THE TIPRO TARGET TEXAS SENATE, HOUSE ANNOUNCE COMMITTEES TIPRO HOSTS FRESHMEN LEGISLATOR RECEPTION, EDUCATIONAL BRIEFING AT CAPITOL

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1 THE TIPRO TARGET VOLUME 22, NO. 2 Januay 24, 2019 Texas Independent Poduces and Royalty Ownes Association TEXAS SENATE, HOUSE ANNOUNCE COMMITTEES The 86th legislative session is up and unning, and leadeship has wasted no time in announcing committee assignments in eithe chambe. On Januay 18th, Lt. Gov. Dan Patick announced the Texas Senate committee assignments. Of the 16 committees, 14 ae headed by Republicans. Democatic Senatos John Whitmie and Eddie Lucio, J. will continue to chai the Ciminal Justice Committee and the Integovenmental Relations Committee, espectively, while new chais include Senato Bandon Ceighton, Senate Highe Education; Senato Byan Hughes, Senate Administation, Senato Paul Bettencout, Senate Popety Tax Committee, Senato Bob Hall, Senate Agicultue and Senato Dawn Buckingham, Senate Nominations. Senato Lois Kolkhost is now chai of Senate Health and Human Sevices. These committee assignments eflect the poven leadeship, commitment, solid wok ethic and wide ange of expetise of the thity-one senatos who have been elected by the people of Texas to epesent them, said Patick in a statement. In the Texas House, Speake Dennis Bonnen announced thei committee assignments on Wednesday. Most notably thee will be new chais fo the House Committees on Enegy Resouces, Calendas, Ways & Means and State Affais. State Repesentative Chis Paddie (R-Mashall) will now chai the House Enegy Resouces Committee, the Calendas Committee will be chaied by State Repesentative Fou Pice (R-Amaillo), State Repesentative Dustin Buows (R-Lubbock) will take Bonnen s fome chai position on the Ways & Means Committee and State Repesentative Dade Phelan (R-Beaumont) will chai the State Affais Committee. Othe impotant chai assignments petaining to oil and gas include: Appopiations: Rep. John Zewas (R) Envionmental Regulation: Rep. J. M. Lozano (R) Land and Resouce Management: Rep. Tom Caddick (R) Natual Resouces: Rep. Lyle Lason (R) Bonnen tweeted the following afte the announcement: Afte thoughtful consideation, the following assignments have been made to eflect the senioity & pesonal pefeences of Membes & the divese demogaphics of the Texas House. TIPRO HOSTS FRESHMEN LEGISLATOR RECEPTION, EDUCATIONAL BRIEFING AT CAPITOL As the 86th Texas Legislative Session kicked off last week, TIPRO hosted seveal events aimed at eaching legislatos and staffes in the Texas Capitol. On the evening of Januay 16th, TIPRO honoed feshmen legislatos with a eception at Peche in Austin. The event was attended by appoximately 15 legislatos and staffes, as well as numeous TIPRO membes. This unique expeience allowed ou membes the chance to inteact diectly with lawmakes and welcome the newcomes as this session begins. On Januay 17th, TIPRO held an oil and gas educational biefing fo Texas legislative staff at the Capitol. Paul Pasons, Managing Diecto and founde of Enegy Taining Resouces, pesented to ove 40 legislative staff membes on the impotance of oil and gas to the Texas economy, also giving a compehensive oveview of the science behind the industy. We want to thank Pasons, as well as ou sponsos Anadako, Hilcop, ConocoPhillips, and the Texas Royalty Council fo assisting us in ou mission to educate legislatos and ensue that they ae infomed about the industy as they go foth ceating and instituting citical legislation. FEBRUARY 13, 2019 HOUSTON IPAA/TIPRO Leades in Industy Luncheon, 11:30 a.m. Houston Petoleum Club. Fo info, call: (202) TIPRO Calenda of Events FEBRUARY 13-15, 2019 HOUSTON Annual NAPE Summit, Geoge R. Bown Convention Cente. Fo info, call: (817) FEBRUARY 26-28, 2019 AUSTIN TIPRO S 73d Annual Convention, Sheaton Austin Hotel at the Capitol. Fo info, call: (512) MARCH 13, 2019 HOUSTON IPAA/TIPRO Leades in Industy Luncheon, 11:30 a.m. Houston Petoleum Club. Fo info, call: (202)

2 Page 2 Januay 24, 2019 THE TIPRO TARGET PRESIDENT S MESSAGE Dea TIPRO Membes, Despite maket volatility and additional challenges facing ou industy, TIPRO has had an exceptional stat to 2019 thanks to the high level of engagement and suppot fom ou membes. Ove the past seveal weeks, TIPRO has been vey active holding tageted foums with legislatos, thei staff and industy executives to netwok, lean and engage in discussions egading ou industy and pioities. These included ou ecent welcome eception fo new Texas legislatos, TIPRO s oil and natual gas biefing at the state capitol, ou monthly Leades in Industy Luncheon and numeous legislato and policy committee meetings. TIPRO s communication stategy is also focused on continuously highlighting the significant contibutions of the Texas oil and natual gas industy, esponding to anti-oil and natual gas sentiment with facts and data, and advancing ou membe pioities at all levels of govenment. This is illustated in ou vaious membe publications, editoials and though nealy 100 media hits and elated coveage ove the past yea. I encouage you to eview ou website fo additional infomation. Thoughout the 86th Texas Legislative Session, TIPRO will tack all developments on policy initiatives facing ou industy, and will advocate on you behalf. We will ultimately monito and lobby hundeds of bills that could negatively impact the Texas oil and natual gas industy. If you ae familia with what s occuing in othe oil and natual poducing states, you will undestand how incedibly fotunate we ae to live and wok in Texas. This did not happen by accident and we must not take it ganted. With you suppot, TIPRO will continue to diligently defend ou industy and its unmatched benefits fo many yeas to come. We have fequently communicated about ou pioities fo 2019, including outlining seveal issues to focus on duing the 86th Texas Legislative session. As always, I highly encouage you to paticipate in this pocess. It is incedibly valuable when elected officials can inteface diectly with ou membes to hea fisthand what dives you and keeps you up at night. A geat oppotunity to help with all these effots is ou upcoming Annual Convention - I encouage you each to eseve a oom and make tavel plans to join us in just unde a month. You can find moe infomation in this newslette and on ou website. Sinceely, Ed Longanecke APACHE CORP. PRESENTS $1 MILLION CHECK TO TEXAS PARKS & WILDLIFE FOUNDATION Today in Austin, Apache CEO and Pesident John Chistmann fulfilled his companies pledge to match all donations dolla fo dolla up to $1 million in suppot of Balmohea State Pak. In August 2018 the Texas Paks and Widlife Foundation and Apache announced the $1 million challenge which bought on a fluy of donations fom aound the state. By mid Januay the challenge had been met with ove $1 million in donations aised. The joint effot povides ove $2 million as donations wee made in esponse to the challenge last summe. Apache is the lagest oil company in the aea and made the pledge to suppot epais to the Balmohea State Pak pool. The popula and sping-fed West Texas swimming hole was closed in May 2018 afte pak staff pefoming an annual cleaning noticed damage to the concete apon unde the diving boad. The concete apon is used to stabilize the walls of the pool against eosion. In addition to the check fo epais in a ceemonial announcement Apache announced it is making a second $1 million contibution to the Texas Paks and Wildlife Foundation to establish an endowment benefitting Balmohea State Pak. Balmohea State Pak is a eal Texas teasue and an iconic asset fo the community. We e gateful fo the wok of both Texas Paks and Wildlife Foundation and Texas Paks and Wildlife Depatment and wee moved by the outpouing of suppot fom the boade community and ou many patnes who joined us in this effot, said Chistmann. In addition to ou $1 million match to help epai the pool, the establishment of a long-tem endowment though an additional $1 million contibution will supplement the pak s existing budget and incementally fund impovements ove time to help ensue the pool and the pak can be enjoyed fo geneations to come.

3 Page 3 Januay 24, 2019 THE TIPRO TARGET PERMIAN OIL LINE REMAINS ON SCHEDULE Ove the past decade, Texas has attacted some of the biggest playes in the oil and gas industy. Poducing 3.8 million baels pe day, the Pemian Basin is one of the ichest plays and the outlook only gets bette. Companies like ExxonMobil, Chevon and BP have all staked thei claim in the West Texas oil fields. They join othes industy leades like Concho Resouces, Occidental Petoleum and Diamondback Enegy in diving poduction gowth. With this pojected gowth additional pipeline capacity is citical in moving poduct fom the basin to the coast. EPIC Cude Pipeline LP faced egulatoy delays fom the U.S. Fedeal Enegy Regulatoy Commission (FERC), which had defeed action on thei petition to set initial taiff ates. The company confimed on Januay 14th that they ae still on schedule to begin inteim sevice in the thid quate of 2019, with pemanent sevice at the stat of 2020, accoding to a statement eleased on thei website. The pipeline would tanspot up to 900,000 baels pe day (bpd), stetching fom the Ola, Texas to the Pot of Copus Chisti. Accoding to the U.S. Enegy Depatment, the Pemian Basin poduces appoximately 3.8 million bpd of the oveall U.S. poduction of 11.7 million bpd. Thee is a huge need fo moving cude fom the Pemian Basin and not enough pipelines to get the job done. TEXAS LNG On Jan. 18th, Fedeal Enegy Regulatoy Commission (FERC) Deputy Secetay Nathaniel Davis ganted Save RGV Fom LNG, an envionmentalist goup inteested in blocking Texas LNG s poposed liquefied natual gas poject at the Pot of Bownsville, a motion to intevene. This means that the goup will be able to challenge FERC odes and equest eheaings. Davis said that the oganization has envionmental, aesthetic, and economic inteests that will be diectly affected by the poject, in his statement. Accoding to the Texas LNG website, the Bownsville location is ideally placed to expot gas fom the US gas gid, which includes a numbe of lage poducing aeas such as the Eagle Fod fields of Southwest Texas and othes theeby potentially educing a potion of cuently flaed gas and poviding valuable jobs and evenues fo the Texas Rio Gande valley egion. UT SYSTEM ENDOWMENT SKYROCKETS BLOCK ON SEISMIC TESTING The Univesity of Texas endowment has supassed Yale s endowment of $29.4 billion, hitting a high of $31 billion. This makes the UT System endowment the second lagest in the nation, following Havad. This incease in wealth is thanks, in pat, to the oil-beaing shale on univesity land. Advances in hoizontal dilling have helped to make this possible. Of couse, Texas A&M has also benefited fom West Texas oil lands, and saw its endowment aise 17% this yea. This is just anothe example of the impotance of the oil and gas industy to the futue of Texas. EIA OUTPUT PREDICTIONS 2019 The U.S. Enegy Infomation Administation s (EIA) latest shot-tem enegy outlook pedicts US cude oil poduction will aveage 12.1 million baels pe day (MMbpd) in 2019 and 12.9 MMbpd by 2020, with much of this gowth attibutable to poduction in the Pemian Basin. This is up fom 2018, which saw 10.9 MMbpd. As poduction appoaches that 12 MMbpd mak, thee may be some fluctuations in oil pices. Pices fell on Thusday, Januay 17. West Texas Intemediate was down 24 cents pe bael, while Bent cude oil was down 14 cents pe bael. Even as OPEC cuts poduction, some analysts fea the US suge in poduction may outpace demand. Thee is also some concen ove the unstable tade elationship between the US and China, though the situation may be coming to a esolution. Souces told Reutes that a shipment of US cude oil left Texas fo China last month fo the fist time since Novembe. In a epot eleased by the EIA on Tuesday, the oganization pedicted that the Pemian Basin will see a ise in output of 23,000 bpd next month. That would put output at a ecod 3.85 MMbpd fo Febuay. They also pedict a ise in output fo the Eagle Fod egion. TEXAS UNEMPLOYMENT RATE HITS RECORD LOW On Jan. 18th, Judge Richad Gegel of the Distict Cout fo South Caolina issued an ode blocking the Tump administation fom issuing pemits to conduct seismic testing fo offshoe oil and natual gas dilling until the govenment shutdown ends. This decision comes in the midst of pushback fom envionmentalists on the administation s decision last Novembe to allow testing fo offshoe oil and natual gas unde the Atlantic Ocean. Once the shutdown comes to an end, we may see dilling in the Atlantic fo the fist time since the 1980s. The Texas unemployment ate, at just 3.7%, is at the lowest in ecoded histoy. In addition to this, the Texas Wokfoce Commission epoted 29 consecutive months of employment gowth in Decembe of This news indicates a pospeous yea ahead fo the state. Oil and gas has a pofound impact on the oveall Texas economy, and with OPEC nations cutting down on poduction, the outlook is good. The Pemian Basin continues to boom, poviding suppot Texas at paticulaly impotant time as this legislative session aspies to incease public school funding and efom popety taxes, both costly endeavos.

4 Page 4 Januay 24, 2019 THE TIPRO TARGET EMINENT DOMAIN, ROAD FUNDING TOPICS TO WATCH Just as in 2017, Eminent domain is expected to be one of the majo issues addessed this legislative session. State Senato Lois Kolkhost (R-Benham) and State Repesentative DeWayne Buns (R-Clebune) filed legislation last session that poposed developes povide moe specific pipeline plans and would have implemented new egulations on landowne payments. While this legislation did not pass last session, both legislatos filed enewed vesions of those bills on Wednesday, Januay 23, 2019; House Bill 991 by Buns and Senate Bill 421 by Kolkhost. The Raiload Commission of Texas has held fim to its cuent eminent domain egulations fo common caie pipelines, which stikes a fai balance between the inceasing impotance of expanding infastuctue to suppot the state s oil and gas industy and pivate popety ights. Road funding is anothe policy aea of citical impotance to the oil and gas industy. State Repesentative James White filed House Bill 42 in Novembe, a bill elating to allocating a potion of oil and gas poduction tax evenue to the counties fom which the oil and gas oiginated and to the use of that evenue. This bill is the continuance of simila legislation filed by White in the 85th session. TIPRO has also been woking diligently with Repesentative White and ou membes to identify othe wokable solutions to ou infastuctue needs, including suppoting a one-time appopiation of funds to addess citical oad funding fo county and state highways in enegy poducing aeas. TIPRO emains committed to monitoing and engaging on legislation affecting eminent domain, oad funding, and numeous othe policy initiatives affecting the oil & gas industy as the 86th session continues to pogess Poposed Revisions - TIPRO Bylaws: The Boad Stuctue Task Foce ecommendations wee appoved by the boad and ae pesented to the membeship fo vote. Aticle V, Section 4: Class C Diectos: Poposed Change: Change the total numbe of Class C Diectos fom thee to fou. Updated Woding: The Chaiman shall have the ight to appoint up to fou (4) Class C Diectos, who, subject to confimation by a majoity of the boad of Diectos, shall seve fo the tem of the Chaiman who appointed them to the Boad of Diectos. If nominated by one o moe successo chaimen and confimed by the Boad, Class C Diectos may seve additional tems without limit. Aticle V, Section 5: Class D Diectos: Poposed Change: Limit Class D Diectos to the five(5( most ecently seving past Pesidents/Chaimen (excluding Immediate Past Chaiman) Change tem of sevice to a maximum of 5 consecutive yea tems. Updated Woding: The Class D Diectos shall be up to five (5) most ecently seving past Pesidents (othe than the Immediate Past Pesident of TIPRO pio to 12/31/09 and past chaimen of TIPRO (Othe than the Immediate Past Chaiman) who notify the Chaiman in witing that they desie to seve as a Class D Diecto, epesent that they will actively paticipate in the meetings of the Boad of Diectos, who ae confimed by the Boad, and elected by the Membeship at the Annual Meeting fo a two yea tem. Class D Diectos may seve a maximum of five consecutive tems. Aticle V, Section 6: Emeitus Status Diectos: Ceate advisoy, non voting Class E Diectos Past Pesdients/Chaimen (othe than Class D Diectos) New Woding: Section 6: At the discetion of the Chaiman, Class E Diectos, Emeitus Status, shall be past Pesidents of TIPRO pio to 12/31/09 and past Chaiman of TIPRO (othe than Class D Diectos) who notify the Chaiman in witing thei desie to seve the Boad of Diectos in an advisoy, non- voting capacity. This new Poposed Class of Diectos to be inseted as Aticle V, Section 6 - all othe sections would be modified accodingly.

5 73 d Annual Convention AUSTIN - TX FEBRUARY 26-28, 2019 TEXAS INDEPENDENT PRODUCERS & ROYALTY OWNERS ASSOCIATION TIPRO will host its 73d Annual Convention as state lawmakes convene in Austin fo the 86th Legislative Session. Goveno Abbot will join a stong lineup of speakes, including newly elected Texas House Speake Dennis Bonnen and Comptolle Glenn Hega. Registe today fo this high pofile event with exceptional content, speakes and many unique oppotunities to inteface with key elected officials and industy colleagues. Texas Goveno Geg Abbott Steve Mooe Economist Texas House Speake Dennis Bonnen Comptolle Glenn Hega Lees Rodionov Schlumbege Timm Schneide Citi Reseach Geg Leveille ConocoPhillips ATTENDEE INFORMATION REGISTER ONLINE AT Name Company: Addess: REGISTRATION MEMBERS ATTENDEE SPOUSE $495 INCLUDES ALL AGENDA EVENTS & MEALS $375 WEDNESDAY ONLY $395 City/State/Zip: NON-MEMBERS $695 $475 $595 INCLUDES ALL AGENDA EVENTS & MEALS & 1 YEAR MEMBERSHIP Phone: Spouse: Have special dietay needs o othe consideations? Please contact TIPRO staff at (512) PAYMENT INFORMATION MARK IF ATTENDING ATTENDEE SPOUSE WELCOME RECEPTION BREAKFAST LUNCH DINNER LEGISLATIVE CALL UP RESERVE A ROOM TODAY $219 GROUP RATE SHERATON AUSTIN HOTEL Total: Pint Name: Billing Addess: Cedit Cad No.: Signatue: Payment Method: VISA MASTERCARD Company: Exp. Date: CID: Registation foms must be accompanied by payment. CANCELLATION POLICY AMEX CHECK NO: In ode to eceive a efund, TIPRO must be notified of you cancellation no late than Fiday, Febuay 15, Retun egistation fom to TIPRO at: 919 Congess Avenue, Suite 1000, Austin, Texas o fax to (512)

6 73d Annual Convention AGENDA Tuesday, Febuay 26 th 9:00 AM Wednesday, Febuay 27 th Geneal Session Welcome & Opening Remaks 1:00 PM Registation Opens 9:15 AM Dennis Bonnen, Speake of the Texas House 1:30 PM Audit Committee Meeting 9:45 AM Geg Leveille, Chief Technology Office, ConocoPhillips 3:00 PM TIPRO Boad Meeting 10:30 AM Timm Schneide, Citi Reseach 5:30 PM TIPRO Welcome Recep 11:15 AM 12:00 PM Lees Rodionov, Schlumbege Netwoking Lunch Hotel Deadline Januay 30th Thusday, Febuay 28 th 2:00 PM Texas Goveno Geg Abbott 8:00 AM Beakfast & Call Up Biefing 2:15 PM Texas Comptolle Glenn Hega 8:40 AM Buses to Texas Capital 2:45 PM Stephen Mooe, Economist, Political Commentato 9:00 AM 12:00 PM Texas Legislato Meetings Boxed Lunch & Depatues 3:30 PM 6:00 PM Texas Legislative Panel Reception & Chaiman s Dinne & 2019 Hat s Off Awad TIPRO Membes Annual Meeting Notice In accodance with Aticle IV Section 1 of the TIPRO bylaws, Chaiman Eugene Gacia heeby calls a Membeship Meeting fo all TIPRO membes in conjunction with the 73d Annual Convention. The 2019 Annual Membeship meeting will be held on Febuay 27th at 8 am in the Balloom of the Sheaton Austin Hotel in Austin, Texas. At the TIPRO Boad Meeting, held Januay 22, membes of the TIPRO Nominations Committee pesented thei ecommendations fo nominees of TIPRO Offices and Diectos, beginning tems on July 1, The Boad unanimously appoved the following candidates and heeby pesent the slate of ecommended candidates fo TIPRO to vote on duing its Annual Meeting. In accodance with Aticle V Sections 2 of the TIPRO Bylaws, the following candidates ae pesented fo consideation by the membeship: M. Matthew V. Haifod, Matado Resouces - Region 3 (Class A Diecto) Fist Tem M. Dennis Hendix, Geat Westen Dilling Co Region 5 (Class A Diecto) Second Tem M. William Wallace, Wallace Petoleum At Lage Repesentative (Class A Diecto) Second Tem M. Eic Dille, EOG Resouces At Lage Repesentative (Class A Diecto) Second Tem Aticle V, Section 5 the following candidates tems have been updated unde the new stuctue of Class D Diectos: Scott Andeson, Andeson Oil, fifth & Final Tem expies 2020 Walte Tad Mayfield, Goldston Oil, fouth tem expies 2020 Stephen Castle, Cowboys Resouces, thid tem expies 2020 David Matineau, Matineau Petoleum, second tem expies 2020 Raymond Welde, Welde Exploation, 1st tem expies 2020 TIPRO thanks all the candidates fo gaciously accepting thei nominations and ageeing to seve on the Boad.

7 73 RD ANNUAL CONVENTION SPONSORSHIP OPPORTUNITIES SPONSORSHIP LEVELS PLEASE CHECK DESIRED SPONSORSHIP CHOICE GOLD $10,000 SILVER $7,500 BRONZE $5,000 BLUE RIBBON $3,500 RED RIBBON $2,500 WHITE RIBBON $1,500 SUPPORTING SPONSOR $500 REGISTRATION & SPECIALTY SPONSORSHIPS LEGISLATIVE RECEPTION SPONSOR $5,000 NOTEBOOK SPONSOR $3,000 HOSPITALITY SUITE SPONSOR $3,500 AMENITY SPONSOR $3,000 TOTEBAG SPONSOR $3,000 LANYARD SPONSOR $2,500 TUMBLER SPONSOR $3,000 HOTEL KEY SPONSOR $2,500 Fo moe infomation on sponsoship please visit o contact Joanne McCod Reynolds at joanne@tipo.og SPECIAL THANKS TO ALL SPONSORS OF TIPRO S 73 RD ANNUAL CONVENTION:

8 NAPEexpo.com NAPE SUMMIT MIT E OIL & GAS SP PROSPECT EXPO AND GLOBAL BUSINESS S CONFERENCE ENC FEB 2019 GEORGE E R. BROWN CONVENTION CENTER HOUSTON, O TX ATTEND EXHIBIT SPONSOR om THE TIPRO TARGET THE TIPRO TARGET Texas Independent Poduces & Royalty Ownes Association With nealy 3,000 membes, TIPRO is the nation s lagest statewide association epesenting both independent poduces and oyalty ownes. Ou membes include small family-owned companies, the lagest publicly taded independents and lage and small mineal estates and tusts. 919 Congess Avenue, Suite 1000 Austin, Texas Phone: (512) Fax: (512)