UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

~~Washington,~~SECURITIES ~~D.C.~~AND ~~20549~~EXCHANGE COMMISSION

~~FORM 10-Q~~Washington, D.C. 20549

~~x QUARTERLY REPORT PURSUANT TO SECTION~~FORM 1310-Q ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~☒ ~~the~~QUARTERLY ~~Quarterly~~REPORT ~~Period~~PURSUANT ~~Ended~~TO ~~September 30,~~SECTION ~~2015~~13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

ORFor the Quarterly Period Ended March 31, 2016

~~o TRANSITION REPORT PURSUANT TO SECTION 13~~ OR ~~15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~☐ ~~the~~TRANSITION ~~transition~~REPORT ~~period~~PURSUANT ~~from to~~ TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

~~Commission~~For ~~File~~the ~~No. 000-33275~~transition period from to

~~WARREN~~Commission ~~RESOURCES, INC~~File No. 000-33275

~~(Exact~~WARREN ~~Name of Registrant as Specified in its Charter~~RESOURCES, INC.)

~~Maryland~~ (~~State~~Exact orName ~~other jurisdiction~~ of ~~incorporation~~Registrant oras ~~organization)~~Specified ~~11-3024080~~in ~~(I.R.S.~~its ~~Employer Identification Number~~Charter.)

1331 17th Street Suite 720 Denver, CO (Address of Principal Executive Offices) 80202 (Zip Code)


Delaware		11-3024080
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

5420 LBJ Freeway, Suite 600 Dallas, TX		75240
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s telephone number, including area code:

(~~720~~214) ~~403~~393-~~8125~~9688

~~1114~~Indicate ~~Avenue~~by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 and 15 (d) of the ~~Americas,~~Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☒

~~New~~Indicate ~~York~~by check mark whether the registrant has submitted electronically and posted on its corporate Web site, NYif ~~10036~~any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☐ No ☒

~~(Former~~Indicate ~~name,~~by ~~former~~check ~~address~~mark ~~and~~whether ~~former~~the ~~fiscal~~registrant ~~year~~is a large accelerated filer, ifan ~~changed~~accelerated ~~since~~filer, ~~last~~a ~~report~~non-accelerated filer, or a smaller reporting company (as defined in Rule 12b-2 of the Exchange Act).

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~☐ ~~whether~~Accelerated ~~the~~filer ~~Registrant~~☐ ~~(1) has~~Non-accelerated ~~filed~~filer ~~all~~☐ ~~reports~~Smaller ~~required~~reporting tocompany ~~be filed by Section 13 and 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days. Yes x No o~~☒

Indicate by check mark whether the registrant ~~has~~is ~~submitted~~a ~~electronically~~shell ~~and~~company ~~posted~~(as ondefined ~~its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to~~ in Rule ~~405~~12b-2 of ~~Regulation S-T during~~ the ~~preceding~~Exchange ~~12 months (or for such shorter period that the registrant was required to submit and post such files~~Act). Yes x ☐ No o ☒

~~Indicate~~The byaggregate ~~check~~number ~~mark~~of ~~whether~~Registrant’s ~~the~~outstanding ~~registrant~~shares ison ~~a large accelerated filer~~April 7, an2017 ~~accelerated~~was ~~filer~~10, ~~a non-accelerated filer~~000,000 orshares aof ~~smaller~~Common ~~reporting~~Stock, ~~company~~$0.01 ~~(as~~par ~~defined in Rule 12b-2 of the Exchange Act)~~value.

LargeTable acceleratedof filer o Accelerated filer x Non-accelerated filer o Smaller reporting company oContents

~~Indicate~~WARREN ~~by check mark whether the registrant is a shell company (as defined in Rule~~RESOURCES, ~~12b-2~~INC. ofAND ~~the~~SUBSIDIARIES ~~Exchange Act). Yes o No x~~

~~The~~TABLE ~~aggregate~~OF ~~number~~CONTENTS ~~of Registrant’s outstanding shares on November 9, 2015 was 85,203,466 shares of Common Stock, $0.0001 par value.~~

Table of Contents


PART I—	FINANCIAL INFORMATION

	Item 1. Financial Statements (Unaudited)

	Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015	3

	Consolidated Statements of Operations for the three months ended March 31, 2016 and 2015	4

	Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015	5

	Consolidated Statements of Comprehensive Loss for the three months ended March 31, 2016 and 2015	6

	Notes to the Consolidated Financial Statements	7

	Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations	17

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	20

	Item 4. Controls and Procedures	22

PART II—	OTHER INFORMATION

	Item 1. Legal Proceedings	22

	Item 1A. Risk Factors	22

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	22

	Item 3. Defaults upon Senior Securities	23

	Item 4. Mine Safety Disclosures	23

	Item 5. Other Information	23

	Item 6. Exhibits	24

	Signatures	25

WARRENTable RESOURCES, INC.of AND SUBSIDIARIESContents

~~TABLE~~WARREN OFRESOURCES, ~~CONTENTS~~INC. AND SUBSIDIARIES

PART I—	FINANCIAL INFORMATION
	Item 1. Financial Statements (Unaudited)
	Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014
	Consolidated Statements of Operations for the three and nine months ended September 30, 2015 and 2014
	Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2015 and 2014
	Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014
	Notes to the Consolidated Financial Statements
	Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
	Item 4. Controls and Procedures
PART II—	OTHER INFORMATION
	Item 1. Legal Proceedings
	Item 1A. Risk Factors
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
	Item 3. Defaults upon Senior Securities
	Item 4. Mine Safety Disclosures
	Item 5. Other Information
	Item 6. Exhibits
	Signatures

CONSOLIDATED BALANCE SHEETS


	March 31, 2016 (Unaudited)			December 31, 2015
	(in thousands, except share and per share data)
ASSETS
Current assets
Cash and cash equivalents	$	17,773		$	26,764
Accounts Receivable, net of allowance for doubtful accounts of $701 at March 31, 2016 and $16 at December 31, 2015		8,494			9,880
Restricted investment in U.S. Treasury Bonds – available for sale, at fair value (amortized costs of $1,156 at March 31, 2016 and $1,138 at December 31, 2015)		1,523			1,448
Derivative financial instruments		9,402			11,081
Other current assets		4,195			5,439

Total current assets		41,387			54,612

Other Assets
Oil and gas properties – at cost, based on full cost method of accounting, net of accumulated depreciation, depletion and impairment (includes unproved properties excluded from amortization of $- at March 31, 2016 and $14,658 at December 31, 2015)		97,294			162,685
Property and equipment - at cost, net		1,440			1,548
Other assets		3,012			3,107

Total other assets		101,746			167,340

	$	143,133		$	221,952

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued expenses	$	37,371		$	43,124
First lien credit facility, net of debt issuance costs of $4,698 at March 31, 2016 and $4,980 at December 31, 2015		229,967			229,685
Second lien credit facility, net of debt issuance costs of $1,850 at March 31, 2016 and $1,952 at December 31, 2015		73,435			72,960
Senior notes, net of debt issuance costs of $4,356 at March 31, 2016 and $5,482 at December 31, 2015		161,082			159,885
Convertible debentures, net of debt issuance costs of $92 at March 31, 2016 and $96 at December 31, 2015		1,520			1,540

Total current liabilities		503,375			507,194
Long-term liabilities
Other long-term liabilities		39,364			38,322

Total liabilities		542,739			545,516

Commitment and Contingencies
Stockholders’ Equity (Deficit)
8% convertible preferred stock, par value $.0001; authorized 10,000,000 shares, issued and outstanding, 10,703 shares in 2016 and 2015, respectively (aggregate liquidation preference $128,437 in 2016 and 2015)		128			128
Common stock, $.0001 par value, authorized 100,000,000 shares, issued 85,250,025 shares in 2016 and 85,203,466 shares in 2015		9			9
Additional paid-in capital		516,883			516,715
Accumulated deficit		(916,872	)		(840,606	)
Accumulated other comprehensive income, net of applicable income taxes		246			190

Total stockholders’ equity (deficit)		(399,606	)		(323,564	)

	$	143,133		$	221,952

~~Table~~See summary of ~~Contents~~significant accounting policies and notes to unaudited consolidated financial statements.

~~PART I—FINANCIAL~~3 ~~INFORMATION~~

ITEMTable 1.of FINANCIAL STATEMENTSContents

WARREN RESOURCES, INC. AND SUBSIDIARIES

CONSOLIDATED ~~BALANCE~~STATEMENTS ~~SHEETS~~OF OPERATIONS

	September 30, 2015 (Unaudited)			December 31, 2014
	(in thousands, except share and per share data)
ASSETS
Current Assets
Cash and cash equivalents	$	9,501		$	1,703
Accounts receivable — trade	15,704			20,025
Restricted investments in U.S. Treasury Bonds—available for sale, at fair value	144			142
Derivative financial instruments	4,192			4,005
Other current assets	2,704			1,245
Total current assets	32,245			27,120
Other Assets
Oil and gas properties—at cost, based on full cost method of accounting, net of accumulated depreciation, depletion and amortization and impairment (includes unproved properties excluded from amortization of $198,612 and $204,626 as of September 30, 2015 and December 31, 2014)	379,561			753,496
Property and equipment—at cost, net	18,120			19,622
Restricted investments in U.S. Treasury Bonds—available for sale, at fair value	1,330			1,280
Deferred debt offering costs, net	12,836			13,942
Derivative financial instruments	3,338			—
Other assets	3,026			3,220
Total other assets	418,211			791,560
	$	450,456		$	818,680
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current maturities of debentures and other long-term liabilities	$	164		$	381
Current maturities of other long-term liabilities	218			—
Accounts payable and accruals	42,872			57,389
Total current liabilities	43,254			57,770
Long-Term Liabilities
First lien credit facility	219,665			—
Revolving loan credit facility	—			134,749
Other long-term liabilities, less current portion	37,666			36,084
Senior notes and debentures, less current portion and discount	229,156			297,525
Total long-term liabilities	486,487			468,358
Commitments and Contingencies
Stockholders’ Equity
8% convertible preferred stock, par value $.0001; authorized 10,000,000 shares, issued and outstanding, 10,703 shares in 2015 and 2014 (aggregate liquidation preference $128 in 2015 and 2014)	128			128
Common stock — $.0001 par value; authorized, 200,000,000 shares; issued 81,203,466 shares in 2015 and 80,754,225 shares in 2014	8			8
Additional paid-in-capital	514,615			512,843
Accumulated deficit	(594,251		)	(220,643		)
Accumulated other comprehensive income, net of applicable income taxes of $141 in 2015 and $141 in 2014	215			216
Total stockholders’ (deficit)/equity	(79,285		)	292,552
	$	450,456		$	818,680

(UNAUDITED)

The accompanying notes are an integral part of these financial statements.


	Three months ended March 31,
	2016			2015
	(in thousands, except share and per share data)
Operating Revenues
Oil and gas sales	$	11,231		$	24,590
Transportation revenue		1,045			1,188

Total revenues		12,276			25,778

Operating Expenses
Lease operating expenses and taxes		10,999			12,508
Depreciation, depletion and accretion		10,411			17,191
Impairment expense		56,702			91,375
Transportation expense		273			577
General and administrative		4,957			5,019

Total operating expenses		83,342			126,670

Income (loss) from operations		(71,066	)		(100,892	)
Other income (expense)
Interest and other income (expense)		(272	)		17
Interest expense		(10,299	)		(5,234	)
Gain on financial instruments		5,511			3,960
Loss on contingent consideration		(140	)		(130	)

Total other income (expense)		(5,200	)		(1,387	)

Income (loss) before provision for income taxes		(76,266	)		(102,279	)
Deferred income tax (benefit) expense		—			(8	)

Net loss		(76,266	)		(102,271	)
Less dividends and accretion on preferred shares		—			3

Net loss applicable to common stockholders	$	(76,266	)	$	(102,274	)

Loss per common share - Basic and diluted	($	0.90	)	($	1.26	)
Weighted average common shares outstanding - Basic and diluted		85,213,025			80,869,169

3See summary of significant accounting policies and notes to unaudited consolidated financial statements.

~~Table~~4 ~~of Contents~~

WARRENTable RESOURCES, INC.of AND SUBSIDIARIESContents

~~CONSOLIDATED~~WARREN ~~STATEMENTS~~RESOURCES, OFINC. ~~OPERATIONS~~AND SUBSIDIARIES

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	(in thousands, except share						(in thousands, except share
	and per share data)						and per share data)
	2015			2014			2015			2014
Operating revenues
Oil and gas sales	$	19,613		$	39,175		$	69,290		$	105,627
Transportation revenue	1,191			1,338			3,509			4,082
Total revenues	20,804			40,513			72,799			109,709
Operating expenses
Lease operating expense and taxes	12,034			13,337			37,413			32,046
Depreciation, depletion and amortization	18,318			15,844			54,750			36,733
Impairment	175,744			—			350,625			—
Acquisition Expense	—			4,080			—			4,080
Transportation expenses	256			558			1,243			1,674
General and administrative	3,994			2,898			12,800			10,731
Total operating expenses	210,346			36,717			456,831			85,264
Income (loss) from operations	(189,542		)	3,796			(384,032		)	24,445
Other income (expense)
Interest and other income	1,926			17			6,047			2,379
Gain on debt extinguishment	—			—			14,407			—
Interest expense	(8,967		)	(3,783		)	(20,935		)	(5,182		)
Loss on contingent consideration	(130		)	—			(400		)	—
Gain on derivative financial instruments	10,644			3,699			11,304			1,038
Total other income (expense)	3,473			(67		)	10,423			(1,765		)
Income (loss) before taxes	(186,069		)	3,729			(373,609		)	22,680
Deferred income tax expense (benefit)	(8		)	4			—			(10		)
Net income (loss)	(186,061		)	3,725			(373,609		)	22,690
Less dividends and accretion on preferred shares	2			2			7			8
Net income (loss) applicable to common stockholders	$	(186,063	)	$	3,723		$	(373,616	)	$	22,682
Earnings (loss) per share — Basic	$	(2.29	)	$	0.05		$	(4.61	)	$	0.30
Earnings (loss) per share — Diluted	$	(2.29	)	$	0.05		$	(4.61	)	$	0.30
Weighted average common shares outstanding — Basic	81,203,466			78,549,255			81,092,772			75,121,693
Weighted average common shares outstanding — Diluted	81,203,466			78,874,219			81,092,772			75,314,166

CONSOLIDATED STATEMENTS OF CASH FLOW

~~The~~(UNAUDITED) ~~accompanying notes are an integral part of these financial statements.~~


	Three months ended March 31,
	2016			2015
	(in thousands)
Cash flows from operating activities:
Net loss	$	(76,266	)	$	(102,271	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Accretion of discount on available for sale debt securities		(18	)		(17	)
Accretion of discount on senior notes		71			131
Accretion of second lien premium		(1,175	)		—
Amortization of deferred bond offering costs		594			515
Depreciation, depletion and accretion		10,411			17,191
Impairment expense		56,702			91,375
Deferred tax expense (benefit)		—			(8	)
Change in fair value of derivative financial instruments		1,678			37
Loss on contingent consideration		140			—
Stock-based compensation		167			1,079
Bad debt expense		701			—
Change in assets and liabilities:
Decrease (increase) in accounts receivable - trade		843			3,717
(Increase) decrease in other assets		2,173			(1,439	)
Increase (decrease) in accounts payable and accruals		(4,052	)		(4,030	)
Decrease in other long term liabilities		—			(288	)

Net cash provided by (used in) operating activities		(8,031	)		5,992
Cash flows from investing activities:
Purchase, exploration and development of oil and gas properties		(868	)		(22,992	)
Purchase of property and equipment		(59	)		(451	)

Net cash used in investing activities		(927	)		(23,443	)
Cash flows from financing activities:
Payments on debt issuance costs		(8	)		—
Payments on debt and debentures		(25	)		—
Proceeds from Credit Facility		—			19,000
Payments on taxes of vested restricted stock and proceeds from the exercise of options		—			(292	)

Net cash provided by (used in) financing activities		(33	)		18,708

Net increase (decrease) in cash and cash equivalents		(8,991	)		1,257
Cash and cash equivalents at beginning of period		26,764			1,703

Cash and cash equivalents at end of period	$	17,773		$	2,960

Supplemental disclosure of cash flow information
Cash paid for interest, net of amounts capitalized	$	5,684		$	11,432
Income taxes paid		—			—
Noncash investing and financing activities
Accrued preferred stock dividend	$	—		$	3

~~Table~~See summary of ~~Contents~~significant accounting policies and notes to unaudited consolidated financial statements.

~~WARREN~~5 ~~RESOURCES, INC. AND SUBSIDIARIES~~

CONSOLIDATEDTable STATEMENTSof OF COMPREHENSIVE INCOME (LOSS)Contents

	Three Months Ended September 30, (Unaudited)						Nine Months Ended September 30, (Unaudited)
	(in thousands, except share						(in thousands, except share
	and per share data)						and per share data)
	2015			2014			2015			2014
Net income (loss)	(186,061		)	3,725			(373,609		)	22,690
Other comprehensive income (loss)
Gain (loss) on investments available for sale	14			(7		)	1			14
Comprehensive income (loss)	$	(186,047	)	$	3,718		$	(373,608	)	$	22,704

WARREN RESOURCES, INC. AND SUBSIDIARIES

~~The~~CONSOLIDATED ~~accompanying~~STATEMENTS ~~notes~~OF ~~are~~COMPREHENSIVE anLOSS ~~integral part of these financial statements.~~

5(UNAUDITED)

Table of Contents


	Three months ended March 31,
	2016			2015
	(in thousands)
Net loss	$	(76,266	)	$	(102,271	)
Other comprehensive loss:
Gain (loss ) on investments available for sale		56			(11	)

Comprehensive loss	$	(76,210	)	$	(102,282	)

~~WARREN~~See ~~RESOURCES, INC.~~summary ~~AND~~of ~~SUBSIDIARIES~~significant accounting policies and notes to unaudited consolidated financial statements.

~~CONSOLIDATED~~6 ~~STATEMENTS OF CASH FLOWS~~

	For the nine months ended September 30, (Unaudited)
	(in thousands)
	2015			2014
Cash flows from operating activities:
Net income (loss)	$	(373,609	)	$	22,690
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Accretion of discount on available-for-sale debt securities	(53		)	(48		)
Accretion of discount on high yield	—			72
Accretion of discount on Senior Notes	144			—
Amortization of deferred offering costs	1,107			946
Depreciation, depletion, amortization and impairment	405,375			36,733
Change in fair value of derivative financial instruments	(3,525		)	(4,305		)
Stock option expense	2,109			1,727
Gain on debt extinguishment	(14,407		)	—
Deferred tax (benefit)	—			(10		)
Change in assets and liabilities:
Decrease (increase) in accounts receivable—trade	4,321			(1,481		)
Decrease (increase) in other assets	(1,265		)	656
Decrease (increase) in accounts payable and accruals	(12,957		)	5,466
Decrease in other long-term liabilities	(956		)	(4,088		)
Net cash provided by operating activities	6,284			58,358
Cash flows from investing activities:
Purchase, exploration and development of oil and gas properties	(28,818		)	(374,376		)
Purchase of property and equipment	(150		)	(1,592		)
Net cash used in investing activities	(28,968		)	(375,968		)
Cash flows from financing activities:
Proceeds from Credit Facility	189,559			371,599
Payments on debt and debentures	(158,748		)	(63,238		)
Payments on taxes of vested restricted stock and proceeds from the exercise of options	(329		)	(594		)
Net cash provided by financing activities	30,482			307,767
Net increase (decrease) in cash and cash equivalents	7,798			(9,843		)
Cash and cash equivalents at beginning of period	1,703			11,620
Cash and cash equivalents at end of period	$	9,501		$	1,777
Supplemental disclosure of cash flow information
Cash paid for interest, net of amounts capitalized	$	13,176		$	4,241
Noncash investing and financing activities
Accrued preferred stock dividend	$	7		$	8
Exchange of Senior Notes for First Lien debt	$	47,164		$	—

~~The~~WARREN ~~accompanying~~RESOURCES, INC. ~~notes~~AND ~~are~~SUBSIDIARIES ~~an integral part of these financial statements.~~

6NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Table~~NOTE ofA—FINANCIAL ~~Contents~~STATEMENT PRESENTATION

~~WARREN~~Basis ~~RESOURCES, INC.~~of Presentation ~~AND~~and ~~SUBSIDIARIES~~Principles of Consolidation

~~NOTES~~Warren TOResources, Inc. ~~CONSOLIDATED~~(the ~~FINANCIAL~~“Company,” ~~STATEMENTS~~“Warren ~~(UNAUDITED~~Resources,” “Warren,” “we” or “us”), was originally formed on June 12, 1990 for the purpose of acquiring and developing oil and gas properties. The Company was incorporated under the laws of the state of Maryland prior to incorporation in the state of Delaware effective October 5, 2016. The Company’s properties are primarily located in California, Pennsylvania, and Wyoming.

~~NOTE~~The accompanying unaudited financial statements and related notes present the Company’s consolidated financial position as of March 31, 2016 and December 31, 2015, the consolidated results of operations for the three months ended March 31, 2016 and 2015, the consolidated statements of comprehensive loss for the three months ended March 31, 2016 and 2015 and consolidated cash flows for the three months ended March 31, 2016 and 2015. The unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2016 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2016. The accounting policies followed by the Company are set forth in Note A~~—ORGANIZATION~~ to the Company’s financial statements included in Form 10-K for the year ended December 31, 2015. These interim financial statements and notes thereto should be read in conjunction with the consolidated financial statements presented in the Company’s 2015 Annual Report on Form 10-K.

~~Warren~~Going ~~Resources, Inc.~~Concern (the “Company” or “Warren”), was originally formed on June 12, 1990 for the purpose of acquiring and developing oil and gas properties. The Company is incorporated under the laws of the state of Maryland. The Company’s properties are primarily located in California, Pennsylvania, and Wyoming.

OnAs ~~September 30,~~a ~~2015,~~result of the ~~Company~~impacts to ~~relocated~~the ~~its~~Company’s ~~corporate~~financial ~~headquarters~~position resulting from ~~New~~declining ~~York~~industry ~~City~~conditions toand ~~its~~in ~~pre-existing~~consideration ~~Denver,~~of ~~Colorado~~the ~~office.~~substantial Inamount ~~addition~~of debt outstanding, the Company ~~announced~~determined that ita ~~will~~filing ~~close~~under Chapter 11 provided the ~~New~~most ~~York~~expeditious ~~City~~manner in which to enhance its liquidity position and ~~Roswell,~~effect ~~New~~a ~~Mexico~~substantial ~~offices,~~reduction ~~with~~in ~~transitioning~~its ~~and~~debt ~~elimination~~obligations. As a result of ~~affected~~these ~~personnel~~circumstances, ~~and~~management ~~offices~~concluded ~~expected~~that tothere ~~begin~~is insubstantial doubt regarding the ~~fourth~~Company’s ~~quarter~~ability ofto ~~2015~~continue ~~and~~as ~~completion~~a ~~expected~~going concern byas it is currently structured. Additionally, our independent registered public accounting firm expressed their audit opinion dated March 31 17, 2016 on the financial statements dated December 31, 2015 with a going concern uncertainty explanatory paragraph.

~~The~~Reclassifications accompanying unaudited financial statements and related notes present the Company’s consolidated financial position as of September 30, 2015 and December 31, 2014, the consolidated results of operations for the three and nine months ended September 30, 2015 and 2014, the consolidated statements of comprehensive income (loss) for the three and nine months ended September 30, 2015 and 2014 and consolidated cash flows for the nine months ended September 30, 2015 and 2014. The unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions of Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2015. The accounting policies followed by the Company are set forth in Note A to the Company’s financial statements included in Form 10-K for the year ended December 31, 2014. These interim financial statements and notes thereto should be read in conjunction with the consolidated financial statements presented in the Company’s 2014 Annual Report on Form 10-K.

~~NOTE~~Certain ~~B—STOCK~~prior ~~BASED~~year ~~COMPENSATION~~amounts in the consolidated financial statements have been reclassified in order to conform to the current year presentation.

~~Stock~~Emergence ~~Options~~from Voluntary Reorganization under Chapter 11

~~Compensation~~On ~~expense~~June 2, ~~related~~2016, tothe ~~stock~~Company ~~options~~ and ~~restricted~~certain ~~stock~~of ~~awards~~its ~~recognized~~wholly inowned ~~operating~~subsidiaries ~~results~~(together with the Company, the “Debtors”) filed voluntary petitions (~~general~~the ~~and~~“Bankruptcy ~~administrative~~Petitions”) ~~expenses~~for reorganization (the “Chapter 11 Cases”) ~~was~~under ~~approximately~~Chapter ~~$0.4~~11 ~~million~~of ~~and~~the ~~$0.7~~United ~~million~~States ~~for~~Bankruptcy Code (the ~~three~~“Bankruptcy ~~months~~Code”) ~~ended~~in ~~September~~the United States Bankruptcy Court for the Southern District of Texas 30(the “Bankruptcy Court”), ~~2015~~Case No. 16-32760. The Debtors continued to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and ~~2014~~in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The subsidiary Debtors in the Chapter 11 Cases were Warren E&P, ~~respectively~~Inc. (“Warren E&P”), ~~and~~Warren ~~approximately~~Resources $2of California, Inc.1 (“Warren California”), Warren Marcellus, LLC (“Warren Marcellus”), Warren Energy Services, LLC and ~~$1.7~~Warren ~~million~~Management ~~for~~Corp., (together the ~~nine~~“Chapter ~~months~~11 ~~ending~~Subsidiaries”) which represent all subsidiaries of the Company. On September 3014, ~~2015~~2016, the Bankruptcy Court entered an order (the “Confirmation Order”) approving the Plan of Reorganization of Warren Resources, Inc. and ~~2014~~Its Affiliated Debtors (as amended and supplemented, ~~respectively~~the “Plan”). On October 5, 2016 (the “Effective Date”), the Plan became effective pursuant to its terms, and the Debtors completed their reorganization under the Bankruptcy Code.

The ~~following~~description ~~assumptions~~of the ~~were~~Plan ~~used~~can tobe ~~value~~found ~~stock~~in ~~options~~its ~~calculated~~entirety ~~using~~by reference to the ~~Black~~full text of the Confirmation Order filed on Form 8-~~Scholes~~K ~~options~~with ~~pricing~~the ~~model:~~Securities and Exchange Commission (the “SEC”) on September 20, 2016.

	Nine months ended September 30,
	2015		2014
Dividend yield	0	%	0	%
Expected volatility	60.85	%	52.8	%
Risk-free interest rate	1.2	%	1.1	%
Expected life	3.5 years		3.5 years

Accounts Receivable

			Weighted		Weighted
			Average		Average	Aggregate
	Number		Exercise		Remaining	Intrinsic Value
	of Options		Price		Term (in years)	(in thousands)
Outstanding at June 30, 2015	3,631,059		$	2.67
Granted	35,000		0.42
Exercised	—		—
Forfeited or expired	(158,864	)	3.04
Outstanding at September 30, 2015	3,507,195		$	2.63	3.90	$	3
Exercisable at September 30, 2015	738,765		$	4.14	2.87	$	—

Accounts receivable include trade receivables from joint interest owners and oil and gas purchasers. Credit is extended based on evaluation of a customer’s financial condition and, generally, collateral is not required. Accounts receivable under joint operating agreements generally have a right of offset against future oil and gas revenues if a producing well is completed. Accounts receivable are due within 30 days and are stated at amounts due from customers net of an allowance for doubtful accounts when the Company believes collection is doubtful. Accounts outstanding longer than the contractual payment terms are considered past due. The Company determines its allowance by considering a number of factors, including the length of time trade accounts receivable are past due, the Company’s previous loss history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and the industry as a whole. The Company writes off specific accounts receivable when they become uncollectible, and payments subsequently received on such receivables are credited to the allowance for doubtful accounts. As of March 31, 2016, the Company has an allowance for doubtful accounts of $701,000. The allowance for doubtful accounts at December 31, 2015 was $16,000.

~~The~~Oil ~~total intrinsic value of options exercised during the nine months ended September 30 , 2015~~ and ~~2014~~Gas ~~was~~Properties ~~approximately $0 and $1.8 million respectively.~~

7The Company accounts for its oil and gas activities using the full cost method. As prescribed by full cost accounting rules, all costs associated with property acquisition, exploration and development activities are capitalized. Exploration and development costs include dry hole costs, geological and geophysical costs, direct overhead related to exploration and development activities and other costs incurred for the purpose of finding oil and gas reserves. Salaries and benefits paid to employees directly involved in the exploration and development of oil and gas properties as well as other internal costs that can be specifically identified with acquisition, exploration and development activities are also capitalized. Proceeds received from disposals are credited against accumulated cost except when the sale represents a significant disposal of reserves, in which case a gain or loss is recognized. The sum of net capitalized costs and estimated future development and dismantlement costs are depleted on the equivalent unit-of-production method, based on proved oil and gas reserves as determined by independent petroleum engineers.

~~Table~~In accordance with full cost accounting rules, the Company is subject to a limitation on capitalized costs. The capitalized cost of ~~Contents~~oil and gas properties, net of accumulated depreciation, depletion and amortization, may not exceed the estimated future net cash flows from proved oil and gas reserves discounted at 10 percent, plus the cost of unproved properties excluded from amortization, as adjusted for related tax effects. If capitalized costs exceed this limit (the “ceiling limitation”), the excess must be charged to expense. The Company recorded impairment expenses of $56.7 million and $91.4 million for the three months ended March 31, 2016 and 2015, respectively.

AsThe costs of ~~September 30,~~certain unevaluated ~~2015,~~oil ~~total~~and ~~unrecognized~~gas ~~stock-based~~properties ~~compensation~~and ~~expense~~exploratory ~~related~~wells tobeing ~~non-vested~~drilled ~~stock~~are ~~options~~not ~~was~~included ~~approximately~~in $2the costs subject to amortization.6 ~~million,~~The ~~which~~Company weassesses ~~expect~~costs tonot ~~recognize~~being ~~over~~amortized afor ~~weighted~~possible ~~average~~impairments ~~period~~or ofreductions 1in value and if impairments or a reduction in value has occurred.8 ~~years~~No impairment expense for unevaluated oil and gas properties was recorded for the three months ended March 31, 2016 and 2015.

~~Restricted~~7 ~~Shares~~

RestrictedTable shareof activity for the nine months ended September 30, 2015 was as follows:Contents

	Shares		Weighted Average Fair Value
Outstanding at December 31, 2014	689,370		$	2.87
Granted	521,322		1.11
Vested	(697,630	)	1.79
Forfeited	(30,567	)	3.15
Outstanding at September 30, 2015	482,495		$	2.50

Recently Issued Accounting Pronouncements

~~Restricted~~In ~~stock~~March ~~awards~~2016, the FASB issued Accounting Standard Update (ASU) No. 2016-9, Compensation-Stock Compensation (ASU 2016-9). For public business entities, ASU 2016-9 is effective for ~~executive~~fiscal ~~officers~~years, and ~~employees~~interim ~~generally~~periods ~~vest~~within ~~ratably~~those ~~over~~fiscal ~~three~~ years., ~~Fair~~beginning after ~~value~~December 15, of2016 ~~our~~and ~~restricted~~early ~~shares~~adoption is permitted. The areas for simplification in this ASU involve several aspects of the accounting for share-based onpayment ~~our~~transactions, ~~closing~~including ~~stock~~the ~~price~~income tax consequences, classification of awards as either equity or liabilities, and classification on the ~~date~~statement of ~~grant~~cash flows. As Some of ~~September 30,~~the ~~2015~~areas for simplification apply only to nonpublic entities. As there are multiple amendments in this ASU, ~~total~~the ~~unrecognized~~FASB ~~stock-based~~has ~~compensation~~issued ~~expense~~guidance ~~related~~on tohow ~~non-vested~~an ~~restricted~~entity should ~~shares~~apply ~~was~~each $0amendment, either prospectively or retrospectively.8 ~~million,~~The ~~which~~Company is ~~expected~~in tothe beprocess ~~recognized~~of ~~over~~assessing athe ~~weighted~~effects ~~average~~of ~~period~~the ofapplication ~~approximately~~on ~~1.5~~the ~~years~~new guidance.

~~NOTE~~In ~~C—STOCKHOLDERS’~~March ~~EQUITY~~2016, the FASB issued ASU No. 2016-06, Contingent Put and Call Options in Debt Instruments (ASU 2016-06). For public business entities, ASU 2016-06 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 and early adoption is permitted. ASU 2016-06 provides new guidance that simplifies the analysis of whether a contingent put or call option in a debt instrument qualifies as a separate derivative. An entity should apply the amendments in this ASU on a modified retrospective basis to existing debt instruments as of the beginning of the fiscal year for which the amendments are effective. The Company is in the process of assessing the effects of the application of the new guidance.

~~The~~In ~~preferred~~February ~~stock~~2016, ~~pays~~the anFASB 8%issued ~~cumulative~~ASU No. 2016-06, ~~dividend~~Leases ~~which~~(Topic is842) ~~treated~~(ASU as2016-02). aFor ~~deduction~~public ofbusiness ~~additional~~entities, ~~paid~~ASU in2016-02 ~~capital~~is effective for fiscal years, ~~due~~and tointerim ~~insufficient~~periods ~~retained~~within ~~earnings.~~those ~~The~~fiscal ~~holders~~years, ofbeginning ~~the~~after ~~preferred~~December 15, ~~stock~~2018 ~~are~~and ~~not~~early ~~entitled~~adoption tois ~~vote~~permitted. ~~except~~The asFASB ~~defined~~issued byASU ~~the~~2016-02 ~~agreement~~to orincrease astransparency ~~provided~~and bycomparability ~~applicable~~among organizations ~~law. The~~by ~~preferred~~recognizing ~~stock~~lease ~~may~~assets beand ~~voluntarily~~lease ~~converted,~~liabilities aton the ~~election~~balance ofsheet ~~the~~and ~~holder,~~disclosing ~~into~~key ~~common~~information ~~stock~~about ofleasing arrangements. An entity should apply the ~~Company~~amendments ~~based~~in this ASU on a ~~conversion~~modified ~~rate~~retrospective ofbasis. ~~one~~The ~~share~~transition will require application of ~~preferred~~the ~~stock~~new ~~for~~guidance ~~0.50~~at ~~shares~~the beginning of ~~common~~the ~~stock.~~earliest ~~The~~comparative ~~accrual~~period ofpresented in the ~~dividend~~financial isstatements. ~~deducted~~The ~~from~~Company ~~earnings~~is in the ~~calculation~~process of ~~earnings~~assessing ~~attributable~~the toeffects ~~common~~of ~~stockholders~~the application of the new guidance.

~~Additionally,~~In ~~holders~~April of2015, the ~~preferred~~Financial ~~stock~~Accounting ~~can~~Standard ~~elect~~Board toissued ~~require~~an ~~the~~Accounting ~~Company~~Standards toUpdate ~~redeem~~(“ASU”) ~~their~~that ~~preferred~~is ~~stock~~intended ~~at a redemption price equal~~ to simplify the ~~liquidation~~presentation ~~value~~ of ~~$12.00~~debt ~~per~~issuance ~~share,~~costs ~~plus~~by ~~accrued~~requiring ~~but~~that ~~unpaid~~debt ~~dividends,~~issuance ifcosts ~~any~~related ~~(“Redemption~~to ~~Price”). Upon the receipt of~~ a ~~redemption~~recognized ~~election,~~debt ~~the~~liability ~~Company,~~be atpresented ~~its option, shall either: (1) pay the holder cash~~ in the ~~amount~~balance ~~equal~~sheet toas ~~the~~a ~~Redemption~~direct ~~Price~~deduction orfrom ~~(2) issue to~~ the ~~holder~~carrying ~~shares of common stock in an~~ amount ~~equal to 125%~~ of ~~the~~that ~~redemption~~debt ~~price~~liability, ~~and~~consistent ~~any~~with ~~accrued~~debt discounts. ~~and~~This ~~unpaid~~ASU ~~dividends,~~will ~~based~~be onapplied ~~the~~retrospectively ~~weighted~~as ~~average closing “bid” price~~ of the ~~Company’s common stock for the thirty trading days immediately preceding the~~ date of ~~the~~adoption ~~written~~and ~~redemption~~is ~~election~~effective byfor ~~the~~fiscal ~~holder~~years upbeginning toafter aDecember 15, ~~maximum~~2015, ofand ~~1.5~~interim ~~shares~~periods ofwithin ~~common~~those ~~stock~~years ~~for~~(early ~~each~~adoption ~~one share of preferred stock redeemed~~permitted). The Company has ~~accreted~~implemented this ~~the~~standard ~~carrying~~in ~~value of its preferred stock to its redemption price using~~ the ~~effective~~attached ~~interest~~financial ~~method with changes recorded to additional paid in capital~~statements.

~~Notwithstanding~~NOTE ~~the~~B—DEBT forgoing, if the closing “bid” price of the Company’s publicly traded common stock as reported by the NASDAQ stock market, or any exchange on which the shares of common stock are traded, exceeds 133% of the conversion price then in effect for the convertible preferred shares for at least 10 days during any 30-day trading period, the Company has the right to redeem in whole or in part the convertible preferred stock at a redemption price of $12 per share (plus any accrued unpaid dividends) or convert the convertible preferred shares (plus any accrued unpaid dividends) into common stock at the then applicable conversion rate.

~~NOTE~~Current ~~D—EARNINGS~~maturing ~~PER~~long-term ~~SHARE~~debt, net of debt issuance costs and discounts, consisted of the following for the balance sheets dated:

Basic earnings (loss) per share is computed by dividing net earnings (loss) applicable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted earnings (loss) per share is based on the assumption that stock options are converted into common shares using the treasury stock method and convertible bonds and preferred stock are converted using the if-converted method. Conversion is not assumed if the results are anti-dilutive. Potential common shares for the nine months ended September 30, 2015 and 2014 of 38,072 and 38,072, respectively, relating to convertible bonds and preferred stock were excluded from the computation of diluted earnings per share because they are anti-dilutive. Potential common shares of 3,989,690 and 2,322,263 relating to stock options and restricted stock were excluded from the computation of diluted earnings per share for the nine months ended September 30, 2015 and 2014, respectively, because they are anti-dilutive. At September 30, 2015 the convertible bonds may be converted from the date of issuance until maturity at 100% of principal amount into common stock of the Company at a price of $50. The preferred stock may be converted at the discretion of the holder or upon meeting certain conditions at the discretion of the Company (see Note C).


	March 31, 2016			December 31, 2015
	(in thousands)
First Lien Credit Facility	$	229,967		$	229,685
Second Lien Credit Facility		73,435			72,960
Convertible Debentures		1,520			1,540
Senior Notes		161,082			159,885

		466,004			464,070
Less current portion		(466,004	)		(464,070	)

Long-term portion	$	—		$	—

8First Lien Credit Facility and Senior Notes Exchange

~~Table~~On May 22, 2015, Warren Resources entered into a first lien credit agreement by and among the Company, Wilmington Trust, National Association, as Administrative Agent, and the lenders from time to time party thereto, that provides for a five-year, $250 million term loan facility (the “First Lien Credit Facility”) which matures on May 22, 2020. At the closing of ~~Contents~~the First Lien Credit Facility, certain of the first lien lenders extended credit in the form of new term loans in the amount of $172.5 million and in the form of commitments for delayed draw term loans for up to an additional $30 million, subject to certain incurrence tests. Approximately $47 million in additional term loans were issued under the First Lien Credit Facility at closing in exchange for $69.59 million in face value of the 9.000% Senior Notes due 2022, as described further under “9.000% Senior Notes due 2022” below.

~~Basic~~8 ~~and diluted net earnings (loss) per share are computed based on the following information:~~

	Three Months Ended September 30, 2015			Three Months Ended September 30, 2014		Nine Months Ended September 30, 2015			Nine Months Ended September 30, 2014
	(in thousands, except for per share data)					(in thousands, except for per share data)
Net earnings (loss) applicable to common shareholders	$	(186,063	)	$	3,723	$	(373,616	)	$	22,682
Weighted average shares outstanding — basic	81,203,466			78,549,255		81,092,772			75,121,693
Effect of dilutive securities — restricted stock	—			12,524		—			—
Effect of dilutive securities — stock options	—			312,440		—			192,473
Weighted average shares outstanding - diluted	81,203,466			78,874,219		81,092,772			75,314,166
Basic net earnings (loss) per share	$	(2.29	)	$	0.05	$	(4.61	)	$	0.30
Diluted net earnings (loss) per share	$	(2.29	)	$	0.05	$	(4.61	)	$	0.30

~~NOTE~~The conditions applicable to further draw downs under the First Lien Credit Facility were modified as part of the First Amendment to the First Lien Credit Facility that was entered into on October 22, 2015. The First Lien Credit Facility was guaranteed by Warren California, Warren E~~—LONG~~&P and Warren Marcellus, which are three of the Company’s wholly-~~TERM~~owned ~~LIABILITIES~~subsidiaries and was collateralized by substantially all of Warren’s assets, including the equity interests of the guarantors. Warren used the proceeds drawn at closing of the First Lien Credit Facility to repay the balance on its former credit facility, and has been released from all legal obligations on such former facility. The Company accounted for this Exchange transaction in accordance with ASC 470 and ASC 405 and as a result recognized a gain on the retirement of debt in the amount of $14.4 million during 2015.

~~Long-term~~The ~~liabilities~~First ~~consisted~~Lien Credit Facility is subject to prepayment in respect of asset sales, subject to limited reinvestment rights and certain excluded asset sales. The First Lien Credit Facility also includes certain covenants, including a maintenance covenant requiring the ~~following~~Company ~~for~~to maintain a minimum consolidated first lien leverage ratio. The terms of the ~~balance~~maintenance ~~sheets~~covenant ~~dated:~~were modified as part of the First Amendment to the First Lien Credit Facility that was entered into on October 22, 2015.

	September 30,			December 31,
	2015			2014
	(in thousands)
Line of Credit	$	—		$	134,749
First Lien Credit Facility	219,665			—
Convertible Debentures	1,636			1,636
Senior Notes	230,410			300,000
Discount on Senior Notes	(2,727		)	(3,947		)
Contingent Earn-Out	6,931			6,531
Asset retirement obligations	30,954			29,771
	486,869			468,740
Less current portion	382			382
Long-term portion	$	486,487		$	468,358

The First Lien Credit Facility is subject to other usual and customary conditions, representations, and warranties, including restrictions on certain additional indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, asset dispositions, repurchase or redemption of our common stock, speculative commodity transactions, transactions with affiliates and other matters. The First Lien Credit Facility is subject to customary events of default. If an event of default occurs and is continuing, the Agent may, or at the request of certain required lenders shall, accelerate amounts due under the First Lien Credit Facility (except for a bankruptcy event of default, in which case such amounts will automatically, by their terms, become due and payable).

The annual interest rate on borrowings under the First Lien Credit Facility was 8.5% plus LIBOR for the applicable LIBOR period (with a minimum LIBOR rate of 1%) and ~~Senior~~was ~~Notes~~payable ~~Exchange~~quarterly in arrears on the next to last business day of each March, June, September and December. At March 31, 2016 the interest rate was 9.5%.

On ~~May~~November 229, 2015, Warren Resources entered into a first lien credit agreement by and among the Company, Wilmington Trust, National Association, as Administrative Agent, and the lenders from time to time party thereto, that provides for a five-year, $~~250 million term loan facility (the “First Lien Credit Facility”) which matures on May~~15 ~~22, 2020. At the closing of the First Lien Credit Facility, certain of the first lien lenders extended credit in the form of new term loans in the amount of $172.5~~ million ~~and in the form~~ of ~~commitments for delayed draw term loans for up to an~~ additional ~~$30~~borrowings ~~million, subject to certain incurrence tests. Approximately $47 million in additional term loans~~ were ~~issued~~drawn ~~under~~depleting the ~~First~~total ~~Lien~~available ~~Credit~~under ~~Facility at closing in exchange for $69.59 in face value of~~ the 9facility.~~000%~~ ~~Senior Notes due 2022, as described further under “9.000% Senior Notes due 2022” below.~~ The ~~conditions~~balance outstanding ~~applicable~~at ~~to further draw downs under the First Lien Credit Facility were modified as part of the First Amendment to the First Lien Credit Facility that was entered into on October~~March 2231, ~~2015~~2016 ~~and~~was ~~is further described under Note N to the Notes to the Consolidated Financial Statements~~$230. ~~The First Lien Credit Facility is guaranteed by Warren Resources of California,~~0 ~~Inc.,~~million ~~Warren E&P, Inc. and Warren Marcellus LLC,~~ which ~~are~~was ~~three~~net of ~~the~~debt ~~Company’s~~issuance ~~wholly-owned~~costs ~~subsidiaries and is collateralized by substantially all~~ of ~~Warren’s assets, including the equity interests of the guarantors~~$4. ~~Warren used the proceeds drawn at closing of the First Lien Credit Facility to repay the balance on its former credit facility, and has been released from all legal obligations on such former facility~~7 million.

9On the Effective Date, pursuant to the Plan, all amounts outstanding under the Company’s previously existing First Lien Credit Facility were cancelled and the obligation thereunder terminated, released and discharged. Lenders under the First Lien Credit Facility received distributions of the Company’s common stock, par value $0.01 (the “New Common Stock”) under the Plan, and entered into a new term loan facility with the Company (the Exit Credit Facility as discussed below).

~~Table~~Second ofLien ~~Contents~~Credit Facility and Senior Note Exchange

~~The~~On ~~First~~October 22, 2015, the Company entered into a second lien credit facility (the “Second Lien Credit Facility”) isby ~~subject~~and toamong ~~prepayment~~the Company, inCortland ~~respect~~Capital ofMarket ~~asset sales~~Services, LLC, ~~subject~~as toAdministrative ~~limited~~Agent, ~~reinvestment~~and ~~rights~~the ~~and~~lenders ~~certain~~from ~~excluded~~time ~~asset~~to ~~sales~~time party thereto. The ~~First~~Second Lien Credit Facility ~~also~~provided ~~includes~~for a five-year, approximately $51.0 million term loan facility that matured on November 1, 2020. At closing, certain ~~covenants~~of the lenders exchanged approximately $63.1 million in face value of previously-issued Senior Notes held by them, ~~including~~plus aaccrued ~~maintance~~interest, ~~covenant~~for ~~requiring~~(i) approximately $40.1 million of second lien term loans under the Second Lien Facility, and (ii) four million (4,000,000) shares of Company toCommon ~~maintain~~Stock aand, ~~minimum~~in ~~consolidated~~addition, ~~first~~extended credit in the form of new second lien ~~leverage~~term ~~ratio~~loans in the amount of approximately $11.0 million. The annual ~~terms~~interest ofrate on borrowings under the ~~maintenance~~Second ~~covenant~~Lien ~~were~~Facility ~~modified~~was as12%, ~~part~~with ofinterest payable semi-annually in arrears on each April 20 and October 20. On the ~~First~~first ~~Amendment~~three semi-annual interest payment dates, beginning with April 20, 2016, the Company could elect to pay up to all of such interest (6% per semi-annual period) by capitalizing accrued and unpaid interest and adding the ~~First~~same ~~Lien~~to ~~Credit~~the ~~Facility~~principal ~~that~~amount ~~was~~of ~~entered~~the ~~into~~second onlien loans then outstanding. For the subsequent three semi-annual interest payment dates, beginning with October 2220, ~~2015~~2017 and isending ~~further~~October 20, ~~described~~2018, ~~under~~the ~~Note~~Company Ncould elect to pay up to one quarter of such interest (1.5% per semi-annual period) by capitalizing accrued and unpaid interest and adding the ~~Notes~~same to the ~~Consolidated~~principal ~~Financial~~amount ~~Statements~~of the Second Lien Loans then outstanding. The amount of accrued unpaid potential “PIK” interest outstanding on the Second Lien Credit facility at March 31, 2016 was $2.7 million.

The ~~First~~transaction ~~Lien~~was ~~Credit~~accounted ~~Facility~~for isas ~~subject~~a totroubled ~~other~~debt ~~usual~~restructuring ~~and~~in ~~customary~~accordance ~~conditions,~~with ~~representations,~~ASC ~~and warranties~~470, ~~including~~whereby ~~restrictions~~no gain on ~~certain~~the ~~additional~~retirement ~~indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, asset dispositions, repurchase or redemption~~ of ~~our~~debt ~~common~~was recognized ~~stock, speculative commodity transactions, transactions with affiliates~~ and ~~other~~a ~~matters.~~premium ~~The~~on ~~First~~the ~~Lien~~issuance ~~Credit~~equal ~~Facility is subject~~ to ~~customary~~the ~~events~~amount of ~~default.~~debt Ifretired ancould ~~event~~be ofamortized ~~default~~over ~~occurs~~the ~~and~~life isof ~~continuing,~~ the ~~Agent~~instrument. ~~may,~~The orvalue ~~at the request~~ of ~~certain required lenders shall, accelerate amounts due under~~ the ~~First~~Second Lien Credit Facility ~~(except~~premium ~~for~~at aMarch 31, ~~bankruptcy~~2016 ~~event~~was of$21.5 million. ~~default,~~The intotal outstanding ~~which~~balance ~~case~~at ~~such~~March 31, ~~amounts~~2016 ~~will~~amounted ~~automatically,~~to by$73.4 million ~~their~~which ~~terms,~~was ~~become~~net ~~due~~of ~~and~~debt ~~payable)~~issuance costs of $1.8 million.

~~The~~On the ~~annual~~Effective ~~interest~~Date, ~~rate~~pursuant onto ~~borrowings~~the Plan, all amounts outstanding under the ~~First~~Company’s previously existing Second Lien Credit Facility iswere ~~8.5%~~cancelled ~~plus~~and ~~LIBOR~~the ~~for~~obligation ~~the~~thereunder ~~applicable~~terminated, ~~LIBOR~~released ~~period~~and ~~(with~~discharged. aLenders ~~minimum~~under ~~LIBOR~~the ~~rate~~Second Lien ofCredit ~~1%)~~Facility ~~and~~received isdistributions ~~payable~~of ~~quarterly~~New inCommon ~~arrears~~Stock onunder the ~~next~~Plan. toAdditionally, ~~last~~the ~~business~~lenders ~~day~~under ofthe ~~each~~prepetition ~~March,~~Second ~~June,~~Lien ~~September~~Credit ~~and~~Facility ~~December.~~were Atparty ~~present,~~to the ~~interest~~Warrant ~~rate~~Agreement, ispursuant 9to which they received warrants (the “Warrants”).~~5%.~~

~~As of September 30, 2015 the Company had $219.7 million outstanding on its borrowings under the First Lien Credit Facility, with zero interest accrued. As of November~~ 9, ~~2015, $15 million of additional borrowings have been drawn and the total outstanding under the facility is therefore $234.7 million.~~

ConvertibleTable Debenturesof Contents

~~The convertible debentures may be converted from the date of issuance until maturity at 100% of principal amount into common stock of the Company at a conversion price of $50~~9. ~~Each year the holders of the convertible debentures may tender to the Company up to 10~~000% ofSenior ~~the~~Notes ~~aggregate~~due ~~debentures~~2022 ~~issued and outstanding. During the three and nine months ended September 30, 2015, there were no debenture redemptions.~~

On August 11, 2014, we acquired essentially all of the Marcellus Assets (the “Marcellus Assets”) of Citrus Energy Corporation (“Citrus”) and two other working interest owners (the “Marcellus Asset Acquisition”). To finance the Marcellus Asset Acquisition, on August 11, 2014, the Company issued 9.000% ~~Senior~~senior ~~Notes~~notes in a private offering at a price equal to 98.617% for a total of $300 million due to mature on August 1, 2022 (the “Unregistered Senior Notes”). Interest was payable on the Unregistered Senior Notes semi-annually in arrears at a rate of 9.000% per annum on each February 1 and August 1.

ToIn ~~finance~~connection with the ~~Marcellus~~First ~~Asset~~Lien ~~Acquisition~~Credit ~~(See~~Facility ~~Note~~entered L)into inon ~~2014~~May 22, 2015, the Company exchanged ~~issued 9~~$69.~~000%~~59 million ~~senior notes~~ in aface ~~private~~value ~~offering~~of atthe aUnregistered ~~price~~Senior ~~equal~~Notes topreviously ~~98.617%~~held ~~due~~by tothe ~~mature~~lenders onunder ~~August 1, 2022 (~~the ~~“Unregistered~~First ~~Senior~~Lien ~~Notes”). Interest~~Credit isFacility ~~payable~~for onapproximately ~~the~~$45.23 million ~~Unregistered~~of ~~Senior~~First ~~Notes~~Lien ~~semi-annually~~Term inLoans ~~arrears~~plus ataccrued aunpaid ~~rate~~interest of 9 $1.~~000%~~93 million ~~per~~rolled ~~annum~~into onthe ~~each~~First ~~February 1~~Lien ~~and~~Term ~~August 1~~Loans as additional borrowing.

InOn ~~connection~~July 27, ~~with~~2015, ~~the~~substantially ~~First~~all ~~Lien~~of ~~Credit~~the outstanding ~~Facility~~Unregistered ~~entered~~Senior ~~into~~Notes onwere ~~May 22, 2015, the Company~~ exchanged ~~$69.59~~for ~~million~~an inequal ~~face~~principal ~~value~~amount of ~~the~~registered ~~Unregistered~~9.000% Senior Notes ~~previously~~due ~~held~~2022 bypursuant ~~the~~to ~~lenders~~a ~~under~~registration ~~the~~statement ~~First~~on ~~Lien~~Form S-4 ~~Credit~~that ~~Facility~~was ~~for~~declared ~~approximately~~effective by ~~$45.23~~the ~~million~~SEC ofon ~~First~~June 19, ~~Lien~~2015 ~~Term~~under ~~Loans~~the ~~plus~~Securities ~~accrued~~Act ~~unpaid~~(the ~~interest~~“Registered ofSenior ~~$1.93~~Notes” ~~million~~and, ~~rolled~~together ~~into~~with the ~~First~~Unregistered ~~Lien~~Senior ~~Term~~Notes, ~~Loans~~the as“Senior ~~additional borrowing~~Notes”). The ~~Company~~Registered ~~accounted~~Senior ~~for~~Notes ~~this~~are ~~transaction~~identical into ~~accordance~~the ~~with~~Unregistered ~~ASC~~Senior Notes ~~470~~except ~~and~~that ~~ASC~~the ~~405~~Registered ~~and~~Senior asNotes awere ~~result~~registered ~~recognized~~under athe ~~gain~~Securities onAct ~~the~~and ~~retirement~~do ofnot ~~debt~~have inrestrictions ~~the~~on ~~amount~~transfer, ofregistration ~~$14.4~~rights ~~million~~or ~~during~~provisions ~~the~~for ~~period~~additional interest.

OnIn ~~July 27,~~connection ~~2015,~~with ~~substantially all of~~ the ~~outstanding~~Second ~~Unregistered~~Lien ~~Senior~~Credit ~~Notes~~Facility ~~were~~entered ~~exchanged~~into ~~for an equal principal amount of registered 9.000% senior notes due 2022 pursuant to a registration statement~~ on ~~Form~~October ~~S-4 that was declared effective by the Securities and Exchange Commission on June 19~~22, 2015 ~~under the Securities Act (the “Registered Senior Notes” and~~, ~~together with~~ the ~~Unregistered~~Company ~~Senior~~exchanged ~~Notes,~~$63.1 million ~~the~~in ~~“Senior~~face value ~~Notes”).~~of ~~The~~ Registered Senior Notes ~~are~~previously ~~identical~~held toby the ~~Unregistered~~lenders ~~Senior Notes except that~~ the ~~Registered~~Second ~~Senior~~Lien ~~Notes~~Credit ~~are~~Facility ~~registered~~for ~~under~~approximately ~~the~~$40.1 million ~~Securities~~of ~~Act~~Second ~~and~~Lien doTerm ~~not have restrictions on transfer, registration rights or provisions for additional interest~~Loans.

AtWe ~~September 30~~could redeem, ~~2015~~at specified redemption prices, some or all of the ~~face~~Senior ~~amount~~Notes at any time on or after August 1, 2017. We could also redeem up to 35% of the Senior Notes ~~was~~using ~~$230~~the proceeds of certain equity offerings completed before August 1, 2017.41 ~~million~~If we should sell certain of our assets or experience certain kinds of changes in control, we could be required to offer to purchase the Senior Notes from the holders. The Senior Notes were fully, unconditionally and jointly and severally guaranteed on a senior unsecured basis by certain of our existing subsidiaries and were fully, unconditionally and jointly and severally guaranteed on a senior unsecured basis by our future domestic subsidiaries, subject to certain exceptions. Warren Resources, Inc. is a holding company with no independent assets or operations. Any subsidiaries of the ~~market~~Company ~~value~~other than ~~was~~the ~~approximately~~subsidiary guarantors are minor. There were no significant restrictions on the Company’s ability, or the ability of any subsidiary guarantor, to obtain funds from its subsidiaries through dividends, loans, advances or otherwise. The total outstanding balance at March 31, 2016 amounted to $50161.71 million which was net of debt issuance costs of $4.4 million.

WeThe ~~may~~Company ~~redeem,~~elected atnot ~~specified~~to ~~redemption~~pay ~~prices,~~the ~~some~~semi-annual orinterest ~~all~~payment of ~~the~~$7.5 million ~~Senior~~due ~~Notes~~on atFebruary 1, ~~any~~2016, ~~time~~although onit orhad ~~after~~sufficient liquidity ~~August 1,~~to ~~2017. We~~make ~~may~~the ~~also~~interest ~~redeem~~payment upin tofull. ~~35%~~According ofto the ~~Senior~~agreement, ~~Notes~~this ~~using~~failure ~~the~~to ~~proceeds~~pay ofwas ~~certain~~not ~~equity~~an ~~offerings~~immediate ~~completed~~event ~~before~~of ~~August 1~~default, ~~2017. If~~however, wethe ~~sell~~30-day ~~certain~~grace ofperiod ~~our~~elapsed ~~assets~~on orMarch 2, ~~experience~~2016, ~~certain~~creating an ~~kinds~~event of ~~changes~~default. inUnder ~~control~~the indenture governing the Senior Notes, wethe ~~may~~trustee beor ~~required~~holders toof ~~offer~~not toless ~~purchase~~than 25% in aggregate principal amount of the Senior Notes ~~from~~outstanding could declare the ~~holders. The~~principal amount of the Senior Notes ~~are~~plus ~~fully,~~accrued ~~unconditionally~~ and unpaid ~~jointly~~interest to be due and ~~severally~~payable. ~~guaranteed~~The failure to pay interest on athe ~~senior~~Senior ~~unsecured~~Notes ~~basis~~within bythe ~~substantially~~30-day ~~all~~grace period also resulted in events of ~~our~~default ~~existing~~under ~~subsidiaries~~Warren’s first lien credit facility and second ~~are~~lien ~~fully~~credit facility, ~~unconditionally~~which ~~and~~entitled ~~jointly~~the administrative agents and ~~severally~~lead ~~guaranteed~~lenders onthereunder ato ~~senior~~declare ~~unsecured~~all ~~basis~~obligations bythereunder ~~our~~to ~~future~~be ~~domestic~~immediately ~~subsidiaries,~~due ~~subject~~and payable. No such right was exercised prior to ~~certain~~filing ~~exceptions~~from bankruptcy.

10On the Effective Date, pursuant to the Plan, the Company’s 9% Senior Notes due 2022 and the indenture governing the Senior Notes were cancelled and the obligations of the Debtors thereunder were terminated, released and discharged. Holders of the Senior Notes received distributions of New Common Stock under the Plan.

~~Table~~Convertible ofDebentures ~~Contents~~

~~NOTE~~In ~~F—ASSET~~January, ~~RETIREMENT~~2016, $25,000 ~~OBLIGATION~~of debentures were exchanged into $25,000 cash. Convertible debenture balances at March 31, 2016, net of debt issuance costs of $92,000, are as follows:

The estimated fair value of the future costs associated with dismantlement, abandonment and restoration of oil and gas properties is recorded generally upon acquisition or completion of a well. The net estimated costs are discounted to present values using a risk adjusted rate over the estimated economic life of the oil and gas properties. Such costs are capitalized as part of the related asset. The asset is depleted on the units-of-production method. The associated liability is classified in other long-term liabilities, net of current portion, in the accompanying Consolidated Balance Sheets. The liability is periodically adjusted to reflect (1) new liabilities incurred, (2) liabilities settled during the period, (3) accretion expense, and (4) revisions to estimated future cash flow requirements. The accretion expense is recorded as a component of depreciation, depletion and amortization. The Company has cash held in escrow with a fair market value of $2.8 million that is legally restricted for potential plugging and abandonment liability in the Wilmington field which is recorded in other assets in the Consolidated Balance Sheets. A reconciliation of the Company’s asset retirement obligations is as follows:


	Maturity date		Principal
			(in thousands)
Secured Convertible 12% Debentures		December 31, 2020	$	761
Secured Convertible 12% Debentures		December 31, 2022		759

			$	1,520

	September 30, 2015
	(in thousands)
Balance at beginning of period	$	29,771
Liabilities incurred in current period	9
Liabilities settled in current period	(956		)
Accretion expense	2,130
Balance at end of period	$	30,954

NOTETable G—CONTINGENCIESof Contents

WeOn ~~are~~the ~~party~~Effective Date, pursuant to athe ~~variety~~Plan, holders of ~~legal,~~the ~~administrative~~Company’s 12% Secured Convertible Bonds due December 31, ~~regulatory~~2020 and ~~government~~the ~~proceedings~~12% Secured Convertible Bonds due December 31, ~~claims~~2022 ~~and~~received ~~inquiries~~payment ~~arising~~in full in cash such that the ~~normal~~claim ~~course~~of such holders was unimpaired, and the trustees under each series of ~~business~~Convertible Debentures were paid reasonable and documented unpaid fees and expenses incurred on or before the Effective Date. ~~Although~~ weOn ~~cannot~~the ~~predict~~Effective Date, the ~~outcome~~Convertible Debentures and the indentures governing each series of ~~these~~Convertible ~~proceedings~~Debentures ~~with~~were ~~certainty,~~cancelled weand the doobligations ~~not~~of ~~currently~~the ~~expect~~Debtors ~~these~~thereunder ~~matters~~were terminated, released and discharged. Other than pursuant to ~~have~~the aforegoing, ~~material~~holders ~~adverse~~of ~~effect~~the onConvertible ~~our~~Debentures ~~consolidated~~did ~~financial~~not ~~position~~receive ordistributions ~~results~~under the Plan in respect of ~~operations~~the Convertible Debentures.

~~There~~NOTE ~~have~~C—STOCKHOLDERS’ ~~been~~EQUITY ~~no significant changes with respect to the legal matters disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014.~~

~~NOTE~~Preferred Stock ~~H - FAIR VALUE OF FINANCIAL INSTRUMENTS~~

The ~~estimated~~preferred ~~fair~~stock ~~values~~pays ofan ~~financial~~8% ~~instruments~~cumulative ~~recognized~~dividend which is treated as a deduction of additional paid in capital, due to insufficient retained earnings. The holders of the ~~Consolidated~~preferred ~~Balance~~stock ~~Sheets~~are not entitled to vote except as defined by the agreement or ~~disclosed~~as ~~within~~provided ~~these~~by ~~Notes~~applicable tolaw. ~~Consolidated~~The ~~Financial~~preferred ~~Statements~~stock ~~have~~may ~~been~~be ~~determined~~voluntarily ~~using~~converted, ~~available~~at ~~market~~the ~~information~~election of the holder, ~~information~~into common ~~from~~stock ~~unrelated~~of ~~third~~the ~~party~~Company ~~financial~~based ~~institutions~~on ~~and~~a ~~appropriate~~conversion ~~valuation~~rate ~~methodologies,~~of ~~primarily~~one ~~discounted~~share ~~projected~~of ~~cash~~preferred ~~flows~~stock for 0.50 ~~However,~~shares ~~considerable~~of ~~judgment~~common isstock. ~~required~~The ~~when~~accrual ~~interpreting~~of ~~market~~the ~~information~~dividend ~~and~~is ~~other~~deducted ~~data~~from toearnings ~~develop~~in ~~estimates~~the calculation of ~~fair~~earnings ~~value~~attributable to common stockholders.

~~Short-term~~Additionally, ~~Assets~~holders ~~and~~of ~~Liabilities~~the preferred stock can elect to require the Company to redeem their preferred stock at a redemption price equal to the liquidation value of $12.00 ~~The~~per ~~fair~~share, ~~values~~plus accrued but unpaid dividends, if any, (“Redemption Price”). Upon the receipt of ~~cash~~a ~~and~~redemption ~~cash~~election, ~~equivalents~~the Company, ~~accounts~~at ~~receivable~~its option, ~~accounts~~shall ~~payable~~either: (1) pay the holder cash in the amount equal to the Redemption Price or (2) issue to the holder shares of common stock in an amount equal to 125% of the redemption price and any accrued ~~expenses~~ and ~~other~~unpaid ~~current~~dividends, ~~liabilities~~based ~~approximate~~on ~~their~~the weighted average closing “bid” price of the Company’s common stock for the thirty trading days immediately preceding the date of the written redemption election by the holder up to a maximum of 1.5 shares of common stock for each one share of preferred stock redeemed. The Company has accreted the carrying ~~values~~value ~~because~~of its preferred stock to its redemption price using the effective interest method with changes recorded to additional paid in capital. The accretion of ~~their~~preferred ~~short-term~~stock ~~nature~~results in a reduction of earnings applicable to common stockholders.

~~U.S.~~Notwithstanding ~~Treasury~~the ~~Bonds~~forgoing, -if ~~Trading~~the ~~and~~closing ~~Available-For-Sale~~“bid” ~~Securities. The~~price ~~fair~~of ~~values~~the ~~are~~Company’s ~~based~~publicly ~~upon~~traded ~~quoted~~common stock as reported by the NASDAQ stock market, ~~prices~~or any exchange on which the shares of common stock are traded, exceeds 133% of the conversion price then in effect for ~~those~~the convertible preferred shares for at least 10 days during any 30-day trading period, the Company has the right to redeem in whole or ~~similar~~in ~~investments~~part ~~and~~the ~~are~~convertible ~~reported~~preferred onstock at a redemption price of $12 per share (plus any accrued unpaid dividends) or convert the ~~Consolidated~~convertible preferred ~~Balance~~shares ~~Sheets~~(plus any accrued unpaid dividends) into common stock at ~~fair~~the ~~value~~then applicable conversion rate.

~~Collateral~~Due ~~Security~~to ~~Agreement~~the ~~Account~~financial condition ~~(included~~of inthe ~~other~~Company ~~non-current~~and ~~assets).~~ultimate ~~The~~filing ~~balance~~of ~~sheet~~bankruptcy ~~carrying~~in ~~amount~~the ~~approximates~~second ~~fair~~quarter ~~value~~of 2016, asall itpreferred ~~earns~~stock adividends ~~market~~were ~~rate~~suspended in 2016.

~~Convertible~~Securities ~~Debentures.~~Authorized ~~Fair values of fixed rate convertible debentures were calculated using interest rates in effect as of period end~~ for ~~similar~~Issuance ~~instruments~~Under ~~with~~Compensation ~~the~~Plans ~~other terms unchanged.~~

~~Other~~The ~~Long-Term~~Company ~~Liabilities. The~~utilizes ~~carrying~~restricted ~~amount~~stock ~~approximates~~and ~~fair~~stock ~~value~~options ~~due~~to compensate employees, officers, directors and consultants. Total stock-based compensation expense related to ~~the~~stock ~~current~~options ~~rates~~and ~~offered~~restrictive stock award amounted to ~~the~~$0.2 million ~~Company~~and $1.1 million for ~~long-term~~the ~~liabilities~~three ofmonths ~~the~~ended ~~same~~March 31, ~~remaining~~2016 ~~maturities~~and 2015, respectively.

11A summary of the Company’s stock options at March 31, 2016 is as follows:

Table of Contents


				Weighted
				Average
	Incentive			Exercise
	Options			Price
Outstanding at December 31, 2015		3,593,589		$	2.26
Issued		—			—
Exercised		—			—
Forfeited or expired		(218,625	)		2.66

Outstanding at March 31, 2016		3,374,964		$	2.18

~~First Lien Credit Facility.~~ The ~~carrying~~total ~~amount~~intrinsic ~~approximates fair~~ value ~~due~~of tooptions ~~the~~outstanding ~~current~~at ~~rate~~March 31, ~~stipulated~~2016 inwas ~~the first lien credit facility agreement~~$0.

~~Derivatives.~~11 The fair values are based upon observable inputs based on market data obtained from independent sources and are considered Level 2 inputs (quoted prices for similar assets, liabilities (adjusted) and market-corroborated inputs) and are reported on the Consolidated Balance Sheets at fair value.

SeniorTable Notes. The fair value is based upon quoted market prices for those or similar investments and are reported on the Consolidated Balance Sheets at face value, net of discount.Contents

~~Contingent~~A ~~Earn-Out.~~summary ~~The~~of ~~fair~~the ~~value~~Company’s isrestricted ~~based~~stock onissued ~~the~~to ~~present~~employees ~~value~~as of ~~the~~March 31, ~~amount~~2016 ~~discounted~~is as ~~back~~follows: ~~at the cost of capital.~~

	September 30, 2015						December 31, 2014
	NumberShares				WeightedAverageExercisePrice
	Fair			Carrying			Fair		Carrying
Outstanding at December 31, 2015		1,277,468			$	0.69
	value			amount			value		amount
Granted		—				—
	(in thousands)
Vested		(79,980	)			3.65
Financial assets
Forfeited		(10,444	)			4.61
Collateral security account	$	2,812		$	2,812		$	3,165	$	3,165
Outstanding at March 31, 2016		1,187,004			$	0.45
Financial liabilities
Fixed rate debentures	$	3,116		$	1,636		$	3,035	$	1,636
Credit Facility	—			—			134,749		134,749
First Lien Credit Facility	219,665			219,665			—		—
Senior Notes	50,690			227,683			195,000		296,053
Contingent Earn-Out	6,930			6,930			6,530		6,530

~~FAIR~~Restricted ~~VALUE~~Stock ~~MEASUREMENTS:~~Awards for executive officers and employees generally vest ratably over three years. Fair value of our restricted shares is based on the closing stock price on the date of grant.

~~Fair~~On ~~value~~the asEffective ~~defined~~Date, bypursuant ~~authoritative~~to ~~literature~~the isPlan, the previously ~~price~~outstanding ~~that~~shares ~~would~~of bethe ~~received~~Company’s toPrepetition ~~sell~~Equity anSecurities, ~~asset~~as orwell ~~paid~~as toall ~~transfer~~unexercised aincentive ~~liability~~stock inoptions, annon-qualified ~~orderly~~stock ~~transaction~~options, ~~between~~stock ~~market~~appreciation ~~participants~~rights ator ~~the~~other unexercised ~~measurement~~options, ~~date~~warrants ~~and~~or ~~establishes~~rights ato ~~three~~acquire ~~level~~or ~~hierarchy~~receive ~~for~~an ~~measuring~~equity ~~fair~~interest ~~value.~~in ~~The~~the ~~literature~~Company, ~~requires~~in ~~fair~~each ~~value~~case, ~~measurements~~outstanding beimmediately ~~classified~~prior ~~and~~to ~~disclosed~~effectiveness ~~in one~~ of the ~~following~~Plan, ~~categories:~~were cancelled and ceased to exist.

~~Level 1: Quoted~~NOTE ~~prices~~D—FAIR ~~(unadjusted)~~VALUE inOF ~~active~~FINANCIAL ~~markets~~INSTRUMENTS ~~for identical assets and liabilities that we have the ability to access at the measurement date.~~

~~Level 2: Inputs~~The ~~other~~estimated ~~than~~fair ~~quoted~~values ~~prices~~of ~~included~~financial ~~within~~instruments ~~Level~~recognized 1in ~~that~~the ~~are~~Consolidated ~~either~~Balance ~~directly~~Sheets or ~~indirectly~~disclosed ~~observable~~within ~~for~~these ~~the~~Notes ~~asset~~to Consolidated orFinancial ~~liability,~~Statements ~~including~~have ~~quoted~~been ~~prices~~determined ~~for~~using ~~similar~~available ~~assets~~market ~~or liabilities in active markets~~information, ~~quoted~~information ~~prices~~from ~~for~~unrelated ~~identical~~third orparty ~~similar~~financial ~~assets~~institutions orand ~~liabilities~~appropriate invaluation ~~inactive markets~~methodologies, ~~inputs~~primarily ~~other~~discounted ~~than~~projected ~~quoted~~cash ~~prices~~flows. ~~that are observable for the asset or liability~~However, considerable ~~and~~judgment ~~inputs~~is ~~that~~required ~~are~~when ~~derived~~interpreting ~~from observable~~ market ~~data~~information byand ~~correlation or~~ other ~~means.~~data ~~Instruments~~to ~~categorized~~develop inestimates ~~Level 2~~of ~~include~~fair ~~non-exchange traded derivatives such as over-the-counter forwards and swaps~~value.

~~Level~~Short-term Assets and Liabilities. ~~3: Unobservable~~The ~~inputs~~fair ~~for~~values ~~the~~of ~~asset~~cash orand ~~liability~~cash equivalents, ~~including~~accounts ~~situations~~receivable, ~~where~~accounts ~~there~~payable isand ~~little,~~accrued ifexpenses ~~any,~~and ~~market~~other ~~activity~~current ~~for~~liabilities ~~the~~approximate ~~asset~~their orcarrying ~~liability~~values because of their short-term nature.

~~The~~U.S. ~~following~~Treasury ~~tables~~Bonds—Available-For-Sale Securities. The ~~present~~fair ~~for~~values ~~each~~are ~~hierarchy~~based ~~level~~upon ~~our~~quoted ~~assets~~market ~~and~~prices ~~liabilities,~~for ~~including~~those ~~both~~or ~~current~~similar investments and ~~non-current~~are ~~portions,~~reported ~~measured~~on atthe ~~fair~~Consolidated ~~value~~Balance onSheets aat ~~recurring~~fair ~~basis~~value.

~~September~~Collateral Security Agreement Account (included in other non-current assets). 30The balance sheet carrying amount approximates fair value, ~~2015~~as it earns a market rate.

	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Restricted investments in US Treasury Bonds — available for sale, at fair value	$	1,474	$	—	$	—	$	1,474
Commodity derivatives	$	—	$	7,530	$	—	$	7,530

Fixed Rate Debentures. Fair values of fixed rate convertible debentures were calculated using interest rates in effect as of year end for similar instruments with the other terms unchanged.

~~December~~First Lien Credit Facility. ~~31,~~The ~~2014~~carrying amount approximates fair value due to the current rate stipulated in the first lien credit facility agreement.

	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets
Restricted investments in US Treasury Bonds — available for sale, at fair value	$	1,422	$	—	$	—	$	1,422
Commodity derivatives	$	—	$	4,005	$	—	$	4,005

Second Lien Credit Facility. The carrying amount approximates fair value due to the current rate stipulated in the second lien credit facility agreement inclusive of capitalized interest paid in kind.

12Derivative Financial Instruments. The fair values are based upon observable inputs based on market data obtained from independent sources and are considered Level 2 inputs (quoted prices for similar assets, liabilities (adjusted) and market-corroborated inputs) and are reported on the Consolidated Balance Sheets at fair value.

~~Table~~9.000% Senior Notes. The fair value is based upon quoted market prices for those or similar investments and are reported on the Consolidated Balance Sheets at face value, net of ~~Contents~~discount.

NOTE I — DERIVATIVE FINANCIAL INSTRUMENTS


	March 31, 2016				December 31, 2015
	Fair value		Carrying amount		Fair value		Carrying amount
	(in thousands)
Financial assets:
Collateral Security Account	$	2,949	$	2,949	$	2,812	$	2,812
U.S. Treasury Bonds-Available-For-Sale Securities		1,523		1,611		1,448		1,636
Derivative Financial Instruments		9,402		9,402		11,081		11,081

To12 minimize the effect of a downturn in oil and gas prices and protect our profitability and the economics of our development plans, we enter into crude oil and natural gas hedge contracts. The terms of contracts depend on various factors, including management’s view of future crude oil and natural gas prices. This price hedging program is designed to moderate the effects of a crude oil and natural gas price downturn while allowing us to participate in some commodity price increases. Management regularly monitors the crude oil and natural gas markets and our financial commitments to determine if, when, and at what level some form of crude oil and/or natural gas hedging and/or basis adjustments or other price protection is appropriate. However, we may use a variety of derivative instruments in the future to hedge. The Company has not designated these derivatives as hedges for accounting purposes.

TheTable Company routinely enters into derivative contracts with a variety of counterparties, typically resulting in individual derivative instruments with both fair value asset and liability positions. The Company nets the fair values of derivative instruments executed with the same counterparty pursuant to ISDA master agreements, which mitigate the credit risk of the Company’s derivative instruments by providing for net settlement over the term of the contract and in the event of default or termination of the contract.Contents

The following table summarizes the open financial derivative positions, as of September 30, 2015, related to oil and gas production. The Company will receive prices as noted in the table below and will pay a counterparty market price based on the NYMEX (for natural gas production) or WTI (for oil production) index price, settled monthly.


	March 31, 2016				December 31, 2015
	Fair value		Carrying amount		Fair value		Carrying amount
	(in thousands)
Financial liabilities:
Fixed Rate Debentures		3,174		1,611		3,057		1,636
First Lien Credit Facility		234,665		234,665		234,665		234,665
Second Lien Credit Facility		75,285		75,285		74,912		74,912
Senior Notes		21,094		165,438		25,090		165,368

Product	Type	Contract Period	Volume	Price per Mcf or Bbl
NYMEX Oil	Swap	10/01/15- 03/31/16	250 Bbl/d	$	62.92
NYMEX Oil	Collar	10/01/15- 03/31/16	500 Bbl/d	$	50.00- 64.00
NYMEX Oil	Collar	04/01/16- 06/30/16	250 Bbl/d	$	55.00- 69.97
NYMEX Oil	Collar	01/01/16- 12/31/16	500 Bbl/d	$	50.00- 71.50
NYMEX Oil	Collar	10/01/15- 12/31/15	500 Bbl/d	$	50.00- 68.15
NYMEX Gas	Swap	10/01/15- 12/31/15	3,000 MMBtu/d	$	4.16
NYMEX Gas	Swap	10/01/15- 10/31/15	10,000 MMBtu/d	$	3.18
NYMEX Gas	Swap	10/01/15- 10/31/15	10,000 MMBtu/d	$	3.14
NYMEX Gas	Swap	10/01/15- 12/31/15	15,000 MMBtu/d	$	2.92
NYMEX Gas	Swap	10/01/15- 03/31/16	5,000 MMBtu/d	$	3.02
NYMEX Gas	Swap	10/01/15- 10/31/16	15,000 MMBtu/d	$	2.93
NYMEX Gas	Swap	01/01/16- 12/31/16	15,000 MMBtu/d	$	3.16
NYMEX Gas	Swap	11/01/15- 03/31/16	15,000 MMBtu/d	$	3.18

FAIR VALUE MEASUREMENTS:

~~The~~Fair ~~tables~~value ~~below~~as ~~summarize~~defined by authoritative literature is the ~~amount~~price ofthat ~~gains~~would ~~(losses)~~be ~~recognized~~received into ~~income~~sell ~~from~~an ~~derivative~~asset ~~instruments~~or ~~not~~paid ~~designated~~to astransfer ~~hedging~~a ~~instruments~~liability ~~under~~in ~~authoritative~~an orderly ~~guidance~~transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories:

Derivatives not designated as	For the Three Months				For the Nine Months
Hedging Instrument under	Ended September 30,				Ended September 30,
authoritative guidance	2015		2014		2015		2014
(in thousands)
Realized cash settlements on hedges	$	2,644	$	11	$	7,778	$	(3,267	)
Mark-to-market gain on hedges	8,000		3,688		3,526		4,305
Total	$	10,644	$	3,699	$	11,304	$	1,038

Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities that we have the ability to access at the measurement date.

13Level 2: Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in inactive markets, inputs other than quoted prices that are observable for the asset or liability, and inputs that are derived from observable market data by correlation or other means. Instruments categorized in Level 2 include non-exchange traded derivatives such as over-the-counter forwards and swaps.

~~Table~~Level 3: Unobservable ofinputs ~~Contents~~for the asset or liability, including situations where there is little, if any, market activity for the asset or liability.

The ~~table~~valuation ~~below~~assumptions ~~reflects~~utilized to measure the ~~line~~fair ~~item~~value inof ~~our~~the Company’s ~~Consolidated~~commodity ~~Balance~~derivatives ~~Sheet~~were ~~where~~observable ~~the~~inputs ~~fair~~based ~~value~~on ofmarket ~~our~~data ~~net~~obtained ~~derivatives,~~from independent sources and are ~~included~~considered Level 2 inputs (quoted prices for similar assets, liabilities (adjusted) and market-corroborated inputs).

~~September 30~~The following table presents for each hierarchy level our assets and liabilities, ~~2015~~including both current and non-current portions, measured at fair value on a recurring basis.

	Derivative Assets
March 31, 2016	Level 1				Level 2		Level 3		Total
~~(in thousands)~~	~~Balance~~(in ~~Sheet Location~~thousands)		~~Fair Value~~
Commodity—Natural Gas	Non-current		$	3,106
Assets
Commodity—Oil	Non-current		$	232
U.S. Treasury Bonds—Available-For-Sale Securities	$	1,523			$	—	$	—	$	1,523
Commodity—Oil	Current		$	1,765
Derivative Financial Instruments	$	—			$	9,402	$	—	$	9,402
Commodity—Natural Gas	Current		2,427
December 31, 2015	Level 1				Level 2		Level 3		Total
Total derivatives not designated as hedging instruments			$	7,530
	(in thousands)
Assets
U.S. Treasury Bonds—Available-For-Sale Securities	$	1,448			$	—	$	—	$	1,448
Derivative Financial Instruments	$	—			$	11,081	$	—	$	11,081

~~December 31,~~NOTE ~~2014~~E—ASSET RETIREMENT OBLIGATION

	Derivative Assets
(in thousands)	Balance Sheet Location	Fair Value
Commodity—Natural Gas	Current	$	3,611
Commodity—Oil	Current	394
Total derivatives not designated as hedging instruments		$	4,005

~~Derivatives~~13 ~~Credit Risk~~

TheTable Company does not require collateral or other security from counterparties to support derivative instruments. However, the agreements with those counterparties typically contain netting provisions such that if a default occurs, the non-defaulting party can offset the amount payable to the defaulting party under the derivative contract with the amount due from the defaulting party. As a result of the netting provisions the Company’s maximum amount of loss due to credit risk is limited to the net amounts due to and from the counterparties under the derivative contracts.Contents

accompanying Consolidated Balance Sheets. The ~~Company’s~~liability ~~derivative~~is ~~agreements~~periodically ~~contain~~adjusted ~~provisions~~to ~~that~~reflect ~~require~~(1) new ~~cross~~liabilities ~~defaults~~incurred, ~~and~~(2) liabilities ~~acceleration~~settled ofduring ~~those~~the ~~instruments~~period, (3) accretion expense, and (4) revisions to ~~any~~estimated ~~material~~future ~~debt~~cash flow requirements. IfThe ~~the~~accretion ~~Company~~expense ~~were~~is torecorded ~~default~~as ona ~~any~~component of ~~its~~depreciation, ~~material~~depletion ~~debt~~and ~~agreements,~~amortization. itThe ~~would~~Company behas cash held in escrow with a ~~violation~~fair market value of $2.8 million ~~these~~that ~~provisions,~~is legally restricted for potential plugging and ~~the~~abandonment ~~counterparties~~liability toin the ~~derivative~~Wilmington ~~instruments~~field ~~could~~which ~~request~~is ~~immediate~~recorded ~~payment~~in onother ~~derivative~~assets ~~instruments~~in ~~that~~the ~~are~~Consolidated inBalance aSheets. ~~net~~A ~~liability~~reconciliation ~~position~~of atthe ~~that~~Company’s ~~time~~asset retirement obligations is as follows:

NOTE J — INCOME TAXES


	March 31, 2016
	(in thousands)
Balance at beginning of period	$	31,405
Liabilities incurred in current period		—
Liabilities settled in current period		—
Accretion expense		749

Balance at end of period	$	32,154

~~The~~NOTE ~~Company’s~~F ~~effective~~— ~~tax~~DERIVATIVE ~~rate~~FINANCIAL ~~differs~~INSTRUMENTS ~~from the federal statutory tax rate due to changes in the valuation allowance on the Company’s net deferred tax asset.~~

~~NOTE~~To Kminimize —the ~~RECENTLY~~effect ~~ISSUED~~of ~~ACCOUNTING~~a ~~STANDARDS~~downturn in oil and gas prices and protect our profitability and the economics of our development plans, we enter into crude oil and natural gas hedge contracts. The terms of contracts depend on various factors, including management’s view of future crude oil and natural gas prices. This price hedging program is designed to moderate the effects of a crude oil and natural gas price downturn while allowing us to participate in some commodity price increases. Management regularly monitors the crude oil and natural gas markets and our financial commitments to determine if, when, and at what level some form of crude oil and/or natural gas hedging and/or basis adjustments or other price protection is appropriate. However, we may use a variety of derivative instruments in the future to hedge. The Company has not designated these derivatives as hedges for accounting purposes.

InThe ~~April 2015,~~Company ~~the~~routinely ~~Financial~~enters ~~Accounting~~into ~~Standards~~derivative ~~Board~~contracts ~~(“FASB”)~~with ~~issued~~a anvariety ~~Accounting Standards Update (“ASU”) that is intended to simplify the presentation~~ of ~~debt~~counterparties, ~~issuance~~typically resulting ~~costs~~in byindividual ~~requiring~~derivative ~~that~~instruments ~~debt~~with ~~issuance~~both ~~costs~~fair ~~related~~value toasset aand ~~recognized debt~~ liability bepositions. ~~presented~~The inCompany ~~the~~nets ~~balance sheet as a direct deduction from~~ the ~~carrying~~fair ~~amount~~values of ~~that~~derivative ~~debt~~instruments ~~liability,~~executed ~~consistent~~ with ~~debt~~the ~~discounts.~~same ~~This~~counterparty ~~ASU~~pursuant ~~will~~to beISDA ~~applied~~master ~~retrospectively~~agreements, aswhich ofmitigate the credit ~~date~~risk of ~~adoption~~the ~~and~~Company’s isderivative ~~effective~~instruments ~~for~~by ~~fiscal~~providing ~~years~~for ~~beginning~~net ~~after~~settlement ~~December 15,~~over ~~2015, and interim periods within those years (early adoption permitted). The Company is currently evaluating~~ the ~~impact~~term of the ~~adoption~~contract ofand ~~this~~in ~~ASU~~the onevent ~~its~~of ~~condensed~~default ~~consolidated~~or ~~financial~~termination ~~statements~~of ~~and~~the ~~related disclosures~~contract.

14The following table summarizes the open financial derivative positions, as of March 31, 2016, related to oil and gas production. The Company will receive prices as noted in the table below and will pay a counterparty market price based on the NYMEX (for natural gas production) or WTI (for oil production) index price, settled monthly.

Table of Contents

Product

Type

Contract Period

Volume

Price per
Mcf or Bbl

NYMEX Oil

Collar

04/01/16- 06/30/16

250 Bbl/d

55.00 – 69.97

NYMEX Oil

Collar

01/01/16- 12/31/16

500 Bbl/d

50.00 – 71.50

NYMEX Gas

Swap

01/01/16- 10/31/16

15,000 MMBtu/d

2.93

NYMEX Gas

Swap

01/01/16- 12/31/16

15,000 MMBtu/d

3.16

NYMEX Gas

Swap

03/01/16- 10/31/16

10,000 MMBtu/d

2.72

~~NOTE~~The Ltables —below ~~ACQUISITIONS~~summarize the amount of gains (losses) recognized in income from derivative instruments not designated as hedging instruments under authoritative guidance.

Marcellus Assets


	For the Three Months Ended March 31,
Derivatives not designated as Hedging Instrument	2016			2015
	(in thousands)
Realized cash settlements on hedges	$	7,171		$	3,997
Mark-to-market gain (loss) on hedges		(1,678	)		(37	)

Total	$	5,493		$	3,960

OnThe ~~August 11,~~table ~~2014,~~below wereflects ~~acquired essentially all of~~ the ~~Marcellus~~line ~~Assets~~item ~~of Citrus Energy Corporation (‘‘Citrus’’) and two other working interest owners~~ in ~~exchange for approximately 6.7 million shares of~~ our ~~common~~Consolidated ~~stock~~Balance ~~valued~~Sheet atwhere ~~$41.4~~the ~~million~~fair ~~and~~value ~~cash consideration~~ of ~~$312.5~~our ~~million,~~net subject to certain post-closing adjustments and certain closing conditions (the ‘‘Marcellus Asset Acquisition’’). The Marcellus Asset Acquisition was accounted for as a business combination in accordance with Accounting Standards Codification (ASC) No. 805derivatives, ~~Business~~ ~~Combinations (ASC 805) which, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair values~~are included. ~~The purchase price of the Marcellus Assets (in thousands):~~

	December 31, 2014
Cash consideration	$	312,500
Fair value of Warren equity common shares	41,400
Closing adjustments	(7,828		)
Fair value of earn-out provision	6,340
Fair value of farm-out provision	3,410
Total purchase price	$	355,822

InTable connection with the Marcellus Asset Acquisition, a contingent consideration payment was included as part of the purchase and sale agreement with a maximum payout of $8.5 million, based upon proved reserves and price differential factors. The fair value of this consideration is based on a 90% probability of achieving the full payout discounted to present value.Contents

The following table presents the initial purchase price allocation of the Marcellus Asset, based on the fair values of assets acquired and liabilities assumed (in thousands):


	March 31, 2016 Derivative Assets				December 31, 2015 Derivative Assets
	Balance Sheet Location		Fair Value		Balance Sheet Location		Fair Value
	(in thousands)				(in thousands)
Commodity—Natural Gas		Current	$	7,738		Current	$	7,816
Commodity—Oil		Current		1,664		Current		3,265

Total derivatives not designated as hedging instruments			$	9,402			$	11,081

	December 31, 2014
Proved oil and gas properties	$	171,070
Unproved oil and gas properties	184,752
Total purchase price	$	355,822

Derivatives Credit Risk

~~NOTE~~The MCompany ~~—CAPITALIZED~~does ~~INTEREST~~not require collateral or other security from counterparties to support derivative instruments. However, the agreements with those counterparties typically contain netting provisions such that if a default occurs, the non-defaulting party can offset the amount payable to the defaulting party under the derivative contract with the amount due from the defaulting party. As a result of the netting provisions the Company’s maximum amount of loss due to credit risk is limited to the net amounts due to and from the counterparties under the derivative contracts.

~~The~~As ~~Company~~of ~~capitalizes~~March 31, ~~interest on qualifying assets~~2016, ~~which~~the ~~include~~counterparty ~~investments~~to inthe ~~undeveloped~~Company’s ~~oil~~commodity ~~and~~derivative ~~natural~~contracts ~~gas~~consisted ~~properties~~of ~~and~~a ~~exploration~~financial ~~and~~institution ~~development projects for~~ which ~~depletion expense~~ is also ~~not~~a ~~currently~~lender ~~recognized,~~under ~~and for which exploration or development activities are in progress. The capitalized interest is determined by multiplying~~ the Company’s ~~interest~~Senior ~~rate~~Credit onAgreement ~~specific borrowing costs, adjusted to include amortization of bond discount~~ and ~~issuance~~share ~~costs,~~in ~~related to~~ the ~~Senior~~collateral ~~Notes~~supporting ~~or exchanges of~~ the ~~Senior Notes used to purchase the Marcellus Assets, by the qualifying costs incurred that are excluded from the full cost pool~~Agreement. ~~However, the amount of capitalized interest cannot exceed the amount of gross interest expense incurred in any given period.~~ The ~~capitalized~~Company interest amounts are recorded as additions to unevaluated oil and natural gas properties on the unaudited condensed consolidated balance sheets. As the costs excluded are transferred to the full cost pool, the associated capitalized interest is ~~also~~not ~~transferred~~generally torequired ~~the full cost pool. Interest of $2.2 million and $8.8 million relating~~ to ~~the~~post ~~Senior~~additional ~~Notes~~collateral ~~was~~under ~~capitalized~~derivative ~~during the three and nine months ended September 30, 2015~~agreements. ~~Previously~~ ~~capitalized interest of $1.4 million was transferred into the full cost pool during the three months ended September 30, 2015.~~

~~NOTE~~The NCompany’s ~~—SUBSEQUENT~~derivative ~~EVENTS~~agreements contain provisions that require cross defaults and acceleration of those instruments to any material debt. If the Company were to default on any of its material debt agreements, it would be a violation of these provisions, and the counterparties to the derivative instruments could request immediate payment on derivative instruments that are in a net liability position at that time.

~~Wyoming~~On ~~Purchase~~June 9, ~~and~~2016, ~~Sale~~the ~~Agreement~~Company, ~~Amendment~~subsequent ~~and~~to ~~Extension~~it filing for bankruptcy, received notice that the counterparty to the three NYMEX Gas Swaps contracts was terminating the contracts. The Company received $1.5 million from the counterparty.

OnNOTE ~~June 16,~~G ~~2015,~~— ~~the~~SUBSEQUENT ~~Company~~EVENTS ~~announced that (i) the Company and its subsidiary Warren E&P had entered into a purchase and sale agreement (the “CBM PSA”) with Escalera Resources, Co. (“Escalera”), pursuant to which~~

15Bankruptcy Proceedings

~~Table~~On June 2, 2016, the Debtors filed the Bankruptcy Petitions for the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court, Case No. 16-32760. The Debtors continued to operate their businesses as “debtors-in-possession” under the jurisdiction of ~~Contents~~the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Bankruptcy Court. The subsidiary Debtors in the Chapter 11 Cases were Warren E&P, Warren California, Warren Marcellus, Warren Energy Services, LLC and Warren Management Corp., which represent all subsidiaries of the Company. On September 14, 2016, the Bankruptcy Court entered the Confirmation Order approving the Plan. On the “Effective Date, the Plan became effective pursuant to its terms, and the Debtors completed their reorganization under the Bankruptcy Code.

~~Escalera~~Termination ~~would acquire all~~ of ~~Warren’s~~Material ~~interests~~Definitive in coalbed methane assets located in the Atlantic Rim area of the Washakie Basin in Carbon County, Wyoming, (ii) the Company, through its subsidiaries, Warren Energy Services, LLC, and Warren E&P, had entered into a purchase and sale agreement (the “Midstream PSA”) with Escalera pursuant to which Escalera would acquire midstream pipeline assets appurtenant to the coalbed methane assets being sold under the CBM PSA; and (iii) the Company and Warren E&P had entered into a letter agreement (the “Deep Rights Agreement,” and together with the CBM PSA and the Midstream PSA, the “Escalera Agreements”) ~~pursuant to which Escalera would acquire an undivided 30% of the Company’s interest in the operated deep rights associated with the Company’s former leases in the Atlantic Rim area.~~

OnFirst- ~~August 28, 2015, the parties to the Escalera Agreements entered into an Amendment of Purchase~~ and ~~Sale~~Second-Lien ~~Agreements~~Credit ~~and~~Facilities Letter Agreement (the “Amendment”) to extend the deadline for closing the transactions contemplated by the Escalera Agreements to September 17, 2015. The Amendment provided that either party may terminate the Escalera Agreements if the transactions contemplated thereby had not been consummated on or before September 17, 2015, or if the closing conditions of the other party had not been satisfied and could not be cured. On November 5, 2015, Escalera announced that it had filed a voluntary Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Colorado. Accordingly, Warren does not expect to consummate the previously announced sale of CBM assets to Escalera and is taking steps to terminate the agreements. Warren continues to consider all strategic options for these assets.

~~Management~~On the Effective Date, pursuant to the Plan, all amounts outstanding under the Company’s previously existing first-lien credit facility and second-lien credit facility were cancelled and the obligations thereunder were terminated, released and discharged. Lenders under such first- and second-lien credit facilities received distributions of New Common Stock under the Plan. The Company also entered into the Exit Credit Facility with the lenders of the First Lien Credit Facility.

OnIndenture October 15, 2015, the Company entered into retention agreements with certain key employees who are currently located in offices being closed as part of the headquarters relocation that is further described under Note A to the Notes to the Consolidated Financial Statements. Each of Mr. Brian Gelman, the Interim CFO, Mr. Jeffrey Keeler, Vice President of Corporate Development, and Ms. Saema Somalya, Senior Vice President, General Counsel and Corporate Secretary, who collectively comprise the executive officers located in the Company’s New York City office was included in this group of employees. These retention agreements were offered in order to retain and incentivize these officers to continue providing services to the Company through the transitional period between relocation of the corporate headquarters from New York City to Denver and closure of the New York office, which is anticipated to occur on or about March 31, 2016. The Retention Agreements provide for payment of certain benefits in the event that the relevant officer remains employed with the Company through a specified retention date. In the case of Mr. Gelman and Ms. Somalya, the specified retention date is March 31, 2016 and, in the case of Mr. Keeler, the specified retention date is December 31, 2015. It is expected that the maximum cash benefits payable to the named executive officers listed above in association with the relocation of headquarters and office closures will be in the range of $1 million, and that total retention expense (including this $1 million) will be in the range of $1.6 million.

~~Subsequent~~On to the ~~quarter,~~Effective ~~on November 2~~Date, ~~2015,~~pursuant ~~Mr.~~to ~~Stewart~~the ~~Skelly~~Plan, the ~~then-current~~Company’s ~~Vice~~9% ~~President~~Senior ~~and~~Notes ~~CFO,~~due ~~tendered~~2022 ~~his~~and ~~resignation,~~the ~~which~~indenture ~~was~~governing ~~effective on November 6, 2015. Pursuant to~~ the ~~terms~~Senior ofNotes ~~his~~were cancelled ~~retention~~ and ~~severance agreement dated October 15, 2015, Mr. Skelly will receive a lump sum payment of $275,000, plus nine months of medical care coverage pursuant to~~ the ~~Consolidated~~obligations ~~Omnibus Budget Reconciliation Act upon his delivery~~ of ~~an irrevocable release and waiver of claims. Mr. Gelman will serve as interim CFO until~~ the ~~Company~~Debtors ~~names~~thereunder awere ~~permanent CFO. In connection with his appointment as interim Chief Financial Officer and interim Chief Accounting Officer~~terminated, ~~the~~released ~~Company~~ and Mrdischarged. ~~Gelman~~Holders ~~entered~~of ~~into~~the aSenior ~~new~~Notes ~~retention~~received ~~agreement~~distributions ~~that revises the terms~~ of ~~his~~New ~~previously-executed~~Common ~~retention~~Stock ~~agreement~~under ~~to reflect his new position with~~ the ~~Company~~Plan.

~~Second~~15 ~~Lien Credit Facility, Senior Notes Exchange and Issuance of Common Stock~~

OnTable October 22, 2015, the Company entered into a second lien credit facility (the “Second Lien Credit Facility”) by and among the Company, Cortland Capital Market Services, LLC, as Administrative Agent, and the lenders from time to time party thereto. The Second Lien Credit Facility provides for a five-year, approximately $51.0 million term loan facility that matures on November 1, 2020. At the closing, certain of the lenders extended credit in the form of new second lien term loans in the amount of approximately $11.0 million. Proceeds of these new second lien loans may be used from time to time for working capital, capital expenditures, repayment of outstanding debt, acquisitions and other general corporate purposes.Contents

InConvertible ~~addition~~Debentures to the new loans, the lenders under the Second Lien Credit Facility also exchanged approximately $63.1 million in face value of previously-issued Senior Notes held by them, plus accrued interest, for (i) approximately $40.1 million of second lien term loans under the Second Lien Facility, and (ii) four million (4,000,000) shares of Company Common Stock.

16On the Effective Date, pursuant to the Plan, holders of the Company’s 12% Secured Convertible Bonds due December 31, 2020 and the 12% Secured Convertible Bonds due December 31, 2022 received payment in full in cash such that the claim of such holders was unimpaired, and the trustees under each series of Secured Bonds were paid reasonable and documented unpaid fees and expenses incurred on or before the Effective Date. On the Effective Date, the Secured Bonds and the indentures governing each series of Secured Bonds were cancelled and the obligations of the Debtors thereunder were terminated, released and discharged. Other than pursuant to the foregoing, holders of the Secured Bonds did not receive distributions under the Plan in respect of the Secured Bonds.

~~Table~~Equity ofSecurities ~~Contents~~and Related Instruments

~~The~~Pursuant ~~Second Lien Credit Facility is subject~~ to ~~prepayment~~the ~~in respect of asset sales~~Plan, subject to limited reinvestment rights and certain excluded asset sales. The Second Lien Credit Facility is guaranteed by Warren Resources of California, Inc., Warren E&P, Inc. and Warren Marcellus LLC on ~~substantially similar terms as~~ the ~~guarantees~~Effective ~~related~~Date, to the ~~First~~previously ~~Lien~~outstanding ~~Credit~~shares ~~Facility and is collateralized by second-priority liens on substantially all~~ of ~~Warren~~the Company’s ~~assets,~~common ~~including~~stock ~~the~~and ~~equity~~preferred ~~interests of the guarantors~~stock (collectively, to the ~~extent~~“Prepetition ~~such~~Equity ~~assets~~Securities”) orwere ~~interests secure the First Lien Credit Facility. Pursuant to the terms of an intercreditor agreement~~cancelled, ~~the security interest in those assets that secure the second lien loans~~ and the ~~guarantees~~obligations ~~are~~of ~~contractually subordinated to~~ the ~~first-priority~~Debtors ~~liens~~thereunder ~~that~~were ~~secure~~terminated, ~~the~~released ~~First Lien Facility~~ and ~~certain other permitted indebtedness (including third party swaps and derivative transactions)~~discharged. ~~Consequently,~~ ~~loans~~Holders ~~and~~of ~~guarantees under~~ the ~~Second~~Prepetition ~~Lien~~Equity ~~Credit~~Securities ~~Facility~~did ~~will~~not bereceive ~~effectively~~distributions under ~~subordinated to~~ the ~~First~~Plan ~~Lien~~in ~~Credit~~respect ~~Facility and such other indebtedness to the extent~~ of the ~~value~~Prepetition ofEquity ~~such~~Securities ~~assets.~~

~~The~~Entry ~~annual~~into ~~interest~~a ~~rate~~Material onDefinitive ~~borrowings~~Agreements under the Second Lien Facility is 12%, with interest payable semi-annually in arrears on each April 20 and October 20. On the first three semi-annual interest payment dates, beginning with April 20, 2016, the Company may elect to pay up to all of such interest (6% per semi-annual period) by capitalizing accrued and unpaid interest and adding the same to the principal amount of the second lien loans then outstanding. For the subsequent three semi-annual interest payment dates, beginning with October 20, 2017 and ending October 20, 2018, the Company may elect to pay up to one quarter of such interest (1.5% per semi-annual period) by capitalizing accrued and unpaid interest and adding the same to the principal amount of the Second Lien Loans then outstanding.

AsNew ofFirst ~~November 9, 2015, the Company had approximately $51 million outstanding on its borrowings under the Second~~ Lien ~~Credit~~Exit Facility.

~~First~~On the ~~Lien~~Effective Date, pursuant to the Plan, the Company entered into a Credit Agreement by and among the Company, Wilmington Trust, National Association, as Administrative Agent (the “Agent”), and the lenders from time to time party thereto (the “Credit Agreement”). The Credit Agreement provides for a $150 million term loan facility (the “Exit Credit Facility”), ~~Amendment~~consisting of initial senior secured term loans in an aggregate principal amount of $130 million (which, pursuant to the Plan, is deemed to be outstanding without any advancement of funds by the lenders under the Credit Agreement) and ~~Additional~~additional ~~Draw~~senior ~~Down~~secured term loans (the “delayed draw term loans”) in an aggregate principal amount of ~~Funds~~up to $20 million, which, subject to the conditions set forth in the Credit Agreement, may be drawn from time to time by the Company.

InThe ~~connection~~outstanding ~~with~~term ~~the~~loans, ~~closing~~along ofwith ~~the~~accrued ~~Second~~and ~~Lien~~unpaid ~~Credit~~obligations ~~Facility,~~with ~~effective~~respect ~~October 22,~~to ~~2015~~such loans, under the ~~Company~~Exit ~~also~~Credit ~~entered~~Facility ~~into~~are ~~the~~subject to ~~first~~prepayment ~~amendment~~in torespect ~~its~~of ~~First~~(i) ~~Lien~~proceeds ~~Credit~~from ~~Facility. The~~the ~~first~~issuance ~~amendment,~~or ~~among~~incurrence ~~other~~of ~~things~~debt, ~~authorizes~~excluding ~~the~~those ~~Second~~items ~~Lien~~of ~~Credit~~debt ~~Facility~~permitted ~~and~~to ~~provides~~be ~~for~~issued ~~certain~~or ~~changes~~incurred tounder the ~~First~~Credit ~~Lien~~Agreement ~~Credit~~and ~~Facility~~(ii) tocasualty ~~conform~~proceeds toand ~~the~~proceeds ~~language~~received infrom ~~the~~asset ~~Second~~dispositions, subject ~~Lien~~to ~~Credit~~limited ~~Facility,~~reinvestment rights and ~~makes~~ certain ~~other~~excluded ~~changes~~asset tosales. ~~the~~The ~~First~~Exit ~~Lien~~ Credit Facility, ~~including,~~is ~~among~~guaranteed ~~other~~by ~~things,~~all toof ~~provide~~the ~~that:~~Company’s ~~(i) asset~~wholly ~~sales~~owned ~~with~~subsidiaries ~~proceeds~~(the in“Guarantors”). ~~excess~~The ofExit ~~$1,000,000~~Credit ~~and~~Facility ~~the~~is ~~reinvestment~~secured ofby substantially ~~such~~all ~~asset~~of ~~sales~~the ~~proceeds~~oil ~~will~~and begas atassets ~~the discretion~~ of the ~~first~~Company ~~lien lenders,~~ and ~~(ii)~~ the ~~Company’s~~Guarantors, ~~compliance~~as ~~with~~well ~~the~~as ~~consolidated~~all ~~first~~of ~~lien~~the ~~leverage~~equity ~~ratio~~interests ~~(as defined~~ in the ~~First~~Guarantors. ~~Lien~~Certain ~~Credit~~third-party ~~Facility)~~swap ~~will~~and ~~begin~~derivative ~~being~~transactions ~~measured~~may asbe ofsecured ~~June 30,~~pursuant ~~2016~~to ~~(instead~~an ofintercreditor ~~December 31,~~agreement ~~2016,~~on asa pari ~~required~~passu ~~pursuant~~basis towith the ~~terms~~same ofcollateral securing the ~~original~~Exit ~~First~~Credit ~~Lien~~ Facility). ~~and~~The ~~the~~Exit ~~quarterly~~Credit ~~testing~~Facility ~~dates~~also ofincludes ~~each~~certain ~~year~~covenants, ~~will~~including ~~require~~a ~~the~~net ~~delivery~~debt ofto aEBITDA ~~compliance~~ratio ~~certificate~~as ~~within~~defined 25in ~~days~~the ~~after~~credit ~~such date~~agreement.

~~The~~Proceeds ~~Company~~of ~~also~~the ~~drew~~delayed ~~down~~draw anterm ~~additional~~loans ~~$10 million~~ under the ~~First~~Exit ~~Lien~~ Credit Facility inmay ~~connection~~be ~~with~~used ~~the~~from ~~first~~time ~~amendment. As~~to ~~previously~~time ~~disclosed, the First Lien Credit Facility provided commitments~~ for ~~delayed~~lawful ~~draw~~corporate ~~term~~purposes, ~~loans~~ including for upworking tocapital ~~$30~~needs ~~million,~~and ~~subject~~ to ~~certain~~finance ~~incurrence~~corporate ~~tests. As~~and acapital ~~result~~expenditures ofand ~~this~~permitted ~~draw,~~acquisitions ~~the Company has made aggregate draws~~ of ~~$15~~oil ~~million~~and ~~under~~gas ~~the~~properties ~~delayed~~and ~~draw~~other ~~feature~~assets ofrelated ~~the~~to ~~First Lien Credit Facility. The first amendment provides that any future draws by~~ the ~~Company~~exploration, ofproduction, ~~the~~development, ~~remaining~~processing, ~~availability~~gathering, ~~under~~storage ~~the~~and ~~First Lien Credit Facility will be at the sole discretion~~ transportation of ~~the first lien lenders~~hydrocarbons.

~~See~~The ~~Note~~interest Erate on borrowings under the Exit Credit Facility will be equal to the ~~Notes~~sum of (i) the LIBOR rate (with a minimum LIBOR rate of 1%) plus 9.0% per annum on the aggregate outstanding principal amount of the loans outstanding, which shall be paid in cash, plus (ii) an amount equal to 1.0% per annum on the ~~Consolidated~~aggregate ~~Financial~~outstanding ~~Statements~~principal amount ~~for~~of ~~further~~the ~~information~~loans ~~regarding~~outstanding, ~~total~~which ~~debt~~shall be paid-in-kind and added to the outstanding principal amount of the loans on each quarterly interest payment date. Other than with respect to prepayments or during periods in which the outstanding principal amount of the loans and other obligations under the ~~First~~Exit ~~Lien~~Credit Facility is subject to an increased interest rate following the occurrence of an event of default under the Credit Agreement, interest on each loan under the Exit Credit Facility shall be due and payable on the next to last business day of each March, June, September and December and on May 22, 2020, the maturity date under the Credit Agreement (the “Maturity Date”).

~~Liquidity~~Stockholders Agreement

~~Under~~On the ~~terms~~Effective ~~of its First Lien Credit Facility~~Date, ~~Warren~~pursuant ~~will~~to bethe ~~subject as of June 30~~Plan, ~~2016~~the toCompany aentered ~~covenant~~into ~~that requires us to maintain~~ a ~~ratio~~Stockholders ofAgreement ~~total~~(the ~~first~~“Stockholders ~~lien~~Agreement”) by ~~debt to past four consecutive quarters of EBITDA that does not exceed 5.5. This ratio threshold will drop to 5.0 as of April 2017. If we are unable to execute on an aggressive program of deleveraging~~ and ~~benefit~~among ~~from~~the ~~significant~~Company ~~improvements in commodity pricing between now~~ and ~~June 30, 2016, we do not expect that we will be in compliance with~~ the ~~required~~stockholders ~~ratio~~named ~~on June 30~~therein, ~~2016.~~providing Iffor ~~the~~certain ~~first~~stockholders’ ~~lien lenders do not amend or waive the covenant, they would be able to accelerate the maturity of our first lien debt and exercise other~~ rights and ~~remedies~~obligations. ~~This,~~Among inother ~~turn~~things, ~~would cause a default under~~ the ~~Second~~Stockholders ~~Lien~~Agreement ~~Credit~~provides ~~Facility~~for ~~and~~Board ~~the~~Compensation, ~~Senior~~Transfer ~~Notes~~Restrictions, ~~which~~Restrictions ~~would~~on Authority ~~permit~~of ~~the~~Board, ~~holders~~Information ofRights, ~~each~~Registration toRights, ~~accelerate~~Preemptive ~~their~~Rights, ~~maturities~~Draw-Along asand ~~well~~Tag-Along Rights.

~~The~~Warrant ~~Company~~Agreement is in regular communication with its first lien lenders regarding overall compliance issues including expectations around the June 30, 2016 maintenance covenant. However, no assurances can be given that the First Lien Lenders will approve waivers or amendments on terms that are acceptable to the Company, or at all. An inability to obtain an amendment or waiver of the relevant covenant would have an adverse effect on the Company’s ability to operate.

On the Effective Date, pursuant to the Plan, the Company entered into the Warrant Agreement, pursuant to which the Company issued the Warrants to Claren Road. The Warrants may be exercised in whole or in part and only during the period (the “Exercise Period”) commencing on the Effective Date and terminating at 5:00 p.m., Eastern time, on October 5, 2021 (the “Warrant Expiration Date”), at an exercise price of $10.50 per share. All Warrants not exercised on or before such time on the Warrant Expiration Date shall become void, and the rights of the holders of such warrants pursuant to the warrants, the Warrant Agreement or the Stockholders Agreement shall cease at such time on the Warrant Expiration Date. The Company may, subject to the Stockholders Agreement, extend the duration of the Warrants by delaying the Warrant Expiration Date.

Sales of Equity Securities

On the Effective Date, pursuant to the Plan:

•

7,899,537 shares of New Common Stock were issued to the lenders under the prepetition first-lien credit facility;

•

755,000 shares of New Common Stock were issued to the lenders under the prepetition second-lien credit facility;

•

1,284,818 shares of New Common Stock were issued pro rata to the holders of the Senior Notes; and

•

60,645 shares of New Common Stock were issued to parties involved in the Marcellus Asset Acquisition.

Additionally, the lenders under the prepetition second-lien credit facility are party to the Warrant Agreement, pursuant to which they received Warrants that are initially exercisable for an aggregate of 526,316 shares of New Common Stock.

NOTE H — Commitments and Contingencies

Bankruptcy Claims

Associated with the Company’s filing and emergence from the Chapter 11 Cases, creditors have filed claims against the Company. The claims reconciliation process is ongoing and the estimated liability has not been finalized. The process includes review of the underlying claim filed against the Company and a reconciliation against the debtor’s books and records.

The Company has estimated the liabilities associated with these claims at $1.5 million. These liabilities are recorded in the consolidated financial statements in the third and fourth quarters of 2016.

Item 2. Management’s Discussion and Analysis of Financial Conditions and Results of Operations

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

The Company has made in this report, and may from time to time otherwise make in other public filings, press releases and discussions with Company management, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 concerning the Company’s operations, economic performance and financial condition. These forward-looking statements include information concerning future production and reserves, schedules, plans, timing of development, contributions from oil and gas properties, and those statements preceded by, followed by or that otherwise ~~including~~include the words “believes,” “expects,” “anticipates,” “intends,” “estimates,” “projects,” “target,” “goal,” “plans,” “objective,” “should” or similar expressions or variations on such expressions. For such statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the Company’s expectations include, but are not limited to, the Company’s assumptions about energy markets, production levels, reserve levels, operating results, competitive conditions, technology, the availability of capital resources, capital expenditures and other contractual obligations, the supply and demand for and the price of oil, natural gas and other products or services, the weather, inflation, the availability of goods and services, drilling risks, future processing volumes and pipeline throughput, general economic conditions, either internationally or nationally or in the jurisdictions in which the Company or its subsidiaries are doing business, legislative or regulatory changes, including changes in environmental regulation, environmental risks and liability under federal, state and local environmental laws and regulations, potential environmental obligations, the securities or capital markets, our ability to repay debt and other factors discussed in “Risk Factors” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s 2015 Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and in the Company’s other public filings, press releases and discussions with Company management. Warren undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, subsequent events or otherwise, unless otherwise required by law

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competitive conditions, technology, the availability of capital resources, capital expenditures and other contractual obligations, the supply and demand for and the price of oil, natural gas and other products or services, the weather, inflation, the availability of goods and services, drilling risks, future processing volumes and pipeline throughput, general economic conditions, either internationally or nationally or in the jurisdictions in which the Company or its subsidiaries are doing business, legislative or regulatory changes, including changes in environmental regulation, environmental risks and liability under federal, state and local environmental laws and regulations, potential environmental obligations, the securities or capital markets, our ability to repay debt and other factors discussed in “Risk Factors” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s 2014 Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and in the Company’s other public filings, press releases and discussions with Company management. Warren undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, subsequent events or otherwise, unless otherwise required by law.

Overview

We are an independent energy company engaged in the exploration and development of domestic onshore oil and natural gas reserves. We focus our efforts primarily on our waterflood oil recovery programs and horizontal drilling in the Wilmington field within the Los Angeles Basin of California, the drilling and development of natural gas reserves within the Marcellus Shale in Pennsylvania, and the exploration and development of ancoalbed ~~undeveloped~~methane ~~acreage~~(“CBM”) ~~position~~properties located in the ~~Washakie Basin of~~ Wyoming. ~~As of September 30, 2015, we owned oil and natural gas leasehold interests in approximately 113,307 gross, 84,240 net, acres, approximately 70% of which are undeveloped~~region.

· The significant decline in crude oil and natural gas prices has affected our business: Oil prices have declined since the end of 2014, with our average realized oil prices decreasing from approximately $63.12 per barrel during the fourth quarter of 2014 to approximately $39.68 per barrel in the third quarter of 2015. The effect of these price decreases has been significant for our 2015 results to date and for our financial condition and will continue to negatively impact our cash flows, operating results, and financial condition if they do not improve. Furthermore, our estimated proved reserves as of December 31, 2014 and related present value of future net revenues (“PV-10”) were calculated under SEC rules using twelve-month trailing average benchmark prices. Using the more recent prices discussed above to estimate our proved reserves, without giving effect to acquisitions or other development activities, would result in a reduction in proved reserve volumes due to economic limits. Furthermore, any such reduction in proved reserve volumes combined with the lower commodity prices prevalent today would substantially reduce the PV-10 and Standardized Measure of our proved reserves as of a more recent date. Management estimates our proved reserves as of September 30, 2015 were approximately 265.7 Bcfe, and that our PV-10 was approximately $135.3 million. If commodity prices continue at current level, we would expect our proved reserves and PV-10 will continue to decline in the fourth quarter.

· 2015 credit agreements: In connection with falling commodity prices, bank lenders severely restricted borrowing bases for E&P companies going into 2015. In response, Warren entered into alternative First and Second Lien Credit Facilities with investors in the Company’s Senior Notes that extended its liquidity and reduced the outstanding notional value of its Senior Notes. The new First and Second Lien Facilities are subject to various conditions, representations, and warranties, including restrictions on certain additional indebtedness, dividends to shareholders, liens, investments, mergers, acquisitions, repurchase or redemption of our common stock, speculative commodity transactions, transactions with affiliates and other matters. In addition, these agreements also impose certain additional restrictions on the Company, including restrictions on asset sales, uses of cash for retirement of junior debt, and a maintenance covenant requiring the Company to maintain a minimum consolidated first lien leverage ratio to EBITDA of not greater than 5.5 as of June 30, 2016. Although the first lien facility permits the Company to draw an additional $15 million at the lender’s sole discretion, the Company does not anticipate making any requests for material additional funding under its first lien facility prior to the third quarter of 2016 and is evaluating various strategic options with respect to compliance with its first lien leverage covenant. However, if we are unable to execute on an aggressive program of deleveraging and benefit from significant improvements in commodity pricing, we will need a waiver or amendment of the June 2016 maintenance covenant in order to avoid a default and continue operating.

· 2015 planned capital expenditures: Recent lower oil and natural gas prices have reduced operating cash flows and, as a result, we have meaningfully reduced our capital spending plans for 2015 compared to 2014 levels. The Company is targeting annual production levels of 5.6 MMBoe to 6.0 MMBoe based on planned full-year capital expenditures of $21 million, with a primary focus on our Marcellus asset. A portion of our capital expenditure program is discretionary and may be further deferred, if necessary. We currently expect to fund the remainder of 2015 capital expenditures with operating cash flow and potential credit facility borrowings.

· 2015 cost reduction initiatives: We continue taking significant actions to reduce our future capital, operating and overhead costs. During the quarter ended September 30, 2015 compared to the quarter ended December 31, 2014 we have reduced our G&A by approximately 10%. In conjunction with the reduction in our capital spending plans for 2015, we have executed sales of non-core assets, implemented headcount reductions, and initiated office consolidations, and we continue to review opportunities to further reduce our capital and operating cost structures. These initiatives have already helped us recognize a meaningful reduction during the first nine months of 2015, with our lease operating expenses, excluding workover costs, decreasing from $13.3 million in the third quarter of 2014 to $12.5 million in the first quarter of 2015, $12.6 million in the second quarter of 2015 and $12.0 million in the third quarter of 2015. These changes will allow us to continue recognizing a meaningful reduction in costs through the end of the year and provide prospective sustained lower overhead costs.

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· CFO Transition. Subsequent to the quarter, on November 2, 2015, Mr. Stewart Skelly, the then-current Vice President and CFO, tendered his resignation, which was effective on November 6, 2015. Pursuant to the terms of his retention and severance agreement dated October 15, 2015, Mr. Skelly will receive a lump sum payment of $275,000, plus nine months of medical care coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act upon his delivery of an irrevocable release and waiver of claims. Mr. Gelman will serve as interim CFO until the Company names a permanent CFO.

Liquidity and Capital Resources

Our cash and cash equivalents ~~increased~~decreased approximately $79.8 0 million to $917.5 8 million during the ~~nine~~three months ended ~~September~~March 3031, ~~2015~~2016. This resulted from cash ~~provided~~used ~~from~~in operating activities of $68.3 0 million and cash ~~provided~~used byin ~~financing~~investing activities of $301.4 0 million,. ~~which~~Cash used in operating activities was ~~offset~~primarily byspent ~~cash~~in oil and gas operations. Cash used in investing activities ofwas ~~$28.9~~primarily ~~million. As~~spent ofon ~~November 9,~~capital ~~2015,~~expenditures ~~total~~for ~~cash~~the ondevelopment ~~hand~~of ~~had~~oil ~~increased~~and togas ~~approximately $30~~properties.7 ~~million.~~

~~Cash~~17 provided by operating activities was primarily generated by oil and gas operations. Cash used in investing activities was primarily spent on capital expenditures for the development of oil and gas properties. Cash provided by financing activities primarily represents the funds received from our First Lien Credit Facility, which is described further below.

CapitalTable additions for the nine months ended September 30, 2015 were approximately $18.7 million and consisted of $13.0 million in drilling and development costs in the Marcellus Assets, $4.1 million for facilities in our California properties and $1.6 million for carry over development in our Wyoming properties.Contents

OnCapital ~~May 22,~~additions 2015, Warren Resources entered into a first lien credit agreement by and among the Company, Wilmington Trust, National Association, as Administrative Agent, and the lenders from time to time party thereto, that provides for ~~a five-year, $250 million term loan facility (~~the “First Lien Credit Facility”) which matures on May 22, 2020. The First Lien Credit Facility is guaranteed by Warren Resources of California, Inc., Warren E&P, Inc. and Warren Marcellus LLC, which are three ofmonths ~~the~~ended Company’s wholly-owned subsidiaries and is collateralized by substantially all of Warren’s assets, including the equity interests of the guarantors. After giving effect to certain amendments to the First Lien Credit Facility that were adopted on OctoberMarch 2231, ~~2015, the First Lien Credit Facility includes an escalation of certain covenants, including requirements that (a) during the period commencing on June 30,~~ 2016 ~~until~~were ~~April 30, 2017, the consolidated first lien leverage ratio (as defined in the First Lien Credit Facility) for any period of four consecutive fiscal quarters shall not be greater than 5.5 to~~ approximately $1.0~~, determined as of the last day of each fiscal quarter, and (b)~~ during the period following April 30, 2017 until the maturity date of the facility, the consolidated first lien leverage ratio for any period of four consecutive fiscal quarters shall not be greater than 5.0 to 1.0 as of the last day of each fiscal quarter. Additionally, the amendment allows for a draw down of an additional $15 million inreflecting ~~new first lien loans at~~ the ~~lender~~Company’s ~~sole~~efforts ~~discretion, authorizes the Second Lien Credit Facility transition described below and makes certain additional changes~~ to ~~conform~~restrict ~~and~~development ~~respond~~activities to provisions of the new Second Lien Credit Facility (as defined below), including provisions providing that (i) any future draws by the Company of the remaining availability under the first lien facility will be at the discretion of the first lien lenders, and ~~(ii) the~~conserve ~~first lien lenders will retain discretion over the Company’s ability to conduct asset sales with proceeds in excess of $1 million~~cash.

~~The~~We ~~annual~~continually ~~interest~~evaluate other ~~rate~~measures ~~on borrowings under the First Lien Credit Facility is 8.5% plus LIBOR for the applicable LIBOR period (with a minimum LIBOR rate of 1%) and is payable quarterly in arrears on the next~~ to ~~last~~further ~~business~~improve ~~day~~our ~~of each March~~liquidity, ~~June,~~including ~~September and December. At present,~~ the ~~interest~~sale ~~rate~~of isequity ~~9.5%.~~or Asdebt ~~of September 30~~securities, ~~2015~~ the ~~Company~~sale ~~had $219.7 million outstanding on its borrowings under the First Lien Credit Facility. As~~ of ~~November 9,~~certain ~~2015~~assets, ~~$15~~entering ~~million~~into ofjoint ~~additional~~ventures ~~borrowings~~with ~~have~~third ~~been~~parties, ~~drawn~~volumetric ~~under~~production ~~the facility~~payments, ~~for a total borrowing under the facility of $234.7. The Company does not anticipate making any requests for~~ additional ~~material~~commodity ~~funding~~price ~~under~~hedging ~~the~~and other ~~First~~monetization ~~Lien Credit Facility prior to the third quarter~~ of ~~2016~~assets strategies.

~~Also~~During ~~on October 22, 2015,~~ the ~~Company~~first ~~entered~~three ~~into~~months aof ~~second~~2016, ~~lien credit facility (~~the ~~“Second Lien Credit Facility”) by and among the~~ Company, ~~Cortland~~reported ~~Capital~~a ~~Market~~net ~~Services,~~loss ~~LLC,~~of as$76.3 million (which ~~Administrative~~included ~~Agent, and the lenders from time to time party thereto~~$56.7 million ~~The~~of ~~Second~~impairment ~~Lien~~expense ~~Credit~~and ~~Facility provides for a five-year, approximately~~ $5110.0 3 million ~~term~~of ~~loan~~interest ~~facility that matures on November 1, 2020~~expense). At ~~closing,~~This ~~certain~~compares ofto the ~~lenders~~first ~~exchanged~~three ~~approximately~~months ~~$63.1 million in face value~~ of ~~previously-issued~~2015 ~~Senior~~when ~~Notes~~the ~~held~~Company byhad ~~them,~~a ~~plus~~net ~~accrued~~loss ~~interest,~~of ~~for~~$102.3 million (~~i) approximately~~which included $4091.14 million of impairment ~~second~~expense ~~lien term loans under the Second Lien Facility,~~ and ~~(ii)~~$5.2 ~~four~~ million ~~(4,000,000) shares~~ of ~~Company~~interest ~~Common~~expense). ~~Stock~~At ~~and~~March 31, ~~in addition~~2016, ~~extended~~current ~~credit~~assets inwere ~~the~~$462 million ~~form~~less ofthan ~~new~~current ~~second lien term loans in the amount of approximately $11~~liabilities.0 ~~million.~~

~~The~~At ~~Second~~March 31, ~~Lien~~2016, ~~Credit~~we ~~Facility~~had isapproximately ~~subject~~3.4 million tooutstanding ~~prepayment~~stock ~~out~~options ofissued ~~the~~under ~~proceeds~~our ofstock ~~asset~~based ~~sales,~~equity ~~subject~~compensation plans. toOf ~~limited~~the ~~reinvestment~~total ~~rights~~outstanding ~~and~~vested ~~certain~~options, ~~excluded~~all ~~asset~~had ~~sales. The~~exercise ~~Second~~prices ~~Lien~~above ~~Credit~~the ~~Facility~~closing ismarket ~~guaranteed~~price byof ~~Warren~~$0.17 ~~Resources~~ of ~~California, Inc.,~~our ~~Warren~~common ~~E&P,~~stock on March ~~Inc~~31, 2016. ~~and~~

19Contractual Obligations

~~Table~~Contracts assumed related to the Marcellus Assets include a Lateral Demand Fee, a Lateral Commodity Fee, and a Transportation Fee. The Lateral Demand Fee stipulates that the company pay $92,000 per month for a period of ~~Contents~~35 months (8 months remain on the contract), for gathering services provided in the Marcellus. The Transportation Fee provides that the Company pay a fixed monthly amount of $1,241,000 for transportation of gas through the interstate pipeline, up to 120,000 dekatherms per day for a term ending in July 2022 (76 months remain on the contract). If the Company exceeds 120,000 dekatherms per day, the agreement states that a monthly fee of $0.34 per dekatherm over the contractually stipulated amount should be paid. Following the emergence from bankruptcy in October 2016, the commitment was reduced to 90,000 dekatherms per day for the next 36 months of the contract. Warren accounts for the aforementioned gathering and transportation fees on the Consolidated Statements of Operations within the lease operating expenses and taxes line item, as incurred. No overage fees have been included in the calculation of transportation fees.

~~Warren~~The ~~Marcellus~~contracts ~~LLC~~also oncall ~~substantially~~for ~~similar~~several ~~terms~~additional asfees. ~~the~~The ~~guarantees~~additional ~~related~~fees include a Lateral Commodity Fee of $0.055 per Mcf up to ~~the~~150 ~~First~~Bcf ~~Lien~~of gas ~~Credit~~gathered, ~~Facility~~Gathering ~~and~~Commodity isRate ~~collateralized~~of by$0.04 ~~second-priority~~per ~~liens~~Mcf onup ~~substantially~~to ~~all~~15,000 Mcf per day per month for certain receipt points, a Gathering Demand Rate of ~~Warren’s~~$0.10 ~~assets~~per Mcf up to 15,000 ~~including~~Mcf ~~the~~per ~~equity~~day ~~interests~~per month for certain receipt points, and a Compression Fee of $0.205 per MCF of gas delivered to certain receipt points. For any amount in excess of the ~~guarantors~~15,000 Mcf delivered to certain receipt points for the ~~extent~~Gathering ~~such~~Demand ~~assets~~and orCommodity ~~interests~~Rates ~~secure~~the company is obligated to pay 50% of the ~~First~~fees ~~Lien~~which ~~Credit~~are ~~Facility~~adjusted for inflation annually by the CPI index.

~~The~~These ~~annual~~obligations ~~interest~~were ~~rate~~not oncancelled ~~borrowings~~as ~~under~~a ~~the~~result Second Lien Facility is 12%, with interest payable semi-annually in arrears on each April 20 and October 20. On the first three semi-annual interest payment dates, beginning with April 20, 2016, the Company may elect to pay up to all of ~~such~~Warren’s ~~interest~~bankruptcy ~~(6% per semi-annual period) by capitalizing accrued and unpaid interest and adding the same to the principal amount of the second lien loans then outstanding~~proceedings. ~~For~~ the subsequent three semi-annual interest payment dates, beginning with October 20, 2017 and ending October 20, 2018, the Company may elect to pay up to one quarter of such interest (1.5% per semi-annual period) by capitalizing accrued and unpaid interest and adding the same to the principal amount of the Second Lien Loans then outstanding. As of November 9, 2015, the Company had approximately $51 million outstanding borrowings under the Second Lien Credit Facility.

AsRESULTS ~~part~~OF ofOPERATIONS ~~our plan to manage liquidity risks and in recognition of lower oil prices, we have scaled back our capital expenditure budget and continue to explore opportunities to divest non-core assets.~~

WeYear-over-year production ~~believe~~remained ~~the~~flat ~~additional liquidity~~ from ~~our new first and second lien facilities~~1,245 ~~when~~Mboe combined with operational cash flows, will be sufficient to maintain operations without additional borrowing well into 2016, if not beyond. However, although we are not subject to borrowing base redeterminations on these new facilities, we are subject to a variety of restrictions under these new facilities, including the June 2016 maintenance covenant. While Warren continues to aggressively review opportunities for ~~further strategic refinancing that will reduce~~ the ~~outstanding~~first ~~principal~~three ~~amount~~months of ~~our~~2015 ~~debt, provide us with additional liquidity and give us an opportunity~~ to ~~reduce our cash interest expense going forward~~1,247 ~~compliance~~Mboe ~~with~~for the ~~June~~same ~~2016~~three ~~maintenance~~months ~~covenant~~of ~~poses challenges as EBITDA and cashflow levels continue to decline~~2016. ~~Accordingly~~However, ~~ongoing~~overall ~~compliance~~prices ~~with~~dropped ~~financial~~55% ~~covenants~~from ~~remains~~$19.80 anMboe ~~area~~in ~~of risk and focus for~~ the ~~Company,~~first ~~and,~~three ifmonths weof ~~are~~2015 ~~unable~~ to ~~execute~~$9.00 onMboe ~~an aggressive program of deleveraging and benefit from significant improvements~~ in ~~commodity~~the ~~pricing,~~first wethree months ~~will need a waiver or amendment~~ of ~~the June~~ 2016 ~~maintenance covenant in order to avoid a default and continue operating~~.

~~During~~The ~~the~~following ~~first~~table ~~nine~~reflects ~~months of 2015,~~ the ~~Company~~decrease ~~reported~~in aoil ~~net loss of $373.6 million (which included $350.6 million of impairment expense~~ and ~~$11.3~~gas ~~million~~sales ofdue ~~gains on derivative financial instruments). This compares~~ to ~~the~~prices ~~first nine months of 2014 when the Company had net income of $22~~changes.7 ~~million (which included $1.1 million of gains on derivative financial instruments). At September 30, 2015, current assets were $9.1 million less than current liabilities.~~

At September 30, 2015, we had approximately 3.5 million outstanding stock options issued under our stock based equity compensation plans. Of the total outstanding vested options, all but fifty thousand had exercise prices above the closing market price of $0.49 of our common stock on September 30, 2015.


	2016			% Increase (Decrease)			2015
Oil production volume (Mbbls)		214			-18	%		262
Oil sales revenue ($millions)	$	5.2			-50	%	$	10.5
Price per Bbl	$	24.30			-39	%	$	40.08
Decrease in oil sales revenue due to:
Change in production volume ($millions)	$	(1.9	)
Change in prices ($millions)		(3.4	)

Total decrease in oil sales revenue ($millions)	$	(5.3	)

Gas production volume (Bcf)		6.2			5	%		5.9
Gas sales revenue ($millions)	$	6.0			-57	%	$	14.1
Price per Mcf	$	0.97			-59	%	$	2.39
Decrease in gas sales revenue due to:
Change in production volume ($millions)	$	0.7

~~Contractual~~18 ~~Obligations~~

TheTable contractual obligations table below assumes the maximum amount under contract is tendered each year. The table does not give effect to the conversion of any bonds to common stock which would reduce payments due. All U.S treasury bonds are secured at maturity by zero coupon U.S. treasury bonds deposited into an escrow account equaling the par value of the bonds maturing on or before the maturity of the bonds. Such U.S. treasury bonds had a fair market value of $1.64 million at September 30, 2015. The table below does not reflect the release of escrowed U.S. treasury bonds to us upon redemption.Contents

Contracts assumed related to the Marcellus Assets include a Lateral Demand Fee, a Lateral Commodity Fee, and a Transportation Fee. The Lateral Demand Fee stipulates that the Company pay $92,000 per month for a period of 35 months (14 months remain on the contract), for gathering services provided in the Marcellus. The Transportation Fee provides that the Company pay a fixed monthly amount of $1,241,000 for transportation of gas through the interstate pipeline, up to 120,000 dekatherms per day for a term ending in December 2021 (75 months remain on the contract). If the Company exceeds 120,000 dekatherms per day, the agreement states that a monthly fee of $0.34 per dekatherm over the contractually stipulated amount should be paid. The Transportation Overage Fee is not included in the table below. Warren accounts for the aforementioned gathering and transportation fees on the Consolidated Statements of Operations within the lease operating expenses and taxes line item, as incurred.


	2016			% Increase (Decrease)			2015
Change in prices ($millions)		(8.8	)

Total decrease in gas sales revenue ($millions)	$	(8.1	)

Total production volume (Mboe)		1,247			—			1,245
Total revenue	$	11.2			-54	%	$	24.6
Price per Boe	$	9.00			-55	%	$	19.80
Increase (decrease) in revenue due to:
Change in production volume ($millions)	$	(1.2	)
Change in prices ($millions)		(12.2	)

Total decrease in total revenue ($millions)	$	(13.4	)

~~The~~We ~~contracts~~recorded ~~also~~a ~~call~~net loss for ~~several additional fees, not included in~~ the ~~table~~three ~~below.~~months ~~The~~ended ~~additional~~March 31, ~~fees~~2016 ~~include a Lateral Commodity Fee~~ of $076.~~055~~3 million ~~per~~or ~~Mcf up to 150 Bcf of gas gathered, Gathering Commodity Rate of~~ $0.0490 loss per share ~~Mcf~~compared up to ~~15,000 Mcf per day per month for certain receipt points,~~ a ~~Gathering~~net ~~Demand~~loss ~~Rate~~ of $0102.103 million ~~per~~or ~~Mcf up to 15,000 Mcf per day per month for certain receipt points, and a Compression Fee of~~ $01.~~205~~26 loss per ~~Mcf~~share ~~of gas delivered to certain receipt points. For any amount in excess of the 15,000 Mcf delivered to certain receipt points~~ for the ~~Gathering~~same ~~Demand~~quarter ~~and Commodity Rates the Company is obligated to pay 50%~~ of ~~the fees which are adjusted for inflation annually by the CPI index~~2015.

20Revenues

~~Table~~Oil ofand ~~Contents~~Gas Revenues

	Payments due by period *
Contractual Obligations As of September 30, 2015	Total		Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years
	(in thousands)
First Lien Credit Facility	$	219,665	$	—	$	—	$	219,665	$	—
Bonds	1,636		164		280		226		966
Marcellus Lateral Demand Fee	1,288		1,104		184		—		—
Senior Notes	230,410		—		—		—		230,410
Marcellus Transportation Fee	92,496		14,892		29,784		29,784		18,036
Leases	5,921		967		1,870		1,885		1,199
Total	$	551,416	$	17,127	$	32,118	$	251,560	$	250,611

Revenue from oil and gas sales decreased $13.4 million in the first quarter of 2016 to $11.2 million, a 54% decrease compared to the same quarter in 2015. Net oil production for the three months ended March 31, 2016 and 2015 was 214 Mbbls and 262 Mbbls, respectively, and the average realized price per barrel of oil for the three months ended March 31, 2016 and 2015 was $24.30 and $40.08, respectively. Net gas production was 6.2 Bcf in the quarter compared with 5.9 Bcf in the prior year with an average realized price of $0.97 per Mcf compared to $2.39 per Mcf in the prior year.

* DoesTransportation ~~not~~Revenue ~~include estimated interest of $41.8 million less than one year, $83.6 million 1-3 years, $76.2 million 3-5 years and $38.3 million thereafter.~~

~~RESULTS~~We OFreceive ~~OPERATIONS:~~fees for transporting gas through our Atlantic Rim intrastate gas pipeline, which connects with the Wyoming Interstate Company pipeline system. Transportation revenue totaled $1.0 million for the three months ended March 31, 2016 compared to $1.2 million for the three months ended March 31, 2015.

~~Three~~Operating ~~months~~Expenses ~~Ended September 30, 2015 Compared to Three Months Ended September 30, 2014~~

~~Oil~~Lease ~~and~~operating expense ~~gas sales. Revenue from oil~~ and ~~gas~~taxes sales decreased $19.6 million in the third quarter of 2015 to $19.6 million, a 50% decrease compared to the same quarter in 2014. Net oil production for the three months ended September 30, 2015 and 2014 was 243 Mbbls and 268 Mbbls, respectively, and the average realized price per barrel of oil for the three months ended September 30, 2015 and 2014 was $39.68 and $89.77, respectively. Net gas production was 7.3 Bcf in the quarter compared with 5.5 Bcf in the prior year with an average realized price of $1.37 per Mcf compared to $2.73 per Mcf in the prior year. This increase in gas production is a result of a full quarter of gas produced from our recently acquired Marcellus Assets as compared to the same quarter in 2014.

~~Transportation~~Lease ~~Revenue. We~~operating ~~receive~~expense ~~fees~~decreased ~~for~~12% ~~transporting~~to ~~first-party~~$11.0 million ~~gas~~($8.82 ~~through~~per ~~our~~Boe) ~~Atlantic~~for ~~Rim~~the ~~intrastate~~first ~~gas~~quarter ~~pipeline,~~of ~~which~~2016 ~~connects~~compared to ~~with~~$12.5 million ~~the~~($10.05 ~~Wyoming~~per ~~Interstate Company (“WIC”~~Boe) ~~pipeline~~in ~~system.~~the ~~Transportation~~comparable ~~and~~period ~~gathering~~of ~~revenue totaled $1~~2015.2 ~~million~~Primarily ~~for~~this ~~the~~decrease ~~three~~in ~~months~~lease ~~ended~~operating ~~September 30,~~expense ~~2015~~resulted ~~compared~~from tocost ~~$1.3~~savings ~~million~~efforts ~~for~~instituted ~~the~~to ~~three~~conserve ~~months~~cash ~~ended September 30, 2014~~balances.

~~Lease~~Depreciation, ~~operating~~depletion ~~expense.~~and ~~Lease~~accretion ~~operating expense decreased 10% to $12 million~~ (~~$8.25 per Boe~~DD&A) for the third quarter of 2015 compared to $13.3 million ($11.20 per Boe) in the comparable period of 2014. This decrease was accomplished despite the inclusion of a full quarter of costs associated with Marcellus production in the third quarter of 2015 versus only a partial quarter in the third quarter of 2014, based on aggressive cost reductions in our California and Wyoming properties.

Depreciation, depletion and ~~amortization.~~accretion ~~Depreciation, depletion and amortization~~ expense ~~increased~~decreased ~~$2.5 million~~ for the ~~third~~first quarter of ~~2015~~2016 to $1810.3 4 million, a 1639% ~~increase~~decrease compared to the first ~~corresponding~~ quarter ~~last~~in ~~year~~2015. This ~~increase~~decrease ~~results~~reflects ~~from~~the animpact ~~increase~~of tothe ~~our~~large ~~full~~impairment ~~cost~~incurred ~~pool~~in as2015 aon ~~result of~~ the ~~consummation~~full-cost ofpool, ~~the~~thus ~~Marcellus~~significantly ~~Asset~~reducing ~~Acquisition~~DD&A. ~~during~~The ~~the~~Company ~~third~~expects ~~quarter~~an ofadditional ~~2014~~decrease asin ~~well~~depreciation, asdepletion ~~increased~~and ~~production~~accretion expense in the ~~current~~second quarter ~~compared~~of to2016 following the ~~same~~impairment ~~period~~expense recorded in the ~~prior~~current ~~year~~period.

Impairment. The Company recorded impairment expense of $175.7 million for the third quarter of 2015, relating to its ceiling test write down of oil and gas properties. This resulted from a significant drop in our PV-10 value reflecting lower commodity prices in 2015. The trailing twelve month SEC pricing used in our reserve report for oil decreased 39% from $86.71 at December 31, 2014 to $52.84 at September 30, 2015 and twelve month gas prices decreased 40% from $3.12 at December 31, 2014 to $1.86 at September 30, 2015. Warren estimates that our proved resources as of September 30, 2015 were approximately 265.7 Bcfe and that our PV-10 was approximately $135.3 million. Further ceiling write-downs may occur in future quarters as average SEC trailing twelve month prices have continued to decline. The Company estimates to have an impairment of approximately $80 million for the three months ended December 31, 2015 assuming production remains at the same levels and based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for each month in the period January through December 2015, using the November 2015 price as an estimate of the December 2015 price.

~~Transportation~~The ~~Expense. Pipeline~~Company ~~operating~~recorded ~~expenses~~impairment ~~totaled~~expense of $056.3 7 million at March 31, 2016 relating to its ceiling test write down of oil and gas properties. Impairment expense for the ~~three~~first ~~months~~quarter ~~ended~~of ~~September 30,~~ 2015 ~~compared~~amounted to $091.6 4 million. These impairments resulted from a significant drop in PV-10 reflecting lower commodity prices for th2016 ~~three~~and ~~months~~2015. ~~ended~~The Company ~~September 30,~~expects ~~2014~~to recognize an additional impairment charge on the oil and gas properties in the second quarter of 2016 as commodity prices have declined when compared to the second quarter of 2015.

~~General~~Transportation ~~and~~Expense administrative expenses. General and administrative expenses increased $1.1million for the third quarter of 2015 to $4.0 million, a 38% increase compared to 2014. This increase resulted from a reduced litigation accrual in the third quarter of 2014 as a result of the settlement of legal matters as well as additional salaries related to the increase in head count in the Denver, Colorado office partially offset by certain cost cutting measures including a reduction in the workforce at other offices in 2015. The Company continues to assess options to improve efficiency across the company.

~~Interest~~Pipeline ~~expense.~~operating ~~Interest~~expenses ~~expense~~totaled ~~increased~~ $50.2 3 million ~~from~~and $~~3.8 to $9.~~0 .6 million infor the ~~third~~three ~~quarter~~months ofended ~~2015~~March 31, ~~compared~~2016 toand ~~the~~March 31, 2015, ~~same quarter last year~~respectively. ~~This~~ ~~increase reflects a full quarter of interest from the issuance of Senior Notes~~

2119

General and ~~the~~administrative ~~increase~~expenses in(G&A ~~interest~~expense) in the First Lien Credit Facility compared to the former credit line. In addition, interest of $2.2 million was capitalized during this period, which relates to the development of the Marcellus Assets.

~~Interest~~Although ~~and~~most ~~other~~categories ~~income.~~of ~~Interest~~G&A ~~and~~expense ~~other~~reflected ~~income~~a ~~increased~~decline ~~$1.9~~during ~~million in~~ the first quarter of 2016 compared to the ~~same~~first ~~period~~quarter ~~last~~of ~~year~~2015, ~~due~~total G&A toexpense remained constant at $5.0 million. This was the ~~sale~~result of ~~property~~higher inG&A ~~our~~expense ~~North~~associated ~~Wilmington~~with ~~Unit~~the inclosing ~~California~~of the New York office.

~~Gain~~Interest ~~(loss) on derivative financial instruments. Derivative gains of $10.6 million were recorded during the third quarter of 2015. This amount reflects $2.6 million of realized gains~~ and ~~$8.0~~other ~~million~~income of(expense) ~~unrealized gains resulting from mark to market accounting of our oil and gas derivatives.~~

~~Loss~~Interest onand ~~contingent~~other ~~consideration. A~~income (expense) decreased $0.1 3 million ~~loss~~in ~~from~~ the ~~contingent~~first ~~consideration was recorded for the~~ quarter ~~ending~~of ~~September 30,~~2016 ~~2015,~~compared ~~related~~ to the ~~Marcellus~~first ~~Asset~~quarter ~~Acquisition. This amount reflects the fair value adjustment for the contingent consideration payment as part~~ of ~~the purchase and sale agreement with Citrus~~2015.

~~Nine~~Interest ~~months~~expense ~~Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014~~

~~Oil~~Interest ~~and~~expense ~~gas~~increased ~~sales. Revenue from oil and gas sales decreased~~ $365.3 1 million ~~for~~in the ~~nine~~first ~~months~~quarter of ~~2015~~2016 to $6910.3 million, ~~a 34% decrease~~ compared to ~~the same period in 2014~~$5. ~~Net~~2 million ~~oil production~~ for the ~~nine months~~ quarter ended ~~September~~March 3031, 2015. ~~and~~This ~~2014~~increase ~~was~~primarily ~~755~~pertains ~~Mbbls~~to ~~and 825 Mbbls, respectively, and~~ the ~~average~~capitalization ~~realized~~of ~~price~~$3.2 million ~~per barrel~~ of ~~oil~~interest ~~for~~expense in the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30,~~ 2015 ~~and~~associated ~~2014~~with ~~was~~the ~~$43.54~~development ~~and~~of ~~$94.15~~the ~~respectively. Net~~Marcellus ~~gas production was 20~~Assets.9 ~~Bcf~~As ~~for~~this ~~the~~development ~~first~~was ~~nine~~abandoned ~~months~~in late ~~compared~~2015, ~~with~~no ~~8.8~~interest ~~Bcf~~was capitalized in the ~~prior~~first ~~year~~quarter ~~with an average realized price~~ of ~~$1.74~~2016 ~~per~~resulting ~~Mcf compared to $3.18 per Mcf~~ in ~~the~~a ~~prior~~significant ~~year. This~~ increase in ~~gas~~interest ~~production~~expense ~~reflects~~in anthe ~~additional~~first ~~12.1~~quarter ~~Bcf~~ of ~~gas produced from our recently acquired Marcellus Assets~~2016.

~~Transportation~~Gain ~~Revenue. We~~on ~~receive~~derivative ~~fees~~financial ~~for~~instruments transporting first-party gas through our Atlantic Rim intrastate gas pipeline, which connects with the WIC pipeline system. Transportation and gathering revenue totaled $3.5 million for the nine months ended September 30, 2015 compared to $4.1 million for the nine months ended September 30, 2014.

~~Lease~~During ~~operating~~the ~~expense.~~three ~~Lease~~months ~~operating~~ended ~~expense~~March 31, ~~increased~~2016, ~~16%~~the toCompany ~~$37.4~~recorded ~~million~~a ~~($9.23~~gain ~~per Boe) for the nine months~~ of ~~2015 compared to~~ $325.1 5 million ~~($14.01~~composed ~~per~~of ~~Boe)~~an inunrealized loss on the change ~~comparable~~in ~~period~~mark-to-market valuations of ~~2014~~$1. ~~Primarily~~7 million ~~this~~and ~~increase~~a ~~reflects~~realized ~~additional~~gain ~~operating~~on ~~expense~~cash ~~resulting~~settlements ~~from~~of ~~our recently acquired Marcellus Assets~~$3.8 million.

~~Depreciation,~~During ~~depletion~~the ~~and~~three ~~amortization.~~months ~~Depreciation~~ended March 31, ~~depletion~~2015, ~~and~~the ~~amortization~~Company ~~expense~~recorded ~~increased~~a gain of $184.0 million ~~for~~composed ~~the first nine months~~ of ~~2015~~an tounrealized ~~$54.8~~loss ~~million,~~on athe change ~~49%~~in ~~increase compared~~ mark-to-market ~~the~~valuations ~~comparable period~~ of ~~2014~~$0. ~~This~~1 million ~~increase~~and ~~results from an increase to our full cost pool as~~ a ~~result~~realized ofgain ~~the~~on ~~consummation~~cash ofsettlements ~~the Marcellus Asset Acquisition during the third quarter~~ of ~~2014~~$3.9 million.

~~Impairment.~~Loss The Company recorded impairment expense of $350.6 million for the first nine months of 2015, relating to its ceiling test write down of oil and gas properties. This resulted from a significant drop in our PV-10 value reflecting lower commodity prices in 2015. The trailing twelve month SEC pricing used in our reserve report for oil decreased 39% from $86.71 at December 31, 2014 to $52.84 at September 30, 2015 and twelve month gas prices decreased 40% from $3.12 at December 31, 2014 to $1.86 at September 30, 2015. Further ceiling write-downs may occur in future quarters as average SEC trailing twelve month prices have declined. The Company estimates to have an impairment of approximately $431 million for the year ended December 31, 2015 assuming production remains at the same levels and based on ~~the~~contingent ~~12-month~~consideration unweighted arithmetic average of the first-day-of-the-month price for each month in the period January through December 2015, using the November 2015 price as an estimate of the December 2015 price.

~~Transportation~~The ~~Expense. Pipeline~~Company ~~operating~~recorded ~~expenses~~a ~~totaled~~ $10.2 1 million ~~for~~loss from the ~~nine~~contingent ~~months~~consideration ~~ended~~related ~~September 30,~~to ~~2015~~the ~~compared~~acquisition toof $1our Marcellus Assets during the first quarter of 2016 and 2015.7 ~~million~~This amount reflects the fair value adjustment for the ~~nine~~contingent ~~months~~consideration ~~ended~~payment ~~September 30,~~as ~~2014~~part of the purchase and sale agreement with Citrus.

~~General~~CRITICAL ~~and~~ACCOUNTING ~~administrative~~POLICIES expenses. General and administrative expenses increased $2.1 million for the first nine months of 2015 to $12.8 million, a 19% increase compared to 2014. This increase resulted from a reduced litigation accrual in the third quarter of 2014 as a result of the settlement of legal matters as well as additional salaries related to the increase in head count in the Denver, Colorado office partially offset by certain cost cutting measures including a reduction in the workforce at other offices in 2015. The company continues to assess options to improve efficiency across the company.

~~Interest~~Our ~~expense.~~discussion ~~Interest~~and ~~expense~~analysis of ~~increased~~our ~~$15.7~~financial ~~million~~condition ~~from~~and ~~$5.2~~results ~~million~~of tooperations ~~$20.9~~are ~~million~~based ~~for~~on ~~the~~consolidated ~~first~~financial ~~nine~~statements ~~months~~that ofhave ~~2015~~been ~~compared~~prepared toin ~~the~~accordance ~~same~~with ~~period~~accounting ~~last~~principles ~~year.~~generally ~~This~~accepted ~~increase~~in ~~reflects~~the aUnited ~~full~~States. ~~year~~The preparation of ~~interest~~these ~~from~~financial statements ~~the~~requires ~~issuance~~us ofto ~~Senior~~make ~~Notes~~estimates and ~~the~~judgments ~~increase~~that inaffect ~~interest in~~ the ~~First~~reported ~~Lien~~amounts ~~Credit~~of ~~Facility~~assets, ~~compared to the former credit line. In addition~~liabilities, ~~interest~~revenues ofand $8expenses.8 ~~million~~Our ~~was~~2015 ~~capitalized~~Form 10-K ~~during~~includes ~~this~~a ~~period,~~discussion ~~which relates to the development~~ of ~~the~~our ~~Marcellus~~critical ~~Assets~~accounting policies.

Table of Contents

Interest and other income. Interest and other income increased $3.7 million for the first nine months of 2015 compared to the same period last year due to the sale of property in our North Wilmington Unit in California.

Gain on derivative financial instruments. Derivative gains of $11.3 million were recorded during the first nine months of 2015. This amount reflects $7.8 million of realized gains and $3.5 million of unrealized gains resulting from mark to market accounting of our oil and gas derivatives.

Loss on contingent consideration. A $0.4 million loss from the contingent consideration was recorded for the nine months ending September 30, 2015, related to the Marcellus Asset Acquisition. This amount reflects the fair value adjustment for the contingent consideration payment as part of the purchase of the Marcellus Assets.

Gain (loss) on retirement of debt. A $14.4 million gain from the retirement of debt was recorded during the nine months ending September 30, 2015, related to the exchange of previously issued Senior Notes for term notes under the First Lien Credit Facility.

CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based on consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Our 2014 Form 10-K includes a discussion of our critical accounting policies.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Energy Price Risk

The Company’s most significant market risk is the pricing for natural gas and crude oil. Management expects energy prices to remain volatile and unpredictable. If energy prices continue to decline significantly, revenues and cash flow would ~~significantly~~continue to significantly decline.

Commodity Risk

Our primary market risk exposure is in the price we receive for our oil and natural gas production. Realized pricing is primarily driven by the prevailing worldwide price for crude oil and spot regional market prices applicable to our U.S. natural gas production. Pricing for oil and natural gas production has been volatile and unpredictable for several years, and we expect this volatility to continue in the future. The prices we receive for production depend on many factors outside of our control, including volatility in the differences between product prices at sales points and the applicable index price.

Derivative Financial Instruments and Hedging Activity

We have entered into several financial derivative swap contracts to hedge our exposure to commodity price risk associated with anticipated future oil and gas production. We believe we will have more predictability of our crude oil and gas revenues as a result of these financial derivative contracts. The total volumes which we ~~hedge~~hedged through the use of our derivative instruments varies from period to period, however, subject to market conditions, our objective iswas to hedge up to at least 50% of our current and anticipated production for the next 12 to 24 months. Our hedge policies and objectives may change significantly as commodities prices or price futures change.

We20 are exposed to market risk on our open derivative contracts of non-performance by our counterparties. We do not expect such non-performance because our contracts are with major financial institutions with investment grade credit ratings.

TheTable following table summarizes our open financial derivative positions as of November 9, 2015, related to oil and gas production.Contents

Product	Type	Contract Period	Volume	Price per Mcf or Bbl
NYMEX Oil	Swap	11/01/15- 03/31/16	250 Bbl/d	$	62.92
NYMEX Oil	Collar	11/01/15- 03/31/16	500 Bbl/d	$	50.00- 64.00
NYMEX Oil	Collar	04/01/16- 06/30/16	250 Bbl/d	$	55.00- 69.97
NYMEX Oil	Collar	01/01/16- 12/31/16	500 Bbl/d	$	50.00- 71.50
NYMEX Oil	Collar	11/01/15- 12/31/15	500 Bbl/d	$	50.00- 68.15
NYMEX Gas	Swap	01/01/16- 03/31/16	5,000 MMBtu/d	$	3.02
NYMEX Gas	Swap	01/01/16- 10/31/16	15,000 MMBtu/d	$	2.93
NYMEX Gas	Swap	01/01/16- 12/31/16	15,000 MMBtu/d	$	3.16
NYMEX Gas	Swap	01/01/16- 03/31/16	15,000 MMBtu/d	$	3.18
NYMEX Gas	Swap	03/01/16- 10/31/16	10,000 MMBtu/d	$	2.72

We are exposed to market risk on our open derivative contracts of non-performance by our counterparties. We do not expect such non-performance because our contracts are with major financial institutions with investment grade credit ratings. Each of the counterparties to our derivative contracts is a lender in our Senior Credit Agreement. We did not post collateral under any of these contracts as they are secured under the Senior Credit Agreement.

23The following table summarizes our open financial derivative positions as of March 31, 2016, related to oil and gas production.

Table of Contents

Product

Type

Contract Period

Volume

Price per
Mcf or Bbl

NYMEX Oil

Collar

04/01/16- 06/30/16

250 Bbl/d

55.00 – 69.97

NYMEX Oil

Collar

01/01/16- 12/31/16

500 Bbl/d

50.00 – 71.50

NYMEX Gas

Swap

01/01/16- 10/31/16

15,000 MMBtu/d

2.93

NYMEX Gas

Swap

01/01/16- 12/31/16

15,000 MMBtu/d

3.16

NYMEX Gas

Swap

03/01/16- 10/31/16

10,000 MMBtu/d

2.72

Under a swap contract, the counterparty is required to make a payment to us if the index price for any settlement period is less than the fixed price, and we are required to make a payment to the counterparty if the index price for any settlement period is greater than the fixed price.

~~Other~~On June ~~Financial~~9, ~~Instruments~~2016, the Company, subsequent to it filing for bankruptcy, received notice that the counterparty to the three NYMEX Gas Swap contracts was terminating the contracts. The Company received $1.5 million from the counterparty.

~~Other~~Interest ~~financial~~Rate ~~instruments~~Risk consist of the following: cash and cash equivalents, U.S. treasury bonds, collateral security accounts, line of credit and other long-term liabilities. The carrying amounts of these instruments approximate fair market value due to the highly liquid nature of these short-term instruments or they are reported at fair value.

~~Inflation~~We are exposed to interest rate risk on our variable interest rate debt. If interest rates increase, our interest expense would increase and ~~Changes~~our inavailable ~~Commodity~~cash flow ~~Prices~~would decrease. Depending on the amount outstanding and the level of borrowing base usage, the annual interest rate on each base rate loan under the Credit Facility will be, at the Company’s option, either: (a) a “LIBOR Loan”, which has an interest rate equal to the sum of the applicable LIBOR period plus the applicable “LIBOR Margin” that ranges from 1.75% to 2.75%, or (b) a “Base Rate Loan”, or any other obligation other than a LIBOR Loan, which has an interest rate equal to the sum of the “Base Rate”, calculated to be the higher of: (i) the Agent’s prime rate of interest announced from time to time, or (ii) the Federal Funds rate most recently determined by the Agent plus one-half percent, plus an applicable “Base Rate Margin” that ranges from 0.75% to 1.75%.

~~The~~Other Financial ~~general~~Instruments level of inflation affects our costs. Salaries and other general and administrative expenses are impacted by inflationary trends and the supply and demand of qualified professionals and professional services. Inflation and commodity price fluctuations affect the costs associated with exploring for and producing oil and natural gas, which have a material impact on our financial performance.

~~Forward-Looking~~Other ~~Statements~~financial instruments consist of the following: cash and ~~Risk~~cash equivalents, U.S. treasury bonds, collateral security accounts, line of credit and other long-term liabilities. The carrying amounts of these instruments approximate fair market value due to the highly liquid nature of these short-term instruments or they are reported at fair value.

~~Certain~~Inflation ~~statements in this report, including statements of the future plans, objectives,~~ and ~~expected~~Changes performance of the company, are forward-looking statements that are dependent upon certain events, risks and uncertainties that may be outside the company’s control, and which could cause actual results to differ materially from those anticipated. Some of these include, but are not limited to, the market prices of oil and gas, financial market conditions, lenders willingness to waive or amend financial covenants applicable to us, availability of derivatives and other hedging instruments, economic and competitive conditions, exploration risks such as drilling unsuccessful wells, higher-than-expected costs, potential liability for remedial actions under existing or future environmental regulations and litigation, potential liability resulting from pending or future litigation, environmental and regulatory uncertainties that could delay or prevent drilling, and not successfully completing, or any material delay of, any development of new or existing fields, expansion, or capital expenditure, legislative and regulatory changes, political and economic uncertainties of foreign governments, future business decisions, and other uncertainties, all of which are difficult to predict. Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “will”, “anticipate”, “plan”, “intend”, “believe”, “expect” or similar expressions that convey the uncertainty of future events or outcomes. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Warren does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. Certain risks that may affect Warren’s results of operations and financial position appear in ~~Part 1, Item~~Commodity 1APrices ~~“Risk Factors” of Warren’s 2014 Annual Report on Form 10-K and this Quarterly Report on Form 10-Q.~~

~~There~~The ~~are~~general ~~numerous~~level ~~uncertainties~~of ~~inherent~~inflation inaffects ~~estimating~~our ~~quantities~~costs. ofSalaries ~~proved oil~~ and ~~gas~~other ~~reserves~~general and inadministrative ~~projecting~~expenses ~~future~~are ~~rates~~impacted ofby ~~production~~inflationary trends and the ~~timing~~supply ~~of development expenditures. The total amount or timing of actual future production may vary significantly from reserves~~ and demand ~~production estimates. The drilling~~ of ~~exploratory~~qualified ~~wells~~professionals ~~can involve significant risks, including those related to timing, success rates~~ and ~~cost~~professional ~~overruns~~services. ~~Lease~~Inflation and ~~rig~~commodity ~~availability,~~price ~~complex~~fluctuations ~~geology~~affect ~~and~~the ~~other~~costs ~~factors~~associated ~~can~~with ~~affect~~exploring ~~these~~for ~~risks.~~and ~~Fluctuations~~producing in oil and natural gas, ~~prices~~which orhave a ~~prolonged~~material ~~continuation~~impact ofon ~~low~~our ~~prices may adversely affect the company’s~~ financial ~~position, results of operations and cash flows~~performance.

Forward-Looking Statements and Risk

Certain statements in this report, including statements of the future plans, objectives, and expected performance of the company, are forward-looking statements that are dependent upon certain events, risks and uncertainties that may be outside the company’s control, and which could cause actual results to differ materially from those anticipated. Some of these include, but are not limited to, the market prices of oil and gas, economic and competitive conditions, exploration risks such as drilling unsuccessful wells, higher-than-expected costs, potential liability for remedial actions under existing or future environmental regulations and litigation, potential liability resulting from pending or future litigation, environmental and regulatory uncertainties that could delay or prevent drilling, and not successfully completing, or any material delay of, any development of new or existing fields, expansion, or capital expenditure, legislative and regulatory changes, financial market conditions, political and economic uncertainties of foreign governments, future business decisions, and other uncertainties, all of which are difficult to predict. Forward-looking statements are generally accompanied by words such as “estimate”, “project”, “predict”, “will”, “anticipate”, “plan”, “intend”, “believe”, “expect” or similar expressions that

convey the uncertainty of future events or outcomes. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. Unless legally required, Warren does not undertake any obligation to update any forward-looking statements, as a result of new information, future events or otherwise. Certain risks that may affect Warren’s results of operations and financial position appear in Part 1, Item 1A “Risk Factors” of Warren’s 2015 Annual Report on Form 10-K.

There are numerous uncertainties inherent in estimating quantities of proved oil and gas reserves and in projecting future rates of production and the timing of development expenditures. The total amount or timing of actual future production may vary significantly from reserves and production estimates. The drilling of exploratory wells can involve significant risks, including those related to timing, success rates and cost overruns. Lease and rig availability, complex geology and other factors can affect these risks. Fluctuations in oil and natural gas prices or a prolonged continuation of low prices may adversely affect the company’s financial position, results of operations and cash flows.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of our disclosure controls and procedures as defined in Securities and Exchange Commission (“SEC”) Rule 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based upon that evaluation, management has concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act is communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

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Commission (“SEC”) Rule 13a-15(e) and 15d-15(e) as of the end of the period covered by this report. Based upon that evaluation, management has concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act is communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure and is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

There have been no changes in our internal controls over financial reporting or in other factors during the quarter ended ~~September~~March 3031, ~~2015~~2016, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The following information should be read in conjunction with the discussion set forth under Part I, Item 3. “Legal Proceedings” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2014~~2015.

We are party to a variety of legal, administrative, regulatory and government proceedings, claims and inquiries arising in the normal course of business. In addition to the other information set forth in this report and our press releases and other reports and materials that we file with the ~~Securities and Exchange Commission~~SEC, you should carefully consider the factors discussed in “Item 1. Business — Regulation and Environmental Matters” and “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015, which could materially affect our business, financial condition, operating results or liquidity and the trading price of our common stock. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

Item 1A. Risk Factors

Our business has many risks. In addition to the other information set forth in this report and our press releases and other reports and materials that we file with the ~~Securities and Exchange Commission~~SEC, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2014~~2015, which could materially affect our business, financial condition, operating results or liquidity and the trading price of our common stock. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

If we are unable to comply with the NASDAQ Stock Exchange’s minimum share price requirement or continue to meet NASDAQ’s other continued listing requirements, the NASDAQ may delist our common stock, which could materially impair the liquidity and value of our common stock.

Our common stock is currently listed on the NASDAQ Global Select Market. This year, through September 30, 2015, the closing price of our common stock ranged between a high of $1.63 per share on January 2, 2015 and a low of $0.36 per share on August 26, 2015. NASDAQ’s continued listing standards require that the average closing price of our common stock does not fall below $1.00 per share over a consecutive thirty trading day period. On June 24, 2015, we received a deficiency letter from the Listing Qualifications Department (the “Staff’) of NASDAQ of non-compliance with this listing standard. In accordance with NASDAQ Listing Rule 5810(c)(3)(A), we need to bring our share price back above $1.00 per share for a minimum of 10 consecutive business days within six months or NASDAQ may at its discretion commence suspension and delisting procedures, or require us to move our listing to the NASDAQ Capital Market in order to obtain a grace period of an additional six additional months to re-attain compliance. In addition, if our common stock price falls further below the $1.00 threshold to the point where NASDAQ considers the stock price to be “abnormally low,” NASDAQ has the discretion to begin delisting proceeding immediately with respect to our common stock. There is no formal definition of “abnormally low” in NASDAQ rules.

A delisting of our common stock, either as result of a failure to regain compliance with NASDAQ’s minimum share price requirement or the Company’s failure to satisfy other qualitative or quantitative standards for continued listing on NASDAQ, could negatively impact us by, among other things, reducing the liquidity and market price of our common stock, reducing the number of investors willing to hold or acquire our common stock, and limiting our ability to issue additional securities or obtain additional financing in the future.

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Significant declines or continuation of currently low prices in oil and natural gas will adversely affect our ability to meet our capital expenditure obligation and financial commitments, and our financial results, cash flows, access to capital and ability to grow.

Our revenues, operating results, cash flow, profitability and future rate of growth depend upon the prevailing prices of, and demand for, oil and natural gas. All of our operating revenues are derived from the sale of our oil and natural gas production. If the currently depressed prices in oil and natural gas do not improve, this will continue to impose material adverse effects on our financial position, our ability to meet our capital expenditure obligations and commitments, our results of operations, our access to capital and the quantities of oil and natural gas that may be economically produced by us. Decreases or continuation in depressed price levels for an extended period negatively affects us in several ways including:

· our cash flow will be reduced, which will decrease funds available for capital investments employed to replace reserves, increase production and operate our properties;

· certain reserves will no longer be economic to produce, resulting in lower proved reserves and cash flow and charges to earnings that impair the value of these assets; and

· access to other sources of capital, such as bank loans and equity or debt markets, could be severely limited or unavailable.

As a result of recent oil and natural gas prices, our oil and natural gas revenues have decreased and our liquidity has been negatively impacted. If our plans to address these changing market dynamnics are not successful in improving our results of operations and liquidity, we might not be able to generate enough cash flow from operations or other sources to meet our obligations and make planned capital expenditures after the second quarter of 2016, which could impair our liquidity and our ability to develop and operate our properties.

The prevailing commodity price environment may require us to restructure our debt or seek bankruptcy protection.

As a result of the steep declines in commodity pricing over the past twelve months, we will need some form of material debt restructuring in order to remain in compliance with the maintenance covenants in our First Lien Credit Facility and, after 2016, to fund our operations and third party payment obligations. Our management is actively pursuing initiatives to address these issues on both a transactional and negotiated basis. If we are unable to restructure our outstanding debt or obtain waivers or amendments on covenant compliance, our secured lenders could foreclose against the assets securing their borrowings, and we may have no option but to seek protection under Chapter 11 of the Bankruptcy Code.

The value of our proved reserves as of December 31, 2014 calculated using SEC pricing is higher than the value of our proved reserves calculated using current market prices.

Our estimated proved reserves as of December 31, 2014 and related present value of future net revenues (“PV-10”) were calculated under SEC rules using twelve-month trailing average benchmark prices. Benchmark prices on NYMEX, Henry Hub and other relevant futures exchanges have deteriorated significantly since that time, and, accordingly, using more recent prices in estimating our proved reserves, without giving effect to any acquisitions or development activities we have executed during 2015, would result in a reduction in proved reserve volumes due to economic limits. Furthermore, any such reduction in proved reserve volumes combined with lower commodity prices would substantially reduce the PV-10 and Standardized Measure of our proved reserves as of a more recent date.

Our First and Second Lien Credit Agreements contain operating and financial restrictions that may restrict our business and financing activities.

Our First and Second Lien Credit Agreements contain, and any future indebtedness we incur may contain, a number of restrictive covenants that will impose significant operating and financial restrictions on us, including restrictions on our ability to, among other things:

· sell assets, including equity interests in our subsidiaries;

· incur or guarantee additional indebtedness or issue preferred stock;

· pay distributions on, redeem or repurchase our common stock or redeem or repurchase our subordinated debt;

· create or incur certain liens;

· make certain acquisitions and investments;

· redeem or prepay other debt;

· enter into agreements that restrict distributions or other payments from our restricted subsidiaries to us;

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· consolidate, merge or transfer our assets;

· engage in transactions with affiliates;

· create unrestricted subsidiaries;

· enter into sale and leaseback transactions; and

· engage in certain business activities.

In addition, we are required under our First Lien Credit Facility to maintain compliance with certain ratios of secured debt to EBITDA as of June 30, 2016, which may further limit the manner in which we conduct our business, and we may be unable to engage in favorable business activities or finance future operations or capital needs.

Our ability to comply with some of the covenants and restrictions contained in our credit facilities may be affected by events beyond our control. If market or other economic conditions either continue to remain depressed or further deteriorate, we will not be able to comply with these covenants.

A failure to comply with the covenants, ratios or tests in our credit facilities or any future indebtedness could result in an event of default, which, if not cured or waived, could have a material adverse effect on our business, financial condition and results of operations. If an event of default under our Credit Facilities occurs and remains uncured, the lenders:

· could elect to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be due and payable;

· may have the ability to require us to apply all of our available cash to repay these borrowings; or

· may prevent us from making debt service payments under our other agreements; or

· may commence foreclosure upon our assets securing our credit facilities.

Our hedging program may be inadequate to protect us against continuing and prolonged declines in the price of oil and natural gas.

At November 9, 2015, we had commodity price derivative agreements on approximately 60% of our estimated oil production and approximately 82% of our estimated gas production for the balance of 2015, and significant percentages of estimated volumes hedged through 2016. These hedges may be inadequate to protect us from continuing and prolonged declines in the price of oil and natural gas. Additionally, we have not entered into any significant hedging transactions with respect to our anticipated 2017 oil and gas production. To the extent that oil and natural gas prices remain at current levels or decline further, we will not be able to hedge future production at the same level as our current hedges, and our results of operations and financial condition would be negatively impacted.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~a. On~~Not October 22, 2015, in connection with the exchange by certain holders of the Senior Notes for Converted Loans and Common Stock as described under Note N of the Notes to Consolidated Financial Statements, the Company issued 4,000,000 shares of Common Stockapplicable. ~~Such issuance was made in reliance upon an exemption from the registration requirements of the Securities Act, pursuant to Section 4(a)(2) thereof.~~

~~b. Not~~22 ~~applicable.~~

c. NotTable applicable.of Contents

Item 3. Defaults upon Senior Securities

~~Not~~The ~~applicable~~Company elected not to make the approximately $7.5 million semi-annual interest payment due February 1, 2016 on its outstanding $167.3 million aggregate principal amount of 9.00% Senior Notes due 2022 (the “Senior Notes”), although it had sufficient liquidity to make the interest payment in full. According to the indenture governing the Senior Notes, this failure to pay was not an immediate event of default, however, the 30-day grace period elapsed on March 2, 2016, creating an event of default. Under the indenture governing the Senior Notes, the trustee or holders of not less than 25% in aggregate principal amount of the Senior Notes outstanding could declare the principal amount of the Senior Notes plus accrued and unpaid interest to be due and payable. The failure to pay interest on the Senior Notes within the 30-day grace period also resulted in events of default under Warren’s first lien credit facility and second lien credit facility, which entitle the administrative agents and lead lenders thereunder to declare all obligations thereunder to be immediately due and payable. On the Effective Date, pursuant to the Plan, the Company’s Senior Notes and the indenture governing the Senior Notes were cancelled, and all amounts outstanding under the Company’s previously existing first-lien credit facility and second-lien credit facility were cancelled and the obligations thereunder were terminated.

Item 4. Mine Safety Disclosures

Not applicable.

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Item 5. Other Information

Not applicable.

~~Item~~23 ~~6. Exhibits~~

a) ExhibitsTable of Contents

~~Exhibits~~Item ~~not~~6. ~~incorporated by reference to a prior filing are designated by an (*) and are filed herewith; all exhibits not so designated are incorporated herein by reference to a prior filing as indicated~~Exhibits.

Exhibit No.		Description
3.1(1)		Articles of Incorporation of Registrant filed May 20, 2004 (Maryland).
3.2(2)		Bylaws of the Registrant, dated June 2, 2004.
3.3(3)		Articles Supplementary (Series A 8% Cumulative Convertible Preferred Stock ($.0001 Par Value)) (Maryland).
3.4(4)		Certificate of Correction to Articles Supplementary (Series A 8% Cumulative Convertible Preferred Stock) (Maryland).
3.5(5)		Articles Supplementary (Series A Institutional 8% Cumulative Convertible Preferred Stock ($.0001 Par Value) (Maryland).
3.6(6)		Certificate of Correction to Articles Supplementary (Series A Institutional 8% Cumulative Convertible Preferred Stock) (Maryland).
3.7(7)		Articles of Amendment to the Articles of Incorporation of Registrant.

a) Exhibits


Exhibit No.		Description

3.1		Certificate of Incorporation of Warren Resources, Inc. (Incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, Commission File No. 000 33275, filed on October 12, 2016).

3.2		Bylaws of Warren Resources, Inc. (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, Commission File No. 000 33275, filed on October 12, 2016).

10.1		Consulting Services Agreement with Jeffrey Keeler, effective as of January 1, 2016 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8 K, Commission File No. 000 33275, filed on January 5, 2016).

10.2		Consulting Services Agreement with Somalya Law PLLC, effective as of January 5, 2016 (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8 K, Commission File No. 000 33275, filed on January 5, 2016).

10.3		First Amendment to the Separation Agreement and General Release with Stewart Skelly, dated February 8, 2016 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8 K, Commission File No. 000 33275, filed on February 9, 2016).

10.4		Consulting Services Agreement with Brian Gelman, dated February 16, 2016 (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8 K, Commission File No. 000 33275, filed on February 18, 2016).

10.5		Separation and Release Agreement with Brian Gelman, dated February 16, 2016 (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8 K, Commission File No. 000 33275, filed on February 18, 2016).

31.1†		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2†		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1†		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

32.2†		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.

101**		Interactive Data File.

~~Table~~† ofFiled ~~Contents~~herewith

4.1(8)		Specimen Stock Certificate for Common Stock (Maryland).
4.2(9)		Form of Registration Rights Agreement made as of December 12, 2002, by and between Warren Resources and the Investors in the Series A 8% Cumulative Convertible Preferred Stock.
4.3(10)		Form of Registration Rights Agreement made as of August 11, 2014, by and between Warren Resources and the Purchasers of Common Stock.
4.4(11)		Indenture, dated as of August 11, 2014, by and between Warren Resources, Inc., Certain Subsidiaries of Warren Resources, Inc., as Guarantors and U.S. Bank National Association, as Trustee.
4.5(12)		Form of Note (included in Exhibit 4.4).
4.6(13)		Form of Registration Rights Agreement made as of August 11, 2014, by and between Warren Resources and the Initial Purchasers of the 9% Senior Notes due 2022.
4.6(14)		Form of Registration Rights Agreement made as of October 22, 2015, by and between Warren Resources and certain Investors in the Common Stock.
10.1(15)		Amendment of Purchase and Sale Agreements and Letter Agreement, dated as of August 28, 2015, by and Warren Resources, Inc. and Warren E&P, Inc. and Escalera Resources, Co.
10.2(16)		Retention Agreement, dated as of October 15, 2015, by and between Warren Resources and Stewart Skelly.
10.3(17)		Retention Agreement, dated as of October 15, 2015, by and between Warren Resources and Saema Somalya.
10.4(18)		Retention Agreement, dated as of October 15, 2015, by and between Warren Resources and Jeffrey Keeler.
10.5(19)		Second Lien Credit Agreement, dated as of October 22, 2015, among Warren Resources, Inc., as Borrower, Cortland Capital Market Services, LLC, as Administrative Agent, and the lenders party thereto.
10.6(20)		Amendment No. 1 to Credit Agreement, dated as of October 22, 2015, among Warren Resources, Inc., as Borrower, Wilmington Trust, National Association, as Administrative Agent, and the lenders party thereto.
10.7(21)		Retention Agreement, dated as of November 4, 2015, by and between Warren Resources and Brian Gelman.
31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-15(e)/15d-15(e).
31.2*		Certification of Chief Financial Officer pursuant to Rule 13a-15(e)/15d-15(e).
32.1*		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted by Section 906 of the Sarbanes-Oxley Act of 2002.
101**		Interactive Data File.

Pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for the purposes of section 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchanges Act of 1934, as amended, and otherwise is not subject to liability under these sections.

*		Filed herewith.
**		Pursuant to Rule 406T of Regulation S-T that this interactive data file is deemed not filed or part of a registration statement or prospectus for the purposes of section 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities and Exchanges Act of 1934, as amended, and otherwise is not subject to liability under these sections.
†		Schedules, exhibits and similar attachments have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The registrant will furnish supplementally a copy of any omitted schedule, exhibit or similar attachment to the Securities and Exchange Commission upon its request.
(1)		Incorporated by reference to Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, Commission File No. 000-33275, filed on March 17, 2005.

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~~Table~~SIGNATURES ~~of Contents~~

(2)		Incorporated by reference to Exhibit 3.6 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, Commission File No. 000-33275, filed on August 16, 2003.
(3)		Incorporated by reference to Exhibit 3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, Commission File No. 000-33275, filed on August 16, 2003.
(4)		Incorporated by reference to Exhibit 3.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, Commission File No. 000-33275, filed on August 16, 2003.
(5)		Incorporated by reference to Exhibit 3.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, Commission File No. 000-33275, filed on August 16, 2003.
(6)		Incorporated by reference to Exhibit 3.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2004, Commission File No. 000-33275, filed on August 16, 2003.
(7)		Incorporated by reference to Exhibit A to the Company’s Definitive Proxy Statement on Form DEF 14-A filed on April 24, 2014.
(8)		Incorporated by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2004, Commission File No. 000-33275, filed on March 17, 2005.
(9)		Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, filed on December 17, 2002.
(10)		Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, filed August 12, 2014.
(11)		Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, filed August 12, 2014.
(12)		Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, filed August 12, 2014.
(13)		Incorporated by reference to Exhibit 4.4 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, filed August 12, 2014.
(14)		Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, filed October 22, 2015.
(15)		Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, filed September 1, 2015.
(16)		Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, dated October 20, 2015.
(17)		Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, dated October 20, 2015.
(18)		Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, dated October 20, 2015.
(19)		Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, dated October 22, 2015.
(20)		Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, dated October 22, 2015.
(21)		Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, Commission File No. 000-33275, dated November 6, 2015.

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 thereunto duly authorized.


	WARREN RESOURCES, INC.
	(Registrant)
Date: April 7, 2017
	By:	/s/ James A. Watt
		James A. Watt
		Chief Executive Officer

	WARREN RESOURCES, INC.
	(Registrant)
Date: April 7, 2017
	By:	/s/ Frank T. Smith, Jr.
		Frank T. Smith, Jr.
		Executive Vice President, Chief Financial Officer

~~Table~~25 ~~of Contents~~

SIGNATURES

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 thereunto duly authorized.

	WARREN RESOURCES, INC.
	(Registrant)
Date: November 9, 2015
	By:	/s/ Brian Gelman
		Brian Gelman
		Interim Chief Financial Officer
		and Interim Chief Accounting Officer

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