From: Thomas Kellahin [mailto:kellahin@earthlink.net] Sent: Wed 9/14/2005 9:59 AM To: Stogner, Michael, EMNRD Cc: Steffanie Hayes

Subject: Fw: Status of NSL's- Section 16-21S-37E, Lea County, NM

Mike:

Apache has request a status report for the following:

On August 4, 2005,1 filed two NSL administrative cases for three wellbores as follows:

(1) State Land "15" Well No. 9 and Well No. 10, both in the same 40-acre tract being Unit O of Sec 16, T21S, R37E and

(2) State Land "15" Well No. 11 in Unit N of Section 16, T21S, R37E

Thanks, Tom

Original Message — From: Haves. Steffanie To: kellahin@earthlink.net Sent: Wednesday, September 14, 2005 8:17 AM Subject: Status of NSL's- Section 16-21S-37E, Lea County, NM

Tom,

Good Morning. As you will recall, Apache has filed for three NSL's in the referenced Section (State Land 15 #9, #10 and #11). Have you heard anything from the OCD on these applications? We plan on spudding these wells in October, so we need the approval as quickly as possible.

Thank you,

Steffanie L. Hayes Phone: 918-491-4815 Fax: 918-491-4854 steffanie.hayes@usa. apachecorp. com

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District 1

1625 N. French Dr., Hobbs, KM 88240

1301 W. Grand Avenue, Artesia, NM 88210

District 111 1000 Rio Brazos Rd., Aztec, NM 87410 District IV

1220 S. St. Francis Dr., Santa Fe, NM 87505

State of New Mexico Energy, Minerals & Natural Resources Department

OIL CONSERVATION DIVISION 1220 South St. Francis Dr.

Santa Fe, NM 87505

Form C-102

Revised June 10,2003

Submit to Appropriate District Office

State Lease - 4 Copies

Fee Lease - 3 Copies

• AMENDED REPORT

' API Number 30-025-06633

' Pool Code 60240

' Pool Name Tubb Oil & Gas

' Property Code 005228

' Property Name State Land 15

' Well Number 4

' OGRID No. 012024

' Operator Name

John H. Hendrix Corporation

' Elevation 3432* GR

1 "Surface Location UL or lot no.

P

Section

16

Township

21S

Range

37E

Lotldn Feet fiom the

660

North/South line

South

Feet fiom the

660

East/West line

East

County

Lea

"Bottom Hole Location If Different From Surface UL or lot no. Section Township Range Lot Idn Feet fiom the North/South line Feet from the East/West line County

" Dedicated Acres

40

" Joint or Infill " Consolidation Code " Order No.

NO ALLOWABLE WILL BE ASSIGNED TO THIS COMPLETION UNTIL ALL INTERESTS HAVE BEEN CONSOLIDATED OR A NON-STANDARD UNIT HAS BEEN APPROVED BY THE DIVISION

16 1 7 OPERATOR CERTIFICATION I hereby certify that the information contained herein i

true andrarnplete to the best of my knowledge and

Signature

Ronnie H. Westbrook Printed Name

Vice President

Title and E-mail Address

06/29/2005 Due

1 7 OPERATOR CERTIFICATION I hereby certify that the information contained herein i

true andrarnplete to the best of my knowledge and

Signature

Ronnie H. Westbrook Printed Name

Vice President

Title and E-mail Address

06/29/2005 Due

/ ,

'"SURVEYOR CERTIFICATION I hereby certify that the well location shown on this plat

was plotted from field notes of actual surveys made by

me or under my supervision, and that the same is true

and correct to the best of my belief.

7 ^

^ r / / /

Date of Survey

Signature and Seal of Professional Surveyor:

Certificate Number

B E F O R E T H E O I L C O N S E R V A T I O N COMMISSION O F T H E S T A T E O F NEW M E X I C O

I N THE M A T T E R OF THE HEARING C A L L E D BY THE OIL CONSERVATION COMMISSION OF THE S T A T E OF NEW MEXICO FOR T H E PURPOSE OF CONSIDERING:

CASE NO. 676 Order No. R-454

THE A P P L I C A T I O N OF M I D - C O N T I N E N T P E T R O L E U M CORPORATION FOR A N ORDER GRANTING A P P R O V A L OF A N E X C E P T I O N PURSUANT TO RULE 7 (a) OF ORDER NO. R-373-A I N E S T A B L I S H M E N T OF A N UNOR­THODOX GAS PRORATION UNIT OF 160 CONTIGUOUS ACRES CONSISTING OF THE SOUTH H A L F OF THE SOUTH H A L F OF SECTION 16, TOWNSHIP 21 SOUTH, RANGE 37 EAST, N M P M , L E A COUNTY, NEW M E X I C O , IN THE T U B B GAS POOL.

ORDER OF THE COMMISSION

BY THE COMMISSION:

This cause came on fo r hearing at 9 o 'c lock a . m . , on M a r c h 17, 1954, at Santa Fe , New Mex ico , before the O i l Conservat ion Commiss ion , here inaf te r r e f e r r e d to as the " C o m m i s s i o n " .

NOW, on this 16th day of A p r i l , 1954, the Commiss ion , a quorum being present , having considered the records and tes t imony adduced, and being f u l l y advised i n the p remises ;

FINDS:

(1) That due notice of the t ime and place of hear ing and the purpose thereof having been given as r equ i red by law, the Commiss ion has j u r i s d i c t i o n of this case and the subject mat te r thereof .

(2) That pursuant to p rov is ions of Rule 7 (a) of Order No. R-373-A, the Commiss ion has power and author i ty to p e r m i t the f o r m a t i o n of a gas p r o r a t i o n unit consist ing of other than a legal quarter section a f te r notice and hear ing by the C o m ­m i s s i o n .

(3) That applicant , Mid-Cont inen t Pe t ro l eum Corpora t ion , is the owner of an o i l and gas lease i n Lea County, New M e x i c o , the land consist ing of other than a legal quarter sect ion, and descr ibed as f o l l o w s , t o - w i t :

TOWNSHIP 21 SOUTH, RANGE 37 EAST, N M P M ~ S / 2 S/2 of Se c t ion 16 ~ "

- 2 -Order No. R-454

containing 160 acres , m o r e or less .

(4) That applicant , Mid-Cont inen t P e t r o l e u m Corpo ra t i on , has obtained p e r m i s s i o n f r o m the C o m m i s s i o n to dual ly complete a w e l l known as the State "15" W e l l No. 4 located 660 fee t f r o m the South and Eas t l ines of Sect ion 16, Township 21 South, Range 37 East , N M P M , the we l l to be dual ly completed i n the Tubb Gas Zone and D r i n k a r d O i l Zone.

(5) That the a foresa id w e l l is located w i t h i n the l i m i t s of the pool here tofore delineated and designated as the Tubb Gas Poo l .

(6) That i t is i m p r a c t i c a l to pool appl icant ' s said lease w i t h adjo in ing acreage i n the South half of Section 16, Township 21 South, Range 37 East , N M P M . , and that the owners of adjoining acreage i n said half sect ion have not objected to the f o r m a t i o n of the proposed p r o r a t i o n uni t of 160 acres , but have express ly consented there to .

(7) That unless a p r o r a t i o n uni t consis t ing of applicant 's a foresa id acreage is p e r m i t t e d , applicant w i l l be depr ived of the oppor tuni ty to recover i t s jus t and equitable share of the na tura l gas i n the Tubb Gas P o o l .

(8) That c rea t ion of a p r o r a t i o n uni t cons is t ing of the a foresa id acreage w i l l not cause but w i l l p revent waste, w i l l p ro tec t c o r r e l a t i v e r i g h t s , and i s necessary to prevent conf i sca t ion of appl icant 's p r o p e r t y .

I T IS T H E R E F O R E ORDERED:

(1) That the appl ica t ion of Mid -Con t inen t P e t r o l e u m C o r p o r a t i o n , f o r approval of an unorthodox p r o r a t i o n uni t cons is t ing of the f o l l o w i n g descr ibed acreage

TOWNSHIP 21 SOUTH, RANGE 37 E A S T , N M P M S/2 S/2 of Section 16

be and the same is hereby approved, and a p r o r a t i o n uni t consis t ing of a fo resa id acreage is hereby created.

(2) That appl icant ' s w e l l , State "15", W e l l No. 4, located i n the SE/4 SE/4 of Section 16, Township 21 South, Range 37 Eas t , N M P M , shal l be granted an allowable i n the p r o p o r t i o n that the above descr ibed 160 acre un i t bears to the standard or orthodox p r o r a t i o n uni t f o r said poo l , a l l u n t i l f u r t h e r o rder of the C o m m i s s i o n , the e f fec t ive date of said al lowable to be de te rmined m accordance w i t h the p rov is ions of Rule 13 of Order R - 3 7 3 - A .

DONE at Santa Fe , New M e x i c o , the day and year hereinabove designated.

State of New Mexico O i l Conservat ion C o m m i s s i o n

Signed by: E d w i n L . M e c h e m , Cha i rman ; E . S. Walker . Member ; R. R. S p u r r i e r , Secre ta ry .

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From: Stogner, Michael, EMNRD Sent: Mon 9/26/2005 4:16 PM To: Thomas Kellahin Subject: RE: Status of NSL's- Section 16-21S-37E, Lea County, NM

I am now more confused about the dedicated acreage for the Tubb gas production within the S/2 of Sec. 16. I stated in my last e-mail that Division Order No approved a 160-acre Non-Standard Tubb gas spacing unit comprising the S/2 S/2 of Sec. 16. R-454 for the John H. Hendrix Corp. State Land "15" Well No. 4 (API No. 30-025-06633), located 660 feet from the South and East lines (Unit P) of Section 16. You now tell me that the SE/4 of Sec. 16 is dedicated to this well. When did this change occur? The proposed Tubb completion for Apache's proposed State Land "15" Well No. 11 (see NSL-5279) still appears to be at risk.

NEW MEXICO ENERGY, MINERALS and NATURAL RESOURCES DEPARTMENT

BILL RICHARDSON September 16, 2005 Governor

Joanna Prukop Cabinet Secretary

Apache Corporation c/o W. Thomas Kellahin P. O. Box 2265 Santa Fe, New Mexico 87504

Administrative Order NSL-5279

Dear Mr. Kellahin:

Reference is made to the following: (i) your application (administrative application reference No. pSEMO-521743064) on behalf of Apache Corporation that was submitted to the New Mexico Oil Conservation Division ("Division") in Santa Fe, New Mexico on August 4, 2005; (ii) your e-mail on Wednesday morning, September 14, 2005 checking on the status of this application; and (iii) the Division's records in Hobbs and Santa Fe: all concerning Apache Corporation's request for an unorthodox oil well location in the Blinebry Oil and Gas Pool (6660), Tubb Oil and Gas Poor(60240)7DfinRafd Pool (19190): and Undesignated Wantz-Abo Pool (62700), for its proposed State Land "15" Well No. 11 to be drilled 330 feet from the South line and 1330 feet from the West line (Unit N) of Section 16, Township 2 1 South, Range 37 East, NMPM, Lea County, New Mexico.

This application has been duly filed under the provisions of: (i) Division Rules 104.F and 1207. A (2), soon to be renumbered 1210.A (2); (ii) the "Special Rules and Regulations for the Blinebry Oil and Cas Pool", as promulgated by Division Order No. R-8170, as amended; and (iii) the "Special Rules and Regulations for the Tubb Oil and Gas Pool", as promulgated by Division Order No. R-8170, as amended.

The SE/4 SW/4 (Unit N) of Section 16, being a standard 40-acre oil spacing and proration unit for all four intervals, is to be dedicated to this well.

It is the Division's understanding that the S/2 S/2 of Section 16 comprises a single state lease issued by the New Mexico State Land Office (State Lease No. B-08105-0003) with common mineral interests; therefore, there are no adversely affected interests to the proposed 40-acre oil spacing and proration unit within these four oil-bearing intervals.

Approval of the proposed unorthodox oil well location request should enable the operator to further develop and/or deplete the Blinebry, Tubb, Drinkard, and Abo intervals within this portion ofthe aforementioned state lease that might not otherwise be recovered.

By the authority granted me under the provisions of Division Rules 104.F (2) and the applicable provisions of the special pool rules governing both the Blinebry and Tubb Oil and Gas Pools, the above-described unorthodox oil well location for Apache Corporation's proposed State Land "15" Well No. 11 is hereby approved for the Blinebry Oil and Gas Pool, Tubb Oil and Gas Pool, Drinkard Pool, and Undesignated Wantz-Abo Pool.

MarkE. Fesmire, P.E. Director

Oil Conservation Division

Oil Conservation Division * 1220 South St. Francis Drive * Santa Fe, New Mexico 87505 Phone: (505) 476-3440 * Fax (505) 476-3462 * http://ww.enrad.state.nm.us

Apache Corporation September 16, 2005 Page 2

Division Administrative Order NSL-5279

If after completion within the Blinebry and Tubb formations, production from either zone is classified as "gas," the operator shall request an amendment to this order seeking such relief as deemed appropriate.

Jurisdiction of this cause is retained for the entry of such further orders as the Division may deem necessary.

Sincerely,

cc: New Mexico Oil Conservation Division - Hobbs New Mexico State Land Office - Santa Fe

From: Tom Kellahin [mailto:kellahin@earthlink.net] Sent: Mon 9/26/2005 4:49 PM To: Stogner, Michael, EMNRD Subject: RE: Status of NSL's- Section 16-21S-37E, Lea County, NM

Mike: I'm the one that is confused-You are correct-My

mistake-the existing S/2S/2 non-standard GPU for the

Hendrix State Land "15" Well No. 4 precludes all three of

these Apache wells from being produced in the Tubb-

Apache needs to withdraw the Tubb from all three wellbores-

Would it be okay to test the Tubb and not produce it until the

Tubb issue of resolved by Apache and Hendrix and OCD

approval has been obtained.

Sorry-this is my mistake, Regards, Tom

From: Stogner, Michael, EMNRD Sent: Mon 9/26/2005 5:06 PM To: Tom Kellahin Subject: RE: Status of NSL's- Section 16-21S-37E, Lea County, NM

Per your Isat two e-mails, I will amend both applications and proceed accordingly. As for as your request to complete any of these wells in the Tubb interval; I am in no position of authority to say yes, just be aware that if Apache attempts to complete any of these wells in the Tubb formation, they do so at their own risk.

From: Thomas Kellahin [mailto:kellahin@earthlink.net] Sent: Wed 10/26/2005 8:38 AM To: Stogner, Michael, EMNRD Subject: Status request: Apache NLS for State Lands "15" Wells9.10, & 11

Re: NSL applications for Apache filed August 4, 2005: State Land "15" Wells No. 9 and No 10

UnitO, Sec 16, T21S, R37E State Land "15" Well No. 11

Unit N Sec 16.T21SR37E

Mike:

Yesterday, I returned from vacation and during the day received 2 requests from Apache to ask you the status of the two NSL applications for the 3 wellbores.

As a result of our e-mails on September 26th, I have hoped that I have provided you will enough information for you to make a decision about this application.

Please advise me if you need anything further from Apache or me. Thanks, Tom