VOLUME 13, ISSUE 2

FEBRUARY 2015

President’s Letter Points of Interest NewMembers

3

Questions from the

4,5

field



Industry Affairs

6-8

Feb. Meeting Pics

9,10

Legislative Affairs

11-13

Dear Members, February has been a busy month for OCAPL and we started off with Gary David Quinnett who spoke to our members about Oil and Gas Well Liens. We had a good turn out and appreciate Mr. Quinnett taking time out of his busy schedule. He explained what constitutes a lien, the process of filing and perfecting them and also the repercussions that one may encounter if they are used. At our monthly meeting we had the honor of hosting Mr. Roger Soape, President of AAPL. He updated everyone on AAPL’s new building, new website, the three entities under the AAPL umbrella and the function and goal of each faction. I forgot to ask him to comment on an article posted to AAPL’s Facebook page: “Best jobs in America: Yours on the list?” Guess who took the third spot? None other than a Landman! The article gave Quality of Life rating to 1) Personal satisfaction, 2) Benefit to society, and 3) Low stress. We received straight A’s! I may disagree with the grade for stress… but it was nice to see us at the top! Here’s the link in case you want to read the entire article: http://fox13now.com/2015/01/27/best-jobs-inamerica-yours-on-the-list/ February 2nd was also President’s Night and we had over 20 past presidents attend the happy hour and dinner. Mr. Soape recognized the OCAPL for its strong representation in AAPL leadership as Jack Sweeney, Jack Richards, Scott Stone and Don Key are all AAPL past presidents. On another note, John Morey was the earliest past president in attendance and he shared that in his year (1972), OCAPL amended its By-Laws to include women! Our female members appreciate what must have been a forward thinking move in 1972. March 2nd Janet Stewart with Oklahoma Conservation Commission will speak at our

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luncheon about Flood Control Easements. Dennis McAfee and Brandy Smart from QPS Engineering will address current Environmental Issues at the evening meeting. Dennis and Brandy are two of my favorite people and have always supported OCAPL by speaking each year at the Weekend Take Off. Most recently, Dennis spoke at the Field Landman Seminar. Please make plans to join us March 2nd! We continue to experience difficulties with the website. Fortunately our member renewals and reservations are not being affected. There have been several days when it goes down completely, but usually only for short periods. If you go online and get a 500 or 501 error, please be patient and check back. One function we cannot seem to resolve is photos. No one has been able to add a profile pic, nor can we add to the online photo gallery. Please accept my apology and know we are working very hard to resolve this issue. Last thing I want to mention is a new addition to the Newsletter: Questions from the Field, by Timothy C. Dowd. Mr. Dowd has agreed to address member questions each month so please support his generous offer by submitting a question to Teresa at OCAPL@ coxinet.net. If you reference “Question from the Field” in the subject line, Teresa will automatically forward it to him. Members will remain anonymous and only be referred to by their initials in the article. Thanks, Tim! I hope you all enjoy the first installment contained within this issue.

Amy Jo Love,

2015 OCAPL President

March 2nd

Educational Luncheon – SPEAKER – Janet Stewart, Oklahoma Conservation Commission - TOPIC – “Flood Control Easements” Monday Night Meeting – SPEAKERS – Dennis McAfee & Brandy Smart, QPS Engineering LLC - TOPIC – “Environmental Issues”

April 6th

May 2nd May 18th August 28th Sept. 7th

Educational Luncheon – SPEAKERS– George Snell, Steptoe-Johnson PLLC & Tim Dowd, Elias, Books, Brown & Nelson TOPIC – “OK & TX Titles – The Differences” Monday Night Meeting – SPEAKER – John Richels, CEO Devon Energy Corporation Fishing Tournament – Lake Texhoma Golf Tournament - Oak Tree and Gaillardia Country Clubs Sporting Clays Tournament – Silverleaf Shotgun Sports Educational Luncheon – SPEAKER - TBA Monday Night Meeting – SOCIAL MEETING – NO SPEAKER

Sept. 25-26th Oct. 5th Nov. 2nd

Weekend Take Off Educational Luncheon – SPEAKER – TBA Monday Night Meeting - SPEAKER – Weldon Watson, Chair of the Energy & Natural Resources Committee, OK House of Rep TOPIC – “Current Legislative Issues affecting our Industry” Educational Luncheon – SPEAKER – TBA Monday Night Meeting – AWARDS NIGHT – Landman of the Year and William Majors Distinguished Service Awards (WHO WILL YOU NOMINATE THIS YEAR?!)

Dec. 7th

CHRISTMAS PARTY THE DATES FOR THE FOLLOWING EVENTS HAVE NOT BEEN SCHEDULED. YOU WILL RECEIVE NOTIFICATION VIA EMAIL WHEN REGISTRATION IS AVAILABLE: FIELD LANDMEN SEMINARS, GIRLS NIGHT OUT, HAPL WEB CAST, VARIOUS COMMUNITY AFFAIRS VOLUNTEER EVENTS

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AAPL MEMBER * *John Esche *Kate Henderson *Traci Christy *Robert Highsaw *Jonathan Holly *Arthur Zwierlein Jim Hamilton Chelsea Lewis Ross Gilbert *Liza Salisbury Daniel Cooper *Hilary Jones Dustin Conner Jordan Pribyl *Kristin Lakatta *Jeremy Black Anthony Hilbers *Casey Dean Katie Langwell *Matthew Wilson *Brian Spomer Katherine O’Brien *Alex Ratliff *Eric Payne Scott Sullivan *John Schneider *Brendon Kushnerick *Phil Montgomery *Richard Jordan *Tyler Thompson *Megan Walerius *Karen Dindy *Trevor Earls *Jeff Glenn *Zac Frazier *Rob Solano George Cobb William Alven *Krista McBain Jeremy Green

Haggard Land Company Bearcat Land, Inc. Deen Garretson Law Chesapeake Energy Corporation Redhead Energy, Inc. Chesapeake Energy Corporation Continental Resources, Inc. American Energy Partners, LP American Energy Partners, LP Devon Energy Corporation Schaffer Herring PLLC Gungoll, Jackson, Box & Devoll, PC Gungoll, Jackson, Box & Devoll, PC DeltaCore Energy, Inc. XTO Energy Inc. XTO Energy Inc. Penterra Services CVD Land Resources LLC American Energy Partners, LP Chesapeake Energy Corporation Saber Land Services Schonwald Land, Inc. Schonwald Land, Inc. Land Services Inc. American Energy Partners, LP American Energy Partners, LP Vitruvian Exploration II LLC Montgomery Properties Purple Land Management Continental Land Resources, LLC Felix Energy, LLC Linn Energy, LLC Tiptop Oil & Gas US LLC RedSky Land Paramount Field Services, LLC Paramount Field Services, LLC Coninental Land Resources Chesapeake Energy Corporation Chesapeake Energy Corporation J. Green Land Management, Inc.

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[email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected]

Questions from the Field Questions fromC.the Field Timothy Dowd

TimothyBROWN C. Dowd ELIAS BOOKS & NELSON ELIAS BOOKS BROWN & NELSON

Editor’s Note: Each month this column will be devoted to answering oil and gas title Editor’s Note: Each month this column will be dequestions.

voted to answering oil and gas title questions.

Q: I examined an Oil and Gas Lease dated July 1, 1984, covering tracts in Sections 1, 2, 3, 4, 5 and 6. I have also examined copies of Oklahoma Corporation Commission Completion Reports (Form 1002) for the Smith 1-1 Well drilled in the SE/4 and the Smith Q: I the examined an 1.Oil and Gas Lease dated July No. 2 Well located in NE/4 of Section

1, 1984, covering tracts in Sections 1, 2, 3, 4, 5 and

During the primary term of the lease, two wells were drilled on the lands in Section 1. The first 6. well,I which denoted as the Smithcopies 1-1 Well, of wasOklahoma commenced on CorOctober 13, haveisalso examined 1984 and drilled in the S/2 SE/4 (which is not part of the leased tract). The Smith 1-1 was poration Commission Completion Reports (Form completed in a formation, which was established as a 160-acre drilling and spacing unit for the SE/4.1002) for the Smith 1-1 Well drilled in the SE/4 and

the Smith No. as2 the Well NE/4 of SecA second well, denoted Smithlocated No. 2 Well,in wasthe drilled in the NE/4 of Section 1 (part of the leased tract) on April 24, 1986, and completed in the Hartshorne formation. The tion 1. Hartshorne formation has not been established as a drilling and spacing unit for the NE/4 of Section 1. the drilling During the primary of the lease, Does of the Smith 1-1 Well in aterm drilling and spacing unit oftwo 160-acres cause the lease to terminate outside the SE/4? What is the impact of the Smith No. 2 Well wells were drilled on the lands in Section 1. The Well on the extension of the Smith 1-1 lease?

first well, which is denoted as the Smith 1-1 Well, was commenced 13, 1984 drilled A: Title 52 O.S. 87.1(b) recites:on "In October case of a spacing unit of and one hundred andin sixty (160) acres or more, no oil and/or gas leasehold interest outside the spacing unit involved the S/2 SE/4 (which is not part of the leased tract). may be held by production from the spacing unit not more than ninety (90) days beyond expirationThe of theSmith primary term of thecompleted lease." (This statute frequently described as the 1-1 was in aisformation, which “Statutory Pugh Clause”). was established as a 160-acre drilling and spacing Unfortunately, there SE/4. is no case law and only one law review article that construes unit for the this statute and its impact on wells drilled. The only guidance is the wording of the statute. In this situation the oil and gas lease would not have been extended solely by virtue of production from the spacing unit and the well drilled in the SE/4, but the lease was



A second well, denoted as the Smith No. 2 Well, was drilled in the NE/4 of Section 1 (part of the leased tract) on April 24, 1986, and completed in the Hartshorne formation. The Hartshorne formation has not been established as a drilling and spacing unit for the NE/4 of Section 1. Does the drilling of the Smith 1-1 Well in a drilling and spacing unit of 160-acres cause the lease to terminate outside the SE/4? What is the impact of the Smith No. 2 Well Well on the extension of the Smith 1-1 lease? A: Title 52 O.S. 87.1(b) recites: “In case of a spacing unit of one hundred and sixty (160) acres or more, no oil and/or gas leasehold interest outside the spacing unit involved may be held by production from the spacing unit not more than ninety (90) days beyond expiration of the primary term of the lease.” (This statute is frequently described as the “Statutory Pugh Clause”). Unfortunately, there is no case law and only one law review article that construes this

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No. 2 Well (assuming it is still commercial) holds all the described land set forth in the oil and gas lease.

SUPERIOR TITLE

My conclusion is that the Statutory Pugh Clause does not cause this Oil and Gas Lease to terminate.

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In order to protect yourself, a company may wish to a) file a declaratory judgment action in the District Court to construe this statute as it relates to this situation; b) name the mineral owner as a respondent in a statutory pooling proceeding, or c) secure a ratification of the lease by the mineral owner.

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statute and its impact on wells drilled. The only guidance is the wording of the statute. In this situation the oil and gas lease would not have been extended solely by virtue of production from the spacing unit and the well drilled in the SE/4, but the lease was extended into the secondary term by virtue of the drilling and production from the Smith No. 2, which is located on the leased premises, but outside any drilling and spacing unit.

Note: If you have any title questions you want answered, email your questions to ocapl@coxinet. net.

Therefore, the oil and gas lease wasn’t extended into the secondary term solely by virtue of the drilling of a well in the drilling and spacing unit. The lease was extended into the secondary term because of the production from the Smith No. 2 Well, which satisfies the “as long thereafter as oil and gas is produced” language of the lease. Further, if one asserts that the drilling of the Smith 1-1 Well would cause the Statutory Pugh Clause to come into effect, then that suggests that production from the Smith No. 2 Well has no effect or is irrelevant. Further, if one were to assert that the Smith 1-1 Well were to hold only a certain size tract, then what would that tract size be? 40 acres? 160 acres? 640 acres? The only logical conclusion is that the production from the Smith

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Natural Gas Shale Drillers Undaunted by 32% Price Plunge

by Naureen Malik, February 5, 2015, Bloomber.com (Bloomberg) -- U.S. natural gas production is poised to reach a record for a fifth year as shale drillers boost efficiency, driving prices toward a low of more than a decade. Output will rise 3.2 percent in 2015, led by gains at the Marcellus formation, the nation’s biggest shale deposit, according to the Energy Information Administration. Marcellus production will increase 2.8 percent through February after a 21 percent gain in 2014, a year when prices tumbled 32 percent. Producers in Pennsylvania and West Virginia have cut break-even costs by half since 2008, according to Oppenheimer & Co. Drilling more wells at one site and extending the length of horizontal wells are among the efficiencies that have helped gas companies cope with falling prices. The EIA expects Marcellus to climb to about 20 percent of production in the lower 48 states from about 2 percent in 2007. Cabot Oil & Gas Corp., the biggest Marcellus producer, plans to increase output by at least 20 percent this year. “The Marcellus has been a game changer in terms of production, reserve potential, everything,” said Fadel Gheit, a senior energy analyst for Oppenheimer & Co. in New York. “They are not waiting for higher gas prices to

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bail them out.” Gas Prices Natural gas futures fell 2.1 cents to $2.579 per million British thermal units Friday on the New York Mercantile Exchange, the lowest settlement since June 2012. Gas has declined 81 percent from a high in 2008 as production from shale formations increased, touching $1.907 in April 2012, the lowest since 2002. Break-even prices for Marcellus producers have dropped below $2 per thousand cubic feet ($1.95 per million Btu) from around $4 in 2008, Gheit said in a Feb. 3 interview. U.S. gas production growth was projected to slow to 1.4 percent last year, the least since a decline in 2005, the EIA said in December 2013. Instead, output jumped 5.6 percent. Efficiency gains at Marcellus producer Range Resources Inc. include plans to increase the length of underground horizontal wells by 36 percent to 6,200 feet (1,890 meters), with a third of the total topping 7,000 feet, according to a Jan. 15 company presentation. Range used drilling efficiencies to cut costs to $2.64 per thousand cubic feet in 2014 from $3.01 in 2012. Shale Deposits The company said it’s targeting 20 percent to 25 percent production growth “for many years.” Southwestern Energy Corp.’s output may rise 28 percent this year as it drills longer wells, increases pipeline capacity and after spending $5.4 billion to acquire shale fields, according to a Dec. 30 company conference call. Output is also rising at other shale plays. Gas production at the Eagle Ford deposit in Texas has climbed more than fourfold since January 2007, while output at the Utica shale, much of which lies below the Marcellus, has increased 12fold. Proved U.S. gas reserves, supplies that can be recovered based on economic and operating conditions, jumped 9.7 percent in 2013 to 354 trillion cubic feet, equal to about 13 years of demand, a December EIA report showed. “Just the magnitude of the build-out in shale and the pace at which it gained momentum is surprising,” Jason Schenker, president of Prestige Economics LLC in Austin, Texas, who was ranked by Bloomberg in the fourth quarter as the top gas price forecaster, said Jan. 29. “Supplies will remain high. We could test the 2012 lows this spring in natural gas prices.” Pipeline Gains While they save money at the wellhead, Marcellus producers have been able to bolster sales of the fuel as new interstate pipelines give them access to more lucrative markets priced at Henry Hub in Erath, Louisiana, the U.S. gas benchmark. “The Northeast has been at a discount to Henry Hub and more pipelines that come on will narrow this to the cost of transport,” Moses Rahnama, an analyst at London-based consultants Energy Aspects Ltd., said by phone on Jan. 5. “That will be more of an incentive to drill.” New pipelines near the Marcellus deposit will allow Range to ship 63 percent of its production outside of Appalachia,

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the company said Jan. 15. Cabot plans to increase output by 20 percent to 30 percent in 2015, and will “re-accelerate activity” once the new Constitution pipeline from Pennsylvania to upstate New York comes into service later this year or in 2016, the company said in November. “All these companies tell us the growth rate will be maintained,” Gheit said. “Gas prices continue to be lower because people are convinced no matter how low gas prices go, these guys are not going to stop growing.” To contact the reporter on this story: Naureen S. Malik in New York at [email protected] To contact the editors responsible for this story: Dan Stets at [email protected] Charlotte Porter

Oil steadies near $58 as U.S. rig count offsets Chinese data

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the market, analysts said crude import figures remained ,17(5(67(',1 EDMOND, OK high and the disappointing data was unlikely to derail a NEW 385&+$6,1* rally in oil prices. 3URGXFLQJ 1RQ3URGXFLQJ “I think we’ll get a bit of a pullback. But will it send prices 0LQHUDOV255,5R\DOW\/HDVHV back to the lows? I’m not convinced about that,” said Michael Hewson, chief market analyst at CMC Markets. “We’ve had such a strong decline that some sort of bounce back is inevitable.” Brent rose more ,1 than 9 percent last week, its biggest weekly rise since February 2011. The North Sea oil futures contract 2NODKRPD7H[DV.DQVDV has climbed more than 18 percent in the past two weeks, its strongest showing since 1998. 3OHDVH&RQWDFW “It’s still the same pattern,” said Carsten Fritsch, senior2oil r 4,000SUITES foFrankfurt. ideAl in sq. ft. & *LE.QLJKW analyst at Commerzbank and commodities 2,000 sq. ft. 9LOODJH&HQWHU&LUFOH gy er rather trade “Markets are ignoring the bearish news enand  or Oakview Professional Pointe on the/DV9HJDV19 bullish news.” 1 SUITE I-35 & E. Memorial Rd. 6,000 sq. ft. turnpike ss tocame Acce Preliminary Chinese January customs data insat 27.22 For More estimates Information or For afrom Showing  million tonnes of crude imports, though Call Hicks Properties & Inv. LLC at 405.478.3836 JLENQLJKW#JPDLOFRP Thomson Reuters Research and Forecasts put the final figure at about 30 million tonnes. Page 0 Tao said crude charts Reuters technical analyst Wang suggested the increase in prices may have ended for a while. “I prefer a bearish bias,” Wang Tao told Reuters Global Oil Forum. “Both WTI and Brent may correct in this week before seeking their next direction.” CO NS

By Jack Stubbs 2 hours ago LONDON (Reuters) - Brent crude prices steadied near $58 a barrel on Monday as falling U.S. oil rig counts and signs of healthy U.S. growth offset concerns over the strength of the Chinese economy. China’s trade performance slumped in January, pointing to lower fuel demand in the world’s biggest energy consumer. Exports fell 3.3 percent from a year earlier while imports tumbled 19.9 percent, highlighting a deepening slowdown. But the falling number of U.S. oil rigs, at its lowest since December 2011, reduced the impact of the Chinese data on oil prices, which have dropped more than 50 percent since June. Stronger-than-expected growth in U.S. jobs in January also helped support oil, as non-farm payrolls increased 257,000, outstripping Wall Street forecasts. Global benchmark Brent crude oil for March was up 10 cents at $57.90 a barrel by 1118 GMT (06:18 a.m. EST) after rising as high as $59.06 earlier in the session. U.S. crude was up 56 cents at $52.25 a barrel, having hit a session high of $53.40. While signs of an economic slowdown in China depressed

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Citigroup; Oil’s Heading To $20 And Opec’s Days Are Over Tim Worstall, 2/10/2015, Forbes.com Citigroup is telling us that oil is going to head down to $20 a barrel soon enough. Further, that Opec’s hold over the oil price is now definitively broken. That’s a pair of pretty strong claims and of course we need to take them both with the appropriate amount of salt. But I think the first is possible and the second is likely. Even though I agree that that second, the days of Opec’s control being over, is the more remarkable claim I do think it is the stronger of the two. The reason for this is two little bits of economics. The

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first being that monopolies and cartels do indeed exist but in the end they always fall over. If it’s not because of legal action against them, or because of cheating among the cartel’s members, then in the end technological advance will indeed get them. And that change here is fracking for tight oil. No, it’s not that the fracking revolution is cheaper than Saudi conventional oil or anything like that. But because the technology of fracking entirely changes the elasticity of supply of oil and that really does change the whole marketplace. Citi’s claim is here: “The recent surge in oil prices is just a “head-fake,” and oil as cheap as $20 a barrel may soon be on the way, Citigroup said in a report on Monday as it lowered its forecast for crude.” Well, maybe, maybe not. I tend not to place all that much strength in predictions of short term price movements: too much like a random walk for most prices. However, the larger claim I do think will come true: “It looks exceedingly unlikely for OPEC to return to its old way of doing business,” Morse wrote. “While many analysts have seen in past market crises ‘the end of OPEC,’ this time around might well be different,” Morse said. As far as I know the point was first made in a research paper I linked to here. The essential contention is that the development of fracking shale has made oil production like manufacturing, not like traditional resource extraction (ie, that it’s the technology you use to do it which is important, not the limited number of resources you can apply the technology to). And the thing we know about manufacturing is that it becomes ever cheaper to produce things as we’re really pretty good at increasing productivity in manufacturing processes. Another way of making much the same point is to look at the elasticity of supply and demand. Famously, demand for oil is inelastic with respect to price. If the price doubles or halves we all go on using much the same amount. For we all live about the same distance away from the office as we did, the supermarket is in the same place, baseball practice is in the same park, just as they all were before the price change. In the longer term the average age of the car fleet is about 10 years, the average American moves every 7 years (although that’s a high figure based on all, so young people moving a few times as they start careers is included there) and some 50% of all jobs are destroyed and created again every 6 or 7 years. So over time demand for oil is quite elastic with respect to price as obviously in a world of $200 oil we’re going to be making different choices about commutes, car engine sizes and so on. On the other side elasticity of supply of oil is pretty inelastic as well. Other than the Saudis who have spare capacity pretty much anyone with an oil field produces at maximum rate whatever the price. And it takes a decade or two to bring a new field from discovery to actually producing. And once you’ve got the field up and running the marginal costs of keeping it so are pretty minimal. So,

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fields don’t closed down when the price falls and it takes a long time to get a new one going if it rises. And of course the longer the time span, as with everything, the more elastic it does become. If you’ve a market with a pretty inelastic demand and also a pretty inelastic supply then it’s the price that is going to do the dancing all over the place. Because that’s what prices do in markets, equate supply and demand. But this is the equation that fracking breaks. A fracking well doesn’t take 20 years and billions of dollars to bring online. It takes $5 to $10 million. And it doesn’t produce for decades either. In terms of significant production a fracking well rarely operates beyond 18 months. So we’ve no longer that inelasticity of supply. Instead we find that we’ve got a rather elastic with regard to price supply: and that entirely changes the price dances that will take place within the industry in the future. As soon as oil goes consistently above, say, $60 a barrel then more fracking will be done, that oil will come to market quickly and that will be the end of the price boom. That’s not an exact number, of course, merely one chosen to illustrate the point.

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- Continued at OCAPL.org

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Christmas Raffle Tickets!!! As you may know, a major focus of oil & gas industry efforts during $5 per Ticket or the 2014 session was the passage of HB2562, which prevented a 5 forwells. $20 dramatic tax increase on gross production from horizontal

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Members should be aware that with reduced gross production tax revenues to the state due to lowHelp oil prices, likely be putthere thewill Merry in

someone else’s Minerals; Christmas. Support own Infant Crisis ORRI; Oil & increasing discussion of revisiting the issue of raising theOKC’s tax to Services, Youth Services and Homeless Interests cover state budget shortfalls. Veterans. Please Contact And you could win: No doubt in response to the contribution of low oil prices to

Patrick Cowan, CPL Packages, Luxury Designer has proposed HB1129, which wouldHandbags, create the Energy RevenueJewelry, Popular CSW Corporation Electronics, Spa Days and so much more!!! TV’s,Rep. Travel Golf the current state budget shortfall, Todd Packages, Russ, R-Cordell,

P.O. Box 21655 Oklahoma City, OK 73156-1655 to the Stabilization Fund.at The Stabilization could only be affle tickets will be sold the MondayFund night meetings starting in (405) 755-7200; accessed if gross production tax revenues declined by 5% or more October** from the previous year. This bill does not attempt to increase Fax (405) 755-5555 gross production taxes, but instead establishes a mechanism to Email: [email protected] Stabilization Fund. This bill would allocate any gross production

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session is municipal limitations on drilling. Anti-fracking activists have enjoyed notable success in convincing municipalities in Ohio and Texas to impose severe limits or outright bans on

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A major focus of oil & gas legislation in the current legislative

drilling and fracking. Attempting to build upon these successes, anti-fracking activists in Stillwater recently attempted to persuade the city council to ban drilling within city limits. Their attempt failed, and they are now attempting to persuade the city to adopt increased offsets required between well sites and homes, businesses, and other properties, with the intent to make it more difficult, if not impossible, to locate wells within city limits. In response to this development, no less than eight bills have been introduced to prevent municipalities and other local government entities from enacting regulations that effectively ban drilling or fracking: HB1395, Casey Murdock, R-Felt; HB1722, Leslie Osborn,

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R-Mustang; HB1954, Weldon Watson, R-Tulsa; HB2070, Sean Roberts, R-Hominy; HB2124, Mark McBride, R-Moore; HB2178, Jeff Hickman, R-Fairview; SB468, Bryce Marlatt, R-Woodward; SB809, Brian Bingman, R-Sapulpa. OKOGA states on its website that bills preventing municipalities from banning drilling are among its top legislative priorities this year. Conversely, HB1107 introduced by Edward Cannaday, D-Porum, would make it unlawful to locate the wellbore of a well that is fracked within 2,000 feet of any occupied structure or producing freshwater well.

Another prominent theme of this session is legislation amending the statutes controlling drilling and spacing units and elections under pooling orders. Bills in this vein are: HB2177, Jeff Hickman, R-Fairview; SB341, Ron Justice, R-Chickasha (2015 Oil and Gas Conservation and Regulation Modernization Act); SB385, John Sparks, D-Norman; SB565, Bryce Marlatt, R-Woodward; SB646, Jason Smalley, R-Stroud; SB807, Brian Bingman, R-Sapulpa.

Other relevant bills and regulations are as follows:

The Journal Record reports (“New rule could require frackers to notify other drillers,” Sarah Terry-Cobo, Feb. 4, 2015) that the Oklahoma Corporation Commission is considering changes to its rules to require drillers of horizontal wells to give nearby well operators notice prior to fracking. This is intended to deal with situations where horizontal frack jobs interfere with production from shallower vertical wells.

SB69, Rob Standridge, R-Norman: Removes statutory language stating that if county clerks provide records in electronic format, the fee charged may not exceed $0.25 per page or $0.15 per page for providing more than 3,500 pages in electronic format. Presumably by removing this limitation it would allow county clerks to charge the traditional $1 per page for records

Analyze

Interpret

Extract

provided in electronic format.

SB654, Anastasia Pittman, D-Oklahoma City: Amends the Oklahoma Energy Security Act (17 O.S. Ch. 22) to change the renewable energy standard goal from 15% by 2015 to 25% by 2020. Note, significantly, that Oklahoma’s renewable energy standard is, and under SB654 would remain, merely a goal, not a requirement as it is in most states.

HB1802, Tommy Hardin, R-Madill: This bill instructs the OCC

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to not issue a permit for any newly drilled or newly converted injection or disposal well unless and until roads and bridges exist or are upgraded to meet minimum standards and can be used without substantial detriment to the roads and bridges.

“Our Goal is to provide the best petroleum land services to our clients as is possible, to do it with integrity, confidence and efficiency, to treat all persons with respect and courtesy, to always act in a professional manner and to enjoy and grow in our Leasing •Expert Negotiations •Value Creation •Market Expertise •Professional Mineral Owner Relationships •Timely processing of documents

HB1803, Tommy Hardin, R-Madill: Increases the amount of financial ability required to drill or operate an oil & gas well from

Acquisitions/Divestitures •Title Examination •Due Diligence •Property and Environmental Inspection •Contract Analysis •Document Preparation •Reporting

$50,000 to $100,000, and the amount of bond required from

Title Services •Prospect Strategy •Value Enhancement •Detailed Title Examination •Cursory Title Examination •Comprehensive Ownership Reports •Title Curative •Document Imaging •Surface and Seismic Examination for Permitting

Additional Land Services •Federal, BIA, and State bidding and lease acquisition •Mineral and Working Interest acquisition •ARC-GIS Mapping •Document Preparation •Prospect Management •Settlement of Surface Damages •Right-of-Way Acquisition •Water Use Agreements

Providing Professional Land Services since 1986 Rocky Mountain Office: 621 17th Street, Suite 1555 Denver, CO 80293 (720) 627-6181 Fax (720) 627-6182

$25,000 to $50,000.

Regulatory Application, Hearings and Permitting •Filing of State Regulatory Applications associated with the drilling of wells and water usage •Preparation of Notice lists and well proposals •Process Management •Expert witness testimony •Federal, State and local permitting •Seismic permitting •Preparation of Federal Application Permit to Drill •Preparation of communization agreements •Strategic planning

Texas Office:

P.O. Box 1323 Canadian, TX 79014 (806) 323-6677

Corporate Office:

10201 Buffalo Ridge Road Edmond, OK 73025 (405) 359-6727 Fax (405) 359-6728

www.rkpinson.com Members of AAPL | OCAPL | TAPL | DAPL | HAPL

SB470, Bryce Marlatt, R-Woodward, and SB614, Brian Crain, R-Tulsa: Removes the requirement to compound interest annually on certain payments that are not timely made; provides that where title has been unmarketable for 2+ years, the operator may presume the accrued proceeds to be abandoned; provides that interest is not applied on proceeds that are not timely paid when the owner elects to take in kind or where the owner cannot be located.

waters of the state); SB16 (provides that any impounded water originating from any natural source be considered the private property right of the landowner and not subject to eminent domain); SB17 (provides that natural spring water be considered the private property right of the landowner and not subject to eminent domain); SB225 (Regional Water Development Act); SB354 (Regional Water Planning Act); SB355 (amends the Oklahoma Wind Energy Development Act); SB356 (allows the recovery of attorney fees under the Energy Litigation Reform

SB745, Anthony Sykes, R-Moore: Provides that with respect to transfer on death deeds, where a record owner with a TODD died prior to November 1, 2011, an affidavit of death does not need to be recorded within 9 months. However, where the record owner with a TODD dies on or after November 1, 2011, the recording of an affidavit of death within 9 months of death would still be required.

Act); SB469 (in civil actions alleging property damage from oil & gas operations, the court may appoint an expert witness who can be agreed upon by the parties or selected from a list provided by the Oklahoma Geological Survey); SB634 (Regional Water Sustainability Act); SB676 (prohibits the adoption of certain state implementation plans regulating emissions from fossil fuel-fired generating units without prior legislative approval); SB744 (authorizes the OCC to establish a program to permit

Less relevant bills that may be of interest are: HB1386 (establishes the Oklahoma Land Application Act, which directs the Corporation Commission to require operators applying deleterious substances to land sites to use a computer-controlled discharge system); HB1968 (modifies the Oklahoma Wind Energy Development Act); HB2115 (creates the Oklahoma Water Reclamation Study Task Force); HB2126 (directs the OWRB to not take any action affecting certain permits used pursuant to the Federal Clean Water Act, and prohibits the state from

land owners to apply certain oil & gas drilling fluids and solid wastes to land deemed appropriate for such application).

As the session progresses, it will become more apparent which bills and which versions of similar bills are likely to pass. If you know of legislative or regulatory activity that you would like the Legislative Affairs Committee to analyze and discuss, please let us know by contacting Aaron Meek at [email protected] or (405) 235-5620.

promulgating any rule that would extend the definition of

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2015 OCAPL Officers *Executive Officers and Committee Chairman President *Love, Amy Vice President *Watkins, Nick Treasurer *Rice, Robert Secretary *Beavers, Matt 1st Past President *Miles, Lindsey 2nd Past President Walker, Mike AAPL Director (thru June) *Woodard, Julie AAPL Director (after June) *Miles, Lindsey Awards and Nominations Walker, Mike Community Affairs Chair *Fixley, Lindsey Community Affairs Co-Chair Gannaway, Stephanie Community Affairs Co-Chair McGee, Jordan Education, Chair Enteshary, Cameron Education Co-Chair Jennings, Brandon Entertainment Chair McCurdy, Sam Entertainment Co-Chair Carlozzi, Brian Ethics *Brooks, Jeff Field Landman Chair Hardegree, Jerrod Field Landman Co-Chair Oliver, Jim Fishing Tournament Chair Graham, David Fishing Tournament Co-Chair Cope, Richard Girls Night Out Chair Wickham, Diana Girls Night Out Co-Chair Ellis, Sandy Golf Tournament Chair *Naik, Bhavin Golf Tournament Co-Chair Kammerer, Brandon Industry Affairs Chair Parks, Colt Industry Affairs Co-Chair Sweeney, Mont Leglislative Affairs Chair Meek, Aaron Leglislative Affairs Co-Chair Hampton, Dave Membership Chair Love, Bethany Monday Night Speaker Chair Noble, Lars Monday Night Speaker Co-Chair Campo, Jennifer Newsletter Chair Fleharty, Michael OU EM Mentoring Co-Chair Vawter, Brandt OU EM Mentoring Co-Chair Hennigan, Bryan OU EM Advisor Long, Steve Public Relations Co-Chair Richards, Clarke Public Relations Co-Chair Raney, Grant Special Advisor Askins, Carrie Special Advisor *Woodard, Julie Special Advisor Richards, Jack Sporting Clays Chair Noblitt, Darrell Sporting Clays Co-Chair Reed, Shannon Website Chair Dickensheet, Dan Website Co-Chair Ivey, Aaron Weekend Take Off Chair Wheeler, Tami Weekend Take Off Co-Chair Anderson, Leslie YPE Chair Orr, Dillon OCAPL Manager Portwood, Teresa

Advertising Price List for the Ocapl Record

[email protected] Advertisement Price: [email protected] _______ Quarter Page Add @ $500 for full [email protected] year (10 issues) [email protected] Ad Requirments: [email protected] - 3 1/4 wide x 4 1/2 tall - Ads need to be submitted in PDF or JPG with at lease 150 dpi resolution [email protected] [email protected] Payment is due prior to publication [email protected] CONDITIONS: All advertising copy is subject to the approval of OCAPL. Where copy is not furnished by the [email protected] deadline date, the space reserved will be moved to the [email protected] next issue subject to availability. Advertising is accepted in the order in which it is received until all space is filled. [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Oklahoma City Association of [email protected] Professional Landmen Office [email protected] [email protected] [email protected] Teresa Portwood [email protected] OCAPL Office [email protected] P.O. Box 18714 [email protected] [email protected] Oklahoma City, OK 73154 [email protected] [email protected] [email protected] [email protected] Website: www.ocapl.org [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Next Newletter Deadline: [email protected] MARCH 13, 2015 [email protected] 2015 Newsletter Chair: [email protected] Michael Fleharty [email protected] [email protected] [email protected] [email protected] [email protected] [email protected] Prepared by Dustin Burton [email protected] [email protected] [email protected]

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