 Regulation FD Disclosure.

On April 8, 2014, the Company  issued a press release announcing the acquisitions described above. A copy of the press release is furnished as Exhibit 99.1 to this Form 8-K. The Company will host a brief conference call tomorrow, April 9, at 10:00 a.m. Central time to discuss the details of the acquisitions. A brief presentation providing maps and other data relating to the acquisitions can be accessed on the Company’s website at www.athlonenergy.com.

In accordance with General Instruction B.2 of Form 8-K, the press release is deemed to be “furnished” and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information and Exhibit be deemed incorporated by reference into any filing under the Securities Act or the Securities Exchange Act of 1934, each as amended.

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Item 9.01. Financial Statements and Exhibits.

(a) Financial Statements of Businesses Acquired

The audited Schedules of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Hibernia Holdings, LLC and Piedra Energy II, LLC for the year ended December 31, 2013, are included as Exhibits 99.2 and 99.3, respectively, hereto.

(d) Exhibits.

Number	Exhibit
99.1	Press Release dated April 8, 2014 regarding Acquisitions.
99.2	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Hibernia Holdings, LLC for the year ended December 31, 2013.
99.3	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Piedra Energy II, LLC for the year ended December 31, 2013.

3

SIGNATURE

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 hereunto duly authorized.

	ATHLON ENERGY INC.
Date:     April 8, 2014	By:	/s/ William B. D. Butler
		William B. D. Butler
		Vice President—Chief Financial Officer and
		Principal Financial Officer

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Exhibit Index

Number	Exhibit
99.1	Press Release dated April 8, 2014 regarding Acquisitions.
99.2	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Gas Properties of Hibernia Holdings, LLC for the year ended December 31, 2013.
99.3	Audited Schedule of Direct Operating Revenues and Direct Operating Expenses of Certain Oil and Natural Gas Properties of Piedra Energy II, LLC for the year ended December 31, 2013.

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EX-99.1

Exhibit 99.1

ATHLON ENERGY ANNOUNCES

NORTHERN MIDLAND BASIN ACQUISITIONS

FORT WORTH, Texas—(BUSINESS WIRE)—April 8, 2014—Athlon Energy (NYSE: ATHL) (“Athlon”, or the “Company”) today announced that it has entered into multiple definitive agreements with five unrelated third-party sellers to acquire certain producing properties and undeveloped acreage for an aggregate purchase price of $873 million in cash. The properties are 100% operated and are concentrated primarily on the western side of the northern Midland Basin in Martin, Upton, Andrews, and Glasscock counties, in proximity to the Company’s existing operating areas.

Acquisition Highlights:

·23,500 net acres with an average 97% working interest (73% net revenue interest)

·Current net production of approximately 4,800 BOE/d (67% oil)

·Privately negotiated transactions represent 99% of the combined value

·Net proved reserves based on the Company’s internal estimates of 31 MMBOE (39% PD)

·Total estimated net reserve potential of over 250 MMBOE

These properties will require one vertical rig drilling approximately 20 wells per year to hold the acreage, which the Company believes can be accomplished through reallocation of its existing eight vertical rig fleet. Athlon is currently operating one horizontal rig and plans to add its second horizontal rig at the end of April, as previously disclosed, add a third horizontal rig at the closing of the acquisitions, and now plans to accelerate to four operated horizontal rigs by early fourth quarter 2014.

“Today’s acquisitions exemplify Athlon’s core strategy of acquiring only high-quality properties, demanding strong economic returns, and applying extensive technical expertise to exploit our huge resource potential through the drill bit,” stated Bob Reeves, Chairman, President & Chief Executive Officer. “With our portfolio of premier assets, Athlon is proud to be a top-tier operator with exposure across the entire northern Midland Basin.”

Less than 20% of estimated vertical locations on the target properties have been drilled to-date and Athlon expects vertical development will represent years of low-risk growth potential:

·840 gross identified vertical drilling locations:

·320 gross 80-acre and 40-acre locations

·520 gross 20-acre locations

The Company also believes the assets are highly prospective for horizontal development with 425 identified gross potential locations in six zones including the Wolfcamp A & B, Lower and Middle Spraberry, Wolfcamp D, and Clearfork horizons:

·Wolfcamp A & B — 150 locations

·Lower and Middle Spraberry — 150 locations

·Wolfcamp D — 85 locations

·Clearfork — 40 locations

Including today’s announced acquisitions, Athlon has added approximately 36,000 net acres of leasehold since the time of its initial public offering. The Company’s pro forma acreage position stands at approximately 134,000 net acres, consisting by county of:

·61,000 net acres in Midland, Martin, & Other

·57,000 net acres in Howard

·16,000 net acres in Glasscock

The transactions are expected to close by or before June 2014.  The acquisitions are expected to be immediately accretive to cash flow per share and earnings per share as well as net asset value. The Company plans to fund the acquisitions with a combination of borrowings under its existing revolving credit facility and equity and debt capital markets transactions.

Athlon expects its revolving credit facility to increase from $525 million to $1 billion as a result of additional proved reserves added through its drilling program, and 2014 acquisitions.

Hedging Update:

Athlon has recently added fixed price hedges for future sales of oil production. The following table reflects Athlon’s current outstanding oil swap contracts, which are priced off NYMEX West Texas Intermediate (“WTI”) crude oil index prices:

NYMEX WTI	Average Bbls	Average Price
Oil Swaps	Per Day	Per Bbl
2014:
First Quarter	8,606	$	92.70
Second Quarter	8,950	$	92.71
Third Quarter	9,950	$	92.52
Fourth Quarter	10,960	$	92.31
2014 Average	9,624	$	92.54
2015:
First Half	9,800	$	90.90
Second Half	4,300	$	91.11
2015 Average	7,027	$	90.97

Conference Call Information:

The Company will host a brief conference call tomorrow, April 9, 2014 at 10:00 a.m. Central time to discuss the details of the acquisitions.  A brief presentation providing maps and other data relating to the acquisitions can be accessed on the Company’s website at www.athlonenergy.com

The conference call will broadcast live over the internet and instructions for listening to the call are shown below:

Title: Athlon Energy Midland Basin Acquisitions Conference Call

Date and Time: April 9, 2014 at 10:00 a.m. Central Time

Webcast: Listen to the live broadcast via www.athlonenergy.com

Telephone: Dial 1-866-383-8009 ten minutes prior to the scheduled time and request the conference call by supplying the title specified above or ID 82523038.

A replay of the conference call will be archived and available via Athlon’s website at the above web address or by dialing 1-888-286-8010 and entering conference ID 63642871.  The replay will be available through April 23, 2014.  International callers can dial 617-597-5342 for the live broadcast or 617-801-6888 for the replay.

About Athlon Energy

Athlon Energy 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.

Contact Information:

William Butler, 817-984-8200

Chief Financial Officer

InvestorRelations@athlonenergy.com

Cautionary Statement Concerning Forward-Looking Statements

Certain statements contained in this press release constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.  These forward-looking statements, including, without limitation,  the benefits of pending acquisitions and the closing thereof, expected borrowing base increases, and expected increases in drilling rigs represent Athlon’s expectations or beliefs concerning future events, and it is possible that the results described in this press release will not be achieved.  These forward-looking statements are subject to risks, uncertainties, and other factors, many of which are outside of Athlon’s control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. The transactions are subject to completion of due diligence and satisfaction of other customary closing conditions. Athlon’s estimates of proved reserves are based on internal analysis of production data provided by the sellers, as well as available geologic and other data, and the Company may revise its estimates following ownership of these properties.

Any forward-looking statement speaks only as of the date on which it is made, and, except as required by law, Athlon does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.  New factors emerge from time to time, and it is not possible for Athlon to predict all such factors.  When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Athlon’s filings with the United States Securities and Exchange Commission.  The risk factors and other factors noted in Athlon’s filings could cause Athlon’s actual results to differ materially from those contained in any forward-looking statement.

EX-99.2

Exhibit 99.2

HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

FINANCIAL SCHEDULE

DECEMBER 31, 2013

CONTENTS

	Page
INDEPENDENT AUDITOR’S REPORT	1
FINANCIAL SCHEDULE
Schedule of Direct Operating Revenues and Direct Operating Expenses	2
Notes to Schedule of Direct Operating Revenues and Direct Operating Expenses	3

INDEPENDENT AUDITOR’S REPORT

To Hibernia Holdings, LLC

We have audited the accompanying Schedule of Direct Operating Revenues and Direct Operating Expenses (the Schedule) of the Martin County Assets (the Properties) for the year ended December 31, 2013, and the related footnotes.

Management’s Responsibility for the Schedule

Management is responsible for the preparation and fair presentation of the Schedule in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Schedule that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on this schedule based on our audit.  We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Schedule is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Schedule.  The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Schedule, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Schedule in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  Accordingly, we express no such opinion.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Schedule.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Schedule of Direct Operating Revenues and Direct Operating Expenses referred to above presents fairly, in all material respects, the direct operating revenues and direct operating expenses of the Properties for the year ended December 31, 2013, in accordance with accounting principles generally accepted in the United States of America.

WEAVER AND TIDWELL, L.L.P.

Houston, Texas

April 8, 2014

HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2013

DIRECT OPERATING REVENUES	$	19,600,958
DIRECT OPERATING EXPENSES	3,255,518
DIRECT OPERATING REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES	$	16,345,440

See accompanying Notes to Schedule of Direct Operating

   Revenues and Direct Operating Expenses.

2

HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

NOTES TO SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

On April 8, 2014, Athlon Energy Inc. (the Purchaser), entered into a Purchase and Sale Agreement (the Agreement) with Hibernia Holdings, LLC (the Company) for its Martin County Assets (the Properties), which are operated by Hibernia Resources, LLC (the Operator) a wholly owned subsidiary of the Company.  The aggregate purchase price, subject to adjustment as provided in the Agreement, is $377 million.

On May 17, 2013, the Company completed the acquisition, from a third party, of the Properties which are located in Martin County, Texas.  At December 31, 2013, the Properties consisted of 100% working interest and associated net revenue interests.  The purchase was effective May 1, 2013; however, the accompanying historical Schedule of Direct Operating Revenues and Direct Operating Expenses (the Schedule) includes historical accounting records related to the Properties for the entire year ended December 31, 2013.

This Schedule is not intended to be a complete presentation of the results of operations of the Properties, as they do not include general and administrative expenses, effects of derivative transactions, interest income or expense, depreciation, depletion and amortization, any provision for income tax expenses, and other income and expense items not directly associated with direct operating revenues from natural gas, natural gas liquids and crude oil.  Historical schedules reflecting financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States of America are not presented, as such information is not readily available on an individual property basis.  Accordingly, the accompanying Schedule is presented in lieu of the financial statements required under Rule 3-05 of Securities and Exchange Commission (SEC) Regulation S-X.

Revenue Recognition

Revenues are recorded on the sales method of accounting for crude oil, natural gas and natural gas liquids, whereby direct operating revenues are recognized as the production is sold to purchasers at a fixed and determinable price, delivery has occurred, and title has transferred.  The amount of production sold may differ from the amount to which the Properties are entitled based on the Properties’ ownership interest.  The Properties had no significant imbalance asset or liability at December 31, 2013.

3

HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

NOTES TO SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES — CONTINUED

Operating Expenses

Operating expenses are recognized when incurred and include amounts incurred to bring crude oil, natural gas, and natural gas liquids to the surface, gather, transport, field process, treat and store same.  Operating expenses are reflected net of gathering, processing and transportation revenues associated with the Properties.

Concentration of Credit Risk

Arrangements for crude oil and natural gas sales are evidenced by signed contracts with determinable market prices, and direct operating revenues are recorded when production is delivered.  A significant majority of the purchasers of these products have investment grade credit rating and material credit losses have been rare.

The Properties had revenues from two purchasers which accounted for over 78% of the oil and gas revenues for the year ended December 31, 2013.  This concentration of customers may impact the Properties’ overall business risk, either positively or negatively, in that these entities may be similarly affected by changes in economic or other conditions.  The Company believes this risk is mitigated by the size, reputation and nature of its purchasers.  All of the Properties’ revenues are from oil and gas production in Texas.  These concentrations may also impact the Properties by changes in the Texas region.

Recently Issued Accounting Pronouncements

There have been no accounting pronouncements issued during the period under audit, or in the subsequent period of December 31, 2013 through April 8, 2014 that are applicable to the Schedule.

Use of Estimates

The preparation of the Schedule in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of direct operating revenues and direct operating expenses during the respective reporting periods.  Actual results may differ from estimates and assumptions used in the preparation of the Schedule.

NOTE 2.   SUBSEQUENT EVENTS

We are not aware of any events that have occurred subsequent to December 31, 2013, but before April 8, 2014, the date the Schedule was available to be issued that require consideration as adjustments to, or disclosure in, the Schedule.

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HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

NOTES TO SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 3.   SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

The following tables summarize the net ownership interest in the proved oil and gas reserves and the standardized measure of discounted future net cash flows related to the proved oil and gas reserves for the Properties.  Natural gas volumes include natural gas liquids.

Proved reserves as of December 31, 2013 were estimated by qualified petroleum engineers of the Company using historical data and other information from the records of the third party seller of the Properties.

All information set forth herein relating to the proved reserves as of December 31, 2013, including the estimated future net cash flows and present values, from that date, is taken or derived from the records of the third party seller of the Properties.  These estimates were based upon review of historical production data and other geological, economic, ownership, and engineering data provided and related to the reserves.  No reports on these reserves have been filed with any federal agency.  In accordance with the SEC’s guidelines estimates of proved reserves, and the future net revenues from which present values are derived, are based on an un-weighted 12-month average of the first-day-of-the-month price for the period, held constant throughout the life of the Properties.  Operating costs, development costs, and certain production-related taxes, which are based on current information and held constant, were deducted in arriving at estimated future net revenues.

The proved reserves, all from the Properties held within the United States, as of December 31, 2013 together with the changes therein are as follows:

5

HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

NOTES TO SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

	Natural Gas		Crude Oil		Total
	Mcf		Bbl		Mboe
Quantities of proved reserves:
Balance December 31, 2012	6,990,690		3,175,880		4,340,995
Revisions	3,220,832		303,729		840,534
Extensions	4,976,790		2,248,340		3,077,805
Acquisition of reserves	18,262,140		8,288,470		11,332,160
Production	(370,992	)	(162,329	)	(224,161	)
Balance December 31, 2013	33,079,460		13,854,090		19,367,333
	Natural Gas		Crude Oil		Total
	Mcf		Bbl		Mboe
Proved developed reserves
December 31, 2012	5,537,230		2,514,380		3,437,252
December 31, 2013	10,067,300		4,158,640		5,836,523
Proved undeveloped reserves
December 31, 2012	1,453,460		661,500		903,743
December 31, 2013	23,012,160		9,695,450		13,530,810

6

HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

NOTES TO SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 3.   SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) — CONTINUED

Standardized measure of discounted future net cash flows relating to proved reserves for 2013 was as follows:

Future cash inflows	$	1,491,194,050
Future production and development costs:
Production	326,330,880
Development	202,159,020
Future state taxes	10,438,358
Future net cash flows	952,265,792
10% discount for estimated timing of cash flows.	(605,099,966		)
Standardized measure of discounted future net cash flows	$	347,165,826

Future cash inflows are computed by applying a 12-month average commodity price adjusted for location and quality differentials for 2013 to year-end quantities of proved reserves, except in those instances where fixed and determinable price changes are provided by contractual arrangements at year-end.  Future development costs include future asset retirement costs.  Future production costs do not include any general and administrative expenses.  The standardized measure presented here does not include the effects of federal income taxes as the tax basis for the Properties is not applicable on a go-forward basis.  A discount factor of 10% was used to reflect the timing of future net cash flows.  The standardized measure of discounted future net cash flows is not intended to represent the replacement cost or fair value of the Properties.  The discounted future cash flow estimates do not include the effects of derivative instruments.  Average sales price per commodity follows:

Natural Gas per Mcf	$	5.56
Crude Oil per Bbl	$	94.36

7

HIBERNIA HOLDINGS, LLC — MARTIN COUNTY ASSETS

NOTES TO SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 3.   SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) — CONTINUED

The principal changes in standardized measure of discounted future net cash flows were as follows for 2013:

Standardized measure of discounted future net cash flows - beginning of year	$	57,733,870
Changes from:
Production, net of production costs	(16,345,440		)
Net change in prices and production costs	40,254,305
Net change in future developmental costs	31,099,527
Acquisiiton of reserves	127,843,950
Extensions and discoveries	60,044,010
Previously estimated development costs incurred	6,292,288
Revisions of previous quantity estimates	15,232,007
Accretion of discount	13,314,731
Net change in taxes	(2,967,694		)
Change in timing and other	14,664,272
Aggregate change in standardized measure of discounted future net cash flows	$	347,165,826

8

EX-99.3

Exhibit 99.3

PIEDRA ENERGY II, LLC

FINANCIAL SCHEDULE

DECEMBER 31, 2013

C O N T E N T S

	Page
INDEPENDENT AUDITOR’S REPORT	1
FINANCIAL SCHEDULE
Schedule of Direct Operating Revenues and Direct Operating Expenses	2
Notes to Schedule of Direct Operating Revenues and Direct Operating Expenses	3

INDEPENDENT AUDITOR’S REPORT

To Piedra Energy II, LLC

We have audited the accompanying Schedule of Direct Operating Revenues and Direct Operating Expenses (the Schedule) of the Properties, as defined in Note 1 - Summary of Significant Accounting Policies for the year ended December 31, 2013, and the related footnotes.

Management’s Responsibility for the Schedule

Management is responsible for the preparation and fair presentation of the Schedule in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of the Schedule that is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on this schedule based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the Schedule is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Schedule.  The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Schedule, whether due to fraud or error.  In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the Schedule in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.  Accordingly, we express no such opinion.  An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the Schedule.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the Schedule of Direct Operating Revenues and Direct Operating Expenses referred to above presents fairly, in all material respects the direct operating revenues and direct operating expenses of the Properties for the year ended December 31, 2013, in accordance with accounting principles generally accepted in the United States of America.

WEAVER AND TIDWELL, L.L.P.

Midland, Texas

April 8, 2014

PIEDRA ENERGY II, LLC

SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

FOR THE YEAR ENDED DECEMBER 31, 2013

DIRECT OPERATING REVENUES	$	28,862,386
DIRECT OPERATING EXPENSES	5,639,869
DIRECT OPERATING REVENUES IN EXCESS OF DIRECT OPERATING EXPENSES	$	23,222,517

See accompanying Notes to Schedule of Direct Operating

   Revenues and Direct Operating Expenses.

2

PIEDRA ENERGY II, LLC

NOTES TO SCHEDULE OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

On April 8, 2014, Athlon Energy Inc. (the Purchaser), entered into a Purchase and Sale Agreement (the Agreement) with Piedra Energy II, LLC (the Company) and other non-operated interest owners in certain oil and gas assets (the Properties) operated by Piedra Operating, LLC (the Operator) a wholly owned subsidiary of the Company.  The aggregate purchase price, subject to adjustment as provided in the Agreement, is $291 million.

The Properties subject to the Agreement include the Company’s respective working and net revenue interest in the Holt, Mabee, Topo Chico, Kolb/Cooper and Cox prospects which are located in Martin, Pecos, and Reeves Counties, Texas and the revenue interest of the non-operated interest owners in the Holt prospect in Martin County, Texas. The accompanying Schedule of Direct Operating Revenues and Direct Operating Expenses (the Schedule) has been derived from the Operator’s historical financial records of the Properties for the year ended December 31, 2013.

This Schedule is not intended to be a complete presentation of the results of operations of the Properties as it does not include general and administrative expenses, effects of derivative transactions, interest income or expense, depreciation, depletion and amortization, any provision for income tax expenses and other income and expense items not directly associated with direct operating revenues from natural gas, natural gas liquids and crude oil.  Historical schedules reflecting financial position, results of operations, and cash flows required by accounting principles generally accepted in the United States of America are not presented as such information is not readily available on an individual property basis.  Accordingly, the accompanying Schedule is presented in lieu of the financial statements required under Rule 3-05 of Securities and Exchange Commission (SEC) Regulation S-X.

Revenue Recognition

Revenues are recorded on the sales method of accounting for crude oil, natural gas and natural gas liquids whereby direct operating revenues are recognized as the production is sold to purchasers at a fixed and determinable price, delivery has occurred and title has transferred.  The amount of production sold may differ from the amount to which the Properties are entitled based on the Properties’ ownership interest.  The Properties had no significant imbalance asset or liability at December 31, 2013.

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PIEDRA ENERGY II, LLC

NOTES TO SCHEDULES OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

Operating Expenses

Operating expenses are recognized when incurred and include amounts incurred to bring crude oil, natural gas, and natural gas liquids to the surface, gather, transport, field process, treat and store same.  Operating expenses are reflected net of gathering, processing and transportation revenues associated with the Properties.

Concentration of Credit Risk

Arrangements for crude oil, natural gas liquids, and natural gas sales are evidenced by signed contracts with determinable market prices and direct operating revenues are recorded when production is delivered.  A significant majority of the purchasers of these products have investment grade credit rating and material credit losses have been rare.

The Properties had revenues from two purchasers which accounted for over 73% of the oil and gas revenues during 2013.  This concentration of customers may impact the Properties’ overall business risk, either positively or negatively, in that these entities may be similarly affected by changes in economic or other conditions.  The Company believes this risk is mitigated by the size, reputation and nature of its purchasers.  All of the Properties revenues are from oil and gas production in Texas.  These concentrations may also impact the Properties by changes in the Texas region.

Recently Issued Accounting Pronouncements

There have been no accounting pronouncements issued during the period under audit, or in the subsequent period of December 31, 2013 through April 8, 2014 that are applicable to the Schedule.

Use of Estimates

The preparation of the Schedule in conformity with accounting principles generally accepted in the United States of America requires the Company’s management to make estimates and assumptions that affect the reported amounts of direct operating revenues and direct operating expenses during the respective reporting periods.  Actual results may differ from estimates and assumptions used in the preparation of the Schedule.

NOTE 2.   SUBSEQUENT EVENTS

We are not aware of any events that have occurred subsequent to December 31, 2013 but before April 8, 2014, the date the Schedule was available to be issued, that require consideration as adjustments to or disclosure in the Schedule.

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PIEDRA ENERGY II, LLC

NOTES TO SCHEDULES OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 3.   SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED)

The following tables summarize the net ownership interest in the proved oil and gas reserves and the standardized measure of discounted future net cash flows related to the proved oil and gas reserves for the Properties.  Natural gas volumes include natural gas liquids.

Proved reserves as of December 31, 2013 were estimated by qualified petroleum engineers of the Company using historical data and other information from the records of the third party seller of the Properties.

All information set forth herein relating to the proved reserves as of December 31, 2013, including the estimated future net cash flows and present values, from that date, is taken or derived from the records of the third party seller of the Properties.  These estimates were based upon review of historical production data and other geological, economic, ownership, and engineering data provided and related to the reserves.  No reports on these reserves have been filed with any federal agency.  In accordance with the SEC’s guidelines, estimates of proved reserves and the future net revenues from which present values are derived, are based on an unweighted 12-month average of the first-day-of-the-month price for the period, held constant throughout the life of the Properties.  Operating costs, development costs, and certain production-related taxes, which are based on current information and held constant, were deducted in arriving at estimated future net revenues.

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PIEDRA ENERGY II, LLC

NOTES TO SCHEDULES OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 3.   SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) — CONTINUED

The proved reserves, all from the Properties held within the United States, as of December 31, 2013 together with the changes therein are as follows:

	Natural Gas		Crude Oil		Total
	Mcf		Bbl		Mboe
Quantities of proved reserves:
Balance December 31, 2012	23,623,950		9,687,770		13,625,095
Revisions	8,527,322		(138,919	)	1,282,301
Production	(661,782	)	(266,761	)	(377,058	)
Balance December 31, 2013	31,489,490		9,282,090		14,530,338
	Natural Gas		Crude Oil		Total
	Mcf		Bbl		Mboe
Proved developed reserves
December 31, 2012	5,789,026		2,166,295		3,131,133
December 31, 2013	8,242,175		2,413,915		3,787,611
Proved undeveloped reserves
December 31, 2012	17,834,924		7,521,475		10,493,962
December 31, 2013	23,247,315		6,868,175		10,742,727

Standardized measure of discounted future net cash flows relating to proved reserves for 2013 was as follows:

Future cash inflows	$	1,073,809,380
Future production and development costs:
Production	321,907,290
Development	160,555,000
Future state taxes	7,516,666
Future net cash flows	583,830,424
10% discount for estimated timing of cash flows.	(369,043,115		)
Standardized measure of discounted future net cash flows	$	214,787,309

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PIEDRA ENERGY II, LLC

NOTES TO SCHEDULES OF DIRECT OPERATING REVENUES

AND DIRECT OPERATING EXPENSES

NOTE 3.   SUPPLEMENTAL OIL AND GAS INFORMATION (UNAUDITED) — CONTINUED

Future cash inflows are computed by applying a 12-month average commodity price adjusted for location and quality differentials for 2013 to year-end quantities of proved reserves, except in those instances where fixed and determinable price changes are provided by contractual arrangements at year-end.  Future development costs include future asset retirement costs.  Future production costs do not include any general and administrative expenses.  The standardized measure presented here does not include the effects of federal income taxes as the tax basis for the Properties is not applicable on a go-forward basis.  A discount factor of 10% was used to reflect the timing of future net cash flows.  The standardized measure of discounted future net cash flows is not intended to represent the replacement cost or fair value of the Properties.  The discounted future cash flow estimates do not include the effects of derivative instruments.  Average sales price per commodity follows:

Natural Gas per Mcf	$	5.75
Crude Oil per Bbl	$	96.79

The principal changes in standardized measure of discounted future net cash flows were as follows for 2013:

Standardized measure of discounted future net cash flows - beginning of year	$	169,297,980
Changes from:
Production, net of production costs	(23,222,517		)
Net change in prices and production costs	1,917,970
Net change in future developmental costs	553,529
Previously estimated development costs incurred	23,238,000
Revisions of previous quantity estimates	19,199,010
Accretion of discount	17,171,994
Net change in taxes	(343,371		)
Change in timing and other	6,974,714
Aggregate change in standardized measure of discounted future net cash flows	$	214,787,309

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