New BEFORE THE BOARD OF OIL, GAS AND MINING DEPARTMENT … · 2016. 7. 19. · BEFORE THE BOARD OF...

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BEFORE THE BOARD OF OIL, GAS AND MINING

DEPARTMENT OF NATURAL RESOURCES

STATE OF UTAH

IN THE MATTER OF THE REQUEST FOR

AGENCY ACTION OF QEP ENERGY

COMPANY FOR AN ORDER SUSPENDING THE

APPLICATION OF UTAH ADMIN. CODE R649-3-

2, R649-3-10, AND R649-3-11(1) AND (2) FOR

THE SOUTH RED WASH UNIT, COVERING THE

S½N½ AND S½ OF SECTION 1, ALL OF

SECTIONS 12 AND 13, AND THE N½ AND SE¼

OF SECTION 24, TOWNSHIP 8 SOUTH, RANGE

22 EAST, SLM, AND ALL OF SECTIONS 3, 4, 6-

10, 13-24, THE E½NE¼ AND S½ OF SECTION

5, THE S½ OF SECTION 11, AND THE S½ OF

SECTION 12, TOWNSHIP 8 SOUTH, RANGE 23

EAST, SLM, UINTAH COUNTY, UTAH.

Docket No. 2016-001

Cause No. 187-11

INDEX OF CORRESPONDENCE

NO. PARTY DATE DESCRIPTION

1. Bureau of Land Management,

Utah State Office

01/14/2016 Letter of Support for QEP’s Request for

Agency Action

2. School and Institutional Trust

Lands Administration

01/21/2016 Letter of Support for QEP’s Request for

Agency Action

State of UtahSchool & lnstitutionalTrust Lands Administration

675 East 500 South, Suite 500Salt Lake City, UT 84102-2813801 -538-51 00801 -355-0922 (Fax)www.trustlands.utah.gov

FILEDJAN 2 I 20t6

SECNETARY, BOANDOFoL GåStùilMitG

Gary R. HerbertGovernor

Spencer J. CoxLieutenant Governor

David UreDirector

cc

January 19,2016

Ruland J. Gill, Jr.ChairmanUtah Board of Oil, Gas and MiningP.O. Box 145801

Salt Lake City, Utah 84114-5801

Re Docket No. 187-l ICause No. 2016-001South Red Wash UnitUintah County, Utah

Dear Mr, Gill:

I am writing on behalf of the State of Utah, School and Institutional Trust LandsAdministration ("SITLA") regarding the above-captioned matter. SITLA has reviewed theRequest for Agency Action filed by QEP Energy Company and has concluded the action is in the

best interest of the beneficiaries. Therefore, SITLA supports this request.

Should you have any questions, please contact me at 801-538-5171.

Very truly yours,

tlffi-'

Laura RippentropLaVonne J. GarrisonRoger L. Bankert

Stephanie Barber-RenteriaLand Professional

IITAHL I F E E L E VAl E P-

BEFORE THE BOARD OF OIL, GAS AND MININGDEPARTMENT OF NATURAL RESOURCES

STATE OF UTAH

EXHIBIT LIST FOR OEP Enerey Company

COUNSEL MarkL. Burshardt. Esq..Holland & Hart LLP

Hearing Examiner Hearing:January 19,2016

Docket No. 2016-001 Cause No. 187-11

EXHIBIT # Description Offered asEvidence

Admitted asEvidence

Exhibit A Resumes

Exhibit B South Red Wash Unit Agreement

Exhibit CExhibit B to the South Red V/ash UnitAgreement

Exhibit D BLM Approval Letter

Exhibit L-l Overview Map

Exhibit L-2 Subject Area Map

Exhibit L-3 Topographic Overlay Map

Exhibit G-l Structure Map

Exhibit G-2 Type Log

Exhibit G-3Regional Peleogeography and DepositionalEnvironment lllustration

Exhibit G-4 Outcropping Schematic

Exhibit G-5 Cross Sections

Exhibit c-6 Detailed Cross Sections Mesaverde

Page I of2

EXHIBIT # Description Offered asEvidence

Admitted asEvidence

Exhibit G-7 Additional Detailed Cross Sections Meseverde

Exhibit E-l Engineering Analysis

Page2 of2

BEFORE THE BOARD OF'OIL, GAS AND MININGDEPARTMENT OF NATURAL RESOURCES

STATE OF UTAH

IN rHB MATTER oF THE Reeuesr roR AceNcyAcrroN or QEP ENency CoupeNv FoR ANORDER SUSPENDING THE APPLICATION OF

UreH Aorr¿r¡{. Coo¡ R649-3-2, R649-3-10,nNo R649-3-11(1) aNo (2) FoR rHE SournR-eo W¡,sH UNrr, covERING rup StlzN% eNoS% or SecrroN 1, RLL or SecrroNs 12 ¡.Np13, RNo rs¡ N% eNo SE% or SBcuoN 24,TowNsHlp 8 SourH, ReNcp 22 Etsr, SLM,AND ALL op SBcrroNS 3, 4, 6-10, 13-24, rynEYI:lEt/4 eNo S% or SBcroN 5, rHE S% onSecrroN 11, euo rrn SYz of S¡cuoN 12,

TowNssrp 8 Souru, ReNce 23 Ensr, SLM,Urxrnn CouNtY, UIRH.

EXHIBIT A

EXHIBIT B

EXHIBIT C

EXHIBIT D

EXHIBIT L.l

EXHIBIT L.2

EXHIBITS

Docket No.2016-001

Cause No. 187-11

QEP Energy Company ("QEP"), by and through its attorneys, Holland &, Hart LLP,

submits the following exhibits:

GENERAL EXHIBITS

Resumes

South Red Wash Unit Agreement

Exhibit B to the South Red Wash Unit Agreement

BLM Approval Letter

LAND EXHIBITS

Overview Map

Subject Area Map

Topographic Overlay MapEXHIBIT L.3

EXHIBIT G-l

EXHIBIT G.2

EXHIBIT G.3

EXHIBIT G-4

EXHIBIT G-5

EXHIBIT G-6

EXHIBIT G.7

GEOLOGY EXHIBITS

Structure Map

Type Log

Regional Peleogeography and Depositional Environment Illustration

Outcropping Schematic

Cross Sections

Detailed Cross Sections Mesaverde

Additional Detailed Cross Sections Meseverde

ENGINEERING EXTIIBIT

EXHIBIT E-l Engineering Analysis

DATED this 18th day of December, 2015,

By

Address of Petitioner:QEP Energy CompanyAttention : Laur a Rippentrop1050 17th Street, Suite 500Denver, CO 80265Telephone: (303) 640-4210

QEP ENERGY COMPANY

Mark LWilliam E. WardHOLI,AND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Telephone: (801) 799-5800Attorneys for Petitioner, QEP Energy Company

8330s62 |

Aaron Bazzell10348 Sierra Ridge Ln 303-308-3421

aaron.bazze I I tOoeo res. comParker CO 801 34

Skills

Education

a Technical: Proficient in petrophysicalwell log analysis, geologic mapping, mudlogapplication to exploration, core descriptionsCommunication: Oral presentations, technical writing to include: memos, proceduralmanuals, core workshop journalsManagement: Completed multiple leadership classes: lnterviewing For Success,Coaching for Development, etc.; experience in managing both profit and cost centersComputer: Geographix, IHS Petra, Kingdom Suite, Pl Dwights, Minitab, MicrosoftOutlook, Word, Excel, PowerPoint

o

a

a

Colorado School of MinesGeology

University of South AlabamaGeology

Delta State UniversityMarketing

M.S. May 2014GPA 3.89

B.S. Aug 2012GPA 3.71

B.B.A. May 2004

Relevant Experience

Associate Geologist, QEP Resources, May 2014 - Present

. Monitor active drilling rigs, both horizontal and vertical

. Apply geochemical analyses to the assessment of source rock potential

. Geological mapping, log analysis, volumetric estimation, XRF analyses

Research Assistant, Colorado School of Mines, Sept 2012 -May,2014

. Thesis topic: Origination of Breccia lntervals and Petrophysical Analysis of the ThreeForks Formation, Williston Basin, North Dakota

. Oral presentations to Bakken Research Consortium members

. Participated in development of Core Workshop for Williston Basin to include core reportsand presentation of cores to industry professionals

Geoscience lntern, Concho Resources, May 2013 - Aug 2013

. Petrophysical analysis of well logs to define Net Pay for exploration project

. Geologic mapping adapted to depositional models

. Presentation of recommendations for prospective well sites and recompletion potential toSenior Management

Awards / Accomplishments

. Member of AAPG and RMAG

. Member of AAPG lmperial BarrelAward team for CSM, Spring2013

. Mobile Rock and Gem Society Field Studies Award, Spring 2012

. Corporate Service for Excellence Award: Process lmprovement, Hancock Bank 2009

. Appointed Operations Officer, Hancock Bank 2009

Daniel J. Rabiolo, P.E.1050 lTtr'SL ste 5oo Daniel.Rabiolo@qepres. com

PROF'ESSIONAL EXPERIENCE

QEP ENERGY / QUESTAR E&P, Denver, Colorado 2008-Present

Uinta / San Juan Division (Dec 2012 - Present)Senior Reservoir Engìneer. Responsible for reserves, forecasting, 3P analysis, and development planning including an exploratory

Green River unconventional oil playo Perform economic and volumetric evaluations on acquisitions, divestitures, lease sales, well proposals, and

other projects for both operated and non-operated properties

Senior Operalions Engineer. Plan and oversee recompletions and workovers for both oil and gas projectso Evaluate and recommend actions on existing and new water flood projects. Work with regulatory and geology to create and execute injection and disposal permits through the EPA

permitting process

High Plains (Legacy) Division (Aug 2008 -Dec2012)Se n ìo r Res emoir E ngíneer. Responsíble for reserves, forecasting, 3P analysis, and development planningo Primary reservoir engineer responsible for QEP's North Dakota acreage positiono Create, review, and defend performance curves for all wells in areas of supervision including ND, MT,

NM, CO, V/Y and work with third party reserves companies to perform reserves evaluationsr Perform economic and volumetric evaluations on acquisitions, divestitures, lease sales, well proposals, and

other projects for both operated and non-operated properties¡ Create exhibits and testify for NDIC hearings including spacing, infilling, flaring, and field expansions

o Provide instruction, guidance, and explanations to engineering techs and new engineers¡ Present regularly to upper management for approval and information distribution

HEADINGTON OIL CO, Denver, Colorado 2007-2008

Pelroleum Engineer I¡ Tracked production, created hearing documents, and compiled economic evaluations for MT and ND

Bakken properties. Kept the reserves database current with acreage holdings and concurrent with operating schedules for

producing and 3P wellso Forecasted production for operated and non-operated wells. Provided instruction, guidance, and explanations to anew engineering tech. Used reserves analysis to study the economic implications of infill wells for our area of operation.o Worked with third party reserves analysts to complete reserves reviews

ENCANA OIL ÄND GAS (USA) INC, Denver, Colorado 2005-2007

Drilling Englneer (2006 -2007)r Wrote drilling procedures, evaluated rig efficiency and performance, reviewed and updated cost estimates.

Engìneering Inlern (Summer 2005)

Daniel J. Rabiolo, P.E.1050 lTth st, ste 500 Daniel,Rabiolo@qepres. com

EDUCATION

B.S. Petroleum Engineering with High Scholastic Honors, Colorado School of Mines - May 2006

PROX'ESSIONAL DEVELOPMENT AND SKILLS

Memberships and Registrationso Professional Engineer, State of Colorado, Registration#46027o Denver Chapter ofSPE

Softwa re Proficiencies. MS Office, Excel, PowerPoint, ARIES, Access, Carte, Vy'ellView

. Vy'ork closely with Land, Regulatory, Completions, and Geolory

. Tactical Planning, Reserves, and 3P analysiso Acquisition and Divestiture Economics. EPA Injection and Disposal Well Applicationso Presentations and management approval recommendationso State commission exhibits and testimony

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TINITAGREEMENTFOR THE DEVELOPMENT AND OPERATION O}-

THE SOUTH RED WASH UNIT AREACOUNfi OFUINTAH

STATEOF UTAHCONTRACT NO. UTU8916IX

This agreement, entered into as ofthe 21st day of February, 2013, by and between the parùes subscribing,

ratifuing, or consenting hereto, and herein refer¡ed to as the "parties hereto,"

WITNESSETH:

WHEREAS, the parties hereto are the owners of working, royalty, or otl¡er oil'and gas interests in the unit area

subject to this agreement; and

WIIERß.AS, the Minerat Leasing Act of February 25,1920,41 Stat.437, as amended, 30 U.S.C. Sec. 181 er

seq., authorizes Federal lessees and thei¡ representatives to unite with each other, orjointly or separately with

others, in collectively adopting and operating under a unit plan ofdevelopment or operation ofany oil and gas

pool, field, or like area, or any part thereoi fo¡ the purpose ofmore properly consewing the natural resources

thereofwhenever determined and certífied by the Secretary offhe lnterior to be necessary or advisable in thc

public interest; aud

WHEREAS, tlre parties hereto hold sufficient interests in the South Red Wash Unit Area covering the land

hereinafter described to give reasonabty effective contol ofoptrations therein; and

WHEREAS, it is the pufpose of the parties hereto to conserve natural resources, pfevent waste, and secure

other benefits obtainabie ûuough development and operation ofthe area subject to this agreement under the

terms, conditions, and limitatiors herein set forth; and

WHEREAS, part of thc lands within the unit area is now subject to the Mulligan Unit Agreement, it is the

intent of the parties here to, including the parties to said Mulligan Unit Agreement (as shown on Exhibit "A')'that in the event of a discovery of unitized substances in paþg quantities under this agreement, the Mulligan

Unit Agreement shall be terminated and the lands subject thereto shall be merged into this unit agreement and

its area because of the more eftcient manner of development and operation of the combined areas afforded

t¡ereby. Until such termination and merger are affected in accordance with Section 32 hereof, said Mulligan

Unit Ágreemenr shall continue to be operated as a separate entity, except that drilling thereunder will be

permissible to satisfo Sections, 9, t I and 18 hereof.

NOW, THEREFORE, in consideration of the premises and the promises herein contaired, the pafies hereto

commit to this agreement their respective interests in the below-defined unit area and agee severally among

themselves as follows:

L ENABLING ACT AND REGULATIONS. The Mineral Leasing Act of February 25, 1920, as amended,

supra, and all valid pertinent regulations including operating and un.it plan regulatiors heretofore issued

thåreunder, o¡ valid, pertinent, and reasonable regulations hereafter issued thereunder, are accepted and made a

part ofthis .g.""-"nt as to Federal lands provided such regulations are not inconsistent with the terms ofthis

àg¡eement; and, as to non-Federal lands, the oil and gas operating regulations in effect as ofthe effective date

hèreof governing drilling and producing operations not inconsistent with the terms hereof, or the laws of the

State in which the non-Federal land is located, are hereby accepted and made a parl ofthis agreement'

2. UNIT AREA, The area specified on the map attached hereto marked Exhìbit A is hereby designated and

recognized as constituting the unit area, containing 15,382.74 acres, more or less'

Exhibit A shows, in addition to tbe boundary of the unit area, the boundaries and identity of hacts and leases in

said area to the extent known to the Unit Operator. Exhibit B attached hereto is a schedule showing, to the

extent known to the Unit Operalor, the acreage, percentage, and kind ofownership ofoil and gas interests in all

lands in thc unit area, llowever, nothing herein or in Exhibits A o¡ B shall be construed as a representation by

âry party hereto as to t-he ownership of any interest other than such interest or interests as are shown in the

ExliUits as owned by such party. Exhibits A and B shall be revised by the Unit Operator whenever changes in

the unit area or in the ownership interests in the individual tracts ¡ender such revision necessary or when

requested by the Authorized Offrcer, hereinafter referred to as the AO, and not less than four copies oftherevised ExÍibits shall be filed with the proper BLM oñìce.

The above-described unit area shall, when practicable, be expanded lo include therein any additional lands or

shall be contracted to sxclude lands whenever such expansion or contraction is deemed to-_be necessary or. RECEIVED

' JUNll2oßl-rnotüLf&å'".

advisable to conform with the purposes ofthis agreement. Such expansion or contraction shall be effected inthe following manner:

(a) Unit Operator, on its own motioû (after preliminary concurrence by the AO) or on demand ofthe AO, shall prepare a notice of proposed expansion or contraclion describing tbe

contemplated changes in the boundaries of the unit are4 the reasons therefor, any plans foraddit.ional drilling, and the proposed effective date ofthe expansion or contractioq preferably

lhe first day ofa month subsequent to the date ofnotice.(b) Said notice shall be delivered to the proper BLM office and copies thereof mailed to the last

known address ofeach working interest owner, lessee, and lessor whose interests are affected,

advising that 30 days wüi be allowed for submission to the Unit Operator of any objections.

(c) Upon expiration of the 30-day period provided in the preceding item @) hereof, Unit Operator

shall file with the AO evidence olmailing of the notice of expansion o¡ contraction and a copy

of any objections thereto which have been filed with Unit Operator, together with an

application in triplicate for approval of such expansion or contraction and with appropriatejoinders.

(d) After due corsideration of all pertinent informatioq the expansion or contraction shall, upon

approval by the AO, become effective as of the date prescribed in the notice thereof or such

other appropriate date.(e) All legal subdivisions of lands (i.e., 40 acres by Govemment survey or its nearest lot or tract

equivalent; in instances ofinegular surveys, unusually large lots or tracts shall be considered in

multiples of 40 acres or the nearest aliquot equivalent thereof), no parts of wbich are in, or

entitled to be i¡U a participating area on or before the fiflh anniversary ofihe effective date offhe first initial participating area established under this unit agreement, shall be eliminated

automatically from this agreement, effective as of said frfth anniversary and such lands shall no

longer be a part of the unit area and shall no longer be subject to lhis agreement unless diligent

drilling operations are in progress on unitized lands not entitled to participation on said fiflh

anniversary; in which event, all such lands shall ¡emain subject hereto for so long as such

drilling operations are continued diligently, with not more than 9O-days time elapsing between

the completion of one such well and the commencemenl of the next such well. AII legal

subdivisions oflands not entitled to be in a participating area within l0 years after the effective

date of the first initial participating area approved under this agreement shall be automatically

eüminated from this agreement as of said tenth anniversary. The Unit Operator shall, withi¡ 90

days after tbe effective date of any elimination hereunder, describe the a¡ea so eliminated to the

satisfaction of the AO and promptly notifu all parties in interest. A[i lands reasonably proved

productive of unitized substances itr paymg quantìties by diligent drilling operations after the

afo¡esaid 5-year period shall become participating in the same manner as during said first 5-

year period. However, when such diligent drilling operations cease, all nonparticipating lands

not then entitled to be in a participating area shall be automatically eliminated effective as of the

9 I st day thereafrer.

Any expansion of the unit area pursuant to this section which emb¡aces lands theretofore

elìminated pursuant to this subsection 2(e) shall not bc consideted automatic commitment o¡

recommitment of such lands. If conditions wanant extension of the lO-year period specified in

this subsection, a single extension ofnot to exceed 2 yeârs may be accomplished by consent ofthe owners of 90 percent of the working interest in the current nonparticipating unitized la¡ds

and the owners of 60 percent of the basic royalty interest (exclusive of the basic royalty

inte¡ests of the United States) in nonparticipating unitized land with approval of tbe 40,provided such extension application is submitted not later than 60 days prior to the expiration

of said 1O-year petiod.

3. UNITIZED LAND AND UNITIZED SUBSTANCES. All land now or hereaftcr commilted to this

agreement shall constitute land refened to herein as "unitized land" or "land subject to this agreement'" All oil

and gas in any and all formations of the unitized land are unitized under the terms of this agreement and herein

a¡e called "unitized substances."

4. UNIT OPERATOR. Kerr-McGee Oil & Gas Onshore LP is hereby des¡gnated as Unit Operator and

by signature hereto as Unit Operator agrees and consents to accept the duties and obligations ofUnit Operator

for the discovery development, and production ofunitized substances as herein provided. Whenever teference

ìs made here.in to the Unit Operator, such reference means the Unit Operator acting in that capaciry and not as

an owner of interest in unitized substances, and the term "working interest owne¡" when used herein shall

include or refer to Unit Operator as the owner of a working interest only when such an interest is owned by it.

5. RESIGNATION OR REMOVAL OF UNIT OPERATOR. Unit Operator shall have the right to resign

at ary time píor to the establishment ofa participating area, or areas, hereunder, but such resignalion shall not

become effective so as to release Unit Operator from the duties and obligations of Unit Operator and terminateUnit Operator's rights as such for a period ofó months after notice ofintention to resign has been served by

z RECETVED

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Land Managamerr.

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Unit Operator on all working intsrest owners and ùe AO and until all wells then drilled hereunder are placed in

a satisfactory condition for suspension or abandonment, whichever is required by the AO, unless a new UnilOperator shall h¿ve been selected and approved and shall have taken over and assumed the duties and

obligations of Unit Operalor prior to the expiration of said period.

Unit Operator shall have the right to resign in like manner and subject to like limitations as above provided at

any time after a participating area established hereunder is in existence; but, in all instances of resignation or

removal, until a successor Unit Operator is selected and approved as hereinafter provided, the workirg interest

owners shall be jointly responsible for performance of the duties of Unit Operator and shall, not later tban 30

days before such resignation or rernoval becomes effective, appoint a coÍì.mon agent to represent them ín aoy

action 1o be taken hereunder.

The resignation of Unit Operator shall not release Unit Operator Aom any liability for any default by ithereunder occurring prior to the effective date of its resiglation.

The Unit Operator may, upon default or failwe in the performance of its duties or obligations hereunder, be

subject to removal by lhe same percentage vote of the owners of working interests as herein pfovided for tbe

selection of a new Unit Operator. Sucb removal shall be effective upon notíce thereof to the AO,

The resignation or removal of Unjt Operator under this agreement shall not terminate its right, title, or interest

as the owner ofworking interest or other interest in unitized substances; but, upon the resignation or removal of

Unit Operator becoming effective, such Unit Operator shall deliver possession of all wells, equipment,

materials, and appurtenances used in conducting the unit operations to the nerv duly qualified successor Unit

Operator or to the common agent, if no such new Unit Operator is selected, to be used for the pu¡pose ofconduc(ing unit operations hereunder. Nothing herein shall be construed as authorizing removal of any

material. equipment, or appurtenances needed for the preservation ofany wells,

ó. SUCCESSOR IINIT OPERATOR. Whenever the Unit Ope¡âtor shall tender his or its resignation as Unit

Operator or shall be removed as hereinabove provided, or a change of Unit Operator is negotiated by thc

working interest owners, the owners of the working interests according to their respective acreage interests in

all unitized land shall, pursuant to the Approval of the Parties requirements of the unit operating agreement'

select â successor Unit Operator, Such selection shall not become effective until:

(a) a Unit Operâtor so selected shall accept in writing the dutìes and responsibilities of Unit

operator, and(b) the selection shall have been approved by the AO.

If no successor Unit Operator is selected and qualìfìed as herein provided, the AO, at his election, may declare

this unit agreement terminated.

7. ACCOUNTING PROWSIONS AND UNIT OPERÀTING AGREEMENT. If the unit operator is not

tbe sole owner of working interests, costs and expenses incurred by Unit Operator in conducting unit

operations hereunder sball be paid and apportioned among, and borne by, the owne¡s ofworking interests all in

aðcordarrce with the agreement or agreemènts entered into by and between the Unit Operator and the owners of

workùrg interests, whether one or more, separately or collectively. Any agleement, or agreements, entered into

between the working intefest owners and the Unit Operator as provided in this section, whether one or more'

are herein referred to as the "unit operating agreement." Such unit operating agreement shall also provide the

manncr in which the working interest owners shall be entitled to ¡eceive thei¡ respective proportionate and

allocared share of the beneñts accruing hereto in conformity with tbeir ulderlying operating agreements, Ieases,

or otlrer independent contracts, and such other rights and obligations as between Unit Operator and the

working interest owners as may be agreed upon by Unit Operator and the working interest owners; however,

no such- unit operating agreement shall be deemed either to modifo any of the terms and conditions of this unit

agreement or io relieve the Unit Operator ofany right or obligation established under this unit agleement, and

in case of any inconsistency or conflict between this agreement and the unit operating agreement, this

agreement shall govem. Two copies ofany unit operating agreement executed pursuant to this section shall be

filed in the proper BLM ofüce prior to approval oflhis unit agreement,

S. RIGHTS AND OBLIGATIONS OF UNIT OPERÀTOR. Except as otherwise specif,cally provided

herein, the exclusive right, privilege, and duty ofexercising any and all rights ofthe parties herelo which are

necessary or convenient for prospecting for, producing, storing, allocating, and distributing the unitized

substances are hereby delegated to, and shall be exercised by, the Unit Operator as herein provided.

Acceptable evidence of title 10 said rights shall be deposited with Unit Operator and, together with this

agreement, shall constitute and dçfure the rights, privileges, and obligations of Unit Operator. Nothing herein,

however, shall be construed to transfer title to any land or to any lease or operating agreement, it being

understood that under this agreement, the Unit Operator, in its capaciry as Unjt Operator, shall exercise the

rights ofpossession and use vested in the parties hereto only for the pulposes herein specified.

3 RECEIVED

JUN I I 2013

Buloåu tLand Managem'

9. DRILLING TO DISCOVERY. None of the wells norv existing in the Mulligan Unit A¡ea shall be

recognized as unit wells hereunder until the efective date ofan initial particiapating area established hereunder

by discovery of production in paying quantities by any well drilled under the provisions of this Section 9 and

outside of the Mulligan Unit Area. Within 6 months after lhe cffectìvc date hereof, the Unjt Operator shall

commence to drill an adequate test well at a location approved by the AO unless on such effective date a wellis being drilled in conformity with the terms hereof, and thereafter continue such drilling diligently until the

Wasafch / Mesaverde formations have been tested or unlil, at a lesse¡ deptl, unitized sìlbstances shall be

discovcred which can be produced in paying quantities (to wit: quantities suflicient to repay the costs oi'

drilling, completing, and producing operations, with a reasonable profit) or the Unit Operator shall at any time

estabüsh to the satisfaction of thc AO that further drilling of said well would be unwananted or ìmpracticable,

provided, howçver, that Unit Operator shall not, in any event, be required to drill said well to a depth inexcess of 11,100' or the stratigraphic equivnlent of 12,800 feet below Kelly Bushing (elevation 5,325') inthe White River Unit EIH 6D-5-8-23 well drilled by QEP Energy Company located 2,016' FNL and

2,178' FWL in Section 5, Tovmship 8 South, Range 23 East, S.L.M. Uintah Counfy, Utah Until the

discovery of unitized substances capable of being produced in payog quantities, the Unit Operator shall

continue drilling one well at a time, allowing not more thân 6 months betrveen thc completion of one well and

the commencement of drilling operations for the next well, until a well capable of producing unitized

substances in paymg quantities is completed to the satisfaction of tbe AO or until it is reasonably proved that

the unitized land is incapable of producing unitized substances it ptytng quantities in the formations drilled

hereunder. Nothing in this section shall be deemed 10 limit the right of the Unit Operator to resign as provided

in Section 5 hereof or as requiring Unit Operator to commence or continue any drilling during the period

pending such resignation becoming efFective in order to comply with the requirements of this section.

The AO may modif any of the drilling requirements of this section by granting ¡easonabìe extensions of time

when, in his opinion, such action is wananted.

Until the establishment of a participating area, the failure to coÍtmence a well subsequent to the drilling of thc

initial obligation rvell, or in the cæe of multiple well requirements, if specified, subsequent to the drìlling oft¡ose multiple wells, as provided for in this (these) section(s), within the time allowed including any exlension

of time granted by the AO, shall cause this agteement to terminate automatica\. Upon failure to continue

drilling diligently any well other than the obtigation well(s) commenced hereunder, the AO ma¡ after l5 days

notice to the Unit Operator, declare this unit agreement terminated. Failure to conìmence drilling the initial

obligation well, or the fi¡st of multiple obligation wells, on time and to drill it diligently shall result in the unit

agreement approval being declared invalid aå initio by the AO. In the case of multiple well requirements,

iailure to .o--"n.. drilling the required multiple wells beyond the fìrst well, and to drill them diligently, may

result in the unit agreement approval being declared invalid ¿ô inilio by the AO.

10. PLAN OF FURTHER DEVELOPMENT AND OPERATION. Within 6 months after completion of a

well capable of producing unitized substances ir puy.g quantities, the Unit Operator shall submit for tl¡e

upp.oá of the AO an acceptable plan of development and operation for the unitized land which, when

appro.'ed by thc authorized ofñcer, shall constitute the ñ¡rther drilling and development obligations of the Unit

Oierator under this agfeement for the period specified therein. Thereafter, from time 1o time, such plan of

dévelopment will be amended by the AO's review of proposed operations on the unitized land.

Any plan submitted pursuant to tl¡is section shall provide for the timely exploration ofthe unitized area and for

the dìIigent drilling necessaryfordetermination of the area, or areast capable of producing unitized substances

in paytng quantiries in each and every productive formation. This plan shall be as complete and adequate as the

AO may determine to be necessary for timely dovelopment and proper conservation of the oil and gas

,"rour.i, in the unitized area and shall Speciff the number and locations of any wells to be drilled and the

proposed order and time for such drilling.

Plans shall be modified or supplemented when necessary to meet changed condilions or to protect the interests

of all parties to lhis agreement. Reasonable diligence shall be exercised in complþg with the obligations ofthe approved plan of development and operation-

Afrer completion of a well capable of producing unitized substances in paying quantities, no furller wells,

except such as may be necessary to afford protection against operations not under this agreement and such as

may be specifically approved by the AO, shall be drilled except in accordance with an approved plan ofdevelopment and operation.

I1. PARTICIPÀTION AFTER DISCOVERY. Determination as to whether a well completed within the

unit area p¡ior to the effective date of this agreement is capable of producing unitized subslances inpayingquantities shall be defened, until an initial participating area is established as the result of the completionof a

well for production of unitized substances in paying quantities in accordance with Section t hereof. Upon

completion of a well capable of producing unitized substances in paying quantities, o¡ as soon thereafter ils

required by the AO, the Unit Opcrator shall submit for approval by the AO "

.åE$h.'Egd on subdivisiorts

4

JUN I I 2013

Bureau olLand Managemttr'

of the public-land suwey or aliquot pafs thereof, of all land then regarded as reasonably proved to be

productive of unitized substances in paying quantities. These lands shall constitute a participating area on

approval of the AO effecdve as of the date of completion of such well or the effective date of this unitagreement, wbichever is later. The acreages of both Federal and non-Federal lands shall be based uponappropriate computations from the courses and distances shown on tbe last approved publicJand suney as ofthe effective date ofeach initial participating area. The schedule shall also set foch the percentage ofunitizedsubslances to be allocatcd, as provided in Section 12, to each commitled tract in the participating area so

established and shall govem the allocation of production commencing with the eflèctive date of thepaficipating area. A different participating a¡ea shall be established for each separate pool or deposit olunitized substances, or for any group thereoi which is produced as a singìe pool or zone, and any lwo or moreparticipating areas so estabLished may be combined into one on approval of the AO. W}en productíon fromhvo or more participating areas is subsequently found to be from a common pool or deposit, the particþatingareas shall be combined info one effective as of such appropriate date as may be approved or prescribed by the

AO. The paficipating area, or areas, so esfablished shall be revised from time to time, subject to the approval

of the AO, to include additional lands then regarded as rcasonably proved to be productive of unitizedsubstances in puy,ng quantities or which are necessary for unit operations or to exclude lands then regarded as

reasonåbly proved not 1o be productive of unitized substances in payrng quantities, and the schedule ofallocation percentâges shall be revised accordingly. The effective date ofany revision shall be the first ofthemonth in which the knowledge or information is obtained on u,hich such revision is predicated; provided,

however, that a more appropriate effective date may be used ifjustiûed by the Unit Operator and approved bythe AO. No land shall be excluded from a participating area on account of depletion of its unitized substances,

except that any participating area estâblished under the provisions of this unit agreement shall terminat€

aulomatically whenever all completions in the formation on whicb the participating area is based are

abandoned.

It is the intent ofthìs section that a participating area shall represent ûre area known or reasonably proved to be

productive of unitized substances i" puy.g quantities or which are necessâry for unit operations; but,

regardless ofany revision ofthe particþatìng area, nothing hefein contâined shall be construed as requiring any

refoactive adjustment for production obtained prior to the eflective date of the revision of the participaling

In ùe absence of agreement at any time between the Unit Operator and the AO âs to the proper definition or

redefinition ofa participating area, or until a participating area has, or areøs have, been established, the portion

of all payments affected thereby shall, except royalty due the United States, be impounded in a manner

mutual)y acceptabìe to the owners of committed working interests. Royalties due the United States shall be

determined by the AO and the amount thereof sball be deposited as di¡ected by the AO until a particþating

area is finally approved and then adjusted in accordance wilh a determination ofthe sum due as Federal royalty

on the basis of such approved participating area.

Whenever it is determined, subject to the approval of the AO, that a well drilled under this agreement is not

capable ofproduction of unitÞed substances io puyi"g quantities and inclusion in a participating area oftbeland on which it is situated is unwarranted, production Íiom such well shall, for tle purposes of settlement

among all parties other than working interest owners, be allocated to the land on which the well is located

unless such land is already within the participating area established lor the pool or deposit from which suclt

production is obtained. Settlement for working interest benefils Êom such a nonpaying unit wcll shall be made

as provided in the unit operating agreement.

Upon terminatíon of the Mulligan Unit Agreernent, as provided for in Section 32 hereof, the 160.00 acre

Wasatch-Mesaverde Formation Participating Area ",{" (UTU-806434) unde¡ the Mulligan Unit Agreement

shall be transferred to this unit agreement intact, and then be subject to this unit ag¡eement the same as iftheparticipating areas had been originally established under this unit agreement.

12. ALLOCATION OF PRODUCTION. All unìtized substances produced from a participating area

establisbed under this ag,reement, except any part thereof used in conformìty with good operating practices

within the unitized a¡ea for drilling, operating, and other produclion or development purposes, or fortepressuring or recycling in accordance with a plan of development and operations that has been approved by

the AO, or unavoidably tost, shall be deemed to be produced equally on an acreage basís from lhe several

tracts ofunitized land, and unleased Federal land, ifany, included in the participating area established for such

production. Eachsuchtractshallhaveallocatedtoitsuchpercentageofsaidproductionasthenumberofacresof such tract included in said participating area bears to the total acres ofunitized land and unleased Federal

lands, if any, included in said participating area. There shall be allocaled to the working interest owner(s) ofeach tract ofunitized land in said participating area, in addition, such percentage ofthe production attributable

to the unleased Federat land within the participating area as the number ofacres ofsuch unitized tract included

in said particípating area bears 1o the total acres ofunitized land in said participating areâ, forlhe payment ofthe compensatory royalty specified in section 17 of thls agreement. Allocation of production hereunder forpurposes other than for settlcment ofthe royalty, overriding royalty, or

5

Pa'menHËblHnlÜtion

JUN I I 2013

Burcau olL¡nd Manáoômont

obligations

of the respective working inte¡esl owners, including compensatory royalry obligations under section 17, shallbe prescn"bed as set forth in the unit operating agreement or as otherwise mutually agreed by the affectedparties. Itisherebyagreedthatproductionofunifizedsubstancesfromaparticipatingareashallbeallocatedasprovided herein, regardless ofwhetler any wells a¡e drilled on any particular part or tract of the participatingarea. Ifany gas produced from one participating arca is used for repressuring or recycling purposes in anotherparticipating area, the fi¡st gas wilhdrawn from the latter participating area for sale during the life of thisagreement shall be considered to be the gas so transferred, until an amount equal to that transferred shall be soproduced for sale and such gas shail be allocated to the participating area Íiom which initially produced as sucharea was defined at the time that such transfered gas was finally produced and sold.

13. DEVELOPMENT OR OPERATION OF NONPARTICIPATING LAND OR FORMATIONS.Any operator may, with the approval of the AO, at such party's sole rislq cost, and expense, drill a well on the

unitized land to test any formation provided the well is outside any panicipating area established for thatformalion unless, within 90 days of receipt of notice from said party of his .intenlion to drill the well, the UnitOperator elects and comrnences to drill the well in a like manner as other wells are drilled by the Unit Operatorunder this agrecment.

If any well drilled under this section by a non-unit operalor results in production of unitized substances in

paying quantities such that the land upon which it is situated may properly be included in a participating area,

such participating area shâll be established or enlarged as provided in this agreement and the well sha]l

thereafler be operated by the Un¡t Operator in accordance with the terms of this agreement and the unitoperating agfeement,

If any well drilled under this section by a non-unit operator that obtains production in quantities insufficient 1o

justi$ the inclusion of the land upon which such well is situated in a participating a¡ea, such well may be

operated and produced by the party drilling the same, subject to the conservation requirements ol this

agreement. The royalties in amount or value of production from any such well shall be paid as specified in the

underlþg lease and agreements affected.

14. ROYALTY SETTLEMENT. The United States and any State and any royaþ owner who is entitled to

lake in kind a share of the substances now unitized hereunder shall be hereafter entitled to the right to take in

kind its share of the unitized substances, and Unit Operator, or the non-unil ôperator in the case of the

operation ofa well by a non-unit operator as herein provided for in special cases, shall make deliveries ofsuchroyalty share t¿rken in kind in conformity with th€ applicable contracts, laws, and regulations, Settlement ftlr

royalty interest not taken in kind shalt be made by an operator responsible therefor under existing contracts,

laws, and regulations, or by the Unit Operator on or before the last day ofeach month for unitized substances

produced during the pr€ceding calendar month; provided, however, that nothing in this section shall operate to

relieve the responsible parties ol any land from their respective lease obligations for the payment of any

royalties due under thei¡ leases.

Ifgas obtained from lands not subject to this agreement is introduced into any panicipating area hereunder for

use in repressuring, stimulation of production, or increasing ultimate recovery in conformity with a plan oldevelopment and operation approved by the AO, a like amount of gas, after settlement as herein provìded for

any gas t¡anslerred from any othcr participating area and with appropriate deduction for loss from any cause,

may be withdrawn from the formation into which the gas is int¡oduced, royalty free as to dry gas but not as to

any products which may be extracted therefrom; provided that such withdrawal shall be at such timc as may be

provided in the approved plan of development and operation or as may otherwise be consented to by the AO as

conforming to good petroleum engineering practice; and provided further, that such right of withdrawal shall

terminate on the termination of this unit agreement.

Royalty due the United States shall be computed âs provided in 30 CFR Group 200 and paid in value or

delivered in kind as to all unitized substances on the basis ofthe amounts thereofallocated to unitized Federal

land as provided in Section 12 at lhe rates specifred in the respective Federal leases or at such other rate or

rates as may be authorized by law or regulation and approved by the AO; provided that, for leases on which the

royalty rate depends on the daily average production per well, said avcrage production shall be determined in

accordance with the operating regulations as though each participating area weÍe a single consolidated lease,

15. RENTAL SETTLEMENT, Rcntal or minimum royalties due on leases committed hereto shall be paid

by the âppropriate parties under existing contracts, laws, and regulations, provided that nothing herein

contained shall operate !o relieve the responsible parties of the land from their respective obligations for the

payment of any rental or minimum royalty due under their leases. Rental or minimum royaþ for lands of the

United States subject to this agreement shall be paid ât the rate specified in the respective leases from the

United States uniess such rental or minimum royalty is waived, suspended, or reduced by law or by approval ofthe Secretary or his duly authorized repÌesentative. FÉCE|ÇD

JUN I I 2013u ,**uüiffL.r

With respect 1o any lease on non-Federal land containing provisions which would terminate such lease unlessdrilling operations are cornmenced upon the land covered thereby within the time therein specified or rentalsare paid for the privilege of deferring such drilling operations, thc rentals required thereby shall,notwithstandíng any other provision of this agreement, be decmed to accrue and become payable during theterm thereof as extended by this agreement and untl'l the required drilling operations are commenced upon theland covered thereby or until some portion ofsuch land is included within a panic¡pating area.

16. CONSERVÄTION. Operations hereunder and production of unitized substances shall be conducted toprovide for the most economical and efficient recovery of saíd substances without wasle as defined by, orpursuant to, State or Federal )aw or regulation.

I7. DRAINAGE.

(a) The Unit Operator shall take such measures as the AO deems appropriate and adequale to preventdrainage of unitized substances from unitized land by wells on land not subject to this agreement,which shall bclude the drilling of protective wells and which may include the payment ola fai¡and reasonable compensatory royalty, as determined by the AO.

(b) tÁ¡henever a participating area approved under Section I f of this agreement contains unleased

Federal lands, the value of 12% percent of the production tlat would be allocated to such Federallands under Section 12 of this agreement, if such lands were leased, committed, and entitled toparticipation, shall be payable as compensatory royalties to the Federal Govcrnment. Parties tothis agreement holding working interests in committed leases within the applicable participatingarea shall be responsible for such compensâtory royalty payment on the volume of production

reallocated from the unleâsed Federal lands to their unitized tracts under Section 12. The value ofsuch production subject to the payment ofsaid royalties shall be determined pursuant to 30 CFR

part 206. Payment ofcompensatory royalties on the production reallocated from unleased Federal

land 1o the comrnitted tracts within the participating area shall fulfill tire Federal royaìty obligation

for such production, and said production shall be subject to no furtber royalty assessment under

Section t4 ofthis agreement. Pa),rnent ofcompersatory royalties as provided herein shall accrue

from the date the committed tracts in the partìcþating area that includes unleased Federal lands

receive a production allocation, and shall be due and payable monthly by the last day of the

calendar month next fotlowing the calendar month ofactual production. Ifleased Federal lands

recaiving a production allocation Êom the participating area become unleased, compensatory

royalties shall accrue from the date the Federal lands become unleased. Payment due under this

provision shall end when the unleased Pederal tract is leased or when production of unitized

substances ceases within the participating area and the participating area is temrinated, whichever

occu¡s first.

18. LEÄSES AND CONTRACTS CONFORIVÍED AND EXTENDED. The terms, conditions, and

provisions of all leases, subleases, and other contracts relating to exploration, drilling' development, or

ãperation for oil or gas on lands committed to this agreement are hereby expressly modifìed and amended to

the extent necessary to make the same conform 1o the provisions hereof but otherwise to remain in full force

and effect; and the parties hereto hereby consent that the Secretary shall, and by his approval hereofor by the

approval hereof by his duly authorized representative does lrereby, estabLish, alter, change, or revoke the

drilling, producing, renkt, minimum royalty, and ro¡alty requirements of Federal leases committed hereto and

the regulations in respecl thereto to conform said requirements to the provisions ofthis agreement; and, without

Iimiting the generality of the foregoing, all leases, subleases, and contracts are particularly modified inaccordance with the following:

(a) The development and operation of lands subject to lhis agreement under the terms hereof shall

be deemed full performance of all obligations for development and operation with respect to

each and every separately owned tract subject to this agteement, regardless ofwhetherthere is

any development of any particula¡ lract ofthis unit area.

(b) Drilling and producing operations performed hereunder upon any tract of unitized lands will be

accepted and deemed to be performed upon, and for the benefit of, each and every tract ofunitized land, and no lease shall be deemed to expire by reason offailure to drill or produce

wells situated on the land the¡ein embraced.(c) Suspension ofdrilling or producing operations on all unitÞed land pursuant to the direction or

consent ofthe AO shall be deemed to constitute such suspension putsuant to such direction orconsenl as to each and every tract of unitized land. A suspension of drilling or producing

operations limited to specified lands shall be applicable only to such lands.(d) Each leæe, sublease, or contract relating to the exploration, drilling, development, or operation

for oil or gas of land other than those of the United States commined to this agreement which,by its terms might expire prior to the termination of this agreement, iIËtËillUled beyond

7 JuNltzot3

r..nauüffi3ln"n,

any such term so provided therein so that it sball be continued in full force and effect fo¡ and

during the term of this agreement.(e) Any Federal lease committed hereto shall continue in force beyond the term so provided therein

or by law as to the land committed so long as such lease remains subject hereto, provided that

production of unitized substances in p"yrog quantities is established under ùis unit agreement

prior to the expiration date ofthe term ofsuch lease; or, in the event actual drìlling operations

are com¡nenced on unitized land in accordance with provisíons of this agreement prior to the

end of the primary term of such lease and are being diligently prosecuted at that time, such

lease shall be extended for 2 years and so long thereafter as oil or gas is produced in paying

quantities in accordance rvith the provisions of the Mi¡eral Leasing Act, as amended.(Ð Each sublease or contract relating to the operation and development of unitizcd substances

from lands of the United States committed to this agreement, which by its terms would expire

prior to the time at which the underlfng lease, as extended by the immediately preceding

paragraph, will expire, is hereby extended beyond any such term so provided therein so that ít

shall be continued in full force and effect for and during the term ofthe underlying lease as

such terrn is hcrcin extended.

G) The segregation of any Federal lease committed to this agreement is governed by the followingprovision in the fourth paragraph of Sec. l7(m) of the Mineral Leasing Act, as amended by the

Act of September 2, 1960 (74 Stat 781-784) (30 U.S.C. 226(m)): "Any [Federal] lease

heretofore or hereafter committed to any such funit] plan embracing lands that are in part

within and in part outside of the area covered by any such plan shall be segregated into separate

leases as to flre lands committed and the lands not committed as of the effective date oluntization: provided, how,ever, that any such lease as to the nonunìtized portion sball continue

in force and efect for the term thereof but for not less tlan two years from the date of such

segregat¡on and so long thereañer as oil or gas is produced ìn palng quantities." Ifthe public

interest requirement is nol satisfied, the segregation of a lease ând/or extension of a lease

pu¡suant to 43 CFR 3101 .3-2 and 43 CFR 3 1 07.4, respectively, shall not bc effective.

(h) Any lease, other than a federal lease, having only a portion ofits lands committed hereto shall

be segregated as to the portion commilted and the port ion not committed, and the provisions ofsuch lease shall apply separately to such segregated portions commencing as of the effective

date hereof. In the event any such lease provides for a lump sum rental payment, such paynent

shall be prorated between the polions so segregated in proportion to the acreage of the

respective tracts.

19, COVEI\AI{TS RUN WITH LAND, The covenants herein shall be construed to be coveDants n:nning

with the land with respect to the interests of the parties hereto and their successo¡s in inte¡est until this

agreement terminates, and any grant, transfer, or conveyance of interest in land o¡ leases subjecl hereto shall

be, and hereby is, conditioned upon the assumption of all privileges and obiigations hereunder by the grantee,

transferee, or other successor in interest. No assignrnent or transfer of any working interest, royalty, or other

interest subject hereto shall be binding upon Unit Operator until the frst day of tÏe calendar month aftel Unit

Operator is furnished with the original, photostatic, or certified copy of the instrument of transfer.

20. EFFECTM DATE AND TERM. This agreement shall bccome effective upon approval by the AO and

shall automatically terminate 5 years from said effective date unless:

(a) Upon application by the Unit Operator, such date of expiration is extended by the AO, or(b) It is reasonably determined prior to the expiration of the fixed tenn or any extension thereof

that the unitized land is incapable of production of unitized substances in payng quantities in

tbe formations tested hereunder, and after notice of intention to terminate this agreement on

such ground is given by the Unit Operator to all parties in interest at their last krown

addresses, this agreement is terminated with the approval of the AO, or

(c) A valuable discovery ofunjtized substances in paying quantities has been nade or accepted on

unitized land during said initial term or any extension tÏereof, in which event, this agreement

shall remain in effect for such term and so long thereafter as unitized substances can be

produced in quantities sufñcient to pay for lhe cost ofproducing same f¡om wells on unitized

land within any particþating area established hereunder, Should production cease and diligent

drilling or reworking operations to restore production or new production are not in progress

within 60 days and production is not restored or should new production not be obtained in

paþg quantities on committed lantls within this unit area, this agreement will automatically

terminate effective the Iast day of the month in which the last unitized production occurred, or

(d) It is voluntarily terminated as provided in this agreement, Except as noted herein, this

agreement may be terminated at any time prior to the discovery of unitized substances which

can be produced in payìng quantities by not less than 75 per centum, on an acreage basis, oftheworking interest owners signatory hereto, with the approval of the AO. The Unit Operator shall

give notice ofany such approval to âll parties hereto. Ifthe public interest requirement is nol

satisfied, the approval of this unit by the AO shall be invalid.RECEIVED

8 JUNll2ol3Burcr¡ o¡

t¡tttl llrm0tlnnt

2f. RATE OF PROSPECTING, DEVELOPMENT, AND PRODUCTION. The AO is hereby vestedwith authority to alter or modif, from time to time, in his discretion, the quantity and rate of production underthis agreement when such quantity and rate are not fixed pursuant to Federal or State law or do not conform toany State-wide voluntary conservation or allocation program which is established, recogruzed, and generallyadhered to by the majority of operators in such State. The above authority is hereby limited to alteration ormodifìcations wlich are in the public interest. The public interest to be served and the purpose thereof, must be

stated in the order of alteration or modification. Without regard to the foregoing, the AO is also hereby vested

rvith the authority to alter or modifu from time to time, in his discietion, the rate of prospecting anddevelopment ând the quantity and rate of production under this agreement when such alteration or modificationis in the interest of attaining the consewation objeclives stated in this agreemenl and is nol in violation of anyapplicable Federal or State law.

Powers in this section vested in the AO shall only be exercised affer nolice to the Unit Operator and

opportunity for hearing to be held not less than l5 days from notice,

22. APPEÀRANCES. The Unit Operator shall, after notice to other parties affected, have the right 1o appearfor, and on bebalf of, any and all interests affected hereby before the Departrnenl of the Intenor and to appeal

f¡om orders issued under the regulations ofsaid Department or to apply for relielfrom any ofsâid regulations

or in any proceedings relative to operations before the D€partment, or any olher legally constituted authority;provided, however, that any other interested party shall also have tbe right, at its own expense, to be heard inany such proceeding.

23. NOTICES. All notices, demands, or slatements required hereunder to be given or rendered to the parties

hereto shall be in writing and shall be personally delivered to the party or parties, or sent by post-paid,

registered, or certified mai[ to the last known address ofthe party or parties.

24. NO \ilAMR OF CERTAIN RIGHTS. Nothing contained in this agreement shall be constnred as a

waiver by any party hereto ofthe right to assert any legal or constitutional right or defense as to the validity orinvalidiry of any law of the State where the unitized lands a¡e located, or of the United States, or regulations

issued thereunder in any way affectrng such party or as a waiver by any such party ofany right beyond his orits authority to waive.

25. UNAVOIDABLE DELAY. AII obligations under this agreement requiring the Unit Operator tocommence or continue drilling or to operate on, or produce unitized substances from, any ofthe lânds covered

by this agreement shall be suspended while the Unit Operator, despite the exercise of due care and diligence, is

prevented from complþg with such obligations, in whole or in part, by strikes, acts of God, Federaì, State, or

municipal law or agencies, unavoidable accidents, unconbollable delays in transporiation, inability to obtain

necessary materials or equipment in the open market, or other matters beyond the feasonable conlrol of the

Unìt Operator, whether similar to matters he¡ein enumerated or not.

26. NONDISCRIMINATION, In connection with the performance of work under thìs agreemenl, the UnitOperator agrees to comply with all the provisions of Section 202 (l) to (7) inclusive, of Executive Ordet 11246

(30 FR 123 1 9), as amended, which are hereby incoçorated by reference in this agreement.

27. LOSS OF TITLE, ln the event title lo any tract of unitized land shall fail and the true owner cannot be

induced to join in this unit agreement, such tract shall be automatically regarded as not committed hereto, and

there shall be such readjustment offuture costs and benefits as may be required on account ofthe loss ofsuchtitle. In the event of a dispute as to title to any royalty, working interest, or other inlerests subject thereto,

payment or delivery on account thereof may be withheld without liability for interest until the dispute is finallysettled; provided that, as to Federal lands o¡ leases, no payments of funds due the United States shall be

withleld, but such funds shall be deposited as di¡ected by the AO to be held as uneamed money pending final

settlement of the title dispute and then applied as eamed or retumed in accordance with suoh fi¡ra'l settlement,

Unil Operator as such is relieved from any responsibility for any defect or failure of any title hereunder'

23. NONJOINDER AND SUBSEQUENT JOII\'DER. If the owner of any subslantial interest in a tract

within the unil area fails or refuses to subscribe or conserrt to this agreement, the owner of the rvorking interest

in that tract may wirhdraw the tract fiom this agreement by written nolice delivered to the proper BLM office

and the Unit Operator prior to the approval of this agreemcnt by tbe AO. Any oil or gas interests in lands

within the unit area not committed hereto prior to firal approval may thereafter be committed hereto by the

owner or owne¡s thereof subscribing or consenting 10 this agreement and, if the interesl is a working interesl,

by the owner of such interest also subscribing to the unit operating agreement, After operations are commenccd

hereunder, the right ofsubsequentjoinder, as provided in this section, by a working interest owner is subject losuch requiements or approval(s), ifany, pertaining to suchjoinder as may be provided for in the unit operating

îffiîË,åY,fr lå-t¿',:J..ili:,ïi;#i-ä'J.å,:î'l::y,:i,:,îff ::iilîïftr#tr;i:'1Jïïe JUN il 20t3

¡'¡ø"ffi't

may accrue hereunder on behalf of such non-working interest, A non-working interest may not be committed tothis unit agreement unless the corresponding working interest is committed hereto. Joinder to the unitagreement by a working inlerest owner, at any time, must be accompanied by appropriate joinder to the unitoperating agreenent, in order for the interest to be regarded as commined to this agteement. Except as may

othenvise herein be provided, subsequent joinders to this agreement shall be effective as of the date of thefrling with the AO of duly executed counterparts of all or any papers necessary to establish effectivecommitment of any intercst and,/or lract to tùis agreement.

29. COUNTERPARTS. This agreement may be executed in any nuñber of counterparts, no one of whichneeds to be executed by all parties, or may be ralified o¡ consented to by separate instrumenf in writingspecifically referring hereto and shall be binding upon all those parties who have executed such a counterpart,

ratification, or consent hereto with the same force and effect as if all such parties had signed the same

document and regardless of wbether or nol il is executed by all other paries owning or claiming an interest in

the lands within the above-described unit area.

30. SPECIAL SURFACE STIPULATIONS, Nothing in this agreement shall modi! the special,

Federal-lease slipulations attached to the individual Federal oil and gas leases.

31. UTAT{ SCHOOL AND TNSTTTUTIONAL TRUST LANDS ADMINÍSTRATION PROVISION.Certain of the unitized land is trust land of the State of Utah, and in corurection with the approval of thisAgreement by the School and Institutional Trust Lands Administration of the State pursuant to applicable

State and Federal regulations, it is agreed that there shall be filed with the Director:

(a) Two copies of the complete Unit Agreemenl and two copìes of any revised Exhibits "4"and "8" with the filing thercof with the AO, pursuant to Section 2 hereof.

(b) One copy ofany notice oftbe proposed expansion or contraction ofthe Unit Area required

to be delivered to the AO pursuant to Section 2(c) hereof.(c) One copy ofany unit operating agfeement executed Pursuant to Section 7 hereof.(d) One copy ofany schedule ofproposed participating area submitted for approval under

Section I l, concunently with its submission to the AO. The Director, or his authorized

representative, shall have a period oî fifteen ( I 5) days from receipt of said schedule withinwhich to file with the AO any objectìon thereto, together with any recommendation forrevision thereof If such objection or recommendation is not concurred in by Unit Operator

and AO prior to submission of the schedule to the AO for approval, the AO shall approve

or disapprove the schedule ater giving due consideration to the objections and

recommendations filed by the Director or his representative.

(e) A copy of any proposed plan of development or modification thereol rvhich is filed withthe AO under Section l0 hereof

(Ð A copy of all instnrments of subsequent joinder ex€cuted under Section 28 hereof.

It is further agreed that:

(l) All valid, pertinent and reasonable regulations hereafter issued governing drilling and

producing operations on non-Federal lands which are not inconsistent with the ferms hereof

or the laws of the State of Utah are hereby accepted and made a part of this Agreement.

(2) Nothing in this Agreemen( contained shall ¡elieve lessees of the trust lands of the

Srate of Ulah ûom their obligations to pay rental and royalties with respect to unitized

substances allocated to such lands bereunder, at the rates specified in their respective

leases.

(3) ln the event that a title dispuf e arises as to trust lands or leases, no payment of funds due

the School and Institutional Trust Lands Administration sball be withheld, but such funds

shall be deposited as directed by the Director to be held as unearned money pending final

settlement of the title dispute, and tben applied as eamed or refilrned in accordance withsuch final settlement.

Each party to this Agreement, holding any lease or leases of trust lands from the School and Institutional

Trusl Lands Administration, or its predecessor, subject to this Agrecment, or holding any interest in orunder such'lease or leases or in the production from the lands covercd thereby, agrees that said School

and Institutional Tnrst Lands Administration, and by its approval hereof, does hereby alter, change,

modify or revoke the drilling, producing ard royalty requirements of such lease or leases, and theregulations in respcct thereto, to conform the provisions ofsaid lease or leases to the provisions ofthisAgreement. Such partics and said School and Institulional Trust Lands Administratioo further agree that,except as otherwise expressly provided in this Agreement, no such lease shall be deemed to terminate orexpire so long as it shall ¡emain committed he¡eto. Notwithstanding anlbing to the contrary in Section

IO RECENEO

JUN I I 2013

Butear¡ ot

Lmd Mmaçment

I

2

3

4

5

6

7

I9

l0lll213

l8 hereof contained, should any of the trust lands of the Stare of Utah outside of a parricipating area

established hereunder cease to be committed to this Agreement, such lands shall thereafter be free from

the effect of this Agreement unless and until such lands are expressly recommitted to this Agreement

pursuant to Section 28 hereof;, with the approval ofthe School and Institutional Trust LandsAdministration.

32. TERMINATION OF THE MI'LLIGAN UNIT AGREEMENT, InAsmuch as cefain of thc

parties arç also parties to the Mulligan Unit Agreement, Uintah County, Utah, No. UTU-80643X,approved effective December 15, 2003, it is agreed that effective as ofthe effective date ofthe initial orftst pârticipating area established hereunder, said Mulligan Unil Agreement shall be deemed to be

temrinated automatically, and the lands subject thereto shall be deemed to be simultancously merged withthis unit.

RECENED

JUN I I 2013

Bureau otlrnd llrttagrmcn'

lt

I

2

3

4

5

6

7

8

9

l01lt2l3l4t5t6t7

l8l920

2t

22

23

24

25

2611

28

29

30

3l32

IN MTNESS WHEREOF, the pafies hereto have caused this agreement to be executed and have set opposile

their respective names the date ofexecution.

UNIT OPERATOR AND WORKING INTEREST OWNER

ATTEST KERR-MCGEE OIL & GAS ONSHORE LP aP

//2 a/(ASSISTANT) SECRETARY

Add¡ess: 1099 l8'h Street, Suite 1800

Denver, CO 80202

Telephone :'l 20-929 -6000

STATE OF COLORADO))ss

COTINTY OF DENVER )

The foregoing instrument was acknowledged before me by Wiiliam C. Latimer

as Agent and Anorney-in-Fact of Ken-McGee Oìl & Gas Onsbore LP.

William C. Latimer,Agent and Attomey-in-Fact

DateofExecuti*, r\tlïlÛ 10, 201ã

BY:

2013This day of

WITNESS my hand and offcial seal.

My commission expies:

fi,lt &mmission Exp¡rcs ilt B/ã)f 1

urh

PUBLIC

RlcttDJUN I I ¿0r3

lluroar¡ orLard Mtntgrmenr

l2

SERIAL #NUMBEROF &EXPIRANON

ACRES DATE OF LEASE

SCHEDULE OFEXHIBIT "8"

OWNERSHIP OF OIL AND GAS INTERESTSSOUTH RED WASH UNIT AREA

UINTAH COUNTY, UTAH

(T¡tle shoM below is for All Depths)

BASICROYALTY& LESEEOFRECORD&PERCENTAGE OF MINERALS PERCENTAGE OF MINERALS

TRACINO. DESCRIPÎON OF LAND

FEDERAL LANDS:

T8S-R22E S.L,M.Sec. l3: S/2Sec.24: N/2, Sg4

T8S.R23E S.L Msec. '18: Lots 3,4, gzswi4, SE/4ALL DEPTHS

3

4 TRç-pr?tr e I À¡

'1.'l't3 52

640.00

80 00

2,5ô0 00

640 00

UTU 0000385Efieclive7l1t't952

HBP

USARoyalty:

USARoyalty:

USARoyalty:

USARoyalty:

USARoyalty:

'100.0000%

'12.50o/oQEP Energy Company 100 000¿ EOG Resources, lnc

ZKB Properties, LLPD.J Stone ExemptTrustFBO Dav¡d K. StoneD J. Stone Exempt TrustFBO Patric¡a S. HolmanWendy L Saærdot¡TrustBarbara A Stone TrustCarol K StoneTrustThe Ballard CompanyMHB PropertiesKathryn Hamm ChaseRalph C. Hamm, JrRWB Oil Corporat¡onLaura B PalmerJohn BrinkerhofiRobert W Br¡nkerhoff, Jr

OVERRIDING ROYALTY& PERCENTAGE

WORKING INTEREST& PERCENTAGE

1.500000% OEP Energy Company'1.050000%

0 3500000/0

0 350000%

0 350000%0 350000%0.350000%0.175000%0.1 750000/6

0 0875000¿0 087500oi6

0 087500%o 0291670/o

0 029166%o 0291670Á

100 000/6

100 000/62 T8S.R23E S.L.M

SEC 13: ALLALL DEPTHS

UTU 06'1396Efiect¡ve4t1t1987

SOP

'100_0000%

Sl¡d¡ng Scale

TOTAL

QEP Energy Company 100 00% Noble EnergyProduct¡on, lnc.

5 000000%

'1.500000% OEP Energy Company

T8S-R23E S.L MSec. 10: W/2Ng4ALL DEPTHS

UTU 071423Effective4l'll't993

SOP

100 0000%12 5Ùo/o

QEP Energy Company 100 00% EOG Resources, lnc

100.0000%12 50o/o

QEP Energy Company 100 00% EOG Resouræs, lnc

'100 0000%'12 509lo

OEP Energy Company 100.000/6 EOG Resouræs, lnc

3.0000000/6 QEP Energy Company 100 000/6

3.0000000/0 OEP Energy Company 100 000¿

3 0000000/6 QEP Energy Company r00 00%

Sec '14: AllSec 15: AllSec 22: AllSec.23: AllALL DEPTHS

T8S-R23E S L MSec.24: AllALL DEPTHS

uru072027Effecl¡ve7t'U1993

SOP

uru 071424Effect¡ve4t1t1993

soP

Page 1 of 4 L2l8/2o1s

TRACTNO. DESCRIPTION OF LAND

NUMBER OFACRES

EXHIBIT "B'SCHEDULE OF OWNERSHIP OF OIL AND GAS INTERESTS

SOUTH RED WASH UNIT AREAUINTAH COUNTY, UTAH

(Title shown below ¡s for All Depths)

SERIAL #& EXPIRATON BASIC ROYALTYE LESEE OF RECORD&

DATE OF LEASE PERCENTAGE OF MINERALS PERCENTAGE OF MINERALSOVERRIDING ROYALTY

& PERCENIAGE

b T8S-R23E S L.M.Sec.6: Lots 2,3,4, 5, 6, 7,

SW4NE/4, Sg4NW/4, E/2SW4s94Sec. 7: Lots 1, 2, 3, 4, El2Et2Wt2(Alt\Sec.8:El2,EnWl2Sec. 9: AllALL DEPTHS

2,290 61

'I ,581.00

'I,440 00

160 00

398 75

40.00

1,279.42

UTU 073020Effect¡ve4t1t1994

SOP

USARoyalty:

USARoyalty:

USARoyalty:

USARoyalty:

USARoyalty:

USARoyalty:

USARoyalty:

100.0000%'12 50o/o

OEP Energy Company 100 00% EOG Resouræs, lnc

100 00000/6'l.2 50o/o

QEP Energy Company 100 00% EOG Resouræs, lnc.

100.00000Á12.50o/o

QEP Energy Company 100 000¿ EOG Resouræs, tnc.

100.0000%'t2.500h

QEP Energy Company '100.00o/o EOG Resources, fnc

100 0000%12 50'/o

QEP Energy Company 100.00% None

100 00000/6

12 5Ùo/o

QEP Energy Company 100 00% None

100 00000¿12 50o/o


3.000000% OEP Energy Company 100 00%

3 000000% QEP Energy Company 100.000Á

3.000000% QEP Energy Company '100.000/6

3 0000000¿ QEP Energy Company 100 00%

3 0000000/6 QEP Energy Company 100 00%

3 0000000/6 QEP Energy Company '100 000¿

3 0000000/6 QEP Energy Company '100.00%

7 T8S R23E. S.L MSec '17: NW4, W2SW4Sec.'18: lots'1, 2,NEl4E/2NW/4Sec 19: Lots 1,2,3,4,NEt4,FJ2Wt2Sec.2'l: N/2, N/2SW4, SE/4ALt DEPTHS

T8S-R22E S.L.MSec 1: S/2N/2, S/2Sec 12:AllSec 13: N/2

fO T8$R23ESL.M.Sec. 3: Lots 1, 2, S/2NE/4s94Sec. 6: Lot I, SE/4N94ALL DEPIHS

1l

'12 T89R23ESLM.Sec.3: Lots 3,4, S/2NW4N/2SW4, SE/4SW/4Sec. 4: Lots 1, 2, S/2NE/4NE/4SW4, S/2SW4s94Sec. 10: E/2N94, W2, SE/4ALL DEPTHS

UTU 07302 1

Efiective411t1994

SOP

9

UTU 073685Effective'v1t1995

HBP

T8S-R23E S.L.M.Sec 19: SE/4ALL DEPTHS

uru 074425Effed¡ve7t1t1995

SOP

UTU 076830Efieclive1t1t'1998

soP

T8$R23E S L M.Sec. 21: SE/4SW4ALL DEPIHS

UTU 076831Efiectire1t1t1998

soP

UTU 077290Effective7t1t1998

SOP

QEP Energy Company 100 00% None

Page 2 of 4 72/812}rs

EXHIBIT "8"SCHEDULE OF OWNERSHIP OF OIL AND GAS INTERESTS


NUMBER OFAGRES

(T¡tle shoM below is for All Depths)

SERIAL #& EXPIRATON BASIC ROYALTY& LESEE OF RECORD&

DATE OF LEASE PERCENTAGE OF MINERALS PERCENTAGE OF MINERALSOVERRIDING ROYALTY

& PERCENTAGE

TRACTNO. DESCRIPÎON OF LAND

13 T8S-R23E S.L.M.Sec 3: SW4SW4Sec 1l: S/2Sec. 12: S/2ALL DEPTHS

'14 T89R23E S.L.MSec 4: Lots 3,4, S/2NW4,Nw/4SW4Sec 5: Lot l, SE/4N94, S/2ALL DEPTHS

680.00

598.84

uTU078228Efective4t'1t1999

soP

USARoyalty:

USARoyalty:

'100 00000ó12.500Â

QEP Energy Company 100 00oÁ None

100 00000Á

12 50o/o

QEP Energy Company '100.000/6


3 000000% QEP Energy Company 100 00%

OEP Energy Company 100 000/6

0.3500000Á

o3233330k

UTU 081 655Efieclive1t'U't951

soP

2 5000000/6

22500000Á1.0500000/6

0 5500000¿0.3500000,60 350000%0 350000%0 350000%

0 1833330/6

0 175000%0 175000%0 14000070O'll2OOOo/o

0.0875000¿0.0875000/6

0.0875000/6

o 0702670/0

o 0702670ko.o702670/o

o 0702670Â0 070266%0 0291670/0

o.0291670/o0.0291660Á

J A JacksEOG Resources, lncZKB Prcpert¡es, LLCWalton O¡l Company, LLCWendy L Sacerdot¡ TrustBarbara A Stone TrustCarcl K. Stone TrustDJ StoneExemptTrustFBO David K StoneDJ StoneExemptTrustFBO Patric¡a S HolmanRussell T Rudy Energy,LLCHelen M. Perry L¡ving TrustThe Ballard CompanyMHB PropertiesLinda L. HayesBetty Morgan Garff lnteryivosTrust dated Oclober 10, I 990Kathryn Hamm ChaseRalph C Hamm, Jr.RWB O¡l Corporat¡onThe Kâren G. MafthewsTrustJerry GrayThe Porter Family TrustGEy Fam¡ly TrustJames A GrayRobert W Brinkerhoff, JrLaurâ B PalmerJohn BrinkerhofiTOTAL 9.9100000Á

PaBe 3 of 4 r2l8l207s

EXHIBIT "B'SCHEDULE OF OWNERSHIP OF OIL AND GAS INTERESTS


NUMBER OFACRES

Cf¡tle shoM below ¡s for All Depths)

SERIAL #& EXPIRANON BASIC ROYALTY& LESEE OF RECORD &

DATE OF LEASE PERCENTAGE OF MINERALS PERCENTAGE OF MINERALS

TRACTNO. DESCRIPTION OF LAND

15 T8S-R23E S L.M.Sec.8: W2W2ALL DEPTHS

16 T8S-R23E S L.M.

Sec. 17: E/2, g2SW4Sec,20: AllSec.2l:SW/4SW/4ALL DEPTHS

160.00

'I,080 00

UTU 081656Efiect¡ve7t1t1952

SOP

UTU 0143276Efiective11t1t1964

SOP

USARoyalty:

USARoyalty:

100 00000/0'l.2 51o/o

100 0000%12 50o/o

QEP Energy Company 100 00%

QEP Energy Company 100 00%

EOG Resouræs, lncZKB Propert¡es, LLCWendy L Sacerdoti TrustBarbara A Stone TrustCarcl K. Stone TrustD J Stone ExemptTrustFBO David K StoneD J Stone ExemptTrustFBO Patric¡a S. HolmanThe Ballard CompanyMHB Propert¡esKathryn Hamm ChaseRalph C Hamm, JrR\ryB Oil CorpoEt¡onLaura B PalmerJohn BrinkerhoffRobert W Brinkerhoff, Jr.TOTAL

Ralph E SmithProdco, lncJohn A HoprcodTecklâ Oil Co, LLCAllan L "Buck" OlsenTOTAL

OVERRIDING ROYALTY& PERCENÎAGE


QEP Energy Company 100 000/6

QEP Energy Company '100.000¿

'l 5000000/6

1 0500000/0

0 3500000ó0 350000%0 3500000/.0 350000%

0 350000%

0.1 750000¿0.175000o/o0.0875000/o

0 0875000/6

0 0875000¿O 0291670/0

0 0291660/6

O 029'1670/0

5 0000000/6

2 500000%1 500000%1.250000%1.250000%'t 0000000¿7.500000%

16 FEDERAL TRACTS TOTALING 14,74214 ACRES BEING

STATE I.ANDS:

95.84016 OF THE UNll AREA

QEP Energy Company 100.000/6 EOG Resouræs, lnc17 T8S-R23E S.L.MSec 16:AllALL DEPTHS

640 00 ML47212Efiecl¡ve4l'U1996

HBU

State of UtahRoyalty:

100 000¿'12 50o/o

3 0000000/6 OEP Energy Company 100 000Á

'I STATE TRACTS TOTALING 640.00 ACRES BEING 4160/0 OF THE UNIT AREA

IOO OOOó OF THE UNIT AREA17 TRACTS TOTALING 15,382.14 ACRES IN THE UNIT AREA

Page 4 of 4 L2l8/2o1s

rdUnited States Department of the Interior

BUREAU OF LAND MANAGEMENTUtah State Office

440 West 200 South, Suire 500Salt l¿ke Ciry, UT 84i0l

http://www. b lm, gov/uflst/en.hnnl

IN REPLY REFER TO

3180 (uTuser6lx)uT922000

June 19,2013

Mr. Robert SpencerKen-McGee Oil & Gas Onshore LP1099 I8ú Street, Suite lB00Denver, Colorado 80202

Dear Mr. Spencer:

The South Red Wash Unit Agreement, Uintah County, Utah was approved on June 19. 2013.This agreement has been designated No. UTU 89161X and is effective the same date asapproved.

This unit provides for the drilling of one obligation well and subsequenr drilling obligarionspwsuant to Section 9 of the unit agreement. The initial well is to be located in the SW4 ofSection 13, Township 8 South, Range 23 East, SLB&M, Uintah County, Utatr and drilled to adepth of I 1,100 feet, or a depth sufiìcient to test all potentially productive zones from the surfacethrough the Blackhawk Member of the Mesaverde Group. In no event will the operator berequired to drill to a depth below I1,100 feet or the stratigraphic equivalent of 12,800 ieet belowthe Kelly Bushing in the White River Unit EIH 6D-5-8,23 well locared, 2,016 feet FNL and2,178 feet FWL in Section 5,Towrrship 8 South, Range 23 East, SLB&M, Uintah County, Utah.No extension of time beyond December 19,2013, will be granted to commence the "obligationwell" other than "unavoídable delay" (Section 25), where justified.

Approval of this agreement does not wa¡rant or ceÍiry that the operator thereof and other holdersof operating rights hold legal or equitable title to those rights in the subject leases which a¡ecommitted hereto.

The basic information is as follows:

1. The depth of the test well and the area to be unitized were âpproved under the unit planregulations of December 22, 1950, by Bureau of Land Management letter of March 19,2013.

t5

(lt"

lt, ,;./tÃ.t<dtilbL3

2. All formations are unitized

3. The unit area embraces 15,3 acres, more orare Federal lands; ó40.00 acres (4.16%) are State lands.

The following leases embrace lands included within the unif a¡ea:

acres

uTu0t43276UTUO385uTU6l396uTu7t423uTU7t424

uTu72027uTU73020uTU73021uTU73685uTU7442s

UTUTó830uTU7683luTU77290uTU78228uTU81655

uTU81656

All lands and interests are fully or effectively committed. Certain overriding royalty interestolryners have not signed the unit agreement. All parties owning interests within this unit a¡eawere invited to join the unit agr€ement.

In view of the foregoing commitment status, effective control of operations within the unit a¡eais assured. We are of the opinion that the agreement is necessary and advisable in the publicínterest and for the purpose of more properly conserving naftral resources.

The Certification-Dctermination, signed by thc School and Instirutional Trust LandAdminisuation for the state of utah, is attached to the enclosed agreement.

Copies of the approved agreement are being distributed to the appropriate regulatory agencies.You a¡e requested to furnish all interested parties with appropriate evidence of this approval.

If you have any fi.nther questions, please contact Judy Nordstrom of this offrce at (801) 539-4108.

Sincerely

/S/ Becky J. Hammond

f* Roger L. BankertChiet Branch of Fluid Minerals

Enclosure:Unit Agreement

cc: UDOGMSITLAONRR wÆxhibit B (Attn: Nancy McCarty)BLM FOM - Vernal Venclosure

Pursuant to the authority vested in the Secretary of the lnterior, under the Act approved

February 25, 1920,41 Stat. 437, as amended, 30 U.S.C. sec 181, et seq., and delegated to the

Authorized Offrcer of the Bureau of Land Management, under the authority of 43 CFR 3180, Ido hereby:

A. Approve the attached agreement for the development and operation of the South

Red rüash Unit Area, located in Uintatr Cor-rnty, Utah. This approval shall be invalid ab initío ifthe public interest requirement under $ 3183.4(b) of this title is not met.

B. Certi$ and determine that the unit plan of development and operation

contemplated in the anached agreement is necessary and advisable in the public interest for the

purpose of more properly conseruing the natural resouces.

C. Ceniff and determine thal the drilling, producing, rental, minimum royalty and

royalty requirements of all Federal leases committed to said Agreement are hereby established,

altered, changed or revoked to conform with the terms and conditions of this agreement.

Dated:June 19.2013

f*Roger L. BankertChief, Branch of MineralsBu¡eau of Land Management

ContractNo: UTU8916lX

J

EP

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ENERGY,"

Docket No.: 2016-001Cause No.: L87-LL

Land Exhibit L-lT8S-R22,23E

Uintah County, Utah

EPENERGY*

Docket No.: 2016-001Cause No.: L87-LL

Land Exhibit L-2

21

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EPENERGY."

Docket No.: 2016-001Cause No.: t87-LL

Land Exhibit L-3 ESOUTHRED H E4OOftwindows

Structure Map and Areas Subject toers

Docket No.2001{23CauseNo.lST{7

Docket No.20O6{12Cause No. I 87-08

Docket No.2006{29CauseNo. 187-09

Wasatch Structure, SubseaContour lnterval: 5@ feet

Docket No.: 2016-001Cause No.: 187-11Geology Exhibit G-1

EType Log

ENERGY,,

Wasatch

Mesaverde

Neslen

Sego

Castlegate

The stratigraphic eq u iva lentof the interval between thetop of the Wasatchformation, as found at 6,1,68',to the base of the Castlegateformation, as found atLL,5OO', on the log of the QEPResources WRU EIH 6D-5-8-23 well located in Section 5,

T8S, R23E.


ES 23tl

South Red Wash Unit

43047389940000

WRU EIH 6D-5-8-23.1

-1æ0

-'t500

-2000

-2500

-3000

¡500

4000

-4500

-50o0

-5500

6000

-r000

-1500

-2000

-25û

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.3500

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-4500

-5000

-5500

6000

Rex ColeMod¡fied from

edmont

fo

Providedand

Sevier

o so lool+Jmiles

GoastalPlain

AlluvialPlain

CanadianBasin

GOM

Regional Pa leogeography andDepositiona I Environ ment

?


from Fenn and Pranter (2OI4)

EPSchematic from Measured

Sections in OutcropENERGY,- 40 acre density

fry

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r00t) ¡lfi0¡000f000

0

r5u0 20m 25û0 3ûn0 3mLateral (North-South) Dastance (ft)

IÞ

-/* --

modified from Cole (2008) Docket No.: 2016-001Cause No.: 187-11Geology Exhibit G-4

Afu73l¿6ffi 1291n ¡w?sü1w0 1103fi 4w737¡6@ trwruErh 30-HLJ*-22 F]RU Eh7Æ15+22 WUEt;N!-15€-22

Wasatch

4000

3500

3000

2500

2000

1500

1000

500

4000

3500

3000

2500

esaveç$ç

1500

'1000

500

0 0

Cross Sect¡ons 4rE/y6W .e. ¡3ü7ffim.r¡. @tffio

B ^ro*^.i,ì*u"--*.o*i"nj*-*""-".o*L"r.or" B'

4000 4000

3500 3500

3000 3000

2500 2500

2000 20m

1500 1500

1 000 1000

500 500

eslen o

I

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Mesaverde +Detailed Section LJ


GB'

o ooB

O

South Red Wash Un¡t

rs :ril;

EP

Mesaverde Detailed Cross-sectionHighlighting Discontinuity of Sandstones

Detailed Cross

Section


1l 03 ft1291 ft

ÆA 1iìl43047374660000

WRU EIH 7D-ML-35€-22

430473864 t 0000

WRU EIH 7AD-3IÙ22

43047374650000

WRU EIH

¿dúîù òeü Cæ¿hna Þqù

6F6R rc0 6Ær r!0 0 qi !50 0 6ÁP¡ 1!0

9500

9500

0 09!00

_ ffi00

EP

Mesaverde Detailed Cross-SectionHighlighting Discontinuity of Sandstones

Detailed Cross

Sect¡on


B43047546690000 ffifr 43047546660000 618 ft B'RED WASH 1584.218 RED WASH 784-2AB RED 7C4-2AB

¿rú6 Þqt

o 6ÁÞt rs

o Neslen o

Sego

-500 -500

EP ngineering

2'ea BCFG EUR - : 32o/o Recovery

9.3L BCFG per 40 Acres

E

ENERGY,.

Docket No.: 2016-001Cause No.: 187-11Geology Exhibit E-l

a

a

a

Eight Mesaverde wells completed in May 2015. Six wells in section 28

. RW01C4-288, RW 02C4-288, RW 0784_288. RW O7C4-288, RW 1584-218, RW 15C4_218

Total six well EUR: L7.88 BCFG. 2.98 BCFG per well

Section 28 OGIP: L49 BCFG. 9.3L BCFG per 40 Acres

. SW <7jyo

. phi>6%

' Bg = o'0032. h=150'

One well is insufficient to fully drain 40 acres

a

a Vacation of citing allows the flexibility to place wells tooptimally drain the acreage

Recoveries and development in South Red Wash areexpected to be similar to these analog wells

a

South Red Wash Unit\S:rí

I

-\,1rY.;-..I

"À,L¡

.'\tf-

.l*

..Å,its

28

N

,L¿

*tF

of 1



STATE OF UTAH





2, R649-3-10, AND R649-3-11(1) AND (2) FOR










Docket No. 2016-001

Cause No. 187-11

NOTICE INDEX

No. Description Date

Signed

Date

Emailed

Date

Mailed

Date

Published

1. Notice of Hearing 12/22/2015 12/23/2015 12/23/2015

2. Proof of Publication

Salt Lake Tribune & Deseret

News

12/27/2016

3. Affidavit of Publication

Uintah Basin Standard 12/29/2016

4. Proof of Publication

Vernal Express 12/29/2016


STATE OF UTAH

IN rsp MRrr¡R oF THE Requesr ¡oR AceNcyAcuoN or QEP ENERGY COMPANY FoR ANORDER SUSPENDING THE APPLICATIoN o¡ UTRTT

AoMrNr. Copp R649-3-2, R649-3-10, AND R649-3-11(1) aNo (2) FoR rHE Souru Rsp WnsHUNtt, covERrNG ru¡ SZzN% nNo S% or SecrroN1, ALL or SecuoNs 12 nNo 13, RNo rse N% RNoSE% on SEcuoN 24, TowNssrp 8 Souru, RINGg22B¡sr, SLM, AND ALL or SBcuoNs3,4,6-10,13-24, rsp E%NB% RNp Slz op SBcrroN 5, rHeS% or SpcuoN 11, Rtto rHe S% o¡ SecrroN 12,TowNsHrp 8 Sourn, R¡Nc¡ 23 ERsr, SLM,Utt.trnu CoLrNtY, Urnu.

NOTICE OF HEARING

Docket No. 2016-001Cause No. 187-11

THE STATE OF UTAH TO ALL PERSONS INTERESTED IN THE FOLLOWING

MATTER.

Notice is hereby given that the Board of Oil, Gas and Mining ("Board"), State of Utah,

pursuant to Utah Administrative Code R641-113-100, has designated a hearing examiner to

conduct a hearing on TUESDAY, January 19,2016, at 10:00 AM, or as soon thereafter as

possible, in rooms 1040 and 1050 at the Department of Natural Resources, 1594 West North

Temple, Salt Lake City, Utah.

The hearing will be conducted as a formal administrative adjudication in accordance with

the rules of the Board as set forth in Utah Administrative Code R641 et seq. and as provided for

in Utah Code Ann. $ 40-6-1 et seq. and Utah Code Ann. $ 63G-4-101 through 601.

The purpose of the hearing will be for the hearing examiner to receive testimony and

evidence regarding a Request for Agency Action to:

1. Suspend the application of Utah Admin. Code R649-3-2,R649-3-10, and R649-3-

l1(1) and (2) for the South Red Wash Exploratory Unit ("South Red V/ash Unit"), covering the

following lands:

Townshin 8 South. Ranse 22 East. SLM

Township 8 South. Range 23 East. SLM

Section 1:

Section 12:Section 13:Section 24:

Section 3:Section 4:Section 5:Section 6:Section 7:Section 8:Section 9:Section 10:Section l1:Section 12:Section 13:Section 14:Section l5:Section 16:Section 17:Section 18:Section 19:Section 20:Section 2l:Section 22:Section 23:Section 24:

SY.N%,5%AllAllN%,SEY4

AllAllEY2NEY4,SY2

AllAllAllAllAllS%S%

AllAllAllAllAllAllAllAllAllAllAllAll

2

(the "Subject Lands");

2. Providing that the producing interval in any future well may not be located closer than

460 feet to the boundaries of the South Red V/ash Unit without obtaining an exception location

from the Division pursuant to Utah Admin. Code R649-3-3;

3. Providingthat no well may be directionally drilled if any producing portion of the 460

foot radius along the projected wellbore intersects with the boundaries of the South Red V/ash

unit without complying with the requirements of utah Admin. code R649-3-11;

4. Providing that QEP or its successor as unit operator of the South Red V/ash Unit

agrees to provide (l) a plat or sketch showing the distance to lease boundaries and the target

location with any application for permit to drill filed for a directionally drilled well and (2) a

copy of the annual plan of development and operation for the South Red V/ash Unit;

5. Providing the requested suspension of these rules will remain in effect only for as long

as the Subject Lands are committed to the South Red Wash Unit; and

6. Providing for such other and further relief as may be just and equitable under the

circumstances.

The examiner's proposed findings of fact and conclusions of law will be filed with the

Board of Oil, Gas, and Mining and presented at the February Board hearing which has been set

for WEDNESDAY, FEBRUARY 24,2016, at 9:00 AM or as soon thereafter as possible, in the

auditorium of the Department of Natural Resources, 1594 West North Temple, Salt Lake City,

Utah.

Objections to the Request for Agency Action must be filed with the Secretary of the

Board at the address listed below no later than the 1lth day of January,2016. A party must file a

J

timely written objection or other response in order to participate as a party atthe Board hearing.

Failure to participate can result in a default judgment.

Natural persons may appear and represent themselves before the Board. All other

representation of parties before the Board will be by attomeys licensed to practice law in the

State of Utah, or attorneys licensed to practice law in another jurisdiction which meet the rules

of the Utah State Bar for practicing law before the Utah Courts.

Persons interested in this matter may participate pursuant to the procedural rules of the

Board. The Request for Agency Action, and any subsequent pleadings, may be inspected at the

office of the undersigned, and inspected online at the Utah Board of Oil, Gas and Mining's

website at

Pursuant to the Americans with Disabilities Act, persons requiring auxiliary

communicative aids and services to enable them to participate in this hearing should call

Julie Ann Carter at (801) 538-5277, at least three working days prior to the hearing date.

DATED this22nd day of December, 2015.

STATE OF UTAHBOARD OF OIL, GAS AND MININGRuland J. Gill, Jr., Chairman

ulieSecretary

1594 V/est North Temple, Suite 1210Salt Lake City, Utah 84116(801) s38-s277

4

CERTIFICATE OF PUBLISHED NOTICE

I hereby certify that I caused a true and correct copy of the foregoing NOTICE OFHEARING for Docket No. 2016-001, Cause No. 187-11 to be PUBLISHED in the followingnewspapers on the following days:

December 27,2015.The Salt Lake Tribune and Deseret Morning News, newspapers ofgeneral circulation in Salt Lake City and County.

December 29,2015:Uintah Basin Standard, a newspaper of general circulation in Duchesne andUintah Counties.

December 29,2015:Vemal Express, a newspaper of general circulation in Daggett and UintahCounties.

5

CERTIFICATE OF SERVICE

I hereby certify that on this 23rd day of December, 2015,I caused a true and correct copy

of the foregoing NOTICE OF HEARING for Docket No. 2016-001, Cause No. 187-11, to be

mailed by Email or via First class Mail with postage prepaid, to the following:

Mark L. BurghardtWilliam E. WardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Email:

Attorneys for Petitioner QEP EnergtCompany

Steven F. AlderJohn Robinson Jr.Melissa L. ReynoldUtah Attorney General's OffrceNatural Resources Division1594 W. North Temple, Suite 300Salt Lake City, Utah 84116Email:Email:Email:

Assistant Attorneys General representing theDivision of Oil, Gas and Mining

United States of America"/oBureau of Land ManagementUtah State Office440 V/est 200 South, Suite 500Salt lake City, UT 84101

Linda L. Hayes612 McGinnis LaneWillmington, NC 28412

Petitioner's Address

Laura Rippentrop

QEP Energy Company1050 17th Street, Suite 500Denver, CO 80265

Mike JohnsonUtah Attorney General's OfficeNatural Resources Division1594 W. North Temple, Suite 300Salt Lake City, Utah 84116Email:

Assistant Attorney General representing theBoard of Oil, Gas and Mining

State of UtahcloUtah School and Institutional Trust LandsAdministration675 F,ast 500 South, Suite 500Salt Lake City, UT 84102

EOG Resources, Inc.600 17th Street, Suite 1000NDenver, CO 80202

6

Wendy L. Sacerdoti TrustBank of Texas, N.A. Trustee7600 W. Northwest HighwayDallas, TX75225-2201

D.J. Stone exempt Trust,FBO Patricia S. HolmanP.O. Box 15135Seattle, WA 98115-0135

Barbara A. Stone TrustBank of Texas, N.A. Trustee7600 W. Northwest HighwayDallas, TX75225-2201

The Ballard Company671 Elk CircleKeystone, CO 80435

Kathryn Hamm Chase9651 MillridgeDallas, TX75234

John Brinkerhoff943 Purcell CourtKelowna, Columbia VIV 1N7Canada

Noble Energy Production, Inc.1625 Broadway, #2200Denver, CO 80202

V/alton Oil Company, LLC575 East 4500 South, Suite B-260Salt Lake City, UT 94107

The Karen G. Matthews Trust2002 Kensington Avenuesalt Lake city, uT 84t09-2629

Gray Family Trust1215 East 200 NorthPleasant Grove, UT 84062

D.J. Stone Exempt Trust,FBO David K. Stone420 Santa Rita AvenueMenlo Park, CA 94025-5828

Betty Morgan Garff Intervivios Trustdated October 10, 19903000 S. Connor Street, Unit 13

Salt Lake City, UT 84109

Carol K. Stone TrustBank of Texas, N.A. Trustee7600 W. Northwest HighwayDallas, TX75225-2201

MHB PropertiesP.O. Box 637Sedalia, CO 80135-0637

Ralph C. Hamm, Jr.12014 Timberlake CourtDallas, TX75230

Robert W. Brinkerhoff, Jr.2210 530 8th Avenue SV/Calgary, Alberta T2P 3S8Canada

J. A. Jacks1144 S. 17th East StreetSalt Lake City, UT 84108

Russell T. Rudy Energy, LLC5701 Woodway Drive, Suite222Houston, TX77057-1505

The Porter Family Trust322East 2450 SouthBountiful, UT 84010

James A. Gray2755 East 2200 South (Rear)Salt Lake City, UT 84109

7

Ralph E. SmithP.O. Box 216Balboa IslandNewport Beach, CA92662

John A. Hopwood1649 Westcliff DriveNewport Beach, CA92660

Allan L. "Buck" Olsen2824Fort Silver DriveBullhead City, A286429

ZKB Properties, LLP1600 Broadway, Suite 1430Denver, CO 80202

LauraB. PalmerBox2, Site 25RR8 LCD 8Calgary, Alberta T3J 2T9

Jerry Gray2805 EvergreenSalt Lake City, UT 84109

Prodco, Inc.383 Cascada DriveGrand Junction, CO 81503

Teckla Oil Co., LLCl7l2 SE 35th LaneOcala, FL3447l

Helen Kathleen Mayo43675 Alcoba DriveTemecula, CA 92592-4373

RWB Oil CorporationP.O. Box 637Sedalia, CO 80135-0637

Helen M. Perry Living Trustc/o Kathleen Perry Mayo43675 Alcova DriveTemecula, CA92592

8

AFFIDAVIT OF PUBLICATION

County of Duchesne,STAIE OF UTAH

I, CYNTHIA KLEINFELIER on oath, say that I amthe LEGALS MANAGER of rhe Uintah Basin Srandard,a weekly newspaper of general circulation, published atRoosevelt, State and County aforesaid, and that a certainnotice, a true copy of which is hereto attached, was publishedin the full issue of such newspaper for consecuttve

and that the was on fhe_-1/_ dayof that the last publicationof such notice was in the issue of such newspaper dated theJl aay of 2¿/srr/Y ,201-í , and that said

notice was published on Utahlegals.com on the same day as

the first newspaper publication and the notice remained onUtahlegals.com until the end of the scheduled run.

NOTICE OFHEARINGDOCKET

NO.2016-001CAUSE NO.

187-11

BÐFORE THEBOARD OF OìL,GASANDMIMNG,DEPARTMENTOFNATURALRE.SOURCES, STATEOF UTAH.

TFIE ST,{TE OFUTAH TOALL PER-SONS INTERESTEDIN THE FOLLOW.INGMATTER:

NOTICE IS .

HEREBYCIVENthat the Board ofOil, Gas and Mining(o'Board"), Staæ ofUtah, pursuant toUtah AdministrativeCode R641-113-100,has designated ahearing examiner toconduct a hearing onTUESDAY, January19,2016, at 10:00AM, or as soon there-after æ possible, inrooms 1040 and J050at the Department ofNatuml Resources,1594 West North .

Temple, Salt LakeCity, Utah.

THE HEARING\ryILL BE CON.DUCTED æ a formaladministrative bdj udi-cation in accordancewith the rules of theBoa¡d as set forth inUtah AdminisrrativeCode R64l et seq.and as pnrvided for'in Utah CodeAnn.$ 40-ó-l et soq. andUtah Code Ann. $63C-4-101 through601,

DOCKETNO.2016-001CAUSENO. 187-11-IntheMatter of the Requostfor Ageney ActionofQEPENERGYCOMPANY for anorder suspending theapplication of UtahAdmin. Codc R649-3-2, R649-3-10, andR649-3-ll(l) and(2) for the South RedWash Unit covering

rhe s%N% and s% ofSection l, all ofsec_tions l2 and 13. andthe NZu and SE% ofSection 24, Townshio8 South, Ranee 22 'East, SLM, aã¿ aU o¡,gections 3,4,6-10.13-24, the Et/liFi.et/oand S% ofsection 5.the S% of Section I I .and the St/¿ of Sec-tion l2,Township g

South, Range 23'EastSLM, Uintah Countv.Utah.

THE PURPOSEOF THE PROCEED.ING will be forrhe

. -þeadng examiner toreceive testimony andevidence regardine aRequest for AeencvAction to:

l. Suspend lheapplicæion ofutâhAdmin. Code R649-3-2, R649-3-10, andR649-3-t l(l) and(2) for the South RedWash ExploratorvUnit ("Sóuth RejWash Unit"), cover-ing the followineIa¡rds:

Township 8 Sourh.Range22East, SLM

Secrion l:St/N%.S%

Section 12; AllSecrion 13: AllSection 24:N%.

sBt/,Township 8 South.

Range 23 East, SLMSection 3: AllSection 4: AllSection 5;

Et/tr{'Et/ ,5%Section 6: AllSection 7: AllSection 8: AllSeôtion 9: AllSection l0: AII

/nc*s MANAcER

Subscribed and sworn to before me on this

FV ou, " ,t0"**1.-,*. 20

by Cynthia Kleinfelter.

rIDñ E-IF-I

Notary PubllcEOTIilEPARRFHCottn5ont53l?

l*f Co¡yttf¡bnE¡ç¡¡rFcönsy2t,20tCglete ol ut h

EI--I-

Notary Public

'l

---- J

Section ll: SZr proposed findings ofSection 12: S7: iaci and conclusionsSection l3:All of law will be filedSection 14: All with the Board ofSectiqn 15:All Oil, Cas, and MiningSectiðn t6; All and presented at theSection 17: All February Board hear-Section 18: All ing whiðh has beenSection l9: All seifor WEDNES-Section 20: All DAY FEBRUARYSection 2l: All 24,2116,at 9:00 AMSection 22: All or as soon thereafterSection 23: All as possible, in theSection 24: All auditorium of the(the "Subject Departrnent of Natu-

Lands'); ral Resources, 15942. Providing that West North Temple,

the producing interval Salt Lake City, Utah.in any future well . Objections to themay not be locaæd Request for Agencycloser than 460 feet Action must be fitedto the bouirdariés of with the Sècretarythe South $ed lVash ofthe Board at theUnit without obtain- address listed bþlowing an excePtion no later than thelocation ftom the 1lth day ofJa¡Ìua¡y,Division pursuant to 2016. A pafy mustUuh Admin. Code file a timely writtenR649-3-3; ' objection or other

3. Providing that reõponse in order toúo well may be.direc- participate as a parlytionally drilled ifany àt the i¡oard hearing.producing portion of Failureîo participatethe.460 foot radius can result in a defaultalong the projected judgment.wellbore intersects " Ñarural personswith the boundar- may appear andies ofthe South Red repiesènt themselvesWash Unit without be-fore the Board. Allcomplying with^the . other representationrequirements o_f -qluh of partiês before theAdmin. Code R649- Board will be by3-i1; afiorneys licensed

4. Providingthat to praciice law in, QEP or its successor thé State of Utàh, or

as unit operato. o,ft!.' attorneys licensedSouth Red Wash Unit to praciice law in

' agrees to provide (l) anôtherjurisdictiona plat or skelch show- which mçet the rulesing the distance to of the Utah St¿te Bar

, lease boundaries and for practicing law be-, the larget location foró the Utah Courts.

Contiqued fromB6

with any applicationfor per.mit to drillfiled for a directional-Ìy drilled well and (2)a copy ofthe annualplan ofdevelopmentand operation forthe South Red WashUnit;

5. Providing therequested suspen-sion ofthese ruloewill remain in effectoniy for as

thearethe SouthUnit; and

.and èquitable underthe circumstances'

The examiner's

Perso¡s interestedin this matter maYparticiPate Pursuantto the proqeduralrules of the Board.The Request forAgency Action,and ahy subsequentpleadings, may,öeinspected ¿t the officeofthe undersigned,and inspeded onlineat the Utah Board

rr¡*€}as and .-.Minhg's website at

sign/books,html.Pursuant to the

Americans with Dis-

abilities Act, persoPsrequiring iurxiliarYcommuuicative aidsand servlces to enablethem to partiqipate inthis hearing shouldcall Julie Ann Carterat (801) 538-5277,atleast three workingdays prior to the hear-ing date.

DATED this 22ndday of Deèember,201s.

STATE OF UTAH ]

BOARDOF OIL,GASAND MINING ,

Ruland J. Gill, Jr., I

Chairman'/si Julie Ann Carter

. goàrd SecretarY1594 West North

Temple, Suite 1210

Salt Lake CitY, .

Utâh 84116(80t) s38-s277Published in the

Uintah Basin Stan-dard December 29,201 5"

6. Providingsuch other and

forfurther

relief as may be just

NOTICE OFHEA,RING

DOCKET N0' 2016'OOI CAUSENO.187-II BEFORETHE BOARD OF

OIL. GAS ANDrr,n¡ÍrNc prpenr-MENTOF NATU-RALRESOURCESSTATE OF UTAH

THB STATEOFUTAHTO ALLPERSONS INTER-

ESTED IN THE

FOLLOWING MAT'TER:NOTICE TSHERE-BY GIVENthat the

Board of OIL'Gæ and

Mining ("Board")'Søte of Utah'oursuant to Utah

hdministrative Code

R641-113-100, has

desienated a hearing

"*utãin"r to conduct a

hearins on TUES-

DAY. lanuary 19,

2016. at l0:00 AM'or as soon thereafter

as possible, in tooms

10+Oand 1050attheDesartment of Natu-

ral'Rosources, 1594

West North TemPle,

salt Lake city, utah'THEHEARINGV/ILL BE CON-DUCTED as a formaladministrative adj ud i-cation in accordance

with the rules of the

Board as set forth in '

Utah AdministrativeCode R64l et seq'

and as provided for inUtah C-ode Ann' $ 40-

6-l et seq' andUtahCodeAnn. ii 63G-4-

101 through 601.

DOCKETNO,2016-001CAUSENO. 1S7-ll - In t}le

Matter of the Request

for Aqency ActionoTQÈP ENERGYcoùPANY for an

order susPending the '

aoolication of UtahÁámin' Code R649-

3-2, R649'3-10, and

R649-3-ll(1) and(2) for the South Red

' ùâsh Unitn coveringtlftSYN% and S/z ofSection l, all of Sec-

tions 12 and 13, and

the NZz and SEl¿ ofSection 24, TownshiP8 South, Range2?€ast SLM, and all ofSections 3,4,6-10,13-24,theE'/rNe/e

PROOF OF PT]BLICATION

STATE OFUTAII,}S.S.

County of Uintah

I, ALYSSA SIMPER, being duly sworn, depose and say that I amthe Legals Manager of The Vernal Express, a weekly newspaper ofgeneral circulation, published each week at Vernal, Utah, that thenotice attached hereto was published in said newspaper for 1

publication(s), the first publication having been made onDecember 29,2015 and the last on December 29,2015, that saidnotice was published in the regular and entire issue ofeverynumber of the paper during the period and times of publication,and the same was published in the newspaper proper and not in asupplement; and was published on Utahlegals.com, a websiteestablished by the Utah Press Association through the collectiveefforts of Utah's newspapers, on the same day as the firstnewspaper publication and the notice remained on Utahlegals.comuntil the last day of publication.

296 lines. Publication fee, $296.25

This page is not a billing statement or invoice, but a proof ofpublication. Please make payment from billing invoice.

B

Subscribed and sworn to before me this

Legals Manager

4û auy or

Notary Public, Residence, Roosevelt, Utah

I-DWæ3r-ro 'rIII

Notary PubllcEOTIIEPARRISHCornlton1653127

trtyCormt¡¡ngrp¡¡¡Fún¡ry23,20f0Stete ol Utah

-.IT-IIIJ

1. Suspend theapplication of UtahAdmin. Code R649-3-2,R649-3-10,'andR649.3-1 l(l) and(2) for the South RedWash ExploratoryUnit ("South RedWash Unit"), cover-

, ing the followinglands:Township 8 South,

, Rãnge 22 East, SLM, Section 1:

I s'txy",suSection 12:

¡ AllSection l3:All¡ Section 24:N%, SEZ¿

¡ Township 8 South,i Range 23 East, SLMSection 3:

Iaur. Section 4:AllSection 5:

) E|/2NEY4,S%Section ó:Alt

i Section 7:i All: Section 8:

' ,AllSection 9:

r AllSection l0:AltSection I l:

' sztSection 12:SYz

, Section l3:All, Section 14:Alt ,

Section l5:AIISection 16:AilSection l7:.AllSection l8;A¡¡Section 19:AltSection 20:Ail

and Sl/:'of Section 5,theS%of Section ll,and the S% ofsec-tion 12,Township 8South, Range 23East,SLM, Uintah County,Utah.THE PURPOSE OFTHE PROCEED-INC will be for the'hearing examine¡ to.receive testimony andevidence regarding aRequest forAgencyAction to:

Section 2l :

AllSection 22:AllSection 23:AllSection 24:AII(the "SubjectLands");2. Providing that theproducing interval inany future well maynot be located closerthan 460 feet to theboundaries oftheSouth Red Wæh Unitwithõut obtáiningãnexception locationfrom the Divisionpursuant to Utah Ad-min. Code R649-3-3;3. Providing that no

. well may be direc-tionally drilled ifanyproducing portion ofthe 460 foot radiusalong the p¡ojectedwellbore intersectswith the boundar-ies of the South RedWash Unit withoutcorhplying with therequirgments of UtahAdmin. Code R649-3-11;4. Providìng that

QEP or its successotas unit operator oftheSouth Red Wash Unitagrees to provide (1)a plat or sketoh show-ing the distance toleáse boundaries andthe target locationwith any applicationfor permit to drill '

filed for a directional-ly drillþd well and (2)a copy ofthe annualplan of developmer$and operation forthe South Red WashUnit;5. Providing therequested suspen-sion of these ruleswill remain in effectonly for as long as

the Subject Landsare committed tothe South Red WashUnit; and6. Providing for suchother and furtherrelief as may be justand equitable underthe circumsta¡ces.The examiner'sproposed findings offact and conclusionsof law will be filedwith the Board ofOil, Gas, and Miuingand presentçd at theFebruary Boafd hear-

ing which has beenset for WEDNES-DAY, FEBRUARY24,2016, at 9:00 AMor as soon thereafteras possible, in theauditorium of the De-partment of NaturalResources, 1594 WestNorth Temple, SaltLake City, Utah.Objecdons to theRequest for AgencyAction must be filedwith the Secretaryof the Board at theaddress listed belowno later than the11th day ofJanuary,2016. A party mustflle a timely written.

, objection or otherresponse in order toparticipate aó a pa(yaf the Board hearing.Failure to participate

r can result in a defaultjudgment,

. Natural persons mayI appear and represent

themselves beforethe Board. All otherrepresentation of Dar-ties before the Boärclwill be by attomevslicensed io practicelaw in the State of

i Utah, or attomeys li-censed to practice lawin another jurisdictionwhich meet the rulesof the Utah State Barforpracticing law be-

'

fore the Utah Courts.Persons interestedin this matter mayparttcrpate pursuantto the proceduralrules ofthe Board.The Request forAgency Action,and any subsequentpleadings, may Uernspected at the officeofthe undersigned,and inspected onlineat the Utah Board ofOil, Gas and Minins'swebsire at hnp://ogñr.utah.gov/amr/board-temp/redesign/books.hrml.

fitÍIii

Pursuant to theAmericans with Dis-abilities Act, personsrequiring auxiliarycommunicative aidsand services to enablethem to participqte inthis hearing shouldcall Julie Ann Carterat.(801) 538-5277,atleast three workingdays prior to the hear-ing date.DAIED this 22ndday of December,2015.STATE OF UTAHBOARD OF OIL,GASAND MININGRuland J. Gill, Jr.,Chairman /s/ JulieAnn Carter BoardSecretary1594 \Mest NorthTemple, Suire l2l0Salt Lake City, Utah841 16 (801) 538-5277Publish in the VernalExpress December29,2015.

of 1



STATE OF UTAH





2, R649-3-10, AND R649-3-11(1) AND (2) FOR










Docket No. 2016-001

Cause No. 187-11

INDEX OF ORDERS

NO. DATE DESCRIPTION

1. 01/12/2016 Order Granting QEP’S Motion to Designate a Hearing Examiner and Set

the Date and Place of Hearing

2. 01/12/2016 Order Granting QEP Energy Company's Motion to Allow Witnesses to

Participate Electronically

3. 03/18/2016 Findings of Fact, Conclusions of Law, and Order


STATE OF UTAH

FILEDJAN I 2 20t5

SECRETAFY, BOANDOF

I¡¡ rHp MATTER oF THE RrquEsr roR AcpNcyAcrroN on QEP ErlpRcy CovpRr.ry FoR ANoRDER SUSPENDING THE APPLICATIoN o¡ UTRTT

Aovr¡q. Coos R649-3-2, R649-3-10, ANDR649-3-11(1) nNo (2) ron rHe SourH ReoWesu UNrr, covERrNG rsp S%N% nNo S% o¡SpcrroN 1, RLL op S¡crroNs 12 eNo 13, eNorsp N% e¡¡o SE% or SecrroN 24, TowNsnrp8 Souru, R¡Nce 22B¡sr, SLM, AND ALL oFSscrroNs 3,4,6-10,13-24, rnp E%NE% nNoS%or SecrroN 5, rHn S%or SecrloN 11, RNotue SYz of Secrrox 12, TowNsure 8 SourH,RnNce 23 ERSI, SLM, UntrnH CouNry,UrRn.

ORDER GRANTING QEP'S MOTIONTO DESIGNATE A HEARING

EXAMINERAND SET THE DATE ANDPLACE OF HEARING

Docket No. 2016-001

Cause No. 187-11

The Utah Board of Oil, Gas and Mining having fully considered QEP Energy Company's

Motion to Designate a Hearing Examiner and Set the Date and Place of Hearing hereby enters its

Order granting this motion as follows:

l John C. Rogers, Associate Director, Oil and Gas, is designated as the hearing

examiner in this cause for the pu{poses of taking evidence and recommending findings of fact and

conclusions of law to the Board.

2. The public hearing conducted by the hearing examiner for this matter will be held

held on Tuesday, January 19,2016, at 10:00 a.m., or as soon thereafter as possible, in Rooms 1040

and 1050, Department of Natural Resources, 1594 West North Temple, Salt Lake City, Utah.

Issued this 12th day of January,2016.

STATE OF UTAHBOARD OF OIL, GAS AND MINING

Gill, JrChairman


I hereby certify that on this 13th day of January,2016,I caused a true and correct copy of

the foregoing ORDER GRANTING QEP'S MoTIoN To DESIGNATE A HEARTNG

EXAMINER AND SET THE DATE AND PLACE OF HEARING for Docket No. 2016-001,

Cause No. 187-11, to be mailed by Email or via First Class Mail with postage prepaid, to the

following:

Mark L. BurghardtV/illiam E. WardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Email:Email:

Attorneys þr Petitioner QEP EnergyCompany

Steven F. AlderJohn Robinson Jr.Melissa L. ReynoldUtah Attorney General's OffrceNatural Resources Division1594 W. North Temple, Suite 300Salt Lake city, utah 84116Email:Email:Email:


United States of America'/oBureau of Land ManagementUtah State Offrce440 West 200 South, Suite 500Salt lake City, UT 84101


Petitioner's Address.

Laura RippentropQEP Energy Company1050 lTth Street, Suite 500Denver, CO 80265

Mike JohnsonUtah Attorney General's OffrceNatural Resources Division1594 W. North Temple, Suite 300Salt Lake Ciry, Utah 84116Email:


State of Utah'/o Utah School and Institutional Trust LandsAdministration675 East 500 South, Suite 500Salt Lake City, UT 84102


2




The Ballard Company899 S. Josephine StreetDenver, CO 80209

[Address updated 11812016l


John Brinkerhoff943 Purcell CourtKelowna, Columbia VlV 1N7Canada



The Karen G. Matthews Trust2002 Kensington AvenueSalt Lake City, UT 84108-2628


D.J. Stone Exempt Trust,FBO David K. Stone420 SarÍa Rita AvenueMenlo Park, CA 94025-5828





Ralph C. Hamm, Jr.l2ll4Timberlake CourtDallas, TX75230

Robert W. Brinkerhoft Jr2210 530 8th Avenue SWCalgary, Alberta T2P 3SB

Canada


[Undeliverablel

Russell T. Rudy Energy, LLC5701 V/oodway Drive, Súte222Houston, TX77057-1505



IUndeliverable]

aJ

Ralph E. SmithP.O. Box 216 Balboa IslandNewport Beach, CA92662




Laura B. PalmerBox2, Site 25RR8 LCD 8Calgary, Alberta T3J 2T9



IUndeliverable]

Teckla Oil Co., LLCl7l2 SE 35th LaneOcala, FL 34471

[Undeliverablel

Helen Kathleen Mayo43675 Alcoba DriveTemecula, CA 92592-437 3


Helen M. Peny Living Trustc/o Kathleen Perry Mayo43675 Alcova DriveTemecula, CA92592

4

FILEDJAN t? 2016

SECRETAHY, BOAÐOF

BEFORE THE BOARD OF OrL, GAS AND MINTNG oll- GAs r müilg

DEPARTMENT OF NATURAL RESOURCESSTATE OF UTAH

IN rHe MATTER oF THE RequEsr roR AceNcyAcrroN or QEP ENpRcy CovrplNy FoR ANoRDER SUSPENDING THE APPLICATIoN o¡ UTaHAoir,tIN. CooE R649-3-2, R649-3-10, ANDR649-3-11(1) eNo (2) ron rse Souru Reo'Wns¡r UNrr, covERrNG tøp.St/l\Yzeuo S% orSpcrrou 1, RLL op SecrroNs 12 aNo 13, euorHe N% nuo SE% or SpcrroN 24, TowNsHrr8 Souru, R¡.Ncs 22 F,¡.st, SLM, AND ALL oFSpcrroNs 3,4,6-10,13-24, rHp EZzNE% aNoS%op SecrroN 5, ure SYzor SecuoN 11, eNoryn SYz of S¡cuoN 12, TowNsup I Souru,RlNce 23 Ersr, SLM, UmrRu Corntrv,UrRu.

ORDER GRANTING QEP ENERGYCOMPANY'S MOTION TO ALLOW

WITNESSES TO PARTICIPATEELECTRONICALLY

Docket No. 2016-001

Cause No. 187-11


Motion to Allow Witnesses to Participate Electronically hereby enters its Order granting this

motion and hereby allows QEP's witnesses to participate via video conference in the January 19,

2016hearing being conducted by a hearing examiner.

Issued this 12th day of January,2016.


Gill, JrChairman


I hereby certify that on this 13th day of January,20l6,I caused a true and correct copy of

thc fOTCgOiNg ORDER GRANTING QEP ENERGY COMPANY'S MOTION TO ALLO\M

WITNESSES TO PARTICIPATE ELECTRONICALLY for Docket No. 2016-001, Cause

No' 187-l l, to be mailed by Email or via First Class Mail with postage prepaid, to the following:

Mark L. BurghardtV/illiam E. WardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Email:

Attorneys for Petitioner QEP EnergtCompany

Steven F. AlderJohn Robinson Jr.Melissa L. ReynoldUtah Auorney General's OfficeNatural Resources Division1594 V/. North Temple, Suite 300Salt Lake City, Utah g4116

Email:Email:Email:

Assistant Attorneys General representing theDivision of Oi[ Gas ond Mining

United States of America'/oBureau of Land ManagementUtah State Off,rce440 West 200 South, Suite 500Salt lake City, UT 84101



Laura RippentropQEP Energy Company1050 17th Street, Suite 500Denver, CO 80265

Mike JohnsonUtah Attorney General's OfficeNatural Resources Division1594 V/. North Temple, Suite 300Salt Lake City, Utah 84116Email:




2


D.J. Stone exempt Trust,FBO Patricia S. HolmanP.O. Box 15135Seattle, V/A 981 I 5-0135



[Address updated 11812016l


John Brinkerhoff943 Purcell CourtKelowna, Columbia VIV lN7Canada

Noble Energy Production, Inc.1625 Broadway,#2200Denver, CO 80202

Walton Oil Company,LLc575 East 4500 South, Suite B-260Salt Lake City, UT 84107









Robert W. Brinkerhoff, Jr.2210 530 8th Avenue SWCalgary, Alberta T2P 3 58Canada


IUndeliverable]

Russell T. Rudy Energy, LLC5701 V/oodway Drive, Stite222Houston, T){77057-1505

The Porter Family Trust3228ast2450 SouthBountiful, UT 84010


IUndeliverablel

J

Ralph E. SmithP.O. Box 216Balboa IslandNewport Beach, CA92662




LauraB. PalmerBox2, Site 25RR8 LCD 8Calgary, Alberta T3J 2T9



[Undeliverablel

Teckla Oil Co., LLCl7l2 SE 35th LaneOcala, FL3447l[Undeliverablel



Helen M. Peny Living Trustc/o Kathleen Perry Mayo43675 Alcova DriveTemecula, CA92592

4

FILED

IN rnp MATTER oF THE Requesr roR AceNcyAcuoN or QEP ENpRcy CovpRNy FoR ANORDER SUSPENDING THE APPLICATION OF

Uran ApvrN. Coon R649-3-2, R649-3-10,aNo R649-3-11(l) nNo (2) FoR rHE SournReo Wesu UNrr, covERrNG rue SZzN% nNoS% o¡ SecuoN 1, RLL or SpcrroNs 12 eNt13, RNo rH¡ N% aNo SE% or SpcrroN 24,TowNsHrp 8 Sourn, R¡.Nce 22 Etsr, SLM,AND ALL or SBcrroNS 3, 4, 6-10, 13-24, runE|/';NEY4 eNr S% or SncrroN 5, rHe S% opSecuoN 11, eNo rup S% of SecrroN 12,TowNssrp 8 Souru, R¡Nce 23 Eesr, SLM,UNreFr CouxrY, Ures.

MAR I I 20t6

$FCRE'TARY, BOANDOFOlt-. GAS û frfiNtitg

FINDINGS OF FACT, CONCLUSIONSOF LA\il, AND ORDER

Docket No. 2016-001

Cause No. 187-11


STATE OF UTAH

This matter was heard before John C. Rogers, Associate Director, Oil and Gas, Utah

Division of Oil, Gas and Mining ("Division"), as Hearing Examiner designated by the Utah

Board of Oil, Gas, and Mining (Board"), on Tuesday, January lg,20I6,at approximately 10:00

a.m. in the Auditorium of the Utah Department of Natural Resources, 1594 West North Temple,

Salt Lake City, Utah. The Hearing Examiner was represented by John Robinson, Jr., Assistant

Attomey General.

Testifying via video conference from Denver, Colorado, on behalf of Petitioner, QEP

Energy Company, was Theresa Chatman, Landman, Aaron Bazzell, Associate Geologist, and

Daniel J. Rabiolo, Senior Reservoir Engineer. QEP was represented by Mark L. Burghardt of

Holland & Hart, LLP.

Attending on behalf of the Division was Dustin Doucet, Petroleum Engineer. The

Division was represented by Steven F. Alder, Assistant Attorney General.

The Hearing Examiner's Recommended Findings of Fact and Conclusions of Law were

filed with the Board on February 23,2016.

This matter came before the Board on W'ednesday February 24,2016, at approximately

9:00 a.m. in the auditorium of the Utah Department of Natural Resources, 1594 West North

Temple, Salt Lake City, Utah. The following Board members participated in the hearing:

Ruland J. Gill, Jr., Chairman, Susan S. Davis, Chris D. Hansen, Carl F. Kendell, and Gordon L.

Moon. The Board was represented by Michael S. Johnson, Assistant Attorney General.

The Board, having considered the Hearing Examiner's Recommended Findings of Fact

and Conclusions of Law, being fully advised, and for good cause shown, hereby enters the

following findings of fact, conclusions of law, and order:

FINDINGS OF FACT

1. QEP is a Texas Corporation in good standing, with its principal place of business

in Denver, Colorado. QEP is qualified to do business in Utah and is fully and appropriately

bonded with all Federal and State of Utah agencies.

2. The Request for Agency Action ('oRequest") covers the following lands:


Section 1:

Section 12:

Section 13:

Section 24:

AllAllNY2,SEY4

Y2,SY,7r¡{S

2


Section 3:Section 4:Section 5:Section 6:Section 7:Section 8:

Section 9:Section l0:Section l1:Section 12:Section 13:

Section 14:

Section 15:

Section 16:Section 17:

Section 18:

Section 19:Section 20:Section 2l:Section 22:Section 23:Section 24:

AllAllEY'NEY4, SY2

AllAllAllAllAllSY2

SY,AllAllAllAllAllAllAltAltAltAllAllAll

("Subject Lands").

3. The oil and gas underlying the Subject Lands is owned by the United States of

America and the State of Utah and leased under the following leases:

Federal Leases

UTU-385UTU-61396UTU-71423UTU-71424UTU-72027UTU-73020UTU-73021UTU-73685UTU-74425UTU-76830

J

UTU-76831UTU-77290UTU-78228UTU-81655UTU-81656UTU-143276

State of Utah Lease

ML-472t2.

QEP owns I00% of the working interest in these leases.

4. The South Red Wash Exploratory Unit (UTU-9021lX) ("South Red Wash Unit")

was approved on June 9, 2013, and consists of all of the Subject Lands, totaling 15,382.14 acres.

The unit is administered by the United States Bureau of Land Management ("BLM"), and QEP

serves as the unit operator. There are no uncommitted tracts within the unit. According to

Section 16 of the South Red Wash Unit Agreement, all operations must be conducted in a manner

that will promote conservation and prevent waste.

5. The Subject Lands have not been previously spaced by the Board. The wells on

the Subject Lands have been located in accordance with the Division and the Board's general

rules, including the well location and siting rules contained in Utah Admin. Code R649-3-2 artd

directional drilling rules in Utah Admin. Code R649-3-10 and R649-3-11. Under these rules,

each well is to be located within a 400-foot "window" in the center of each 4}-acre governmental

quarter-quarter section, or substantially equivalent lot or tract, and no well may be located closer

thart 920 feet from an existing well drilled to or capable of producing oil and gas from the same

pool. The default siting and location rules allow an approximate 4O-acre well density pattern.

4

6. Well density and location pattems within the South Red Wash Unit are

determined in accordance with the terms of the South Red Wash Unit Agreement and the annual

plan of development approved by the BLM.

7. Based on a proposed 4O-acre density pattern, there is potential for a total of 343

additional wells within the South Red V/ash Unit. Of these proposed locations, it is anticipated

that at least 32 of the wells would require approval of an exception location under Utah Admin.

Code R649-3-3, since the wells cannot be located within the allowed "window" due to the

topography in portions of the Subject Lands.

8. In requesting that the Board suspend Utah Admin. Code R649-3-2, R649-3-10,

and R649-3-11 for the lands located in the South Red Wash Unit, QEP has agreed to the

following conditions:

(a) The producing interval of any future wells will not be located closer than

460 feet from the South Red Wash Unit boundary without obtaining an exception

location from the Division in accordance with Utah Admin. Code R649-3-3;

(b) No well may be directionally drilled on the Subject lands if any portion of

the producing wellbore will be closer than 460 feet to the South Red V/ash Unit boundary

without complying with Utah Admin. Code R649-3-3 and R649-3-11(1) and (2);

(c) QEP or its successor as unit operator of the South Red Wash Unit agrees

to provide (1) a plat or sketch showing the distance to lease boundaries and the target

location with any application for permit to drill filed for a directionally drilled well and

5

(2) a copy of the annual plan of development and operation for the South Red Wash Unit;

and

(d) The requested suspension of these rules will remain in effect only for as

long as the Subject Lands are committed to the South Red Wash Unit.

9. Evidence presented by QEP indicated that development of the South Red Wash

Unit on 40-acre well density is economical and appropriate under the circumstances.

10. QEP mailed copies of the Request to the last known addresses of record as shown

in the records of the Uintah County Recorder's Office, Utah School and Institutional Trust Lands

Administration, and the Bureau of Land Management, Salt Lake City Office, for all persons

having a legally protected interest in the lands subject to this Request by certified mail, retum

receipt requested.

I 1. Notice of the filing of the Request and of the hearings was duly published in the

Salt Lake Tribune, the Deseret News, the Uintah Basin Standard, and the Vernal Express on

December 29,2015.

12. The Board members present at the hearing unanimously voted to grant the

Request.

CONCLUSIONS OF LA\il

13. Due and regular notice of the time, place, and purpose of the hearings was

properly given in the form and manner as required by law and the rules and regulations of the

Board and Division to all parties whose legally protected interests are affected by the Request.

6

14. The Board has jurisdiction of the parties and of the subject matter pursuant to

Utah Code Ann. $ 40-6-t. et seq.

15. Development in accordance with the South Red V/ash Unit annual plan of

development will conserve the resource and prevent waste.

16. The requested suspension of the default siting and location rules will result in

consistent and orderly development and the greatest ultimate recovery of oil, gas and associated

hydrocarbons, prevent waste, and adequately protect the correlative rights of all affected parties

in the Subject Lands.

17. QEP has sustained its burden of proof, demonstrated good cause, and satisfied all

legal requirements for granting the Request.

ORDER

Based upon these findings of fact and conclusions of law, the Request, and testimony and

other evidence submitted by QEP, the Board hereby orders:

l. The Request in this matter is granted.

2. Utah Admin. Code R649-3-2, R649-3-10, and R649-3-11(l) and (2) are

suspended for the Subject Lands, provided that:

i. The producing interval in any future well may not be located closer than

460 feet to the boundaries of the South Red Wash Unit without obtaining

an exception location from the Division pursuant to Utah Admin. Code

R649-3-3;

7

ii. No well may be directionally drilled if any producing portion of the 460-

foot radius along the projected wellbore intersects with the boundaries of

the South Red Wash Unit without complying with the requirements of

Utah Admin. Code R649-3-11; and

iii. QEP or its successor as unit operator of the South Red V/ash Unit agrees

to provide (1) a plat or sketch showing the distance to lease boundaries

and the target location with any application for permit to drill filed for a

directionally drilled well and (2) a copy of the annual plan of development

and operation for the South Red V/ash Unit.

3. This suspension of these rules will remain in effect only so long as the Subject

Lands are committed to the South Red V/ash Unit.

4. The Board has considered and decided this matter as a formal adjudication,

pursuant to the Utah Administrative Procedures Act, Utah Code Ann. $$ 63G-4-204 through

208, and of the Rules of Practice and Procedure before the Board of Oil, Gas and Mining, Utah

Admin. Code R641.

5. This order is based exclusively upon evidence of record in this proceeding or on

facts officially noted, and constitutes the signed written order stating the Board's decision and

the reasons for the decision, as required by the Utah Administrative Procedures Act, Utah Code

Ann. $ 63G-4-208, and the Rules of Practice and Procedure before the Board of Oil, Gas and

Mining, Utah Admin. Code R641-109; and constitutes a final agency action as defined in the

Utah Administrative Procedures Act and Board rules.

I

6. Notice of Right of Judicial Review by the Supreme Court of the State of

Utah. As required by Utah Code Ann. $ 63-G-4-208(e) through (g), the Board hereby notifies

all parties to this proceeding that they have the right to seek judicial review of this order by filing

an appeal with the Supreme Court of the State of Utah within 30 days after the date this order is

entered. Utah Code Ann. $ 63G-4-401(3)(a) and a03.

7. Notice of Right to Petition for Reconsideration. As an alternative, but not as a

prerequisite to judicial review, the Board hereby notifies all parties to this proceeding that they

may apply for reconsideration of this order. Utah Code Ann. $ 63G-4-302. The Utah

Administrative Procedures Act provides:

(1) (a) V/ithin 20 days after the date that an order is issued forwhich review by the agency or by a superior agency under Section6346b-12 is unavailable, and if the order would otherwiseconstitute final agency action, any party may file a written requestfor reconsideration with the agency, stating the specific groundsupon which relief is requested.(b) Unless otherwise provided by statute, the filing of the request isnot a prerequisite for seeking judicial review of the order.(2) The request for reconsideration shall be filed with the agencyand one copy shall be sent by mail to each party by the personmaking the request.(3Xa) The agency head, or a person designated for that pulpose,shall issue a written order granting the request or denying therequest.(b) If the agency head or the person designated for that purposedoes not issue an order within 20 days after the filing of therequest, the request for reconsideration shall be considered to bedenied. Id.

The Rules of Practice and Procedure before the Board of Oil, Gas and Mining entitled

"Rehearing and Modification of Existing Orders" state:

9

Any person affected by a final order or decision of the Board mayfile a petition for rehearing. Unless otherwise provided, a petitionfor rehearing must be filed no later than the l0th day of the monthfollowing the date of signing of the final order or decision forwhich the rehearing is sought. A copy of such petition will beserved on each other party to the proceeding no later than the 15thday of that month. Utah Admin. Code R641-110-100.

The Board hereby rules that should there be any conflict between the deadlines provided

in the Utah Administrative Procedures Act and the Rules of Practice and Procedure before the

Board of Oil, Gas and Mining, the later of the two deadlines shall be available to any party

moving to rehear this matter. If the Board later denies a timely petition for rehearing, the

aggrieved party may seek judicial review of the order by perfecting an appeal with the Utah

Supreme Court within 30 days thereafter.

8. The Board retains exclusive and continuing jurisdiction of all matters covered by

this order and of all parties affected thereby; and specifically, the Board retains and reserves

exclusive and continuing jurisdiction to make further orders as appropriate and authorized by

statute and applicable regulations.

9. The Chairman's signature on a facsimile copy of this order shall be deemed the

equivalent of a signed original for all purposes.

DATED this lSth day of March,20l6.

STATE OF UTAHBOARD OF GAS, AND MINING

By:

(

10

Gill, Jr.,


I hereby certify that on this lSth day of March,2016,I caused a true and correct copy of

the foregoing FINDINGS OF FACT, CONCLUSIONS OF LAW, AND ORDER for Docket

No. 2016-001, Cause No. 187-11, to be mailed by Email or via First Class Mail with postage

prepaid, to the following:

Mark L. BurghardtWilliam E. WardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Email: [email protected]: [email protected]

Attorneys þr Petitioner QEP EnergtCompany

Steven F. AlderJohn Robinson Jr.Melissa L. ReynoldUtah Attorney General's OfficeNatural Resources Division1594 W. North Temple, Suite 300Salt Lake City, Utah 84116Email: [email protected]: [email protected]: [email protected]


United States of Americat/oBureau of Land ManagementUtah State Office440 West 200 South, Suite 500Salt lake City, UT 84101



Laura Rippentrop

QEP Energy Company1050 lTth Street, Suite 500Denver, CO 80265

Mike JohnsonUtah Attorney General's OfficeNatural Resources Division1594 W. North Temple, Suite 300Salt Lake City, Utah 84116Email : mikej ohnson@utah. gov



EOG Resources,Inc.600 17th Street, Suite 1000NDenver, CO 80202

11

V/endy L. Sacerdoti TrustBank of Texas, N.A. Trustee7600 W. Northwest HighwayDallas, TX75225-2201


Barbara A. Stone TrustBank of Texas, N.A. Trustee7600 V/. Northwest HighwayDallas, TX75225-2201


[Address updated I 18 12016l


John Brinkerhoff943 Purcell CourtKelowna, Columbia VIV lN7Canada

Noble Energy Production, Inc1625 Broadway,#2200Denver, CO 80202

Walton Oil Company,LLc575 East 4500 South, Suite B-260Salt Lake City, UT 84107








Robert W. Brinkerhoff, Jr2210 530 8th Avenue SWCalgary, Alberta T2P 3S8Canada

[Undeliverable]


[Undeliverablel

Russell T. Rudy Energy, LLC5701 Woodway Drive, Suite222Houston, TX77057-1505


12


Ralph E. SmithP.O. Box 21 6 Balboa IslandNewport Beach, CA92662[Undeliverable]

John A. Hopwood1649 Westcliff DriveNewport Beach, CA92660IUndeliverable]

Allan L. "Buck" Olsen2824Fort Silver DriveBullhead City, AZ 86429


Laura B. PalmerBox 2, Site 25RR8 LCD 8

Calgary, Alberta T3J 2T9


Marjorie MinorVandever House3102 South Juniper AvenueBroken Arrow, OK 74012

[Undeliverablel


[Undeliverable]


[Undeliverablel

Teckla Oil Co., LLC1712 SE 35th LaneOcala, FL3447l[Undeliverable]

Helen Kathleen Mayo43675 Alcoba DriveTemecula, C A 92592-437 3

RV/B Oil CorporationP.O. Box 637Sedalia, CO 80135-0637


Warren L. Jacobs1494 South 2900 EastSpanish Fork, UT 84660

[Undeliverablel

\.^.Q; ,1,*C^.T c.--./ "/

13

of 1



STATE OF UTAH





2, R649-3-10, AND R649-3-11(1) AND (2) FOR










Docket No. 2016-001

Cause No. 187-11

INDEX OF PLEADINGS

NO. PARTY DATE DESCRIPTION

1. QEP Energy Company 12/10/2015 Request for Agency Action

2. QEP Energy Company 12/10/2015 Certificate of Service

3. QEP Energy Company 12/10/2015 Motion to Designate a Hearing Examiner and

Set the Date and Place of Hearing

4. QEP Energy Company 01/07/2016 Motion to Allow QEP Energy Company's

Witnesses to Participate Electronically

5. QEP Energy Company 01/07/2016 [Proposed] Order Granting QEP Energy

Company's Motion to Allow Witnesses to

Participate Electronically

6. Utah Division of Oil,

Gas and Mining

02/23/2016 Hearing Examiner’s Recommended Findings

of Fact and Conclusions of Law

7. QEP Energy Company 03/15/2016 Proposed Findings of Fact, Conclusions of

Law, and Order

FffifuHÞßfrü r 0 20t5

.$ËGRËTARY, BMRDOFOIL, GAS & MNING


STATE OF UTAH

IN rsp MATTER oF THE Requesr ron Ac¡NcyAcuoN or QEP ENpncy Covrp¡.Ny FoR ANORDER SUSPENDING THE APPLICATION OF

Ureu Aotr4N. Cop¡ R649-3-2, R649-3-10,¿,Np R649-3-11(1) aNo (2) FoR rHE SournRep V/esu UNrr, covERrNG rup SZzN% nNoS% or SpcrroN 1, .rr,l on S¡crroNs 12 nxo13, RNo rse N% ¿.Nr SE% op SscrroN 24,TowNssrp 8 Souru, ReNce 22 E¡sr, SLI\4,AND ALL or SecrroNs 3, 4, 6-10, 13-24, tunEYiNEY4 eNo S% or SpcuoN 5, tuE S% opSpcrtoN ll, lNo utp. SYz of SecuoN 12,

TowrlsHrp 8 Sours, RaNcB 23 E¡.sr, SLM,UrNres CouNrv, Ur¡.H.

Section l:Section 12:

Section 13:

Section 24:


REQUEST FORAGENCY ACTION

Docket No.

Cause No.

QEP Energy Company ("QEP"), by and through its attorneys, Holland &, Hart LLP,

pursuant to Utah Code Ann. $$ 40-6-5(3)(b) and Utah Admin. Code R649-2-l andR649-2-3,

hereby requests the Board of Oil, Gas and Mining (the "Board") to enter an order suspending the

application of Utah Admin. Code R649-3-2,R649-3-10, and R649-3-11(1) and (2) for the Sourh

Red V/ash Exploratory Unit ("South Red Wash Unit"), covering the following lands:

Townshio 8 South- Ranse 22 East. SLM

Section 3:Section 4:Section 5:Section 6:Section 7:

SL/]\\Y2, SY2

AllAllN%,SEY4

AilAllEt/21:lE%,5%AllAll

juliecarter

Typewritten Text

2016-001

juliecarter

Typewritten Text

187-11

Section 8:

Section 9:Section l0:Section 1 l:Section 12:

Section 13:

Section l4:Section 15:

Section 16:

Section 17:

Section l8:Section 19:

Section 20:Section 2l:Section 22:Section 23:Section 24:

AllAilAllS%

S%

AllAllAllAllAllAilAllAllAllAllAllAll

(the "Subject Lands").

In support of its Request for Agency Action (the "Request"), QEP respectfully states and

represents that:

1. QEP is a Texas Corporation in good standing, with its principal place of business

in Denver, Colorado. QEP is qualified to do business in Utah and is fully and appropriately


2. The Board has jurisdiction over the parties and of the subject matter of this

Request pursuant to Utah Code Ann. $ 40-6-1, et seq,



Federal Leases

UTU-385UTU-61396UTU-7t423

2

UTU-71424UTU-72027UTU-73020UTU-73021UTU-7368sUTU-74425UTU-76830UTU-76831UTU-77290UTU-78228UTU-81655UTU-81656UTU-143276

State of Utah Lease

ML-47212.

QEP owns 100% of the working interest in these leases

4. The South Red V/ash Unit (UTU-89161X) was approved on June 9, 2013, and

consists of all of the Subject Lands, totaling 15,382.14 acres. The unit is administered by the

United States Bureau of Land Management ("BLM"), and QEP serves as the unit operator.

There are no uncommitted tracts within the unit. According to Section 16 of the South Red

Wash Unit Agreement, all operations must be conducted in a manner that will promote

conservation and prevent waste.

5. Well location and density patterns within the South Red Wash Unit are

determined by the Unit Agreement and the annual plan of development and operation, which are

approved by the BLM. An application for permit to drill in the South Red Wash Unit must be

approved by the BLM and the Utah Division of Oil, Gas and Mining (the "Division").

6. These Subject Lands are not covered by a.ry spacing order of the Board and are,

therefore, subject to the general statewide siting and location rule in Utah Admin. Code R649-3-

3

2 and directional drilling rules in Utah Admin. Code R649-3-10 and R649-3-11. Under these

rules, each well is to be located within a 400-foot "windo\ry" in the center of each 40-acre

governmental quarter-quarter section, or substantially equivalent lot or tract, and no well may be

located closer than 920 feet from an existing well drilled to or capable of producing oil and gas

from the same pool. The default siting and location rules allow an approximate 4O-acre well

density pattern.

7. Based on a proposed 40-acre density pattern, there is potential for a total of 343

additional wells within the Unit. Of these proposed locations, it is anticipated that at least 32

would require approval of an exception location, as required under Utah Admin. Code R649-3-3,

since the wells cannot be located within the allowed "window" due to either topographical

conditions or because the surface location would conflict with existing surface uses.

8. In order to allow the greatest flexibility for orderly development and to account

for surface and geologic conditions, as well as for the foregoing considerations, QEP is

requesting the Board to suspend Utah Admin. Code R649-3-2, R649-3-10, and R649-3-11

provided, however, to ensure protection of the correlative rights of owners surrounding the

Subject Lands, QEP agrees that:


460 feet from South Red Wash Unit boundary without obtaining an exception location

from the Division in accordance with Utah Admin. Code R649-3-3;

(b) No well may be directionally drilled on the Subject Lands if any portion of

the producing wellbore will be closer than 460 feet to the South Red Wash Unit boundary

without complying with utah Admin. code R649-3-3 and R649-3-11(1) and (2);

4


to provide (1) a plat or sketch showing the distance to lease boundaries and the target

location with any application for permit to.drill filed for a directionally drilled well and


and



9. The Board has approved suspension ol'these default rules on multiple occasions

for federal exploratory units. Specifically, in Cause No. 191-06 (Ouray Park II Federal

Exploratory Unit), Cause No. 259-01 (River Bend and Little Canyon Units), Cause No. 268-01

(Love Unit), and Cause No. 173-25 (Natural Buttes Unit), the Board suspended these general

rules to allow development under the unit agreements and plans of development for these federal

exploratory units.

10. QEP believes that the requested order and the development in accordance with the

South Red Wash Unit Agreement and the annual plan of development and operations will allow

for orderly development, will prevent waste, will adequately protect the correlative rights of all

affected parties, and isjust and reasonable.

I 1. QEP is filing, concurrent with the filing of this Request, a separate certificate of

mailing which lists all persons known to QEP whose legally protected interests in the Subject

Lands will be affected by this Request, together with their last known addresses. Said list

contains the names and addresses of known mineral owners (lessors), overriding royalty or other

5

production interest owners, working interest owners (lessees) and active producers and operators.

There are no respondents or adverse parties known at this time to QEP.

12. QEP is also filling a motion to designate a hearing examiner to take evidence and

make recommended findings of fact and conolusions of law to the Board.

WHEREFORE, QEP respectfully requests that:

l. This Request be placed on the Board's docket, and pending approval of the

motion to designate a hearing examiner, be scheduled at the Board's next regularly scheduled

hearing after the hearing examiner has conducted an evidentiary hearing and issued

recommended findings of fact and conclusions of law to the Board.

2. Due notice of such hearings be given as provided by law.

3. Following said hearings, the Board enter an order:

(a) Suspending Utah Admin. Code R649-3-2, R649-3-10, and R649-3-11(1)

and (2) for the Subject Lands;

(b) Providing that the producing interval in any future well may not be located

closer than 460 feet to the boundaries of the South Red Wash Unit without obtaining an

exception location from the Division pursuant to Utah Admin. Code R649-3-3;

(c) Providing that no well may be directionally drilled if any producing

portion of the 460 foot radius along the projected wellbore intersects with the boundaries of the

South Red Wash Unit without complying with the requirements of Utah Admin. Code R649-3-

I l;

6

(d) Providing that QEP or its successor as unit operator of the South Red

Wash Unit agrees to provide (1) a plat or sketch showing the distance to lease boundaries and the

target location with any application for permit to drill filed for a directionally drilled well and (2)

a copy of the annual plan of development and operation for the South Red Wash Unit; .

(d) Providing the requested suspension of these rules will remain in effect

only for as long as the Subject Lands are committed to the South Red Wash Unit;

(e) Making such findings and orders in connection with this Request as it

deems necessary; and

(Ð Providing for such other and further relief as may be just and equitable

under the circumstances.

Respectfully submiued this 1Oth day of December, 2015.

QEP ENERGY COMPANY

L. BurghardtWilliam E. WardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Telephone: (801) 799-5800Attorneys þr Petitioner, QEP Energy Company

Address of OEP:

QEP Energy CompanyAttention: Laura Rippentrop1050 lTth Street, Suite 800Denver, CO 80265Telephone: (303) 640-4287

By

7

8289028 I

BEFORE THE BOARD Or,OIL, GAS AND MINTNGDEPARTMENT OF NATURAL RESOURCES

STATE OF UTAH

FITEDüEt t 0 20t5

BOARDOF

Iu ru¡ MATTER oF THE Reeuesr ¡oR AcnNcyAcrroN or QEP ENency Corr¿pRNy FoR ANoRDER SUSPENDING THE APPLICATIoN op UTaHAovrN, Cooe R649,3-2, R649-3-10, AND R649-3_11(1) nm (2) ron rHB SourH Rso WasH UNrr,covERrNG rtßS%N% nup S% or S¡crrox l, Rr,Lop Spcrrons 12 eNo 13, RNo rnn N% eNp SE%or SecnoN 24, TowNssrp 8 Sourn, RcNcp 22ERSI, SLM, AND ALL or SscrloNs 3,4, 6-10, l3-24, ranEYÌ.{E% nuo S% on S¡crroN 5, run Syzor SBcnoN 11, AND THE S% of SncrroN 12,TowNsurp I SourH, RtNce 23 ERSI, SLM,Un'¡reH CoLnvry, UIRH.

United States of America'/o Bureau of Land ManagementUtah State Office440 West 200 South, Suite 500Salt lake City, UT 84101

Michael S. Johnson, Esq.Assistant Attorney GeneralAttorney for the Board of Oil, Gas andMining1594 North West Temple, Suite 300Salt Lake City, UT 84114


CERTIF'ICATE OF SERVICE

Docket No. 201 1

QEP ENERGY COMPANY ("QEP"), acting by and through its attomeys, Holland &Hart LLP, hereby certifies that the following constitutes, to the best of eEp's knowledge, a listof all persons whose "legally protected interests" will or may be affected by eEp,s Request forAgency Action dated December 10, 2015:

Cause No. 187-


Steven F. Alder, Esq.Assistant Attorney GeneralAttorney for the Division of Oil, Gas andMining1594 North West Temple, Suite 300Salt Lake City, UT 84114

EOG Resources, Inc.600 lTth Street, Suite 1000NDenver, CO 80202


D.J. Stone exempt Trust,FBO Patricia S. HolmanP.O. Box 15135Seattle, V/A 98 1 1 5-01 35


The Ballard Company671Elk CircleKeystone, CO 80435


John Brinkerhoff943 Purcell CourtKelowna, Columbia VIV 1N7

Noble Energy Production, Inc.1625 Broadway,#2200Denver, CO 80202

Walton Oil Company,LLC575 East 4500 South, Suite B-260Salt Lake City, UT 84107






salt Lake city, uT 84109




Robert W. Brinkerhoft Jr2210 530 8th Avenue SWCalgary, Alberta T2P 3S8


Russell T. Rudy Energy, LLC5701 V/oodway Drive, Suite222Houston, T){77057-1505




2

John A. Hopwood1649 V/estcliff DriveNewport Beach, CA92660



Laura B. PalmerBox 2, Site 25

RR8 LCD 8



8301827 I

Teckla Oil Co., LLC1712SE 35th LaneOcala, FL3447l

Helen Kathleen Mayo43675 Alcoba DriveTemecula, CA 92592-437 3



Respectfully submitted this l0th day of December,2}IÍ

HOLLAND & HART LLP

By: L

J


STATE OF UTAH

IN rsp MATTER oF THE Reqursr roR AcBNcvAcrroN on QEP ENency CovrpeNv FoR ANORDER SUSPENDING THE APPLICATION OF

UraH AoN¿rNr. Cooe R649-3-2, R649-3-10,nNo R649-3-ll(1) eNo (2) FoR rHE SouruR¡p V/esu UNrr, covERrNG rup S%N% aNoS% or SecrroN l, ALL or SecuoNs 12 nNo13, RNo rue N% eNo SE% o¡ SncrroN 24,TowNsHrp 8 Souru, R¡.Ncp 22 Etsr, SLM,AND ALL on SecrroNs 3, 4, 6-10, 13-24, rrlr..E/rNE/4 eNp S% or Secrtou 5, tue S% c>r

SecrroN 11, RNo tuø S% of SecnoN 12,

TowNssrp 8 Souru, ReNce 23 Eesr, SLM,UnrRu CoLrNrv, Urnn.

MOTION TO DESIGNATE A HEARINGEXAMINERAND SET THE DATE AND

PLACE OF HEARING

Docket No.

Cause No.

QEP Energy Company ("QEP"), by and through its attorneys, Holland &, Hart, LLP,

pursuant to Utah Admin. Code R641-105-300 and R64l-113-100, hereby moves the Utah Board

of Oil, Gas and Mining for an order designating a hearing examiner to take evidence and

recommend findings of fact and conclusions of law to the Board. QEP proposes that the hearing

examiner conduct a public hearing at the Utah Department of Natural Resources, 1594 West

North Temple, Salt Lake City, Utah to receive evidence in this matter on January 19,2016, at

l0:00 a.m., or on such other date and time as is mutually acceptable to the hearing examiner and

QEP.

Respectfully submitted this lOth day of Ðecember,2015.

QEP ENERGY COMPANY

ByMark L. BurghardtWilliam E. V/ardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Telephone: (801) 799-5800Attorneys for Petitioner, QEP Energ,, Company

juliecarter

Typewritten Text

2016-001

juliecarter

Typewritten Text

187-11

Address of OEP:

QEP Energy CompanyAttention: Laura Rippentrop1050 17th Street, Suite 800Denver, CO 80265Telephone: (303) 640-4287

2


The undersigned hereby certifies that on this 10th day of December, 2015, a true and

correct copy of the foregoing MOTION TO DESIGNATE A HEARING EXAMINER AND

SET THE DATE AND PLACE OF HEARING was mailed, postage prepaid, to the following:

United States of America'/o Bureau of Land ManagementUtah State Offrce440 V/est 200 South, Suite 500Salt lake City, UT 84101



Wendy L. Sacerdoti TrustBank of Texas, N.A. Trustee7600 V/. Northwest HighwayDallas, TX75225-2201


BarbaraA. Stone TrustBank of Texas, N.A. Trustee7600 W. Northwest HighwayDallas, TX75225-2201

The Ballard Company671 Elk CircleKeystone, CO 80435


Steven F. Alder, Esq.Assistant Attorney GeneralAttorney for the Division of Oil, Gas andMining1594 North V/est Temple, Suite 300Salt Lake City, UT 84114


D.J. Stone Exempt Trust,FBO David K. Stone420 SantaRita AvenueMenlo Park, CA 94025-5828





J

Kathryn Hamm Chase

965l MillridgeDallas, TX75234

John Brinkerhoff943 Purcell CourtKelowna, Columbia VlV 1N7






John A. Hopwood1649 V/estcliff DriveNewport Beach, CA92660



LauraB. PalmerBox 2, Site 25RR8 LCD 8



Robert W. Brinkerhoff, Jr2210 530 8th Avenue SWCalgary, Alberta T2P 3S8


Russell T. Rudy Energy, LLC5701 V/oodway Drive, Suite222Houston, TX77057-1505




Teckla Oil Co., LLCI7I2 SE 35th LaneOcala, FL3447I


RV/B Oil CorporationP.O. Box 637Sedalia, CO 80135-0637


4


8289157 I

Respectfully submitted this lOth day of December, 2015.

By:

5

FILED


STATE OF UTAH

IN rgp MATTER oF THE Reeulsr roR AceNcvAcrroN or QEP EN¡ncy CovpeNv FoR ANORDER SUSPENDING THE APPLICATION OF

Ur¿.s ArurN. Co¡s R649-3-2, R649-3-10,nNo R649-3-11(1) e,No (2) FoR rHE SournReo WA.SFI UNtt, covERINc rgB St/rN% nNoS% o¡ SpcrroN I, ALL or S¡crroNs 12 eNo13, eNo rup N% eNo SE% or SBcrroN 24,TowNsHlp 8 Souru, RnNcp 22 Etsr, SLM,AND ALL o¡ SecrroNs 3, 4, 6-10, 13-24, rrcE%NEY4 eNo S% or SBcrtoN 5, tut Slz opSpcuoN 11, RNo nn S% of SpcrroN 12,

TowNsnrp 8 SourH, RaNcp 23 ERsr, SLM,Ur¡qreFI CoLrNtv, Ureu.

MOTTON TO ALLO\ry QEP ENERGYCOMPANY'S WITNESSES TO

PARTICIPATE ELECTRONICALLY

Docket No. 187-11

Cause No. 2016-001

QEP Energy Company ("QEP"), by and through its attomeys, Holland &. Hart, LLP,

pursuant to Utah Admin. Code R641-100-631, hereby moves the Utah Board of Oil, Gas and

Mining for an order allowing QEP Energy Company's witnesses to participate via video

conference in the public hearing being conducted by a hearing examiner on January 19,2016, at

10:00a.m.

Due to the current economic turmoil in the oil and gas industry, companies are seeking

new and innovative ways to promote efficiency and cut costs. To this end, allowing QEP's

witnesses, which are located in Denver, Colorado, to participate in this hearing electronically

will eliminate the need to travel from Denver to Salt Lake, saving not just the cost of travel, but

the lost productivity due to travel time.

Respectfully submitted this 7th day of January,20l6

QEP ENERGY COMPANY

ByL.

William E. V/ardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Telephone: (801) 799-5800Attorneys þr Petitioner, QEP Energt Company

Address of OEP

QEP Energy CompanyAttention: Laura Rippentrop1050 17th Street, Suite 800Denver, CO 80265Telephone: (303) 640-4287

2


The undersigned hereby certifies that on this 7th day of January, 2016, a true and correct

copy of the foregoing MOTION TO ALLO\ry QEP ENERGY COMPANY'S WITNESSES

TO PARTICIPATE ELECTRONICALLY was mailed, postage prepaid, to the following:

United States of America"/o Bureau of Land ManagementUtah State Ofhce440 V/est 200 South, Suite 500Salt lake City, UT 84101



Steven F. Alder, Esq.Assistant Attorney GeneralAttorney for the Division of Oil, Gas and

Mining1594 North'West Temple, Suite 300Salt Lake City, UT 84114

Respectfully submitted this 7th day of J ,2016.

By

8380139 I

J


STATE OF'UTAH

FILED

iN rnp MATTER oF THE Rrquesr ¡oR AceNcyAcrrox on QEP ENeRcy CovpnNy FoR ANORDER SUSPENDING THE APPLICATION OF

Urns ArN¿D,r. Cooe R649-3-2, R649-3-10,nNo R649-3-11(1) nNn (2) FoR rHE SouluRpo Wtsn Uurr, covERrNc rne S%N% nxoS% or Spcr¡oN 1, nLL or SecnoNs 12 nNo13, RNo rHn N% nNo SE% op Secuox 24,TowNsurp 8 Sourn, RnNce 22 E¡sr, SLM,AND ALL or SecuoNS 3, 4, 6-10, 13-24, rutEYrNE|i¡ nN¡ S% o¡ SpcuoN 5, rHe S% oeSncrroN 11, nNo rue S% of SecrroN 12,Towxsnrp 8 Souru, RlNc¡ 23 Ensr, SLM,UnreH CouNty, Ureg.

IPROPOSEDI

ORDER GRANTING QEP ENERGYCOMPANY'S MOTION TO ALLOW

WITNESSES TO PARTICIPATEELECTRONICALLY

Docket No. 187-11

Cause No. 2016-001


Motion to Allow Witnesses to Participate Electronically hereby enters its Order granting this

motion and hereby allows qEP's witnesses to participate via video conference in the January 19,

20l6hearing being conducted by a hearing examiner,

Issued this _ day of January, 2016.


ByRuland Gill, Jr.Chairman

CERTIF'ICATE OF SERVICE

The undersigned hereby certifies that on this 7th day of January, 2A16, a true and correct

copy of the foregoing ORDER GRANTING QEP ENERGY COMPANY'S MOTION TO

ALLO\ry WITNESSES TO PARTICIPATE ELECTROMCALLY was mailed, postage

prepaid, to the following:

United States of Americat/oBureau of Land ManagementUtah State Offrce440 West 200 South, Suite 500Salt lake City, UT 84101



Steven F. Alder, Esq.Assistant Attorney GeneralAttorney for the Division of Oil, Gas andMining1594 North West Temple, Suite 300Salt Lake City, UT 84114

Respectfully submitted this 7th day of ,20t6

By:

8380248 r

2

IN rsp MATTER oF THE R¡euesr ¡oR AceNcyAcuoN or QEP ENeRcy CotrpeNy FoR ANORDER SUSPENDING THE APPLICATION OF

Uran ApN¿rN. Cooe R649-3-2, R649-3-10,eNn R649-3-11(1) nNo (2) FoR rHE SournR¡o Wess UNrr, covERrNc rue SZzN% nNoS% or SpcrroN 1, ALL or Spcrrous 12 aNt13, rNp rnp N% eNo SE% or SpcrroN 24,TowNsulp 8 SourH, ReNce 22 Etsr, SLM,AND ALL or SecuoNS 3, 4, 6-10, 13-24, runEt/zNEy4 eNo S% o¡ SecrtoN 5, rHe SV, orSpcuoN 11, RNo rse S% of SecroN 12,TowNsnrp 8 SourH, Rexce 23 Easr, SLM,Unqrng CouutY, UrnH.

FILEDFEB 2 3 2016

SEORETAffY, BOANOOFOL, GAS û MNNG

HEARING EXAMINER'SRECOMMENDED FINDINGS OF FACT

AND CONCLUSIONS OF LA\il

Docket No.2016-001

Cause No. 187-11

BEFORE THE BOARD OF OIL, GAS AND MININGDEPARTMENT OF' NATURAL RESOURCES

STATE OF UTAH


Division of Oil, Gas and Mining (the "Division"), as Hearing Examiner designated by the Utah

Board of Oil, Gas, and Mining (the "Board"), otr Tuesday, January 19,2016, at approximately

10:00 a.m. in the Auditorium of the Utah Department of Natural Resources, 1594 West North

Temple, Salt Lake City, Utah. The Hearing Examiner was represented by John Robinson, Jr.,

Assistant Attorney General.

Testifuing via video conference from Denver, Colorado, on behalf of Petitioner, QEP

Energy Company, was Theresa Chatman, Landman, Aaron Bazzel| Associate Geologist, and


Holland &Hart,LLP.

Attending on behalf of the Division of Oil, Gas and Mining (the "Division") was Dustin

Doucet, Petroleum Engineer. The Division was represented by Steven F. Alder, Assistant

Attorney General.

The Hearing Examiner, having considered the testimony presented and the exhibits

received into evidence at the hearing, hereby recommends the following findings of fact and

conclusions of law:

FINDINGS OF FACT

l. QEP is a Texas Corporation in good standing, with its principal place of business

in Denver, Colorado. QEP is qualihed to do business in Utah and is fully and appropriately


2. The Request for Agency Action covers the following lands:


Township 8 South. Range 23 East" SLM

Section l:Section 12

Section 13

Section 24

Section 3:Section 4:Section 5:Section 6:Section 7:Section 8:

Section 9:Section 10

Section I ISection 12

Section 13

SI/2NY2,SY2AllAllNY2,SEY4

AllAllE|/21'{'EY4,SY2

AllAllAllAllAllSY,SY"All

2

Section 14: AllSection l5: AllSection 16: AllSection 17: AllSection l8: AllSection 19: AllSection 20: AllSection 2l: AllSection 22: AllSection 23: AllSection 24: All

(the "Subject Lands").



Federal Leases

UTU-385UTU-61396UTU-71423UTU-71424UTU-72027UTU-73020UTU-73021UTU-73685UTU-74425UTU-76830UTU-76831UTU-77290UTU-78228UTU-81655UTU-81656UTU-|43276

State of Utah Lease

ML-47212.

QEP owns 100% of the working interest in these leases.

J

4. The South Red Wash Exploratory Unit (UTU-9021lX) ("South Red V/ash Unit")

was approved on June 9, 2013, and consists of all of the Subject Lands, totaling 15,382.14 acres.

The unit is administered by the United States Bureau of Land Management ("BLM"), and QEP

serves as the unit operator. There are no uncommitted tracts within the unit. According to

Section 16 of the South Red Wash Unit Agreement, all operations must be conducted in a manner

that will promote conservation and prevent waste.

5. The Subject Lands have not been previously spaced by the Board. The wells on

the Subject Lands have been located in accordance with the Division and the Board's general

rules, including the well location and siting rules contained in Utah Admin. Code R649-3-2 and

directional drilling rules in Utah Admin. Code R649-3-10 and R649-3-11. Under these rules,

each well is to be located within a 400-foot o'window" in the center of each 40-aqe governmental

quarter-quarter section, or substantially equivalent lot or tract, and no well may be located closer

than 920 feet from an existing well drilled to or capable of producing oil and gas from the same

pool. The default siting and location rules allow an approximate 4O-acre well density pattern.

6. Well density and location pattems within the South Red Wash Unit are

determined in accordance with the terms of the South Red Wash Unit Agreement and the annual

plan of development approved by the BLM.

7. Based on a proposed 4O-acre density pattern, there is potential for a total of 343

additional wells within the South Red Wash Unit. Of these proposed locations, it is anticipated

that atleast 32 of the wells would require approval of an exception location under Utah Admin.

Code R649-3-3, since the wells cannot be located within the allowed "window" due to the

topography in portions of the Subject Lands.

4

8. In requesting that the Board suspend Utah Admin. Code R649-3-2, R649-3-10,

and R649-3-11 for the lands located in the South Red Wash Unit, QEP has agreed to the

following conditions:


460 feet from the South Red Wash Unit boundary without obtaining an exception

location from the Division in accordance with Utah Admin. Code R649-3-3;

(b) No well may be directionally drilled on the Subject lands if any portion of

the producing wellbore will be closer than 460 feet to the South Red Wash Unit boundary

without complying with Utah Admin. Code R649-3-3 and R649-3-l l(1) and (2);


to provide (l) a plat or sketch showing the distance to lease boundaries and the target

location with any application for permit to drill filed for a directionally drilled well and


and



9. Evidence presented by QEP indicated that development of the South Red Wash

Unit on D-acre well density is economical and appropriate under the circumstances.

10. QEP mailed copies of the Request to the last known addresses of record as shown

in the records of the Uintah County Recorder's Office, Utah School and Institutional Trust Lands

Administration, and the Bureau of Land Management, Salt Lake City Office, for all persons

5

having a legally protected interest in the lands subject to this Request by certified mail, return

receipt requested.

11. Notice of the frling of the Request and of the hearing was duly published in the

Salt Lake Tribune, the Deseret News, the Uintah Basin Standard, and the Vernal Express on

December 29,2015.

CONCLUSIONS OF LAW

12. Due and regular notice of the time, place, and purpose of the hearing was properly

given in the form and manner as required by law and the rules and regulations of the Board and

Division to all parties whose legally protected interests are affected by the Request.

13. The Board has jurisdiction of the parties and of the subject matter pursuant to

Utah Code Ann. $ 40-6-1. et seq.

14. Development in accordance with the South Red Wash Unit annual plan of

development will conserve the resource and prevent waste.

15. The requested suspension of the default siting and location rules will result in

consistent and orderly development and the greatest ultimate recovery of oil, gas and associated

hydrocarbons, prevent waste, and adequately protect the correlative rights ofall affected parties

in the Subject Lands.

16. QEP has sustained its burden of proof, demonstrated good cause, and satisfied all

legal requirements for granting the Request.

HEARING EXAMINER'S RECOMMENDATION

6

I, John C. Rogers, Associate Director of the Division, acting under Utah Admin. Code

R641-l l3-100, et seq., as the Board's duly-appointed Hearing Examiner in the above-captioned

matter, held an evidentiary hearing on the record on January 19,2015, at approximately 10:00

4.m., in the Auditorium of the Utah Department of Natural Resources, 1594 North Temple, Salt

Lake City, Utah. Based on the evidence received in the record, and based on applicable law, I

hereby recommend that the Board adopt the foregoing "Hearing Examiner's Recommended

Findings of Fact and Conclusions of Law."

DATED this A3 day of Febfrtry, 2016.

By: &

Rogers,sion of Oil, Mining

Oil and Gas

848'1226 1

7

FILEDMAR I 5 2016

SECRETAHY, BOARDOFOlL, GAS e i'illìllNc


STATE OF UTAH

IN rue MATTER oF THE Requesr ¡oR AcENcyAcrroN or QEP ENency CovpeNy FoR AN

ORDER SUSPENDING THE APPLICATION OF

UraH AourN. Cope R649-3-2, R649-3-10,aNo R649-3-11(1) aNo (2) FoR rHE SournRro Wesu UNrr, covERrNG ruE SZzN% aNoS% op SscrroN 1, RLL op SecrroNs 12 eNp13, eNo rHs N% eNp SE% o¡ SecrroN 24,TowNsulp I Sourn, RaNce 22 Ensr, SLM,AND ALL on SecrroNs 3, 4, 6-10, 13-24, rlneEY;/.\E% aNo S% or SecuoN 5, rnr S% orSecrroN 11, RNn rup S% of SpcrroN 12,TowNssrp 8 Sourrr, Rnxcp 23 ERsr, SLM,UnlrRH CouNtv, Ureu.

PROPOSED F'INDINGS OF FACT,CONCLUSIONS OF LAW' AND ORDER

Docket No.2016-001

Cause No. 187-11


Division of Oil, Gas and Mining ("Division"), as Hearing Examiner designated by the Utah

Board of Oil, Gas, and Mining (Board"), on Tuesday, January 19,2016, at approximately l0:00

a.m. in the Auditorium of the Utah Department of Natural Resources, 1594 West North Temple,

Salt Lake City, Utah. The Hearing Examiner was represented by John Robinson, Jr., Assistant

Attorney General.

Testifuing via video conference from Denver, Colorado, on behalf of Petitioner, QEP

Energy Company, was Theresa Chatman, Landman, Aaron Bazzell, Associate Geologist, and


Holland &.Hart,LLP.

New BEFORE THE BOARD OF OIL, GAS AND MINING DEPARTMENT … · 2016. 7. 19. · BEFORE THE BOARD OF...

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