tJPERKINS& PL L C G. ALAN PERKINS [email protected]A PROFESSIONAL LIMITED UABlLITY COMPANY Attorneys and COllnselors POST OFFICE Box 251618 LITILE ROCK. ARKANSAS 72225-1618 www.perkinstrotter.com November 18, 2009 Street Address 101 Morgan Keegan Drive, Suire A Ililic Rock. Arkansas 72202 TEL 501-603-9000 FAX 501-603-0556 Hand Delivery Arkansas Oil and Gas Commission Mr. Lawrence E. Bengal, Director 301 Natural Resources Drive Suite 102 Little Rock, AR 72205 Re: DOCKET REFERENCE NO. 796-2009-12 Application of Petrohawk Operating Company for integration of all unleased mineral interests and uncommitted leasehold working interest owners in a unit described as Section 4, Township 7 North, Range 17 West, Conway County, Arkansas; Proposed Dunn 7-17 #1-4H Commissioners: Petrohawk Operating Company, 6100 S. Yale, Suite 500, Tulsa, OK 74136 ("Applicant"), hereby applies to the Arkansas Oil and Gas Commission for integration of all unleased mineral interests and uncommitted leasehold working interest owners in the proposed unit, as more particularly described below. I. Proposed Unit - Background I. The proposed drilling unit is a governmental section containing 640 acres, more or less. The proposed drilling unit is located within the "section (c) lands" subject to AOGC Rule B-43, and is an Exploratory Unit within the meaning of Rule B-43. The geological data available to Applicant indicates that there is a reasonable possibility that an oil and gas well drilled in the proposed unit would recover oil and/or gas in commercial quantities and, therefore, it is prospective of oil or gas. 2. The Applicant proposes to drill a horizontal well to be completed at a non- exceptional location with a surface hole in the Northwest Quarter down to a non-exceptional bottom hole location in the Southwest Quarter of the proposed unit. The proposed well will be drilled to a total vertical depth of approximately 7,456 feet to test the Fayetteville Shale and any intervening fOTmations, with a proposed lateral length of 3,486 feet.
A PROFESSIONAL LIMITED UABlLITY COMPANYAttorneys and COllnselors
POST OFFICE Box 251618LITILE ROCK. ARKANSAS 72225-1618
www.perkinstrotter.com
November 18, 2009
Street Address101 Morgan Keegan Drive, Suire A
Ililic Rock. Arkansas 72202
TEL 501-603-9000FAX 501-603-0556
Hand DeliveryArkansas Oil and Gas CommissionMr. Lawrence E. Bengal, Director301 Natural Resources DriveSuite 102Little Rock, AR 72205
Re: DOCKET REFERENCE NO. 796-2009-12
Application of Petrohawk Operating Company for integration of all unleasedmineral interests and uncommitted leasehold working interest owners in aunit described as Section 4, Township 7 North, Range 17 West, ConwayCounty, Arkansas; Proposed Dunn 7-17 #1-4H
Commissioners:
Petrohawk Operating Company, 6100 S. Yale, Suite 500, Tulsa, OK 74136("Applicant"), hereby applies to the Arkansas Oil and Gas Commission for integration of allunleased mineral interests and uncommitted leasehold working interest owners in the proposedunit, as more particularly described below.
I. Proposed Unit - Background
I. The proposed drilling unit is a governmental section containing 640 acres, more orless. The proposed drilling unit is located within the "section (c) lands" subject to AOGCRule B-43, and is an Exploratory Unit within the meaning of Rule B-43. The geologicaldata available to Applicant indicates that there is a reasonable possibility that an oil and gaswell drilled in the proposed unit would recover oil and/or gas in commercial quantities and,therefore, it is prospective of oil or gas.
2. The Applicant proposes to drill a horizontal well to be completed at a non-exceptional location with a surface hole in the Northwest Quarter down to a non-exceptionalbottom hole location in the Southwest Quarter of the proposed unit. The proposed well willbe drilled to a total vertical depth of approximately 7,456 feet to test the Fayetteville Shaleand any intervening fOTmations, with a proposed lateral length of 3,486 feet.
PERKINS & TROTTER, PLLC
Arkansas Oil and Gas CommissionPetrohawk Operating CompanySec. 4-77N-R17W, Conway Co.November 18, 2009Page 2
3. Applicant owns oil and gas leases covering a majority of the proposed unit, or hasobtained agreements with other working interest owners with whom they collectively ownoil and gas leases covering a majority of the proposed unit. Applicant should be named asoperator of the well. The list of parties to be integrated is attached hereto as Exhibit A.
4. Applicant states that it is in the best interest of conservation and the protection ofcorrelative rights of all interested parties that the proposed unit be developed for oil and gasproduction without undue delay.
5. Applicant, or another working interest owner, owns an oil and gas lease covering theproposed drill site.
n. Integration ofUnleased Mineral Owners
6. Applicant states that it has made repeated efforts to identify, locate and negotiateleases with the unleased mineral interest owners; that those owners have been offered anopportunity to participate in the proposed well; that they have been offered a fair andreasonable bonus consideration for the execution of an oil and gas lease covering theirinterests; that Applicant has furnished, or offered to furnish, a proposed oil and gas lease anda copy of the AAPL operating agreement form which Applicant proposes to use inconnection with the drilling of said well; but that all of the efforts of the Applicant haveproduced no agreement between Applicant and the unleased mineral owners listed on ExhibitA.
7. Applicant requests that the Arkansas Oil and Gas Commission set this matter forpublic hearing and, after same, issue its order that Section 4, Township 7 North, Range 17West, Conway County, be integrated and, in the alternative, that:
(a) The owners of the unleased mineral interests identified in thisApplication shall execute and deliver to Applicant a one-year oiland gas lease, on Applicant's proposed lease form, for fair andreasonable compensation, in the alternative, a bonus of $850 peracre and 3/16 royalty, in lieu of the right to participate in theworking interest in said unit;
(b) The owners of the unleased mineral interests identified in thisApplication shall be force-pooled and integrated into the captionedunit with assessment of a reasonable risk factor penalty against theirinterest; or
PERKINS & TROTTER, PLLC
Arkansas Oil and Gas CommissionPetrohawk Operating CompanySec. 4-17N-R17W, COllway Co.November 18, 2009Page 3
(c) The owners of the unleased mineral interests identified in thisApplication shall participate in the cost of drilling, testing and completionof the test well to be drilled by Applicant on the captioned unit, subject tothe terms of the uniform modified AAPL Operating Agreement andattachments adopted by the Commission, and authorization forexpenditures proposed by Applicant.
8. The unleased mineral owners identified in this Application should be required to electwithin fifteen (15) days after issuance of the Commission's order which method will be pursuedin the development of the proposed unit, with respect to their interest, and, in the event noelection is made, those unleased mineral owners shall be deemed to have elected to accept abonus of $850 per net mineral acre as compensation in lieu of the right to participate in theworking interest in said unit, and with the royalty to be 3116.
9. Due to the risks and costs inherent in the drilling of the proposed well, the Commissionshould fix a reasonable risk factor to be assessed as a penalty against the integrated interestswithin the unit. The risk factor should be applied to the proportionate cost and expenses ofdrilling, completing and equipping the well, which would have been borne by the interest ofsaid parties had they participated. Applicant proposes a risk factor of 400% for the initial welland 400% for subsequent wells.
DI. Integration of Uncommitted Working Interest Owners
10. Applicant has made diligent efforts to negotiate with each uncommitted leaseholdworking interest owner with an oil and gas leasehold interest in the proposed unit, butApplicant has been unable to secure an assignment of such leasehold interests on an equitablebasis or to secure participation by these parties in the drilling of the proposed well.
II. In order that it may proceed with the orderly development of the proposed unit,Applicant hereby requests that the Arkansas Oil and Gas Commission issue its order, in thealternative, that:
(a) The owners of uncommitted oil and gas leasehold working interestsidentified in this Application shall participate in the cost of drilling, testingand completion of the test well to be drilled by Applicant on the captionedunit, subject to the terms of an Operating Agreement which substantiallyemploys the terms of the uniform modified AAPL Operating agreementand attachments adopted by the Commission, and authorization forexpenditures proposed by Applicant; or
PERKINS & TROTTER, PLLC
Arkansas Oil and Gas CommissionPetrohawk Operating CompanySec. 4-T7N-R17W, Conway Co.November 18, 2009Page 4
(b) The owners of uncommitted oil and gas leasehold working interestsidentified in this Application shall be force-pooled and integrated into theunit, and a reasonable risk factor shall be established by the Commissionand assessed as a penalty against the integrated interest.
12. The uncommitted working interest owners identified in this Application should berequired to elect within fifteen (15) days after issuance of the Commission's order whichmethod will be pursued in the development of the proposed unit, with respect to their interest,and, in the event no election is made within 15 days after issuance of the Commission's order asbetween alternatives (a) and (b), those integrated parties shall be deemed to have electedalternative (b) in lieu of the right to participate in the working interest in said unit.
13. Due to the risks and costs inherent in the drilling of the proposed well, the Commissionshould fix a reasonable risk factor to be assessed as a penalty against the integrated interestswithin the unit. The risk factor should be applied to the proportionate cost and expense ofdrilling, completing and equipping the well, which would have been borne by the interest of theintegrated parties had they participated. Applicant proposes a risk factor of 400% for the initialwell and 400% for subsequent wells.
IV. General and Procedural Matters
14. Applicant requests that the resulting Order of the Commission be made applicable to anyunknown spouse, heir, devisee, personal representative, successor or assign of all parties subjectto the Order.
15. Notice has been or will be given to the interested parties identified in this Application inaccordance with the rules of the Arkansas Oil & Gas Commission. Proof of publication of theNotice and an Affidavit of Notice will be submitted at the hearing.
16. Below is a list of Exhibits that are attached to this Application, which Applicant requestsbe made a part of the record of this proceeding:
A. List of Parties to be IntegratedB. Resume of Efforts to Secure Leases and/or ParticipationC. Uniform Operating Agreement election formD. Authorization for expenditures (AFE) for Proposed Unit WellE. Structure MapF. Isopach MapG. Proof of Publication (to be submitted at hearing)H. Affidavit of Notice to Interested Parties (executed copy to be submitted at hearing)1. Affidavit of Geologist
PERKINS & TROTTER, PLLC
Arkansas Oil and Gas CommissionPetrohawk Operating CompanySec. 4-T7N-R17W, Conway Co.November 18,2009PageS
17. Please note the appearance of G. Alan Perkins, Perkins & Trotter, PLLC, P.O. Box251618, Little Rock, Arkansas 72225-1618, on behalf of Applicant.
Respectfully Submitted,
PERKINS & TROTTER, PLLC
G. Alan PerkinsAttorney for Petrohawk Operating Company
GAP/scr
SECTION 4 T7N R17WCONWAY COUNTY, AR
EXHIBIT A
INTERESTED PARTIES
UNLEASED MINERAL OWNERS
Heirs and Assigns of Thomas and Essie Chronister
Heirs and Assigns of Esther C. Porter f/k/a Esther Chronister Jones
Occidental Petroleum f/k/a Cities Services Oil and Gas Corp
XTO Energy Inc
Isaacs Family Limited Liability Partnership
Quail Creek Royalty, LLC
E GEnergy LLC
Heirs and Assigns of Thomas a/k/a T.!. a/k/a jim and Ila Virden
Heirs and Assigns of B.R. Gorman
Heirs and Assigns ofj.W. R. Crawford, Jr.
Heirs and Assigns ofj.D. Kimmel
Heirs and Assigns of Robert E. Garrett
Maurice D. Coover, Trustee of Florence Coover Estate Trust
Erwin Barglof
Herbert Ackley Arms
Cindy and Michael Aiper
Debra and Rick Maage
Keith Coover, individually and as Executor of the Estate of Beatrice Coover andShirley Coover
Craig G. Tirey Family Limited Partnehsip
David and Robyn Guest
Christine M. Brinninstool
Richard and Phyllis Hawkes
Gary and johnnie Hawkes
Dennis and jerri Hawkes
Patricia Albert
Lynda and Lloyd Murphy
Rickey Hawkes
Twyla Hawkes
Marilyn and john Wilde
Mark Warford
Nancy and james Tharpe
Wendell H. Hawkes
Christine and Harold Isom
Dianne and jim Tatro
Michael H. Ellis
David and Patricia Edenfield
Mark and Charlotte Edenfield
Kathlenn Edenfield Ryan
Brian and Anne Hawkes
Heirs and Assigns of Bessie Cole
WORKING INTEREST OWNERS
Chesapeake Exploration Limited Partnership
BP America Production Company
Seeco, Inc.
Flatirons Development, LLC
Mayhem Oil and Gas, Inc.
Ronald C. Agel
XTO Energy Inc.
SECTION 4 T7N R17WCONWAY COUNTY, AR
EXHIBIT B
RESUME OF EFFORTS TO LEASE
Township 7 North. Range 17 WestSection 4:
Heirs and Assigns of Thomas and Essie Chronister
September 15, 2009 Mailed Lease to address that appeared on the last lease signedby family
September 24,2009 A Ms. Maxwell who is the Daughter of Thomas and Essie Calledand Gave us some Heirship information, Thomas and Essie are deceased and hadtwo children
September 25, 2009 Mailed Leases to the two heirs
October 5, 2009 received Mrs. Maxwells's lease
October 14, 2009 received the other lease, listing for curative purposes
Township 7 North. Range 17 WestSection 4:
Heirs and Assigns of Esther C. Porter flkla Esther Chronister Jones
September 15, 2009 Mailed Lease to address that appeared on the last lease signedby family
September 24,2009 A Ms. Maxwell who is the Niece of Esther and Gave us someHeirship information, Ether is deceased and had one child who is deceased but didnot know if he had any children
October 6,2009 Searched Internet for death and heirship information
Township 7 North. Range 17 WestSection 4:
Occidental Petroleum f/k/a Cities Services Oil and Gas Corp
October 8, 2009 Occidental will wait to be integrated
Township 7 North. Ranee 17 WestSection 4:
XTO Energy Inc
October 10, 2009 XTO will wait to make an election when they receive an AFE andWell proposal
Township 7 North. Range 17 WestSection 4:
Isaacs Family Limited Liability Partnership
October 10, 2009 Listing for Curative purposes, XTO has the right to make anelection for Isaacs
Township 7 North. Ranee 17 WestSection 4:
Quail Creek Royalty, LLC
October 10, 2009 Listing for Curative purposes, XTO has the right to make anelection for Quail
Township 7 North. Range 17 WestSection 4:
E G Energy LLC
October 6, 2009 Mailed letter asking if E GEnergy will want to lease or participate
November 2,2009 EG wants to be sent an AFE and Well Proposal
Township 7 North. Range 17 WestSection 4:
Heirs and Assigns of Thomas aJkJa T.J. aJkJa Jim and Ila Virden
October 6, 2009 Listing for curative purposes, we have leased all known heirs oftheVirdens
Township 7 North. Range 17 WestSection 4:
Heirs and Assigns of B.R. Gorman
October 7, 2009 Listing for curative purposes, it appears Seeco has leased all knownheirs
Township 7 North. Ranee 17 WestSection 4:
Heirs and Assigns of J.W. R. Crawford, Jr.
October 7,2009 Listing for curative purposes, it appears Seeco has leased all knownheirs
Township 7 North. Ranee 17 WestSection 4:
Heirs and Assigns of J.D. Kimmel
October 7, 2009 Listing for curative purposes, it appears Mayhem et al has leasedall known heirs
Township 7 North. Range 17 WestSection 4:Heirs and Assigns of Robert E. Garrett
October 5, 2009 Robert E. Garrett is deceased and there are a large number of heirsand assigns to this interest, below are the heirs and assigns of Garrett.
Township 7 North. Range 17 WestSection 4:
Maurice D. Coover, Trustee of Florence Coover Estate Trust
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28,2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Erwin Barglof
October 5,2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28,2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Herbert Ackley Arms
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number and death information, webelieve he may be deceased
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North, Range 17 WestSection 4:
Cindy and Michael Aiper
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Keith Coover, individually and as Executor of the Estate of Beatrice Coover andShirley Coover
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 21, 2009 Lessor called and said he leased with third party
Township 7 North. Range 17 WestSection 4:
Craig G. Tirey Family Limited Partnehsip
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 13,2009 Spoke to lessor, he was showing a different net than what weshow
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
David and Robyn Guest
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 13, 2009 Spoke with lessor he was wanting to know what we showed hisinterest at
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Christine M. Brinninstool
October 5,2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Richard and Phyllis Hawkes
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Dennis and Jerri Hawkes
October 5,2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Patricia Albert
October 5,2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Lynda and Lloyd Murphy
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28,2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Rickey Hawkes
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Marilyn and John Wilde
October 5,2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28,2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Mark Warford
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28,2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Nancy and James Tharpe
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Wendell H. Hawkes
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Christine and Harold Isom
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Dianne and Jim Tatro
October S, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
David and Patricia Edenfield
October S, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Mark and Charlotte Edenfield
October S, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Ran&e 17 WestSection 4:
Kathlenn Edenfield Ryan
October 5,2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Brian and Anne Hawkes
October 5, 2009 Heir or assign of Robert E. Garrett, mailed lease to lessor
October 17, 2009 Searched internet for phone number
October 28, 2009 Talked to an heir asking for more information on heirship
Township 7 North. Range 17 WestSection 4:
Heirs and assigns of Bessie Cole
October 5,2009 Searched SSDi for death information
October 12, 2009 Conducted ancestry search and internet search for her heirs orassigns
October 28, 2009 Called some possible heirs to ask if they know Bessie Cole
Township 7 North. Range 17 WestSection 4:
Chesapeake Exploration Limited Partnership
November 11, 2009 Sent AFE and Well Proposal
BP America Production Company
November 11, 2009 Sent AFE and Well Proposal
Seeco, Inc.
November 11 2009 Sent AFE and Well Proposal
XTO Energy Inc.
November 11, 2009 SentAFE and Well Proposal
Flatirons Development LLC
November 11 2009 Sent AFE and Well Proposal
Mayhem Oil and Gas, Inc.
November~ 2009 SentAFE and Well Proposal
Ronald C. Agel
November 11, 2009 Sent AFE and Well Proposal
SECTION 4-TIN-17WCONWAYCOUNTY,AR
EXHffiITC
UNIFORM OPERATING AGREEMENT ELECTION FORM
Election of Uniform Operating Agreement
For purposes of this integration application, Applicant hereby elects the uniform modified AAPLOperating Agreement and attachments as most recently approved by the Arkansas Oil & GasCommission at its regularly scheduled hearing. Applicant further requests that the terms shown belowbe inserted into the Operating Agreement and attachments at the place indicated.
OPERATING AGREEMENT
I. Operator: Petrohawk Operating Company
Contract Area: All of Section 4, Township 7N, Range 17W
COUNTY OF CONWAY
STATE OF ARKANSAS
2. Article VI. B. 2(b) (non-consent penalty for subsequent operations): 400 %
EXHIBIT C - COPAS
I. III Overhead I. A.
Drilling Well Rate: $7500/mo.
Producing Well Rate: $750/mo.
PROPOSED DEVIATIONS FROM APPROVED FORM
NONE.
EXHIBIT D
PETROHAWK ENERGY CO=R=P=-=O=-=RA=-=-=T'IONandall wholly-ownedsubsidiaries PETROHAliWKNj;~~~
land/leS!lllDamages i 3' 19'000 I 3' 1!(000 I 341~O.840 FACILITIES I
Construction Contracf'Services/LaborlW~.t.din9 39, 400,000'1 400,
ells Killed by Frac ~ Water H3.!Jling 40I 5,000 I 5,
ells Killed b~ Frac - CTUIRi9 4' 10cQ90 ! 10,ells Killed by Frac ~ Lift 4' I 5,000 r 5ells-Killed by Frac - Flow~acklLibor 1 43 5,000 I 5,
:TOTAL INTANGIBLES 51,286,800.1 I 51,410,600: 52,697,T~NGIBLES ACCTfSUB I AMOUNT I ACCT/SUB I AMOUNT r TOTAL
I LENGTH I SIZE l=EIGHT r- GRADE .10.836 . 10,845 I~ctor ' 64- i 16,0 . I. 02 8,000 8,Surface I 750 I 9,630 I 40,5 I J,55 03 - 2',200 21,ProtecUon I. 1094~ I I r
:o.
t=228,iO~Prod/Uner I 5,500 17 i P-110 06
I228,
Tubing J I , 07 19,000 I 19,,Pa~ers/Olher SUbsurface Equipment 09 r 22,500 I
,
01 22,o. tWellheadffree i 12 20,000_, I I 20
I -10.826 I FACILITIES I
Flowfine I 08 I 35,00~ I 35,rtincla! Lift
-l'
Production Tree I 5,000 I -5,- '2 I
Meters & Production Controls '3 12,000 I 12,Separa-tors- ---
Valve-siManifolds/Fittings/Conneciions I 17 I 65,000 ; 65,Compresso-!, Eq~ipmenUPumps I I '9 I 0Mi~cCosts 5%
,
I '0 'i5,000 I 20 I 28,000 , 43,TOTAL TANGIBLES ,
-$314100 I 5188,000 : 5502,TOTA WELL roST 51 600,900 I I $1,598,600 , 53,199,
c
O'PE'RATORpetrohawk OperatingWEll NAME
Dunn 717 1-4H
:OPER
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I
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F
'rCOUNTYtPARISH,Conway
1 "Il'ITANGIBLES'
'Conlract Drillln9 (Turnkey)DAYWORK w/OP
""'---OAYWORK wlo OPCompletion Rig _Rig Mobilization/Demobilization;PermiUin9/Surve~g/~~k~in~9 _:Locatlonl Roadsl Pits/etc.iFUeliwaler/Power/Lubricants _[Overhead " -;-,0;---i ",5",,0:c.0~0 I 10 5,000 10,000:D!i1l1n9 Mud/Complelion FluldsfChe.~m",ica=ls,--___ 11 74900 1--,,,,'----+--- " 0 74,906iCement & Cement Service"'-_____ 29,000.11£9.ring/DST -_. 0 IIStimulation/Sand ControVColl Tubing ----- 450]001!Productlon Testing 19.500 ;.pirectionaIOrilling- ,______ 148.00(f I;Mud Log9inll-_ ':-:-_____ 13,500 IO~~ Hole Wire line Service 8,000~~sed Hole Wireline service I 92,7OOjTransoortationO:r~Ekin9 ,.------- t=io--+----c7:cO"',0~00I '0 7,000 I 77,000Bits/SlabilizersJReamersletc. 21 1-= 24,200 I 21 .- a ! 24,200Surface Rentals - - 2"3 ~ 29.400 I ?~_+-__--7.28",QQQ.I 57,400 1Downhole Renlals _ 27,000 I '3 '2,QQQ.1 39,00.Qj~up.rvlsion""E~n"'9"in':.e'-er"'in"g!uG"'e"'?"log=~/"CC'on'-SU1li0"9------ '4 ~ 93,2661 ~= 50,000 1------i14"3,200ContractService~ab~rlWeldin9 25 37,000 I ~ 17.0001_ 54,000
!insurance 26 - ,2,400 C I 2.400rEriV1iOnmentaVPit DisposaVSafelylReQuiatory Compliance 29 _I 75.600 i 29 70,400 I 146.000[ConlingenciesIMisc Costs 8% 30 93600 I 30 1 71400 I 165 000! 000c= 0
Section 4-7N-17W n 2_10Hjferogen Res eS,lr;-1-.10H
c .- -Conway Co, AR
'-' Gordon, Ed '€ DS",··1-10
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Isopach: Fayetteville ...(::'-1PAN AMERICAN
Contour Interval: 25' FRAN LIN COLLIER
POSTED WelL DATA
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By DCF
0 3000
T7f\1. ,R17\1\/! !
FEET•
PETRA 11111/2009 7 35 28 PM
EXHIBITH
BEFORE THE ARKANSAS OIL & GAS COMMISSION
AFFIDAVIT OF NOTICE TOINTERESTED PARTIES
STATE OF ARKANSAS ))
COUNTY OF PULASKI )
KNOW ALL MEN BY THESE PRESENTS:
COMES NOW SELINA C. RICE, Affiant herein, who after being by me duly sworn,states on oath as follows, to-wit:
1. I, SELINA C. RICE, am the assistant to G. Alan Perkins, who has been retainedto represent Petrohawk Operating Company (Applicant) before the Arkansas Oil & GasCommission at the Decem ber 8, 2009, hearing in Little Rock, Arkansas, to be heard inconnection with the following matter:
Re: DOCKET REFERENCE NO. 796-2009-12
Application of Petrohawk Operating Company for integration of all unleasedmineral interests and uncommitted leasehold working interest owners in aunit described as Section 4, Township 7 North, Range 17 West, ConwayCounty, Arkansas; Proposed Dunn 7-17 #1-4H
2. I hereby certify that a true and correct copy of the Notice attached hereto has beenplaced in the United States Mail, postage prepaid, on or before the __ day of November, 2009,addressed to each of the parties named on the LIST OF INTERESTED PARTIES attached to thereferenced Application as Exhibit A.
3. This Affidavit is made and executed based upon my own personal knowledge.
FURTHER Affiant sayeth not.
SELINA C. RICE
SUBSCRIBED AND SWORN to before me, a Notary Public, on this __ day ofNovember, 2009.
Notary PublicMy Commission Expires:
ARKANSAS OIL AND GAS COMMISSIONDirector's Office:301 Natural Resources DriveSuite 102Little Rock, AR 72205Phone: (501) 683·5814Fax: (501) 683·5818http://www.aogc.state.ar.us
Mike BeebeGovernor
Lawrence BengalDirector
El Dorado Regional Office:2215 West HillsboroEI Dorado, AR 71730Phone: (870) 862-4965FAX: (870) 862-8823
Fort Smith Regional Office:3309 Phoenix AvenueFort Smith, AR 72903Phone: (479) 646-6611FAX: (479) 649·7656
NOTICE OF PUBLIC HEARING
Pursuant to the provisions of Act 105 of the 52no General Assembly and Act 937 of 1979 of theState of Arkansas and any Amendments thereof, notice is hereby given that a public hearing willbe conducted at the office of the Arkansas Oil and Gas Commission on the date, time andlocation indicated on the following Agenda. The Commission has received applications and hasbeen requested by interested parties to convene a hearing to receive evidence relative to thematters specified on the Hearing Agenda, and for the issuance of any rules and regulations thatare found to be appropriate following the hearing. Due to the length of some docket items, thehearing may continue into the following day.
Information concerning or copies of the submitted applications are available for review at theCommission offices located at 301 Natural Resources Drive, Suite 102, Little Rock, Arkansas,phone number 501-683-5814; 2215 West Hillsboro, EI Dorado, Arkansas, phone number 870862-4965; and 3309 Phoenix Avenue, Fort Smith, Arkansas, phone number 479-646-6611.Please use the appropriate docket number in any inquiries to the Commission concerning thismatter. Inquiries should be directed to Alan York, Commission Attorney, at the Little Rockaddress, or bye-mail [email protected].
Any parties who propose to oppose a filed application, shall notify, in writing, the Director of theArkansas Oil and Gas Commission and the Applicant's Attorney of the proposed opposition, notlater than the close of business on the Friday before the scheduled public hearing date indicatedon the Hearing Agenda.
NOTICE IS HEREBY GIVEN that Petrohawk Operating Company (Applicant) has filed anApplication with the Arkansas Oil and Gas Commission for integration of interests in the Unit asshown below. Said application will be heard by the Arkansas Oil and Gas Commission at apublic hearing commencing at 9:00 am on December 8, 2009, or as soon thereafter as possible,at the Arkansas Game & Fish Commission Hearing Chambers, Two Natural Resources Drive,Little Rock, Arkansas 72205
Re: DOCKET REFERENCE NO. 796·2009-12
Application of Petrohawk Operating Company for integration of all unleased mineral interests anduncommitted leasehold working interest owners in a unit described as
Section 4, Township 7 North, Range 17 West, Conway County, Arkansas;Proposed Dunn 7-17 #1-4H
COMMISSION MEMBERSChad White, Chairman, Magnolia
W. Frank Morledge, Vice-Chairman, Forrest CityCharles Wohlford, Fon Smith' Bill Poynter, Texarkana
Mike Davis, Magnolia' Kenneth Williams, .JerseyCarolyn Pollan, Fort Smith' William L. Dawkins, Jr., Fort Smith
Jerry Langley, Smackover
An equal opportunily employer
EXHIBIT I
AFFIDAVIT AND TESTIMONY OF DEBBIE C. FRITSCHE, A REGISTEREDPROFESSIONAL GEOLOGIST
STATE OF Arkansas)
COl,lnty ofSebastian) .. .
Debbie C. Fritsche, having been first duly sworn, makes the following affidavit:
My name is Debbie C. Fritsche.
I am employed as a consl,llting geologist by the applicant, Petrohawk Operating, and am familiarwith the geology relative to the applicant's well, (the "subject proposed well"), which is thesl,lbject ofDocket No. 796-2009-12.
I have previol,lsly been qualified to give expert geological testimony in matters pending beforethe Arkansas Oil and Gas Commission. I was first recognized as such expert by the ArkansasOil and Gas Commission in its Order Reference No. 1-2006-01.
I l,lnderstand that I am sl,lbmitting this Affidavit, under oath, as testimony in this docketed matter.This Affidavit is sl,lbmitted in lieu oflive testimony in this matter and is materially the same asthe testimony which I wOl,lld present herein as a live witness.
The proposed well is planned as a horizontal well targeting the Fayetteville Shale formation.The smface-hole location is planned in the NW/4 and the bottom-hole location is planned in theSW/4 of Section 4, Township 7 North, Range 17 West, Conway COl,lnty, Arkansas.
The sl,lbject well is planned to drill to a total vertical depth ofapproximately 7,456 feet, with alateral length ofapproximately 3,486 feet, resl,llting in a total measl,lred depth for this well ofapproximately 10,942 feet
As is shown on the Stmctme Map filed as Exhibit No. E in this matter, the sl,lbsea depth oftheFayetteville Shale is projected to OCCl,lr at approximately -5,550 feet below sea level at thislocation.
As is evident from the Fayetteville Gross Thickness map filed as Exhibit No. F in connectionwith this application, the Fayetteville is expected to be approximately 230 feet thick along thewell-path.
There is significant risk associated with the drilling and prodl,lction of the sl,lbject proposed well.A disCl,lssion of some of the significant elements of that risk follows:
DISCUSS ELEMENTS OF GEOLOGAL RISK THE FOLLOWING ARE EXAMPLES:
The nearest producing Fayetteville Shale well is Petrohawk's Alta-Briggler 1-31B well inSection 31-8N-16W, 4 miles to the northeast. This well began producing on 1/11/08, had an 1Prate of 650 mcf/day, is currently producing 120 mcf7day, and has cumed 186,698 mcr
Faulting is present within the section of the proposed well and adds to the structural risk ofthisprospect.
The nearest pipeline is app'rOJiimately 4 mjles to the'northeast~
Given the combined structural, stratigraphic, and mechanical risk ofthis prospect, it is myopinion that 400"/0 risk factor penalty for all wells in this unit is appropriate for this and allsubsequent wells in this section.
This Affidavit executed the Jd- day of~ ,2009.
~(/£J , /JiZlAuDebbie C. Fritsche, RPG #355
ACKNOWLEDGEMENT
STATE OF ARKANSAS
COUNTY OF SEBASTIAN
On this the [Z- day of VI)(Oo I.e c ,2009, before me the undersigned officer, personally appeared Debbie C.Fritsche, known to me (or satisfactorily proven) to be the person whose name issubscribed to the within instrument and acknowledged that she executed thesame for the purposes therein contained.
In witness whereof I hereunto set my hand an
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