I nvestor Presentation Carbon Natural Gas Company June 2013
Appalachian and Illinois Basins Basins Appalachian and Illinois Appalachian Basin Properties 2 I llinois Basin Properties
Southern Southern Appalachian Basin Producing Horizons Appalachian Basin Producing Horizons t on Land, Poi nt , OH n Fuel s, gt on, KY gt on, KY Ri v er , TN per t i es per t i es her , KY her KY V her W stem or t h out h Series Horizon KY V Sout h Po Addi ngt o Sou W W New Ri v K Addi ngt Addi ngt Car bon Ot he Pr ope Ot he Pr ope No Ashe Sys ● M i dd i ddl e l e Br eat Br eat hi t t hi t t ● ● Penn Penn Penn Penn Cow Run sandst one Cow Run s andst one ☼ Lowe Lo wer Sal t Sal t Sands Sands ● ☼ ● ☼ ☼ ☼ ☼ ☼ M M ax axon on an si ssi ppi an Up Uppe per Li t t l e Li m Li t t l e Li m e e ● ☼ ☼ ☼ ☼ ☼ ● i ssi ssi ppi Bi g Li m Bi g Li m e / M e / M ont eagl e ont eagl e ● Ft . P Ft . Payne ayne ☼ i s Bi g I nj un Bi g I nj un Lo Lowe wer ● ☼ ● ☼ M M ☼ ☼ W ei r ei r ☼ ☼ Sunbur y Shal e Sunbur y Sunbur y Sunbur y Shal e Shal e Shal e ● ☼ ● ☼ ☼ Ber ea Sandst one Ber ea Sa ndst one ☼ ☼ Cl evel an Cl evel and Shal e d Shal e ☼ Devoni an Si l t st one Devoni an Si l t st one ☼ ☼ ☼ ☼ ☼ ☼ ☼ ☼ Devoni an evoni an Uppe Up per Lower Hur on Shal e Lower Hur on Shal e ☼ Chat t anoo Chat t anooga Shal e ga Shal e ☼ ☼ ☼ ☼ Rhi nest r eet Shal e Rhi nest r e Rhi nest r e Rhi nest r eet Shal e et Shal e et Shal e ☼ M M ar cel l u ar cel l us Shal e s Shal e Onondag Onondaga l i m a l i m e e M i ddl e i dd l e Or i skany Or i skany Sandst one Sandst one Lo Lowe wer ☼ ☼ Cor ni f Cor ni f er ous er ous i l ur i an i l ur i an Uppe Up per ☼ Bi g Si x Bi g Si x ☼ ☼ Lo Lowe wer Cl i Cl i Cl i nt on Cl i t on S Ut i ca Shal e Ut i ca Shal e dovi ci an Or dovi ci a Up Uppe per Tr en Tr ent on t on M i ddl e i dd l e Bl ack Ri ver Bl ack Ri ver ● ☼ Or Lowe Lo wer Knox nox Uppe Up per Ros Rose Run e Run ● ☼ ● ☼ i an n br i a Conasaug Conasauga Shal e a Shal e M i dd i ddl e l e br Cam Cam Rom om e e Lowe Lo wer M M t . Si m t . S i m on on Oil ● Gas ☼ 3
Highlights Highlights � Multiple Horizontal Resource Play opportunities • Significant Undeveloped Resource Potential with large inventory of Horizontal development drilling locations • Significant opportunity for expansion of production, reserves and cash flow at low finding and development and lease operating costs � Over 1,100 development locations , p • Horizontal Berea Sandstone • Horizontal Seelyville CBM • Horizontal Lower Huron Shale / Siltstone • Horizontal Chattanooga Shale Horizontal Chattanooga Shale � 259,633 net acres of oil and gas and coalbed methane rights • > 50% Held by Production • > 40% expire greater than 5 years > 40% expire greater than 5 years � Horizontal Berea Oil Development Program • 22,175 net acres � � Additi Additional oil development opportunities identified l il d l t t iti id tifi d 4
Highlights Highlights � High BTU natural gas in close proximity to market � � Low Finding and Development Costs Low Finding and Development Costs � Low Lease Operating Expenses � I nterests in over 800 wells � 90% properties are operated � Strong technical team with acquisition, production and drilling expertise in unconventional reservoirs p 5
Management T Management Team am Patrick McDonald, CEO and Director Patrick R McDonald Mr McDonald is Chief Executive Officer of Carbon Natural Gas Company (OTC:CRBO) a company involved in the oil and natural gas Patrick R. McDonald Mr. McDonald is Chief Executive Officer of Carbon Natural Gas Company (OTC:CRBO), a company involved in the oil and natural gas exploration and production business in the Appalachian and Illinois Basins of the United States. From 1998 to 2003, Mr. McDonald was Chief Executive Officer, President and Director of Carbon Energy Corporation (AMEX:CRB), an oil and gas exploration and production company which in 2003 was merged with Evergreen Resources, Inc (NYSE:EVG). From 1987 to 1997 Mr. McDonald was Chief Executive Officer, President and Director of Interenergy Corporation, a natural gas gathering, processing and marketing company which in December 1997 was merged with KN Energy Inc (NYSE:KNE). Prior to that he worked as an exploration geologist with Texaco International Exploration Company where he was responsible for oil and gas exploration efforts in the Middle East and Far East Mr McDonald received a Bachelor’s degree in Geology and Economics from Ohio Wesleyan University and a Masters in Business East and Far East. Mr. McDonald received a Bachelor s degree in Geology and Economics from Ohio Wesleyan University and a Masters in Business Administration (Finance) from New York University. Mr. McDonald is a Certified Petroleum Geologist and is a member of the American Association of the Petroleum Geologists and of the Canadian Society of Petroleum Geologists. Mark Pierce, President Mark D. Pierce, President, has been with the company since 2001. For 20 years he had various roles at Ashland Exploration Inc., from Staff Engineer to Vice President Eastern Region of Ashland Exploration, Inc. Prior to joining Ashland, Mr. Pierce was a Production Engineer with Texaco, Inc. Mr. Pierce has a B.S. in President Eastern Region of Ashland Exploration, Inc. Prior to joining Ashland, Mr. Pierce was a Production Engineer with Texaco, Inc. Mr. Pierce has a B.S. in Civil Engineering from Rose-Hulman Institute of Technology and attended Harvard University’s Graduate School of Business Advanced Management Program. He is a registered Petroleum Engineer in Kentucky, West Virginia and Ohio and a member of the Society of Petroleum Engineers. Kevin Struzeski, CFO, Secretary, and Treasurer Kevin D. Struzeski, Chief Financial Officer, Secretary and Treasurer, has been with the company since 2004. From 2003 to 2004 Mr. Struzeski was a Director of Treasury of Evergreen Resources Inc., and from 1998 to 2003, he was Chief Financial Officer, Secretary and Treasurer of Carbon Energy Corporation. Mr. y g , , , y gy p Struzeski holds a B.A. in Business Administration from Colorado State University and a M.S. in Accounting from the University of Colorado. He is a Certified Public Accountant. Steven Ferris, Vice President of Exploration , Steven Ferris joined the company in 2000. Mr. Ferris has over 25 years of exploration and development experience including 15 years with Conoco Inc. and as a consultant with Exxon-Mobil, Snyder Oil and Halliburton. Mr. Ferris holds a B.S. Mineralogy from Miami University, an M.S. Geology from the University of Cincinnati and an M.B.A. from Xavier University. He is a Registered Professional Geologist and a member of AAPG, SPE, and SEG. Richard Finucane, Vice President of Engineering Richard Finucane, Vice President of Engineering, has been with the company since 1998. From 1982 to 1997 he was Engineering Manager of Ashland Exploration Inc. Prior to joining Ashland, Mr. Finucane was a Petroleum Engineer with Texaco, Inc. Mr. Finucane holds a B.S. in Civil Engineering from the University of Tennessee. Lloyd Hall, Vice President of Operations Lloyd Hall has been with the company since 2011. Mr. Hall has over 35 years of experience. His most recent role was Vice President Compression and Pipeline Operations for EQT Midstream/Equitable Gathering. He is a member of the Society of Petroleum Engineers and sits on the board of the Southeast Energy cooperative. 6
Berea Sandstone Horizontal Oil Development 7
Berea Sandstone Play Berea Sandstone Play � The Berea trend covers over 50,000 square miles in Kentucky, Ohio, Pennsylvania, Virginia & West Virginia & West Virginia PA � Entire Berea play has produced ~ 2 TCF in > 100 years USGS Berea Assessment Unit � � OH Oil window is Oil window is significantly under- developed in Kentucky WV Carbon focus area KY VA 8
Regional Location Regional Location Map – Map – Carbon Acreage arbon Acreage OH Horizontal Berea Oil � 600 sq. mi. prospective area � Northern Area: > 32,000 gross Oil & Gas acres Greenup Co. � Long term or HBP leases are the majority WV Southern Area: � Current acreage supports Torchlight significant horizontal well Lawrence Co. development plan development plan � Currently leasing additional acreage � Liberty Energy has participated in 15 wells to date on a in 15 wells to date on a KY KY promoted basis. Liberty has 40% interest in 26,111 acres. VA VA TN 9
Berea Sandstone Horizontal Development Program Berea Sandstone Horizontal Development Program Northern Area: Greenup Co Northern Area: Greenup Co. Horizontal Drilling in a Proven Berea Sandstone Oil Field � � 13 h 13 horizontal wells drilled through i t l ll d ill d th h 12/ 31/ 12 � 7 additional horizontal wells drilled in 2013 through April 2013 � � Greenup Co . Greenup Co . 25 horizontal wells permitted or in 25 horizontal wells permitted or in process � 2,500’ - 3,000’ laterals with multi-stage fracturing � $600,000 - $650,000 well cost � Exploration program to delineate additional areas underway � EUR estimates 20,000 - 60,000 bbls Drilled Well Permitted / I n progress 1 Mile 10
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