IN THE DISTRICT COURT OF CADDO COUNTY STATE OF OKLAHOMA

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1 IN THE DISTRICT COURT OF CADDO COUNTY STATE OF OKLAHOMA IVAN J. SIMMONS, MADALINE M. THOMPSON, AND GAYLON LEE MITCHUSSON, v. FOR THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, PLAINTIFFS, ANADARKO PETROLEUM CORPORATION, DEFENDANT. Case No. CJ NOTICE OF PROPOSED SETTLEMENT OF CLASS ACTION BETWEEN PLAINTIFFS AND ANADARKO PETROLEUM CORPORATION AND HEARING TO DETERMINE WHETHER TO APPROVE PROPOSED CLASS SETTLEMENT AND TO ADDRESS OTHER ISSUES The Named Plaintiffs represent themselves and a Settlement Class is defined as follows: All non-excluded persons or entities who are or were royalty owners in Oklahoma wells where Anadarko Petroleum Corporation is or was the operator and/or working interest owner/lessee under oil and gas leases, or under governmentally created or sanctioned poolings of interests by the Oklahoma Corporation Commission, including forced pooling orders, drilling and spacing unit orders, enhanced production orders, field wide unit orders or orders approving unit agreements, from and after January 1, The Class Claims relate only to payment for hydrocarbons produced from the wells. The Class does not include overriding royalty owners or other owners who derive their interest through the oil and gas lessee. Except that: (1 the Class Claims shall not include any claims for the Norge Marchand Unit that are part of the Class Claims currently alleged and certified in Greghol v. Kerr McGee Oil and Gas Onshore, LLC, 1998 OK CIV APP 111, 959 P.2d 596 (filed and pending trial in the district court of Grady County, State of Oklahoma, Case No. CJ ; (2 the Class Claims shall not include royalty owners claims in those wells and during those periods where Anadarko was a nonoperating working interest owner and did not through itself or a related entity market its production or pay royalty; (3 the Class Claims shall not include claims for underpayment of royalty on gas sold by Anadarko at maximum lawful prices under the Natural Gas Policy Act of 1978 to interstate pipeline companies under regulated gas contracts, but Class Claims do include sales of temporarily or permanently released gas. The persons or entities excluded from the Class are agencies, departments or instrumentalities of the United States of America and the State of Oklahoma, publicly traded oil and gas exploration companies and their affiliates, and persons or entities that Plaintiffs counsel is, or may be prohibited from representing under Rule 1.7 of the Oklahoma Rules of Professional Conduct. Posted, as Ex A, at is a list of Class Wells that will be part of the Class Settlement, along with information relating to each. Ex A represents the parties' best efforts to identify the Class Wells that will be part of the Class Settlement. 1

2 This Notice is given pursuant to the Order of the District Court of Caddo County, Oklahoma (the Court, pursuant to Okla. Stat. tit. 12, The purpose of this Notice is to advise you: (a (b (c (d This lawsuit has been certified for settlement as a class action by the Court. Class Representatives and Anadarko Petroleum Corporation ( APC have entered into a Settlement Agreement which shall become effective, if at all, upon a Court Order approving the settlement becoming final and unappealable. The Settlement Agreement provides that APC shall pay the Plaintiff Class $155,000, Class Counsel have proposed to distribute the net settlement proceeds to the Class Members by proportionately allocating the net settlement proceeds to various systems or groups of wells identified by the Class experts based upon the asserted damage related thereto, with the resulting allocation to be then proportionately allocated to each well within that system or group of wells, and finally proportionately allocating the net settlement amount for each well to each royalty owner within that well as of a certain time. Based upon the current information, the net settlement proceeds would be allocated to the following systems or groups of wells in the following percentages: Antioch (56.04%; Panhandle (includes Duke Panhandle, Hugoton, and Other Panhandle (23.08%; Norge Marchand (0.47%; Bingham (0.03%; Off-System Wells - Affiliate Sales (0.54%; Off- System Wells - Non-Affiliate Sales (Texaco/OneOk (9.55%; and Off-System Wells - Non-Affiliate Other Sales (10.29%. The amounts shown above are gross amounts before deduction of fees and expenses. See section V below for a description of fees and expenses to be deducted to arrive at the net settlement proceeds to be distributed to class members. While APC has provided, and will be providing additional, information that Class Counsel will be utilizing in allocating the net settlement proceeds, APC has had no role in determining the manner in which funds are to be allocated, and takes no position with respect to such allocations. The Court, which has direct control over the Common Fund and the settlement process, will conduct a hearing to determine whether to approve the Settlement Agreement between Plaintiffs and APC (the Settlement Fairness Hearing. As a putative Class Member you have the right to exclude yourself from the Class or object to the proposed Class Settlement and/or Class Counsel s requested fees and litigation expenses. IT IS IMPORTANT THAT YOU READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. YOUR RIGHTS WILL BE AFFECTED BY THE LEGAL PROCEEDINGS IN THIS LAWSUIT. I. SUMMARY OF THE CLASS ACTION LITIGATION CLAIMS This Class Action Litigation was originally filed in February, The Class Representatives have asserted various claims and causes of action against APC regarding underpaid royalties related to wells in Oklahoma operated by APC for non-payment of royalties on natural gas, deduction of fees and expenses relating to treating, compressing, gathering and processing produced gas, and failure to pay royalty on the full Btu content of produced gas, and other claims resulting from breach of contract, fraud (both actual and constructive, conspiracy, fraudulent misrepresentation, breach of fiduciary duty, breach of express and implied duties of oil and gas leases, pooling orders and spacing orders, deceit, breach of statutory duty and fraudulent concealment, all as more fully described in the Second Amended Petition and in the Court s Amended Order Certifying Class dated January 9, 2008, and collectively referred to as the Class Claims. APC continues to deny all of Plaintiffs allegations of liability and damages and asserts various defenses to the Class Claims. If the settlement with APC is approved, the Class Action Litigation will be dismissed with prejudice to refiling. By giving this Notice, the Court is not expressing any opinion regarding the merits of either the Plaintiff Class or APC s claims or defenses. Nothing contained in this Notice should be construed as suggesting the Court s view as to which side might prevail should this matter proceed to trial. 2

3 II. CLASS CERTIFICATION The Court entered an Order titled Order on Joint Motion for Certification of Settlement Class granting Plaintiffs Motion for Class Certification, for settlement purposes only, pursuant to Okla. Stat. tit. 12, 2023 (A and (B(3. Under the Settlement Agreement, APC was required to deposit the Settlement Amount into a Court administered common fund. In the Certification Order, the Court defined the Class as described above and designated Ivan J. Simmons, Madaline M. Thompson, and Gaylon Lee Mitchusson as Representatives of the Plaintiff Class and appointed as Class Counsel: (a Robert N. Barnes, and Patranell Britten Lewis, of Barnes & Lewis, LLP, 208 NW 60 th Street, Oklahoma City, OK 73118; telephone ( ; (b Allan DeVore, Jane Good Rowe, and Jacquelyn Dill, of The DeVore Law Firm, A Professional Corporation, 5709 NW 132 nd Street, Oklahoma City, OK 73142; telephone ( ; (c Kerry W. Caywood, and Angela Caywood Jones, of Park, Nelson, Caywood & Jones, PO Box 968, Chickasha, OK 73023; telephone ( III. TIME PERIOD OF CLASS CLAIMS The time period of the settlement of past claims is January 1, 1985 through November 1, IV. THE PROPOSED CLASS SETTLEMENT After a thorough analysis of all claims and defenses, and after extensive negotiations, the Class Representatives and APC have agreed to settle the Class Claims against APC, including any claims associated with APC s affiliates and predecessor entities as well as certain other working interest owners as they relate to the Class Claims, on the terms described below, subject to final approval by the Court. The Court has preliminarily approved the settlement for the purpose of giving this Notice and setting a Settlement Fairness Hearing. The basic terms of the Settlement Agreement between the Plaintiff Class and APC which the Court is being asked to approve are as follows: 1. APC will pay the sum of $155,000, to the Plaintiff Class, as a full, complete and final settlement of all Released Claims against Released Parties, as those terms are specifically defined in the Settlement Agreement. APC shall not be liable to the Plaintiff Class, the Class Representatives or Class Counsel for any other costs, expenses or fees. 2. APC and the Class Representatives agree that the Common Fund Settlement Amount shall be for the benefit of the Plaintiff Class, subject only to the Administrative Expenses and claims of Class Counsel for attorneys fees, a class representatives award and litigation expenses. 3. Ultimate allocation and distribution of the Common Fund Amount to members of the Plaintiff Class, the Class Representatives and/or Class Counsel shall be in accordance with the Plan of Allocation and Distribution attached to the Compromise and Settlement Agreement and approved by the Court. 4. Upon the date that a Court Order approving the settlement between APC and the Plaintiff Class, and specifically approving the terms of the Compromise and Settlement Agreement, becomes final and unappealable, the Plaintiff Class, the Class Representatives and Class Counsel shall be deemed to have, and by operation of the Court Order approving the settlement shall have, fully, finally and forever released, relinquished and discharged the Released Parties for the Released Claims, as these terms are specifically defined in the Compromise and Settlement Agreement. 5. Released Parties as defined in the Compromise and Settlement Agreement means (a APC, Anadarko Energy Services Company ( AESC, Anadarko Gathering Company ( AGC, any subsidiaries, affiliates, partnerships, and general partnership interests of APC, AESC, or AGC, and all such entities officers, directors, employees, agents, representatives, attorneys, predecessors, successors, and assigns (except third parties to which APC assigned interests in Oklahoma wells or Oklahoma gathering systems, and (b third party leasehold working interest owners in Class Wells during the Claim Period for each Class Well to the extent, and only to the extent, such parties oil or gas was marketed by APC under the same terms as APC s gas during the Claim Period and APC distributed the royalties as operator of the well. 3

4 6. Released Claims as defined in the Compromise and Settlement Agreement include all claims asserted in the Class Action Litigation and shall also mean and include any and all claims against Released Parties (defined below, whether asserted or unasserted, known or unknown, in contract, tort, or based on statute or on any other legal or equitable ground or theory, related to (a the payment, calculation, or reporting of royalties on hydrocarbons produced from any of the Class Wells during any portion of the Claim Period that APC was either (i the well operator, or (ii a non-operator working interest owner marketing and selling its own gas in-kind and remitting royalties thereon to the operator, or (b the sale or assignment of oil and gas leases and/or wells in the Antioch area of Oklahoma and/or related gas purchase agreements to Exco, or (c the sale or assignment of the Antioch gathering system and associated gathering contracts to DCP and/or the extension of any such gathering contracts. The term Released Claims specifically does not include: (a royalty payments that APC would have made in the ordinary course of its royalty settlement practices for production months prior to the release date for which royalty had not been paid to that royalty owner; (b claims that APC is obligated to make routine prior period adjustments for clerical or administrative errors concerning prices actually received, volumes actually sold or produced, or decimal interest of the type that historically have been addressed by APC by way of prior period adjustments, (c claims to money held in suspense by APC as of November 1, 2008, (d claims that APC failed to comply with obligations to protect Class Representatives or members of the Settlement Class from drainage, (e claims that APC breached obligations to Class Representatives or members of the Settlement Class to develop Oklahoma oil and gas leases, or (f claims currently being asserted in the pending class action styled Greghol v. Kerr McGee Oil and Gas Onshore, LLC, 1998 OK CIV APP 111, 959 P.2d 596 (filed and pending trial in the district court of Grady County, State of Oklahoma, Case No. CJ APC repeatedly has asserted and continues to assert many defenses to the Plaintiff Class and Class Representatives claims and contentions. APC expressly asserts its defenses have merit and that they have no liability to the Plaintiff Class or the Class Representatives. V. LITIGATION COSTS AND DISTRIBUTION OF NET AMOUNT TO CLASS MEMBERS Class Counsel has requested that the Court award Class Counsel an attorney s fee of forty percent (40% of the Common Fund; award the Class Representatives a fee of one-half of one percent (1/2 of 1% of the Common Fund; and reimburse Class Counsel for expert and consulting fees and litigation expenses totaling approximately $850,000. If the Court approves this request, said amounts will be deducted before distribution to the Class. After deducting any award entered by the Court for the fees and expenses described above and the Administrative Expenses (as defined in the Compromise and Settlement Agreement, the net common fund amount will be allocated proportionately to the Class Members based upon the general methodology described above. Furthermore, the distribution of the net common fund amount will be based upon royalty ownership as of the last date APC operated the well, with some minor exceptions. The specific formulae used to make individual allocations of Common Fund Settlement Amount for each of the Class Claims are set out in the Plan of Allocation and Distribution attached to the Settlement Agreement. Furthermore, to the extent that putative Class Members elect not to participate in this Class (i.e., opt out of the Class, if any, the amount attributable to those royalty owners will be proportionately reallocated to the remaining Class Members. The distribution described above to Class Members is based on the following assumptions: (a that very few sales of royalty interests have occurred during the claim period, (b that where sales did occur, the parties intended for the buyer to receive payment for past claims, and (c that where royalty interests passed through inheritance, devise or interfamily transfers, it was the intent that the heir, devisee or transferee receive payment for past claims. To the extent these assumptions are not correct in relation to particular transfers of interests, the Court will order that the 4

5 Class Member who receives payment shall in turn make payment to the proper party. Any member of the Settlement Class who receives a payment pursuant to this Settlement and fails to make payment to the proper party pursuant to this Settlement shall indemnify APC against any claim made against APC by the party asserting entitlement to the payment, but only to the extent of the payment received. Members of the Settlement Class who do not receive distributions from the Net Settlement Amount for Distribution as a result of the assumptions described above shall be deemed to have released the Released Parties against all Released Claims, regardless of whether the Class Member who did not receive a distribution from the Net Settlement Amount for Distribution is entitled to some or all of the distribution made to another Class Member and regardless of whether the Class Member to whom the distribution was made does or does not comply with the Court s order to make payment to the proper party. VI. CLASS SETTLEMENT FAIRNESS HEARING The Settlement Fairness Hearing will be held on December 23, 2008, at 9:00 a.m., before the Honorable Wyatt Hill, Judge of the District Court, in the Caddo County Courthouse, Anadarko, Oklahoma. VII. WHAT ARE YOUR OPTIONS AS A CLASS MEMBER? A. You Can Approve the Proposed Class Settlement with APC by Doing Nothing. By taking no action, or by taking any action other than: 1 opting out of the Class or 2 objecting to the approval of the settlement with APC, as set forth below, your interests will be represented by the Class Representatives and Class Counsel. As a Class Member you will be bound by the outcome of the proposed Settlement with APC, if approved by the Court. You are advised that the Class Representatives and Class Counsel believe that the proposed Settlement with APC is in the best interest of the Class, and, therefore, they intend to support the proposed Settlement at the Settlement Fairness Hearing. B. You May Opt Out of the Settlement Class. If you do not wish to be a member of the Settlement Class, then you may opt out of the Class as long as you do so in writing on or before December 15, If you do not opt out by that time in writing, you will remain a member of the Settlement Class and be bound by any rulings, decisions or judgment affecting the Class. If you wish to opt out of the Class, you must send a letter to Opal Finch, Caddo County Court Clerk (physical address 201 W. Oklahoma Ave., Anadarko, Oklahoma 73005; mailing address P.O. Box 10, Anadarko, Oklahoma , in generally the following form and content: Dear Judge, I do not want to be a member of the Settlement Class in Simmons v. Anadarko, Case No CJ , District Court of Caddo County, Oklahoma. I understand it will be my responsibility to pursue any claims I may have, if I so desire, on my own and at my expense. The letter must be signed by you and acknowledged by a Notary Public. In the letter you must identify the Class Wells in which you are a royalty owner (by Well name, APC well number, Section, Township, Range, and County and provide your APC royalty owner number. C. You May Remain a Member of the Settlement Class, but Object to the Proposed Class Settlement or to Class Counsel s Request for Attorney s Fees, Class Representatives Award, Expert and Consulting Expenses and other Litigation Expenses. You have the right to remain a member of the Settlement Class, but still object to the proposed settlement with APC and/or the requested fees and expenses as set forth above. Persons who desire to object to the Settlement or the fees and expenses must file a written statement with Opal Finch, Caddo County Court Clerk (physical address 201 W. Oklahoma Ave., Anadarko, Oklahoma 73118; mailing address P.O. Box 10, Anadarko, Oklahoma , and provide a copy of same to Class Counsel Robert N. Barnes, Barnes & Lewis, LLP, 208 NW 60 th Street, Oklahoma 5

6 City, OK 73118, and counsel for APC, Patrick M. Ryan, Ryan Whaley Coldiron Shandy PC, 900 Robinson Renaissance, 119 North Robinson Avenue, Oklahoma City, OK Your written objection statement must be postmarked (if mailed or hand-delivered on or before December 15, The written statement must contain: (1 A heading referring to Case No. CJ and to the District Court of Caddo County, Oklahoma; (2 A statement as to whether the objector intends to appear at the Settlement Fairness Hearing, either in person or through counsel, and, if through counsel, identifying counsel by name, address and telephone number; (3 A detailed statement of the specific legal and factual basis for each and every objection; (4 A list of any witnesses the objector may call at the Settlement Fairness Hearing, together with a brief summary of each witness s expected testimony; (5 A list of and copies of any exhibits which the objector may seek to use at the Settlement Fairness Hearing; (6 A list of any legal authority the objector may present at the Settlement Fairness Hearing; (7 The objector s current address; (8 The objector s current telephone number; (9 The objector s signature executed before a Notary Public; and (10 Identification of the objector s interest in Class Wells by identifying each Class Well (by Well name, APC well number, Section, Township, Range, and County and objector s APC Royalty number. Any Class Member that fails to timely file such written statement and provide the required information will not be permitted to present any objections at the Settlement Fairness Hearing. D. You May Retain your own Attorney to Represent you at the Settlement Fairness Hearing. Subject to the conditions set forth in subparagraph C, you have the right to retain Your Own Attorney to Represent You at the Settlement Fairness Hearing. If you retain separate counsel, you will be responsible for the fees and expenses out of your own pocket. VIII. CONDITIONS AND CONSEQUENCES OF NON-APPROVAL If the Court does not enter an Order approving the settlement between APC and the Plaintiff Class, or if the Court enters an Order approving the settlement between APC and the Plaintiff Class and appellate review of said Order is sought and upon such review such approval of the settlement between APC and the Plaintiff Class is reversed, or is modified so as to materially change the terms of the settlement, then the settlement between APC and the Plaintiff Class shall become null and void. If the settlement between APC and the Plaintiff Class becomes null and void, the case will proceed as though the Settlement Agreement was not entered into. 6

7 IX. SCOPE OF NOTICE AND ADDITIONAL INFORMATION This Notice contains only a summary of the Class Action Litigation and the proposed Compromise and Settlement Agreement. For more detailed information regarding the Class Action Litigation, you are referred to the pleadings and orders in the Court file, which may be inspected during regular business hours at the Office of the Court Clerk, Caddo County Courthouse, Anadarko, Oklahoma. You may obtain a copy of the Compromise and Settlement Agreement, and related documents, by mailing a written request to Class Counsel at the following address: Simmons Class Counsel, Barnes & Lewis, LLP, 208 NW 60 th Street, Oklahoma City, OK Further information is available by contacting Class Counsel, c/o Rust Consulting, Inc., PO Box 57, Minneapolis, MN , or telephone by contacting Patranell Lewis at plewis@barneslewis.com or ( ; or Jacquelyn Dill at jackie@devorelawfirm.com or ( , or toll-free at or visit If you believe that you are a member of this Settlement Class, but did not receive a copy of this Notice by mail, you should contact Class Counsel concerning your claim. If you wish to communicate with or address questions to Class Counsel, you may contact them at the above-listed telephone numbers and addresses. You may, of course, seek the advice and guidance of your own attorney if you desire. If you desire a list of Class Wells, you may examine that list online at or request that list from Class Counsel. PLEASE DO NOT TELEPHONE THE COURT OR THE COURT CLERK S OFFICE FOR INFORMATION. By Order of the District Court of Caddo County, State of Oklahoma. Dated: November 12, 2008 /s/ The Honorable Wyatt Hill Judge of the District Court 7

IN THE DISTRICT COURT OF TEXAS COUNTY, STATE OF OKLAHOMA

IN THE DISTRICT COURT OF TEXAS COUNTY, STATE OF OKLAHOMA MARVIN TAYLOR, MARGARET SHEPPARD AND ALESEN SHEPPARD ) FOR THEMSELVES AND ALL OTHERS SIMILARLY SITUATED, ) PLAINTIFFS, ) VS. ) CASE NO. CJ-2002-104