Carbon Natural Gas Company announced the acquisition of producing natural gas wells and natural gas gathering facilities assets located in the company’s Appalachian Basin operating area. The purchase price of the acquired assets is $9,000,000, subject to normal and customary closing and post-closing adjustments with an effective date of October 1, 2016. Funds for the acquisition were provided from borrowings from a newly established reserves-based lending facility provided by LegacyTexas Bank. The acquired assets will significantly increase the natural gas production of the company and will position the company to generate additional shareholder value through increased cash flow, significantly reduced general and administrative expenses (per unit of production), a broad inventory of value enhancing development projects along with increased financial and operational flexibility. The acquisition is comprised of approximately 2,300 natural gas wells which are currently producing approximately 9,300 net mcfe of gas per day (95% natural gas). The average working interest and average net revenue interest of the acquired wells is 95% and 79%, respectively. Estimated proved developed producing reserves on a Securities and Exchange Commission methodology at September 30, 2016 of the acquired properties are 37.7 bcfe (98% natural gas). The acquisition includes over 900 miles of natural gas gathering pipelines and associated compression facilities. Carbon will operate the wells and the gathering systems. As a result of the acquisition, Carbon will have the following attributes: Concentrated southern Appalachian Basin natural gas properties which offer meaningful growth potential through recompletions and optimization of gathering and compression facilities, an extensive inventory of low-risk development drilling projects and a number of identified additional acquisition opportunities. Average net daily production of approximately 15,300 mcfe of gas (90% natural gas). Approximately 487,000 net acres of oil and gas mineral interests of which approximately 70% are held by production. Interests in over 3,200 wells of which 86% are operated by Carbon. Average working interest and average net revenue interest of 91% and 77%, respectively. High heating content natural gas. A multi-year hedge strategy which the Company believes will provide protection against commodity price volatility.