RECOMMENDATION SHEET OF THE OIL & GAS APPELLATE REFEREE TRIUMPH ENERGY PARTNERS, LLC HORIZONTAL DRILLING AND SPACING UNIT

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1 RECOMMENDATION SHEET OF THE OIL & GAS APPELLATE REFEREE APPLICANT: RELIEF SOUGHT: TRIUMPH ENERGY PARTNERS, LLC HORIZONTAL DRILLING AND SPACING UNIT CAUSE CD NO T LEGAL DESCRIPTION: SECTION 33, TOWNSHIP 15 NORTH, RANGE 11 WEST, BLAINE COUNTY, OKLAHOMA FILED APR APPLICANT: TRIUMPH ENERGY PARTNERS, LLC COURT CLERKS OFFICE - OKC CORPORATION COMMISSION OF OKLAHOMA RELIEF SOUGHT: POOLING CAUSE CD NO T LEGAL DESCRIPTION: SECTION 33, TOWNSHIP 15 NORTH, RANGE 11 WEST, BLAINE COUNTY, OKLAHOMA ORAL APPEAL OF THE ADMINISTRATIVE LAW JUDGE'S RULINGS ON MOTIONS TO CHANGE VENUE These motions came on for hearing before Curtis Johnson, Deputy Administrative Law Judge ('AU'), for the Oklahoma Corporation Commission, at 9 a.m. on the 24th day of March, 2017, in the Commission's Courtroom, Kerr Building, Tulsa, Oklahoma, pursuant to notice given as required by law and the rules of the Commission for the purpose of taking testimony and reporting to the Commission. APPEARANCES: Grayson Barnes, attorney, appeared on behalf of appellant and applicant, Triumph Energy Partners, LLC ("Triumph"); Robert A.

2 Miller, attorney, appeared on behalf of movant Marathon Oil Company ("Marathon"); and James L. Myles, Deputy General Counsel for Deliberations, filed notice of appearance, for the Commission. The Oral Arguments on the Oral Appeal were referred to Patricia D. MacGuigan, Oil and Gas Appellate Referee ("Referee"), on the 27th day of March, After considering the arguments of counsel and the record contained within these causes, the Referee finds as follows: STATEMENT OF THE CASE Triumph filed its horizontal drilling and spacing unit application in CD T in Section 33, T15N, R11 W, Blame County, Oklahoma on December 22, 2016, and initially the hearing was set on January 17, 2017, in Tulsa. Marathon was not named as a respondent even though they owned mineral rights in this section. Additionally, no other applications were filed at the time this application was filed. Triumph filed this application for pooling in CD T in Section 33, T15N, R1 1W, Blame County, Oklahoma on January 26, 2017 with the initial hearing set on February 21, 2017, in Tulsa. Marathon filed CD spacing, CD pooling, CD multiunit horizontal well, and CD location exception applications on January 4, 2017, which were initially set for hearing on January 30, 2017, in Oklahoma City. Triumph filed its Amended spacing and pooling applications on January 26, The Amended spacing application was set for hearing on February 13, 2017 in Tulsa, and the Amended pooling application was set for February 21, 2017 in Tulsa. Marathon is not appealing the Motion to Change Venue decision of the AW in these two causes, but Triumph is appealing the decision of the AW in Triumph's pooling case in CD T, which changed the venue of the pooling matter from Tulsa to Oklahoma City. REPORT OF THE ADMINISTRATIVE LAW JUDGE 1) The issue here concerning the Motions to Change Venue concerned what cases were filed first. It was not the issue of forum non conveniens. Marathon is not appealing the Motions to Change Venue decisions of the AW in these causes. The Triumph pooling, which is a separate application and has not been consolidated with the Triumph horizontal drilling and spacing unit application, wasn't filed by Triumph until January 26, Marathon's pooling was filed January 4, Marathon's pooling therefore had the priority date filed in Oklahoma City. The AW therefore granted the Motion to Page No. 2

3 Change Venue in the CD T pooling case to Oklahoma City because the Marathon application for pooling was filed earlier than the Triumph pooling application. Triumph is appealing the Motion to Change Venue decision of the ALJ to change venue of the Triumph pooling in CD T from Tulsa to Oklahoma City. DECISION OF THE OIL & GAS APPELLATE REFEREE 1) Marathon stated that they were not appealing the recommendation of the AU to not grant Marathon's Motion to Change Venue concerning the horizontal drilling and spacing unit application by Triumph in Cause CD T. Triumph however is appealing the recommendation of the AU to grant the Motion to Change Venue concerning Triumph's pooling CD T from Tulsa, Oklahoma to Oklahoma City, Oklahoma. Triumph believes that it makes more sense that both the pooling and the spacing applications by Triumph be heard in the same venue and not separately. 2) Triumph's pooling in CD T was filed subsequent to Marathon's pooling being filed in CD , however Triumph's spacing in CD T was filed first/ before Marathon's spacing application in CD Marathon asserts that the poolings are entirely different from spacings with different witnesses, different issues. Marathon definitely filed their pooling application on January 4, Triumph filed their pooling application much later on January 26, The spacing and the pooling applications are two different issues. Marathon filed its spacing, pooling multiunit horizontal well and location exception all on January 4, ) The Referee finds that the AU's recommendations to: (1) grant Marathon's Motion to Change Venue of the Triumph pooling application in Cause CD T to the Commission's Western Regional office in Oklahoma City, and (2) to deny Marathon's Motion to Change Venue of Triumph's horizontal drilling and spacing unit application in Cause CD T from the Commission's Eastern Regional office in Tulsa, Oklahoma to the Commission's Western Regional office in Oklahoma City, Oklahoma, are supported by the weight of the evidence and free of reversible error and therefore should be affirmed. 4) Commission rule OCC-OAC 165:5-1-8 Place of Hearing, provides in pertinent part: (a) General. 1) The Commission may set a cause for hearing anywhere in the State; Page No. 3

4 2) Unless otherwise ordered, all hearings in a cause shall be held at the regional service office where the cause is set for hearing on the merits. *** (c) For CD, PD, and oil and gas related EN dockets. (1) All hearings on any oil and gas application including but not limited to appellate hearings shall be held in the regional service office where the application is filed. In the case of a protested application where a protestant objects to venue on the basis that the holding of the hearing in a certain regional service office would not be at the convenience of any respondent having standing to protest by statute or rule of the Commission, the Commission shall permit such protesting respondent to present testimony by telephone in the other regional service office or any other approved location. (2) Requests to change the place of a hearing may be made by motion, notice of protest or written response filed with the Court Clerk not less than five (5) days before the scheduled hearing. Applicant's reply to a request to change venue shall be governed by OAC 165: Disposition of requests to change the hearing location may be decided upon documents submitted unless oral arguments are ordered by the Commission. 5) 17 O.S. Section 40.1 provides in relevant part: B. 1. Applications for oil and gas well development, administrative applications and any other related matters may be filed in any regional service office. Page No. 4

5 2. The central record of all filings with all regional service offices shall be maintained in the State Office of the Corporation Commission located in Oklahoma City and all initial dockets shall be simultaneously announced in Oklahoma City and transmitted to regional offices. 3. All hearings on any application including but not limited to appellate hearings shall be held in the regional service office where the application is filed unless: a. in the case of an application protested by a respondent mineral owner, or surface owner having standing to protest by statute or by Rule of the Corporation Commission, holding the hearing in the regional service office would not be at the convenience of such respondent mineral owner, or surface owner, or b. the applicant and all protestants agree to have the Commission proceed to hear any case, or any portion thereof, during any stage of the proceedings, at any regional service office, or by telecommunication hearings, or C. the applicant, all protestants and the Commission agree to have the Commission proceed to hear any case, or any portion thereof, during any stage of the proceedings, at another location other than a regional service office. 6) The Commission usually follows the doctrines of primary jurisdiction and comity when it comes to an issue concerning venue between two competing applications. Under said doctrines it is generally held that the court that first acquires the subject matter jurisdiction over a cause should hold the hearing that affects that subject matter. See Tenneco Oil Company v. Corporation Commission, 775 P.2d 296 (Okl. 1989); Fent v. Oklahoma Natural Gas Company, a Div. Of ONEOK, Inc., 898 P.2d 126 (Old. 1994). Marathon filed its pooling application in CD on January 4, Therefore in Triumph's pooling CD T the Commission's Western Regional office in Oklahoma City first acquired the subject matter jurisdiction. Page No. 5

6 7) The Referee finds it to be reasonable to conduct the pooling hearing in the Commission's Western Regional office in Oklahoma City since it first acquired subject matter jurisdiction. The Referee further agrees with the AU that the spacing application by Triumph in CD T will be heard in the Commission's Eastern Regional office in Tulsa since it first acquired the subject matter jurisdiction. The Referee also finds there is no judicial economy served by having both Triumph's spacing and pooling applications heard in the same regional office as a pooling and spacing proceeding are two different requests with different witnesses and different issues. The recommendation of the ALJ should therefore be affirmed. RESPECTFULLY SUBMITTED THIS 5th day of April, PM: ac xc: Commissioner Murphy Commissioner Hiett Commissioner Anthony James L. Myles AU Curtis Johnson Grayson Barnes Robert Miller Michael L. Decker, OAP Director Oil-Law Records Commission - 3 Patricia D. MacGuigan OIL & GAS APPELLATE REFEREE Page No. 6