BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA

Transcription

1 BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA If2 APPLICANT : LONGFELLOW ENERGY, L.P RELIEF SOUGHT : POOLIN G CAUSE CD NO LEGAL DESCRIPTION : ALL OF SECTION NINE (9), TOWNSHIP TWO (2) SOUTH, RANGE THIRTEEN (13) EAST, ATOKA COUNTY, OKLAHOMA ORDER NO ORDER OF TH E COMM ISSION 1. HEARING DATE AND PLACE : This cause came on for hearing before MICHAEL PORTER, Admin istrative Law Judge for the Corporat ion Commission of the State of Oklahoma on the 10 `h day of December, 2008, Jim Thorpe Building, Oklahoma City, Oklahoma. 2. APPEARANCES : ROBERT D. GRAY, Attorney, appeared for LONGFELLOW ENERGY, L. P. ; ROBIN STEAD, Attorney, appeared for JACK D. & LOU ANN SHEFFIELD, CO - TRUSTEES OF THE JACK D. SHEFFIELD REVOCABLE TRUST DATED JULY 20, 2007 ; LOU ANN & JACK D. SHEFFIELD, CO -TRUSTEES OF THE LOU ANN SHEFFIELD REVOCABLE TRUST DATED JULY 20, 2007 and LARRY R. SHEFFIELD ; and SALLY SHIPLEY, Deputy General Counsel for Conservation, filed notice of appearance for the Corporation Commission. 3. NOTICE AND JURISDICTION: The Commission has jurisdiction over the subject matter and the persons interested herein. The Commission has conducted a judicial inquiry into the sufficiency of Applicant's search to determine the names and whereabouts of the Respondents who were served herein by publication, and based on the evidence adduced, the Commission finds the Applicant has exercised due diligence and has conducted a meaningful search of all reasonably available sources at hand. The Commission approves the publication service given herein as meeting statutory requirements and the minimum standards of state and federal due process and finds notice has been given in all respects as required by law and the rules of the Corporation Commission. 4. AMENDMENT: At the time of the hearing, the Application was amended by d ismissing the First Repeated Arkansas Novaculite, First Repeated Missouri Mountain, First Repeated Big Fork and Womble common sources of supply. Additionally, the Appl ication was amended by dismissing the follow ing respondents, to-wit : 11. Mary Ellen Davenpo rt 409 Virg inia Place Fort Wort h, TX Terry D. Callicoat and Barbara J. Callicoat, hw/jt 100 W. Sandy Rd. Atoka, OK The F. L. Snyder Trus t c/o Mary Ellen Davenpo rt 409 Virginia Place Fort Worth, TX Thomas S. McDermott 4208 Persh ing Ave. Fort Worth, TX RELIEF REQUESTED : To pool and adjudicate the rights and equ ities of the owners named in Exhibit "A" attached hereto, in the Stanley, Arkansas Novaculite, Missouri Mountain, Big Fork and First Repeated Stanley common sources of supply underlying the drill ing and spacing unit consisting of all of Section 9-T2S-R13E, Atoka County, Oklahoma, and to designate the Applicant or some other party as Operator. 6. RELIEF GRANTED AND ELECTION: The requested relief is granted and the rights and equity of all owners named in Exhibit "A" attached hereto are hereby pooled, adjudicated, and determined in the lands described in the caption hereof for the common sources of supply as indicated : Common Source of Supplv Stanley Arkansas Novaculite Missouri Mountain Big Fork First Repeated Stanley Size of Unit Order No.

2 APPLICANT : LO N G FEL L OW ENERGY, L. P. APPLICATION FO R POOLI NG - O RDER OF THE CO MMISSIO N ALL OF SECTION 9-T2S-R1 3E, ATOKA COUNTY, OKLAHOMA CAUSE CD NO.: PAGE-2- said owners named in Exhibit "A" attached hereto, are afforded the following elections which said owners must make with all or any pa rt of their interest, however, the owners must make their elections within 15 days from the date of this order PARTICIPATE : To participate in the development of the unit and common sources of supply by agreeing to pay such owner's proportionate part of the actual development and operation costs of the first well covered hereby, which costs shall include a reasonable monthly charge for overhead which may be charged from time to time at the opt ion of the Operator, but shall not exceed what is reasonable, and by paying, as set out below, to Operator such owner's proportionate part of the estimated completed for production cost thereof, or by securing or furnishing security for such payment satisfacto ry to the Operator, within 20 days from the date of this order, as follows: Completed for product ion : $3,980, Completed as a dry hole : $2,444, provided, however, if an owner elects to participate in the well by paying his proportionate part of the costs thereof and fails or refuses to pay or secure the payment of such owner 's proportionate part of the completed for product ion cost as set forth herein, or fails or refuses to pay or make an arrangement with the Operator for the payment thereof, all within the periods of time as prescribed in this order, then such owner shall be deemed to have elected the option as set out in Paragraph 6.2 below; provided, however, if any owner's interest is subject to a royalty, overriding royalty or other burden on production in excess of the normal 1/8th royalty plus additional or excess royalty of 1/16 x 8/8, as prov ided in Paragraph 6. 2, then in that event, such owner shall be deemed to have accepted the option provided in Paragraph 6.3 below. Thereupon, the payment of such cash bonus shall be made by Operator within 30 davs after the last day on which such default ing owner under this order, should have paid his propo rtionate pa rt of such costs or should have made satisfacto ry arrangements for the payment thereof. 6.2 CASH CONSIDERATION: $ PLUS UNIT INTEREST: To accept $ per acre plus an add itional or excess royalty of 1/16 x 8/8 or 6.25% royalty as a fa ir, reasonable and equitable bonus to be paid unto each owner who ele cts not to participate in the well by paying such owner's proportionate pa rt of the cost thereof ; such bonus to be paid within 30 days from the date of this Order and when so paid, shall be satisfaction in full for all rights and interests for such owner 's interest in the wells, drilling and spacing units and common sources of supply covered hereby, except for any normal 1/8th royalty interest, as defined in 52 O.S (e), provided, however, if any owner's interest is subject to a royalty, overrid ing royalty or other burden on production in excess of the normal 1/8th plus addit ional or excess royalty of 1/16 x 8/8 as provided in this paragraph, then in that event, such owner shall be deemed to have accepted the option provided in Paragraph 6. 3 below CONSIDERATION IN LIEU OF CASH : UNIT INTEREST: To accept an additional or excess royalty of 1/8 x 8/8 or % roya lty as a fair, reasonable and equitable bonus to be paid unto each owner who elects not to pa rticipate in the well by paying such owner's propo rtionate part of the cost thereof ; such overriding royalty interest or excess royalty shall be satisfaction in fu ll for a ll rights and interests for such owner 's interest in the wells, drilling and spacing units and common sources of supply covered hereby, except for the normal 1/8th roya lty interest, as defined in 52 O.S (e), provided however, if any owner's interest is subject to a royalty, overriding royalty or other burden on production in excess of the normal 1/8th royalty as defined herein, then such excess royalty, overriding royalty or other burden shall be charged against the 1/8 x 8/8 or 12.50% overriding royalty or excess roya lty as herein set fo rt h, and the same shall be reduced by the amount of such excess. 7. FAILURE TO E4ECT : If any owner fails to elect within the time and in the manner as set out above which of the alternatives set forth in Paragraph 6 above, any such owner accepts, then such owner shall be deemed to have accepted the opt ion as set out in Paragraph 6. 2 ; provided, however, if any owner's interest is subject to a royalty, overriding royalty or other burden on production in excess of the normal 1/8th royalty, plus an additional or excess royalty of 1/16 x 8/8, as provided in Paragraph 6. 2, then and in that event, such owner shall be deemed to have accepted the option provided in Paragraph If any owner elected to do other than pa rticipate in the well by paying his propo rtionate share of the cost thereof, or fails to make an election as provided above, such owner shall be deemed to have relinquished to the operator all of such owner 's right, title, interest or claim in and to the wel ls, drilling and spacing unit, and common sources of supply covered hereby, except for the normal 1/8 royalty interest, and other share in production to which such owner may be entitled by reason of any election hereunder.

3 APPLICANT : LONGFELLOW ENE RGY, L.P. APPL ICATI ON F O R POOLI NG - ORDER O F THE COMM IS SI ON A L L OF S ECTION 9-T2S- R1 3 E, ATOKA COUNTY, OKLAHOMA CAUSE C D N O.: PAGE-3-8. OPERATOR: LONGFELLOW ENERGY, L.P GAILLARDIA PARKWAY, SUITE 225 OKLAHOMA CITY, OK TELEPHONE : (405) is designated as initial operator of the unit and common sources of supply named herein, and the well, or wells, drilled hereunder. All elections required in paragraph 6 hereof shall be communicated to Operator at their address shown above, as required in th is Order. All written elections must be mailed and postmarked within the elect ion period set forth in paragraph 6. Operator has a current plugging bond and surety, or financial statement on file w ith the Corporation Commission. All written elections must be ma iled and postmarked within the elect ion period set fo rth in paragraph 6. LONGFELLOW ENERGY, L.P. has a current plugging bond and surety, or financial statement on file with the Corporation Commission. 9. COMMENCEMENT OF OPERATIONS : The Operator, or Subsequent Operator as provided above, shall commence operations for the drilling or other operations with respect to the first test well covered hereby within one (1) year from the date of th is order and shall diligently prosecute the same to completion in a reasonably prudent manner, or this order shall be of no force and effect, except as to the payment of bonus. If any payment of bonus, royalty payments or other payments due and owing under th is order cannot be made because the person entitled thereto cannot be located or is unknown, then said bonus, royalty payments or other payments shall be paid into an escrow account w ith in 90 davs after the date of th is order and shall not be commingled with any funds of the Applicant or Operator. Provided, however, the Commission shall retain jurisdiction to grant financially solid and stable holders an exception to the requirement that such funds be paid to an escrow account with a financial institution and permit such holder to escrow such funds within such holder 's organization. The responsibility for filing repo rts w ith the Commission as required by law and Commiss ion rule as to bonus, royalty or other payments escrowed hereunder shall be with the applicable holder. The escrowed funds shall be held for the exclusive use, and sole benefit of, the person entitled thereto. It shall be the responsibility of the Operator to notify all other holders of this prov is ion and of the Comm ission rules regarding unclaimed monies under pooling orders. If any payment of bonus due and owing under th is order cannot be made for any reason, then such bonus shall be paid into an escrow account and shall not be comm ingled with any funds of the Applicant or Operator. Any royalty payment or other payments due to such person shall be paid into an escrow account by the holder of such funds. 10. OPERATOR'S LIEN : The Operator, pursuant to 52 O. S (e) (1985), and in addition to any other rights provided herein, shall have a lien on the leasehold estate and the share of production from the drilling and spacing unit pooled hereby of any owner subject to the terms of th is order who has elected to pa rticipate in the first well covered hereby. The lien shall secure the payment of the participant's proportionate share of all costs incurred in the development and operation of the un it. 11. SPECIAL FINDING : The Applicant exercised due diligence to locate each of the respondents subject to this Application and a bona fide effort was made to reach an agreement with each respondent and the Applicant has not agreed with all such respondents in the drilling and spacing unit to pool their interests and to develop the drill ing and spacing unit and common sources of supply as a unit; the Appl icant has proposed the dril ling of the first well on the unit and to develop the common sources of supply ; the Operator, herein above named, is an owner of the right to drill on the drill ing and spacing unit and to develop and produce the common sources of supply. 12. SPECIAL PROVISIONS : NON-PARTICIPANTS : The granting of the relief requested by the Applicant shall include the intent of the Applicant to pool and adjud icate the rights and equities of the owners in the tract described herein as to those separate common sources of supply set fo rth above to be tested by the proposed well on a unit bas is and not on a borehole basis for any wells drilled as to the respective separate common sources of supply cited herein. The election not to participate as a working interest owner in the proposed initial unit well shall operate to foreclose the interest of the respondents as to elections to pa rt ic ipate in any subsequent well that may at some future time be drilled within the subject unit pursuant to this order ; and the initial election made by the respondents herein shall be binding as to the respondents, their assigns, heirs, personal representatives, agents, or estate for the first and all subsequent wells drilled pursuant to this order.

4 APPLICANT: LONG F EL LOW ENERGY, L. P. APP LICAT ION F OR POO L ING - ORD E R OF THE COMM ISSIO N ALL OF SECTION 9-T2S-R 13E, ATOKA COUNTY, OKLAHOMA CAUS E CD NO. : PAGE PARTICIPATION IN SUBSEQUENT WELLS : Only those owners electing to participate in the initial well will be allowed to pa rticipate in subsequent wells drilled on the drilling and spacing unit covered hereby. Owners electing or deemed to have elected any option other than participation shall receive the no cash plus additiona l or excess royalty of 1/8 x 8/8 or % as provided in Paragraph 6.3 herein ; provided however, if any owner's interest is subject to a royalty, overriding royalty or other burden on production in excess of the normal 1/8th royalty plus additional or excess royalty of 1/8 x 8/8 as provided in Paragraph 6. 3, then in that event, such excess royalty, overriding royalty or other burden shall be charged against the 1/8 x 8/8 or 12.50% overriding royalty or excess royalty, and the same shall be reduced by the amount of such excess. Any owner electing to participate in the in itial well may propose the dr il l ing of a subsequent we l l, and the proposing party shall notify those owners who elected to participate in the prior well of the proposed subsequent well, and said owner shall have 15 days from the receipt of said notice to elect whether to pa rticipate in the subsequent well or accept the options set forth here i n. The notice provided by the proposing par ty shall be made by ce rtified mail and shall include an AFE containing the proposed costs of the subsequent wel i, and owners electing to participate must pay to the operator their propo rtionate share of the costs with in 20 davs from the receipt of not ice from the propos ing party. Those owners failing to elect within the period provided or those owners electing to pa rticipate but failing to pay within the period provided shall be deemed to have elected not to participate in the subsequent well and shall be deemed to have elected the no cash plus add it ional or excess royalty of 1/8 x 8/8 or 12.50% as provided herein ; provided however, if any owner 's interest is subject to a royalty, overriding royalty or other burden on production in excess of the normal 1/8th royalty plus additional or excess royalty of 1/8 x 8/8 or 12.50%, then such burden sha ll be charged against the 1/8 x 8/8 or 12.50% overriding royalty or excess royalty as herein set forth, and the same shall be reduced by the amount of such excess. Operator shall commence, or cause to be commenced, operations for the drilling of any subsequent well proposed under th is paragraph within 180 days from the date written notice proposing the subsequent well, and shal l continue such operations with due diligence to completion. If operations for the drilling of the subsequent well are not commenced within the above described 180 day period, elections of the pa rties as to the proposed subsequent wells shall expire and the pa rties shall be in the same position relative to each other that they were in immediately pr ior to the written notice of the subsequent well being transmitted by the proposing party. In such event all rights acquired from the pa rties electing to the proposed subsequent well not to continue to pa rticipate in the development of the separate common sources of supply and drilling and spacing units hereunder the plan and development establ ished by this order, shall be relinqu ished by the propos ing party and any other acquiring pa rty and such relinquished rights shall vest in the parties who elected not to continue to so pa rticipate. Failure to timely commence any subsequent well shall not divest or otherwise effect in any manner the rights and interests of the various pa rties in any well or wells drilled prior thereto under the plan of development established by th is order and shall not terminate such plan of development. The Corporation Commission of the State of Oklahoma shall retain jurisdiction to determine the reasonableness of the drilling and completion costs proposed by Applicant for subsequent wells. A "SUBSEQUENT WELL" shall not include or cover any sidetrack operations in the initial unit well or any subsequent well covered hereby, when said sidetrack operation is conducted only to straighten the hole or to drill around junk in the hole, or to overcome other mechanical difficulties. No party shall have the right to make any subsequent elections as to any such sidetrack operation described in the preceding sentence. A s idetrack operation, however, for any other reason shall be considered a "SUBSEQUENT WELL" and shall fall within the terms set fo rth herein. 13. FILING OF AFFIDAVIT: The Applicant or its attorney shall file with the Secretary of the Commission, within 10 days from the date of this order, an Affidavit stating that a copy of the order was mailed within 3 davs from the date of this order to all parties pooled by this order, whose addresses are known.

5 APPLICANT: LONGFELLOW ENERGY, L. P. APPLICAT I ON FOR POOLING - ORDER OF THE COMM I SSION ALL OF SECTION 9-T2S- R13E, ATOKA COUNTY, OK L AHOMA CAUSE CD NO. : PAGE CONCLUSION : The relief requested is necessary to prevent or to assist in preventing the various types of waste of oil or gas prohibited by statute, or any of said wastes, and to protect or assist in protecting the correlative rights of interested parties. Such requested relief, as set out above, should be granted and IT IS SO ORDERED.. ". r~ COMMISSION OF OKLAHOM A F U tju D ANTHONY/.Ifte CZirman ROTH, Comm DONE AND PERFORMED t his day of December, ~MOF THE C0MISSION :, Secretary J CE dc~ivl~sei~, /~sssstant Secretary REPORT OF THE ADMINISTRATIVE LAW JUDG E The foregoing findings and order are the report and recommendations of the Administrative Law Judge. APPROVED :,Q3 ;c =146 Date Date Z a -a -3-~$. d as to form and content: 0_(~ 1/) C-) R e rt D. Gray, OBA # E. Memorial, Su ite 101 Edmond, OK Telephone : (405) Facsimile : (405) E-Ma i l : Bob@rdgraylaw.co m

6 4. A PP LIC ANT: LONGF E LLOW ENERGY, L. P. APP LICATION FOR POO LING - ORD ER OF T H E COMMISSION A L L OF SECTION 9-1'2S-R13 E, ATOKA COU NTY, OK LAHO MA CAUSE CD NO.: PAGE-6- EXHIBIT "A" 1 2 Deborah Susan Dunbar 9522 W. Shade Lane Wichita, KS Den ise A. Wilson (1) 8378 South Urbana Tulsa, OK Estate of Blanche Drum m c/o Milton V. Thueson 3023 S. Norwood Ave. Tulsa, OK Estate of E.L. Drumm c/o Milton V. Thueson 3023 S. Norwood Ave. Tulsa, OK Estate of Mamie Drum m c/o Milton V. Thueso n 3023 S. Norwood Ave. Tulsa, OK Estate of Marilyn M. Thueson e/o Milton V. Thueso n 3023 S. Norwood Ave. Tulsa, OK Jack D. & Lou Ann Sheffield, (2) Co-Trustees of the Jack D. Sheffield Revocable Trust dated July 20, 2007 P.O. Box 66 Lane, OK John A. Clingenpeel (2 ) E. 1181h St. N. Collinsville, OK Larry R. Sheffield (2) 470 S. Mimosa Rd. Lane, OK Lou Ann and Jack D. Sheffield, (2) Co-Trustees of the Lou Ann Sheffield Revocable Trust dated July 20, 2007 P. O. Box 66 Lane, OK Dismissed 13. The Board of Education of Stringtown (4) Independent School District #7 P.O. Box 130 Stringtown, OK The Charles Harold W illingham (2) Family Trust Bank of America, N.A., Trustee c/o Brad Kolin s 901 Main Street, 17th Floor Dallas, TX Dismisse d 16. The Hefner Co. (2 ) P.O. Box Oklahoma City, OK Dismissed U NLOCATED RESPO NDENTS KNOWN ADDRESSES : David Wilson 0) Address Unknow n Eulala Wallace (1) Address Unknow n WITH LAST 11. Dismissed These parties' addresses are unknown or could not be located, or who did not claim the certified mailing in connection with this action. (2) These parties for whom good addresses were obtained, accepted service of the certified mailing at the addresses shown. (3) These respondents refused the certified mailing. ( 4 ) These parties were listed for curative purposes only. LONGFELLO0A20081P 9-2S 13E.OR0ER.wpd END OF EXHIBIT "A"