FILED BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA APPLICANT: RELIEF SOUGHT: POOLING R. L. CLAMPITF & ASSOCIATES, INC.

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1 BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA APPLICANT: RELIEF SOUGHT: POOLING R. L. CLAMPITF & ASSOCIATES, INC. Cause CD No LEGAL NE ¼ SECTION 4, TOWNSHIP 2 DESCRIPTION: NORTH RANGE 2 WEST, GARVIN COUNTY, OKLAHOMA APPLICANT: R. L. CLAMPITF & ASSOCIATES, INC. RELIEF SOUGHT: POOLING Cause CD No LEGAL SE 1/4 SECTION 4, TOWNSHIP 2 DESCRIPTION: NORTH RANGE 2 WEST, GARVIN COUNTY, OKLAHOMA FILED DEC 2 S 2014 OUR1 CLERKS OFFICE - OKt CORRECTED REPORT OF THE ADMINISTRAT1VIORPTION COMMISSION LAW JHOMA These Causes came on for hearing before Niles Stuck, Administrative Law Judge for the Corporation Commission of the State of Oklahoma, on the 8th day of October, 2014, at 8:30 a.m. in the Commission's Courtroom, Jim Thorpe Building, Oklahoma City, 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. CASE SUMMARY R. L. Clampitt & Associates, Inc. brings CD and CD seeking authority to pool the NE 1/4 of Section 4, Township 2 North, Range 2 West and the SE 1/4 of Section 4, Township 2 North, Range 2 West both in Garvin County, Oklahoma. At issue is whether a Joint Operating Agreement (JOA) should be described in the pooling order and what effect that JOA has on that order. RECOMMENDATION: The applications should be approved so long as the following language be included in the pooling orders in both applications:

2 ) "The Applicant recognizes there is an allegation that a Joint Operating Agreement burdens the interests being pooled by this order. The Commission does not have jurisdiction over parties who have entered into a private agreement. The Commission does not have jurisdiction over matters arising out of private contracts and takes no position regarding whether the Joint Operating Agreement burdens the lands pooled by this Order. Should it be determined that the Applicant and one or more Respondents are parties to a private agreement, and that agreement burdens the lands pooled by this Order, this order has no effect with regard to those respondents." HEARING DATE: APPEARANCES: October 8, Charles B. Davis, Attorney at Law, appeared on behalf of the Applicant, R. L. Clampitt & Associates, Inc. John C. Moricoli, Jr., Attorney at Law, appeared on behalf of protesting Respondent, Lario Oil and Gas Company. Richard Books and Eric Huddleston, Attorneys at Law, appeared on behalf of Respondent, XTO Energy, Inc. SUMMARY OF EVIDENCE The following numbered exhibits were admitted into evidence. 1. An Authorization For Expenditure. 2. "Takeoff' for each unit describing. 3. A Title Opinion created by Bill Gwinn. 4. A series of Oil and Gas Leases covering the E/2 of Section 4, Township 2 North, Range 2 West, Garvin County, Oklahoma. 5. An Operating Agreement and related amendments. 6. A series of conveyances filed against the E/2 of Section 4, Township 2 North, Range 2 West, Garvin County, Oklahoma. SUMMARY OF TESTIMONY 1. Rick Gibbon, a Landman appeared for the Applicant. His qualifications were accepted without objection. He provided testimony in support of a Pooling order containing the terms as described below. These terms are not in dispute. a. The applicant intends to drill a well in each of the tracts covered by each of these Applications that will explore the Sycamore, Woodford, Hunton and Viola. b. Each well is estimated to cost $796, to drill as a dry whole and $1,485, to drill and complete. c. The wells will be drilled to a true vertical depth of 8,1oo feet.

3 d. All Respondents have the right to participate and will be allowed to perfect their right to participate by paying their proportionate share of the estimated completion within the deadline as provided below. e. If a Respondent does not wish to participate, they may elect either of the following options: i. To accept a $200 per acre bonus and a 1/8 royalty. ii. To accept a $150 per acre bonus and a 3/16 royalty. f. All elections must be made within 20 day of the order. Any payment of completion costs must be made within 25 days of the order. The Applicant will tender any bonus payments within 35 days of the order. g. If any respondent fails to make or perfect an election within the deadline, they will be defaulted to the election with the highest bonus and lowest royalty. h. The order will contain a standard subsequent well clause allowing participating parties to propose an additional well under the same terms and deadlines as the initial well. If any subsequent well is not drilled within 18o days, the proposal is deemed withdrawn and all parties are returned to the position they held before the proposal was made. L R. L. Clampitt & Associates, Inc. is the designated operator and will commence the well within 18o days for the date of the order. 2. The parties stipulate to the following: a. The Applicant owns an interest in the oil and gas leases in evidence as Exhibit 4. The Applicant obtained its interest from William L. Jones by an assignment dated 1/6/2006. b. The leases owned by Applicant and Respondent are leases 1, 2, and 3 contained in Exhibit 4. Those leases covered i00% of the minerals in the lands leased. c. All leases are held by production. d. R. L. Clampitt & Associates, Inc. is the successor in interest to Vickers Petroleum Company, Inc. e. Lario is the successor in interest to Globe Oil and Refining Company. 1. XTO is the successor in interest to Exxon Company and Exxon Company was the successor in interest to the Carter Oil Company. g. Questar Exploration & Production Co. is the successor in interest to Vickers Petroleum Company, Inc. h. Larriet Petroleum is the successor to Phillips Petroleum Company.

4 i. The JOA entered into evidence as Exhibit 5 is in full force and effect. j. The title opinion was prepared by Bill Gwinn based on public documents and personal knowledge. k. The JOA is binding on all parties to these applications and run with the land. FINDINGS OF FACT 1. The findings of fact are those stipulated by the parties. FINDINGS OF LAW 1. NE 1/4 of Section 4, Township 2 North, Range 2 West and the NE 1/4 of Section 4, Township 2 North, Range 2 West both in Garvin County, Oklahoma. 2. The Respondent has standing to protest this action. 3. The Commission lacks jurisdiction to pool parties who have entered into a private agreement. 4. The Commission lacks jurisdiction to hear disputes arising from private contracts. RATIONAL 1. It is unknown whether or not the JOA entered into evidence burdens the interest being pooled in these two applications and the Commission does not have jurisdiction to decide that matter. 2. The Applicant must include a special finding of fact recognizing the existence of the contractual dispute. Should a court of competent jurisdiction or the parties themselves determine their interests are burdened by a private agreement, any pooling order will be null and void as to that party and interest. 3. Based on the above analysis, I recommend the applications be approved so long as the following language be included in both pooling orders: "The Applicant recognizes there is an allegation that a Joint Operating Agreement burdens the interests being pooled by this order. The Commission does not have jurisdiction over parties who have entered into a private agreement. The Commission does not have jurisdiction over matters arising out of private contracts and takes no position regarding whether the Joint Operating Agreement burdens the lands pooled by this Order. Should it be determined that the Applicant and one or more Respondents are parties to a private agreement, and that agreement burdens the lands pooled by this Order, this order has no effect with regard to those respondents."

5 4. RESPECTFULLY submitted this 23rd day of December, 2014 NS:sm Xc: Charles Davis John Moricoli Richard Books Office of General Counsel Michael L. Decker, OAP Director Oil Law Records Court Clerk - 1 Commission Files Niles Stuck Administrative Law Judge