BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA RIMROCK RESOURCES OPERATING, LLC RIMROCK RESOURCES OPERATING, LLC

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1 APPLICANT: BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA RIMROCK RESOURCES OPERATING, LLC F I LS N0V2221J15 COURT CLERK'S OFFICE - TULSA CORPORATION COMMISSION OF OKLAHOMA RELIEF REQUESTED: MULTIUNIT HORIZONTAL WELL LEGAL DESCRIPTION: SECTION 29 AND 32, TOWNSHIP 2 NORTH, RANGE 2 WEST, GARVIN COUNTY, OKLAHOMA CAUSE CD NO T APPLICANT: RIMROCK RESOURCES OPERATING, LLC RELIEF REQUESTED: WELL LOCATION EXCEPTION (PART OF A MULTIUNIT HORIZONTAL WELL LEGAL DESCRIPTION: SECTION 29 AND 32, TOWNSHIP 2 NORTH, RANGE 2 WEST, GARVIN COUNTY. OKLAHOMA CAUSE CD NO REPORT OF THE ADMINISTRATIVE LAW JUDGE The cause came on for hearing before Curtis M. Johnson, Deputy Administrative Law Judge (AU, in the Oklahoma Corporation Commission's (Commission courtroom, Kerr Building, Tulsa, Oklahoma, pursuant to notice given as required by law and the rules of the Oklahoma Corporation Commission for the purpose of taking testimony and reporting to the Commissioners. HEARING DATE: October 28, APPEARANCES: RON M. BARNES, Attorney, appeared for the Applicant, Rimrock Resources Operating, LLC ("Rimrock"; CHARLES B. DAVIS, Attorney, appeared for R.L. Clampitt & Associates, Inc. ("Clampitt" and Don Moore; GREGORY L. MAI-IAFFEY, Attorney, appeared for Newfield Exploration Mid-Continent, Inc. ("Newfield"; and appearing in CD T, Well Location Application, only, RUSSELL I. WALKER appeared for Triad Energy, Inc. CASE SUMMARY The Applicant, Rimrock, seeks a Multiunit Horizontal Well and a Location Exception for the Sycamore, Woodford and Hunton, with the lateral targeting the Woodford formation, and the Sycamore and Hunton Formations being included as associated common sources of supply. Rimrock requests it be named operator under both Applications. Rimrock proposes to commence a well with a surface location no closer than 1400 feet from the South line and no closer than 440 feet from the west line of Section 32, Township 2 North, Range 2 West, Garvin County, Oklahoma. The Protestant, Clampift's, only opposition to Rimrock's requests is Clarnpitt contends the surface location for the proposed Well should be moved

2 south of the fault with the horizontal portion of the Well drilled on a curve so to encounter the Woodford north of the fault. Clampitt contends this would add 100 to 200 feet of additional lateral to the Well. Both parties are in agreement the weilbore should not cross the fault as this would constitute an unnecessary risk to drilling the proposed Well. RECOMMENDATIONS After hearing the Witnesses, considering the Exhibits, and hearing arguments of Counsel, the Administrative Law Judge finds that both Application's should be granted with Rimrock being named the operator under both Application's, and the proposed well should be drilled at the location proposed by Rimrock. I WX1 I fflv Exhibit #1 Rimrock's Respondent List for the Multiunit Horizontal Well. Exhibit #2 Rimrock's Respondent List for the Well Location Exception (Part of a Multiunit Horizontal Well. Exhibit 93 Rimroek' s Production Map with Trace of Propose Horizontal Lateral. Exhibit 44 Rimrock' s Volumetric Recovery Calculations. SUMMARY OF PROCEEDING 1. Cause CD Nos T and CD T are the Applications of Rimrock seeking Multiunit Horizontal Well and Well Location Exception (Part of a Multiunit Horizontal Well for the Sycamore, Woodford, and l{unton common sources of supply in Section 29 and 32, Township 2 North, Range 2 West, Garvin County, Oklahoma. 2. The Commission hasjurisdiction over the subject matter, and notice has been given in all respects as required by law and the rules of the Commission. 3. Mr. Barnes began the Cause for the Applicant by calling Debbie Bodenhamer, a Petroleum Landman for Rimrock, to testify on their behalf. She testified the Applicant owns 49% of Section 29 and 32% of Section 32, Clampitt owns no interest in Section 29 and 1.38 acres in Section 32, and Don Moore owns no interest in Section 29 and 7.6 acres in Section 32. The Witness sponsored Exhibits #1 & 2 the Respondent List for each Application. Both Exhibits were accepted into evidence. The Witness testified she used county records, phone books and internet search engines to attempt to locate all the Respondents. The Witness requested and was granted authority to have notice by publication for those Respondents she could not locate. The Witness stated the proposed Well lateral allocation is anticipated to be 57% in Section 29 and 43% in Section Mr. Davis conducted cross examination of the Witness. The Witness again provided the interest each party holds in the subject Sections. 5. Mr. Barnes called Mike Faulk, a Geologist, to testify for Rimrock. The Witness sponsored Exhibit #3, Rimrock's Production Map with Trace of Propose Horizontal Lateral and the Exhibit was accepted into evidence. The Witness explained the black line in the W/2 W72 of Section 29 and 32 denote a trace of the proposed Well lateral and the purple dashed line in the Sf2 of Section 32

3 illustrates the location of a fault. The Witness requested the Order to issue in CD T that spaced the Sycamore, Woodford, and Hunton on a 640 acre horizontal basis be incorporated into the record by reference. The AU granted the Witness' request. The Witness testified the surface location of the proposed Well is just North of the fault, purple dashed line, in the Sf2 of Section 32. The Witness stated Rimrock had 3D seismic over this area and this provides more accurate data than older generation 2D seismic. The Witness provided a copy of proprietary structure map for demonstrative purpose only based upon his interpretation of the 3D seismic data. The Witness explained this seismic data consisted of a data point every 110 feet. 6. The Witness provided the basis for Rimrock's request to drill the Well at the proposed location. The Witness explained this is as far South as we can move the Well to avoid any contact with the fault. We want to avoid the fault if it is a zone of instability in the Woodford by causing shale to fall into the wellbore which could result in failure of the lateral. Another reason to drill the Well at this location is Rimrock wants to drill the Well South to North because the Woodford is structurally higher to the North and this will result in the toe of the Well being up dip and this assists the Well in better drainage of the reservoir. The Witness further testified this Well would be the first Woodford horizontal well drilled in this Township. When the Witness was asked what would happen to the reserves in the Woodford located South of the fault in Section 32, the Witness stated these reserves could be recovered by drilling a multiunit well for the Section South, Section 5, into Section The Witness testified regarding the need for the Location Exception. He explained the Well's location is legal in relation to the West line of the Sections, so the only reason for the Location Exception is to cross the Section line between Section 29 and 32. The Witness further testified if the Sycamore and Hunton are not encountered in the wellbore they will be dismissed from these Applications. 8. Mr. Davis conducted cross examination of the Witness. Mr. Davis asked the Witness what was the source of the 3D seismic. The Witness responded it was shot by Sayhaw about 1 1/2 years ago. Richard Carter interpreted the 3D seismic when he was on contract with Rimrock. The 3D seismic was purchased by Rimrock and it is not commercially available at this time. The Witness explained the fault that runs through the South part of Section 32 only cut the deep formation but it does not traverse up into the shallower ones. The Witness testified the fault starts at about 8,000 feet and penetrates all the way down through the Hunton and into deeper formations. The Witness said this fault has about 100 feet of through to the East but moving West the through diminishes, so it would be a sealing fault to the East with the sealing nature of the fault deceasing toward the West. 9. Mr. Barnes conducted redirect examination of the Witness. The Witness agreed if the surface location of the Well was moved South of the fault and then the vertical portion of the Well was drilled North through the fault to land at the same place Rimrock wants to land the Well in the Woodford, it would not result in the recovery of any additional reserves. The Witness has met with the Geophysist that interpreted the 3D seismic and in the Witness's opinion this is a reasonable interpretation of the 3D seismic data. The Witness explained the reason Rimrock is not presenting the 3D seismic as an exhibit is Rimrock paid for this data and it is proprietary. 10. Mr. Barnes called Bob McNulty, a Petroleum Engineer, to testify for Rimrock. The Witness contends this is the best location to drill the Well because it is mechanically risky to drill through the fault. The Witness contends this is the best location for the Well to avoid the fault and get the longest lateral possible. The Witness sponsored Exhibit #4, Rimrock's Volumetric Recovery Calculations, and it was accepted into evidence. The Exhibit shows there were 804,382 bbl of recoverable oil in Section 29 and 811,548 bbl of recoverable oil in Section 32. The estimated ultimate recovery from wells producing from the Woodford in Section 29 was calculated to be 38,000 bbl of oil and there are no wells in Section

4 32 that produce from the Woodford. Therefore this leaves unrecovered reserves of 766,382 bbl for Section 29 and 811,548 bbl for Section 32. The Witness stated that recoveries from up dip toe oriented wells in the Woodford produce 25% more reserves than toe down oriented wells. For this reason the Witness contends a prudent operator would drill a Woodford well in a toe up orientation. 11. The Witness testified Rimrock can drill the Well at the location out lined in the Application and a well drilled at that location would avoid contact with the fault. The Witness asserts a prudent operator would not drill though the fault in the south half of Section 32. As for the reserves located south of the fault, the Witness contends these reserves would best be accessible to a multiunit well drilled from the Section to the South, Section 5, into the south half of Section When the Witness was asked if it would be prudent to move the surface location South of the fault, and then drill North of the fault though shallower formations which are no affected by the fault to the same landing point in the Woodford, the Witness responded this would be more expensive, this poses a greater risk, and this would not result in a longer lateral in the Woodford. 13, Mr. Davis conducted cross examination of the Witness. The Witness testified Exhibit #4, Rimrock's Volumetric Recovery Calculations, was prepared with varying thickness of the Woodford across the subject area. The Witness calculated the volume in Section 29 of 145,600 acre feet and in Section 32 of 146,897 acre feet in the Woodford. The Witness agreed his testimony just concerned the proposed Well. He testified it would take about four wells to properly develop the Multiunit consisting of Section 29 and 32. The Witness opined that production per foot a lateral should be fairly consistent in the Woodford. For this reason the Witness agreed that having the longest lateral possible was important to the potential production of the Well. However, the Witness contends it is risky to drill through the fault compared to the additional lateral you may accumulate. The Witness explained you would not increase the length of the lateral that much because you should not perforate or fracture stimulates the area within 200 feet on either side of the fault. The risks associated with drilling through a fault are possible cave-ins and sloughing which can lead to loss of circulation and getting stuck in the hole or even total loss of the hole. In the Witness' opinion it does not make any sense to risk drilling through the fault. At this point in the proceeding the Applicant rested it's Cause. 14. Mr. Davis called Mr. John Stromberg, a Consultant Petroleum Engineer, to testify for the Respondent. The Witness stated his Clients, Clampitt and Don Moore, think the well is located too far to the North and is effectively abandoning 160 acres of reserves located South of the fault. The Witness did agree that he would not want to drill through the fault. The Witness contends the Well could access additional length of lateral if the surface location of the Well was located South of the fault and built a curve over the fault to contact the Woodford closer to the fault. The Witness testified the lateral would still encounter the Woodford North of the fault and this could result in an additional 100 to 200 feet of lateral. The Witness added he is not a Geophysist so he has no reason to disagree with the seismic data presented. The Witness stated if the fault is present in the Woodford then it would also cut through the associated common sources of supply, the Mississippian and Hunton. 15. The Witness was asked to review Exhibit #4, Rimrock's Volumetric Recovery Calculations. The Witness stated the engineering calculations utilized to make the volumetric calculations were correct, but he could not comment on the accuracy of these calculations without the isopach map used to calculate acre feet of pay. 16. Mr. Barnes conducted cross examination of the Witness. The Witness agreed it would be detrimental to hit the fault. The Witness also agreed his plan was to start South of the fault and build in a curve to go over the fault and land the lateral in the Woodford at a location 100 to 200 feet closer to the fault. Mr. Barnes had the Witness calculate the amount of reserve recovered in an additional 100 feet of

5 lateral and of that amount how much would paid to Clampitt and Don Moore. The Witness calculated the additional 100 feet of lateral would recover 3520 BBL of oil and at $50 per BBL which would total $176,000. Since Clampitt's interest in the multiunit Well is this additional 100 feet of lateral would result in an additional benefit to Clampitt of $ Don Moore's interest in the multiunit Well of would result in an additional $10, The Witness further agreed he would not want to cross the fault in the curve or in the lateral and if that were to occur it could cost a lot more then the recovery by this additional 100 foot of lateral. The Witness argued that this all depends on where the fault is or is not. The Witness did state he thinks the fault does come up through the Mississippian. 17. Mr. Davis conducted redirect examination of the Witness. Again the Witness stated it all depends on where the fault is located. The Witness' Clients just want to start the Well South of the fault and build the curve in over the top of the fault. The Witness wants to accomplish drilling the Well without encountering the fault. As for the amount of additional revenue his clients will recover from an additional 100 feet of lateral, the Witness contends you have to multiply this amount by four or six wells that will ultimately be drilled. 18. Mr. Barnes recalled Mr. Bob McNulty as a rebuttal witness. The Witness testified Rimrock does not want to move the Well further to the South. The Witness stated the reason for this is the seismic data located the fault 1100 feet for the South boundary of Section 32 and at the proposd location the Well is 1400 feet from said boundary. The Witness stated this leaves a 300 foot buffer between the Well and the fault. He contends that moving any closer to the Southern boundary of Section 32 than 1400 feet is not worth the risk of potentially encountering the fault. CONCLUSIONS OF LAW After taking into consideration all of the facts, circumstances, evidence and testimony presented at hearing the ALJ finds as follows: 1. The ALJ recommends the Applications of Rimrock seeking a Multiunit Horizontal Well and Well Location Exception Part of a Multiunit Horizontal Well for the Sycamore, Woodford and Hunton common sources of supply underlying Section 29 and 32, Township 2 North, Range 2 West, Garvin County, Oklahoma, be recommended with Rimrock named operator of the Unit and the Well should be located at the site selected by Riinrock. 2. The ALJ contends the Well location of 1400 feet from the Southern boundary of Section 32 is the best location to drill the proposed Well. The undisputed testimony established neither party wants to encounter the fault in the welibore, and to do so could result in loss of circulation or wellbore collapse which could result in the loss of the Well. Neither party knows the exact location of the fault. Rimrock is privy to 3D seismic data which indicates the presence of a fault in the South half of Section 32. However, no one will know the exact location of the fault until the area is developed. Furthermore, Mr. McNulty testified the fault is located at a distance of 1100 feet from the south line of Section 32 and he would not want to perforate or fracture stimulate the Woodford within 200 feet of the fault. Therefore, if the Well were moved further South, it could only move another 100 feet. Taking into consideration that this 100 feet of lateral would only yield an additional $176,000, when weighed against the possibility of encountering the fault, which could result in damage to the wellbore or total loss of a multimillion dollar well, the ALJ must agree with Rimrock's conclusion that the risk is too high. Furthermore, this is the first horizontal well drilled in this Township and no one is certain of the exact location, width or breath of the fault. For these reasons the ALJ recommends the location for the proposed Well should be no closer than 1400 from the South land and no closer than 440 feet from the West line of Section 32.

6 3. Thus the ALJ recommends the Applications of Rimrock seeking a Multiunit Horizontal Well and Well Location Exception Part of a Multiunit Horizontal Well for the Sycamore, Woodford and Hunton common sources of supply underlying Section 29 and 32, Township 2 North, Range 2 West, Garvin County, Oklahoma, be recommended with Rimrock named operator of the Unit and the Well should be located at the site selected by Rimroek. Respectfully submitted this 22'' day of November, 2016 CURM M. JOHNSON, Deputy Administrative Law Judge