BEFORE THE CORPORATION COMMISSION OF OKLAHOMA

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1 4. BEFORE THE CORPORATION COMMISSION OF OKLAHOMA APPLICANT: CRAWLEY PETROLEUM CORPORATION AND RELIEF SOUGHT: CLARIFY, CONSRUE, MODIFY, AND/OR AMEND ORDER (MAY 31, 1979) LEGAL DESCRIPTION: SECTION 27, TOWNSHIP 14 NORTH, RANGE 12 WEST, BLAINE COUNTY, OKLAHOMA CAUSE CD NO FILED FEB COURT CLERKS OFFICE - OKC CORPORATION COMMISSION OF OKLAHOMA VACATE ORDER AND TO REOPEN CAUSE The Motion to Vacate Order and to Reopen Cause came on for hearing before Michael L. Decker, Administrative Law Judge, Monday, January 9, 2017, and was continued for the filing of brief to Tuesday, January 24, 2017, on the Oil and Gas Conservation Motion Docket in Courtroom C, Jim Thorpe Building, Western Regional Service Office, Oklahoma Corporation Commission, Oklahoma City, Oklahoma. At the time of the hearing, Gregory L. Mahaffey, attorney, appeared for Newfield Exploration Mid-Continent Inc. (Newfield or Movant); Charles L. Helm, attorney, appeared for Crawley Petroleum Corporation and PDI, INC. (Crawley/PDI or Protestants); and David E. Pepper, attorney, appeared for Continental Resources, Inc. SUMMARY OF THE MOTION PROCEEDINGS 1. On Monday, January 9, 2017, and Tuesday, January 24, 2017, the Motions to Vacate Orders and to Reopen Causes came on for hearing as a protested motion on the Oklahoma City Oil and Gas Conservation Motion Docket. The Motion was filed in CD pursuant to OAC 165: ' At the conclusion of the hearing on January 9, 2017, 1 "165: Within 10 days; motion (a) Within ten (10) days after an order of the Commission is entered, any person may file a motion for rehearing, or a motion to set aside or to modify the order, or for any other form of relief from the order. However, a motion to reopen the record after an order has been entered shall not be considered a proper motion to seek relief from the order. The motion shall specifically state: (1) The parts or provisions of the order sought to be set aside or modified or from which relief is sought. (2) The specific modifications or other relief sought by the motion. (3) The specific grounds relied upon for relief. (b) Such motion shall be set for hearing before

2 the parties requested the motion be continued to Tuesday, January 24, 2017, for briefs to be submitted, at which time the matter was taken under advisement. 2. On January 9, 2017, the Mr. Pepper appeared in support the Protestants in the protested motion. 3. Mr. Mahaffey argued on behalf of the Movant that Order should be vacated and the cause reopened for a protested hearing. The Protestants filed CD on September 15, 2016, seeking to vacate the provisions of Order (May 31, 1979), which force pooled the Chester, Mississippian Limestone, and Hunton common sources of supply underlying Section 27-14N-12W, Blame County, Oklahoma. Mr. Mahaffey indicated two (2) wells had been drilled in Section 27 that perpetuated the primary term of the pooling order. Section 27-14N-12W is located in the STACK play where horizontal wells are being drilled to recover hydrocarbons from the Chester, Mississippi, and Hunton using multiunit well plans of development. On July 7, 2016, Chesapeake Energy Corp. sold its interests in the STACK play to Newfield, which included mineral rights in Section 27-14N-12W. A Form 1073 operator transfer was filed by Newfield on August 24, 2016, which changed the operator designation for a long list of wells in Blame and Canadian Counties. The Form 1073 listed the Tulsa address for Newfield (Movant's Exhibit B, submitted at hearing, and Exhibit 1, attached to Brief of January 17, 2017). Thereafter, on September 12, 2016, Newfield recorded a general "Notice of Address" denoting a change of address for the Newfield in Blame County, Oklahoma, listing a Texas address for the Movant: Newfield Exploration Mid-Continent Inc. 24 Waterway Avenue Suite 900 The Woodlands, Texas the Commission, unless referred. A copy of the motion, including notice of the date set for hearing, shall be served by the movant on each party of record by regular mail, facsimile, electronic mail or in person. If any motion filed pursuant to this Section is placed on the emergency or regular docket for hearing, the movant shall give at least five (5) days written notice to all respondents listed on the affidavit of mailing and all parties of record." 2

3 The Protestants had knowledge of Newfield's interest in Section 27, because Newfield had protested related applications covering Section 27 in which PD!, INC. was an active party of record. Mr. Mahaffey referred to a letter dated September 6, 2016, (Exhibit E) where Newfield had notified protesting parties to CD , CD , CD , and CD , that it had taken over the protest in the causes from Chesapeake. Mr. Mahaffey asserted Newfield should have been notified either at the Tulsa address or the Texas address listed in the Blame County "Notice of Address" (Exhibit C in the hearing, or Exhibit 2, attached to January 17, 2017 brief). There is still a small land management office in Tulsa. Pursuant Chancellor v. Tenneco Oil Co.,2 the Protestants should have been required to give notice of CD to Newfield at address listed in the Exhibit C Blame County notice of address change. 4. Mr. Helm argued on behalf of the Protestants that the Motion should be denied. Mr. Helm pointed to Exhibit F, the application and respondent list for CD , which listed the address for Newfield as: Newfield Exploration Mid-Continent Inc. 4 Waterway Square Place Suite 100 The Woodlands, Texas On the face of the proceedings in CD , notice was proper. The Commission had jurisdiction to issue Order The Movant wants the Commission to go outside the record to determine facts regarding notice to Newfield. The Protestants obtained service on Newfield through a certified mail return receipt signed "green card" twenty-three (23) days prior to the hearing in CD The Affidavit filed by the Movant in Blame County on September 12, 2016, Exhibit C, made no reference to the assignment from Chesapeake to Newfield covering the STACK play. The July 7, 2017 assignment (Exhibit 8, attached to the Protestants' January 24, 2017 brief) lists the address OK 122, 653 P.2d

4 used by the Protestants, which was the source of Crawley's certified mailing to Newfield for CD Further, Mr. Helm argued the Oklahoma Secretary of State records for the Movant listed the 4 Waterway Square Place, Suite 100, The Woodlands, Texas 77380, address for the Movant employed by the Protestants to obtain service by certified mail. Next, the Protestants used the Movant's address at 4 Waterway Square Place, Suite 100, The Woodlands, Texas 77380, found on the Internet website for Newfield. The Motion to Vacate Order and Reopen CD was filed eighty-two days (82) after the initial application was filed by the Protestants. The Motion is erroneous regarding the Movant's claim about lack of proper notice. The Movant's employee signed the green card at the 4 Waterway Square Place, Suite 100, The Woodlands, Texas address. Regardless of the filing of the Form 1073 on September 12, 2016, Newfield's witness testified on September 14, 2016 in a Commission spacing unit hearing that wells in Section 27-14N- 12W were operated by Chesapeake. Mr. Helm appeared at the September 14, 2016, hearing for and heard the witness testify regarding Chesapeake's status as the Section 27 operator. The evidence presented in the Protestants' hearing for CD demonstrated the original wells drilled in Section 27-14N- 12W had not penetrated to the depth of the Chester, Mississippian Limestone, and Hunton common sources of supply. Consequently, the Protestants' secured the AI's recommendation, and ultimately the Commission approval of Order to dismiss the zones from the pooling order, Order (May 31, 1979). Mr. Helm contended the Movant cannot be allowed to stand as the arbiter of what business address is to be used to establish proper notice. The Movant cannot be allowed to select what address to employ to establish service of process by certified mail. The Blame County deed records and Secretary of State information showed the 4 Waterway Square Place, Suite 100, The Woodlands, Texas 77380, address used by the Protestants. The due diligence employed by the Protestants' land managers had been sufficient to identify the correct address to list for Newfield in The Woodlands, Texas. Order (November 30, 2016) was a valid Commission order that vacated the zones in question from Order Newfield should not be allowed to maneuver the address

5 issue to its advantage by selecting an address, which supports its position. Newfield's corporate office accepted the service by certified mail at 4 Waterway Square Place, Suite 100, The Woodlands, Texas The Form 1073 address should not be used. The Movant's best avenue should be an appeal to the appellate court. Exhibit C affidavit filed in Blame County records was not indexed to the legal description for Section 27-14N-12W. It should not be considered by the Commission in the present cause. The only records to be reviewed to determine sufficiency of notice should be those in CD The order was proper and should not be set aside. As a result of the spacing hearing in CD on September 14, 2016, and ultimate Order (October 13, 2016), Newfield had vacated the Chester, Mississippian Limestone, and Hunton from the original 640 acre spacing order for 27-14N-12W. 5. Mr. Mahaffey stated in response that the Commission is authorized by case law to consider extrinsic evidence to determine the sufficiency of notice in an application. In this instance, the Commission can review extrinsic evidence to determine the correct address for proper notice to be employed in CD The Motion was filed within ten (10) days of Order The Form 1073 is a public record that should be taken into account to determine an address the Movant was using at the Commission in September Order is essentially a default judgment. There remains a Newfield office in Tulsa so that address is still in use. In response to Mr. Helms' claims about the Exhibit C document in Blame County records are not indexed to 27-14N-12W, Mr. Mahaffey stated the land manager's due diligence efforts should not be limited to research of the tract index. All county land records should be reviewed to determine ownership and contact information. The address listed on the Form 1073 should have been used by the Protestants--24 Waterway Avenue, Suite 900, The Woodlands, Texas At the conclusion of the hearing, the ALJ inquired if the parties desired to file briefs. There was an affirmative response, so the Motion was continued to January 24, 2017 for the filing of the Movant's brief and Protestants' response brief. 7. The Movant's brief was filed January 17, 2017, and expounded upon the position expressed on January 9. The brief cited Holder v Genie Oil 5

6 & Gas Corp.3; Miller v. Wenexco, Inc. 4 ; and Marshall Oil Corp. v. Adams5 for the proposition that extrinsic evidence should be considered when the Commission is reviewing the sufficiency of its jurisdiction to issue an order based on improper notice to a respondent. In the Protestants' January 24, 2017, brief, the points argued by Mr. Helm were reiterated that the record of CD should be the only information considered to determine if notice was proper to the Movant at 4 Waterway Square Place, Suite 100, The Woodlands, Texas Additionally, the brief included twenty-one (21) attached exhibits that cover a range of arguments. The status of the underlying Chester, Mississippian Limestone, and Hunton 640 acre spacing units established by Order was explained. Through Order (October 13, 2016), CD , the three common sources of supply were vacated by way of Newfield's request for affirmative relief. The Protestants' brief stated "When Order issued on November 30, 2016, the Oklahoma Corporation Commission (at Newfield's request) had already deleted and vacated the 640-acre drilling and spacing units for the Chester, Mississippian Limestone and Hunton common sources of supply underlying Section 27, Township 14 North, Range 12 West, Blame County, Oklahoma." 6 The Protestants attached several exhibits to the brief related to the question of the Movant's address: 1. Exhibit 8 to the brief is the "Assignment, Bill Of Sale And Conveyance" dated July 7, 2016, which covered the sale of STACK play acreage by Chesapeake to Newfield. Exhibit 8 lists the Movant's address as 4 Waterway Square Place, Suite 100, The Woodlands, Texas OK CIV APP 99, 111, 885 P.2d 1388, at (citing Anson Corp v. Hill, 1992 OK 138, 841 P.2d 583) K CIV APP 54, 1,743 P.2d 152, at OK 102, 113, 688 P.2d 37, at 40. Protestants' Brief at 4.

7 2. Exhibit 16 to the brief is a copy of the information page for Newfield found in the Oklahoma Secretary of State's corporate records database. Exhibit 16 lists the Movant's address as 4 Waterway Square Place, Suite 100, The Woodlands, Texas Exhibit 18 to the brief is a copy of the Internet webpage for the Movant. It lists the Movant's address as 4 Waterway Square Place, Suite 100, The Woodlands, Texas Exhibit 19 to the brief is a copy of a May 11, 2016 article from the Tulsa World newspaper indicating the Movant's plan to transfer a large number of employees from Tulsa to the Woodlands, Texas, which would result in the closing of its Tulsa office. 5. Exhibit 20 to the brief is the Internet report regarding the Movant's addresses from Accurint.com, which listed an alternative address for the Movant as 4 Waterway Square Place, Suite 100, Spring, Texas Exhibit 21 to the brief consists of copies of pleadings from the Application of Devon Energy, CD , Location Exception, 34-16N-9W, Kingfisher County, Oklahoma. The Exhibit A respondent list to the application showed the Movant's address as 4 Waterway Square Place, Suite 100, The Woodlands, Texas Next, attached is a copy of the "Entry of Appearance and Notice of Protest" filed on behalf of the Movant on September 21, 2016, by the Barnes Law firm of Tulsa. The purpose of the Exhibit 21 to the brief was to indicate a September 2016 notice delivered to the Movant's 4 Waterway Square Place, Suite 100, The Woodlands, Texas address resulted in the filing of a timely protest by the Movant to CD DISCUSSION OF ARGUMENTS AND BRIEFS From review of the original exhibits in CD , it is clear that none of the items listed above are in the record of the Protestants' application. While the instant circumstances are not within the test of Anson 7, the Movant and Protestants have presented arguments and 7 The Anson court held: 7

8 attachments to briefs that are extrinsic to the original record of CD The record of CD demonstrates the Movant was notified by certified mail, return receipt requested, and a green card was signed by an employee of the Movant at the address of 4 Waterway Square Place, Suite 100, The Woodlands, Texas Review of the items provided by the Protestants' as attachments to the January 24, 2017, brief confirm that the Protestants notified the Movant at the address determined from the property records for Section 27-14N-12W, Blame County, Oklahoma, prior to the filing of CD on September 15, In Chancellor v. Tenneco Oil C0. 8, the court held that the applicant in a forced pooling application should be required to research prior to the filing of the application, the respondents' list consisting of the owners of mineral interests not subject to agreement based upon determination of the "record owner." 9 The best evidence of the record ownership in Blame County, Oklahoma for Section 27-14N-12W, clearly is the Exhibit 8 attached to the Protestants' September 24, 2017, brief, the "Assignment, Bill Of Sale In the present case, it is undisputed that the respondents were entitled to notice. The record does not contain any notice or mailing to the respondents. While extrinsic evidence may have been necessary to establish that the respondents were entitled to notice, the face of record clearly fails to establish that the respondents received the required notice. Thus, under [841 P.2d 587] this Court's holding in Union, the Commission's attempt to exercise jurisdiction over the respondents was ineffective and a nullity insofar as it affected the respondents' interest. (Emphasis added.) 1992 OK 138, 115, 841 P.2d 583, at Supra, footnote 2. See Chancellor at 1982 OK , 653 P.2d 204, at 206 ("We agree with the trial court and find that under the facts in this case, C.W. Mann was the agent for Mason involving her oil and gas leasing activities and that Tenneco obtained good service on the record owner, Mason, by doing all it could by mailing notice of the application and the Commission's pooling order to Mason at the address of C.W. Mann, and that Tenneco owed no duty to inform Chancellor of any part of the proceeding before the Corporation Commission.")

9 And Conveyance" dated July 7, 2016, which covered the sale of STACK play acreage by Chesapeake to Movant. Exhibit 8 lists the Movant's address as 4 Waterway Square Place, Suite 100, The Woodlands, Texas The Protestants bolstered their use of the Movant's address taken from the primary ownership documents of record in Blame County, Oklahoma by reference to the Oklahoma Secretary of State corporation listing for the Movant, which was 4 Waterway Square Place, Suite 100, The Woodlands, Texas (Exhibit 16 attached to the Protestants' brief). The Protestants' brief provided additional information that the Movant listed the address of 4 Waterway Square Place, Suite 100, The Woodlands, Texas on its Internet webpage (Exhibit 18 attached to the Protestants' brief). Lastly, the circumstances observed from review of pleadings in the Application of Devon Energy, CD , Location Exception, 34-16N-9W, Kingfisher County, Oklahoma, demonstrate the Movant was able to internally process an application and notice of hearing delivered in September 2016 at 4 Waterway Square Place, Suite 100, The Woodlands, Texas 77380, and have an "Entry of Appearance and Notice of Protest" filed on its behalf within one week of receipt of the application in question. In contrast, the principal extrinsic information asserted by the Movant consists of its Exhibit 2 attached to the January 17, 2017 brief identified as a "Notice of Address" form filed in Blame County, Oklahoma on September 12, 2017, which was not referenced to any legal description in the county, but listed all 77 Oklahoma counties. The notice listed the Movant's address as Newfield Exploration Mid-Continent Inc., 24 Waterway Avenue, Suite 900 The Woodlands, Texas Likewise, the Movant asserted the Protestants should have researched the OCC's Oil and Gas Conservation Division records to determine the Movant's address used on the August 24, 2016, Form 1073 Multiple Well Transfer form (Exhibit 1 attached to the Movant's September 17, 2017 brief). The Form 1073 listed the address of One Williams Center, Suite 1900, Tulsa, Oklahoma In both instances, the sources of address information asserted by the Movant in the instant motion are not the best source of record ownership, which the Protestants would be expected to research. Obviously, the Movant failed to adhere to internal controls to ensure that the application and notice of hearing in CD were forwarded to the proper department in The Woodlands, Texas headquarters for action. The use of the same address of 4 Waterway Square Place, Suite 100, The Woodlands, Texas by

10 another applicant in CD resulted in proper routing within the company, so that the Movant was able to file a protest within one week of receiving the application and notice in that cause. In the instant proceeding, the Protestants should not be penalized for the Movant's failure to properly forward the application and notice in CD to the correct office in The Woodlands, Texas headquarters. FINDINGS AND RECOMMENDATIONS After consideration of the Motion, briefs, exhibits, and arguments of counsel, the ALJ recommends as follows: 1. The ALJ recommends that the Motion filed by the Movant, should be DENIED. 2. The ALJ recommends that the Movant should seek remedies regarding the Chester, Mississippian Limestone, and Hunton common sources of supply underlying Section 27-14N-12W, Blame County, Oklahoma, pursuant to the forced pooling application in CD , which is pending on the Oklahoma City protest docket on March 1, 2, and 3, The Movant has taken over CD from Chesapeake and should seek to adjudicate rights for the subject common sources of supply in that application. /1f 0 RESPECTFULLY SUBMITTED TWS DAY OF FEBRUARY, Michael L. DecRr Administrative Law Judge MLD:sm xc: Commissioner Murphy Commissioner Hiett Commissioner Anthony ALJ Patricia MacGuigam AU Michael Decker Gregory L. Mahaffey Charles L. Helm 10

11 PD!, INC. David E. Pepper Office of General Counsel James Myles Oil Law Records Court Clerks - 1 Commission Files 11