Well Cost

WildHorse to Build Sand Mine Supporting Eagle Ford Development

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Sand Mine Development Plan

On January 4, 2018, Wildhorse Resources acquired surface and sand rights on 727 acres in Burleson County, TX. Prior to the acquisition, Wildhorse Resources retained a third party engineering advisor to evaluate and assess the proposed sand mine location. Based on such analysis, total resource potential of the sand mine is estimated at 85 million tons of sand. The reserves contain fine grade 100 mesh and 40/70 sand which is comparable to the product WRD currently sources from other mines.

Capital expenditure for the full development of the sand mine, a wholly-owned subsidiary of WRD, will total $65 - $75 million in 2018 which includes property acquisition, reserve evaluation, and construction. WRD expects that the sand mine will complement operations by lowering both the cost of sand and transportation.

As a result of WRD's contiguous 404,000 net acre Eagle Ford position, the sand mine will reduce the distance traveled to well sites from 70 to 180 miles per truckload compared to alternative mine options. Savings are expected to reduce well costs by $400,000 to $600,000 per well when the mine becomes fully operational by the first quarter of 2019.

WRD expects that these savings could reduce Eagle Ford and Austin Chalk well costs to $5.9 - $6.1 million and $7.2 - $7.4 million per well, respectively. Based on the estimated resource potential and the 2018 development plan, the sand mine will provide WRD with over 40 years of sand supply in East Texas which effectively hedges the price of sand for the foreseeable future and covers WRD's total development inventory.

The estimated payback period for the sand mine is less than two years upon completion based on the current pace of 100 to 110 gross Eagle Ford and Austin Chalk completions in 2018.