Case 2:11-cv-01474-PM-KK Document 16 Filed 01/06/12 Page 1 of 5 PageID #: 330 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION EXXON MOBIL CORPORATION, vs. Plaintiff, KENNETH SALAZAR, SECRETARY, UNITED STATES DEPARTMENT OF THE INTERIOR; ROBERT S. MORE, DIRECTOR OFFICE OF HEARINGS AND APPEALS; JAMES WATSON, DIRECTOR, BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT, Defendants. CIVIL ACTION NO: 2:11-cv-01474 Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay JOINT MOTION TO APPROVE SETTLEMENT AGREEMENT AND TO DISMISS WITH PREJUDICE MAY IT PLEASE THE COURT: Plaintiff Exxon Mobil Corporation ( ExxonMobil or Plaintiff ) and Defendants Kenneth Salazar in his official capacity as Secretary of the United States Department of the Interior ( DOI ), Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals ( OHA ), and James Watson in his official capacity as Director of the Bureau of Safety and Environmental Enforcement ( BSEE ) 1 (collectively Federal 1 Effective October 1, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement ( BOEMRE ) was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. -1-
Case 2:11-cv-01474-PM-KK Document 16 Filed 01/06/12 Page 2 of 5 PageID #: 331 Defendants ), pursuant to Rule 41(a)(2) of the Federal Rules of Civil Procedure, respectfully submit this Joint Motion to Approve Settlement Agreement and to Dismiss With Prejudice. The parties jointly request that the motion be granted so that Plaintiff and Federal Defendants can carry out the terms of the Settlement Agreement. On December 30, 2011, Plaintiff and Federal Defendants entered into the Settlement Agreement attached hereto as Exhibit 1. 2 The Settlement Agreement and in turn the Proposed Order attached hereto provide, in relevant part, that: (1) Plaintiff will dismiss with prejudice its claims in this litigation; (2) Federal Defendants will issue Suspensions of Production for the Gulf of Mexico Outer Continental Shelf Walker Ridge Block 627 Unit ( Julia Unit ) according to certain agreed-upon terms and conditions, including a schedule of activities toward oil production; and (3) three of the leases comprising the Julia Unit will be amended to incorporate agreed-upon modifications to their terms. The Settlement Agreement is conditioned upon the Court s dismissal of Plaintiff s claims and entry of an Order that incorporates the terms of the Settlement Agreement, as reflected in the attached Proposed Order. Plaintiff and Federal Defendants stipulate and respectfully submit that the terms of the Settlement Agreement constitute a fair and just resolution of Plaintiff s claims in this lawsuit. Furthermore, resolution of Plaintiff s claims in accordance with the terms of the Settlement Agreement would promote judicial economy and conserve valuable judicial resources. There is Effective December 1, 2011, James Watson assumed the role of Director of BSEE from Michael Bromwich. 2 The parties to the Settlement Agreement are Exxon Mobil Corporation ( ExxonMobil ), Statoil Gulf of Mexico LLC ( Statoil ), and the Federal Defendants. Statoil filed a parallel lawsuit, Statoil Gulf of Mexico LLC v. DOI, No. 11-cv-01485 (W.D. La.), and an essentially identical Joint Motion is being filed contemporaneously in that proceeding. The parties had intended to consolidate the two actions but reached a settlement prior to moving for consolidation. -2-
Case 2:11-cv-01474-PM-KK Document 16 Filed 01/06/12 Page 3 of 5 PageID #: 332 a strong public policy interest in favor of settling disputes rather than expending resources in litigation. See Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d 1154, 1164 (5th Cir. 1985) ( [P]ublic policy favors voluntary settlements which obviate the need for expensive and time-consuming litigation. ); Insurance Concepts, Inc. v. Western Life Ins. Co., 639 F.2d 1108, 1111 (5th Cir. 1981) ( Without a doubt, public policy favors the settlement of claims brought before the courts. ). Settlement agreements are highly favored in the law and will be upheld whenever possible because they are a means of amicably resolving doubts and preventing lawsuits. Miller v. Republic Nat l Life Ins. Co., 559 F.2d 426, 428 (5th Cir. 1977) (quoting Pearson v. Ecological Science Corp., 522 F.2d 171, 176 (5th Cir. 1975)). The Court s approval of the parties proposed settlement in this case would be consistent with the public policy in favor of settlement and would avoid potentially lengthy litigation over the complex legal claims presented in Plaintiff s complaint. Accordingly, there is good cause to grant the parties joint motion. For the foregoing reasons, Plaintiff and Federal Defendants respectfully request that the Court grant their Joint Motion to Approve Settlement Agreement and to Dismiss With Prejudice, and that it enter the attached Proposed Order so that Plaintiff and Federal Defendants can carry out the terms of the Settlement Agreement. Dated: January 6, 2012 Respectfully submitted, IGNACIA S. MORENO Assistant Attorney General Environment & Natural Resources Division /s/ Michael D. Thorp MICHAEL D. THORP, T.A. Natural Resources Section Environment & Natural Resources Division United States Department of Justice P.O. Box 663 Washington, D.C. 20044-0663 Tel: (202) 305-0456 -3-
Case 2:11-cv-01474-PM-KK Document 16 Filed 01/06/12 Page 4 of 5 PageID #: 333 Fax: (202) 305-0267 E-mail: Michael.Thorp@usdoj.gov LUTHER L. HAJEK U.S. Department of Justice Environment & Natural Resources Division Natural Resources Section 999 18th St. - South Terrace, Suite 370 Denver, CO 80202 Tel: (303) 844-1376 Fax: (303) 844-1350 E-mail: luke.hajek@usdoj.gov STEPHANIE A. FINLEY UNITED STATES ATTORNEY /s/janice E. Hebert KATHERINE VINCENT (#18717) JANICE E. HEBERT (#20218) Assistant United States Attorneys 800 Lafayette Street, Suite 2200 Lafayette, Louisiana 70501 (337) 262-6618 Telephone Katherine.Vincent@usdoj.gov Janice.Hebert@usdoj.gov Attorneys for Federal Defendants /s/ Jonathan A. Hunter Jonathan A. Hunter, T.A. (Bar #18619) Shannon S. Holtzman (Bar # 19933) Lesley Pietras (Bar # 33628) LISKOW & LEWIS One Shell Square 701 Poydras Street, Suite 5000 New Orleans, Louisiana 70139-5099 Telephone: (504) 581-7979 Attorneys for Plaintiff Exxon Mobil Corporation -4-
Case 2:11-cv-01474-PM-KK Document 16 Filed 01/06/12 Page 5 of 5 PageID #: 334 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on January 6, 2012 a copy of the foregoing pleading was filed electronically with the Clerk of Court using the CM/ECF system. Notice of this filing will be sent to all counsel of record registered to receive electronic service by operation of the court s electronic filing system. /s/ Michael D. Thorp MICHAEL D. THORP, T.A. -5-
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 1 of 21 PageID #: 335 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION EXXON MOBIL CORPORATION CIVIL ACTION NO: 2:11-cv-01474 vs. KENNETH SALAZAR, SECRETARY, UNITED STATES DEPARTMENT OF THE INTERIOR; ROBERT S. MORE, DIRECTOR OFFICE OF HEARINGS AND APPEALS; JAMES WATSON, DIRECTOR, BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay STATOIL GULF OF MEXICO LLC CIVIL ACTION NO: 11-cv-01485 vs. UNITED STATES DEPARTMENT OF THE INTERIOR; BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION AND ENFORCEMENT; KEN SALAZAR, in his official capacity as Secretary, Department of the Interior; JAMES WATSON, in his official capacity as Director, Bureau of Safety and Environmental Enforcement; and ROBERT S. MORE, in his official capacity as Director, Office of Hearings and Appeals, Department of the Interior Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay SETTLEMENT AGREEMENT 1
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 2 of 21 PageID #: 336 For purposes of settling the claims filed by Exxon Mobil Coi poration ("ExXOnMobil") and Statoil Gulf of Mexico LLC ("Statoil")(together, the "Companies" ar "Plaintiffs") in the above-captioned cases without further judicial proceedings, and for no other purpose, Plaintiffs and the defendants in those cases the United States Department of the interior ("DOI"), the Bureau of Ocean Energy Management, Regulation and Enforcement (`BOEMRE")(through its successor, the Bureau of Safety and Environmental Enforcement (`BSEE")), Kenneth Salazar in his official capacity as Secretary of the DOI, James Watson in his official capacity as Director of the BSEE,1 and Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals ("OHA")(collectively "Federal Defendants") hereby state as follows: WHEREAS, the Companies acquired Leases OCS G-20351, OCS-G 20361 and OCS-G 20362 (the "Original Julia Leases"), which were granted in an Outer Continental Shelf lease sale in 1998; and WHEREAS, the Minerals Management Service ("MMS") approved the unitization of the Oriiginal Julia Leases, along with two later-acquired adjacent leases Leases OCS-G 25251 and OCS-G 25258 (together with the Original Julia Leases, the "Unit Leases") into the Walker Ridge Block 627 Unit ("Julia Unit"), effective February 1, 2008; and WHEREAS, ExxonMobil, as designated unit operator for the Julia Unit, requested a Suspension of Production ("SOP") for the Julia Unit on October 2l, 2008; and WHEREAS, MMS denied ExxonMobil's SOP request by decisions dated February 10 and Apri19, 2009; and 1 Effective October 1, 2011, BOEMRE was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. Effective December 1, 2011, James Watson assumed the role of Director of BSEE from Michael Bromwich. 2
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 3 of 21 PageID #: 337 WHEREAS, the Companies appealed the MMS decisions to the Interior Board of Land Appeals ("IBLA"), which reversed the MMS decisions by order dated December 22, 2009; and WHEREAS, MMS obtained further review of the IBLA decision from the Director of the OHA, who reversed the IBLA decision by order dated May 31, 2011; and WHEREAS, the Companies filed the above-captioned litigation seeking to overturn the OHA decision; and WHEREAS, the effect of the MMS decisions and the OHA decision have been stayed; and WHEREAS, the Plaintiffs and Federal Defendants (together the "Settling Parties") believe that it is in the interests of the public, the parties, and judicial economy to resolve Plaintiffs' claims against the Federal Defendants without further protracted litigation; and WHEREAS, the Settling Parties, through their authorized representatives, and without any admission or final adjudication of issues relating to Plaintiffs' claims, have reached a settlement with respect to those claims, as set forth in this Settlement Agreement. THEREFORE, the Settling Parties hereby stipulate and agree to the following terms in settlement of the claims of ExxonMobil and Statoil: 1. This Settlement Agreement does not constitute an admission by any of the Settling Parties to any fact, claim, liability, or defense on any issue in these lawsuits. 2. This Settlement Agreement has no precedential value and shall not be admissible in any proceeding other than a proceeding to enforce the terms of the Settlement Agreement. 3. Within seven days of the Effective Date of this Settlement Agreement, the Settling Parties shall file this Settlement Agreement with the District Court along with a Joint Motion and a Proposed Order in each above-captioned case (Attachment A). The
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 4 of 21 PageID #: 338 Proposed Orders implement the terms set forth in this Settlement Agreement and therefore dismiss with prejudice all of ExxonMobil's and Statoil's claims in these actions pa~rsuant to Federal Rule of Civil Procedure 41(a)(2); such dismissal with prejudice is expressly conditioned as provided in Paragraph 4. 4. If the District Court does not enter Orders in substance the same as the Proposed Orders attached hereto as Attachment A, this Settlement Agreement will be voidable by any one of the Settling Parties by delivering notice to the other Settling Parties within seven (7) days of entry of the Court's Orders. If the Settlement Agreement is voided, then (i) any dismissal of these actions shall be deemed to have been without prejudice, and ExxonlVlobil and Statoil shall be entitled to refile their lawsuits; and (ii) the Settling Parties will have no further obligations under this Settlement Agreement except that set forth in Paragraph 16. 5. To being the Julia Unit into production, ExxonMobil and Statoil agree to adhere to the attached Activity Schedule (Attachment B) and to notify BSEE promptly of any needed modification to the Activity Schedule. BSEE will promptly consider and approve such modification if it is reasonable and will not require extension of the suspension periods provided in Paragraph 6. Modifications that would require additional suspension periods will be reviewed as provided in Paragraph 7. Further, ExxonMobil and Statoil agree to maintain their rights under the Julia Participation Agreement, dated April 1, 2010 ("JPA")(including any amendments), and to provide prompt notice to BSEE of any material change to the status of the JPA and/or to their rights or participation in the Jack and St. Malo Lost facility pursuant to the JPA.
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 5 of 21 PageID #: 339 6. In consideration of the commitments and agreements made by ExxonMobil and Statoil in this Settlement Agreement, and pursuant to 30 C.F.R. Part 250, within ten (10) days after the Court's entry of Orders pursuant to both Joint Motions described in Paragraph 3, DOI will direct a Suspension of Production ("SOP") for the Julia Unit, from December 13, 2008, up to and including October 31, 2013 ("First Suspension"). The Settling Parties further agree that, if at that time ExxonMobil and Statoil remain in good faith compliance with the agreed-upon Activity Schedule (Attachment B) and the terms of this Settlement Agreement, DOI will grant a second SOP for the Julia Unit up to and including August 31, 2014 ("Second Suspension"; together with the First Suspension, the "Initial Suspensions"). BSEE reserves the right, after following the dispute resolution procedures set forth in Paragraph 9 of this Settlement Agreement, to modify or terminate any suspension because of a material deviation from the Activity Schedule or upon a material adverse change in ExxonMobil's and/or Statoil's production capacity rights under the JPA; ExxonMobil and Statoil reserve their rights to seek administrative or judicial review, in a separate proceeding, of any such modification or termination of any suspension. 7. Nothing in the Settlement Agreement will preclude Plaintiffs from requesting, and DOI from granting or directing, additional SOPS for the Julia Unit in accordance with DOI regulations if the circumstances warrant. 8. The Settling Parties agree to amend the Original Julia Leases to incorporrate and include the following financial terms: a. Production Incentive Fee:
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 6 of 21 PageID #: 340 i. A yearly production incentive fee ("PIF") on each of the Original Julia Leases of $650 per acre or fraction thereof will be payable each calendar year until 87.5 Million Barrels of Oil Equivalent ("MMBOE") is produced from, or allocated to, the Original Julia Leases, in aggregate. ii. The first yearly PIF shall be owed for calendar year 2011 and shall be paid within ten (10) days of the entry of the Orders implementing this Settlement Agreement, and each succeeding PIF shall be payable each year by December 31. iii. Once 87.5 MMBOE has been produced from, or allocated to, the Original Julia Leases, in aggregate, a final PIF payment will be made for the calendar year in which the 87.5 MMBOE production level is reached but no PIF will be owed for any subsequent year, even if production thereafter ceases. The final PIF payment will be prorated to include only those months prior to and including the month in which the 87.5 MMBOE production level is reached. Allocation of production to the Original Julia Leases will be based on the allocation of production established under the Julia Unit Agreement. iv. The PIF for any lease will no longer be owed for any subsequent year after the lease terminates for any reason. The final PIF payment for that lease will be prorated to include only those months prior to and including the month in which the lease terminates. b. Royalty Rates and Royalty Suspension: D
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 7 of 21 PageID #: 341 i. The royalty rate for each of the Original Julia Leases shall be set at 18.75 percent. ii. Subject to subsection iii below, no royalties will be owed on the first 87.5 MMBOE produced from, or allocated to, the Original Julia Leases in aggregate. iii. If all three Original Julia Leases terminate, or if the Companies provide notice to BSEE that production will cease (which notice the Companies agree in good faith to provide promptly when that decision is made), before 175 MMBOE has been produced from, or allocated to, the Original Julia Leases in aggregate, a payment equal to 6.25% of the value of any volumes produced from or allocated to the Original Julia Leases, up to and including 87.5 MMBOE, will become due and owing according to the following terms: (A) payment shall be due on the last day of the month in which all three Original Julia Leases have terminated or such notice has been provided; (B) late payment interest shall commence accruing on (and not prior to) the date such payment is due; (C) production will be valued based on value at the time of production determined in accordance with applicable DOI royalty valuation regulations in effect at the time of the production; and (D) any amounts paid as PIF during production of the first 87.5 MMBOE from the Original Julia Leases, in aggregate, will be credited against this payment. After 87.5 MMBOE has been produced from, or allocated to, the Original Julia Leases in aggregate, royalties will 7
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 8 of 21 PageID #: 342 be owed on all subsequent production from, or allocated to, the Original Julia Leases at the rate of 18.75 percent. c. Rental and Minimum Royalty Rates: the minimum royalty rate for the Original Julia Leases is increased to $11 per acre or fraction thereof, and the yearly rental rate for the Original Julia Leases is increased to $16 per acre or fraction thereof, beginning the next lease year after the Effective Date of this Settlement Agreement. d. Plaintiffs agree to pay the PIF and rent during the term of the Initial Suspensions. e. The Settling Parties agree that the Original Julia Leases and the Julia Unit Agreement are hereby amended to incorporate the terms and conditions of this Settlement Agreement upon the Court's entry of the Orders as provided in Paragraphs 3 and 4. The Companies further agree that the terms of this Settlement Agreement are enforceable and waive any right to assert that the provisions are in conflict with existing statutes or regulations. f. The Settling Parties agree that by operation of law the Original Julia Leases never terminated, and through this Settlement Agreement, the Original Julia Leases and the Julia Unit are ratified and declared to be in full force and effect. 9. In the event of a dispute between the Settling Parties concerning the interpretation or implementation of any aspect of this Settlement Agreement, the disputing party shall contact the other party and schedule an initial conference of counsel to attempt to reach an agreement on the disputed issue. If the parties cannot reach an agreed-upon resolution within 30 days after the initial conference of counsel, then any party may file a motion in the District Court seeking enforcement of the Orders implementing this Settlement
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 9 of 21 PageID #: 343 Agreement or seeking interpretation of this Settlement Agreement. The Parties agree that contempt of court is not an available remedy for any violation of this Settlement Agreement and the Orders, and the parties therefore knowingly waive any right that they might have to seek an order of contempt for any such violation. 10. The Settling Parties agree and will request that the District Court retain jurisdiction to oversee compliance with the terms of this Settlement Agreement and to resolve any motions regarding the interpretation or implementation of the Settlement Agreement. See Kokkonen v. Guardian Life Ins. Co. ofamerica, 511 U.S. 375 (1994). 11. Nothing in the terms of this Settlement Agreement shall be construed to limit or deny the power of a federal official to promulgate or amend regulations or interpretive guidance, or to treat the principles set forth in DIR-2010-0027, 42 OHA 261 (May 31, 2011) as controlling Departmental authority. Nothing in the terms of this Settlement Agreement shall be construed to limit or deny the rights of the Companies to challenge DOPs decisions, including its application of regulations, with respect to leases or issues that are outside the scope of the above-captioned lawsuits. 12. Nothing in this Settlement Agreement shall be interpreted as imposing obligations on any federal agency that is not a party to the Settlement Agreement. 13. Nothing in this Settlement Agreement shall be interpreted as a commitment or requirement that Federal Defendants obligate funds in contravention of the Anti- Deficiency Act, 31 U.S.C. 1341, or any other applicable law or regulation. 14. Each of the Settling Parties shall bear its own attorneys' fees, costs and expenses. 15. This Settlement Agreement represents the entirety of the Settling Parties' commitments with regard to settlement.
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 10 of 21 PageID #: 344 16. The Settling Parties agree that all communications and documents made or shared leading up to this Settlement Agreement are confidential pursuant to the terms of the Confidentiality Agreement dated August 15, 201 1, and, other than between the Settling Parties and their attorneys, will not be disclosed except as provided in that Confidentiality Agreement. 17. The undersigned representatives of each Settling Party certify that they are fully authorized by the Settling Parties they represent to execute this Settlement Agreement. 18. This Settlement Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Settling Parties. ~9. This Settlement Agreement may only be supplemented, modified, or amended by written agreement of the Settling Parties. 20. The "Effective Date" of this Settlement Agreement will be the date on which the last of the Settling Parties executes the Settlement Agreement by signing below. 21. Tlae Settling Parties agree that they will take such further actions and execute such other instruments as maybe necessary to implement the provisions of this Settlement Agreement. 22. Within ten (10) days after the Court's entry of Orders dismissing both above-captioned actions, Exxon Mobil will dismiss its appeal in Exxon Mobil Corp. v. U.S. Department of the Interior, No. 11-30230 (5th Cir,), which appealed the district court's decision in Exxon Mobil Corp. v. U.S. Department of the Interior, Case No. 2:09-cv-06732-AJM- JCW (E.D. La. Jan. 3, 2011). 10
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 11 of 21 PageID #: 345 23. This Settlement Agreement maybe executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division -~ ~~ L~ ~~~ ~ ;~ ~ C Paul W. Watson Attorney-in-Fact ~~ /,~,~ ~r,~ft ~~% -=1%;``! _.. Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record Paul R. Owen, Secretary THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT I, 11
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 12 of 21 PageID #: 346 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION nathan A. Hunter LISKOW & LEWIS Counsel of Record, - ~ Paul W. Watson Attorney-in-Fact THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record Paul R. Owen, Secretary THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 13 of 21 PageID #: 347 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record Paul W. Watson Attorney-in-Fact THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record As to the Lease Amen ments: THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT ti-2~ Paul R. Owen, Secre ary ~O ~~c~n,~~,~ ~ ~
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 14 of 21 PageID #: 348 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record Paul W. Watson Attorney-in-Fact THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATO.~, GULF OF MEXICO LLC ~ p ~T ~ THE UNITED STATES DEPARTMENT OF THE Peter J. Schaumberg INTERIOR BEVERIDGE & DIAM D PC Counsel of Record "~ ~ ;~~,,, ~~ ;~ ~' JOHN RODI i ~ - J ~ GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT Paul R. Owen, Secretary 11
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 15 of 21 PageID #: 349 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Paul W. Watson Attorney-in-Fact Michael D. T orp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section ~.Z ~v ~~~~ { STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record Paul R. Owen, Secretary THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIlZECTOR BUREAU OF OCEAN ENERGY MANAGEMENT 11
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 16 of 21 PageID #: 350 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants Jonathan A. Hunter IGNACIA S. MORENO LISKOW & LEWIS Assistant Attorney General Counsel of Record Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Paul W. Watson Natural Resources Section Attorney-in-Fact STATOIL GULF OF MEXICO LLC THE UNITED STATES DEPARTMENT OF THE Peter J. Schaumberg INTERIOR BEVERIDGE &DIAMOND PC Counsel of Record ~~~ ~ ~,+ JO RODI GUL OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT Paul R. Owen, Secretary A. ~ ~., ~ ~ ~ ~ ~ ~ E 11
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 17 of 21 PageID #: 351 ATTACHMENT A UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION EXXON MOBIL CORPORATION versus KENNETH SALAZAR, SECRETARY, UNITED STATES DEPARTMENT OF THE INTERIOR; ROBERT S. MORE, DIRECTOR OFFICE OF HEARINGS AND APPEALS; JAMES WATSON, DIRECTOR, BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT CIVIL ACTION NO: 2:11-cv-01474 Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay f PROPOSEDI ORDER CONSIDERING THE FOREGOING Joint Motion filed by Plaintiff, Exxon Mobil Corporation ("EaxonMobil"), and Defendants, Kenneth Salazar in his official capacity as Secretary of the United States Department of the Interior ("DOI"), Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals ("OHA"), and James Watson in his official capacity as Director of the Bureau of Safety and Environmental Enforcement (`BSEE")1 (collectively "Federal Defendants"), to approve the terms set forth in the attached ' Effective October 1, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement ("BOEMRE") was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. Effective December 1, 2011, James Watson assumed role of Director of BSEE from Michael Bromwich.
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 18 of 21 PageID #: 352 Settlement Agreement (Att. A) and to dismiss with prejudice all of the claims asserted by ExxonMobil in this case pursuant to Federal Rule of Civil Procedure 41(a)(2), IT IS HEREBY ORDERED that the Motion is GRANTED; and it is further ORDERED: 1. The Settlement Agreement is hereby approved. 2. The terms and conditions of the Settlement Agreement are adopted as an enforceable Order of this Court, and this Court shall retain jurisdiction over this matter as provided in Paragraph 10 of the Settlement Agreement. 3. Leases OCS G-20351, OCS-G20361 and OCS-G20362 (the "Original Julia Leases") are hereby amended to incorporate the terms and conditions in Paragraph 8 of the Settlement Agreement, and the Original Julia Leases and the Walker Ridge Block 627 Unit ("Julia Unit") are ratified and declared to be in full force and effect. 4. As provided in Paragraph 6 of the Settlement Agreement, pursuant to 30 C.F.R. Part 250, DOI will direct a Suspension of Production for the Julia Unit from December 13, 2008, up to and including October 31, 2013. 5. This case and all of ExxonMobil's claims asserted therein are hereby dismissed with prejudice. SO ORDERED. Lake Charles, Louisiana, this day of 20 Hon. Patricia H. Minaldi U.S. District Court Judge -2-
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 19 of 21 PageID #: 353 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION STATOIL GULF OF MEXICO LLC versus UNITED STATES DEPARTMENT OF THE INTERIOR; BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION AND ENFORCEMENT; KEN SALAZAR, in his official capacity as Secretary, Department of the Interior; JAMES WATSON, in his official capacity as Director, Bureau of Safety and Environmental Enforcement; and ROBERT S. MORE, in his official capacity as Director, Office of Hearings and Appeals, Department of the Interior ~` CIVIL ACTION NO: 11-cv-01485 Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay f PROPOSEDI ORDER CONSIDERING THE FOREGOING Joint Motion filed by Plaintiff, Statoil Gulf of Mexico LLC ("Statoil"), and Defendants, the United States Department of the Interior ("DOI"), the Bureau of Ocean Energy Management, Regulation and Enforcement ("BOEMRE")(through its successor, the Bureau of Safety and Environmental Enforcement ("BSEE")), Kenneth Salazar in his official capacity as Secretary of the DOI, James Watson in his official capacity as Director of the BSEE,~ and Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals (OHA") (collectively "Federal Defendants"), to approve the terms set Effective October 1, 2011, BOEMRE was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. Effective December 1, 2011, James Watson assumed role of Director of BSEE from Michael Bromwich.
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 20 of 21 PageID #: 354 forth in the attached Settlement Agreement (Att. A) and to dismiss with prejudice all of the claims asserted by Statoil in this case pursuant to Federal Rule of Civil Procedure 41(a)(2), IT IS HEREBY ORDERED that the Motion is GRANTED; and it is further ORDERED: 1. The Settlement Agreement is hereby approved. 2. The terms and conditions of the Settlement Agreement are adopted as an enforceable Order of this Court, and this Court shall retain jurisdiction over this matter as provided in Paragraph 10 of the Settlement Agreement. 3. Leases OCS G-20351, OCS-G20361 and OCS-G20362 (the "Original Julia Leases") are hereby amended to incorporate the terms and conditions in Paragraph 8 of the Settlement Agreement, and the Original Julia Leases and the Walker Ridge Block 627 Unit ("Julia Unit") are ratified and declared to be in full force and effect. 4. As provided in Paragraph 6 of the Settlement Agreement, pursuant to 30 C.F.R. Part 250, DOI will direct a Suspension of Production for the Julia Unit from December 13, 2008, up to and including October 31, 2013. 5. This case and all of Statoil's claims asserted therein are hereby dismissed with prejudice. SO ORDERED. Lake Charles, Louisiana, this day of ~r31~ Hon. Patricia H. Minaldi U.S. District Court Judge Q.~
Case 2:11-cv-01474-PM-KK Document 16-1 Filed 01/06/12 Page 21 of 21 PageID #: 355 ATTACHMENT B Activity Schedule Activity Date Commence FEED and technical qualification activities June 2012 Award Flowline and Pump FEED contracts September 2012 Commence ordering Long Lead Subsea Equipment March 2013 Award contracts for detailed design and fabrication of the production system October 2013 Commence Fabrication Apri12014 Commence development well drilling and completion operations August 2014 Commence offshore installation, hookup and commissioning September 2015 Commence first production from Walker Ridge 627 Unit June 2016
Case 2:11-cv-01474-PM-KK Document 16-2 Filed 01/06/12 Page 1 of 2 PageID #: 356 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION EXXON MOBIL CORPORATION, vs. Plaintiff, KENNETH SALAZAR, SECRETARY, UNITED STATES DEPARTMENT OF THE INTERIOR; ROBERT S. MORE, DIRECTOR OFFICE OF HEARINGS AND APPEALS; JAMES WATSON, DIRECTOR, BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT, Defendants. CIVIL ACTION NO: 2:11-cv-01474 Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay ORDER CONSIDERING THE FOREGOING Joint Motion filed by Plaintiff, Exxon Mobil Corporation ( ExxonMobil ), and Defendants, Kenneth Salazar in his official capacity as Secretary of the United States Department of the Interior ( DOI ), Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals ( OHA ), and James Watson in his official capacity as Director of the Bureau of Safety and Environmental Enforcement ( BSEE ) 1 (collectively Federal Defendants ), to approve the terms set forth in the attached Settlement Agreement (Att. A) and to dismiss with prejudice all of the claims asserted by ExxonMobil in this case pursuant to Federal Rule of Civil Procedure 41(a)(2), 1 Effective October 1, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement ( BOEMRE ) was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. Effective December 1, 2011, James Watson assumed the role of Director of BSEE from Michael Bromwich. -1-
Case 2:11-cv-01474-PM-KK Document 16-2 Filed 01/06/12 Page 2 of 2 PageID #: 357 IT IS HEREBY ORDERED that the Motion is GRANTED; and it is further ORDERED: 1. The Settlement Agreement is hereby approved. 2. The terms and conditions of the Settlement Agreement are adopted as an enforceable Order of this Court, and this Court shall retain jurisdiction over this matter as provided in Paragraph 10 of the Settlement Agreement. 3. Leases OCS-G 20351, OCS-G 20361 and OCS-G 20362 (the Original Julia Leases ) are hereby amended to incorporate the terms and conditions in Paragraph 8 of the Settlement Agreement, and the Original Julia Leases and the Walker Ridge Block 627 Unit ( Julia Unit ) are ratified and declared to be in full force and effect. 4. As provided in Paragraph 6 of the Settlement Agreement, pursuant to 30 C.F.R. Part 250, DOI will direct a Suspension of Production for the Julia Unit from December 13, 2008, up to and including October 31, 2013. 5. This case and all of ExxonMobil s claims asserted therein are hereby dismissed with prejudice. SO ORDERED. Lake Charles, Louisiana, this day of, 2012. Hon. Patricia H. Minaldi U.S. District Court Judge -2-
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 1 of 21 PageID #: 358 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION EXXON MOBIL CORPORATION CIVIL ACTION NO: 2:11-cv-01474 vs. KENNETH SALAZAR, SECRETARY, UNITED STATES DEPARTMENT OF THE INTERIOR; ROBERT S. MORE, DIRECTOR OFFICE OF HEARINGS AND APPEALS; JAMES WATSON, DIRECTOR, BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay STATOIL GULF OF MEXICO LLC CIVIL ACTION NO: 11-cv-01485 vs. UNITED STATES DEPARTMENT OF THE INTERIOR; BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION AND ENFORCEMENT; KEN SALAZAR, in his official capacity as Secretary, Department of the Interior; JAMES WATSON, in his official capacity as Director, Bureau of Safety and Environmental Enforcement; and ROBERT S. MORE, in his official capacity as Director, Office of Hearings and Appeals, Department of the Interior Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay SETTLEMENT AGREEMENT 1
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 2 of 21 PageID #: 359 For purposes of settling the claims filed by Exxon Mobil Coi poration ("ExXOnMobil") and Statoil Gulf of Mexico LLC ("Statoil")(together, the "Companies" ar "Plaintiffs") in the above-captioned cases without further judicial proceedings, and for no other purpose, Plaintiffs and the defendants in those cases the United States Department of the interior ("DOI"), the Bureau of Ocean Energy Management, Regulation and Enforcement (`BOEMRE")(through its successor, the Bureau of Safety and Environmental Enforcement (`BSEE")), Kenneth Salazar in his official capacity as Secretary of the DOI, James Watson in his official capacity as Director of the BSEE,1 and Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals ("OHA")(collectively "Federal Defendants") hereby state as follows: WHEREAS, the Companies acquired Leases OCS G-20351, OCS-G 20361 and OCS-G 20362 (the "Original Julia Leases"), which were granted in an Outer Continental Shelf lease sale in 1998; and WHEREAS, the Minerals Management Service ("MMS") approved the unitization of the Oriiginal Julia Leases, along with two later-acquired adjacent leases Leases OCS-G 25251 and OCS-G 25258 (together with the Original Julia Leases, the "Unit Leases") into the Walker Ridge Block 627 Unit ("Julia Unit"), effective February 1, 2008; and WHEREAS, ExxonMobil, as designated unit operator for the Julia Unit, requested a Suspension of Production ("SOP") for the Julia Unit on October 2l, 2008; and WHEREAS, MMS denied ExxonMobil's SOP request by decisions dated February 10 and Apri19, 2009; and 1 Effective October 1, 2011, BOEMRE was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. Effective December 1, 2011, James Watson assumed the role of Director of BSEE from Michael Bromwich. 2
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 3 of 21 PageID #: 360 WHEREAS, the Companies appealed the MMS decisions to the Interior Board of Land Appeals ("IBLA"), which reversed the MMS decisions by order dated December 22, 2009; and WHEREAS, MMS obtained further review of the IBLA decision from the Director of the OHA, who reversed the IBLA decision by order dated May 31, 2011; and WHEREAS, the Companies filed the above-captioned litigation seeking to overturn the OHA decision; and WHEREAS, the effect of the MMS decisions and the OHA decision have been stayed; and WHEREAS, the Plaintiffs and Federal Defendants (together the "Settling Parties") believe that it is in the interests of the public, the parties, and judicial economy to resolve Plaintiffs' claims against the Federal Defendants without further protracted litigation; and WHEREAS, the Settling Parties, through their authorized representatives, and without any admission or final adjudication of issues relating to Plaintiffs' claims, have reached a settlement with respect to those claims, as set forth in this Settlement Agreement. THEREFORE, the Settling Parties hereby stipulate and agree to the following terms in settlement of the claims of ExxonMobil and Statoil: 1. This Settlement Agreement does not constitute an admission by any of the Settling Parties to any fact, claim, liability, or defense on any issue in these lawsuits. 2. This Settlement Agreement has no precedential value and shall not be admissible in any proceeding other than a proceeding to enforce the terms of the Settlement Agreement. 3. Within seven days of the Effective Date of this Settlement Agreement, the Settling Parties shall file this Settlement Agreement with the District Court along with a Joint Motion and a Proposed Order in each above-captioned case (Attachment A). The
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 4 of 21 PageID #: 361 Proposed Orders implement the terms set forth in this Settlement Agreement and therefore dismiss with prejudice all of ExxonMobil's and Statoil's claims in these actions pa~rsuant to Federal Rule of Civil Procedure 41(a)(2); such dismissal with prejudice is expressly conditioned as provided in Paragraph 4. 4. If the District Court does not enter Orders in substance the same as the Proposed Orders attached hereto as Attachment A, this Settlement Agreement will be voidable by any one of the Settling Parties by delivering notice to the other Settling Parties within seven (7) days of entry of the Court's Orders. If the Settlement Agreement is voided, then (i) any dismissal of these actions shall be deemed to have been without prejudice, and ExxonlVlobil and Statoil shall be entitled to refile their lawsuits; and (ii) the Settling Parties will have no further obligations under this Settlement Agreement except that set forth in Paragraph 16. 5. To being the Julia Unit into production, ExxonMobil and Statoil agree to adhere to the attached Activity Schedule (Attachment B) and to notify BSEE promptly of any needed modification to the Activity Schedule. BSEE will promptly consider and approve such modification if it is reasonable and will not require extension of the suspension periods provided in Paragraph 6. Modifications that would require additional suspension periods will be reviewed as provided in Paragraph 7. Further, ExxonMobil and Statoil agree to maintain their rights under the Julia Participation Agreement, dated April 1, 2010 ("JPA")(including any amendments), and to provide prompt notice to BSEE of any material change to the status of the JPA and/or to their rights or participation in the Jack and St. Malo Lost facility pursuant to the JPA.
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 5 of 21 PageID #: 362 6. In consideration of the commitments and agreements made by ExxonMobil and Statoil in this Settlement Agreement, and pursuant to 30 C.F.R. Part 250, within ten (10) days after the Court's entry of Orders pursuant to both Joint Motions described in Paragraph 3, DOI will direct a Suspension of Production ("SOP") for the Julia Unit, from December 13, 2008, up to and including October 31, 2013 ("First Suspension"). The Settling Parties further agree that, if at that time ExxonMobil and Statoil remain in good faith compliance with the agreed-upon Activity Schedule (Attachment B) and the terms of this Settlement Agreement, DOI will grant a second SOP for the Julia Unit up to and including August 31, 2014 ("Second Suspension"; together with the First Suspension, the "Initial Suspensions"). BSEE reserves the right, after following the dispute resolution procedures set forth in Paragraph 9 of this Settlement Agreement, to modify or terminate any suspension because of a material deviation from the Activity Schedule or upon a material adverse change in ExxonMobil's and/or Statoil's production capacity rights under the JPA; ExxonMobil and Statoil reserve their rights to seek administrative or judicial review, in a separate proceeding, of any such modification or termination of any suspension. 7. Nothing in the Settlement Agreement will preclude Plaintiffs from requesting, and DOI from granting or directing, additional SOPS for the Julia Unit in accordance with DOI regulations if the circumstances warrant. 8. The Settling Parties agree to amend the Original Julia Leases to incorporrate and include the following financial terms: a. Production Incentive Fee:
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 6 of 21 PageID #: 363 i. A yearly production incentive fee ("PIF") on each of the Original Julia Leases of $650 per acre or fraction thereof will be payable each calendar year until 87.5 Million Barrels of Oil Equivalent ("MMBOE") is produced from, or allocated to, the Original Julia Leases, in aggregate. ii. The first yearly PIF shall be owed for calendar year 2011 and shall be paid within ten (10) days of the entry of the Orders implementing this Settlement Agreement, and each succeeding PIF shall be payable each year by December 31. iii. Once 87.5 MMBOE has been produced from, or allocated to, the Original Julia Leases, in aggregate, a final PIF payment will be made for the calendar year in which the 87.5 MMBOE production level is reached but no PIF will be owed for any subsequent year, even if production thereafter ceases. The final PIF payment will be prorated to include only those months prior to and including the month in which the 87.5 MMBOE production level is reached. Allocation of production to the Original Julia Leases will be based on the allocation of production established under the Julia Unit Agreement. iv. The PIF for any lease will no longer be owed for any subsequent year after the lease terminates for any reason. The final PIF payment for that lease will be prorated to include only those months prior to and including the month in which the lease terminates. b. Royalty Rates and Royalty Suspension: D
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 7 of 21 PageID #: 364 i. The royalty rate for each of the Original Julia Leases shall be set at 18.75 percent. ii. Subject to subsection iii below, no royalties will be owed on the first 87.5 MMBOE produced from, or allocated to, the Original Julia Leases in aggregate. iii. If all three Original Julia Leases terminate, or if the Companies provide notice to BSEE that production will cease (which notice the Companies agree in good faith to provide promptly when that decision is made), before 175 MMBOE has been produced from, or allocated to, the Original Julia Leases in aggregate, a payment equal to 6.25% of the value of any volumes produced from or allocated to the Original Julia Leases, up to and including 87.5 MMBOE, will become due and owing according to the following terms: (A) payment shall be due on the last day of the month in which all three Original Julia Leases have terminated or such notice has been provided; (B) late payment interest shall commence accruing on (and not prior to) the date such payment is due; (C) production will be valued based on value at the time of production determined in accordance with applicable DOI royalty valuation regulations in effect at the time of the production; and (D) any amounts paid as PIF during production of the first 87.5 MMBOE from the Original Julia Leases, in aggregate, will be credited against this payment. After 87.5 MMBOE has been produced from, or allocated to, the Original Julia Leases in aggregate, royalties will 7
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 8 of 21 PageID #: 365 be owed on all subsequent production from, or allocated to, the Original Julia Leases at the rate of 18.75 percent. c. Rental and Minimum Royalty Rates: the minimum royalty rate for the Original Julia Leases is increased to $11 per acre or fraction thereof, and the yearly rental rate for the Original Julia Leases is increased to $16 per acre or fraction thereof, beginning the next lease year after the Effective Date of this Settlement Agreement. d. Plaintiffs agree to pay the PIF and rent during the term of the Initial Suspensions. e. The Settling Parties agree that the Original Julia Leases and the Julia Unit Agreement are hereby amended to incorporate the terms and conditions of this Settlement Agreement upon the Court's entry of the Orders as provided in Paragraphs 3 and 4. The Companies further agree that the terms of this Settlement Agreement are enforceable and waive any right to assert that the provisions are in conflict with existing statutes or regulations. f. The Settling Parties agree that by operation of law the Original Julia Leases never terminated, and through this Settlement Agreement, the Original Julia Leases and the Julia Unit are ratified and declared to be in full force and effect. 9. In the event of a dispute between the Settling Parties concerning the interpretation or implementation of any aspect of this Settlement Agreement, the disputing party shall contact the other party and schedule an initial conference of counsel to attempt to reach an agreement on the disputed issue. If the parties cannot reach an agreed-upon resolution within 30 days after the initial conference of counsel, then any party may file a motion in the District Court seeking enforcement of the Orders implementing this Settlement
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 9 of 21 PageID #: 366 Agreement or seeking interpretation of this Settlement Agreement. The Parties agree that contempt of court is not an available remedy for any violation of this Settlement Agreement and the Orders, and the parties therefore knowingly waive any right that they might have to seek an order of contempt for any such violation. 10. The Settling Parties agree and will request that the District Court retain jurisdiction to oversee compliance with the terms of this Settlement Agreement and to resolve any motions regarding the interpretation or implementation of the Settlement Agreement. See Kokkonen v. Guardian Life Ins. Co. ofamerica, 511 U.S. 375 (1994). 11. Nothing in the terms of this Settlement Agreement shall be construed to limit or deny the power of a federal official to promulgate or amend regulations or interpretive guidance, or to treat the principles set forth in DIR-2010-0027, 42 OHA 261 (May 31, 2011) as controlling Departmental authority. Nothing in the terms of this Settlement Agreement shall be construed to limit or deny the rights of the Companies to challenge DOPs decisions, including its application of regulations, with respect to leases or issues that are outside the scope of the above-captioned lawsuits. 12. Nothing in this Settlement Agreement shall be interpreted as imposing obligations on any federal agency that is not a party to the Settlement Agreement. 13. Nothing in this Settlement Agreement shall be interpreted as a commitment or requirement that Federal Defendants obligate funds in contravention of the Anti- Deficiency Act, 31 U.S.C. 1341, or any other applicable law or regulation. 14. Each of the Settling Parties shall bear its own attorneys' fees, costs and expenses. 15. This Settlement Agreement represents the entirety of the Settling Parties' commitments with regard to settlement.
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 10 of 21 PageID #: 367 16. The Settling Parties agree that all communications and documents made or shared leading up to this Settlement Agreement are confidential pursuant to the terms of the Confidentiality Agreement dated August 15, 201 1, and, other than between the Settling Parties and their attorneys, will not be disclosed except as provided in that Confidentiality Agreement. 17. The undersigned representatives of each Settling Party certify that they are fully authorized by the Settling Parties they represent to execute this Settlement Agreement. 18. This Settlement Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Settling Parties. ~9. This Settlement Agreement may only be supplemented, modified, or amended by written agreement of the Settling Parties. 20. The "Effective Date" of this Settlement Agreement will be the date on which the last of the Settling Parties executes the Settlement Agreement by signing below. 21. Tlae Settling Parties agree that they will take such further actions and execute such other instruments as maybe necessary to implement the provisions of this Settlement Agreement. 22. Within ten (10) days after the Court's entry of Orders dismissing both above-captioned actions, Exxon Mobil will dismiss its appeal in Exxon Mobil Corp. v. U.S. Department of the Interior, No. 11-30230 (5th Cir,), which appealed the district court's decision in Exxon Mobil Corp. v. U.S. Department of the Interior, Case No. 2:09-cv-06732-AJM- JCW (E.D. La. Jan. 3, 2011). 10
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 11 of 21 PageID #: 368 23. This Settlement Agreement maybe executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division -~ ~~ L~ ~~~ ~ ;~ ~ C Paul W. Watson Attorney-in-Fact ~~ /,~,~ ~r,~ft ~~% -=1%;``! _.. Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record Paul R. Owen, Secretary THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT I, 11
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 12 of 21 PageID #: 369 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION nathan A. Hunter LISKOW & LEWIS Counsel of Record, - ~ Paul W. Watson Attorney-in-Fact THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record Paul R. Owen, Secretary THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 13 of 21 PageID #: 370 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record Paul W. Watson Attorney-in-Fact THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record As to the Lease Amen ments: THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT ti-2~ Paul R. Owen, Secre ary ~O ~~c~n,~~,~ ~ ~
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 14 of 21 PageID #: 371 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record Paul W. Watson Attorney-in-Fact THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section STATO.~, GULF OF MEXICO LLC ~ p ~T ~ THE UNITED STATES DEPARTMENT OF THE Peter J. Schaumberg INTERIOR BEVERIDGE & DIAM D PC Counsel of Record "~ ~ ;~~,,, ~~ ;~ ~' JOHN RODI i ~ - J ~ GULF OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT Paul R. Owen, Secretary 11
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 15 of 21 PageID #: 372 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION Jonathan A. Hunter LISKOW & LEWIS Counsel of Record THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants IGNACIA S. MORENO Assistant Attorney General Environment and Natural Resources Division Paul W. Watson Attorney-in-Fact Michael D. T orp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Natural Resources Section ~.Z ~v ~~~~ { STATOIL GULF OF MEXICO LLC Peter J. Schaumberg BEVERIDGE &DIAMOND PC Counsel of Record Paul R. Owen, Secretary THE UNITED STATES DEPARTMENT OF THE INTERIOR JOHN RODI GULF OF MEXICO REGIONAL DIlZECTOR BUREAU OF OCEAN ENERGY MANAGEMENT 11
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 16 of 21 PageID #: 373 23. This Settlement Agreement may be executed in counterparts and different parties may sign different counterparts, but all counterparts together shall constitute a single agreement. EXXON MOBIL CORPORATION THE UNITED STATES DEPARTMENT OF JUSTICE On behalf of all Federal Defendants Jonathan A. Hunter IGNACIA S. MORENO LISKOW & LEWIS Assistant Attorney General Counsel of Record Environment and Natural Resources Division Michael D. Thorp Luther L. Hajek United States Department of Justice Environment and Natural Resources Division Paul W. Watson Natural Resources Section Attorney-in-Fact STATOIL GULF OF MEXICO LLC THE UNITED STATES DEPARTMENT OF THE Peter J. Schaumberg INTERIOR BEVERIDGE &DIAMOND PC Counsel of Record ~~~ ~ ~,+ JO RODI GUL OF MEXICO REGIONAL DIRECTOR BUREAU OF OCEAN ENERGY MANAGEMENT Paul R. Owen, Secretary A. ~ ~., ~ ~ ~ ~ ~ ~ E 11
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 17 of 21 PageID #: 374 ATTACHMENT A UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION EXXON MOBIL CORPORATION versus KENNETH SALAZAR, SECRETARY, UNITED STATES DEPARTMENT OF THE INTERIOR; ROBERT S. MORE, DIRECTOR OFFICE OF HEARINGS AND APPEALS; JAMES WATSON, DIRECTOR, BUREAU OF SAFETY AND ENVIRONMENTAL ENFORCEMENT CIVIL ACTION NO: 2:11-cv-01474 Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay f PROPOSEDI ORDER CONSIDERING THE FOREGOING Joint Motion filed by Plaintiff, Exxon Mobil Corporation ("EaxonMobil"), and Defendants, Kenneth Salazar in his official capacity as Secretary of the United States Department of the Interior ("DOI"), Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals ("OHA"), and James Watson in his official capacity as Director of the Bureau of Safety and Environmental Enforcement (`BSEE")1 (collectively "Federal Defendants"), to approve the terms set forth in the attached ' Effective October 1, 2011, the Bureau of Ocean Energy Management, Regulation and Enforcement ("BOEMRE") was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. Effective December 1, 2011, James Watson assumed role of Director of BSEE from Michael Bromwich.
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 18 of 21 PageID #: 375 Settlement Agreement (Att. A) and to dismiss with prejudice all of the claims asserted by ExxonMobil in this case pursuant to Federal Rule of Civil Procedure 41(a)(2), IT IS HEREBY ORDERED that the Motion is GRANTED; and it is further ORDERED: 1. The Settlement Agreement is hereby approved. 2. The terms and conditions of the Settlement Agreement are adopted as an enforceable Order of this Court, and this Court shall retain jurisdiction over this matter as provided in Paragraph 10 of the Settlement Agreement. 3. Leases OCS G-20351, OCS-G20361 and OCS-G20362 (the "Original Julia Leases") are hereby amended to incorporate the terms and conditions in Paragraph 8 of the Settlement Agreement, and the Original Julia Leases and the Walker Ridge Block 627 Unit ("Julia Unit") are ratified and declared to be in full force and effect. 4. As provided in Paragraph 6 of the Settlement Agreement, pursuant to 30 C.F.R. Part 250, DOI will direct a Suspension of Production for the Julia Unit from December 13, 2008, up to and including October 31, 2013. 5. This case and all of ExxonMobil's claims asserted therein are hereby dismissed with prejudice. SO ORDERED. Lake Charles, Louisiana, this day of 20 Hon. Patricia H. Minaldi U.S. District Court Judge -2-
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 19 of 21 PageID #: 376 UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF LOUISIANA LAKE CHARLES DIVISION STATOIL GULF OF MEXICO LLC versus UNITED STATES DEPARTMENT OF THE INTERIOR; BUREAU OF OCEAN ENERGY MANAGEMENT, REGULATION AND ENFORCEMENT; KEN SALAZAR, in his official capacity as Secretary, Department of the Interior; JAMES WATSON, in his official capacity as Director, Bureau of Safety and Environmental Enforcement; and ROBERT S. MORE, in his official capacity as Director, Office of Hearings and Appeals, Department of the Interior ~` CIVIL ACTION NO: 11-cv-01485 Judge Patricia H. Minaldi Magistrate Judge Kathleen Kay f PROPOSEDI ORDER CONSIDERING THE FOREGOING Joint Motion filed by Plaintiff, Statoil Gulf of Mexico LLC ("Statoil"), and Defendants, the United States Department of the Interior ("DOI"), the Bureau of Ocean Energy Management, Regulation and Enforcement ("BOEMRE")(through its successor, the Bureau of Safety and Environmental Enforcement ("BSEE")), Kenneth Salazar in his official capacity as Secretary of the DOI, James Watson in his official capacity as Director of the BSEE,~ and Robert S. More in his official capacity as Director of the DOI Office of Hearings and Appeals (OHA") (collectively "Federal Defendants"), to approve the terms set Effective October 1, 2011, BOEMRE was divided into two new bureaus BSEE and the Bureau of Ocean Energy Management. BSEE assumed responsibility for the administration of suspensions. Effective December 1, 2011, James Watson assumed role of Director of BSEE from Michael Bromwich.
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 20 of 21 PageID #: 377 forth in the attached Settlement Agreement (Att. A) and to dismiss with prejudice all of the claims asserted by Statoil in this case pursuant to Federal Rule of Civil Procedure 41(a)(2), IT IS HEREBY ORDERED that the Motion is GRANTED; and it is further ORDERED: 1. The Settlement Agreement is hereby approved. 2. The terms and conditions of the Settlement Agreement are adopted as an enforceable Order of this Court, and this Court shall retain jurisdiction over this matter as provided in Paragraph 10 of the Settlement Agreement. 3. Leases OCS G-20351, OCS-G20361 and OCS-G20362 (the "Original Julia Leases") are hereby amended to incorporate the terms and conditions in Paragraph 8 of the Settlement Agreement, and the Original Julia Leases and the Walker Ridge Block 627 Unit ("Julia Unit") are ratified and declared to be in full force and effect. 4. As provided in Paragraph 6 of the Settlement Agreement, pursuant to 30 C.F.R. Part 250, DOI will direct a Suspension of Production for the Julia Unit from December 13, 2008, up to and including October 31, 2013. 5. This case and all of Statoil's claims asserted therein are hereby dismissed with prejudice. SO ORDERED. Lake Charles, Louisiana, this day of ~r31~ Hon. Patricia H. Minaldi U.S. District Court Judge Q.~
Case 2:11-cv-01474-PM-KK Document 16-3 Filed 01/06/12 Page 21 of 21 PageID #: 378 ATTACHMENT B Activity Schedule Activity Date Commence FEED and technical qualification activities June 2012 Award Flowline and Pump FEED contracts September 2012 Commence ordering Long Lead Subsea Equipment March 2013 Award contracts for detailed design and fabrication of the production system October 2013 Commence Fabrication Apri12014 Commence development well drilling and completion operations August 2014 Commence offshore installation, hookup and commissioning September 2015 Commence first production from Walker Ridge 627 Unit June 2016