1. What is Baron Energy Inc. (“Baron”)? What is its purpose?

Baron Energy (“Baron”) (OTCPK: BROE) is a publically-traded, independent oil and gas company based in San Marcos, Texas. Baron operates oil and gas properties in Texas. We are currently managing a consortium of oil and gas non-operated working interest partners and building a portfolio of producing properties in South Texas with the goal of monetizing the portfolio once certain value metrics are achieved. Additional information can be found at www.baronenergy.com.

2. Who is Baron’s management team and what is their experience level?

Our management team includes seasoned executives with more than 37 years of industry experience each. The team has both major oil company and private oil company owner/operator experience across multiple disciplines. We cover most of the upstream disciplines and also have extensive experience in business development and public company management.

3. What is the timing of the exit strategy?

In late 2015 we set a time line of 3-5 years to achieve our portfolio targets. This was based upon our experience and the type properties we had planned to pursue. With our first full year now behind us, we have set our exit target date to 2019. We believe, given our progress over the past year and the data base we now have, that we can aggregate enough properties to achieve our exit goals within this time-frame.

4. What is Baron’s current focus area? Why was this area chosen?

We chose South Texas as our Focus Area because it is a major oil and gas producing area in which we have worked since 2014. Our focus is on 17 counties with more than 122,000 well bores, stacked pay scenarios in many areas, and more than 1.6 million barrels of oil equivalent production per day. We believe we have sufficient opportunity to acquire properties that meet our criteria in the time-frame we have allocated if we focus on this area. We also prefer to operate properties within a 100 mile radius of our office in order to take advantage of operating efficiencies.

5. What type of properties does Baron target for acquisition?

We seek to acquire producing properties with upside potential. This upside can be well workovers, recompletions, and/or new drilled wells. We plan to have a balanced mix of shallow oil wells (less than 5,000 feet) and vertical and horizontal oil wells. Our primary focus is on oil production.

6. What is the valuation range for the targeted portfolio?

Our goal is to aggregate a sufficient number of the right kind of properties over a 2-3 year period such that the portfolio will have substantial value versus the amount of investment. Our valuation target is 3-10 times investment. Our experience leads us to believe this is a reasonable target. The higher range of our valuation will be realized if we can acquire properties with substantial upside via future drilling locations.

7. Does Baron’s management team have experience with this type of business model?

Our management team has been active with this type business model for the past 15 years. We’ve completed more than 130 buy/sell transactions and have operated oil and gas properties in 24 Texas counties. We are comfortable with the business model. We only operate in Texas and over the years have developed a good data base for production operations including the Permian Basin of West Texas, Eastern Shelf of Central Texas, Panhandle of North Texas and the Plains of South Texas. Additionally our business development activities have provided the opportunity to evaluate oil and gas properties in an additional 38 Texas counties.

8. What are Baron’s major challenges going forward?

We have set an internal target of up to 40 producing wells and 300-500 barrels of oil equivalent per day (BOEPD) of production in 2019. To hit these targets we need to secure drilling/acquisition funding for 2017-2018; after that we should be able to fund our growth plans from project cash flows.

9. How does Baron’s general and administrative costs compare to the industry?

Our general and administrative expenses are low compared to the industry and for a public company our size. We have two full-time employees at Baron and one part-time assistant. Our management team has extensive, multiple-discipline experience reducing the need for a larger staff. We do not anticipate adding more staff. And, being based in a small city allows for lower office rent versus being headquartered in one of the energy industry cities like Houston, Dallas/Fort Worth or Midland/Odessa. We are also able to easily commute to our field operations in South Texas, which reduces the time and cost required for providing production operations management, land-related activities, field inspections, and other due diligence activities.

10. What projected oil prices are being used by Baron for its business plan?

We are currently using $45/Bbl oil for 2017 for our base case cash flow projections and $35/Bbl as a low case. We are aligned with general industry thinking which says that oil markets will balance in late 2017 and that prices could stabilize in the $50 plus per barrel range by year-end 2017.

11. What are Baron’s plans for 2017?

We’re optimistic about 2017. We currently manage 5 producing wells and have a number of potential future drilling locations. We are working to drill two wells in the second half of 2017 and continue to look for bolt-on acquisitions in our focus area. We have a good group of like-minded, non-op working interest partners that share our vision and support our plan. Oil prices seem to be holding in the $45-50/Bbl range, with industry projections in the $50-60/Bbl range for year-end 2017, and field costs have reduced 20-30% over the past few years.

12. Does Baron have a contingency plan should industry conditions change?

We designed our business model to be flexible under a number of different scenarios including our ability to identify and fund acquisitions, low oil prices, slowdown in industry conditions, etc. Our contingency plan is similar to our Base Case plan; under certain conditions, the pace of acquisitions and production ramp-up is slowed but the general acquire, exploit, and exit plan remains the same. We call this our Low Case and it requires less investment than our Base Case over the next few years and extends our exit by a year.