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

STATE OF UTAH

FILEDilAR r 0 20t5

SECREIARY, BCNruOFotL,0A8 t mMNO

IN rnp MATTER oF THE Rrquesr ¡on Ace¡¡cvAcuoN on QEP ENsRcv CovpeNv FoR AN

oRDER EXTENDING THE BoARo's OnlenENTERED rN Cnuse No. 191-06, wHrcHSUSPENDED THE APPLICATIoN oF UTaTT

Aprr¿rNr. Coos R649-3-2, R649-3-10, AND

R649-3-1 l(l) eNo (2) ron rHE AREA LocArEDwrrHrN THE Ounlv Pen< II FeopRrr-ExpLoR¡.roRy UNtt, To rHE LANDS ADDED

THROUGH EXPANSION OF THE UNIT,

coNSISTING oF ALL oF S¡crtou 1, THE

NE74\IE% oF SecrroN 11, RNo rur. EYz,

NW%, AND rHE NE%SV/% o¡ SecrroN 12,

Towr.rsrrrp 7 SourH, ReNce 20 ERsr, SLM,Unrnu CouNrY, Urau.

REQUEST F'ORAGENCY ACTION

Docket No.2015-015

Cause No. 191-07

On December 5, 2014, the Utah Board of Oil, Gas and Mining issued the Findings of

Fact, Conclusions of Law, and Order in Cause No. 191-06, suspending the application of Utah

Admin. Code R649-3-2, R649-3-10, and R649-3-11(1) and (2) for the Ouray Park II Federal

Exploratory Unit (the "OP il Unit"). Effective January I,2015, the OP II Unit was expanded to

include additional lands located in Uintah County.

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 Fr649-2-l and R649-2-3,

hereby requests the Board to enter an order extending its previous order in Cause No. 19l-06 to

suspend the application of Utah Admin. Code R649-3-2, R649-3-10, and R649-3-l l(1) and (2)

for the area located within the expansion of the OP II Unit, covering the following lands:

Township 7 South. Ranee 20 East. SLM

Section l: Lots 1-4, SI/À{Y2, S% [All]Section I l: NE74NE%Section 12: EY2,NW|/4, NE%SW%

(containing 1,20L28 acres, more or less)

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

bonded with all Federal and State of Utah agencies.

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.

3. The oil and gas underlying the subject lands is owned by the United States of

America and leased under federal lease UTU-88140. QEP owns a majority of the working

interest in this lease.

4. The OP II Unit (UTU-9021lX) was approved on June 2,2014, and was expanded

effective January I,2015, to include all of the subject lands, consisting of 1,201.28 acres, more

or less. The unit is administered by the United States Bureau of Land Management ("BLM"),

and QEP seryes as the Unit Operator. There are no uncommitted tracts within the Unit.

According to Section 16 of the OP II Unit Agreement, all operations must be conducted in a

manner that will promote conservation and prevent waste.

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5. V/ell location and density patterns within the OP II Unit are determined by the OP

II Unit Agreement and the annual plan of development and operation, which are approved by the

BLM. An application for permit to drill in the OP II Unit must be approved by the BLM and the

Utah Division of Oil, Gas and Mining.

6. The subject lands are not covered by any spacing order of the Board and are,

therefore, subject to the general statewide siting and location rule 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 "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 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 28

additional wells within the expansion of the OP II Unit. Of these proposed locations,

approximately l0 of the wells would require that an exception location approval be obtained

pursuant to Utah Admin. Code R649-3-3 because 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 such as irrigation works or agricultural 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 extend its prior order in Cause No. 191-06 and suspend Utah Admin. Code

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R649-3-2, R649-3-10, and R649-3-11 to cover the expansion of the OP II Unit, provided

however, to ensure protection of the correlative rights of owners surrounding the Subject lands,

QEP agrees that:

(a) The producing interval of any future wells will not be located closer than

460 feet from the OP II 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 OP II 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 OP II 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 OP II 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 OP II Unit.

9. QEP believes that the requested order and the development in accordance with the

OP il 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.

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10. 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 owner (lessor), overriding royalty or other

production interest owners, working interest owner (lessee) and active producers and operators,

if any. There are no respondents or adverse parties known at this time to QEP.

WHEREFORE, QEP respectfully requests that:

1. This Request be set for hearing at the regularly scheduled meeting of the Board on

April22,2015.

2. Due notice of such hearing be given as provided by law.

3. Following said hearing, the Board enter an order:

(a) Extending its Order in Cause No. 191-06 and suspend 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 OP II 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

OP II Unit without complying with the requirements of Utah Admin. Code R649-3-11;

5

(d) Providing that QEP or its successor as unit operator of the OP II 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 OP II 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 OP II 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 submitted this 1Oth day of March, 2015.

QEP ENERGY COMPANY

L. Burghardt

'William E. WardHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101Telephone: (801) 799-5800Attorneys for Petitioner, QEP Energt Company

Address of QEP:

QEP Energy CompanyAttention: Theresa Chatman1050 lTth Street, Suite 500Denver, CO 80265Telephone: (303) 640-42107600912 I

By

6

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

STATE OF UTAH

FILEDMAR t 0 20t5

SECRETARV, BOA,FÐOFoL oAse mffiilG

QEP ENERGY COMPANY ("QEP"), acting by and through its attorneys, Holland &

Hart LLP, hereby certifies that the following constitutes, to the best of QEP's knowledge, a list

of all persons whose "legally protected interests" will or may be affected by QEP's Request for

Agency Action dated March 10,2015:

IN rup MATTER oF THE Rrquesr ron AceucyAcrroN oF QEP ENeRcy Corr¿peNy FoR ANoRDER EXTENDING THE BoARD'S ORogR ENTERED

IN Ceusp No. 191-06, v/HrcH suspENDED THE

AppLrcATroN oF UrAH ADMTN. Cooe R649-3-2,R649-3-10, AND R649-3-11(1) eNo (2) ron rueAREA LocATED wrrHrN THE Ouney Pnnrc IIFeopRel- ExplonRroRy UNrr, To rHE LANDS

ADDED THROUGH EXPANSION OF THE UNIT,coNsrsrrNc oF ALL oF SECTToN 1, rHE NE74NE%oF SECTION 11, AND THE Ey2, NWy4, AND THE

NE%SW% oF SECrroN 12, TowNsHrp 7 Sourrr,ReNce 20 Eesr, SLM, UtNrRu CouNry, UIRH.

United States of Americac/o Bureau of Land ManagementUtah State Off,rce440 West 200 South, Suite 500Salt lake City, UT 84101

Steven F. Alder, Esq.Assistant Attomey GeneralAttorney for the Division of Oil, Gas andMining1594 V/est North Temple, Suite 300Salt Lake City, UT 84114

KFRT, LLCc/oRegistered AgentJ Nicholas Murdock211 S 2nd Street Unit ALaramie, WY 82070-3682

CERTIFICATE OF SERVICE

Docket No.2015-015

Cause No. 191-07

Michael S. Johnson, Esq.Assistant Attorney GeneralAttorney for the Board of Oil, Gas andMining1594 rüVest North Temple, Suite 300Salt Lake City, UT 84114

Josephine Hunter, Surviving Spouse and SoleHeir and Personal Representative for theEstate of Roy A. Hunter3737 Atlantic Avenue 1301

Long Beach, CA 90807

Fred V. Jones, Jr.c/o Nancy Kay Hargrove2400 N Braeswood Blvd., #119Houston, TX77030

LeMoyne H, OdellPMB I993301 South l4th Street, Ste. 16

Abilene, TX79605

Staci L. Owen10381 Tennyson Court'Westminster,

Colorado 8003 1

Nancy Kay Hargrove2400 N Braeswood Blvd., #119Houston, TX77030

Jay D. Rockey22530 Cass AvenueV/oodland Hills, CA 91364

7626677 I

Cynthia H. MurchisonPO Box 1637Dripping Springs, TX 78620

Virginia T. Schulze6239 West Greentree DriveSomis, CA 93066

Viking Resources CorporationP.O. Box 160Deerfield, OH 44411

Respectfully submitted this 1Oth day of March, 2015

HOLLAND & HART LLP

By:

2

FILEDBEFORE THE BOARD OF OIL, GAS AND MINING

DEPARTMENT OF NATURAL RESOURCESSTATE OF UTAH

l,{AR I I 20t5

IN run MATTER oF THE Rrqunsr noR AceNcvAcrroN or QEP ENpRcv CovpRNv FoR AN

oRDER EXTENDINc rHE Bo¡,Rp's OnoenENTERED IN C¿.use No. 191-06, wHICHSUSPENDED THE APPLICATIoN oF UT¡TTApir¿rN. Cope R649-3-2, R649-3-10, AND

R649-3-l 1(1) nNo (2) ron rHE AREA LocArEDv/rrHrN THE Ounav Pnnrc II FpopRRr.ExploRerony UNn, To rHE LANDS ADDED ToTHE UNIT, coNSISTING oF ALL or SectloN l,rne NE7¿NEt/o of Section 11, RNo ruuE/2,NV/%, and the NE%SW% or SecrroN 12,

TowNsHrp 7 Souru, RnNce 20 ERsr, SLM,UNrnH CoLnvrv, Urns.

BCNÐ OFoAs Itiltitc

MOTION TO DESIGNATE A HEARINGEXAMINER AND SET THE DATE AND

PLACE OF HEARING

Docket No. 2015-015

Cause No. 191-07

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

pursuant to Utah Admin. Code R641-105-300 and R641-113-100, 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 rWest

North Temple, Salt Lake City, Utah to receive evidence in this matter on April 15,2015, at 10:00

a.m., or on such other date and time as is mutually acceptable to the hearing examiner and QEP.

Respectfully submitted this 18th day of March, 2015.

QEP ENERGY COMPANY

Lk L. Burghardt

William E. WardHOLLAND & HART, LLP222 Soulh Main Street, Suite 2200Salt Lake City, UT 84101Telephone: (801) 799-5800Attorneys for Petitioner, QEP Energt Company

By

Address of OEP:

QEP Energy CompanyAttention: Theresa Chatman1050 17th Street, Suite 500Denver, CO 80265Telephone: (303) 640-4210

760t700 I

2

CERTIFICATE OF' SERVICE

The undersigned hereby certifies that on this lSth day of March, 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'/oBureau of Land ManagementUtah State Office440 'West 200 South, Suite 500Salt lake City, UT 84101

Steven F. Alder, EsqAssistant Attorney GeneralAttorney for the Division of Oil, Gas and Mining1594 West North Temple, Suite 300salt Lake city, uT 84114

KFRT, LLC"/o Registered AgentJ Nicholas Murdock2l I S. 2nd Street, Unit ALaramie, WY 82070-3682

LeMoyne H. OdellPMB 199

3301 South l4th Street, Ste. 16

Abilene, TX79605

StaciL. Owen10381 Tennyson CourtWestminster, Colorado 8003 I

Nancy Kay Hargrove2400 N. Braeswood Blvd., #119Houston, TX77030

Jay D. Rockey22530 Cass AvenueWoodland Hills, CA 91364

Michael S. Johnson, Esq.Assistant Attorney GeneralAttorney for the Board of Oil, Gas and Mining1594 West North Temple, Suite 300salt Lake city, uT 84114

Josephine Hunter, Surviving Spouse and SoleHeir and Personal Representative for the Estateof Roy A. Hunter3737 Atlantic Avenue l30lLong Beach, CA 90807

Fred V. Jones, Jr.c/o Nancy Kay Hargrove2400 N. Braeswood Blvd., #119Houston, TX77030

Cynthia H. MurchisonP.O. Box 1637Dripping Springs, TX 78620

Virginia T. Schulze6239 West Greentree DriveSomis, CA 93066

Viking Resources CorporationP.O. Box 160

Deerfield, OH 44411

Respectfully submitted this 1 8th day of March, 201 5

By:

J

I.]¡IIT AGREEMENT A¡ID PLAN.OF I.JNITIZATION

FORTHE DEVELOPMENT AND OPERATION

OFTHE

OTJRAY PARK II TJNIT

COI]NTY OF UINTAH

STATE OFUTAH

TABLE OF CONTENTS

SECTION Page

Preliminary Recitals.Enabl ing Act and Regulations ...,,................

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I9l0llt2l3t4l5t6l'll8t9202l77232425262728293031

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Unitized Land and Unitized Substances

Unit OperatorResignation or Removal of Unit OperatorSuccessor Unit OperatorAccounting Provisions a¡rd Unit Operating AgreementRights and Obligations of Unit OperatotDrilling to DiscoveryPlan of Further Development and OperationParticipation Aft er Discovery ..,...,,...., ".....,Allocation of ProductionDevelopment or Operation of Non-Palticipating Lands or FormationsRoyalty SettlementRental Settlem ent ..................

Unit Area

Conservation

Notices

DrainageLeases and Contracts Conformed and ExtendedCovenants Run With Land ..,..........,.Effective Date and Term ..,...,..,....Rate of Prospecting, Development and ProductionAppoarancos

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No Waiver of Cerlain Rights ,.....,..,..Unavoidable DelayNon-Discrimination

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Non-Joinder arrd Subsequent Joinder t2

TaxesNo PartnershipSpecial Surface Stipulations..., .............., 13

Utah School a¡rd Institutional Trust Lands Administration Provision.,.......,..,....,....,.,,.,,.., l3

Exhibit "A" - Map of Unit Area

Exhibit "8" - Schedule of Ownership

Loss of Titlc

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TJNITAGREEMENT

FOR THE DEVELOPMENT AND OPERATTON

OFTHE

OURAY PARK II I.]NIT

COUNTY OFUINTAH

STATE OFUTAH

CONTRACTNO, UTU

THIS AGREEMENT, entered into as of the approval date of final approval by the Bureau ofLand Management ("BLM"), by and between the parlies subscribing, ratifing, or consenting

hereto, and herein refered to as the "parties hereto,"

WITNESSETH:

\ryHEREAS, the parties hereto a¡e the owners of working, royalty, or other oil and gas interests

in the unit area subject to this agreement; arrd

\üHEREAS, the Mineral Leasing Act of Februa¡y 25,1920,41 Stat. 437, as amended, 30 U,S.C.Sec. 181 et seq., authorizes Federal lessees and their representatives to unite with each other, orjointly or separately with others, in collectively adopting and operating under a unit plan ofdevelopment or operations of any oil and gas pool, field, or like area, or any part thereof for the

purpose of more properly conserving the natural resources thereof whenever determined and

certifred by the Secretary ofthe Interíor to be necessary or advisable in the public interest; and

\ryHEREAS, the parties hereto hold sufficient interests in the Ouray Park II Unit Area coveringthe land hereinafter described to give reasonably effective control ofoperations therein; and

\ryHEREAS, it is the purpose of the parties hereto to conserve natural ¡esources, prevent waste,

and secure other benefìts obtainable through development and operation of the area subject to

this agreement under the terms, conditions, and limitations herein set forth;

NO\ü, THEREFORE, in consideration of the premises and the promises herein contained, the

parties hereto commit to this agreement their respective interests in the below-defined unit area,

and agree severally among themselves as follows:

I. ENABLING ACT AND REGULATIONS.

The Mineral Leasing Act of February 25, 1920, as amended, supra, and all valid pertinent

regulations including operating and unit plan regulations, heretofore issued thereunder or valid,pertinent, and reasonable regulations hereafter issued thereunder are accepted and made a part ofthis agreement as to Federal lands, provided such regulations are not inconsistent with the terms

ofthis agreement; and as to non-Federal lands, the oil and gas operating regulations in effect as

ofthe effeotive date hereofgoverning drilling and producing operations, not inconsistent with the

terms hereof or the laws of the State in which the non-Federal land is located, æe hereby

accepted and made a part of this agreement.

2. UNIT AREA.

The area specified on the map attached hereto marked Exhibit A is hereby designated and

recognized as constituting the unit area, containing2,926.56 acres, more or less.

Exhibit A shows, in addition to the boundary of the unit area, the boundaries and identity oftracts 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 Operator, the acreage, percentage, a¡ld kind

of ownership of oil and gas interests in all lands in the unit area. However, nothing herein or inExhibits A or B shall be construed as a representation by any party hereto as to the ownership of

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L any interest other thari such interest or interests as are shown in the Exhibits as owned by such

2 party, Exhibits A and B shall be revised by the Unit Operator whenever changes in the unit area

¡ or in the ownership interests 1n the individual tracts render such revision nocessary, or when

4 requested by the Authorized Officer, hereinafter refered to as AO and not less than four copies

s of the revised Exhibits shall be filed with the proper BLM office.

o The above-described unit area shall when practicable be expanded to include therein any

z additional lands or shall be contracted to exclude lands whenever such expansion or contraction

s is deemed to be necessary or advisable to conform with the purposes of this agreement. Such

9 expansion or contraction shall be effected in the following manner:

(a) Unit Operator, on its own motion (after preliminary concurrence by the AO), or on demand ofthe AO, shall prepare a notice ofproposed expansion or contraction describing the contemplated

changes in the boundaries ofthc unit æea, the reasons therefor, any plans for additional drilling,and the proposed effective date of the expansion or contraction, preferably the first day of a

month subsequent to the date ofnotice.

(b) Said notice shall be delivered to the proper BLM offrce, and copies thereof mailed to ihe last

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

advising that 30 days will be allowed for submission to the Unit Operator of any objections,

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

shall file with the AO evidence of mailing of the notice of expansion or contraction and a copy ofany objections thereto which have been filed with Unit Operator, together with an application in

triplicate, for approval ofsuch expansion or contraotion and with appropriatejoinders.

(d) After due consideration ofall pertinent information, the expansion or contraction shall, upon

approval by the AO, become effective as ofthe date prescribed in the notice thereofor such other

appropriate date.

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

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

multiples of 40 acres or the nea¡est aliquot equivalent thereof), no parts of which are in or

entitled to be in a participating area on or before the frfth anniversary ofthe effective date ofthefirst initial participatíng 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 ofthe unit area and shall no longer be subject to this agreement, unless diligentdrilling operations are in progress on unitized lands not entitled to participation on said fifthanniversary, in which event all such lands shall remain subject hereto for so long as such drillingoperations are continued diligently, with not more than 9O-days time elapsing between the

completion of one such well and the commencement of the next such well, All legal subdivisions

of lands not entitled to be in a participating area within l0 years after the effectlve date of thë

first initial participating area approved under this agreement shall be automatically eliminated

from this agreement as of said tenth anniversary. The Unit Operator shall, within 90 days after

the effective date ofany elimination hereunder, describe the area so eliminated to the satisfaction

of the AO and promptly notifl all parties in interest. All lands reasonably proved productive ofunitized substances in paying quantities by diligent drilling operations after the aforesaid 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 9l't day thereafter.

Any expansion of the unit area pursuant to this section which embraces lands theretofore

eliminated pursuant to this subsection 2(e) shall not be considered automatic commitment or

recommitment of such lands. If conditions warrant extension of the lO-year period specified inthis subsection, a single extension ofnot to exceed 2 years may be accomplished by consent ofthe owners of 90 percent of the working interest in the cunent nonparticipating unitized lands

and the owners of60 percent ofthe basic royalty interests (exclusive ofthe basic royalty interests

of the United States) in nonparticipating unitized lands with approval of the AO, provided such

extension application is submitted not later than 60 days prior to the expiration ofsaid l0-yearperiod.

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Ouray Park II Unit Agreement Page2 4/29t2014

1 3. UNITIZED LAND AND UNITIZED SUBSTANCES.

z All land now or hereafter committed to this agreement shall constitute land refened to herein æ

3 "unitized land" or "land subject to this agreement." All oil and gas in any and ail formations of4 the unitized land are unitized under the terms ofthis agreement and herein are called "unitized5 substa¡rccs. "

4. UNIT OPERATOR.

QEP Enersv Company is hereby designated as Unit Operator and by signature hereto as UnitOperator agrees and consents to accept the duties and obligations of Unit Operator for thediscovery, development, and production of unitized substances as herein provided. Wheneverreference is made herein to the Unit Operator, such reference means the Unit Operator acting inthat capacity and not as an owner of interest in unitized substances, and the term "workinginterest owner" when used herein shall include ot tefer to Unit Operator as the owner of a

working interest only when such an interest is owned by it.

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I4 5. RESIGNATION OR REMOVAL OF'UNIT OPERATOR.

Unit Operator shall have the right to resign at any time prior to the establishment of a

participating area or areas hereunder, but such resignation shall not become effective so as torelease Unit Operator from thc duties and obligations of Unit Operator and terminate UnitOperator's rights as such for a period of 6 months after notice of intention to resign has been

served by Unit Operator on all working interest owners and the AO and until all wells thendrilled hereunder are placed in a satisfactory condition for suspension or abandonment,

whichever is required by the AO, unless a ncw Unit Operator shall have been selected and

approved and shall have taken over and assumed the duties and obligations of Unit Operatorprior to the expiration ofsaid period.

Unit Operator shall have the right to resign in like manner and subject to like limitations as aboveprovided at any time after a participatingarea established hereunder is in existence, but in allinstances ofresignation or removal, until a successor Unit Operator is selected and approved as

hereinafter provided, the working interest owners shall be jointly responsible for performance ofthe duties ofUnit Operator, and shall not later than 30 days before such resignation or removalbecomes effective appoint a common agent to represent them in any action to be taken hereunder.

The resigrration of Unit Operator shall not release Unit Operator from any liability for any defaultby it hereunder oocurring prior to the effective date ofits resignation,

The Unit Operator may, upon default or failure in the performance of its duties or obligationshereunder, be subject to removal by the same percentage vote of the owners of working interests

as herein provided for the selection of a new Unit Operator. Such removal shall be effective upon

notice thereof to the AO.

The resignation or removal of Unit Operator under this agreement shall not terminate its right,title, or interest as the owne¡ ofworking interest or other interest in unitized substances, but upon

the resignation or removal of Unit Operator becoming effective, such Unit Operator shall deliverpossession of all wells, equiprnent, materials, and appurtenances used in conducting the unitoperations to the new duly qualified successor Unit Operator or to the common agent, if no such

new Unit Operator is selected to be used for the purpose ofconducting unit operations hereunder.

Nothing herein shall be construed as authorizing removal of any material, equipment, orappurtcnances needed for the preservation ofany wells.

6.@Whenever the Unit Operat'or 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 the workinginterest owners, the owners of the working interests according to their respective aüe Eeinterests in all unitized land shall, pursuant to the Approval of the Parties requiremonts of tho unitoperating agreement, select a successor Unit Operator. Such selection shall not become effectiveuntil:

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Ouray Park II Unit Agreement Page 3 4n9nÙl4

t (a) Unit Operator so selected shall accept in writing the duties and responsibilities of Unitz Operator, and

3 (b) the selection shall have been approved by the AO. Ifno successor Unit Operator is selectedq and qualifìed as herein provided, the AO at his election may declare this unit agreement

5 terminated.

6 7. ACCOUNTING PROVISIONS AND UNIT OPERATING AGREEMENT.

If the Unit Operator is not the sole owner of working interests, costs and expenses incurred byUnit Operator in conducting unit operations hereunder shall be paid and appoftioned among and

borne by the owners of working interests, all in accordance with the agreement or agreementsentered into by and between the Unit Operator and the owneÌs of working interests, whether one

or more, separately or collectively, Any agreeme¡t or agreements entered into between theworking interest owners and the Unit Operator as provided in this section, whether one or more,are herein referred to as the "unit operating ageement." Such unit operating agreement shallalso provide the manner in which the working interest owners shall be entitled to receive theirrespective proportionate and allocated share of the benefrts accruing hereto in conformity withtheir underlying operating agreements, leases, or other independent contracts, and such otherrights and obligations as between Unit Operator and the working interest owners as may beagreed upon by Unit Operator and the working interest owners; however, no such unit operatingag¡eement shall be deemed either to modifr any of the terms and conditions of this unitagreement or to relieve the Unit Operator of any right or obligation established under this unitagreement, and in case of any inconsistency or conflict between this agreement and the unitoporating agreement, this agreement shall govern. Two copies of any unil operating agreement

executed pursuant to this section shall be filed in the proper BLM office prior to approval ofthisunit agreement.

8. RIGHTS AND OBLIGATIONS OF UNIT OPERATOR.

Except as otherwise specifically provided herein, the exclnsive right, privilege, and duty ofexercising any and all rights of the parties hereto which aÍe necessary or convenient forprospecting for, producing, storing, allocating, and distributing the unitized substances are hereby

delegated to a¡rd shall be exercised by the Unit Operator as hercin provided. Acceptable evidence

of title to said rights shall be deposited with Unit Operator and, together with this agreemçnt,shall constitute and define the rights, privileges, and obligations of Unit Operator. Nothingherein, however, shall be construed to transfer title to any la¡rd or to any lease or operatingagreement, it being understood that under this agreement the Unit Operator, in its capacity as

Unit Operator, shall exercise the rights ofpossession and use vested in the parties hereto only forthe purposes herein specified.

9. DRILLING TO DISCOVERY.ìvVithin 6 months after the effective date hereot the Unit Operator shall commence to drill an

adequate test well at a location approved by the AO, unless on such effective date a well is beingdrilled in conforrnity with the terms hereof, and thereafter continue such drilling diligently untilthe Green River formation zones down to H4a Lime, or its stratigraphic equivalent, have been

tested or until at a lesser depth unitized substances shall be discovsred which can be produced inpaying quantities (to wit: quantities sufficient to repay the costs of drilling, completing, and

producing operations, with a reasonable profit) or the Unit Operator shall at any time establish tothe satisfaction of the AO that further drilling of said well would be unwananted orimpracticable, provided, however, that Unit Operator shall not in any event be required to drillsaid well to a depth in excess of7,500 feet, Until the discovery ofunitized substances capable ofbeing produced in paying quantities, the Unit Operator shall continue drilling one well at a time,allowing not more than 6 months between the completion of one well and the commencement ofdrilling operations for the next well, until a well capable of produoing unitized substances inpaying quantities is completed to the satisfaction of the AO or until it is reasonably proved thatthe unitized land is incapable of producing unitized substances in paying quantities in theformations drilled hereunder. Nothing in this section shall be deemed to limit the right of theUnit Operator to resign as provided in Section 5, hereof, or as requiring Unit Operator to

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1 commence or continue any drilling during the period pending such resignation becoming

z effective in order to comply with the requirements of this section.

s The AO may modif, any of the drilling requirements of this section by granting reasonable

4 extensions of time when, in his opinion, such action is wananted,

s Until the establishment of a participating area, the failure to commence a well subsequent to the

o drilling of the initial obligation well, or in the case of multiple well requirements, if specified,

I subsequent to the drilling of those multiple wells, as provided for in this (these) section(s), within

a the time allowed including any extension of time granted by the AO, shall cause this agreement

9 to terminato automatically, Upop failure to continue drilling diligently any well other than the

t 0 obligation well(s) commenced hereunder, the AO may, after 15 days notice to the Unit Operator,

11 declare this unit agreement terminated. Failure to commence drilling the initial obligation well,

12 or the first of multiple obligation wells, on time and to drill it diligently shall result in the unit

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

14 requirements, failure to commence drilling the required multiple wells beyond the first well, and

1s to drill them diligently, may result in the unit agreement approval being declared invalid ab inilio16 by the AO.

I7 IO. PLAN OF'FURTHER DEVELOPMENT AND OPERATION'

Within 6 months after completion of a well capable of producing unitized substances in paying

quantities, the Unit Operator shall submit for the approval of the AO an acceptable plan ofdevelopment and operation for the unitized la¡rd which, when approved by the authorized officer,

shall cònstitute the further drilling and development obligations of the Unit Operator under this

agreement for the period specified therein. Thereafter, from time to time before the expiration ofany existing plan, the Unit Operator shall submit for the approval of the AO a plan for an

additional speoified period for the development and operation ofthe unitized land, Subsequent

plans should normally be filed on a calendæ year basis not later than Ma¡ch I each year. Any

proposed modification or addition to the existing plan should be fìled as a supplement to the

plan.

Any plan submitted pursuant to this section shall províde for the timely exploration of the

unitizi¿ area, and for the diligent drilling necessary fo¡ determination ofthe area or areas capable

of producing unitized substances in paying quantities in each and every productive formation.

Thiì plan s¡rãlt be as complete and adequate as the AO may determine to be necessary for timely

development and proper conservation ofthe oil and gas resources in the unitized area and shall:

(a) Specifi the number and locations of any wells to be drilled and the proposed order and time

for such drilling; and

(b) Provitle ¿ sutlunaly ufuperatious and production for thc prcvious yeor'

Plans shall be modifìed or supplemented when necessary to meet changed conditions or toprotect the interests of all parties to this agreement. Reasonable diligence shall be exercised in

èomplying with the obligations of the approved plan of development and operation. The AO is

authàrjzed to grant a reasonable extension of the 6-month period herein prescribed for

submission of an initial plan of development and operation where such action is justified because

of unusual conditions or circumstances.

After completion of a well capable of producing unitized substances in paying quantitios, no

fu¡ther weils, except such as may be necessary to afford Brotection against operations not under

this agreement a¡rd such as may be specifrcally approved by the AO, shall be drilled except in

accordance with an approved plan ofdevelopment and operation.

11.

Upon completion of a well capable of producing unitized substances in paying quantities, or as

soon thereaftcr as required by the AO, the Unit Operator shall submit for approval by the AO, a

schedule, based on subdivisions of the publicJand survey or aliquot parts 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, effective as of the date ofcompletion of such well or the effective date of this unit agreement, whichever is later. The

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I acreages of both Federal and non-Federal lands shall be based upon appropriate computationsz from the courses and distances shown on the last approved public-land survey as ofthe effective¡ date ofeach initial participating area. The schedule shall also set forth the percentage ofunitized4 substances to be allocated, as provided in Section 12, to each committed tract in the participatings area so established, and shall govem the allocation of production commencing with the effectivee date ofthe participating area. A different participating area shall be established for each separate

r pool or deposit ofunitized substances or for any group thereofwhich is produced as a single pool

I or zone, and any two or more participating areas so established may be combined into one, on

9 approval of the AO. When production from two or more participating areas is subsequently

10 found to be from a common pool or deposit, the participating areas shall be combined into one,

rl effective as of such appropriate date as may be approved or prescribed by the AO. The

12 participating ^rea

or aroas so established shall be revised from time to time, subject to the

13 approval of the AO, to include additional lands then regarded as reasonably proved to be

14 productive of unitized substances in paying quantities or which are necess.rry for unit operations,

ls or to exclude lands then regarded as reasonably proved not to be productive of unitized16 substances in paying quantities, and the schedule of allocation percentages shall be revised

n accordingly. The effective date of any revision shall be the fi¡st of the month in which the

1B knowledge or information is obtained on which such revision is predicated; provided, however,le that a more appropriate effective date may be used ifjustified by Unit Operator and approved byzo the AO. No la¡rd shall be excluded from a participating area on account of depletion of its

2r unitized substances, except that any participating area established undcr the provisions of thiszz unit agreement shall terminate automatically whenever all completions in the formation on which

2J the participating area is based a¡e abandoned.

It is the intent ofthis section that a participating area shall represent the area known o¡ reasonably

proved to be productive of unitized substances in paying quantities or which are necessary forunit operations; but, regardless of any revision of the participating area, nothing herein contained

shall be construed as requiring any retroactive adjustment for production obtained prior to the

effective date ofthe revision ofthe participating area.

In the absence of agreement at any time between the Unit Operator and the AO as to the proper

definition or redefrnition ofa participating area, or until a participating area has, or ateas have,

been established, the portion ofall payments affected thereby shall, except royalty due the United

States, be impounded in a manner mutually acceptable to the owners of committed workinginterests. Royalties due the United States shall be determined by the AO and the amount thereof

shall be deposited, as directed by the AO, until a participating area is fìnally approved and then

adjusted in accordance with a determination of the sum due as Federal royalty on the basis ofsuch approved participating area.

Whenever it is determined, subject to the approval of the AO, that a well drilled under thisagrcculcltt is rrut uapablc ofproduction ofunitizcd substanccs in paying quontitics and inclusion1n a partioipating area of the land on which it is situated is unwarranted, production from such

well shall, for the purposes of sçttlement 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 for the pool or deposit from which such production is obtained.

Settlement for working interest benefits from such a nonpaying unit well shall be made as

provided in the unit operating agreement.

12, ALLOCATION OF PRODUCTION.

All unitized substances produced from a participating area established under this agreement,

except any part thereof used in conformity with good operating practices within the unitized a¡ea

for drilling, operating, and other production or development purposes, or for repressuring orrecycling in accordance with a plan of development and operations that has been approved by the

AO, or unavoidably lost, shall be deemed to be produced equally on an acreag€ basis from the

several tracts ofunitized la¡d and unleased Federal land, ifany, included in the participating area

established for suoh production. Each such tract shall have allocated to it such percentage ofsaidproduction as the number of acres of such tract included in said participatingarea bears to thetotal acres ofunitized land and unleased Federal land, ifany, included in said participating area.

There shall be allocated to the working interest owner(s) of each tract of unitized land in saidparticipating are4 in addition, such percentage of the production attributable to the unleased

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Federal land within the participating area as the number of acres of such unitized tract included

in said participating area bears to the total acres ofunitized lærd in said participating area, for the

payment of the compensatory royalty speoified in section l7 of this agreement. Allocation ofproduction hereunder for purposes other than for settlement ofthe royalty, overriding royalty, orpayment out of production obligations of the respective working interest owners, includingcompensatory royalty obligations under section 17, shall be prescribed as set forth in the unít

operating agreement or as otherwise mutually agreed by the affected parties. It is hereby agreed

that production of unitized substances from a partìcipating area shall be allocated as provided

herein, regardless of whether any wells are drilled on any particular part or tract of the

participating area. If any gas produced from one participating area is used for repressuring orrecycling purposes in another participating area, the first gas withdrawn from the latter

participating a¡ea for sale during the life of this agreement shall be considered to be the gas so

transferred, until an anount equal to that tra¡rsferred shall be so produced for sale and such gas

shall be allocated to the particip ating area from which initially produced as such area was defined

at the time that such tra¡rsfened gas was finally produced a¡rd sold.

13. DEVELOPMENT OR OPERATION OT' NONPARTICIPATING LAND ORFORMATIONS.

Any operator may with the approval of the AO, at such party's solc risk, costs, and expense, drilla well on the unitized land to test any formation provided the well is outside any participating

ar.ea established for that formation, unless within 90 days of receipt of notice from said party ofhis intention to drill the well, the Unit Operator elects and commences to drill the well in a likemanner as other wells a¡e drilled by the Unit Operator under this agreement.

If any well drilled under this section by a non-unit operator 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 shall be established or enlarged as

provided in this agreement a¡rd the well shall thereafter be operated by the Unit Operator in

accordance with the terms of this agreement and the unit operating agreemsnt,

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

insufficient to justify the inclusion of the land upon which such well is situated in a participating

area, such well may be operated and produced by the party drilling the same, subject to the

conservation requirements of this agreement, The royalties in amount or value of produotion

from any such well shall be paid as specified in the underlying lease and agreements affected.

14. ROYALTY SETTLEMENT.

The United States and any State and any royalty owner who is entitled to take in kind a share ofthc substanccs now unitizcd hcrcunder shall be horoofter be entitled to the right to take in kind its

share of the unitized substances, and Unit Operator, or the non-unit operator in the case of the

operation of a well by a non-unit operator as herein provided for in special cases, shall make

deliveries of such royalty sha¡e taken in kind in conformity with the applicable contracts, laws,

and regulations. Settlement for royalty interest not taken in kind shall be made by an operator

responsible therefore under existing contracts, laws and regulations, or by the Unit Operator on

or before the last day of each month for unitized substances produced during the preceding

calendd month; provided, however, that nothing in this section shall operate to relieve the

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

royalties due under their leases.

Ifgas obtained from lands not subject to this agreement is introduced into any participating area

hereunder, for use in repressuring, stimulation of production, or increasing ultimate recovery, in

conformity with a plan of development and operation approved by the AO, a like amount of gæ,

after settlement as helein provided for any gas transfened from any other participating area and

with appropriate deduction for loss ftom any cause, may be withdrawn from the formation into

which the gas is introduced, royalty free as to dry gas, but not as to any products which may be

extracted therefrom; provided that suoh withdrawal shall be at such time as may be provided in

the approved plan of development and operation or as may otherwise be consented to by the AOas conforming to good petroleum engineeríng praotice; and provided further, that such right ofwithdrawal shall terminate on the termination of this unit agreement.

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r Royatty due the United States shall be computed as provided in 30 CFR Group 200 and paid in

z value or delivered in kind as to all unitized substances on the basis of the amounts thereof

: allocated to unitized Federal land as provided in Section 12 at the rates specified in the respeotive

¿ Federal leases, or at such other rate or rates as may be authorized by law or regulation and

s approved by the AO; provided, that for leases on which the royalty rate depends on the daily

6 average production per well, said average production shall be determined in accordance with the

r operating regulations as though each participating area were a single consolidated lease.

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15. RENTAL SETTLEMENT.

Rental or minimum royalties due on leases committed hereto shall be paid by the appropriate

parties under existing contracts, laws, and regulations, provided that nothing herein contained

shall operate to relieve the responsible parties ofthe land from their respective obligations for the

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

lands of the United States subject to this agreement shall be paid at the rate specifìed in the

respective leases from the United States unless such rental or minimum royalty is waived,

suspended, or reduced by law or by approval of the Secreta¡y or his duly autho¡ized

representative.

With respect to any lease on non-Federal land containing provisions which would terminate such

lease unless drilling operations are commenced upon the land covered thereby within the time

therein specified or rentals are paid for the privilege of defening such drilling operations, the

rentals required thereby shall, notwithstanding any other provision of this agreement, be deemed

to accrue and become payable during the term thereof as extendod by this agreement and until the

required drilling operations are commenced upon the land covered thereby, or until some portion

of such land is included within a participating area.

16,@Operations hereunder and production of unitized substances shall be conducted to provide for the

most economical and efficient recovery of said substances without waste, as defìned by or

pursuant to State or Federal law or regulation.

17. DRAINAGE.

(a) The Unit Operator shall take such measures as the AO deems appropriate and adequate to

prevent drainage of unitized substances from unitized land by wells on land not subject to this

àgreement, which shall include, the drilling of protective wells and which may include the

payment of a fair and reasonable compensatory royalty, as determined by the AO.

(b) Whenrver a ¡articipating area apnroved under sçÇtion I I of this agreement contains unleased

Federal lands, the value of I2Vzpercentofthe production that would be allocated to such Federal

lands under section l2 of this agreement, if such lands were leased, committed, and entitled to

participation, shall be payable as compensatory royalties to the Federal Govemment. Parties to

this agreement holding working interests in committed leases within the applicable participating

area shall be responsible for such compensatory royalty payment on the volume of production

reallocated from the unleased Federal la¡rds to their unitized tracts under section 12. The value ofsuch production subject to the payment of said royalties shall be determined pursuant to 30 CFR

part206. Payment ofcompensatory royalties on the production reallocated from unleased Federal

land to the committed tracts within the participating area shall fulfill the Federal royalty

obligation for such production, and said production shall be subject to no further royalty

assessment under section 14 of this agreement. Payment of compensatory royalties as provided

herein shall accrue from the date the committed tracts in the participating 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 following the calendar month of actual production. Ifleased Federal lands receiving a production allocatíon from the participating a¡ea become

unleased, compensatory royalties shall accrue from the date the Federal lands become unleased.

Payment due under this provision shall end when the unleased Federal tract is leased or when

production ofunitized substances ceases within the participating area and the palticipating area is

terminated, whicheve¡ occurs first.

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I r8. LEASES AND CONTRÀCTS CONFORMED AND EXTENDED.

The terms, conditions, and provisions of all leases, subleases, and other contracts relating to

exploration, drilling, development or operation for oil or gas on lands committed to thisagreement are hereby expressly modified and amcnded to the extent necessary to make the same

conform to 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 hereot or by the approvalhereof by his duly authorized representative, does hereby establish, alter, change, or revoke thedrilling, producing, rental, minimum royalty, and royalty requirements of Federal leases

committed hereto a¡rd the regulations in respect thereto to conform said requirements to theprovisions of this agreement, and, without limiting the generality of the foregoing, all leases,

subleases, and contracts are particularly modifìed in accordance with the following:

(a) The development and operation of lands subject to this 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 agreement, regardless ofwhether there is

any development of any particular tract of this unit area.

(b) Drilling and producing operations performed hereunder upon any tract ofunitized lands willbe accepted and deemed to be performed upon and for thc benefit of each and every tract ofunitized land, and no lease shall be deemed to expire by reæon of failure to dr.ill or produce wellssituated on the land therein embraced.

(c) Suspension ofdrilling or producing operations on all unitized lands pursuant to direction orconsent ofthe AO shall be deemed to constitute such suspension pursuant to such direction orconsent 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 lease, sublease, or contract relating to the exploration, drilling, development, oroperation for oil or gas of lands other than those of the United States committed to this

agreement which, by its terms might expire prior to the termination of this agreement, is hereby

extended beyond any such term so provided therein so that it shall be continued in full force and

effect for and during the term ofthis agreement,

(e) A¡y 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 paying quantities is established under this unitagreement prior to the expiration date of the term of such lease, or in the event actual drìllingoperations are commenced on unitized land, in accordance with provisions 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 fot 2 years, and so long thereafter as oil or gas is produced in payingquantitics in accordancc with thc provìsions of the Minorol Leasing Aot, as amended.

(f) Each sublease or contract relating to the operation and development of unitized substances

from lands of the United States committed to this agteement, which by its terms would expireprior to the time at which the underlying lease, as extended by the immediately precedingparagraph, will expire is hereby. extended beyond any such terrñ so provided therein so that itshall be continued in full force a¡rd effect for and during the term ofthe underlying lease as such

term is herein extended.

(g) The segregation of any Federal lease committed to this agreement is governed by the

following provision 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 [unit] plan embracing lands that are

in part within and in part outside ofthe area covered by any such plan shall be segregated intoseparate leases as to the lands committed and the lands not committed as of the effectivo date ofunitization: Provided, however, That any such lease as to the non-unitized portion shall continuein force and effect for the term thereof but for not less than two years from the date of such

segregation and so long thereafter as oil or gas is produced in paying quantities."

Ifthe public interest requirement is not satisfied, the segregation ofa lease and/or extension ofalease pursuant to 43 CFR 3 107.3- 2 and 43 CFR 3 107.4, respectively, shall not be effective.

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1 (h) Any lease, other than a Federal lease, having only a portion of its lands committed heretoz shall be segregated as to the poftion committed and the portion not committed, and thet provisions ofsuch lease shall apply separately to such segregated poftions commencing as ofthea effective date hereof. In the event any such lease provides for a lump sum rental payment, such

s payment shall be prorated between the portions so segregated in proportion to the acreage ofthes respective tracts.

7 19. COVENANTS RUN\ryITH LAND.

The covenants herein shall be construed to be covenants running with the land with respect to the

interests ofthe parties hereto and their successors in interest until this agreement terminates, and

any grant, transfer or conveyance ofinterest in land or leases subject hereto shall be and hereby isconditioned upon the assumption of all privileges and obligations hereunder by the grantee,

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

royalty, or other interest subject hereto shall be binding upon Unit Operator until the first day ofthe calendar month after Unit Operator is fumished with the original, photostatic, or certifiedcopy of the instrument of tra¡rsfer.

20. EFFECTIVE DATE AND TERM.

This agreement shall become effective upon approval by the AO and shall automaticallyterminate 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 term or any extension thereofthat the unitized land is incapable of production of unitized substances ín paying quantities in theformations tested hereunder, and after notice of intention to terminate this agreement on suchground is given by the Unit Operator to all parties in interest at their last known addresses, thisagreement is terminated with the approval of the AO, or

(c) A valuable discovery ofunitized substances in paying quantities has been made or accepted

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

shall remain in effect for such term and so long thereafter as unitized substances ca:r be producedin quantities suffrcient to pay for the cost of producing same from wells on unitized land withinany participating area established hereunder, Should production cease and diligent drilling orreworking 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 paying quantities on

committed lands within this unit area, this agreement will automatically terminate effective thelast day of the month in which the last unitized production occurred, or

(d) It is voluntarily terminated as provided in this agreement. -bxcept as noted herein, thisagreement may be terminated at any time prior to the discovery of unitized substances which can

be produced in paying quantities by not less than 75 per centum, on an acreag€ basis, of the

working interest owners signatory hereto, with the approval of the AO. The Unit Operator shallgive notice of any such approval to all parties hereto. If the public interest requirement is notsatisfìed, the approval ofthis unit by the AO shall be invalid.

2r. RATE OSIROSPECTING. pEVELOPMENT. ANp PROpUCTION.

The AO is hereby vested with authority to alter or modifl from time to time, in his discretion, the

quantity and rate of production under this agreement when such quantity and rate are not fixedpursuant to Federal or State law, or do not conform to any Statewide voluntary conservation orallocation program which is established, recognized, and generally adhered to by the majority ofoperators in such State. The above authority is hereby limited to alteration or modificationswhich are in the public interest. The public interest to be served a¡rd the purpose thereof, must be

stated in the order of alteration or modification. rWithout regard to the foregoing, the AO is also

hereby vested with authority to alter or modify from time to time, in his discretion, the rate ofprospecting and development and the quantity and rate ofproduction under this agreement whensuch alteration or modifrcation is in the interest ofattaining the conservation objectives stated inthis agreement and is not in violation of any applicable Federal or State law.

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I Powers in this section vested to the AO shatl only be exercised after notice to Unit Operator and

z opportunity for hearing to be held not less than 15 days from notice.

3 22.APPEARANCES

e The Unít Operator shall, after notice to other parties affected, have the right to appear for and on

s behalfofany and all interests affected hereby before the Department ofthe Interior and to appeal

e from orders issued under the regulations of said Department, or to apply for relief from any ofr said regulations, or in any proceedings relative to operations before the Department, or any othera legally constituted authority; provided, however, that any other interested party shall also have

s the right at its own expense to be heard in any such proceeding.

23. NOTICES.

All notices, demands, or statements 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 bypostpaid registered or certified mail, to the læt-known address of the party or parties.

24. NO \ryAIVER OF CERTAIN RIGHTS.

Nothing contained in this agreement shall be construed as a waiver by any parly hereto of the

right to assert any legal or constitutional right or defense as to the validity or invalidity ofany lawof the State where the unitized lands are located, or of the United States, or regulations issued

thereunder in any way affecting such party, or as a waiver by any such party of any right beyond

his or its authorily to waive.

10

11

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19

20 25. UNAVOIDABLE DELAY.

All obligations under this agreement requiring the Unit Operator to commencs or continuedrillíng, or to operate on, or produce unitized substances from any ofthe lands covered by this

agreement, shall be suspended while the Unit Operator, despite the exercise of due ca¡e and

diligence, is prevented from complying with such obligations, in whole or in part, by strikes, acts

of God, Federal, State, or municipal law or agencies, unavoidable accidents, uncontrollabledelays in transportation, inability to obtain necessary materials or equipment in the open matket,

or other matters beyond the reasonable control of the Unit Operator, whether similar to matters

herein enumerated or not.

26. NON-DISCRIMINATION.

In connection with the performance of work under this agreement, the Unit Operator agrees tocomply with all thc provisions of section 20? (l) to (7) inolueive, of Executive Order ll?46 (30

FR 12319), as amended, which ate hereby incorporated by reference in this agreement'

27. LOSS OF TITLE.

In the event title to any tract of unitized land shall fail and the true owner cannot be induced tojoin 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

of the loss of such title. In the event of a dispute as to title to any royalty, working interest, orother interests subject thereto, payment or delivery on account thereof may be withheld withoutliability for interest until the dispute is finally settled; provided, that, as to Federal lands or leases,

no payments of funds due the United States shall be withheld, but such funds shall be deposited

as directed by the AO, to be held as unea¡ned money pending final settlement of the title dispute,

and then applied as earned or retumed in accordance with such final settlement.

Unit Operator as such is relieved from any responsibility for any defect or failure of any titlehereunder.

28. NONJOINDER AND SUBSEOUENT JOI¡{DER.

If the owner of any substantial inte¡est in atract within the unit area fails or refüses to subscribe

or consent to this agteement, the owner of the working interest in that tract may withdraw the

Ouray Park II Unit Agreement Page I I 4/29/2014

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16t718

tract from this agreement by written notice delivered to the proper BLM office and the UnitOperator prior to the approval of this agreement by the AO. Any oil or gas interests in lands

within the unit area not committed hereto prior to final approval may thereafter be committedhereto by the owner or owners thereof subscribing or consenting fo this agreement, and, if the

interest is a working interest, by the owner ofsuch interest also subscribing to the unit operatingagreement, After operations are commenced hereunder, the right of subsequent joinder, as

provided in this section, by a working interest owner is subject to such requirements orapproval(s), if any, pertaining to such joinder, as may be provided for in the unit operatingagreement. After final approval hereof joinder by a nonworking interest owner must be

consented to in writing by the working interest owner committed hereto and responsible for thepayment of any benefits that may accrue hereunder in behalf of such nonworking interest. Anonworking interest may not be committed to this unit agreement unloss the conespondingworking interest is committed hereto. Joinder to the unit agreement by a working interest owner,

at any time, must be accompanied by appropriate joinder to the unit operating agreement, in order

for the interest to be regarded as committed to this agreement. Except as may otherwise herein be

provided, subsequentjoinders to this agreement shall be effective as ofthe date ofthe fiting withthe AO of duly executed counterparts of all or ¿¡riy papers necessary to establish effectivecommitment of any interest and/or tract to this agreement.

29. COUNTERPARTS.

This agreement may be executed in any number of counterparts, no one of which needs to be

executed by all parties, or may be ratifìed or consented to by separate instrument in writingspecifically referring hereto and shall be binding upon all those partíes who have executed such a

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

signed the same document, and regardless of whether or not it is executed by all other parties

owning or claiming an interest 1n the lands within the above-described unit area.

30. SURRENDER.

Nothing in this agreement shall prohibit the exercise by any working interest owner of the rightto surrender vested in such party by any lease, sublease, or operating agreement as to all or any

part of the lands covered thereby, provided that each party who will or might acquire such

working interest by such surrender or by forfeiture as hereafter set forth, is bound by the terms ofthis ageement.

Ifæ a result ofany such surrender, the working interest rights as to such lands become vested inany party other than the fee owner of the unitized substances, said party may forfeit such rightsand further benefits from operations hereunder as to said la¡rd to the pa¡ty next in the chain oftitle who shall be and become the owner of such working interest,

If as the result of any such surrender or forfeiturc working interest rights become vested in the fee

owner of the unitized substances, such owner may:

(a) Accept those working interest rights subject to this agreement and the unit operatingagreement; or

(b) Lease the portion of such land as is included in a participating area established hereunder

subject to this agreement and the unit operating agreement; or

(c) Provide for the independent operation ofany part ofsuch land that is not then included withina participating area established hercunder.

Ifthe fee owner ofthe unitized substances does not accept the working interest rights subject tothis agreement and the unit operating agreement or lease such lands as above provided within 6

months after the sunendored or forfeited, working interest rights become vested in the fee owner;the benefits and obligatíons ofoperations accruing to suoh lands under this agreement and the

unit operating agreement shall be shared by the remaining owners of unitized working interests inaccordance with their respective working interest ownerships, and such o\ryners of workinginterests shall compensate the fee owner of unitízed substances in such lands by paying sums

equal to the rentals, minimum royalties, and royalties applicable to such lands under the lease ineffect when the lands were unitized.

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Ouray Park II Unit Agreement Page 12 4129/20t4

1 An appropriate accounting and settlement shall be made for all benefits accruing to or payments

z and expenditures made or incurred on behalf of such surrendered or forfeited working interests

: subsequent to the date ofsurrender or forfeiture, and payment ofany moneys found to be owing¿ by such an accounting shall be made as between the parties within 30 days.

s The exercise of any right vested in a working interest o\ryner to reassign such working interest to

o the party from whom obtained shall be subject to the same conditions as set forth in this section

r in regard to the exercise ofa right to surrender.

I 31. TAXES.

The working interest owners shall render and pay for their account and the aÇcount ofthe royaltyowners all valid taxes on or measured by the unitized substanccs in and under or that may be

produced, gathered and sold from the land covered by this agreement after its effective date, or

upon the proceeds derived therefrom. The working interest ownsrs on each tract shall and may

charge the proper proportion of said taxes to royalty owners having interests in said-tract, and

may currently retain and deduct a sufficient amount of the unitized substances or derivative

products, or net proceeds thereof, from the allocated share of each royalty owner to secure

reimbursement for the taxes so paid. No such taxes shall be charged to the United States or the

State of Utah or to any lessor who has a contract with his lessee which requires the lessee to pay

such taxes.

9

l011

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t_4

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16l718

19 32. NO PARTNERSHIP.

It is expressly agreed that the relation ofthe parties hereto is that ofindependent contractors and

nothing contained in this agreement, expressed or implied, nor any operations conducted

hereunder, shall create or be deemed to have created a partnership or association between the

parties hereto or any of them.

33. SPECIAL STJRFACE STIPULATIONS.

Nothing in this Unit Agreement shall modifr the special Federal Lease stipulations attached to the

individual Federal Oil and gas Leases.

34. UTAH SCqOOL AND INSTITUTIONAL TRUST LANDS ADMINISTRATIONPROVISION.

Certain of the unitized land is trust land of the State of Utah, and in connection with the approval

of this Agreement by the School and Institutional Trust Lands Administration of the State

pursuant to applicable State and Federal regufations, it is agreed that there shall be fìled with the

Dircotor;

(a) Two copies of the complete Unit Agreement and two copies of any revised

Exhibits "4" and "8" with the filing thereof with the AO, pursuant to Section 2 hereof.

(b) One copy ofany notice ofthe proposed expansion or contraction ofthe Unit Arearequired to be delivered to the AO pursuant to Section 2(c) hereof.

(c) One copy ofany unit operating agreement executed pursuant to Section 7 hereof.

(d) One copy of any schedule of proposed participating area submitted for approval

under Section 11, concurrently with its submission to the AO, The Director, or his

authorized representative, shall have a period offiftcen (15) days from receipt ofsaid schedule within which to file with the AO any objection thereto, together with any

recommendation for revision thereof. If such objection or recommendation is not

concurred in by Unit Operator and AO prior to submission of the schedule to the AO forapproval, the AO shall approve or disapprove the schedule after giving due considerationto the objections and recommendations filed by the Director or his representative.

20

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2526

)1

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Ouray Park II Unit Agreement Page 13 4/29t2014

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I

G) A copy of any proposed plan of development or modification thereot which is filedwith the AO under Section l0 hereof,

(Ð A copy ofall instruments ofsubsequentjoinder executed under Section 28 hereof.

It is further agreed that:

(1) All valid, peftinent and reasonable regulations hereafter issued governing drillingand producing operations on non-Federal lands which are not inconsistent with the terms

hereof or the laws of the State of Utah are hereby accepted and made a part of thisAgreement.

Ø Nothing in this Agreement contained shall relieve lessees of the trust lands of the

State of Utah from their obligations to pay rental and royalties with respect to unitizedsubstances allocated to such lands hereunder, at the rates specified in their respectiveleases.

(3) In the event that a title dispute arises as to trust lands or leases, no payment offundsdue the School and Institutional Trust Lands Administration shall be withheld, but such

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

final settlement ofthe title dispute, and then applied as earned or retumed in accordance

with such final settlement.

Each party to this Agreement, holding any lease or leases of trust lands from the Schooland Institutional Trust Lands Administration, or its predecessor, subject to thisAgreement, or holding any interest in or under such lease or leases or ìn the production

from the lands covered thereby, agrees that said School and Institutional Trust La¡rds

Administration, and by its approval hereof does hereby alter, change, modify or revoke

the drilling producing and royalty requirements of such lease or leases, and the

regulatíons in respect thereto, to conform the provisions of said lease or leases to the

provisions of this Agreement. Such parties and said School and lnstitutional Trust Lands

Administration further agree that, except as otherwise expressly provided in thisAgreement, no such lease shall be deemed to terminate or expire so long as it shall

remain committed hereto. Notwithstanding anything to the contrary in Seotion l8 hereofcontained, should any ofthe trust lands ofthe State ofUtah outside ofa participating area

established hereunder cease to be committed to this Agreement, such lands shallthereafter be free from the effect of this Agreement unless and until such lands æe

expressly recommitted to this Agreement pursuant to Section 28 hereof, with the approvalof the School and Institutional Trust La¡rds Administration.

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Ouray Park II Unit Agreement Page l4 412912014

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IN \YITNESS WffiREOF, the parties hereto have caused this agreement to be execüed and

have sot opposite their respective n¡meg fþe date of execution.

AS LINIT OPERATORAND WORKINGINTEREST OïVNER:

OEP ENERGYCOMPANY

Michacl K. WatauabeVioe President. Land

I9

1011\213T415161718L9202L22232425262't2829303t32333435

Address:j,050 1/ Street. Suite 500

Denver. CO 80265

STATEOF COLORADO

COI.'NTY OF DENVER

WITNESS my hærd and official seal.

My cornmission expires :

KRYSTALT{OTARYPUBLIC

STATE OF COLORADONOÍARY lÐ 20134025147

MYCOf\ßUIS$Oû¡ n17

s$

$

The foregoing inshument was acknowledged beforc meby Michael K Wslanabe as Vice

2e4

Ouray Park II Unit Agleement Page 15 4l29lAÙt4

EXHIBIT "8"

UINTAH COUNTY, UTAH

NUMBERTRACT ROYALDESCRIPTION OF

AND AND& EFFECTIVE

NUMBERANDROYALTY

ANDLESSEE OF

FEOERAL LANOS:

Township 7 South - Renqe 20 East. SLMSEC'10: N/2, N/2S/2, S/2SE/4, SE/4SW4SEC 11:W2NE/4, W2, SE/4NE/4, SE/4

'1640 00

643 68

1201 2A

UTU-90216EFF 5t1t197'l

HBP

IOTAL

TOTAL

11æ730/00 66668%0.666680/6

2.500'to/o

s2'1429%o 914300/00 50000%o 47139Vo1 22859Voo 17'1430/0

I 50000%

UTU-8633.1EFF'12t1t1949

HBRL (UTSL-065342 )SEC 12: W2SW/4. SE/4SW4SEC'14: El2

USA -All (125o/orovaltv\ eEpEnersvCompanv lOOOOOO% NancvKaVHarqroveCvnth¡e H MurchisonLeMoyne H Odell

QEP Enerqv Companv 1OO OOOOOO%

3 000000% QEp En€rav Compånv 1OO OOOOOO%

2 Township 7 South - Ranqe 20 East. SLMSEC 3: LOT 1 (41 00), LOT2 (40.9s),LOT 3 t40 89). & LOT 4 (40 84). S/2N/2. S/2

3 Townsh¡p 7 South - Ranqe 20 East. SLMSEC 1: LOT 1 (40.09), LOT2 (40.24),LOT 3 (40.40), & LOT 4 (40.55), St2Nt2, St2SEC 11: NE/4NE/4SEC 12: N/2. SE/4. NE/4SW4

*ExDans¡on Tract

USA -All (125%rovattv) eEpEnerqvCompanv 1OOOOOO% KFRT,LLC

U.S A -All (12 5% rovattv\ QEP Energv Companv 100 0000%.tJTU-88140

eFF 11t111950HBP

QEP Enerqv CompanvStac¡e L OwenV¡k¡nq Resouræs CorDorationRov A Hunt€rJav D RockeyVirqinia T Schulze

QEP Enerov Companv 100 000000%

3.484.96 TOTAL ACRES OR 84 430/o3 FEDERALTRACTS

OF UNIT AREA

STATE I-.ANDS:

4 Townsh¡p 7 South - Ranoe 20 East. SLMSEC 2: LOT 1 (40 sB), LOT 2 (40.67),LOT 3 (40 77\, LOT 4 (40 86). S/2N/2. S/2 (ALL)

State of Utah -A¡l (12 5ø/o rovaftv\ OEp Enerqv Companv 1OO OOOO% NONE OF RECORD642 8A UT ST M1.49758

EFF 6/1/2005EXP 5t3'112015

QEP Enerqv Companv 1OO OOOOOO%

642 8A 15 570/.TOTAL ACRES ORSTATE TRACTS

OF UNIT AREA

100.00%4 TRACTS TOTALING 4.127.84 ACRES IN UNIT AREA

CACHERICH

BOX ELf]CR

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Ouray Park ll Unit Outline (as expanded)

EPRESOURCES,"

Land Exh¡b¡t L-1

T7S-R2OE

Uintah County, Utah

Docket No. 2015-0L5

Cause No. I9I-07

3 EP

4

34 35RESOURCES,,

La nd Exh ¡b¡t L-2

T7S-R2OE

Uintah County, Utah

Docket No. 20L5-0L5

I

16 13

3 1

10 11 12

15 1

ORIGINAL OUR RK II UNIT OUTLIN

FEDERAL LANDS

S E LANDS

I

23 24Cause No. I9I-07

EP? 34

1

35 36RESOURCES...

Land Exh¡b¡t L-3

T7S-R2OE

U inta h Cou nty, Uta h'

\

Docket No. 2015-015, Cause No. 19L-07

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EXPANDED OUR PARK II OUTLINE

4OO FOOT WINDOWS

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Structure Map - top of X Marker, SubseaContour lnterval: 100 feet EP

RESOURCES*

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Lands subject to270-02Order

ILands subject to270-03 Order

Exhibit G-1Docket No.: 201-5-0L5

Cause No.: 19L-07

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EPRESOURCES,"

EXHIBIT GFINLEY Uinta Basin Stratigraphy - Three Rivers Type Wellrùsources

oLo(Jo

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IHHEE RNERS 3¿31.120 + i ¡ ;szóea

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=

GREEN RIVER

MAHOGANY

N GUTCH MAR(ER

OOUGtAs CN€EK

SHALE MARKER._CAsTLE PEAK

UTELAND BUTTEWASATCH

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Scale = I mlle

The interval to be spaced is defined as:

The stratigraphic equivalent of theinterval between the Mahogany Bench

top, as found at 4,359', andapproximately 1,000' into thePaleocene Wasatch, as found aL7,787',on the log for the Ultra Resources

Three Rivers 34-3L-72O Well located inSection 34, T7S-R20E, SLM.

Doc¡{et: 20 l¿}O24Cðuic:270-03

Exh¡bit G-2

Docket No.: 2015-015Cause No.: 191-07

PERFS lnd¡câtad ln DrNli 7787 lLmd

Cross-sectionLocator Map P

RESOURCES trl

il

I

Exh¡b¡t c-3Docket No.:20L5-0L5Cause No.: L9L-07

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Cross Section A-A'

EPA A' RESOURCES,"

The subject formationsconsist of lacustrine fluvial-deltaic deposits in the GreenRiver and alluvial/fluvial fandeltas ín the Wasatch.Average porosities in theGreen River are 8To to LO%

with average permeability of- .05 to .l- mD. The Wasatchin this area typically averagesless than 8% porosity andless than .05 mDpermeability.

Three Rivers

16-41-820Three Rivers

34-37-720oP 16G-12-7-20

Mahogany Bench

X Marker

Douglas Creek

Castle Peak -

Uteland Butte

Wasatch

Exhibit G-4Docket No.: 2015-015Cause No.: 191-07

Sand Geometry

@ FINLEY Green River Reservoir Geometries (Nine Mile canyon outcroo ilä'tJ[fft

EPRESOURCES,"

rctoqrccrjtg,órhÈ.r¡,Ëln 40 Drill Pattern Examole

Channel Reservoir Ave, 15-20 ft. l-ligh and 145-375 ft. WideShoreline Related Reservolr Ave. 20 ft. High and 1650 ft. WideEffective Porosity Ave. at Three Rivers is 9%

L}¡r ¡D.gn

.fr

æl Rna RE*ilrons t¡E ilAtROyü AltO CODLET¡

l-¡fcataaæü¡$ AêTI DÛffilE P¡tIt'î

Allcr A¡¡ ÊnHgy

The scaled outcrop example above highlights sand bodies deposíted in an envlronrnentanalogous to that of the Three Rivers area. Sand bodies penetrated by the well bores 1320feet apart (40 acre spacing)are hlghllghted in green whlle sand bodies not penetrated arehighlighted yellow and orange. This example shows that many hydrocarbon charged sandbodles would not be produced by rl0 acre well denslty. ffffiÍ.

a

a

Exhibit G-5

Docket No.: 2015-0L5Cause No.: 191-07

{æ--

oorP

@ Original Oil in Place Per 640 Acres (MMBO)

EPRESOURCES,-

EXHIBIT M-I.

26

3B 36

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T{l ?4Ãt-?20l¡'

,Va. 35

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Finley estimated thatSection 16 contains -147MMBOf P or *9.2

MMBOIP/40 acres. Section34 contains -120 MMBOIPor ^7.5 MMBOIP/40 acres.

This assumes an effectiveporosity cutoff of 3,5 Yo, artoil saturation (So) of 45%which results in a totalreservoir thickness (h) of37I' in Section 34to 484'

in section 16,

Calculated OOIP Averages-133.5 MMBO/sec

OOIP MetricsSw < 55%

Phíe > 3.5%Bo = 1.2h = 37I'to 484'

oockclr 2014'024teu¡r: ??0-03

Exhibit E-1

Docket No.: 201-5-015Cause No.: 191-07

Srðtê. 1 mile

OOIP and Recovery Factor

@ FINLEY OrÍginal Oil in Place Per 640 Acres (MMBO)relources¡CW,¡.\tF ¡ r!É(6¡

EPRESOURCES,,

EXHIBIT M.Z

TI{REE

.t

1aft

ot 1'lrÔ

1¿l

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3ds 8E æ

2

aa

I12 q

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f=qt

lf a typicalwell recoversbetween 200 MBO and2LS MBO, a 40 acrespacing density (16 wellsper section) would allowrecovery of only -2.3%of the OOIP in Section l-6and-2.9% in Section 34.If these calculations arecorrect, a substantialamount of oílwill be leftbehind. Usìng Axía's

estirnated recoveryfactor ol7-9%, over 5%

of the OOIP would notbe recovered if only 16

wells were drilled, orbetween 5.0 and 7.35MMBO per section leftbehind.

Û o\1e æ

30 21 æ.272Ê 25

a ._-r

b36P

natrr4¡

¿f

H

N

1

DoÉkst:2014{24Cause: 270.03

Exhibit E-2

Docket No.: 2015-0L5Cause No.: L9L-07

scôle = 1 mfle

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

STATE OF UTAH

IN rup MRrrpR oF THE Rrqunsr poR AcpNcyAcrroN or QEP ENERGY COMPANY ron ¡.NOnoen EXTENDING THE BoRRo's OnopnENTERED rN Ceusp No. 19l-06, v/HrcHsuspENDED THE AppLICATIoN Or UreH Aoir¡nt.Cooe R649-3-2, R649-3-10, AND R649-3-11(1)eNo (2) FoR THE AREA LocATED wrrHrN THE

OunRy Pnm II Fpopnnl Expr,oRRrony UNlr,TO THE LANDS ADDED THROUGH EXPANSION OF

THE LTNIT, coNSISTING oF ALL o¡ SEcrtoN l, tHeNE74ì{E% op SecrroN ll, lNo rør.EYz,NW%,AND THE NE%SW% op SEcrroN 12, Towussrp 7Souru, ReNce 20 ERSI, SLM, UmrRsCoLtNtv, UreH

NOTICE OF HEARING

Docket No. 2015-015Cause No. 191-07

THE STATE OF UTAH TO ALL PERSONS INTERESTED IN THE FOLLOIWINGMATTER.

Notice is hereby given that the Board of Oil, Gas and Mining ("Board"), State of Utah,pursuant to Utah Administrative Code R64l-113-100, has designated a hearing examiner toconduct a hearing on TUESDAY, APRIL28,20|5, at 10:00 AM, or as soon thereafter aspossible, in room 2000 of the Department of Natural Resources, 1594 V/est North Temple, SaltLake City, Utah.

The hearing will be conducted as a formal administrative adjudication in accordance withthe rules of the Board as set forth in Utah Administrative Code R641 et seq. and as provided forin 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 andevidence regarding a Request for Agency Action to:

1. Pursuant to its authority under Utah Code 40-6-5(3Xb) and R649-2-l and649-2-3,extend the Board's previous order entered on December 5,2014, in Cause No. 191-06 to suspendtheapplicationofutahAdmin.codeR64g-3-2,R649-3-l0,andR649-3-11(1) and(2)forthearea located within the expansion of the Ouray Park II Federal Exploratory Unit (the "OP IIUnit"), covering the following lands:

Township 7 South. Range 20 East. SLMSection 1: Lots 1-4, St/2N/2, S% [All]Section 11: NE74NE%Section 12: EY2,NW%, NE%SW%

(containing 1,201.28 acres, more or less);

2. Providing that the producing interval in any future well may not be located closer than460 feetto the boundaries of the Ouray Park II Federal Exploratory Unit (the "OP II Unit")without obtaining an exception location from the Division pursuant to Utah Admin. Code R649-3-3;

3. Providing that no well may be directionally drilled if any producing portion of the 460foot radius along the projected wellbore intersects with the boundaries of the OP II Unit withoutcomplying with the requirements of Utah Admin. Code R649-3-ll;

4. Providing that QEP or its successor as unit operator of the OP II Unit agrees toprovide (1) a plat or sketch showing the distance to lease boundaries and the targetlocation withany application for permit to drill filed for a directionally drilled well and (2) a copy of theannual plan of development and operation for the OP II Unit;

5. Providing the requested suspension of these rules will remain in effect only for as longas the subject lands are committed to the OP II Unit; and

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

The examiner's proposed hndings of fact and conclusions of law will be filed with theBoard of Oil, Gas, and Mining and presented at the next regularly scheduled Board hearingwhich has been set for V/EDNESDAY, MAY 27,2015, at 9:00 AM or as soon thereafter aspossible, in room 1040 of the Department of Natural Resources, 1594 rü/est North Temple, SaltLake City, Utah.

Objections to the Request for Agency Action must be filed with the Secretary of theBoard at the address listed below no later than the l4th day of April, 2015. A party must file atimely written objection or other response in order to participate as a party atthe Board hearingFailure to participate can result in a default judgment.

Natural persons may appear and represent themselves before the Board. All otherrepresentation of parties before the Board will be by attorneys licensed to practice law in the

2

State of Utah, or attorneys licensed to practice law in another jurisdiction which meet the rulesof the Utah State Bar for practicing law before the Utah Courts.

Persons interested in this matter may participate pursuant to the procedural rules of theBoard. The Request for Agency Action, and any subsequent pleadings, may be inspected at theoffice of the undersigned, and inspected online at the Utah Board of Oil, Gas and Mining'swebsite at

Pursuant to the Americans with Disabilities Act, persons requiring auxiliarycommunicative aids and services to enable them to participate in this hearing should callJulie Ann Carter at (801) 538-5277, at least three working days prior to the hearing date.

DATED this 3lst day of March,2015

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

lsl CarterSecretary

1594 WestNorth Temple, Suite 1210Salt Lake City, Utah 84116(801) s38-s277

J

CERTIF'ICATE OF' NOTICE

I hereby certify that I caused a true and correct copy of the foregoing NOTICE OFHEARING for Docket No. 2015-015, Cause No. 191-07 to be PUBLISHED in the followingnewspapers on the following days:

April5, 2015:The Salt Lake Tribune and Deseret Morning News, newspapers ofgeneral circulation in Salt Lake City and County.

April7,2015:Uintah Basin Standard, a newspaper of general circulation in Duchesne andUintah Counties.

April7,2015:Vernal a newspaper of general circulation in Daggett and UintahCounties

4

CERTIFICATE OF SERVICE

I hereby certiff that on this 3lst day of March, 2015,I caused a true and correct

copy of the foregoing NOTICE OF HEARING for Docket No. 2015-015, Cause No. 191-

07,to be mailed by Email or via First Class Mail with postage prepaid, to the following:

Mark L. BurghardtrWilliam E. V/arHOLLAND & HART, LLP222 South Main Street, Suite 2200Salt Lake City, UT 84101

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

Steven F. Alder, Esq.Assistant Attomey GeneralAttorney for the Division of Oil, Gas andMining1594 West North Temple, Suite 300Salt Lake City, UT 84114

KFRT, LLCc/o Registered AgentJ Nicholas Murdock211 S 2nd Street Unit ALararie, WY 82070-3682

LeMoyne H. OdellPMB 199

3301 South 14th Street, Ste. 16Abilene, TX79605

Staci L. Owen10381 Tennyson CourtW'estminster, Colorado 8003 I

Laura Rippentrop

QEP Energy Company1050 lTth Street, Suite 500Denver, CO 80265

Michael S. Johnson, Esq.Assistant Attorney GeneralAttomey for the Board of Oil, Gas andMining1594 rü/est North Temple, Suite 300Salt Lake City, UT 84114

Josephine Hunter, Surviving Spouse and SoleHeir and Personal Representative for theEstate of Roy A. Hunter3737 Atlarftic Avenue l30lLong Beach, CA 90807

Fred V. Jones, Jr.c/o Nancy Kay Hargrove2400 N Braeswood Blvd., #119Houston, TX77030

Cynthia H. MurchisonPO Box 1637Dripping Springs, TX 78620

Virginia T. Schulze6239 West Greentree DriveSomis, CA 93066

5

Nancy Kay Hargrove2400 N Braeswood Blvd., #119Houston, TX77030

Jay D. Rockey22530 Cass AvenueWoodland Hills, CA9l364

Viking Resources CorporationP.O. Box 160Deerfield, OH 44411

6

United States Department of the InteriorBUREAU OF LAND MANAGEMENT

Utah State Office440 West 200 South, Suite 500Salt Lake city, uT 84101-1345

http ://www. blnr, gov/ut/st/en. htm I

FILEDtN RFlPt.Y tìtìtìtiR't o:

3160 - uTU902l lx(uT-922000)

APR 0 2 ?0t5 fþl C. tti¿lk.¡€

ft\;ti')

'tiz / t 5-'Board of Oil, Gas and MiningP.O. Box 145801

Salt Lake City, Utah 841 l4-5801

Re Docket 2015-015, Cause No. l9l-07Ouray Park II Unit,

Gentlemen

The Bureau of Land Management (BLM) has reviewed the referenced Request for AgencyAction affecting lands within the Expanded Unit Area of the Ouray Park II Federal ExploratoryUnit (Expanded Unit Area).

The Expanded Unit Area covers the following lands

Township 7 South. Range 20 East. SLMSection 1: AllSection I l: NE%N%Sectionl2: Et/z,NWt/a,NE%SW%

The applicant has requested the Board issue an order:

(a) Extending its Order in Cause l9l-06 suspending Utah Adrnin. Code R649-3-2,R649-3- I 0, and R649-3- I I (l) and R649-3-ll (2) f'or the Subject Lands;

(b) Providing that the producing interval in any future well rnay not be located closerthan 460 fbet to the boundaries of the Ouray Park II Unit without obtaining an exception locationfrom the Division pursuant to Utah Admin. Code R649-3-3;

(c) Providing that no well may be directionally drilled if any producing portion ofthe 460 t-oot radius along the projected wellbore intersects with the boundaries of the Ouray ParkII Unit without complying with the requirements of Utah Adrnin. Code R649-3-l l;

(d) Providing that QEP or its successor as unit operator of the Ouray Park II Unitagrees to provide (l) a plat or sketch showing the distance to lease boundaries and the targetlocation with any application for permit to drill filed for a directionally drilled well and (2) acopy of the annual plan of development and operation for the Ouray Park II Unit;

(e) Providing the requested suspension of these rules will remain in effect only for as

long as the Subject Lands are committed to the Ouray Park II Unit;

(Ðnecessary;

Making such frndings and orders in connection with this Request as it deemsand

(g) Providing f'or such other and further relief as may be just and equitable under thecircumstances.

The BLM supports the request.

lf you should have any questions regarding this letter, please contact Michael Coulthard of thisoffice at (801) 539-4042.

Respectfully submitted this 2nd Day of April, 2015.

Sincerely,

úV,z g"¿-Roger L. BankertChief, Branch of Minerals

cc: QEP Energy CompanyAttn: Theresa Chatman1050 l Tth Street, Suite 500Denver, Colorado 80265

Mark L. BurghardtHOLLAND & HART, LLP222South Main Street, Suite 2200Salt Lake City, Utah 84101

Vernal Field Office Manager (UTGOl)

UDOGM

United States Department of the InteriorBUREAU OF LAND MANAGEMENT

Utah State Office440 West 200 South, Suite 500

Salt Lake Ciry, UT 84101- 1345

http ://www.blnr. gov/ut/st/en.html

lN REPLY REFÌ:R'l O:

3160 - uru902l lx(uT-e22000) APR 0 2 2CI15

Board of Oil, Gas and MiningP.O. Box 145801

Salt Lake City, Utah 841l4-5801

Re Docket 201 5-01 5, Cause No. I 9l-07Ouray Park II Unit,

Gentlemen

The Bureau of Land Management (BLM) has reviewed the refèrenced Request ffir AgencyAction affecting lands within the Expanded Unit Area of the Ouray Park II Federal ExploratoryUnit (Expanded Unit Area).

The Expanded Unit Area covers the following lands

Township 7 South. Range 20 East. SLMSection l: AllSection I l: NE%N%Section l2: E'/r,NW'/q,NE%SW%

comprising 1.201.28 acres more or less

The applicant has recluested the Board issue an order:

(a) Extending its Order in Cause l9l-06 suspending Utah Admin. Code R649-3-2,R649-3- 10, and R649-3- I I (l) and R649-3- I I (2) t'or the Subject Lands;

(b) Providing that the producing interval in any firture well may not be located closer

than 460 f-eet to the boundaries of the Ouray Park II Unit withor-rt obtaining an exception location

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

(c) Providing that no well nray be directionally drilled if any producing portion ofthe 460 foot radius along the projected r,vellbore intersects with the boundaries of the Ouray Park

II Unit without conrplying with the requirernents of Utah Admin. Code R649-3- I I ;

(d) Providing that QEP or its successor as unit operator of the Ouray Park II Unitagrees to provide ( 1) a plat or sketch showing the distance to lease boundaries and the targetlocation with any application fol permit to drill filed for a directionally drilled well and (2) acopy of the annual plan of development and operation for the Ouray Park II Unit;

(e) Providing the requested suspension of these rules will remain in effect only for as

long as the Subject Lands are committed to the Ouray Park II Unit;

(Ð Making such findings and orders in connection with this Request as it deemsnecessary; and

(g) Providing for such other and further relief as may be just and equitable under thecircumstances.

The BLM supports the request.

If you should have any questions regarding this letter, please contact Michael Coulthard of thisofflrce at (801) 539-4042.

Respectfully submitted this 2nd Day of April, 2015.

Sincerely,

/s/ Roger L. Bankert

Roger L. BankertChiel Branch of Minerals

cc QEP Energy CompanyAttn: Theresa Chatman1050 lTth Street, Suite 500Denver, Colorado 80265

Mark L. BurghardtHOLLAND & HART, LLP222 South Main Street, SuiteSalt Lake City, Utah 84101

,rw

Vernal Field Office Manager (UTGOl)

UDOGM

bcc Ouray Park Il FileUT950 - Central FilesUT920 - Reading FileAgr. Sec. Chron.

MCoulthard:mc:4-2- l5

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

STATE OF UTAH

FILEDAPR 0'2 2015

SECRETARY BOIÐ OFOL, OAB T i'ilñG

IN rHe MATTER oF THE Rrquesr poR AcsNcyAcuoN on QEP ENeRcy CorrrpnNy FoR ANoRDER EXTENDING THE Bo¿,Ro's On¡enENTERED rN Cnusp No. 191-06, v/HrcHsuspENDED THE AppLrcATroN o¡ UrRn AourN.Cope R649-3-2, R649-3-10, AND R649-3-l1(1) nNo (2) ron rHE AREA LocArED rùvrrHrN

rH¡ Ouney Pam II Fpoennl Expr,oRlroRyUNTT, TO THE LANDS ADDED To THE UNIT,coNSISTING oF ALL oF S¡cuoN l, THE

NE74NE% of Section 11, tNo rnnBYz, NW%,and the NE%SW% o¡ SecrroN 12, TowNsurp 7

SoutH, ReNce 20 ERsr, SLM, Ur¡trRHCotxtv, Urnu.

ORDER GRANTING QEP'S MOTIONTO DESIGNATE A HEARING

EXAMINERAND SET THE DATE ANDPLACE OF HEARING

Docket No.2015-015

Cause No. 191-07

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:

1. Mr. John C. Rogers, Associate Director, Oil and Gas Program, Utah Division of

Oil, Gas and Mining, is designated as the hearing examiner in this cause for the purposes 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

on April 28,2015, at l0:00 a.m., or as soon thereafter as possible, at the Department of Natural

Resources, 1594 V/est North Temple, Salt Lake City, Utah.

Issued this 2nd day of April,2}ls

STATE OF UTAHBOARD OF'OIL, GAS AND MINING

Gill, Jr.

Chairman

7656980 I

2

CERTIFICATE OF SERVICE

The undersigned hereby certifies that on this 3rd day of April,2Dls, a true and correct copyof the foregoing ORDER GRANTING QEP'S MOTION TO DESIGNATE A HEARINGEXAMINER AND SET THE DATE AND PLACE OF HEARING for Docket No. 2015-015Cause No. 191-07, was mailed to the following:

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

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

Steven F. Alder, Esq.Assistant Attomey GeneralAttorney for the Division of Oil, Gas andMining1594 WestNorth Temple, Suite 300Salt Lake City, UT 84114

KFRT, LLCc/o Registered AgentJ Nicholas Murdock211 S 2nd Street Unit ALarunlie, V/Y 82070-3682

LeMoyne H. OdellPMB I993301 South l4th Street, Ste. 16

Abilene, TX79605

Staci L. Owen10381 Tennyson CourtWestminster, Colorado 8003 I

Laura Rippentrop

QEP Energy Company1050 lTth Street, Suite 500Denver, CO 80265

Michael S. Johnson, Esq.Assistant Attomey GeneralAttomey for the Board of Oil, Gas andMining1594 West North Temple, Suite 300Salt Lake City, UT 84114

Josephine Hunter, Surviving Spouse and SoleHeir and Personal Representative for theEstate of Roy A. Hunter3737 Atlarfüc Avenue l30lLong Beach, CA 90807

Fred V. Jones, Jr.

c/o Nancy Kay Hargrove2400 N Braeswood Blvd., #119Houston, TX77030

Cynthia H. MurchisonPO Box 1637Dripping Springs, TX 78620

Virginia T. Schulze6239 V/est Greentree DriveSomis, CA 93066

J

Nancy Kay Hargrove2400 N Braeswood Blvd., #119Houston, T)(77030

Jay D. Rockey22530 Cass AvenueWoodland Hills, CA9l364

Viking Resources CorporationP.O. Box 160

Deerfield, OH 44411

By \"1,'' &n^ C,,fr^.t_-

4

AFFIDAVIT OF PUBLICATIOI{

County of Duchesne,

STA|E OF UTAH

I, Cynthia Kleinfelter, on oath, say that I am the Legals

Manager of the Uintah Basin Standard, a weekly newspaper ofgeneral circulation, published at Roosevelt, State and Countyaforesaid, and that a certain notice, a true copy of which is

com on the same day as the first newspaper publication and

the notice remained on Utahlegals.com until the end of the

scheduled run.

S MANAGER

Subscribed and sworn to before me on this

NOTICE OFTIEARING

DOCKETNO.2015-015 CAUSENO. 191-07

BEFORETHEBOARD OF OIL,GAS AND MINING,DEPARTMENT OFNATURALRE-SOURCES, STATEOF UTAH

THE STATE OFUTAHTOALLPER-SONS INTERESTEDINTHEFOLLOW-INGMATTER:

NOTICE ISTIEREBYGIVENthat the Board ofOil, Gas and Mining("Boardn'), State ofUtah, pursuafit toUtah AdministrativeCode R641-113.100,has designated a

thearing examiner toconduct a hearing onTUESDAYAPRIL' 28,2015, at 10:00

I AM, or as soonthereafter as possible,in room 2000 ofthe

/2_day of

by Cynthia Kleinfelter

20

Notary Public

C¿r+ itt¿lrl rvut (¿ (( í 5e

@ Ðt úÑæææ¡æ

------

T!I¡

¿----

Department ofNatu-ral Resou¡ces, 1594West North Temple,Salt Lake Ciry, Utah.

TIIE HEARINGWILL BE CON-DUCTED as a formaladmi nistrative adjudi-cation in accordancewith the rules of theBoard as set forth inUtah AdministrativeCodeR64l etseq.and as provided forin Utah Code Ann.$ 40-6-l et seq., andUtah Code Am. $ 40-8'1 et seg., and UtahCodeAnn. $ 63G-4-101 .through 601.

DOCKETNO.2015-015 CAUSENO. 191-07 - In theMatter of the Requestfor Agency ActionofQEP ENERGYCOMPANYfoT anOrder extending theBoard's Order enteredin Cause No. 191-06,which suspendedthe application Ofut¿rhAdmin. codeR649-3-2, R649-3-l0; and R649-3-11 (l)and (2) for the arealocated within theOura! Park II FederalExploratory Unit,to the lands addedt}rough expansionofthe unit, consist-ing of all of Section1, the NEI/¿NE% ofSection 11, and theEYt,NWV , and theNE%SW% of Sec-tion72, Township 7South, Range 20 East,SLM, Uintah County,Urah

T}IE PURPOSEOF THE PROCEED-ING will be for thehearing examiner toreceive testimony andevidence regarding aRequest for AgencyAction to:

1; Pursuant toitq autho¡ity underUtah Code 40-6-5(3)(b) and R649-2-land649-2-3, exrendthe Board's previ-ous order entered onDecember 5,2014,in Cause No. 191-0ó to suspend theapplication of UtahAdmin. Code R649-3-2, R649-3-10, andR649-3-11(1) and(2)for the area locatedwithin the expansionof the Ouray Parkll Federal Explor-atorv Unit (f he "OP fI

of law will be filedwith the Board of Oil,Gas, and Mining andplesented at the nextregularly scheduledBoard hearing whichhas been set forWEDNESDAY, MAY27,2015, at 9:00 AMor as soorl thereafteras possible, in room1040 of the Depart-ment ofNaturalResources, 1594 WestNorth Temple, SaltLake City, Utah.

Objections to theRequest for AgencyAction must be hledwiththe Secretaryof the Board at theaddress listed belowno later than the14fh day of April;2015. Apafi mustfile a timely writtenobjection or otherresponse in order toparticipate as a paúyat the Board hearing,Failure to participatecan result in a defaultjudgment.

Natural personsmay appear andrepresent themselvesbefore the Board.All other representa-tion ofparties beforethe Board will be byattorneys licensedto practice law inthe State of Utah, orattomeys licensedto practice law inanother jurisdictionwhich meet the rulesof the Utah State Barfor practicing law be-fore the Utah Courts.

Pefsons interested.in this matter maypariicipate pursuantto the procedu.ralrules of the Board.The Request forAgency Action,and any subsequentpleadings, may beinspected at the offrceofthe undersigned,and inspected onlineat the Utah Board ofOil, Gas and Min-ing's website at http:l Iogm.utah.govlamr/boardtemp/redesign/books.html.

Pì¡rsuant to theAmericans with Dis-abilities Act, personsrequiring auxiliarycommunicative aidsand services to enab.le

them to participate inthis hearing shouldcall Julie Ann Carterat (801) 538-527'7,z"

Unit"), covering the

following lands:TownshiP ? South'

Ranse 20 East' SLMSãction l: Lots

1-4, S7zN7z, S'/z [All]Section 1 l:

NE74l'{E%Section 12:EYz,

NWTa,NE%SW%(containing

1,201.28 acres' more

or less);2. Providingthat

al

tothe bounda¡ies oftheOurav Park tl Federal

Exolóratory Unit (the

"oþ tt unir) withoutobtaining an excep-tion location from theDivision pursuänt toUtahAdmin. CodeR649-3-3;

3. Provìding thatno well may be direc-tionally drilled ifanyproducing portion ofthe 460 foot radiusalong the projectedwellbore intersectswith the boundar-ies of the OP II Unitwithout complyingwith the requirementsofUtahAdmin. CodeR649-3-l 1;

4: Providing thatQEP or its successo¡as unit op€Tator ofthe OP Il Unit agreesto provide (1) a plator sketch showingthe distance to leaseboundaries and thetarget location withany application forpermir to drill flrledfor a directionallydrilled well and (2)a copy ofthe arurualplan of developmentand operation for theOP ll Unit;

5. Providing therequested suspen-sion ofthese ruleswill remain in effectonly for as long as

the subject lands arecommitted to the OPll Unit; and

6. Providing forsuch other and'furtherrelief as may be justand equitable underthe circumstances.

The examiner'sproposed findings offact and conclusions

least three workingdays Prior to the hear-

ins date.-Onf'm this 31st

dav of March. 2015'.STNTP OF UTAH

BOARD OF OIL'GASANDMINING

RrLland J. Gill, Jr',

Chairman/s/ Julie Ann CarterBoard Secretary1594 WestNorfh

Temple' Suite l210sált Lake ciry,

Utah 8411ó(80l) 538-s277Published in the

Uintah Basin St¿n-

dard APril 7,2015

NOTTCE OFHEARINGDOCKET

NO.2015-015CAUSE NO.

191-07 ,

BEFORE THEBOARD OFOIL' GAS

AND MININGÐEPARI'MENT OFNATURAL

RESO{JRCESSTATE OF

UT,{H

THE STATEOF UTAHTOALL PERSONSTNTERESTED IN

ïrleEol-lownsc

DOCKE'| NO.

2015-01s cAusENO. i91-0? - ln the

Matter of the Request

for Agency Action

ofQÈP ENERCYCOMPANY for

an Order extend-

ins, the Boal'd's

oider entered in ,

CauseNo' 191-0ô'

which susbended

thê aPPlication Of

tJtah-Admin' Code

R6,49-3-2. R649-3-

t0' and R649-3-11( I )

and (2) fol'the at'ea

iocated within the

OulaY Park Il Federal

ExPlóratory Unit'

to ihe lands added

through exPansion

ofthe unit' conslst-

ins, ofall ofSection

1"-theNETNE%ofsection l1' and.

theEVz,NW%' and

the NE%SW% ol - .

Section 12' TownshtP

i south, Range 20

East. SLM' Uint¡h

CountY, UtahTHE PURPOSE

OF TT{EPROCEEDINC wrlt

be for the hearing

examiner to recelve

testimonY and evl-

PROOF OF'PUBLICATION

STATE OFUTAH,Ìs.s.

County of Uintah

I, ALYSSA SPRINGER, being duly sworn, depose and say that Iam the Legals Manager of The Vernal Express, a weeklynewspaper of general circulation, published each week at Vernal,Utah, that the notice attached hereto was published in saidnewspaper for I publication(s), the first publication having beenmade on April 7, 2015 and the last on April 7,2015, that saidnotice was published in the regular and entire issue of everynumber 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.

160 lines. Publication fee, $160.25

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

Legals Manager

and sworn to before me April 7 ,2015

MATTER:NOTICE TS

HEREBY GIVEN

that the Board o.t .

Oil, Gas and Mintng('"Board"), State or

Utah, Pursr'ønt to.

Utah AdministrattveCodeR64i-113-100, has designated

a hearing exalnlner

to conduct a heal'-

ìns. onTUESDAY'nÞruL ze. 2015' at

10:00 AM, or as soon

thereafter as Pos-

sible, in room 2000 ^

.of the Depaftment oÏ

Natural Resources'

i 594 West NorthTemPie, Salt Lake

ciw; Utah'ruege¡.ruuc

WILLBECONDUCTED as a

forrnal administra-tive adiudicatton tn

accordãnce with the

rules of the Board

as ser forlh in utah

Administrative Code

R641 et seq' and as

orovided for in Utah'Code Ann' $ 40-6-

1 et seq', and Utan-

Code Arrn' $ 40-8- t

et geq', and Utah

Code'Ann' |j 63G-4-

l0l ttu'ough601'

Notary Public, Residence, Roosevelt, Utah

.I-I

--I-I- -I-T

- GñrF"6irc-BOT¡ilIËPARRISHConrnl¡¡lon t653427

l¡ly Conunbshn ËxPlnsFtbnsy 23, 2018Stato ol Utâh

'lII¡J

â&ttIII\ P_#$e ;çï jl

-

dence regarding a

Request tbr AgencvAction to:

1. Pursuant toits authority under' :

Utah Code 40-ó-5(3)(b) and R649-2-1and 649-2-3, extendthe Board's previ-ous order entered onDecember 5,2074,in Cause No. 191-06 to suspend theapplication of UtahAdmin. Code R649-3-2, R649-3-10, and

R649-3-l 1(1) and (2)for the area locatedwithin the expansionof the Ouray Park llFederal Exploratoryunit (the "oP IIUnit"), covering tlrefollowing lands:

Township 7 South,Range 20 East, SLM

Section 1:

Lots 1-4, SYiNt/r,SYz

lAluSection I 1:

NE7"NE%Section

12: E%, NW'¿,NE%SW%

(containing' | ,201.28 acres, more

or less);2. Providing that

the producing intervalin any future wellmay not be locatedcloser than 460 1èet

to the boundar-ies of the OuraYPark II FedeialExnloratorvUnit (the "OPII Unit") withoutobøining an excep-lion location from theDivision pwsuant toUtah Admin. CodeR649-3-3;

3. Providing thatno well may be direc-tionally drilled ifanyproducing portion oftlie 460 foot ¡adiusalong the projectedwellbore intêrsectswìth the borindar-ies of the OP ll Unitwithout complyingwith the tequirementsof Urah Admin. Codet{649-j- I i;

4, Providing tharQLIP or i1s successoi.as unit ()¡re r.ator.oftl¡e OP ll Lhit agr.ees1o provide (1 ) a plator sketch showingthe distance to leaseboundarìcs and fhetarget location withany application forpermit to clrill filedfor a dir.ectionally.drilled weil and (2)a copy ofthe annualplan of developmentand opelation fortheOP tl Unir;

5. Providing therequested suspen-sion of,these ruleslvill remain in effectonly for as long asthe subject lands arecommilted to the OpIf Unit; and

6. Providing fur.such other and fuftherrelief as may be justand equitabie under.the cilcumstances.

The examiner'sproposed findings ot'fact and conclusionsof law will be filedwith the Boar.d ofOil, Gas, and Miningand presented at then'exf regulàrly sched-uled Board hearingwhich has been setfoL WEDNESDAYMAY 27.2015, ar9:00 AM or as soonthereafter as pos-sible, in room 1040of the DepaÍment ofNatural Resouces,1594 West North,Ternple, Salt LakeCiry, Utah.

Objections to theRequest fot'AgencyAction must be filedwilh the Secretaryof the Board at theaddless listed belowno latetfhan.the14th day of April,2015. A þaay mustfile a timely writtenobjection or otherresponse in order toparticipate as aparl;y'at the Board hearing.f¡ailure to parlicipate

.ca¡r result in a defuultiudgrnent.

Natut'al pctsonsmay appear and reP.resent themselvcsbefore thè Board. Allother reptesentalionofparties before theBoard will be byattorneys licensed

'to placlice law inthe State ofljtah. or'

at1(r rn e-v-s. I i censed roÊpractice larv in anoth_er jurisdiction whichmeet úre rules ofltheUtah State Bar forplacticing law belorefhe Utah Couns.

Persons in¿crcstedin this maftel.mavpartjçipate pu,"rå,,rto the proceduralrules of the Board.The Request forAgency Action,and any subsequentpleadings, rna1, 6.rnspected at the ofìiceof.rhe undersigned,and inspected onlinea1 the Uta¡ Board

.of Oil, Gas anciMining's website arhttp :,/ / ogm.wd.t.eov /afnrlboardtemp/rede_srgn/book.htrnl.

Pursuant to theAmer.icans withDisabiliries Acr, per.

I sons requjring auxil_rary comnrunicativea.ids and ser?ices tcrenable thein ro parric-rpate in this hearirreshould call Julie AinCarter ar (B0ll S-tg_5277 , at leasr rhreeworking days pr.ior tothe hearing date.

STATE oF L,fAHBOARD OF OII-GAS AND MININCRuland J. Cill, .1r..Chairman JulieAnn Carter BoardSecretary 1594 WestNorth Temple. Suitel2 I 0 Sah Lakr. Cilr,.Utah84116(Billl ''538-5277.

Publish in theVemai Express {rrril7,20ts

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

STATE OF UTAH

FILEDr{AY

! 2 20t5

sEcnEf nY BoAÐ 0FotL, 0A8 t ililiflNG

IN rse MATTER oF THE Rrqursr ron AceNcyAcuoN on QEP ENsncy CovpRNy FoR ANoRDER EXTENDINc rHE BoRRo's On¡BnENTERED rN Causn No. 191-06, v/HrcHSUSPENDED THE APPLICATIoN oF UTaHApir,lN. Cope R649-3-2, R649-3-10, ANDR649-3-l l(1) AND (2) FoR rHE AREALocATED wrrHrN THE Ounny Pem IIFeoenRl ExpLoRlroRv UNII, To rHE LANDS

ADDED THROUGH EXPANSION OF THE UNIT,coNSISTING oF ALL oF Secuou l, THE

NE74NE% oE SBcrroN ll, RNo run E/2,NIW%, AND THE NE%SW% or SpcuoN 12,TowNsurp 7 Sourrr, RnNce 20 ERsr, SLM,UmrRu CouNrv, UreH.

HEARING EXAMINER'SRECOMMENDED FINDINGS OF FACT

AND CONCLUSIONS OF LA\il

Docket No. 2015-015

Cause No. 191-07

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

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

Board of Oil, Gas, and Mining (the "Board"), on Tuesday, April28, 2015, at approximately 10:00

a.m. in Room 2000 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.

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

Energy Company, was Laura Rippentrop, 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 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

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 covers the following lands:

Township 7 South, Range 20 East, SLM

Section l: Lots 1-4, St/2Ì\Y2, S% [All]Section 11: NE7ÀIE%Section 12: E%,NWYI NE%SW%

(the "Subject Lands").

3. The oil and gas underlying the subject lands is owned by the United States of

America and leased under federal lease UTU-88140. QEP owns a majority of the working interest

in this lease.

4. On December 5, 2014, the Utah Board of Oil, Gas and Mining issued the Findings

of Fact, Conclusions of Law, and Order in Cause No. 191-06, suspending the application of Utah

Admin. Code R649-3-2,R649-3-10, and R649-3-11(1) and(2) for the Ouray Park II Federal

Exploratory Unit (the "OP II Unit").

2

5. The OP II Unit (UTU-9021lX) was approved on June 2,2014, and was expanded

effective January 1,2015, to include all of the subject lands, consisting of 1,201.28 acres, more or

less. 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 OP II Unit Agreement, all operations must be conducted in a manner that will

promote conservation and prevent waste.

6. 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 - I 0 and R649-3 - I 1 . Under these rules, each

well is to be located within a 400-foot "windod'in the center of each 4O-acre governmental quarter-

quarter section, or substantially equivalent lot or tract, and no well may be located closer than920

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. Well density and location pattems within the OP II Unit are determined in

accordance with the terms of the OP II Unit Agreement and the annual plan of development

approved by the BLM. Applications for permit to drill are approved by both the BLM and the

Division.

8. Based on a proposed 40-acre density pattern, there is potential for a total of 28

additional wells within the expansion of the OP II Unit. Of these proposed locations, approximately

10 of the wells would require that an exception location approval be obtained pursuant to Utah

J

Admin. Code R649-3-3 because the wells cannot be located within the allowed "window" due to

the topography in portions of the Subject Lands.

9 . In requesting that the Board extend its prior order in Cause No. I 9l -06 and suspend

Utah Admin. Code R649-3-2, R649-3-10, and R649-3-11 to cover the expansion of the OP II 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 OP II 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 OP II 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 OP II Unit agrees to provide (1)

aplat 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 OP II 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 OP II Unit.

10. Evidence presented by QEP indicated that development of the OP II Unit on 40-

acre well density is economical and appropriate under the circumstances.

I 1 . QEP mailed copies of the Request to the last known addresses of record as shown

in the Uintah County Recorder's Office and the Bureau of Land Management, Salt Lake City

4

Office, for all persons having a legally protected interest in this matter by certified mail, return

receipt requested.

12. Notice of the frling ofthe Request and of the hearing was duly published in the Salt

Lake Tribune and the Deseret Morning News on April 5,2015, and the Uintah Basin Standard and

the Vernal Express on April 7,2015.

CONCLUSIONS OF LAW

13. 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.

14. The Board has jurisdiction of the parties and of the subject matter pursuant to Utah

Code Ann. $ 40-6-1 . et seq.

15. Development in accordance with the OP II 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.

5

HEARING EXAMINER' S RECOMMENDATION

I, John C. Rogers, Associate Director of the Division, acting under Utah Admin. Code

R64l-113-100, et seq., as the Board's duly-appointed Hearing Examiner in the above-captioned

matter, held an evidentiary hearing on the record on April 28,2015, at approximately 10:00 a.m.,

in Room 2000 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 12th day of May,2015.

By:C. Rogers, Director, Oil and GasDivision of Oil, Gas and Mining

77s3397 2

6

CERTIFICATE OF SERVICE

I hereby certify that on this I 3th day of May , 2015 , I caused a true and correct copy of

the foregoing HEARING EXAMINER'S RECOMMENDED FINDINGS OF FACT AND

CONCLUSIONS OF LAW for Docket No. 2015-015, Cause No. 191-07, 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 84101

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

Steven F. Alder, Esq.Assistant Attorney GeneralAttorney for the Division of Oil, Gas andMining1594 West North Temple, Suite 300Salt Lake City, UT 84114

KFRT, LLCc/o Registered AgentJ Nicholas Murdock2l I S 2nd Street Unit ALararnie, V/Y 82070 -3 682

LeMoyne H. OdellPMB 199

3301 South 14th Street, Ste. 16

Abilene, TX79605

Laura Rippentrop

QEP Energy Company1050 lTth Street, Suite 500Denver, CO 80265

Michael S. Johnson, Esq.Assistant Attorney GeneralAttorney for the Board of Oil, Gas andMining1594 West North Temple, Suite 300Salt Lake City, UT 84114

Josephine Hunter, Surviving Spouse and SoleHeir and Personal Representative for theEstate of Roy A. Hunter3737 AtlarÍic Avenue 1301

Long Beach, CA 90807

Fred V. Jones, Jr.

c/o Nancy Kay Hargrove252 Wellington DrAustin, TX78737-4735[Address updated 4l23ll5l

Cynthia H. MurchisonPO Box 1637Dripping Springs, TX 78620

7

Staci L. Owen10381 TennysonCourtWestminster, Colorado 8003 I

Nancy Kay Hargrove252Wellington DriveAustin, TX 78737-4735

[Address updated 4 120 l20l5l

Jay D. Rockey22530 Cass AvenueWoodland Hills, CA9l364

Virginia T. Schulze6239 V/est Greentree DriveSomis, CA 93066

Viking Resources CorporationP.O. Box 160Deerfield, OH444ll

I

FILEDJUL 0 6 20ts

SECRETANT BOAROOFOiL,0AS l lttî{lt{G

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

STATE OF UTAH

IN rHe MATTER oF THE Requesr FoR

AcnNcv AcuoN oF QEP ENeRcvCol¿plNv FoR AN oRDER EXTENDING THE

BoRRo's Onuen ENTERED rN Ceuse No.191-06, v/HrcH SUSPENDED THE

AppLrcATroN o¡ UrRs Aorr¡rNI. Coop R649-3-2,R649-3-10, RNo R649-3-11(1) nNl (2)FoR THE AREA LocATED v/rrHrN rsB OURRyPenrc II Fs¡ennt, Expr-oReronv UNII, toTHE LANDS ADDED THROUGH EXPANSION OF

THE UNIT, coNSISTINc oF ALL ot SecuoN 1,

ru¡ NE7¿NEYI op SBcuoN 11, lNo ureE/2, NW%, AND THE NE%SW% oFS¡cuoN 12, TowNsurp 7 Souru, ReNcn 20EASI, SLM, Umrau CoLrNrY, Ureu.

PROPOSED FINDINGS OF FACT,CONCLUSIONS OF LAW,

AND ORDER

Docket No. 2015-015

Cause No. 191-07

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

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

Board of Oil, Gas, and Mining (the "Board"), on Tuesday, April 28, 2015, at approximately

10:00 a.m. in Room 2000 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.

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.

Testifying via video conference before the Hearing Examiner from Denver, Colorado, on

behalf of Petitioner, QEP Energy Company, was Laura Rippentrop, Landman, Aaron Bazzell,

Associate Geologist, and Daniel J. Rabiolo, Senior Reservoir Engineer. QEP was represented by

Mark L. Burghardt of Holland & Hart, LLP.

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

filed with the Utah Board of Oil, Gas and Mining (the "Board") on May 12,2015.

This matter came before the Board on Wednesday, May 27,2015, 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 were present and participated in the

hearing: Ruland J. Gill, Jr., Chairman, Susan S. Davis, Gordon L. Moon, Chris Hansen, Richard

Borden, Carl F. Kendell, and Michael Brown. 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 clo business in Utah and is fully and appropriately

bonded with all Federal and State of Utah agencies.

2. The Request for Agency Action covers the following lands:

Township 7 South. Ranee 20 East. SLM

Section l: Lots 1-4, S'/l:lYr, S% [All]Section l1: NEZ4NE%Section 12: EY2,NWYI NE%SV/%

2

(the "Subject Lands")

3. The oil and gas underlying the subject lands is owned by the United States of

America and leased under federal lease UTU-88140. QEP owns a majority of the working

interest in this lease.

4. On December 5, 2014, the Utah Board of Oil, Gas and Mining issued the Findings

of Fact, Conclusions of Law, and Order in Cause No. 191-06, suspending the application of Utah

Admin. Code R649-3-2,R649-3-10, and R649-3-11(1) md(2) for the Ouray Park II Federal

Exploratory Unit (the "OP il Unit").

5. The OP II Unit (UTU-9021lX) was approved on June 2,2014, and consists of all

of the Subject Lands, totaling 2,926.56 acres. The unit is administered by the United States

Bureau of Land Management ("BLM"), a1¿ QEP serves as the unit operator. There are no

uncommitted tracts within the Unit. According to Paragraph 16 of the OP II Unit Agreement, all

operations must be conducted in a manner that will promote conservation and prevent waste.

6. 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-ll. 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

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 }-acre well density pattern.

7. Well density and location patterns within the OP II Unit are determined in

accordance with the terms of the OP II Unit Agreement and the annual plan of development

aJ

approved by the BLM. Applications for permit to drill are approved by both the BLM and the

Division.

8. Based on a proposed 4O-acre density pattern, there is potential for a total of 28

additional wells within the expansion of the OP II Unit. Of these proposed locations,

approximately ten of the wells would require that an exception location approval be obtained

pursuant to Utah Admin. Code R649-3-3 because the wells cannot be located within the allowed

"window" due to the topography in portions of the Subject Lands.

9. In requesting that the Board extend its prior order in Cause No. 191-06 and

suspend Utah Admin. Code R649-3-2, R649-3-10, and R649-3-11 to cover the expansion of the

OP II 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 OP II 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 OP II 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 OP II 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 OP II 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 OP II Unit.

4

10. Evidence presented by QEP indicated that development of the expansion of the

OP II Unit on 4O-acre well density is economical and appropriate under the circumstances.

11. QEP mailed copies of both the Request to the last known addresses of record as

shown in the Uintah County Recorder's Office and the Bureau of Land Management, Salt Lake

City Offrce, for all persons having a legally protected interest in this matter by certified mail,

return receipt requested.

12. Notice of the filing of the Request and of the hearing was duly published in the

Salt Lake Tribune and the Deseret Morning News on April 5, 2015, and the Uintah Basin

Standard and the Vernal Express on April 7,2015.

13. The vote of the Board members present at the hearing was unanimous in favor of

granting the Request.

CONCLUSIONS OF LA\ry

14. 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.

15. The Board has jurisdiction of the parties and of the subject matter pursuant to

Utah Code Ann. $ 40-6-1. et seq.

16. Development in accordance with the OP II Unit annual plan of development will

conserve the resource and prevent waste.

17. 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

5

hydrocarbons, prevent waste, and adequately protect the correlative rights of all affected parties

in the Subject Lands.

18. QEP has sustained its burden of proof, demonstrated good cause, and satisfied all

legal requirements for granting the Request.

ORDER

Based upon these f,rndings of fact and conclusions of law, the Request, and testimony and

other evidence submitted by QEP, the Board hereby orders:

1. The Request in this matter is granted.

2. Utah Admin. Code Pt649-3-2, R649-3-10, and R649-3-11(1) 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 expansion of the OP II Unit without

obtaining an exception location from the Division pursuant to Utah

Admin. Code R649-3-3;

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 expansion of the OP II Unit without complying with the requirements

of Utah Admin. Code R649-3-l l; and

iii. QEP or its successor as unit operator of the expansion of the OP II 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

6

filed for a directionally drilled well and (2) a copy of the annual plan of

development and operation for the OP II Unit.

3. This suspension of these rules will remain in effect only so long as the Subject

Lands are committed to the OP II 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 inthis proceeding or on

facts offrcially 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 R64l-109; and constitutes a final agency action as defined in the

Utah Administrative Procedures Act and Board rules.

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 notihes

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 Arur. $ 63G-4-401(3Xa) and 403.

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

7

may apply for reconsideration of this order. Utah Code Ann. $ 63G-4-302. The Utah

Administrative Procedures Act provides :

(l) (a) Within 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 purpose,shall issue a written order granting the request or denying therequest.(b) If the agency head or the person designated for that pu{posedoes not issue an order within 20 days after the hling 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:

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 10th 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 R64l-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

I

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 _ day of July,20l5.

STATE OF UTAHBOARD OF OIL, GAS, AND MINING

By:Ruland J. Gill, Jr., Chairman

9

CERTIFICATE OF SERVICE

The undersigned hereby certifies that on this 6th day of July, 2015, a true and correct

copy of the foregoing PROPOSED FINDINGS OF FACT, CONCLUSIONS OF LAW AND

ORDER was mailed, postage prepaid, to the following:

Michael S. Johnson, Esq.Assistant Attorney GeneralAttorney for the Board of Oil, Gas and Mining1594 West North Temple, Suite 300Salt Lake City, UT 84114

United States of Amerrca%Bureau of Land ManagementUtah State Office440 West 200 South, Suite 500Salt lake City, UT 84101

7842408 I

Steven F. Alder, Esq.Assistant Attorney GeneralAttorney for the Division of Oil, Gas and Mining1594 West North Temple, Suite 300Salt Lake City, UT 84114

Respectfully submitted this 6th day of July, 2015.

By

10

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

STATE OF UTAH

FILED

IN THE MATTER oF THE Rrquesr FoRAcpNcv AcuoN oF QEP ENeRcyCoir¿peNy FoR AN oRDER EXTENDING THE

BoRRp's ORoen ENTERED rN Cnus¡ No.19l-06, wHrcH SUsPENDED THE

AppLrcATroN op UrRu AovrN. Cooe R649-3-2,R649-3-10, eNo R649-3-l l(1) nNo (2)FoR THE AREA LocATED wtrHIN rHe OuReyPenr II F¡pennt. Expr,oRnrony UNrr, roTHE LANDS ADDED THROUGH EXPANSION OF

THE UNIT, coNSISTING oF ALL or SecttoN 1,

rHp NE7¿NE% or SEcuoN 11, RNo rHeEY2, NV/%, AND rHE NE%SW% oFSecrroN 12, TowNsHrp 7 SourH, ReNce 20ERSI, SLM, UtNren Cot-llltv, UrnH.

FINDINGS OF FACT,CONCLUSIONS OF LAW,

AND ORDER

Docket No.2015-015

Cause No. 191-07

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

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

Board of Oil, Gas, and Mining (the "Board"), on Tuesday, April 28, 2015, at approximately

10:00 a.m. in Room 2000 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.

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.

Testifying via video conference before the Hearing Examiner from Denver, Colorado, on

behalf of Petitioner, QEP Energy Company, was Laura Rippentrop, Landman, Aaron Bazzel|

Associate Geologist, and Daniel J. Rabiolo, Senior Reservoir Engineer. QEP was represented by

Mark L. Burghardt of Holland & Hart, LLP.

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

filed with the Utah Board of Oil, Gas and Mining (the "Board") on May 12,2015.

This matter came before the Board on Vy'ednesday,May 27,2015, 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 were present and participated in the

hearing: Ruland J. Gill, Jr., Chairman, Susan S. Davis, Gordon L. Moon, Chris Hansen, Richard

Borden, Carl F. Kendell, and Michael Brown. The Board was represented by Michael S.

Johnson, Assistant Attomey 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 covers the following lands:

Townshio 7 South. Range 20 East. SLM

Section 1: Lots l-4, St/2N/2, S% [All]Section 11: NEZ4NE%Section 12: EY2,NWY4, NE%SV/%

2

(the "Subject Lands").

3. The oil and gas underlying the subject lands is owned by the United States of

America and leased under federal lease UTU-88140. QEP owns a majority of the working

interest in this lease.

4. On December 5, 2014, the Utah Board of Oil, Gas and Mining issued the Findings

of Fact, Conclusions of Law, and Order in Cause No. 191-06, suspending the application of Utah

Admin. Code R649-3-2,R649-3-10, and R649-3-11(1) and (2) for the Ouray Park II Federal

Exploratory Unit (the "OP II Unit").

5. The OP II Unit (UTU-9021lX) was approved on June 2,2014, and consists of all

of the Subject Lands, totaling 2,926.56 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 Paragraph 16 of the OP II Unit Agreement, all

operations must be conducted in a manner that will promote conservation and prevent waste.

6. 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 "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

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 4}-acre well density pattem.

7. Well density and location patterns within the OP II Unit are determined in

accordance with the terms of the OP II Unit Agreement and the annual plan of development

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approved by the BLM. Applications for permit to drill are approved by both the BLM and the

Division.

8. Based on a proposed 40-acre density pattem, there is potential for a total of 28

additional wells within the expansion of the OP II Unit. Of these proposed locations,

approximately ten of the wells would require that an exception location approval be obtained

pursuant to Utah Admin. Code R649-3-3 because the wells cannot be located within the allowed

"window" due to the topography in portions of the Subject Lands.

9. In requesting that the Board extend its prior order in Cause No. 19l-06 and

suspend utah Admin. code R649-3-2, R649-3-10, and R649-3-11 to cover the expansion of the

OP II 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 OP II 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 OP II Unit boundary without

complying with Utah Admin. Code R649-3-3 and R649-3-l l(1) and (2);

(c) QEP or its successor as unit operator of the OP II 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 OP II 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 OP II Unit.

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10. Evidence presented by QEP indicated that development of the expansion of the

OP il Unit on 4}-acre well density is economical and appropriate under the circumstances.

I 1. QEP mailed copies of both the Request to the last known addresses of record as

shown in the Uintah County Recorder's Office and the Bureau of Land Management, Salt Lake

City Office, for all persons having a legally protected interest in this matter by certified mail,

return receipt requested.

12. Notice of the filing of the Request and of the hearing was duly published in the

Salt Lake Tribune and the Deseret Morning News on April 5, 2015, and the Uintah Basin

Standard and the Vernal Express on April 7 ,2015.

13. The vote of the Board members present at the hearing was unanimous in favor of

granting the Request.

CONCI, OF LAW

14. 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.

15. The Board has jurisdiction of the parties and of the subject matter pursuant to

Utah Code Ann. $ 40-6-1. et seq.

16. Development in accordance with the OP II Unit annual plan of development will

conserve the resource and prevent waste.

17. 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

5

hydrocarbons, prevent waste, and adequately protect the correlative rights of all affected parties

in the Subject Lands.

18. QEP has sustained its burden of proof demonstrated good cause, and satished 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(1) 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 expansion of the OP II Unit without

obtaining an exception location from the Division pursuant to Utah

Admin. Code R649-3-3;

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 expansion of the OP II Unit without complying with the requirements

of Utah Admin. Code R649-3-l l; and

iii. QEP or its successor as unit operator of the expansion of the OP II 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

6

filed for a directionally drilled well and (2) a copy of the annual plan of

development and operation for the OP II Unit.

3. This suspension of these rules will remain in effect only so long as the Subject

Lands are committed to the OP II 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.

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. Utatr Code Ann. $ 63G-4-401(3Xa) and 403.

7. Notice of Right to Petition for Reconsideration. As an altemative, but not as a

prerequisite to judicial review, the Board hereby notifies all parties to this proceeding that they

7

may apply for reconsideration of this order. Utah Code Ann. $ 63G-4-302. The Utah

Administrative Procedures Act provides

(l) (a) Within 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 pu{pose,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 be

denied. Id.

The Rules of Practice and Procedure before the Board of Oil, Gas and Mining entitled

"Rehearing and Modification of Existing Orders" state

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 10th 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 be

served on each other party to the proceeding no later than the l5thday 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

8

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 16th day of July,20l5.

STATE OF UTAHBOARD OF OIL, GAS, AND MINING

BJ. Gill,

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CERTIFICATE OF SERVICE

I hereby certify that on this I 7th day of July , 2015, I caused a true and correct copy of the

foregoing FINDINGS OF FACT AND CONCLUSIONS OF LAW for Docket No. 2015-015,

Cause No. l9l-07, 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 84101

United States of America'/oBureau of Land ManagementUtah State Ofhce440 West 200 South, Suite 500Salt lake City, UT 84101

Steven F. Alder, Esq.Assistant Attorney GeneralAttorney for the Division of Oil, Gas andMining1594 West North Temple, Suite 300Salt Lake City, UT 84114

KFRT, LLCc/o Registered AgentJ Nicholas Murdock211 S 2nd Street Unit ALaranie, WY 82070-3682

LeMoyne H. OdellPMB 1993301 South 14th Street, Ste. l6Abilene, TX79605

Laura Rippentrop

QEP Energy Company1050 lTth Street, Suite 500Denver, CO 80265

Michael S. Johnson, Esq.Assistant Attomey GeneralAttorney for the Board of Oil, Gas andMining1594 V/est North Temple, Suite 300Salt Lake City, UT 84114

Josephine Hunter, Surviving Spouse and SoleHeir and Personal Representative for theEstate of Roy A. Hunter4320Linden AvenueLong Beach, CA 90807-2725

[Address updated 5l2ln015l

Fred V. Jones, Jr.

c/o Nancy Kay Hargrove252Wellington DrAustin, T){78737-4735[Address updated 4l23ll5l

Cynthia H. MurchisonPO Box 1637Dripping Springs, TX 78620

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Staci L. Owen10381 Tennyson CourtWestminster, Colorado 8003 I

Nancy Kay Hargrove252 Wellington DriveAustin, TX 78737-4735

[Address updated 4120 l20l5l

Jay D. Rockey22530 Cass AvenueWoodland Hills, CA 91364

Virginia T. Schulze6239 V/est Greentree DriveSomis, CA 93066

Viking Resources CorporationP.O. Box 160Deerfield, OH 44411

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