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HomeMy WebLinkAboutO 141CIO C= N CD Q J � o Z ^ 3 W W > bg1pY oozQ�m,�® Nim m,N^�r-- wG4gm ZX w aIQi,� W0 QX6 C LL ^ 0 IN THE SUPERIOR COURT FOR THE STATE OF ALASKA TII2D JUDICIAL DISTRICT AT KENAI PLC, LLC and MH2, LLC, ) Plaintiff(s), ) V. ) STATE OF ALASKA, DEPARTMENT ) OF NATURAL RESOURCES and ) STATE OF ALASKA OIL AND GAS ) CONSERVATION COMMISSION, ) Defendant(s). ) Case No. 3KN-17-00649 CI [PROPOSED] ORDER GRANTING MOTION FOR AWARD OF ATTORNEY'S FEES After review of the Motion for Award of Attorney's Fees and the supporting documents and exhibits filed by defendant Alaska Oil and Gas Conservation Commission (AOGCC), the Court finds as follows: AOGCC is the prevailing party in this action and is entitled to an award of 20 percent of its attorney's fees under Rule 82(b), Alaska Rules of Civil Procedure. 2. The attorney's fees set forth in support of AOGCC's motion are reasonable and were necessarily incurred. Therefore, it is ORDERED that AOGCC is awarded attorney's fees in the amount of$!I.y3p ; - li8•Ko. DATED 51 31 2018, at Kenai, Alaska. I certify that a copy of the forgoing was mailed to —placed in court box to (T)ie Honorable Jennifer K. Wells faxed to Superior Court Judge scanned toSALMY-n ih-,r.,Kn'<.M lel ck4 i o. n. -,r...,.- i CCIQ V Judicial Assistant ub Date �_ I a W w o N �? �%' NbNby W =OmmOf �xzo<..o z°ai<vio m` Wz = QHY2QOgC o -W 'o uxFx LL� U � O IV r. IN THE SUPERIOR COURT FOR THE STATE OF ALASKA THIRD JUDICIAL DISTRICT AT KENAI PLC, LLC and M112, LLC, ) } PIaintiff(s), ) V. ) STATE OF ALASKA, DEPARTMENT ) OF NATURAL RESOURCES and ) STATE OF ALASKA OIL AND GAS ) CONSERVATION COMMISSION, ) Defendant(s). ) Case No. 3KN-17-00649 CI [PROPOSED] ORDER GRANTING STATE OF ALASKA, DEPARTMENT OF NATURAL RESOURCES' MOTION FOR AWARD OF ATTORNEY'S FEES AND COSTS Defendant State of Alaska, Department of Natural Resources moved for an award of attorney's fees and costs pursuant to Alaska Rules of Civil Procedure 82(b) and 79(f) and (g). The Court has reviewed the motion, its supporting documents, and any opposition thereto. The Court finds that the Defendant is the prevailing party in this action. Therefore, it is ORDERED that the Department of Natural Resources is awarded 5.7 (97. (p'D -X attorney's fees in the amount of $Sand costs in the amount of $214.39. DATED l 2018, at Kenai, Alaska. Til.¢ Ccv,-it Litvlolej 4 -V -o r0/1V/(q- `75 k wl•F The Wonorable Jennifer K. Wells I coh' qgi �eAj8j4g& forgoing was ___,mailed to placed in court box to faxed to scanned too Judicial Assistant Date IN THE DISTRICT/SUPERIOR COURT FOR THE STATE OF ALASKA AT KENAI PLC, LLC and MH2, LLC, Plaintiff(s), Vs, STATE OF ALASKA, DEPARTMENT OF NATURAL RESOURCES and STATE OF ALASKA OIL & GAS CONSERVATION COMMISSION, Defendant(s). CASE NO. 3KN-17- ern, 4S[ Cl SUMMONS AND NOTICE TO BOTH PARTIES OF JUDICIAL ASSIGNMENT To Defendant: STATE OF ALASKA OIL & GAS CONSERVATION COMMISSION You are hereby summoned and required to file with the court a written answer to the complaint which accompanies this summons. Your answer must be filed with the court at (address): 125 Trading Bay Drive Suite 100, Kenai, Alaska 99611 within 20 days' after the day you receive this summons. In addition, a copy of your answer must be sent to: Plaintiffs attorney or plaintiff (if unrepresented): William M. Bankston Address: Bankston Gronning O'Hara, P.C. 601 W. 5th Avenue, Suite 900, Anchorage, Alaska 99501 If you fail to file your answer within the required time, a default judgment may be entered against you for the relief demanded in the complaint. If you are not represented by an attorney, you must inform the court and all other parties in this case, in writing, of your current mailing address and any future changes to your mailing address and telephone number. You may use court form Notice of Change of Address / Telephone Number (TF -955), available at the clerk's office or on the court system's website at www.state.ak.us/courts/forms.htm , to inform the court. -OR- If you have an attorney, the attorney must comply with Alaska R. Civ. P. 5(i). NOTICE OF JUDICIAL ASSIGNMENT To: Plaintiff and Defendant You are hereby given notice that this case has been assigned to Judge�-(<�,. , (SEAL) — ' Date CLERK OF COURT By: \=' W?4 uty Clerk ' The state or a state officer or agency named as a defendant has 40 days to file its answer. If you have been served with this summons outside the United States, you also have 40 days to file your answer. CIV -100 (2l06)(st.3) Civil Rules 4, 5, 12, 42(c), 55 SUMMONS U a N Owl c N O" C3J�Y`a Zy d H X 3 'ZiTdQ O Z 0> 6C .o 5 v 4 3 c Z dao O x Z �Q RECEIVED AUG 0 7 ?w AGGGC William M. Bankston, Esq. Renee J. Sheyko, Esq. Bankston Gronning O'Hara, P.C. Attorneys for PLC LLC and MH2 LLC wbankston@bgolaw.pro rsheyko@bgolaw.pro IN THE SUPERIOR COURT FOR THE STATE OF ALASKA THIRD JUDICIAL DISTRICT AT KENAI PLC LLC and MH2 LLC, ) Plaintiffs, ) V. ) STATE OF ALASKA, DEPARTMENT OF ) NATURAL RESOURCES and STATE OF ) ALASKA OIL AND GAS CONSERVATION ) COMMISSION, ) ) Defendant. ) Case No. 3KN-17-JCI COMPLAINT FOR DECLARATORY RELIEF COME NOW Plaintiffs PLC LLC and MH2 LLC, by and through counsel of record Bankston Gronning O'Hara PC, hereby state and allege as follows: PARTIES PLC LLC ("PLC") is an Alaska limited liability company in good standing organized pursuant to the laws of the state of Alaska, and is in all ways qualified to maintain this action. 2. MH2 LLC ("MH2") is an Alaska limited liability company in good standing organized pursuant to the laws of the state of Alaska, and is in all ways qualified to maintain this action. COMPLAINT FOR DECLARATORY RELIEF Page 1 of 1 I PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources 2934/32/PLEADING S/COMPLA INT 3. The State of Alaska Department of Natural Resources ("DNR") is a state agency that manages the development of natural resources within Alaska pursuant to A.S. 44.37.010 et. seq. 4. The State of Alaska Oil and Gas Conservation Commission ("Commission") is a state agency established pursuant to the Alaska Oil and Gas Conservation Act, A.S. 31.05.005 et. seq. JURISDICTION AND VENUE 5. This Court has jurisdiction over the parties hereto and the subject matter hereof pursuant to A.S. 22.10.020 and A.S. 09.05.015. 6. Venue is proper in Kenai pursuant to Alaska Rule of Civil Procedure 3 by reason of the fact that this matter involves real property interest located near Clam Gulch, south of Kenai. FACTUAL ALLEGATIONS 7. Plaintiffs are owners of an overriding royalty interest ("ORRI") in State of Alaska oil and gas lease ADL 384314 ("Lease"). The working interest in the Lease is owned by Hilcorp Alaska, LLC ("Hilcorp"). Hilcorp represented to the State of Alaska that the Lease overlies the Falls Creek gas reservoir and that Hilcorp has proven that the Lease contributes to gas production. The south Lease boundary is contiguous with the existing north boundary of the Falls Creek Participating Area ("FCPA'), Ninilchik Unit. 8. On November 2, 2016, Hilcorp filed an application with the State of Alaska Department of Natural Resources Oil and Gas Division ("DNR") to expand the Ninilchik Unit and the FCPA ("Application").' Hilcorp requested in its Application to include 80 acres of the Lease in the FCPA. In its Application, Hilcorp stated, "Only acreage that has been proven to contribute to the production of natural gas has been ' Attached hereto as Exhibit 1. COMPLAINT FOR DECLARATORY RELIEF PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COMPLAINT Page 2 of I I U a 20 x ma" W01, o 0 j0Ym- Z LL Z N C@ p¢ Z rd " >Ia O E¢ rn� Ritnoco os 0 ¢ tr 3 z c is O �¢� -- x~ z included in this application."2 The legal requirement under Alaska oil and gas law is that "Participating Areas" must "include acreage reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities... ."3 9. On January 2, 2017, Plaintiffs submitted comments to DNR in a letter directed to the Director of the Division of Oil and Gas regarding Hilcorp's Application for limited expansion of the FCPA.4 Plaintiffs requested that DNR correct its documents to reflect accurately the owners of record of certain identified ORRIS. Plaintiffs also requested that DNR expand the FCPA beyond the 80 acres proposed by Hilcorp to include the full areal extent of all mineral rights in the Lease and in surrounding mineral rights that could be reasonably estimated to be capable of producing or contributing to the production of hydrocarbons (in accordance with 11 AAC 83.351(c)) from the pool in question—not just the 80 acres that Hilcorp had stated were proven to contribute to production. 10. On May 16, 2017, DNR approved certain changes in the boundary of the FCPA but denied Hilcorp's proposal to expand the FCPA by 80 acres into the Lease ("DNR Decision").5 The standard proposed by Hilcorp to determine whether acreage was to be included in the FCPA was that an area must be "proven" to contribute to production—a significantly more conservative standard than is required under Alaska law. DNR accepted Hilcorp's proposed standard rather than applying the standard set out in 11 AAC 93.351(c) that provides that a Participating Area should include all acreage "...reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities...." When DNR expanded the FCPA in the DNR 2 Exhibit 1, at 2. 3 11 AAC 83.351(c). 4 Attached hereto as Exhibit 2. 5 Attached hereto as Exhibit 3. COMPLAINT FOR DECLARATORY RELIEF Page 3 of I I PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADING S/COMPLAINT Decision, DNR disagreed with Hilcorp that the 80 acres were proven to be contributing to production. Hilcorp admitted in its Application that at least some of the mineral rights on which Plaintiffs' ORRI's are located are proven to be productive of gas from one or more of the FCPA wells. These productive mineral rights were specifically not included in the expanded FCPA per the DNR Decision. 11. The DNR Decision did not address any of the issues raised in Plaintiffs' comments submitted January 2, 2017. 12. On June 5, 2017, Plaintiffs appealed the DNR Decision to the DNR Commissioner.6 The appeal raised a number of issues, including: a. DNR did not consider the specific content of the Plaintiffs' written comments in the DNR Decision; b. DNR erred in accepting Hilcorp's conservative "proven to contribute" standard rather than the required standard set out in the relevant regulations; c. DNR's decision left out of the FCPA an area that Hilcorp had declared to be proven to contributing to production; d. The DNR Decision dismissed a seismic data interpretation published by Hilcorp's predecessor (Marathon); dismissed drilling and production records from Hilcorp's well applications and well reports; and dismissed Hilcorp's method used to prove gas production from the Lease, among other technical and factual errors discussed in detail in Plaintiffs' appeal to the DNR Commissioner; e. The DNR Decision contained no findings of fact indicating the process used to reach the final decision; f. The decision to ignore available evidence was erroneous and caused economic damage to Plaintiffs; and g. The decision to exclude 80 acres proven by Hilcorp to contribute to production from FCPA's expansion was reached without providing due process to Plaintiffs. 6 Attached hereto as Exhibit 4. COMPLAINT FOR DECLARATORY RELIEF Page 4 of I I PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADING S/COMPLAINT 13. On July 7, 2017, the DNR Commissioner issued its decision regarding Plaintiffs' appeal ("DNR Decision on Appeal') 7 The DNR Commissioner did not address any of the substantive issues raised by Plaintiffs in the submitted appeal. Rather, the DNR Commissioner denied Plaintiffs' appeal on the grounds that Plaintiffs lacked standing. Specifically, DNR stated, " ... an ORRI has no interest in a lease or unit and thus has no basis to be aggrieved if the lease is included in a unit's participating area or not."8 14. The DNR Decision on Appeal erroneously determined that Plaintiffs' ORRIs were not interests in leases in a decision that is not supported by factual considerations or relevant legal precedent. The purported legal authority cited by the DNR Commission in support of its denial of Plaintiffs' appeal were misstated, deliberately misconstrued, or irrelevant to the correlative rights associated with an ORRI. 15. ORRIs are created from, and part of, a leasehold interest in oil and gas. The initial assignment of an ORRI in and from a State of Alaska oil and gas lease is an assignment of interest that must be approved by the Director of the Division of Oil and Gas. The assigned ORRI is a recordable interest in real property. 16. AS 31.05.110(b) sets out the requirements for unitization and identifies a class of individuals affected by unitization upon terms that are fair, reasonable, equitable, and which are necessary or proper to protect, safeguard, and adjust the rights and obligations of affected persons, which includes ORRI owners. 17. The Alaska Oil and Gas Conservation Commission ("Commission") is an agency housed within the Alaska Department of Administration. A.S. 31.05.030(d)(9) grants the Commission the power to require "the filing and approval of a plan of development and operation for a field or pool [the components of both a "unit" and a "Participating Area" within a unit] to prevent waste, ensure a greater ultimate Attached hereto as Exhibit 5. 8 Exhibit 5, at 1. COMPLAINT FOR DECLARATORY RELIEF PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COMPLAINT Page 5 of I I COMPLAINT FOR DECLARATORY RELIEF Page 6 of 1 1 PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COMPLAINT recovery of oil and gas, and protect the correlative rights of persons owning interests in the tracts of land affected." 18. The owners of an ORRI in a State of Alaska oil and gas lease are persons owning a recorded real property interest approved and assigned by the DNR in the tract of land included in a lease. When allocation of production is a matter of debate among two or more persons owning interests in neighboring tracts of land, the Commission is the only governmental entity within State of Alaska that has statutory authority to consider the evidence and then to issue a decision about allocation of production from ri a pool of oil or gas in a manner that provides due process and protects the correlative rights of the persons owning interests in the tracts of land affected. C 19. AS 31.05.110(c) specifies that an order of the Commission defines the area to be x ��N o O 3 m o 0 included within a unit. v, x xa 20. Nothing in the DNR's organic statute, A.S. 44.37.010 et seq., vests DNR with the Z 4 0 A 3 ry 7 ALL A z ; 0 a , specific authority to create or expand a unit area. Within the Alaska Administrative z:a'�^a c Code the regulations regarding DNB's creation and management of units and a a o participating areas are declared to be issued by authority of A.S. 38.05.020. However, o °= this statute granting the authority of the duties of the DNR commissioner is silent with x z respect to creation of oil and gas units and Participating Areas within units. Under Alaska's statutes, the Commission is the only governmental entity that has authority to define the area to be included within a unit and to decide about correlative rights within a pool of hydrocarbons. 21. AS 31.05.026 sets out the Commission's relationship to DNR. Specifically in subsection (c), the statute provides that, in case of overlapping work between the two agencies, the Commission "may by regulation enter into an agreement with the [DNR] whereby either the [C]ommission or [DNR] shall have the responsibility to collect the information lawfully required by both." This language provides the authority to either agency to approve or disapprove certain actions, but only on the COMPLAINT FOR DECLARATORY RELIEF Page 6 of 1 1 PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COMPLAINT delegation of responsibility to collect information—not the authority to define the area to be included in a unit. 22. No regulation in the Alaska Administrative Code sets out any agreement between the Commission and DNR under A.S. 31.05.026 that would permit delegation to DNR the power to approve unitization or pooling plans. 23. The Commission is the only State of Alaska agency that has the statutory authority to make a determination regarding Plaintiffs' correlative rights with respect to the acreage from the Lease that must be included in the expansion of the FCPA within the unit after review of all available evidence regarding the areal extent of the pool of hydrocarbons being produced. 24. A.S. 31.05.026(e) states "[DNR] shall have the same standing (no more or less) before the [C]ommission as granted by law to any other proprietary interest." Pursuant to this statute, DNR may opt to submit evidence to the Commission about this matter, with the same standing as Plaintiffs or any other persons owning interests in the tracts of land affected. DNR is not authorized by statute to stand above other proprietary interests–in this case Plaintiffs' interests–to render a decision affecting other proprietary interests in response to a dispute among two or more interested persons involving oil and gas correlative rights. FIRST CLAIM FOR RELIEF (Declaratory Relief- Jurisdiction) 25. Plaintiffs reallege and incorporate each and every allegation contained in all previous paragraphs of this Complaint. 26. DNR erroneously asserts that it has statutorily -granted jurisdiction to decide whether to grant or deny Hilcorp's Application for limited expansion of FCPA. 27. DNR does not have statutory authority to approve plans for units. 28. Plaintiffs have and will continue to suffer damages if the DNR Decision is left standing. COMPLAINT FOR DECLARATORY RELIEF Page 7 of 1 1 PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COMPLAINT 29. An actual controversy exists, and further factual development outside the context of this action will hinder instead of advance the Court's ability to address the legal issues presented. Judgment declaring that the Commission is the only State of Alaska agency endowed with jurisdiction to approve unit expansion and that DNR lacks jurisdiction 33. Plaintiffs reallege and incorporate each and every allegation contained in all previous paragraphs of this Complaint. COMPLAINT FOR DECLARATORY RELIEF Page 8 of 1 1 PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COM PLAINT over approval of unit expansion is necessary and proper. 30. If the Court determines that DNR does have statutory authority to approve plans for units by way of the Alaska Administrative Code, the Plaintiffs request declaratory judgment that DNR has no statutory authority to usurp the Commission's authority to Lj render a decision pertaining to the protection of correlative rights. p 31. If the Court does not determine that the Commission is the only State of Alaska P h agency with jurisdiction to approve unit expansion, then Plaintiffs request declaratory x 4M S N _ judgment that the Commission is the only State of Alaska agency endowed with 3gmoo jurisdiction to decide about allocation of production within a pool of hydrocarbons in Z% 4 w p 3 z ; d a LL m a unit and that DNR lacks jurisdiction over allocation of production within a pool of z r o gas that has been declared by the operator of the pool to span across contiguous lease a N boundaries. z Sao 32. Plaintiffs are entitled to an order declaring that the Commission is the proper agency z~ with jurisdiction over unit expansions and any other decision within a unit pertaining PQto protection of correlative rights, and that the DNR Decision is invalid for lack of subject matter jurisdiction. The Court's judgment will terminate the controversy and afford relief to Plaintiffs from the uncertainty, insecurity, and controversy giving rise to the proceeding. SECOND CLAIM FOR RELIEF (Declaratory Relief- Standing) 33. Plaintiffs reallege and incorporate each and every allegation contained in all previous paragraphs of this Complaint. COMPLAINT FOR DECLARATORY RELIEF Page 8 of 1 1 PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COM PLAINT 34. The DNR Decision on Appeal denied Plaintiffs' appeal of the DNR Decision on the grounds that Plaintiffs lack standing because they were not "aggrieved" by the DNR Decision. The DNR Commissioner based this erroneous conclusion on the assumption that ORRIS are not interests in a lease or unit and ORRI owners have no basis to be aggrieved if a lease is included in or excluded from a unit's Participating Area. 35. Plaintiffs have an interest adversely affected by the DNR's decision to grant Hilcorp's Application while simultaneously denying Hilcorp's request to expand the FCPA into the Lease. Plaintiffs have and will continue to suffer harm caused by the DNR Decision to exclude the Plaintiffs' ORRIS from the FCPA despite Hilcorp's admission in its Application that it is draining gas from the Lease, and the DNR Decision on Appeal upholding the DNR Decision. Plaintiffs' ORRIs are in an area that Hilcorp's Application requested to be included in the expansion of the FCPA but were excluded by the DNR Decision about the unit and the participating area. The exclusion of Plaintiffs ORRIS from the FCPA has a material effect on the value of the ORRIS. 36. An actual controversy exists, and further factual development outside the context of this action will hinder instead of advance the Court's ability to address the legal issues presented. Judgment declaring that ORRIs are real property and mineral interests that confer Plaintiffs with standing to challenge agency decisions on unit and participating area formation and expansion is necessary and proper. 37. Plaintiffs are entitled to an order declaring that ORRIs are real property and mineral interests that confer Plaintiffs with standing to challenge any decisions on unit and participating area formation and expansion to the extent that such decisions impact the correlative rights associated with the ORRIS. The Court's judgment will terminate the controversy, afford relief to Plaintiffs from the uncertainty, insecurity, and controversy giving rise to the proceeding, and will clarify the rights and privileges of ORRI ownership. COMPLAINT FOR DECLARATORY RELIEF Page 9 of I I PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COMPLAINT U a a ►,y� N O mca N 3 m o 0 C7 -mj a Z d M R 3 o- A W U. A Y! G a O z 0> 0i� I CO'r o§vai e c �o z Warn O F z �Q THIRD CLAIM FOR RELIEF (Agency Appeal) 38. Plaintiffs reallege and incorporate each and every allegation contained in all previous paragraphs of this Complaint. 39. In the alternative, if DNR is declared to be the correct agency to make the determination of Hilcorp's Application and the correct agency to resolve disputes pertaining to correlative rights, Plaintiffs appeal the substantive errors contained in the DNR Decision which was upheld by the DNR Decision on Appeal. 40. Plaintiffs reallege and incorporate all allegations contained in their Second Claim for Relief (Declaratory Relief -Standing) as part of its Agency Appeal claim should the Court declare that DNR is the correct agency to make the determination of whether Hilcorp's Application should be approved or denied. 41. DNR erred in failing to consider Plaintiffs' public comments submitted January 2, 2017. 42. DNR erred in accepting Hilcorp's proposed "proven to contribute" standard rather than the required standard set out in the relevant regulations. 43. DNR erred when it left out of the FCPA an area that Hilcorp admitted is proven to contribute to production from the FCPA. 44. DNR erred in dismissing Hilcorp's geological data in favor of DNR's "circle and tangents" method to identify areas of gas accumulation rather than relying on Hilcorp's data geological analyses that it used to determine acreage proven to be contributing to production. DNB's overly simplistic approach reduced the boundaries of the reservoir to a series of circles around existing wellbores connected by tangents — as if straight lines can account for the meandering braided stream beds and river beds described in the DNR Decision. 45. DNR erred in failing to make findings of material facts needed to support its decision. COMPLAINT FOR DECLARATORY RELIEF Page 10 of I I PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COM PLAINT U a d � T � N M m 0 O C3 JN K•..'O. z d n o 3 H A A LL N i N C Q O z T dIm z0>da Q E < in' �a3`= z Sao O '° v E d x ~ z Gq 46. DNR erred in failing to consider material evidence. 47. DNR erred in failing to provide the Plaintiffs sufficient due process. 48. As a result of these errors committed by DNR, Plaintiffs suffered damages. WHEREFORE, Plaintiffs request the following relief: 1. For the entry of declaratory judgment that the Alaska Oil and Gas Conservation Commission has exclusive jurisdiction over the subject matter contained in Hilcorp's Application for limited expansion of the Falls Creek Participation Area and the DNR Decision is void for lack of subject matter jurisdiction; 2. For the entry of declaratory judgment that Plaintiffs have standing to assert claims pertaining to correlative rights regarding ORRIs in Lease ADL 384314; 3. In the event it is determined that DNR is the correct agency to make the determination about Hilcorp's Application, an order finding that the DNR Decision was factually and legally erroneous and remanding the decision to DNR for further consideration in accordance with this Court's instructions and that Plaintiffs have standing to challenge the DNR Decision; 4. For Plaintiffs' reasonable costs and fees; and 5. For such other relief as the Court deems just and proper. DATED at Anchorage, Alaska this 2"d day of August, 2017. BANKSTON, GRONNING, O'HARA, P.C. Attorneys for Plaintiffs By: William M. Bankston AK Bar No. 7111024 wJ agkston@bgolaw.pro 0 Renee J. Sheyko - AK Bar No. 1411105 rsheyko@bgolaw.pro COMPLAINT FOR DECLARATORY RELIEF Page 11 of 11 PLC, LLC and MH2, LLC v. State of Alaska, Department of Natural Resources C2934/32/PLEADINGS/COMPLAINT Department of Natural Resources DIVISION OF OIL & GAS 550 W r Avenue, Suite 1100 Anchorage, AK 99501-3560 Main: 907.269.8800 Fax: 907.269.8939 Public Notice of Application to Expand the Ninilchik Unit The Department of Natural Resources (Department), Division of Oil and Gas (Division), gives notice under 11 AAC 83.311 of an application for the expansion of the Ninilchik Unit (NU) under 11 AAC 83.356. The application includes a proposal to modify the Ninilchik Unit Falls Creek Participating Area. The NU is located on the Kenai Peninsula of Alaska, between Clam Gulch and Ninilchik, and the expansion area is near where Falls Creek crosses the Sterling Highway. Hilcorp Alaska, LLC (Hilcorp), the NU operator, filed an application with the Division to expand the NU on November 2, 2016. The application was deemed complete on November 29, 2016. Hilcorp's address is 3800 Centerpoint Drive, Suite 100, Anchorage, Alaska 99503. The proposed expansion area covers approximately 40 acres in three (3) fee oil and gas leases including all or portions of the following lands: Seward Meridian, Alaska T. 1 N., R. 12 W., sec. 7, NWl/4NEIA. In accordance with 11 AAC 83.356, geological, geophysical, and engineering information were submitted in support of the application to expand the NU. The application will be approved if consistent with 11 AAC 83.303, and other applicable statutes and regulations. You may review the non -confidential portions of the application on the Division's website http://dog.dnr.alaska.gov/Units/Units.htm, in-person at the Division's office, or by writing to Division of Oil & Gas, Units Section, 550 West 7th Avenue, Suite 1100, Anchorage, Alaska 99501-3560. The Division charges a photocopy fee of $.25 per sheet, per I 1 AAC 05.010(a)(16XC). Any person may file written comments on the application. Comments must be received by 4:30 p.m., Alaska Time, Wednesday, January 4, 2017 and should be mailed to the Division of Oil and Gas, attention Kyle Smith, Unit Manager, at the above address. You may also submit comments via email to DOG.Units@alaska.gov. The Division will consider all timely written comments and will evaluate the application based on the criteria in 11 AAC 83.303 and 83.356. Within 60 days after the close of the comment period, the Division will issue a written decision to approve or deny the application. Individuals or groups of people with disabilities, who require special accommodations, auxiliary aids or services, or alternative communication formats, please contact Sean Clifton at (907) 296-8507, or TDD (907) 269- 8411 (5 days before end of comment period). This notice �also appears on the State of Alaska website at http://dnr.alaska.gov/commis/pic/pubnotfrm. Chantal Walsh, Director Date first published in newspaper: December 5, 2016 Division of Oil and Gas EXHIBIT I Page 1 of 74 Hilcorp Alaska, LLC November 2, 2016 Jim Beckham, Acting Director Division of Oil and Gas Alaska Department of Natural Resources, 550 West 7u' Avenue, Suite 1100 Anchorage, Alaska 99501-3557 Re: Proposal to expand Ninilchik Unit Falls Creek Participating Area Dear Mr. Beckham, Post Office Box 244027 Anchorage, AK 99524-4027 3800 Centerpoint Drive Suite 100 Anchorage, AK 99503 Phone: 907-777-8414 Fax: 907-777-8580 dduffy@hilcorp.com Pursuant to 11 AAC 83.351(c),t Hilcorp Alaska, LLC ("Hilcorp"), as sole working interest owner and operator of the Ninilchik Unit, hereby requests the Department of Natural Resources, Division of Oil and Gas ("DNR") to expand the Fall Creek Participating Area. Areal expansion of the Falls Creek Participating Area is appropriate because Hilcorp has drilled and produced delineation wells outside of the existing participating area boundary. Vertical expansion is required because various participating area wells (all originally Tyonek producers) have been recompleted in the Beluga Formation. The proposed vertical expansion will also align the Falls Creek Participating Area with the applicable AOGCC-administered pool rules for the Ninilchik Unit/Field 2 Areal expansion of the Falls Creek Participating Area boundary will also require modification of the Ninilchik Unit boundary. This change involves unitization of approximately 40 acres of fee mineral property, 100% leased by Hilcorp within the NW4 NE4, Section 7, Township 1 North, Range 12 West, Seward Meridian, Alaska. In support of this application, Hilcorp has previously submitted technical data to DNR. In addition, Hilcorp hereby submits an additional confidential geologic report. In summary, Hilcorp's proposed Falls Creek PA modifications are based on the Lowest Known Gas (LKG) intervals of all wells associated with the current and proposed PA boundary. Only acreage that has been proven to contribute to the production of natural gas has been included in this application. EXHIBIT 1 Page 2 of 74 i 1 I AAC 83.351(c) provides: A participating area must be expanded to include acreage reasonably estimated through the use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities, and must be contracted to excluded acreage reasonably proven through the use of geological, geophysical, or engineering data to be incapable of producing hydrocarbons in paying quantities, subject to approval by the commissioner. A revised division of interest formula or formula allocating production and costs must be submitted for approval under 11 AAC 83.331 at the time o of expansion or contraction of a participating area. z Conservation Order 702A, Rule 2 provides: The Ninilchik Beluga/Tyonek Gas pool comprises the gas -bearing intervals common to and correlating with the interval between the measured depths of 1,480 feet in the Paxton #5 well and 9,600 feet in the Paxton #1 well. Hilcorp Alaska, LLC Proposed Ninilchik Unit / Falls Creek PA Modification Page 2 of 2 This is the first revision to the Falls Creek Participating Area. As such, Hilcorp anticipates that the revised participating area boundary will also involve the re -allocation of production retroactive to first Falls Creek PA production in 2003.3 Hilcorp proposes to address this requirement within 90 days following DNR's final approval of the proposed participating area expansion. As required by Article 9 of the Ninilchik Unit Operating Agreement, and as part of this application, proposed Ninilchik Unit Exhibits A & B and proposed Falls Creek Participating Area Exhibits C &D are attached hereto. Consistent with our currently approved Plan of Development, Hilcorp anticipates submitting similar proposals to expand/modify the Grassim Oskolkoff and Susan Dionne -Paxton Participating Areas during calendar year 2017. After this unit -wide delineation process is complete, Hilcorp and DNR can cooperatively address issues related to mandatory unit contraction. Should any technical or administrative questions remain, please do not hesitate to contact me directly at 777-8414 or by email at dduffvna hilcom.com. Sincerely, David Duffy, Landman Hilcorp Alaska, LLC Enclosures: Proposed Unit / PA Exhibits; Confidential Geologic Report CC: AOGCC EXHIBIT 1 Page 3 of 74 'See FINDINGS AND DECISION OF THE DIRECTOR, DIVISION OF OIL AND GAS, THE FIRST EXPANSION OF THE UNIT AREA, FORMATION OF THE FALLS CREEK, GRASSIUM OSKOLKOFF, AND SUSAN DIONNE PARTICIPATING AREAS, AND AMENDMENT TO THE UNIT AGREEMENT, dated June 30, 2003, at pp. 12-13 ("The finally determined Falls Creek PA and the tract allocation schedule for those participating lands will be re- determined retroactive to the first day ofproduction from the participating area. Any imbalances created by the retroactive adjustment ofthe Falls Creek PA tract participation schedule will be made from production of Unitized Substances firom the Falls Creek PA after the effective date of the revised tract participation schedule. ). Exhibit A W Ninilchik Unit 2016 Proposal Working Working Tract Mineral Mineral Royalty ORRI ORRI Y tY Interest Interest Tract Tract Legal Description Acreage Lease p Owner Interest Percent Owner Percent Ownership Owner 001 T2N-RI3W 320.0000 HAK# 1035733 State of Masks, 100.00% 12.500% Hilcorp Alaska, LLC 100.00% Smion36: R2 ADL# 384318 Departmentof Natuml Raourca 002 nN-R12W 3,518.4500 HAK# 1030487 Stateof Alaska, Seaion 19'. All ADL# 384314 Department of Natuml Section 20: Unsusveyad, all tide and Resources submerged lands Smion: 21: NW/4N 4& N/2NE/4NE/4SFJ4 & M4NW/4 Section 28: SEA Smion 29: All tide and submerged lands Smion 30: All Smion 31: Fradional 003 TIN-R12W 3095.5500 HAK# 1034385 Sbteof Alaska, Section 6: That pan ofthe M lying below ADL#389737 Depment of Natuml the line of mean high tide (estimated at 30.56 Resources acres) Sentient 7: Fmetional TIN -ROW Section 1: NW/4 and W/2NF14 and NW4NF/4 and W/2SW/4 and N ,;SW/4 Seaion 2: W/2 Seaion 3: SE/4 Seddon 10. N/2 & SWA Scotian 22: Tide and submerged land Seaion 23: All tide aM submerged land Station 27. Lot 5 and all tide and submerged lands 100.00% 12.500% Paul Craig 2.466670% Him, Alaska, LLC William Webb 033330% Cook Inld Energy, LLC 1.000000% Make[ Oil and Cres LLC 0,500000% Hes Sun Kim 0.100000% lassie. Cmig 0.100000% 2,1529900 HAK# 1031010 State of Alaska, 100.00/. 12.500°/. ADL# 384305 Department of Natural Resources Hilcwp Alaska, LLC 6.500000% Hilcerp Alaska, LLC Hilcmp Alaska, LLC 100.00% 100,W% 10000% X15 TIN-R13W 48000M ll K# 1035732 State of Alaska, 100.00% 12.500%. Hilmrp Alaska, LLC 100.00% Smion 16: E/2&SW/4 ADL#384306 Depadmentof Natuml Resources Ninilchik Proposed Unit Exhibit A Last Update: 11/1/2016 Page 1 of47 Ninikhik Proposed Unit Exhibit A Last Update: 11AMM Page 2 of47 .. r F� .� Working Working o Tract Mineral Mineral Ro yalty O Interest Interest ~ � Tract Tract Legal Dncripti0n Acreage Leaq Leonowner Owner Interest Percent Owner owns Percerce nt ^/o Ownership Owner 006 TIN-R13W 4,6250200 HAKN 1031008 Stateof Alaska, 1MOM.. 12.SOP1.p" Hilcorp Alaska, LLC 100.00% W Section 20: F12&SW/4 ADLN 389180 Department of Natural Section 21: All Resources Section 28: All Section 29: All Scotian 30: Flt & SW/4 Section: 31: All Section 32: All 007 TIN-R14WSation36: SFl4 160.0000 HAKN 1035904 Stateof Alaska, 100.00% 12.500% Hilcmp Alaska, LLC 100.00% ADL 0 390085 Deportment of Natural Resources ` 008 TIS.RI4W 3,507.8400 HAK# 1031009 State of Alaska, 100.00% 12500% Hilmp Alaska, LLC 100.00% Section 1: All ADL # 384372 Department of Natuml Section 2: All Resources Section 11: All Section 12: SENSE14 & All tide and submerged land 009 TIS-R14W 160.0000 HAKN 1035905 State of Alaska, 10000% 12.500% Hilcorp Alaska, LLC 100.00% Section l S:SE/4 ADLN 390105 Departmcntof Natural Resources 010 TIS.RI3W 852.0000 HAK#1030481 State of Aloka, 100.00/. 12.500°/ fames W. White 3.5000 Hi Imp Alaska, LLC 100.00% Section 4: W/2SW/4 ADL #359242 Depanment of Natuml Section 5: All tide and submerged land Resourna Tucson Ltd 3.000000% Section 6: All tide and submerged land V. Paul Ga. 3.0000 Section 7: All tide and submerged land lames L Thurman 3.000000°/. 011 TIS-R13W 120.0000 HAK# 1029933 Stateof Alaska, 10000% 12.500% Hilcorp Alaska, LLC 3.000000% Hilomp Alaska, LLC lo0m% Section 7: SE14SF14 ADL# 388226 Depanmant of Namml Section 8: MSF/4 Renounces 012 TIN-R12W 59.9600 HAK# 1035902 Smteof Alaska, 100.00 % 12.500% Hilcmp Alaska, ILC loom% Section S: Lot 3&F12SE14NW/4 ADL# 390363 Depanmantof Natuwl Resources 013 TIN-R12W 40.0000 HAK# 1035902 Staleof Alaska, 100.00% 12.500% Hilcorp Alaska, LLC 100.w% -- Section 7: SE/4W/4 ADLN 390363 Depattment of Natural Resources Ninikhik Proposed Unit Exhibit A Last Update: 11AMM Page 2 of47 Tract Mineral Mineral Royalty ORRI ORRI Working Working Ya ry Interest Interest Tract Tract Legal Description Acreage Lease k Owner Interest Percent Owner Percent Ownership Ownerwner 014 TIN-R13W 2.5000 HAK# 1034934 Bureau ofland Section 14: That pan of 1. at l lying within AKA #A-024399 Management the aoutheasl camv of the SF14NF14 lest 2.5 acres) 1000W. 12.5000 Ham, Alaska, LLC 3 250000% Ann L Edwards 0,350000% Charles Delaney Faland 0.35NW% B Dorothy Anne Dedrick 0.100000% Mina L Mendez 0.050000% Dustin D. Faland 0.0500001. Mary Lynne Mxllering 0.0500009. Kevin Maelntosh 0.0500009. Hilcorp Alaska, LLC I00,W/. 015 TIN-R13W 911100 HAK# 1034934 Bureau of lend 100.00% 12.5001. HilcorpMaska,LLC 3.250000°/. HilcorpAlaska. LLC 10000°0 W I Smion 12: That pan of Lot l lying within AKA#A-024399 Management the SP2 4 and Ids 2 and 3 Ann L. Edwards 0.350000% Charles Delaney Ealand 0.350000% a Dorothy Anne Detrick 0.100000% Ali. L. Mendez 0.050000% Dustin D. Eeland 0,050000% Mary Lynne Moellering 0.0500001/0 Kevin Macintosh 0.0500001/. 015A TIN -13W 10.2300 HAK# 1034934 Bureau ofland 100.00% 12.500% Hilwrp Alaska, LLC 3.2500001. Hilcor, Alaska, LLC 100001. Section 12: That pan of Lot 1 lying in the AKA # A-024399 Management NE/4NF14 dd/a Int 1, except that pan lying Ann L Edwards 0.3500001/. in the SRNE14 Charles Delme,Ealand 0.3500009. B Dorothy Anne Dedrick 0.1000001/. Alin. L. Mendez 0.050000% Dustin D. Ealand 0050000% Mary Lynne Moellering 0.050000% Kevin Macintosh 0.050000% Ninilchik Proposed Unit Pxhibit A tan Update: 11/1/2016 Page 3 of47 017 TIN-R13W University of Alaska Section 34: NW/4SW/4 & S2NW/4 018 T2N-R12W Working Interest UA# Nsulchik Section 28: SWA Tract Mineral Mineral Royalty Y ty ORRI ORRI Interest Interest SEJ4SW/4 Tract Tract Legal Description Acreage Lmse # Owner Ivterest Percent Owner Percent Ownership Owner Hilcorp Alaska, LLC 016 TIN-R13W 8.9600 HAK01034934 Burwu of Land 100.00% 12.500% Hilcorp Alaska, LLC 3.250000% Hilcorp Alaska LLC 100.00% Station 8: NF14NEJ4 Section 23: Lot 5 (4.96 acres) and that pan of AKA # A4)24399 Management Section 21: That part of the Hilwrp Alaska LLC MNEANE/4SEA & St2NFJ4SFJ4 & SFJ4SFJ4 lying southwstaly of and Lot 1 lying in he W2 (animated at 4.0 acres) Ann L. Edwards 0,350000% 40,000 HAK# 1031009 University of Alaska Charles Delaney Eeland 0.350000% 12.500% Hilcorp Alaska, LLC 100.00°/. UA# Tract #2-05 R 55.0000 �.. Cook Inlet Region, Inc. 100.00°/. 20000% Hilcorp Alaska, LLC 100.00% Dorothy Anne Debits 0.100000% CMI# C461596 sa"ya1 O Aline L Mendez 0.050000% FF11w.�1/4l Dustin D. Ealand 0050000% 1+/ bD Mary Lynne Moellering 0.050000% W a Kevin Macintosh 0050000% 017 TIN-R13W University of Alaska Section 34: NW/4SW/4 & S2NW/4 018 T2N-R12W 100.00% Section 21: NE/4N 4 UA# Nsulchik Section 28: SWA Section 29: SE/4SFJ4 Section 32: M2 4 & NF14NEJ4 & SEJ4SW/4 019 TIN-R12W Section 6: SE/4NFJ4 020 TIN-R13W 100.00°0 Section 33: W 1 Hilcorp Alaska, LLC Section 34: E2SW/4 and WAWA 021 TIS-R13W Section ]: Lot 4 022 TIS-R13W Station 8: NF14NEJ4 023 nN-R12W 100.00% Section 21: That part of the Hilwrp Alaska LLC MNEANE/4SEA & St2NFJ4SFJ4 & SFJ4SFJ4 lying southwstaly of and excluding the Sterling Highway Niailchik Proposed Unit Exhibit A Ian Update: 11/1/2016 120.0000 untamed BurwuofleM loo' Y. Management 400.0000 HAK# 1033481 Universityof Alaska 100.00% 12.500% Hilcorp Alaska, LLC 100.00% UA# Ninilchik Tract #2 40.0000 HAK # 1033481 University of Alaska 100.00 % 12.500% Hilcorp Alaska, LLC 100.00% UA# Nsulchik Tract#2 1504400 HAK91031002 University of Alaska 100.00°0 12.500% Hilcorp Alaska, LLC 100.00% UA# Tract #2-04 30.9100 HAI# 1033481 University of Alaska 100.00% 12.500•/. Hilwrp Alaska LLC 100.00/. DAN Nnilchik Tract #2 40,000 HAK# 1031009 University of Alaska 100.00% 12.500% Hilcorp Alaska, LLC 100.00°/. UA# Tract #2-05 55.0000 HAK# 1033508 Cook Inlet Region, Inc. 100.00°/. 20000% Hilcorp Alaska, LLC 100.00% CMI# C461596 Page 4 of40 Section 21: S12NE14 & SE14NW/4 & NP14SWA & WASE/4 & W2E2SE/4 & SE/4NFJ4SF14 &S2NF14NE13SF14 lying northwesterly of and including the Sterling Highway 024 nN-R12W Section 29: Lots 32.6100 HAR # 1031005 Cook kid Region, Inc. 100.00% 200006 Me C-061505 025 nbl-RIM 240.0000 HAK# 1031006 Cook held Region, Ne, 10000% 16,66790 Section 33: W2SW/4&SW/4NW/4& CM14 C -0615t0 N/29V4 & SE14SF14 Hilawp Alaska, LLC Hilaorp Alaska, LLC 100.00% 100.0000 026 TIN-R12W 60.0000 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease it Owner Interest Percent Owner Percent Ownership Owner 023A nls-RIM 2200000 unleased Cook hold Region, hoc. 100.00% 027 TIN-RI3W Section 21: S12NE14 & SE14NW/4 & NP14SWA & WASE/4 & W2E2SE/4 & SE/4NFJ4SF14 &S2NF14NE13SF14 lying northwesterly of and including the Sterling Highway 024 nN-R12W Section 29: Lots 32.6100 HAR # 1031005 Cook kid Region, Inc. 100.00% 200006 Me C-061505 025 nbl-RIM 240.0000 HAK# 1031006 Cook held Region, Ne, 10000% 16,66790 Section 33: W2SW/4&SW/4NW/4& CM14 C -0615t0 N/29V4 & SE14SF14 Hilawp Alaska, LLC Hilaorp Alaska, LLC 100.00% 100.0000 026 TIN-R12W 60.0000 HAK# 1033507 Cook Tula Region, Inc. 100.009. 20.000% Hilcwp Alaska, LLC 100.009. Section 5: S/2SF14 Section 5: SW/4NW/4 and W/2SF14NW/4 CIRI# C-060385 SW/4NE14 027 TIN-RI3W 1.8800 11 K91031005 Cook Inlet Region, Inc. INOW0 200009. Hilcorp Alaska, LLC 100.009. TIS-R14W Section 22: W 1 CIRI # C-061505 028 TIN-RI3W 50.2300 HAK# 1031005 Cook hold Region, Inc 10000% 20.00014b Hilcorp Alaska, LLC 100.009. Semon 27: Lots 8, 9, 11, 12, 13, 14, 15, I6, CRU # C461505 17, and 18 l29 TIN-R13W Sanion 33: Government Lot 5 1.9000 HAK# 1031005 Cook hold Regio, Inc. 100.0090 20.000% CIR1 # C-061505 Hilcorp Alaska, LLC 100.0000/. 130 TIS-R13W 694.7800 HAK# 1031NS Cook Inlet Region, Inc. 10000% 20.000% Hilcwp Alaska, LLC 10000% Section 4: SW/4NW/4 CRUS C-MIS05 Section 5: S/2SF14 Semon 7: Gov I -ms 1, 2, 3, and SW/4NE14 Semon 8: SFJ4NW/4 & NW/4NEA & S12NF14 & NFASW/4 & S2SW/4 & W2SF14 TIS-R14W Section 12: Gov Lot 1 031 TIS-R13W 163.25W HAK# 1033507 Cook hold Region, Inc. 10000% 20.000% - Section 9: NW/4NW/4 MIS C-060385 Section 18: Lots 1, 2, 3, NWASE14NW/4 and N/21M/4NE/4 Hilcwp Alaska, LLC 100.00% 032 nN-R12W 120.0000 HAK# 828033 James B Borden and 1000006 12.500°6 Hiloorp Alaska, LLC 10000% Section 21: NW/4SW/4 & S2SW/4 Tammy L. Borden Ninilchik Proposed Unit Exhibit A Page 5 of 47 Un Update: 11/1/2016 033A.1 T2N-R12W 14.2600 HAK#318 Rebekah A. Chapek 20.00% Working Working �- Smion 21: Lets 3-5, Black I & Ids 2,3,5,] Tract Mineral Mineral Royalty ORRI ORRI Interest Interest & 8 of Block 2 and all thededicated stress of Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 033A nN-RIM 2.0000 HAK# 318 Jeff L. Wells&Hilda G. 2000% 12.500°6 Hilcmp Alaska, LLC 10000°. HAK# 1033547 Section 21: Lots 1 & 2, Black 1 Clam Gulch 12.500% Wells & IaRon Wells SWASFJ4 lying Southeast of the Sterling Acres Subdivision, plat #86-81 HAK# 1033533 Jeff L Wells &Hilda G. 2000% 12.500 HAK# 1033548 Hilda C. Unfrid 20000s 12500°/. Wells & LaFlon Wells animated Marshall K. Coryell 20.00% 0338 HAK# 1033547 IeRL. Wells&Hilda G. 20 W% 12.500%. 12.500% Hilcorp Alaska, LLC 100.00% Section 21: Las 6 & ], Block 1 & Lots 11 & Wells & "Ban Wella Tammy L. Borden 12, Black 2 of Clam Gulch Acres HAK# 1033548 JeRLWells&Hilda G. 20.00% 12.500% Subdivision, plat #86-81 Wells& Lehon Wells 033C TN -MW 3.6900 unleased Kelly Guy Baker 100.00% Section 21: Lots 6,9, 10, Block 2 of Clam unleased Jeff L. Wells &Hilda G. 20:00°6 F 7 033D Wells & Lefton Wells 7.8400 unleased Nell Kelly Ie000. Section 21: The minerals underlying the right ISI W 033A.1 T2N-R12W 14.2600 HAK#318 Rebekah A. Chapek 20.00% 12.500% Hilcmp Alaska, LLC 100.001% �- Smion 21: Lets 3-5, Black I & Ids 2,3,5,] & 8 of Block 2 and all thededicated stress of HAK# 1033533 Elate of Lillian Nuvolae 20.00% 12.500°/. x 0 Clam Gulch Acres Subdivision. plat #86-81 >1M andtheunsubdividd«mainderofthe HAK# 1033547 Stephen Wayne Gordon 20.00% 12.500% r, a ha4 SWASFJ4 lying Southeast of the Sterling Highway HAK# 1033548 Hilda C. Unfrid 20000s 12500°/. animated Marshall K. Coryell 20.00% 0338 MIN-R12W 5.8900 HAKA 828033 James B Borden and 100.00°6 12.500% Hilcorp Alaska, LLC 100.00% Section 21: Las 6 & ], Block 1 & Lots 11 & Tammy L. Borden 12, Black 2 of Clam Gulch Acres Subdivision, plat #86-81 033C TN -MW 3.6900 unleased Kelly Guy Baker 100.00% Section 21: Lots 6,9, 10, Block 2 of Clam Gulch Acres Subdivision, plat #86-81 033D nN-R12W 7.8400 unleased Nell Kelly Ie000. Section 21: The minerals underlying the right of way "the Staling Highway as it croua the SWASE14 (est. 7.84 acres) 033E nN-R12W 10000 unleased Delphine L.Chasing-Hawk 100.00% Section 21: Lot 1, Block 2 of Clam Gulch Acres Subdivision, plat #8681 033F T2N-R12W 1.1000 unleased Robert E. IJnk&Deborah 100.00Yn - Section 21: Lot 4, Block 2 of Clam Gulch A. Link (H&W) Acres Subdivision, plat #86-81 Ninilchik Proposed Unit Exhibit A Page 6 of47 Las Update: 1 UMOI6 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner % 034 T2N-RI2W 158.0000 HAK# 1031630 IWYW, LLC, a Hawaii 83.33% 12.500% Hilcap Alaska, LLC 10000% Section 2b.M W/4&SW/4NW/4(less the LLC 2 acre Harold A. Pederson Tract in the SF/c HAK # 1031631 Stephen Ree and Marilyn 16.67% 12.500% of SW/4NW/4) Scaion29:SE/4N&4 Iapge (excluded tract is Tract #36 of this exhibit) 035 T2N-R12W 400000 HAK# 8280% Leonard Aand EvelynD 100.00% 12.500% Hilcap Alaska, LLC 10000% Section 28: Trees A & B of plat 4794 and Keener Lots B-1 & B-2 of Plat 681.118 aid/. SE/4W/4 036 nN-R12W 2.0000 unleased Harold A. and Marguerite 100.00°/ Hilcap Alaska, LLC 100.00% Sation 28: Atract beginning at the SFh of M. Pedeson the SW/4W/4; TH. Norah 500'; TH. West 175'; TH. South 500; TH. East 17 'to POB. 037 T2N.R12W 160.0000 HAK4828034 Rodney W. Andrews and 10000% 12.500% Hilcap Alaska, LLC 100.00% Section 28: NEA Victoria H. Andrews 038 ttN-R12W 147.4500 HAKa 1031616 Mary Hawkins(deaaaed) 75.00% 12.500°, Hilcap Alaska, LLC 100.00% Sation 29: Ints 2 & 3 & N/2SFJ4In. a beet in the Northeastern caner of the N/2SE/4 HAK#1031617 Richard M. Hawkins 5.OW. 12.50M/. owned by Verroa Andrews and Leonard Kauer(.1.ded tract is Tract#39 of this HAK4 1031618 Charles F. Hawkins 500% 12.500°/a ahibib) unlased &a Hawkins, recessed 5.001h, unleased James Hawkins 5.00% unleased Marguerite Hawkins 500% 039 T2N-R12W 3.6731 HAK# 828052 Leonard Aand EvelynD 50.00% 1250V% Hilcorp Alaska, LLC 100.00°6 Keener Section 29: A tract in the Nonheaaem HAK#828053 Rodney W. Andrews and 50.00% 12SO(sl. Coma of the N/2SE/4 lying North of the Victoria H. Andrews Sterlin8Hghway 040 nN-R12W 3.9100 HAK41031623 Per Eric & Forces L 50.00% 12.500% Hilemp Alaska, LLC 10000% Water Section 29; Block 7 of Clam Gulch Park Plat unbound Theodore L. & Ann C. 25,00% 475-69 Maris ur lessed Thomas W. Palmer 25.00% 041 T2N-R12W 31.1100 HAK410316D Per Eric &SomeasL 50.00% 12.500°/. Hilcap Alaska, LLC 100.00% Section 32: Tracts 1-6 of Tract E and the W.. unsubdivided remainder of Tract E a T.L. HAK# 1033546 Timothy G. and Kristine 50.00% 12.500°6 Mortis Subdivision of Tract E of Clam Gulch Mmolan Subdivision, Plat #81-06 Ninilchik Proposed Unit Exhibit A Ian Update: 11/1/2016 Page 7 of47 Tract Mineral Mineral Ro al ORM ORRI Working Working Y tY Interest Interest Tract Tract Legal Description Acreage Lease Owner Interest Percent Owner Percent Ownership Owner au 042 MtN-R12W 220000 HAK01031623 Per Eric &Frances L. MOW.. 12.500% Hilcorp Alaska. LLC 10000% Section 32: The SE/4W/4 lying Southeast 0.. of Staling Highway, excluding the Clam Gulch Subdivision, Moms 1979 Addition Plat #79-192 042A M-R12W 2.7940 unleased Ronald E. Russell 100.00% Section 32: Tran G of Clam Gulch Subdivision Osman 1981 Addition, Plot #81- H j. 51 E•y W Section 32: Lot 2, Clam Gulch Subdivision, Plat#90-18 Shirley AN Grow & Richard James Edelman 044A -I nN-1112W 10000 HAI(# 1033561 Willie. Donald&Kerry 50.001. 12.500% Hileorp Alaska, LLC 100001. W Section 32: Lms 10 & 11, Thomack L Rader (Ww) Subdivision, Plat #KA 575, in m ferns they unleased Donald M. and Susan R. 50.00% he within Tract 'N' of forma Plat K-509 Canes (e41. 1 acre) 044A.2 nN-R12W 0.5000 HAKN 1031623 Par Eric & Frances L 50.00% 12.500% Hilemp Alaska, LLC 100009/6 Section 32: Las 10 & 11, Thmnack Osmar Subdivision, Plat #K-1575, in so far as they unleased Donald M. and Susan R 50.00% he outside Tract "A' of former Plat K-509 Corms (est 0.5 ase) 044AA nN-R12W 0.8000 unleased Deborah Lee Murphy 100.00% Section 32: Lm 13A, Clam Gulch Subdivision, plat #90-28 )44AB T2N-R12W 0.4600 HAK91033534 Lawrence&Carolina 100.00% 12.500% Hilemp Masks, LLC I00.0O10 Section 32: Lot 6, Clam Gulch Subdivision, Rebischke Conley 1977 Addition, plat 97843 )44AC nbi-R12W 0.9600 HAK# 1033553 Karen Loraine Landwehr 100.00% 12.500% Hilemp Alaska, LLC IOO.W% Section 32: Lots 7 & 8, Clam Gulch Subdivision, Conley 1977 Addition, plat #]8- 43 A4AD UN-R12W 00700 HAK91033534 ",armies&Carolina 10000% 12.500°/. Hi]wM Alaska, llC 100.00% Section 32: Tran B, Clam Gulch Rebischke Subdivision, ]at #K509 NimIchik Proposed Unit Exhibit A Page a of4] Last Update: 11/1/2016 Working worhang Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner% 044AE T24-RI2W 40200 HAK# 1031623 Per En. &F....L 50.00% 12.500% Hilcap Alaska. LLC 100.00% Section 32: Las IA & 10A. Clam Gulch Osman Subdivision No. 2, Plat #95-58&minerals unleased Arlyn H.&June C. 50.00% under the madbeda of Thomack Strew cad Thomack North IAurel Avenue 044AF nN-RI2W M600 HAK# 1033561 Willie. Donald &Kerry, 50.00% 12500°/ Hilcorp Alaska, LLC 10000°/. Session 32: Lets 8 & 9, Thomack L Reeder (hAv) Subdivision, Plat #K-1575 unleased Arlyn H.&June C. 5000% Thomack rl � 044AG RN-RI2W 0.5900 HAI(# 1033561 William Donald&Kerry 50.00°6 12.500% Hilcap Alaska, LLC 10000°/a w Section 32: tut 7, Thomack Subdivision, Plat 4 Rader (h/wj 1r�"A�'ysa O #K-1575 unlaced Sharon Nahorney 50.00% aaN N 044AH-1 nN-RI2W 0.1186 HAK#305 S.F.&Framis B. 5000% 12.500%. Hilcorp Alaska, LLC 100.00% M��k41I d Section 32: Lot 4, Thomack Subdivision, Plat Rebischke Iry #K-1575 in an far as it lies within Tma'A' HAK# 1033561 William Donald & Kemy 50.00% 12.500.6 W of Forma plat #K-509 (est. 0.1186 acre) L Reeder (h)w) 044AH-2 T2N-RI2W 0.2372 HAK# 305 S.F.&Reach B. 50.00%. 12.500% Hilcorp Alaska, LLC 100.00% Section 32: La 4, Thomack Subdivision, Plat Rebi.like #K-1575 in no faros it liesomside Treat 'A" HAK# 1031623 Per Eric &Francis L. 50.00% 12.500% of forma plat #K-509 (an. 0.2372 acre) ON.. 044AH-3 TN-RI2W 0.1370 HAK#1033561 William lMneld&Karr, 50.00% 12.50 Hilcap Alaska, LLC 10000% Section 32: Lots 5 & 6, Thomack L. Reeler low) Subdivision. Plat #K-1575 in an far as it lies unleased Arlyn H. & June C. 50.00% within Treat -A' offonaer plat #K-509 (est. Thomack 0. 13 7 ace) 044AH4 UN-RI2W 02372 HAK# 1031623 Per Eric &Frances L. 50.00% 12.500% Hi lcmp Alaska. LLC 100005a Section 32: Las 5 & 6, Thomack Osmar Subdivision, Plat #K-1575 in so far as it lies unlased Arlyn H. & lune C. 50.WA outside Tract 'A' of forma plat 9K-509 (est. Hammack 0.2372 acre) 044AI 112N-RI2W 3.0300 HAK# 1031623 Par Eric &FmncesL 5000% 12.50M. Hilcorp Alaska, LLC 100.00% Section 32: Lot C-10 of Thomack Subd., Plat ON.. _ #1502 unleased Ad,,n H.&June C. 50.00% Thomack 044M nN-R12W 0,2801) HAK # 1033545 Robert C. Johnson and 50.00% 12.5001/6 Hilcap Alaska, LLC 100.00% Section 32: Lot 3, Thomack Subdivision, PIN Trustee for #K-1575 unleasal Arlyn H. & June C. 50.00% Thomack Ninilchik Proposed Unit Exhibit A Page 9 o1`47 Lan Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORM ORRI Interest Interest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner% Gas" T2N-R12W 0.5000 HAK # 1031623 Per Eric & Frances L 50.W% 12.5000 Section 32: Lot 2, Thomack Subdivision, Plat 100.000 Osmar M43-2 MIN-R12W 9K-1575 HAK#1033551 9J Corporation 50.00%. 12.5000 044,E T2N-R12W 1.0000 HAK# 1031623 Par Eric&Franca L. 50,00 12.5000 Semon 32 Block 6, Clam Gulch Park Plat #K-1575 in as fm as it lies within Tract Osman 'A' of forma plat #K-509 (est. 0.715 sure) 044C-2 Subdivision, plat #75-69 ..[.ad Ed Krueger 25000 Plat #K-1575 in as fu as it lies outside Tract P. Eric & Frances L unlasd Shelia Darling (A. Kant 25.00%. Section 32: I.ot 14, Thomack Subdivision, Krug.) 'A' of formar plat #K-509 (est 0.1 ane) 0448-1 nN-R12W `. Session 32: Lot 12, Thomack Subdivision, 12.5000 Plat #K-1575, in so On as it lies within Tract 100.000 'A' of forma plat #K-509 (est. 1.0 care) M43-2 MIN-R12W 50.00% Section 32: Lot 12, Thomack Subdivision, Plat #K-1575, in so far as it lies outsideTmot 'A" of form. plat #K-509 (est 0.43 acre) 044C.1 nN-R12W Section 32: Lot 13, Thomack Subdivision, Plat #K-1575 in as fm as it lies within Tract HAK#591215 'A' of forma plat #K-509 (est. 0.715 sure) 044C-2 TIN -RIM Hilcorp Alsace, LLC Section 32: Lm 13, Thomack Subdivision, Plat #K-1575 in as fu as it lies outside Tract P. Eric & Frances L 'A' of form. plat NK -509 (ea. 0.715 acre) 04413-1 nN-R12W Section 32: I.ot 14, Thomack Subdivision, Plat #K-15]5 in so fm as it lies within Tmct 'A' of formar plat #K-509 (est 0.1 ane) 044D-2 nN-R12W 0.2150 Section 32: Lot 14, Thomack Subdivision, William Donald &Kerry Plat #K-1575 in so far as it lies outside Tmct 12.500% 'A' of form. plat #K-509 (at. 1.33 ane) Hilcmp Alaska, LLC Hilcorp Alaska, LLC 100 00% low% 10000 HA ft 591215 Walt. L. Wilson 50.00% 12.5000 Hilcorp Alaska, LLC 100.000 HAK# 1033561 William Donald &Kent' 50.00% 12.500%. L Realer (h/w) 04300 HAK#591215 Walter Wilson 50.00% 12.500% Hilcorp Alsace, LLC 100.00%. 11 K# 1031623 P. Eric & Frances L 50.001A 12500% Osman 0.2150 HAK# 1033561 William Donald &Kerry 50.00°!. 12.500% Hilcorp Alaska, LLC 100.00% L. Reader (Ww) unleasal John T. Givens 50.00%. 0.7150 HAK # 1031623 Par Eric & Frances L. 50.00% 12.50014. Hilcorp Alaska, LLC 100000 Owner unhand Job. T. Givens 50.00% 0,3000 HAK # 1033545 Robert C. Johnson and 50.00%. 12.500°. Hilcorp Alaska, LLC 10000% Trust. for HA ft 1033561 William Donald&Kerry 50.00% 12.500% L. Reda (h/w) 13300 HAK # 1031623 P. Eric & Forces L 50.00% 12.500% Hilcorp Alaska, LLC 100.00%. Osmu HAK# 1033545 Roban C. Johnsen and 5000% 12.50M. Trust. for 044E T2N-R12W 1.4200 HAK# 1031623 Par Eric & Frances L 50.00% 12.500% Hilcorp Alaska, LLC 10000% Section 32: Lal 15, Thomack Subdivision, Dam. Plat #K-1575 unlased Arlyn H. & June C. 50.00% Thomack Ninilchik Proposed Unit Exhibit A Page 10 o1747 Inst Update: Il/1/20I6 044H T2N-R12W 1.3200 unleased Jennifer Abbott Section 32. Lm 2 of Clam Gulch Subdivision, Conley 1977 Addition, plat #7843 0441 T2N-R12W Section 32: Int 3 of Clam Gulch Subdivision, Conley 1977 Addition, plat 07843 0441 T2N-R12W Section 32: Lot 4 of Clam Gulch Subdivision, Conley 1977 Addition, plat #7843 HAK # 1033535 Timothy M. Lynch 10000% 12.500% untamed Ptttt 1.&Carolyn J. 10000% Crosby 044K TZN-R12W 1.2900 unlessd Brian J. Farmy 100.00% Section 32: Lot 5 of Clam Gulch Subdivision, Conley 1977 Addition, plat 47843 Hilcorp Alaska, LLC Nimlchik Proposed Unit Fxhibit A page I 1 of 47 Last Update: 11/12016 Working Working Tract Mineral Mineral Royally ORRI ORRI Interest Interegt Tract Tract Legal Description Acreage Lease 9 Owner Interest Percent Owner Percent Ownership Owner % 044F T2N-R12W 14200 HAK # 1031623 Per Eric & Frances L 5000% 12.500% Hilcorp Alaska, LLC 100 DO% Section 32: let 16, Thomack Subdivision, Osmar Plat #K-1575 HAK# 1033550 an. Moorefield 50.00% 12.500% 12.500% Hilcorp Alaska, LLC 10000% 0446 nN-R12W 2.5300 HAI(# 1031623 Per Eric&Franc. L 50.00% Section 32:Lot C - I, Thoraces Subdivision, 0.. ~ Plat#Ked 575& Lot 1, Clam Gulchuntamed Dolores C. Sage 50.00% Subdivision, Conley 1977 Addition & also F Lot I ofPlm 97843 H p 044H T2N-R12W 1.3200 unleased Jennifer Abbott Section 32. Lm 2 of Clam Gulch Subdivision, Conley 1977 Addition, plat #7843 0441 T2N-R12W Section 32: Int 3 of Clam Gulch Subdivision, Conley 1977 Addition, plat 07843 0441 T2N-R12W Section 32: Lot 4 of Clam Gulch Subdivision, Conley 1977 Addition, plat #7843 HAK # 1033535 Timothy M. Lynch 10000% 12.500% untamed Ptttt 1.&Carolyn J. 10000% Crosby 044K TZN-R12W 1.2900 unlessd Brian J. Farmy 100.00% Section 32: Lot 5 of Clam Gulch Subdivision, Conley 1977 Addition, plat 47843 Hilcorp Alaska, LLC Nimlchik Proposed Unit Fxhibit A page I 1 of 47 Last Update: 11/12016 Tract Tract Legal Description Tract Acreage Lease If Mineral Owner Mineral Intrrcst Royalty ORRI Percent Owner Working ORRI Interest Percent Ownership Working Interest Owner % 044L T2N-R12W 5.2300 HAKa 317 Leonard&Juanita 50,W% 12500%. Hilcorp Alaska, LLC lw,00%. Section 32 A 5.23 acres tract described by HAK91033556 Sabrowski Revocable 50.00% 12.500% Hilcmp Alaska, LLC 100.00% Section 32: Lots IJ & 14 of Clam Gulch metes and bounds and lying within Clam unleased Living Trost 50.00% 192 Gulch Subdivision That cdtsin real property HAKM 591305 James R. Sabroveld and 500^ 12500% situated in the Third Judicial District, Kenai Suamm. E. S.I mwaki Recording District, State of Alaska, within nN, R12W, S.M., Alaska. Said property which is within the Clam Gulch Subdivision is are particularly described as begirming at ry 7 the one quarte coma of Sections 29 & 3$ t� THENCE South 379.1 fen to the Wen right of way of the Sterling Highway as shown on Clam Gulch Subdivision; Ia".a41 O the plat of said THENCE South 44.13' West along right of IWMI ^ yy-ay4 way, 1011.5 far to the beginning of a move,W W the center of which bears South 45°47' Fast 1946.3 feet, THENCE following the son of r l W said curve Southwesterly a distance of 200.4 feet to Coma 1, the true point of beginning of said real property; THENCE continuing Southwesterly, along the aro of mid curve, a distance of 385.4 feet to Comer 2; THENCE Norah 65°13' Wert approximately 305 fed to the wen ono -sixteenth line a Section 32 to Coma 3; THENCE North 0°07' Wex approximately 130 fed to the Northwest one- sixlanth turner a Section 32 to Comer 4; THENCE West along the North one -sixteenth line of Scmma 32 approximately 438 fat to ,he line ofMenn High Water of Cook held to Corned 5; THENCE Norah 20°00' End along Mean High Water 225.8 fed to Comer 6; THENCE East 695.0 fed to Com. 7; THENCE South 45.47' East 209.3 fat to Coma 1, the point of beginning. The parcel contains 5.23 acres, more or less. 044M T2N-R12W O.3800 HAKN 1033556 David Keith Crosby 50.00% 12.500% Hilcorp Alaska, LLC 10000%. Section 32: Tram F of Clam Gulch Subdivision, Morris 1979 Addition, plat 479- oriented Theodore L & Ann C. 50, % 192 Moms 044N T2N-R12W 0.9200 HAK91033556 David Keith Crosby 50.00% 12.500% Hilcmp Alaska, LLC 100.00% Section 32: Lots IJ & 14 of Clam Gulch Subdivision, Morris 1979 Addition, Plat 979. unleased Edna Fuller 50.00% 192 Ninilchik Proposed Unite hibitA Page 12 of 47 Lot Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest interest Tract Tract Legal Description Acreage Lease ti Owner Merest Percent Owner Percent Ownership Owner % 0440 UN-R12W 25.5260 HAK# 1031623 Par Eric & Frances L 10000% 12.500% Hilcmp Alaska, Ll.0 100.00% Section 32: Minerals underlying Ne roadbed 0445 Osmar Section 32: A 150' 8 200' Tract in the W2 of of the Starling Highway as it passes through fat 3 of Clam Gulch Subdivision, plat #90-28 044T nN-R12W Clam Gulch Subdivision & underlying Clam Gulch Subdivision, plat 090-28 0440 nN-R12W dedicated straMs in Clam Gulch Subdivision Section 32: Lot 4 & Lot 15, Clam Gulch subdivision, plat 00-28 044V (est. 25.562 aces) Section 32: Lm 5, Clam Gulch Subdivision, plat #90-28 044P UN-R12W 0.5500 HAK91033556 David Keith Crosby 50.00% 12.500% Hilcorp Alaska, LLC 100.00%. rl Section 32: Lot 1-B-2 of Clam Gulch 044X nN-Rl2W FI Subdivision Morn s 1979 Addition. plat #79. unleased Earl Carmichael 50.00% say 1%! 044Q nbl-R12W Swim 32: Lot 1 -B -I of Clam Gulch Subdivision, Mortis 1979 Addition, Plat #79- 192 04411 nN.R12W Section 32: Triangular portion of 1-m 3, Clam Gulch Subdivision, Plat 490-28 0445 MN-R12W Section 32: A 150' 8 200' Tract in the W2 of fat 3 of Clam Gulch Subdivision, plat #90-28 044T nN-R12W Section 32: The southeast 138.9' of Lot 3 of Clam Gulch Subdivision, plat 090-28 0440 nN-R12W Section 32: Lot 4 & Lot 15, Clam Gulch subdivision, plat 00-28 044V T2N-R12W Section 32: Lm 5, Clam Gulch Subdivision, plat #90-28 044W nN-R12W Section 32: Lots 6 & 7, Clam Gulch Subdivision, plat #90-28 044X nN-Rl2W Semon 32: Lots e & 9, Clam Gulch Subdivision, D[at #90-28 HAK# 311 Karl aad Martini 2500. 12.500% Hilcorp Alaska, LLC 10000%. Lmambacls HAK# 1033556 David Keith Crosby 50.00% 12.500% ualessed Theodore L & Ann C. 25.00/. Morns unleased Tam A. & Therese A. Ellis IOO.OW.. unleased Barbara A Mimch 10000% Ronald E. & Audrey L. 100.000/. Russell 10000 HAK# 315 Lue Rae Erickson 10000% 12.500% Hilcorp Alaska, LLC 100.00°6 0.4000 unleased 0.8000 unlensd Susan R. Cange 10000% Ronald E. & Audrey L 100.00% Russell John 1.& Emily J. Minnick 10000% Ninilehik Proposed Unit Eahibil A Page 13 of 47 Last Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORR[ Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner % 044Y RN-RI2W Section 32: Lots 10 & 11, Clam Gulch Subdivision, plat #90-29 0.8000 NAI(# 1033537 Richard D. Bamlckman 100.00% 12.500%. Hilcorp Alaska, LLC 100.00% 0442 nN-RI2W 0.4000 HAK# 1033546 Timothy G. and Kristine 100.00% 1250016 Hilcorp Alaska, LLC 100.00% Section 32r La 12, Clam Gulch Subdivision, moasd Werlein 37.50% plat #90-28 Morris USA T2N-RI2W 0.6300 HAK# 1031623 Pa Eric & Frances L 5000% 12.500% Hilcorp Alaska, LLC 100.00% 045" Section 29: Lot 10, Block S. Clam Gulch 0.9400 HAK# 1031623 Owner 5000. 12.500% Hilcwp Alaska, LLC 10000% Park Subdivision unlash Theodore L &Ann C. 37.50% Park Subdivision, plat #75-69 uNasri Morris 37.50 . unhand Michael F. Harrigan 12.50% 045" T2N-RI2W 0.5100 HAK# 1031623 Per Eric &Frances L. 500016 12.500% Hilcorp Alaska, LLC too W% Section 29:1.012, Block 3, Clam Gulch Park Osmm Subdivision, plat #75-69 moasd Theodore L At Ann C. 37.50% Morris unhand Scott Rumfish] 12.50% 045" T2N-RI2W 0.9400 HAK# 1031623 Per Eric &Frances L. 5000. 12.500% Hilcwp Alaska, LLC 10000% Section 29: Lot 3 & 4, Block 3, Clam Gulch Osmar Park Subdivision, plat #75-69 uNasri Theodore L & And C. 37.50 . Morris uvlasd Sally A. Lawrena 12.50% 045AC T2N-RI2W 0.5100 HAI(# 10316D Per Eric &FrancesL 5000% 12.500%. Hilcorp Alaska, LLC 100.00°/. Section 29: Lot 19, Block 5, Clam Gulch Osmm Park Subdivision, plat #75-69 unloosed Theodore L & Ann C. 37.50%. Moms unlasd Debbie A Hall 12.50% 045AD nN-RI2W 0.4600 HAK# 1031623 Pat Eric &FmncesL 50.00% 12.500% Hilcmp Alaska, LLC 100.00% Section 29: Lot 16, Block 5, Clam Gulch Osmar Park Subdivision, [at 075-69 unlasd TheodomL&Ann C. 3750% Mortis unlasd Donald R. and Debre A. 12.50'6 Nome[] 045AE T2N-RI2W 0.8800 HAK#312 LEFFEL FAMILY TRUST 12.50% 12.500% Hilcorp Alaska, LLC 100.001/ Section 29: W 16 & 17, Block 5, Clam Gulch Park Subdivision, plat 975.0 HAK# 1031623 Per Eric &Frances L. 5000% 12500% Osmar unhand Theodore L & Ann C. 37.50% Morris Ninnchik Poopo.d Unit Exhibit A Pege 14 of 47 Lan Update: 11/1/2016 045AH UN-R12W 03900 HAK # 1031623 Per Eric & Frances L 50.00% Working Working 100.00% Section 29: Lot 11, Block 5, Clam Gulch Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner% 0451.E T N-R12W 08800 HAK# 1031623 Per Erie&Franc. L 50.00/. 12.500% Hileorp Alaska, LLC Meets Section 29: Lot 14 & 15, Block 5, Clam Osmar lune A. Scheele, Mary L 12.50% Gulch Park Subdivision, plat 475-69 unlosh Theodore L. & Ann C. 37,50% Moms Stoltman 045B nN.R12W unleased Sheila A. Gorham 1350% 1350 % 12.500% Hilcorp Alaska, LLC 100.00°% 045AG nN-R12W 0,8800 HAK# 103169 Per Enc&Franc. L 50.00/. 12.500% Hilcorp Alaska, LLC 10000% F Section 29: Lot 12 & 13, Black 5, Clam Osman Per Ed, &Frances L. 50.00% 12.500% ~� Gulch Park Subdivision, plat #75-69 unlash neml..L&Ann C. 32.50% Morris Theod... L & Ann C. 37.5061. unlash Patricia A. Ullian & 12.50/. YF�yr�y1 Fly 045C nN-R12W 0.4600 Clarinets Williams KATHLEEN J POWERS 12.50% 12.500% Iilemp Alaska, LLC 10000% 045AH UN-R12W 03900 HAK # 1031623 Per Eric & Frances L 50.00% 12,500% Hilcorp Alaska, LLC 100.00% Section 29: Lot 11, Block 5, Clam Gulch Osmar Park Subdivision, plat #7569 ..lased Theodore L & Ann C. 3].50% Moans unleased lune A. Scheele, Mary L 12.50% Stan... & Nola E Stoltman 045B nN.R12W 0.5000 HAK# 310 Phyllis Edwmha 1350 % 12.500% Hilcorp Alaska, LLC 100.00°% Section 29: La 9, Block 5, Clam Gulch Park Subdlvisian, plat 975-0 HAI(# 1031623 Per Ed, &Frances L. 50.00% 12.500% Osmar unleased Theod... L & Ann C. 37.5061. Moms 045C nN-R12W 0.4600 HAK#30] KATHLEEN J POWERS 12.50% 12.500% Iilemp Alaska, LLC 10000% Section 29: Lot 8, Block 5, Clam Gulch Park Subdivision, plat #75-69 HAK# 1031623 Per Eric &Fmnoes L. 50.000/. 12.50000 Osman unleash TheodoreL&Ann C. 37.50% Morns 045D nll-R12W 04600 HAK# 1031623 Per Ed, & Franc. L 50.00°% 12.5000% Hilcorp Alaska, LLC IOD.00% Scaion 29: Lot ], Block 5, Clam Gulch Park Osman Subdivision, plat #75-0 HAK# 1033552 Blanche M. Struemke 12.50% 12.5000/. unleased Theodore L & Ann C. 37.50% Moms Ninilchik Proposed Unit Exhibit A Page 15 of 47 lin Update: 11/12016 Ninilchik Proposed Unit Exhibit A Page Ibof 47 Ian Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner% 045E T2N-RI2W 04600 HAI(# 304 Jack Boughton 4.1W.. 12.500% Hilcorp Alaska, LLC 10000% Section 29: Lot 6, Block 5, Clam Gulch Park Subdivision, plat #75-66? HAK# 1033538 Phillip Boughton 4.19% 12.500°0 HAK # 1033539 Michel D. Lee 4.19% 12.500% unleased Pa Eric & Frances L 50.00% ry Osman unleased Theodore L & Ann C. 39.5014, H wO Morris 045E T2N-RI2W 0.9200 HAI(# 1031623 Pa Eric &RencesL 50.00% 12.50WI.. Hilcorp Alaska, LLC 100.00% M 0) Section 29: Las 4 & 5, Black 5, Clam Gulch Water �yWI Park Subdivision, plat #K-1506 unlmsed Theodore L & Ann C. 39.50% Morris 1+4 unleased Sherwood Williams, Jr& 12.50°/1 Darlene M. Ross 045G nN-RI2W 0.4600 HAK# 1031623 Pa Eric & Frances L 50.00% 12.500% Hilcmp Alaska, LLC 10000%. Section 29: Lot 3, Block 5, Clam Gulch Park Garner Subdivision, plat #K-1506 HAI(# 1033549 Ruben S. Ka.,. 12.5W. 12.50M. unleased Theodore L & Ann C, 37.50% Morris 045H TIN-RI2W 0.4800 HAK # 1031623 Par Eric & Frances L 5000% 12.500% Hilcorp Alaska, LLC OM MOM Section 29: I 1, Block 5, Clam Gulch Park Osman Subdivision, plat #K-1506 unleased Theodore L. & Ann C. 37 5M. Morris unleased Danny C.&Alice Eileen 12.5W, Rose 0451 nN-RI2W 04300 HAK#313 Roben W.&Casio. G. 12.50% 12.500% Hllcap Alaska, LLC 100.00% Section 29: Lot 2, Block 5, Clam Gulch Park Wilkins Subdivision, plat NK -1506 HAI(# 1031623 Pat Eric &Frances L. 5000% 12.50M.. Osmar unleased Theodore L & Ann C, 37.50% ` Moms 0451 T2N-IU2W 1.1000 HAI(# 1031623 Pa Ed. & Franc. L 50,00% 12.500% Hilcap Alaska, LLC 10000°/. Section 29: Lots 1 & 2, Block 1, Clam Gulch Osmer Park Subdivision, plat #75-(19 HAI(# 1033541 lames L.&Doris R. 12.50°/ 12.500% Waggoner unleased Thwdae L & Ann C. 37.50% Moms Ninilchik Proposed Unit Exhibit A Page Ibof 47 Ian Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease H Owner lotcrest Percent Owner Percent Ownership Owner % 045K nN-R12W 1.3300 HAK# 1031623 Per Eric &Fanca L. 50.001/. 12.500% Hilcorp Alaska, LLC 100.00%. Sation 29lots 1,2, 3, Block 2, Clam Gulch Oc n. Park Subdivision, plat 975fi unleased neadore L & Ann C. 37.50% Moms unleased Mildred A. Drum 12.50% 045L RN-R12W 09200 HAK9314 William L.&Renae 12.50°/1 12.500% Hilcmp Alaska, LLC 100.00% SMmn 29' Lots 4 & 5, Block 2, Clam Gulch Denton 3"'I Park Subdivision, plat 475-69 unleased Per Eric & Franc. L 5000% Esq n Osmar unlaced Theodore L & Mn C. 3250% rp.4 s..y C D Moms 1~ cq 045M nN-R12 W 0 9200 HAK # 1031623 Per Eric & Frances L 50.00% 12.500°/ 111map Alaska, LLC 100.00% .vl W Sation 29: Lois 6 & 7, Block 2, Clam Gulch Osmar rI`♦t W a Park Subdivision, plat #75-69 unleased Thadmc L. & Ann C. 37.50% Moms unleased Koo Nal & Vicki L. 12.50% Nelson 045N nN-R12W 23000 HAK# 1031623 Pa Eric &FmncesL 5000% 12500% Hilcorp Alaska, LLC 10000% Semion 29: Lots 8,9, 10 & 11, Black 2, Clam Osmar Gulch Park Subdivision, plat 975-69 unlaced Theodore L. & Ana G 37.50°/. Moms unlasd Chun. R.&Elizabeth J. 12.50% Hudson 0450 nN-R12W 0.97M HAN# 1031623 Pa Eric & pounces L 5000%. 12.500% Hilcmp Alaska LLC 100.00°/6 Section 29: Lots 1 &; Block 4, Clem Gulch Damar Park Subdivision, plat #75-69 unlasd noodore L. & Ann C. 37.50% Moms unloosed Richard Flanders 12.50% 045P MN-R12W 0.4600 HAK # 1031623 Pa Eric & Fmnca L 50.00% 12.500% Hiluup Alaska, LLC 100.00% Section 29: Lot 3, Block 4, Clam Gulch Park Osmar Subdivision, plat#7569 HAK# 1033536 Fmnca 1, Todd 12.5VK 12.5001/ unlasd ThwdmeL&Ann C. 37.50% Morris 045Q RN-R12W 04600 HAK# 1031623 Pa Eric & Franc. L 5000% 12.500% Hilcorp Alaska, LLC 100.00°6 Section 29: Lot 4, Block 4, Clam Gulch Park Osmsr Subdivision, plat #75-69 unleased Thwdmc L & Ann C. 37.5 Morris unlasd John W. & Marjorie L 12.50% Williamson Ninilchik Proposed Unit Exhibit A Page 17 of 47 last Update: U11/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease 4 Owner Interest Percent Owner Percent Ownership Owner % 045R 0455 095T 045V 045W nN-R12W 0,400 HAK # 306 Jean M. & Larry P. 12.50% Section 29: Lm 5, Black 4, Clam Gulch Park Brooking Subdivision, plat 475.69 HAI( # 1031623 Per Eric & Franca L. 50.00% Omar unleased Theodore L. & Ann C. 37.50°1, Morris nN-R12W 04600 HAK# 1031623 Per Eric & Frances L 50.00% Session 29: La 6, Block 4, Clam Gulch Park Omar Subdivision, plat #75-69 HAK41033559 Michael C. Wyatt&Daune 12.50% Wyatt ..lased Theodore L. & Ann C. 37.50°/. Morris TPN -ROW 09600 HAK# 1031623 Pa Eric &FmncaL 50.00% Section 29: Lot 7, Block 4, Clam Gulch Park Omar Subdivision, plat #7549 ..lased Theodore L. & Arm C. 37.50% Morris unlash Lan F& Alice M. Hawkins 12.50°. nN-R12W 0.9200 BAR 10316D Pa Ern &FmncaL 50,00% Sodium 29: Lor. 8 & 9, Block 4, Clam Gulch Omar Park Subdivision, plat #75-69 urdased Theodore L. & Ann C, 37.50% Monis unloosed Vernon &Mary Dab= 12.50°/1 nN.R12W 0.4600 HAK#313 Robert W.&Cam. G. 12.50% Section 29: Lot 10, Block 4, Clam Gulch Wilkins Park Subdivision plat 075-69 HAK 0 1031623 Par Eric & Franca L. 50.00% Omar unleased Theodore L. & Ann C, 37.50°. Morris T2N-R12W 1.1300 HAK# 1031623 Per Eric&Frances L. 50.00% Section 29: Las 11 At 12, Block 4, Clam Omar Gulch Park Subdivision, plat #7549 unbound Theodore L & Ann C. 37.50% Moms unloosed Theodore Paullas 12.5051. nN-R12W 3.0000 HAI(# 1031623 Pa En. &Frances L. 50.00% Section 29: Mineral interest in dedicated Osmar roads and ansernmts in Clam Gulch Park untanned Theodore L. & Ann C. 37.50% Subdivision, Plat 975-69 Moms .nlmed Donald F. and Verona G. 12.50°1, Smith 12 500°/. 12.500% Hilwrp Alaska, ILC 12.500% Hilcorp Alaska, LLC 100.00% 12.5001A 12.500°1, Hilcap Alaska, LLC 100.00% Hilcap Alaska, LLC 100.00% 12.500% Hilcap Alaska, LLC 100.00% 12.500% 12.500% Hilwrp Alaska, LLC 10000% Hilcorp Alaska, LLC 10000% Ninilchik Proposed Unit Exhibit A Page 18 of 47 Lon Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease H Owner Interest Percent Owner Percent Ownership Owner % 045Y nN-RI2W 120350 HAK41031623 Per Eric& Frances L 50.00% 12.500% Ellicott, Alaska, LLC 10000% Section 29: Minerals underlying the Staling Dsmar Section 6: All oflot l lying to the south and HAK# 1031614 Highway right-of-way as it passes through unleased Thmdore L & Ann C. 50,00% Clam Gulch Park Subdivision, plat 475-69 Morris Ruth A. Waldner Creech 12.50% 12500°6 0452 UN-RI2W 04700 HAK9308 Regina A.&Joe M. Miller 12.50% 12.500% Hilcorp Alaska, LLC 100.00% Section 29: Lot 1, Block 3, Clem Gulch Park Heirs pf Helen L. Magionoe 50.00% Subdivision, plat 425-69 HAK # 1031623 Per Eric & Frances L 50.00% 12.500% Osma induced Theodore L & Ann C. 37.50% Morris — nN4212W Section 32: Lot 3 and SW/4SW/4 TIN-RI2W Section 6: All of Lot L less and except that part lying to the sowh and east of the Staling Highway a pan of which is described es Lots 1-7 of the Webb Tracts 1974 Subdivision (Plat #H74-1]24) 128.0500 HAK # 1031633 Shells K. I.eamm 33.33% 12.500% HAK # 1031633 Stephen S. Webb 33.33% 12.500% HAK# 1031633 Susan L. Steinbach 3333% 12.500°0 Hilcotp Alaska, LLC 10000% 147 TIN-RI2W 410000 HAK# 1031614 Dorothy Marie Wollner Mm% 12.500% Hilcorp Abska, LLC 10000% Section 5'. Lot 4 Section 6: All oflot l lying to the south and HAK# 1031614 Marjorie A. Houser 12.5W. 12.50051. mot ofthe Staling Highway HAKk 1011614 Ruth A. Waldner Creech 12.50% 12500°6 HAK41031614 William H. Wollner 12.50% 12.500% unlesed Heirs pf Helen L. Magionoe 50.00% Ninilchik Proposed Unit Exhibit A Lan Update: 11/31016 Page 19 of 47 Working Working Tract Mineral Mineral Royalty ORR] ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 048 TIN-Al2W 2.6690 HAK# 1034912 Brillion Thebaut 1667% 12.500% Hilemp Alaska, LLC 100, W/. Section 6: Tract #I of Udelhoven Subdivision HAK k 1034912 Joann Steik 16,67% 12.500% (Plat #H]] -]O), a pan ofgoverament W 2 HAK q 1034912 Shirlry 1, Cox 16.67/o 12500% HAK# 1034912 Ann Marie Davis 8.33% 12.5001. HAK# 1034912 Dawn M. Dutton 8.33% 12.500% ~ f� l� HAK# 1034912 Jennifer Limn. 8.33% 12,500%.Mrs p Whe erspohn M HAK# 1034912 Jesse Udelhoven 8.33% 12500% H N ^� 0 HA)C# 1034912 Sand. K. Uddhoven- 8,33% 12.5001. Taylor hVr l s•� HAA # 1034912 Hanna Koga Uddhoven 4.17% 12,50KH6 HAK01034912 Miranda Marilyn 4.1 T/. 12.500% Udelhoven 049 TIN -RIM 29.9510 HAK# 1034912 James Udelhoven 2500% 12.5001. Hilcorp Alaska, LLC 6.500000% Hilcwp Alaska, LLC IOO OPG Section 6: Tracts 2, 3, 5,6 and ].f Udelhoven Subdivision (Phu #H]]-90), a HAK # 1034912 Brigitte Theban 16.67% 12.500% pan of government W 2, less that part of Tracts 2 and 3 lying outside the SWANP14 HAK# 1034912 Joann Stals 16.67% 12.500% and also any mineral rights lying under the roadbed of the Staling Highway rightof-way HAK # 1034912 Shirley J. Cox 16.6%6 12.500 HAK# 1034912 Ann Marie Davis 4.17% 12. SOW.. HAIC # 1034912 Dawn M. Dun. 4.17% 12.50010 HAK# 1034912 Jennifer Unarm 4.l Wo 12.500% Wiedempohn HAKN 1034912 lase Udelhoven 4.17°6 12.500% HAK# 1034912 Send. K. Uddhoven- 4.176 125001. Taylor HAK # 1034912 Hanna Koger Udelhoven 2.0851 12.500% HAK# 1034912 Mmmda Marilyn 2.08% 12500% Udelhoven Noulchik Proposed Unit Exhibit A Page 20 of 4] Ian Update: 1111l201fi Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease Owner Interest Percent Owner Percent Ownership Owner% 049A TIN-RI2W 20000 HAK# 1034912 Lama Udelhoven 250094, 12.500°/ Hilcorp Alaska, LLC 10000% Section 6: That pan of Tracts 2 end 3lying outside the SW/4N&4 HA 01034912 Brigitte Thebaut 16.67% 12.500% HAK# 1034912 Joann Sreik 16.67% 12500°/. HAK# 1034912 Shirley J. Co. 16.67% 12.500% HAK # 1034912 Ann Marie Davis 4.17% 11500% V HAK # 1034912 Dawn M. Dutton 4.17%. 12.50034 O HAK# 1034912 JenniferUnann 4.17% 12.500% r Widenpohn HAK # 1034912 Jesse Udelhoven 4.17% 12.500%1,100 HAK # 1034912 Sandra K. Uddhoven- 4.17°. 12.5001/6 W Q+ Taylor HAK41034912 Hama Koger Uddhoven 2.08% 12.500°0 HAK# 1034912 Miranda Marilyn 2.08% 12.500°0 Uddhoven 050 TIN-RI2W 3.6200 HAY,# 1034912 Jennifer unarm 5000% 12.500% Hilcorp Alaska, LLC 6.500000% Hilcorp Alaska, LLC 100.00% Semon6 ThatpanofTract4of Uddhoven WiderspoM Subdivision lying within the SW/4N 4 HAK41034912 Brigitte Thebaut 16.67°. 12.500%. HAK # 1034912 Joann Steik 16.67% 12.500% HAK# 1034912 Shirley J. Cox 16.67% 12.500% 050A TIN-RI2W 26700 HAK41034912 Jennifer Linarm 5000% 12.5M% Hilcorp Alaska. ILC 3.250000°. Hilcorp Alaska, LLC 100.00% Section 6: That pan of Tran 4 of Uddhoven W iderspohn Subdivision lying onside the SW/4NE/4 HA ff 1034912 Brigitte Thebaut 16 M. 12.500% HAK # 1034912 Joann Steil, 16.67% 12.500%. HAK # 1034912 Shirleyl. Cox 16.67% 12.500°. 051 TIN-RI2W 09100 HAK41034950 E. W. Vanderbilt 10000% 12.500% Hilcorp Alaska,LLC 6.500000°/. Hilcorp Alaska, ILC 100.00% Section 6: That portion of the north 165' of (Margaret Vanderbilt Lvg the W SEM of seetion 6 -IN -12W lying west Trust) of the Sterling Highway 051A TIN-RI2W 2.3400 HAK#1034850 E. W. Vanderbilt 00%. 12.500°/a Hilcorp Alaska, LLC 3.250000% Hilcorp Alaske, ILC 100.00% Section 6: The North 165' ofGW Lot 3 (Margaret Vanderbilt Lvg TNst) Ninilchik Proposed Unit Exhibit A Page 21 of 47 Izu Update: 11/1@016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner % 052 TIN-R12W Section 6: That pan of N2SP14lying cast of the Sterling Highway 59NN HAKN 10335W Harold A. and Marguerite M. Pedeson 100004'. 12.500% Hilcmp Alaska, LLC 100.00% 053 TIN-R12W 21.0900 HAK# 103490 Harold l.ce and Diane R 100.00% 12.5006% Hilwrp Alaska, LLC 6.500000% Hilcorp Alaska, LLC 100.00% 2500% Section6' That part of NRSP/4 lying won of Hilwrp Alaska, LLC 6.5000WA Pederson 100.00°/. Section 6: Block2, Lot 4 of Chmmas Haven the Staling Highway, less and accept the north 165 feel and that portion ofthe Staling Subdivision planed in Plat NH -76-62, a pan HAK# 1034911 Charles Weyhaupt 18.75% 12.50 Highway night -of -Way lying within the of S2SF/4 N2SP14 053A TIN-R12W 28.9000 HAIL# 1034913 Harold Lee and Diane R 10000% 12500°. Hilwrp Alaska, LLC 3.250000% Hdcorp Alaska, LLC 100.00% Section 6: La 3, less and accept the Noah Pederson HAK # 1034911 lames Reinhardt 18.75% 12.500% 165'therwf 054 TIN-R12W Section 6: Black 3, Int 2 of Clanan. Haven Subdivision platted in Plat #H -76L2, a Pont of SFl4 26600 HAK# 1034911 HAK # 1034911 HAK# 1034911 HAIL# 1034911 HAK#1034911 Roberta A Kiera Charles Wayhaupt David Wtyhaupt James Reinhardt Thomas Weyhaupt 25.00% 18,75% 18.75% 18.75% 18.75% 12500°. 12.500% 12500°/. 12.500616 12.500% Hilem, Mellon, LLC 6.500000% Hilwrp Alaska, LLC 100,"" 055 TIN-R12W 2.8800 HAK# 1034911 David William Pen, 2500% 12.50051- Hilwrp Alaska, LLC 6.5000WA Hilwrp Alaska, LLC 100.00°/. Section 6: Block2, Lot 4 of Chmmas Haven Subdivision planed in Plat NH -76-62, a pan HAK# 1034911 Charles Weyhaupt 18.75% 12.50 of S2SF/4 HAK#1034911 David Weyhaupt 18.75% 12.500% HAK # 1034911 lames Reinhardt 18.75% 12.500% HAK # 1034911 Thomas Weyhaupt 18.75% 12 500% 056 TIN-R12W 58.1510 HAK# 1034911 Charter Weyhaupt 18.75% 12500% Hilwrp Alaska, LLC 6.500000°. Hilcorp Alaska, LLC 100.00% Section 6: S/2SP14, Ins and accept Block 2, Las 1, 4, and 8, Block 3, Lot 2, and Block 5, HAK # 1034911 David Weyhaupt 18.75°. 12 5000K, Lots 1, 4, and 5 of Clammers Haven Subdivision, Plat 76b2 HAK# 1034911 lames Reinhardt 18.75% 12500°/. HAK # 1034911 Thomas Weyhaupt 18,75% 12.500% BAR ft 1034911 Noma lean¢ Nichols 16.67% 12.500% HAK#1034911 Walter G. Williams 8.33% 12.500% Ninilchik Proposed Unit &hibit A Page 22 of 07 Ian Update: 11/1/2016 Ninilchik Proposed Unit Exhibit A Page 23 of 47 Last Update: 11/1/2016 Working Working Tract Mineral Minenl Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 057 TIN-R12W 3.1600 HAK# 1034911 Shawna A Roney 2500% 12.500% Hilem, Alaska, LLC 6.500000% Hilem, Alaska, LLC IOn00% Sentient 6: Blocks, Lw 5 of Clam n. Haven # 1034911 Charles Weyhaupt 18,75V. 12.500•/ Subdivision planed in Plat #H-76-62, a pan HAK of SnSF14 HAK# 1034911 David Weyhaupt 18.75% 12.500% led K91034911 James Reinhardt 18.75% 12.500% HAK# 1034911 Thomas Weyhaupt 1835/° 12.500% awl 7 058 TIN-R12W 3.5900 HAKk 1034911 Andrea Gregory 25.00% 12.500% Hilcorp Alaska, LLC 6.5000009° HOcmp Alaska, LLC 100.0w larN O Section 6: BIxk5, Lot 4 of Clammers Haven Subdivision planed in Plat #H-76-62, a pan HAK# 1034911 Charles WeJlempt 1875% 12.500% of S/2SFJ4 HAK# 1034911 David Weyhaupt 18.75% 12.500% jWy 6) otl 11 K4 1034911 lames Reinhardt 18.75% 12.500/° Wa HAK # 1034911 Thomas Waylusupt 18 75 % 12.500% 059 TIN-R12W 2.9400 HAK# 1034911 Chades Weyhaupt 18.75% 12.500% Hilcorp Masks, LLC 6.500000% Hilcorp Alaska, LLC 100.00% Semion 6: Block2, Lot 1 of Clammers Haven Subdivision planed in Plat #H-76-62, a Dan HAK # 1034911 David Weyhaupt 18.75% 12.500% of S25F 4 HAKk 1034911 lames ReinM1adt 18.75°"0 12.500% 11 K4 1034911 Thomas Weyhaupt 19,75% 12300°. if K# 1034911 Jens H. and Meas re 12.5M.. 12.500% Hansen HAK# 1034911 Vmay H. Mathews 12.50% 12.500% 060 TIN-R12W 2.9000 HAK# 1034911 John Stallone, Jr. 2500% 12.500% Hileorp Alaska, LLC 6.5000009. Hilcmp Alaska, LLC 1000 Semion 6: Block2, Lot 8 of Clammers Haven Subdivision planed in Plat #H-06.62, a pan 11 K6 1034911 Chad. Weyhaupt 16 75% 12.500% of S/2SF14 HAKk 1039911 David Weyhaupt 1875% 12.500% HAK # 1034911 lames Reinhardt 18.75% 12.500% HAK# 1034911 Thomas Weyhaupt 18.75% 12.500% Ninilchik Proposed Unit Exhibit A Page 23 of 47 Last Update: 11/1/2016 Ninilchik proposed Unit Exhibit A Page 24 of 47 Last Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner % 061 TIN-R12W 3.2600 HAK41034911 Dennis Hedman 2500% 12.500% Micorp Alaska l,I,C 6.500000% Hilcarp Alaska, LLC 100.00°/. Section 6: B1ock5, Lot 1 of Clammers Haven Subdivision planed in Plat #H46-62, a pan HAK # 1034911 Charles Weyhaupt 18.75% 12.500% of MSE/4 HAK#10]4911 David Wtyhaupt 18.75% 12.500°0 BAK# 1034911 James Reinhardt 18.75% 12.500°/ HAK# 1034911 Thomas Weyhaupt 18.75% 12.500% �aM W 062 TIN-R12W 349900 HAK# 1034911 Charles Wtyhaupt 18.75% 12.500°/ Hilerap Alaska, LLC 6.5000001. Hilcmp Alaska LLC 100.00% HI O Section 6: That pan of government Lm 4 CA lying in the SFy4SW/4, las Block 1, Lot 9 HAK# 1034911 David Weyhaupt 18.75% 12, SDD°o sir and Block 2, Lots 3 and 4 of Cummera Haven Addition No, l as platted in plat #H- HAK#1034911 James Reinhardt I835% 12.500% 78-25 a/d/a That pan of Block 1, tut 4 and G -t that pan of Block 2 Lot 1 lying in the HAK # 1034911 Thomas Wtyhaupt 18.75% 12.500% SE/4SW/4 and all of Black 1, Lou 5-8 HAK # 1034911 Norma Janne Nichols 16.6N. 12.500% (inclusive) and 10-16 (inclusive) and Block 2, Lots 2, 5 and 6 and any interest in mad HAK # 1034911 Walter G. Williams 9.33% 12.500% ways and easements dedicated to public use in the Clammers Haven Addition No. 1 as planed in plat # H-78-25 062A TIN-Rl2W,SM. 12.1100 BAK#1034911 CharlasWtyhaupt 18.75% 12.500% Hilcorp Alaska LLC 3.25000051. Hilcorp Alaska, LLC 100.00% Sec 6: Those parts of Clammers Haven Addition No.l (plat Hd8-251 described as HAK # 1034911 David Weyhaupt 18.75% 12.500% all of Block 1, Lot 2 and those pans of Block 1, Lot 4 lying outside the SE14SW/4 AND HAK# 1034911 lama Reinhardt 1875% 12.500%. those pans of Block 2, Lot 1 lying outside the SFl4SWA and all minerals underlying HAK# 1034911 Thomas Weyhaupt 18.75% 12.500510 dedicated !Olds and Gaaments lying outside HAK# 1014911 Norma Jeanne Nichols 16.6751 12.500°0 the SEJ4SW/4(a pan of GLO Jut 4) HAK# 1034911 WalterG. Williams 8.33% 12.50W. 0628 TIN-Rl2W, S.M. 4.4600 HAK# 1034911 Edward C. and Myong C. 25.00% 12.500% Hilmrp Alaska LLC 3.250000% Hilcorp Alaska, LLC 100.00% Sec 6: TTose parts of Clammers Haven Gane Addition No.l(plat HA8-25), described as HAK# 1034911 Charles Wtyhaupt 18.75% 12.500510 -- all of Block 1, Lot 1 (a part of GLO Lot 4) HAK#1034911 David Weyhaupt 18.75% 12.500% HAK# 1034911 lames Reinhardt 1875% 12.500°/. HAK# 1034911 Thomas Weyhaupt 18.75% 12.500°0 Ninilchik proposed Unit Exhibit A Page 24 of 47 Last Update: 11/1/2016 063 TIN-R12W Semon 6: That pan of Government Lm 4 more particulady described as Block 2, Lot of Clammess Haven Addition No. 1, as planed in plat # H48-25 170M HAI(# 1034911 HAK# 1034911 HAK # 1034911 HAK # 1034911 HAK # 1034911 Michael and Marjorie Barry 2500% Charles Wrybaupt 1875% David Weybaupt 1875% James Reinhardt 18,75% Thomas W eyhaupt 1975% 064 TIN-R12W Working Working Michael and Marjorie Bury 25.00% Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 062C TIN-R12W, S. M. 29900 HAI(# 1034911 Keith C. and no. D. 25.00% 12.500°/ Hilmrp Alaska, LLC 3.250000% Hilcorp Alaska LLC IW.OU°N, Sm 6: Those pans of Clammers Haven HAK# 1034911 lavejoy 18.75% HAI(#1034911 Thames Weyhaupt Addition No,I (plat H-78-251 descried as HAI(# 1034911 Charles Weybaupt 18.75% 12 50W.. Charles Wrybaupt 1875% Secion 6: That pan of Govermnmt Int 4 all of Block 1,L 3(a pan of GLO Lot 4) more particularly described as Block 1, Lot 9 HAK # 1034911 David Weyhaupt 1875% HAK# 1034911 David Wrybaupt 18.75% 12.500°. planed in plat #H-78-25 HAI(# 1034911 James Reinhardt 18.75% 12.500°/. HAK# 1034911 Thomas Weyhaupt 18.75% HAK# 1034911 Thomas Weyhaupt 18.75% 12500•. Corey Kruse 12.50% 063 TIN-R12W Semon 6: That pan of Government Lm 4 more particulady described as Block 2, Lot of Clammess Haven Addition No. 1, as planed in plat # H48-25 170M HAI(# 1034911 HAK# 1034911 HAK # 1034911 HAK # 1034911 HAK # 1034911 Michael and Marjorie Barry 2500% Charles Wrybaupt 1875% David Weybaupt 1875% James Reinhardt 18,75% Thomas W eyhaupt 1975% 064 TIN-R12W 1.7400 HAK# 1034911 Michael and Marjorie Bury 25.00% Section 6: That pan ofCmvesnment Int 4 more particularly described as Block 2, Lot 3 HAI( # 1034911 Charles Weyhaupt 18.75% ofClammers Haven Addition No. 1, as planed in plat #H-78-25 HAK#1034911 David Weyhaupt 18.75% HAK# 1034911 lames Reinhardt 18.75% HAI(#1034911 Thames Weyhaupt 18.75% 065 TIN-R12W 1.5700 HAK# 1034911 Charles Wrybaupt 1875% Secion 6: That pan of Govermnmt Int 4 more particularly described as Block 1, Lot 9 HAK # 1034911 David Weyhaupt 1875% of Claremore Haven Addition No 1, as planed in plat #H-78-25 HAK# 1034911 James Reinhardt 18.75% HAK# 1034911 Thomas Weyhaupt 18.75% HAI(# 1034911 Corey Kruse 12.50% HAK# 1034911 James Kruse 12.5V1. Ninilchik Proposed Unit Pahibit A Use Update: 11/1/2016 12.500x: Hilcorp Alaska, LLC 6.500000°. 12.500/. 12500. 12 500. 12.500% 12.500% Hilmrp Alaska, LLC 6.500000% 12.500/. 12.500% 12.500/. 12.500% 12.500/. Hilmrp Alaska, LLC 12.500/. 12.500°/. 12.500% 12.500% 12.500% Hilcorp Alaska, 1d Hilemp Alaska, LLC 6.500000 % Hilemp Alaska, LLC 100.001/. 100.00% 100.00% Page 25 oF47 I Ninilchik Proposed Unit Exhibit A Ust Update: 1 l/1/2016 Page 26 of 47 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract legal Description Acreage lease # Owner Interest Percent Owner Percent Ownership Owner % 066 TIN-R12W, S.M. 114.8640 HAK#1031611 Emil and Frances 100.00% 12.500% Hilcmp Alaska, LLC 10000% Section 7: Government We 1 and 2 and the Banolowits NE/4NW/4, less and acept Lots 7, 9, 10, 12, 14 and 15 of Fa11s Creek Ridge 1978 Subdivision (Plat #H78-23 mplaned #H78- 71), andapoaionofthe NWl/4NE1/4lying west of the centerline of the Sterling Highway; 067 TIN-R12W 4.0300 HAK # 591276 James A. and Theresa L. 100.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 7: Lon 7 and 10 of Fells Crack Wilson rl <{ Ridge 1978 Subdivision (Plat #H78-23 t` replan #H78-71), a Pan of government W w0 2 CT N 068 TIN-R12W p0280 HAK# 1033555 Richard S. Banolowits 100.00% 12.500% Hilccip Alaska, LLC 10000°% d Semon7:Ws9end 12 of Falls Creek b0 Ridge 1978 Subdivision (Plat #H79-23 toplatted#1178-7O, a pan of government Lot W Pr 2 069 TIN-R12W 2028o HAK# 1031350 Paul D. and LeRae A. 100.00%. 12.500% Hilcmp Alaska, LLC 10000% Section 7: Lot 14 of Falls Creek Ridge 1978 Battolowits Subdivision (Plat #H78-23 replan #1178- 71),apan ofga mmem Lott 070 TIN-R12W 2A260 HAK# 1031612 Paul D. and LaRee A. 100.00. 12.500% Hilcorp Alaska, LLC 100.0w. Session 7: Lot 15 of Falls Creek Ridge 1978 Bartoloems Subdivision (Plat #1178.23 rationed #1178- 71), a part of govermuent I 2 071 TIN -RDW 120.0000 HAK# 1031W6 James M. Rusk 12.50°% 12.500°% Hilcorp Alaska, LLC 100.00°/. Section 12: E SE/4 and SWASEA HAK# 1031W6 MsWd Calder 12.50% 12.500°/. HAIC# 1031606 Morybeth Jackson 12.50% 12.500%, HAK# 1031606 Michelle lean McCanen 12.50% 12.507% HAK # 1031607 Adair Propc tics, LLC 25.00%. 12.500%. HAK# 103107 LS. Kunz 25.005S 12.500% 072 TIN-R13W 1107200 HAK# 1031632 Marion Oskolkoff 100.00°% 12.50011. Hilcorp Alaska, LLC 100.00°% Section 23: Lot 2 and Lot 6 and SE14SW/4 Ninilchik Proposed Unit Exhibit A Ust Update: 1 l/1/2016 Page 26 of 47 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner 073 TIN -1113W 10.3100 unleased F,aL Woodhead 100.00. Smtion 23'. A pan of GovnnmeM Lot 4 demsibN as Tincts A and E of the Woodhead Subdivision planed in Plat #H-83-110 074 TIN -1113W 7.9400 unleased Roben N.Woodheadand 100.00% Smion 23: A part of Government l.a 4 Kathleen I Woodhead dem6bd as Tract B ofthe Woodhead (H&W) Subdivision planed in Plat 911-63-110 075 TIN -RAW 8.6100 unleased Ton, Lee Woodhead 100.009. Smion 23: A pan of Government Let 4 described as Tract C of the Woodhead Subdivision platted in Plat #H-83-110 Smtion 23: A part of Govammmt I.ot 4 described as Tract D ofthe Wodhmd Subdivision planed in Plat 911-83-110 or TIN-R13W 1.0000 unleased James H. Mmdand Muriel 100.00% Smion 27: That ponion of US Govwenment R. Mead W 6lying in the Norah Half ofthe Nonhuman Quanm of the Nathan Quanm (M2 4NE4) in the Homer Recording Dinrio, Third Judicial Diatict, State of Alaska 078 TINADW 18.5600 fl R# 1031602 Pamela Vantress living 50.00% 12.5009. Hilcnrp Alaska, LLC 100.009K gentian 29: That part of l.ot 6lying within Trust the SI2N 41P4a/d/aS NF/4NE/9 FIAR# 1031602 Paula Lee Honchni Living 50.00% 12.500.. Trust 079 TIN-R13W 55.5500 11 K9321 Anne Etimbeah Milner 3333% 12.500% Section 27: La 7 11 R# 321 Brian Alfred Milner 33.33% 12.5009. HAR # 321 Ms... Elimbah Milner 33.33% 12.5009. Nindchik Proposed Unit Exhibit A last Update: 11/1/2016 Hilcorp Alaska, LLC 100.00. Page 27 of 47 Ninilchik Proposed Unit Exhibit A Page 28 of 4] Lan Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner% 080 TIN-R13W 46.8440 HAK# 1031599 Jana M. Clucas 20.00% 125000a Hilasp Alaska,LLC 100.00% Section 27: Lot 10 and NEASE/4, acept Tract A Tract B and Tract C of Corea Bend HAK # 1031599 Judith A Johnson 20 00% 12.500°/ Subdivision #2, plat #9941 H"4 10315" Kathleen M. Wallace 2000°/. 12.500% HAK# 1031599 Mitzi Louise Blossom 20.00116 12500% ti 11 K9 10315W Ogren 2013 Family Trust 20 00% 12.50054. W O OSOA TIN-Rl3W 6.8910- H" ft 1031599 Marta Denise, levan 40.00% 12.500% Hilc.p Alaska, LLC 100.00% wy M _ Section 27: Tram B l of Corn Bend Wayne and Alarm Camille yry Subdivision#3, plat 02003-53 Slmpeon W HAK# 1031599 lana M. Clucas 2000% 12.500% al W HAK# 1031599 Kathleen M. Wallace 20.00°/. 12.500°/. HAK# 1031599 Mitzi I,oum Blossom 20.00% 12.500/. 0806 TIN-R13W 4.9980 HAK# 1031599 Janet M. Cluaa 20.00% 12.5001/° Hilcmp Alaska, LLC 100.00°5 Section 27: Tram Al of Corm Bend Subdivision #3, plat #2007-116 HA( # 1031599 Judith A. Johnson 20 0000 12.500 0 HMC #1031599 Kathleen M. Wallace 20.00% 12, 50OV. HAK41031599 Mitzi Louise Blossom 20.00% 12.50000 HAK # 1031599 Rohit Bumil and Mica 20.00% 12.500°/a Mae Ogren 080C TIN-R13W 10.5370 fl K# 1031599 Danis K. and Martha E. 20.00% 12500%1 Hilcmp Alaska, LLC 100.00% Section 27'. Tram C ofC9rm Bond Ogren Subdivision #2, plat 49941 HAK # 1031599 Jana M. Clunes 20,00% 12.500% HAK # 1031599 Judith A. Johnson 20.00% 12.500 HAK# 1031599 Mitzi Louise Blossom 20.00% 12,500% HAK#1031599 Ogren 2013 Family Trust 20.00°0 12500% 0801) TIN -R13 W 11.1680 HAK # 1031599 Ogren 2013 Family Trust 40.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 27'. Tram B -2A of Corm Bend Subdivi sion #4, plat #2007-116 escape Tract H"# 1031599 Jana M. Clucas 2000% 12.50005 A of Corea Bend Subdivision #2, plat 49941 HAK # 1031599 Kmhleen M. Walla. 20.00°/. 12.500% HAK# 1031599 Mitzi Louise Blossom 2000% 12500% Ninilchik Proposed Unit Exhibit A Page 28 of 4] Lan Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner toterest Percent Owner Percent Ownership Owner % 080E TIN.R13W 50020 HAK# 1031599 Jan. M. Closes 20.00% 12.50VI.. Smrion 27: Trott A of Cora Bend 12500% �- Section 27: That part ofthe SEI/SEI14 lying Subdivision #2,plat #9941 except Trott Al HAK41031599 Judith A. Johnson 2001)1. 12.500% of Corm Bend Subdivision 04, plat #2007- HAK4591309 KathleenM. Wallace 20.00% 116 HAK41031599 Kathleen M. Wallace 2000% 12.500°/. Judith A and Brat Johnson 20.00% HAK# 1031599 Mitzi Louise Blossom 2000% 12,500% HAK # 591311 11 K9 1031599 Ogren 2013 Family Trust 20.00% 12,50M 081 TIN-R13W 7.0000 HAK#31 hardly! and Ruben C. 20001. 12500% �- Section 27: That part ofthe SEI/SEI14 lying Cloces an ofthe Sterling Highway right-of-way HAK4591309 KathleenM. Wallace 20.00% 12.5009. HAK # 591310 Judith A and Brat Johnson 20.00% 12.500% HAK # 591311 Mitzi Louise Blossom 20 00% 12500% HAK # 591312 Ogren 2013 Family Trust 20 M% 12.500% 082 TIN-R13W 7.9880 HAK# 1031599 Jana M. Chutes 20.W1. 12.500°% Section 27: A pan ofthe S/2SE/4 lying north and wast ofthe Staling Highway described HAK# 1031599 Judith A. Johnson 20.00% 12.500% as Loss 1, 2, 3 and 4 of the Corea Bend Subdivision (platted as Plat #H85-15) HAK# 1031599 Kathleen M.Wallace 20009. 12.500% 11 K4 10315W Mitzi Louie Blossom 20.01)11. 12.50VI.. H"4 1031599 Ogre 2013 Family Trust 20.00% 12.500% 083 TIN.R13W 27550 HAK# 10315W Jouph R. and Gail M. 100009. 12500°% Section 2t. A pan ofthe S12SF/4lying north idome a and wast ofthe Sterling Highway described as We 5 and 6 of the Cozen Bend Subdivision (planed as Plat #H85-15) 084 TIN-R13W 1.0580 HAI(# 1031599 Robert L. Yates Vol 12.5009. Section 27: A pan of the S2SE/4 lying north and west of the Sterling Highway described as Lot 7 of the Cores Bend Subdivision (planed as Plat #H85-15) 085 TIN-R13W 1.0840 HAK# 1031599 Evelyn C. and lames L 100.00% 12.500% Season 27: A pen ofthe S2SEM lying north Smith and west ofthe Sterling Highway described as Lot 8 ofthe Corm Bend Subdivision (planed as Plat #H85.15) Ninilchik Proposed Unit Exhibit A Lan Update: 11/1/2016 Hilcorp Alaska, LLC Hilcorp Alaska LLC Hilcorp Alaska, LLC Hilcorp Alaska, LLC Hilcorp Alaska, LLC Hilcorp Masks, LLC 100.00% Page 29 of 47 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 086 TIN -ROW 14350 unleased Alfred L. and Clan M. 100.009. Section 27: A pan of the S/2SF/4 lying north lames and west of the Sterling Highway described 100.00% as I,mr 9 of the Corea Bend Subdivision Semon 27. A part ofthe S12SFJ4 lying north (plana) as Plat X1185-15) 087 TIN -RIM LW70 HAKX 1031599 Les and Marcy Lauinger 100.00% Senion 27: A pan ofthe S/2SE/4 lying math and wen of the Sterling Highway deseribd and west ofthe Starting Highway described as Lot 10 of the Cora Bend Subdivision (plane as Plat #H85-15) as Lots 12 ofthe Corea Bend Subdivision 088 TIN -ROW 1.0260 HAKX 591264 Imes S. and Veronica T 100.00°/. Section 27: A part ofthe S12SE/4lying north Crain and west ofthe Sterling Highway dewribd (planed as Plat XH85-15) as lAt I I of the Corea Band Subdivision ('land as Plat XH85-15) 12500% Hilcorp Alaska, LLC Hilcorp Alaska, LLC 10000% 100 00% 089A TIN-RI3W 1.0190 unlcase Bierbe, Jackson 100.00% Semon 27. A part ofthe S12SFJ4 lying north Revocable Trust and wen of the Sterling Highway deseribd as Lots 12 ofthe Corea Bend Subdivision (planed as Plat XH85-15) 089B TIN-RI3W 1.5530 unleased Ferguson Revocable Trust 100.00°/. Section 27: A part of the S SEA ]yin, north and wast of the Staling Highway described as Las 13 of the Corea Bend Subdivision (planed as Plat XH85-15) 090 TIN-RI3W 10410 HAKX 1031636 Jamesad Christine 100.009. 12.5009. Hilcorp Alaska, LLC 10000°% Section 27: A pan ofthe S/2SFJ4 lying north Kenahalo and wast of the Sterling Highway described as Lot 14 of the C. Bend Subdivision (planed as Plat XH85.15) 091 TIN-RI3W 1.2530 unleased Michael D. and Cynthia A. 100.00% Station 27: A pan ofthe S/2SEJ4 lying north Massey and west of the Staling Highway described as Lor 15 of the Corea Bend Subdivision (plane as Plat 111185-15) 092 TIN -ROW 1.3560 unleud Wayneand Paula Bumpus 100.00% Section 27: A pan ofthe 8/2SW4 lying north and west of the Sterling Highway deembd as Lot 16 ofthe Came Bend Subdivision (planedas Plar X1185-15) Ninilchik Proposed Unit Exhibit A Page 30 of 47 Lan Update. 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Pereent Owner Percent Ownership Owner % 093 TIN-R13W 2.6000 HAK# 1031599 Janet M. Clucas 20.00% 12500% Station 27: A part of the SRSFl4 lying north 100 00% Section 271 A pan ofthe S12SF/4 lying north Kenahalo V and west of the Starling Highway described HAK # 1031599 Judith A. Johnson 20,00% 12.500% as Las 17 and 18 of the Corea Bend (planed as Plat #1185-15) M 096A TIN-RUW Subdivision (platted as Plat #H85-15) HAK# 1031599 I(athlam M. Walla. 20.00% 12.500% and west of the Staling Highway described HAK# 1031599 Mitvlouiae Blossom 2000% 12.50(yi HAK # 1031599 Ogren 2013 Family Trust 20.00°/ 12.500°0 094 TIN-R13W Section 27: A pan ofthe SRSP/4lying north and west of the Sterling Highway described as 1.ot 19 ofthe Cam Bend Subdivision (planed as Plat #H85-15) 1.1230 HAK# 1031599 Monte G. 095 TIN-RUW 1.1580 HAK# 1031636 James ens 100 00% Section 271 A pan ofthe S12SF/4 lying north Kenahalo V and west ofthe Sterling Highway described as Lot 20 ofthe Cora Bend Subdivision bba (planed as Plat #1185-15) M 096A TIN-RUW 2.1660 HAK# 1031599 Ferguson Section 27: A pan of the S/2SFl4 lying north 100.00% and west of the Staling Highway described as lots 21 and 22 of the Corm Bend Subdivision (platted as Plat #H85-15) 096B TIN -ROW 1.0190 HAK# 1031599 India A.' Section 27: A part ofthe S/2SPl4 lying north and wen of the Sterling Highway described as Lots 23 of the Corm Bend Subdivision (platted as Plat #H85-15) 100.00% 12.500% 100.00°/. 12.500° e 100.00% 12.500% 12.500% 097 TIN-R13W 1.1800 HAK# 1031599 lana M. Clucas 20.00% 12.5on% Station 22 A pan ofthe SRSFl4 lying north and west of the Staling Highway described HAK # 1031599 Kathlem M. Wallace 2000% 12.500% as Lot 24 ofthe Cores Bend Subdivision (platted as Plat #1185-15) HAK# 1031599 Mitzi Louise Blossom 20.0 12.500% HAK # 1031599 Ogren 2013 Family Trust 20.00% 12.500°/ HAK# 1031599 Tammy Lm Cmin 20.00% 12500% Ninilchik Proposed Unit Fahibii A lass Update: 11/1/2016 Hilcorp Alaska, LLC Hilcap Alaska. LLC Hilmrp Alaska, LLC Hikorp Alaska, LLC Hilcorp Alaska, LLC Hilcorp Alaska, LLC 100.00 100 00% H O V W bba M �rrt a 100.00% 100.00% 100 00°/. Page 31 of 47 099 TIN-R13W 81.7600 HAK# 10316M nary, and Lois Jones 50.E Working Working 100.00% Hyr4I r1 Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner % 12.5001. 098 TIN-R13W 41.1490 HAK# 1031599 Jana M. Clavas 20,00°% 12.500% Hilcorp Alaska, LLC 10000% Section 27: All of the 5/2SE/4 except Lots W � unloosed 1-24, inclusive of Corse Bend Subdivision HAK# 1031599 Judith A. Johnson 20.00°6 12.5001. (plains] as Plat #H-85-15) and eacept the SE/4SFl4 lying asst of the Sterling Highway HAK#1031599 Kathleen M. Wallace 20.00°% 12.500% right-of-way. HAK# 1031599 Mity Louise Blossom 20.00% 12.500% H � TIN-R13W 2.0800 HAK# 1031603 Michael and Deborah Russ 48.00% 12.500% Hilcorp Alaska, LLC 10000°% HAK # 1031599 Ogren 2013 Family Trust 20.00% 12.500% H O 4 and SE/4SE/4 lying west clthe Starling unleased David lames Tyner 50.00% �s4 099 TIN-R13W 81.7600 HAK# 10316M nary, and Lois Jones 50.E 12.500% Hilcorp Alaska, LLC 100.00% Hyr4I r1 Sermon 33: That pen of Govemmem Lots 3 yy 4J and 4 and the SE/4SE/4 lying seat of Staling HAK # 1031603 Michael and Deborah Russ 49o0% 12.5001. 01) M Highway/V1 W � unloosed Basil S Bolstridge 1.00°/. unloosed Gaylord 0. Smith and 1 00% Ledla Smith 100 TIN-R13W 2.0800 HAK# 1031603 Michael and Deborah Russ 48.00% 12.500% Hilcorp Alaska, LLC 10000°% Section 33: A pan of Government Loss 3 and 4 and SE/4SE/4 lying west clthe Starling unleased David lames Tyner 50.00% Highway more particularly described as Lots unloosed Basil S Bolstridge IW°/. 1 and 2 of Seaside Tenace, platted in Plat unloosed Gaylord O. Smith and 1.001. #H82.101, replatted as Lot I A in Plat #H89-5 Luella Smith 101 TIN-R13W 93300 HAK# 1031603 Michail and Deborah Russ 48.0011 12.500% Hilcorp Alaska, LLC 100.00% Section 33: A pan of Government Loss 3 and 4 and SFASE/4 lying wast ofthe Starling unlusd Alaska Tons Company, 50.00% Highway more particularly described as Lots trustee ofthe Elisabeth 3, 4 and 5 of Seaside Tenant. platted in Plat Anne Cole Charitable #H82-101 Remainder Annuity Truss unlusd Basil SBolsnidge 1.00% unleaad Gaylord 0. Smith and 1.00% Luella Smith 102 TIN-R13W 2.9400 HAK# 1031603 Michael and Deborah Russ 48.00% 12.500% Hilcorp Alaska, LLC 100.00% Station 33: A pan of Government Lots 3 and 4 and SE/4SFJ4 lying west of the Sterling unleased Daniel A. Rock 12 50°% - Highway more particularly described as tat 6 unlusd Sandra 1. Rock 12.5 of Seaside Tenace, planed in Plat #H82-101 unlusd Shari L. Rock 12.50% unfused Timothy D. Rock 12.50% unleased Basil S Bolstridge 1.00% unlusd Gaylord O. Smith and 1.00% Wella Smith Minilchik proposed Unit &hibit A Page 32 of47 Last Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner% 103 TIN-Rl3W 192M HARM 1031W3 Michaeland Deborah Russ 48.00% 12.500% Section 33: A pen of Government Lots 3 and 12.50W. Hilcorp Alaska, LLC 10000% 4 and SEASE/4 lying west ofthe Sterling unleased John & Davis &Martha 50.00% Highway more particularly described as Lot ] D. Davis (H&W ) west myth. Sterling Highway more of Seaside Terrace, plants in Plat NH82-101 untraced Basil SBolaridge 1.00% unleased Gaylord O. Smith and 1.00°0 unleased Basil S Bolxridge I.ow. Luella Smith 104 TIN-R13W 4.6700 HAKN 1031603 Michael and Deborah Russ 48.00% 12.500°0 Section 33: A pan of Government Lou 3 and 12.50W. Hilcorp Alaska, LLC 10000% 4 and SE/4SE/4 tying west of the Sterling unleased Norman E. Seitz&Linda 50.00/. �- Highway more particularly described as Lm 8 L. Seitz (H&W ) west myth. Sterling Highway more of Seaside Terrace, Planed in Plat #H82-101unleased unleased Basil S Bolstridg. 1.00% unleased Gaylord 0. Smith and Ifolk unleased Basil S Bolxridge I.ow. Luella Smith Hilcorp Alaska, LLC 100.N% Hilemp Alaska, LLC 100.00% Oeeal O M to Wa 105 TIN-Rl3WS.don33:Apanof 5.2800 HAHN 1031603 Michael and Deborah Russ 48.00'G 12.50W. Hilcorp Alaska, LLC 10000% Government Lots 3 and 4 and SPJ4SEJ4 lying west myth. Sterling Highway more unleased Kalli, R. Mouaw 50.00% particularly described as Lm 9 of Seaside unleased Basil S Bolxridge I.ow. Terrace, planed in Plat NH82-101 unleased Gaylord 0. Smith and Low. Luella Smith 106 TIN-R13W 2.5700 HAKN 1031603 Michael and Deborah Russ 48.00% 12.500/. Hilwrp Alaska, LLC 10000% Section 33: A pan aGovemment Lots 3 and 4 and SEASEA lying west ofthe Sterling unleased Kenneth W. Bartley 33.33% Highway more particularly described as Lm unleased Patrick M. Davis 16.67% 10 of Seaside Terrace, planed in Plat NH82- unleased Basil S Bolnridge L00% 101 and the minerals underlying Seaside Court unleased Gaylord O. Smith and 1 00% Luella Smith 107 TIN-R13W 2.5400 HAK6 591266 lames E. and Suan E. 50.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 33: A pan of Government Lots 3 and Troutman 4 and SEASE/4 lying west of the Sterling HAK # 1031603 Michael and Deborah Russ 48.00% 12.500% Highway more particularly described as Lot 11 of Seaside Terrace, planed in Plat 4H82- unleased Basil S Bolxridge 1.0091. 101 unleased Gaylord O. Smith and 1.00% Wella Smith 108 TIN-Rl3W 2.5100 HAK91031603 Michael and Deborah Russ 48.OW. 12.500% Hilcorp Alaska, LLC 100.00% Section 33: A pan ofGovrmmrnt Lots 3 aad 4 and SEASE14 lying west of the Starling unleased Warren S. Team and Pat 50.00% Highway more particularly described as Lot C. Trani 12 of Seaside Terrace, phned in Plat NH82- unleased Basil S Bolxridge low. 101 unleased Gglord 0. Smith and 1.00% Wella Smith Niatcluk Proposed Unit Exhibit A Page 33 of 4] Isx Update 11/12016 Ninilchik Proposed Unit Exhibit A Lan Update: 11/1/2016 12.500% sN � W 12.500% Hilmrp Alaska, LLC 100.00°0 � M W °- 12.500% Hilcerp Alaska, LLC 100.00% 12.500% 12500% Hilcap Alaska, LLC I00.00% 12.500% 12.500% Hilcorp Alaska, LLC I W.00% Page 34 of 47 Section 33: A pan of Go onamem Lots 3 and Working Working Tract Mineral Mineral Royalty ORlil ORRI Interest Interest Tract Tract Legal Description Acreage LeaseB Owner Interest Percent owner Percent Ownership Owner% 109 TIN-R13W 213M HAI( #591270 Robert and Susan 50.00% 12.5001. Hilcom Alaska, LLC 100.00% Ninilchik Proposed Unit Exhibit A Lan Update: 11/1/2016 12.500% sN � W 12.500% Hilmrp Alaska, LLC 100.00°0 � M W °- 12.500% Hilcerp Alaska, LLC 100.00% 12.500% 12500% Hilcap Alaska, LLC I00.00% 12.500% 12.500% Hilcorp Alaska, LLC I W.00% Page 34 of 47 Section 33: A pan of Go onamem Lots 3 and Hundrdmark 4 and SE/4SB/4 lying west ofthe Sterling HAK# 1031603 Michael and Deborah Russ 48.00% Highway more particularly dercribd as Lot 13 of Seaside Terrace, planed in Plat #H82- unleasd Basil S Bolstndge 1.00% 101 unleased Gaylord O. Smith and 1.00% Luella Smith Ila TIN-R13W 18700 HAK# 1031603 Michael and Deborah Russ 48.00% Section 33: A pan of Government W s 3 ad 4 a ad SEASE14 lying wen ofthe Sterling unleased Francis D. Waltaand 50.00% Highway more particularly described as lot Sheryl M. Walter 14 of Seaside Terrace, platted in Plat#1182- unleasd Basil S Bolnridge Lwaak 101 unleasd Gaylord 0. Smith and 1 Ow. Wella Smith Ill TIN-R13W 5.3000 HAK # 1 W 1603 Michael and Deborah Russ 48.00% Section 33: A part of Government Lots 3 and 4 and SFJ4SEE14 lying west of the Staling HAK# 1033554 Ann Van Dom Musarra 5000% Highway more panicularly described as Lots and Charles A Mumrre 15& 16 of Seaside Terrace, planed in Plat unleased Basil S Bolatddge 1.00% #H82-101 unleasd Gaylord O. Smith and I.Ov/o Luella Smith 112A TIN-R13W 30100 flK#5913W Don L. McDaniel 2500% Section 33: A pan of Crovanment Wa 3 and 4 and SE/4SFJ4 lying west ofthe Sterling HAK# 1031M3 Michael and Deborah Russ 4800% Highway more panicularly described as W E.Brnnat 25.00% 19 of Saside T.ac.,pkmg1in Plv#H82- untamedMichael 101 unleasd Basil S Bolnridge 1.00% unleased Gaylord O. Smith and 1.00% Luella Smith 112B TIN -ROW 2.9140 HAK# 591299 Steve Cavin 50()W. Section 33: A pan of Government W s 3 and 4 and SFJ4SE/4 lyi ng west ofthe Staling HAK# 1031W3 Michael and Deborah Russ 48.00% Highway more particularly described as W Basil S BolsMdge 1.00% 18 of Seaside Tensce, platted in Plat #H92- unleasd 101 unleasd Gaylord O. Smith and 1.00% Luella Smith Ninilchik Proposed Unit Exhibit A Lan Update: 11/1/2016 12.500% sN � W 12.500% Hilmrp Alaska, LLC 100.00°0 � M W °- 12.500% Hilcerp Alaska, LLC 100.00% 12.500% 12500% Hilcap Alaska, LLC I00.00% 12.500% 12.500% Hilcorp Alaska, LLC I W.00% Page 34 of 47 112C TIN -ROW 34800 HAK# 1031603 Michael and Deborah Russ 48.00% 12.506X. Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner % 112C TIN -ROW 34800 HAK# 1031603 Michael and Deborah Russ 48.00% 12.506X. Hilcmp Alaska, LLC lmlmr Section 33: Apart ofGovernment lets 3 and Jennifer I Hood -Bosch 50.00% 4 and SEASE/4 lying wast ofthe Sterling untested Highway more particularly describe as tat tnlease Basil S Bolnsidge 1.004 19 of Seaside Termce, planed in Plat 91182- unloosed Gaylord O. Smith and 1,00% lot Luella Smith 113 TIN -ROW 2.4800 HAK91031603 Michael and Deborah Russ 48.001. 12.500% Hilcorp Alaska, LLC 10000% Semon 33: A pan ofGovernment Lots 3 and 4and SEASE/41yingweaofflo Starling unloosed Whitehead Revocable 5000°6 Highway more particularly described as let Living Tmst ry 20 of Seaside Terrace, platted in Plot#H82- unleased Basil S Bolaridge 1.0010 101 talented Gaylord O. Smith and 1.00% Wella Smith m W 114 TIN-RI3W 3.8600 HAK# 591300 Don L McDaniel 25.00Y. 12.500% Hilcmp Alaska, LLC lWoo-K M M Section 33: A pan of (ineen mens lets 3 and 4and SE/4SE14 lying west ofthe Sterling HAK# 1031603 Michael and Deborah Russ 48.00% 12.500% V to Highway more particularly describe as Lm unlaced Michael E. Emmett 25 00°/. 1.� 21 of Sounde Temaca planed in Plat 41192- 101 unleased Basil S Bolaridge 100°/. unloose Gaylord O. South and 1.00% Wella Smith 115 TIN-RI3W 400000 HAK# 1031619 Richnd M. Hawkins -Mary 41.20%%, 12.500% Hilcorp Alaska, LLC 10000% Section 34: NEANW/4 Hawkins Elate HAK#1031619 Charles F Hawkins -Mary 3380% 12.500% Hawkins Estate HAK91031620 Richard M. Hawkins 4.69% 12.500% fl K# 1031621 Charlas F. Hawkins 5.31% 12.500% unloosed Ian Hawkins, chase 5.00% unlase James Hawkins 5.00% t Heated Marguerite Hawkins 5 00% 116 TIS -ROW 40.0400 HAK# 1035744 Thomas H. and Carol Ann 100.00% 12.500% Hilcmp Alaska, LLC 10000% Section 4: Lm 4 Jackson Ill TIS-RI3W 0.6800 HAK# 591297 Susanne Faye Windelor 100.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 5: That pan ofGovarnment Lot 2 lying as of the Sterling Highway Ninilchik Propose Unit Exhibit A Page 35 of 47 Lan Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner lateral Percent Owner Percent Ownership Owner % 119 TIS -ROW 2.0800 HAK# 1031351 Richard L. and Juamus L 100.00°. 12 500% Section 5: A pan of Government Lot 2 more Millen particularly described as Lots I & 17 of 10000°. Sunset Bluffs Subdivision as platted in Plat Hilcorp Alaska, LLC #H-79-5 TIS-RUW 1.5800 HAKN 591314 Robert D. and Linda L 100.00% 12.500°/. Section 5: A pan of Government Lot 2 more Steinke, Nw particularly described as Lot 2 of Sunset Bluffs Subdivision as planed in Plat #H-79-5 TIS -ROW 1.9900 HAK# 1033543 Arthur E Decker Section 5: A pan of Government Lot 2 more Karen D. Decker particularly described as Lot 3 of Sunset Bluffs Subdivision as platted in Plat #H49-5 12.500% Hilcorp Alaska, LLC Ioo 001. Hilcorp Alaska. LLC 100, M. Hilcorp Alaska, LLC 121 TIS-R13W 2.3000 HAK# 1031351 RicMrd L. and Juanita J. 10000°. 12500% Hilcorp Alaska, LLC 100,00% Section 5: A part of Government Lm 2 more Millet panicularly described as Lot 4 of Sunset Bluffs Subdivision as platted in Plat #H.N-5 122 TIS-R13W 23700 HAK# 591242 Kathleen M. Kennedy 50.00% 12.500% Hiloorp Alaska, LLC 100.00% Section 5: A pan of Government Lot 2 more particularly described as Lot 5 of Sunsn HAK # 591247 Donald L. Erwin 50.00% 12.50016 Bluffs Subdivision as platted in Plat #H-79-5 123 TIS-R13W 10600 HAK # 1031351 Richard L. and Jummus 1, 50.001. 12.5001. Hilcorp Alaska, LLC 100.00% Section 5: A part of Government Lot 2 more Millin particularly described as Lot 6 of Suaset BAK# 1033543 Arthur T. Matt 50.00% 12.5001. Bluffs Subdivision as platted in Plat #H-79-5 124 TIS -RDW 2.0800 HAK#1031351 Richard L. and Juanita 3, 100.00% 12.500% Hilcorp Alaska, LLC 100.001. Section 5: A pan of Government Ina 2 more Millin particularly described as Lot 7 of Sunsn Bluffs Subdivision as platted in Plat #H-79.5 125 TIS-RUW 14,7299 HAK# 1031351 Richard L and Juanita J. 50.00% 12.500% Hilcorp Alaska, LLC 100.00% Semion 5: A pert of Government Lot 2 more Millen particularly described as Lots 8, 9, 10 and 11 HAK# 1033543 Arthur T. Mau 50.00% 12.500% of Sunset Bluffs Subdivision as platted in Plat #H-79-5 and that pan of Government Lot 2 lying under the roadbed of Sunset Drive 126 TIS-R13W 1.1700 HAK #591274 John D. Inman and Dee 100.00% 12.500% Hilcorp Alaska, LLC IM.001. Section 5: A pan of Government Lot 2 more Mn Imran particularly described as Lot 12 a Sunset Bluffs Subdivision as platted in Plat #H49-5 Ninilchik Proposed Unit Fihibit A Page 36 of 47 Last Update: l l/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner% 127 TIS-RI3W 2.0700 HAKN 1031351 Richard L. and Juanita 1. 100.00% 12.500% Hilcorp Alaska, LLC 10000/6 Section 5' A pan of Government Lot 2 more Millen particularly described as Lot 13 and 14 of HAK # 1033543 Arthur T. Man 5000% 12.500% Sunset Bluffs Subdivision as planed in Plat #H-79-5 129 TIS-RI3W 1.0300 HAK# 1031637 lawrence Allen IOOOO6A 12.500% Hilcap Alaska, LLC IW Wool/. Section 5: A part of Government Lot 2 more described Lot 15 Sonset caH F particularly as of Bluffs Subdivision as planed in Plat NH -79-5 Furl 0 M �-- 129 Tl S-RI3W 1.0000 HAK # 1031351 Richard L and Juanita J. 5000% 12.5006/ Hilcorp Alaska, LLC 100.0 FSI IWre Section 5: A part of Government Lou 2 more Millett C) particularly described as Lot 16 of Sunset HAK#I033SO Arthur T. Maze 50.00% 12.500% to td Bluffs Subdivision as planed in Plat NH -79-5 a 130 TIS-RI3W 10200 BAR 910357M Leon A. Windelar Heirs 100.0V% 12.500% Hilcorp Alaska, LLC 10000% Section 5: W 1 of Block 1 of Windela Subdivision, Plat 74-1526 130A TIS-RI3W 9.2210 unleased Leon A Wadeler Heirs 10000% Section 5: the mineral rights underlying that pan of the Sterling Highway, the Leon Windeler Highway and Persons Drive, in an far as those it, he within the Windel. Subdivision, Plat N 74-1526 131 TIS -ROW 4.1495 HAKN 591297 SurmmeFaye Windela 100.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 5: That pan of Government lot 2 lying under the roadbed of the Sterling Highway 132 TIS -RDW 296000 BAR 91035745 Jack A. Windeler 100.00% 125001. Hilcorp Alaska, LLC 100.00% Section 5: That Pan a Government Lot 1 described as Trac[ A of would. Subdivision, Plat #74-1526 132A TIS-RI3W 400000 HAK# 1035747 Honors WindelerDrew 25.00% 12.5ow. Hilcorp Alaska, LLC 100.00% Section 5: All of the SFl4NFl4 _ HAKq 1035747 Susanne Faye Windela 25.00/. 12.500% unleased Ronald Ord Windeler 25.00% unleased Susanne Faye Windeler (2) 25.00% 133 TIS-RI3W 13090 HAKN 1035745 Ronald Ord Wimller 100005% 12.500% Hilcorp Alaska, LLC 100.00% Semon 5: Lot 2 of Block 1 of Windela Subdivision, Plat 74-1526 Ninilchik Proposed Unit Evhibit A Page Tl of 47 Lan Update'. 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease n Owner Interest Percent Owner Percent Ownership Owner % 134 135 TIS-RI3W 30520 HAKN 1035746 Bounce Windeler Drew 10000% 12.500°1. Section 5: That pan of Government Lot 2 more particularly described as Block 2, Lot I of W indela Subdivision as platted in Plat all. 74-1526 TIS -ROW 126.6300 HAKN 1031609 Wayne and bene Findley 100001% 16.6701,1, Section 5: Government Lots 3 and 4 and NE/4SW/4 Ililcap Alaska, LLC 100.W% Hilcorp Alaska, I 100.00% 136 TIS-R13W 10463M HAKN 1031622 Clarence Eugene Herman 100.00% 12.500% Hilcorp Alaska, LLC I0000% Senion 5: A Part of the SWANE/4 more particularly desa bd as We 1, 3, 5, 6, 9, 15, 16, 17, and 18 of Buda Acres Subdivision as planed in Plat NH85.69 and the NWASE/4 and the NE14SE/4 a/d/a Tram A and B, respectively, of Haman Tram' Subdivision as planed in Plat #H-95-36 including the minerals under the Staling Highway and Bonnard Circle, Fellin Lane and Herman Drive in cu far as they lie within SW/41 F 4 & W2SE/4 136A TIS-RI3W 28100 HAKN 1031622 James C. and Kay E. INow/. 12.500% Hilcmp Alaska, LLC 100.00% Section 5: Las 11 & 12 of Bud's Acres Forrest Subdivision as planed in plat NH -85-69 136B TIS-R13W 15700 HAK N 1031622 Mark S. and LeAnne 100,001/6 12.500% Hilcorp Alaska, LLC 100.00% Section 5: Lot 10 of Bud's Acres Subdivision Herman (H&W ) as platted in plat N11-85-69 136C TIS -RDW 3,4900 HAK N 1031622 Ed 1. and Jean F. Adamson 100.00% 12.500°6 Wean, Alaska, LLC 100.00% Section 5: Lots 13 & 14 of Bud's Acres (H&W ) Subdivision as platted in plat NH -85-69 137 TIS-RI3W 20000 HAKa 1031634 Fart Bead. 100.00°0 12.500% Hilcmp Alaska, LLC IW.00°6 Section 5: A part ofthe SW/4NF14 more particularly described as Lot 2 of Bud's Acres Subdivision as planed in Plat NH85.69 138 TIS-RI3W 2.2020 HAKN 1031635 Clarence Eugene Herman 100.00% 1250% Hilcmp Alesks, LLC 100.00% Section 5: A pan of the SW/4NE/4 more Particularly described as Lot4 of Bud's Acres Subdivision as planed in Plat NH85fi9 Ninilchik Proposed Unit Exhibit A Page 38 of 47 Last Update: 11/1/2016 " ". F � Fa41,r� � ryaW�yaaN O ry � 00 Ninilchik Proposed Unit EOibit A Page 39 of 4] Last Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI CIRRI Interest Interest Tract Tract Legal Description Acreage Leasell Owner Interest Petreot Owner Percent Ownership Owner % 139 TIS-R13W 1.2910 HAK# 1031635 Clarence Eugene Herman 100.0W, 12.500°1. Hilcosp Alas", LLC 100.00% Section 5: A part of the SW/4NE/4 more particularly described as Lot ] of Bud's Acres Subdivision as planed in Plat #H85-69 140 T1S.R13W 1,250 HAI(#591292 Stephen Vanek, Jr, and 50.00% 12.500°1. Hilcorp Alaska, LLC 103.03% Section 5: A part of the SWANE/4 more Monica J. Vanek L particularly described as Lot 8 of Bud's Acres unleased Scott and Karen Bennett 5003% W Subdivision as planed in Plat #H85-69 p1&WI Irl m O N 141 TIS-R13W 4.0000 unleased Evelyn Terry McLaughlin 50.00% I. �`— Section S N/3NW/4SW/4SW/4 less the west unleased Patricia Tarry lodge 33.33% O W bo 132'thaeof unleasei Lila Tany Hanson I&6W. 0 C ] P. 141A T1S.R13W 1.0000 unleash lames C. Sanders 100.00/. Section 5: The west 132' of the N/2NW/4SW/4SW/4 142 TIS-R13W 350000 HAK# 1030482 Paul Dionne 50.00% l&67W. Intrepid Production 5.333330°/. Hilcorp Alaska, LLC 100.03% S.d. 5: S/2SW/4SW/4 & NEl4SW/4SW/4 Company &S/2NW/4SW/4SW/4 HAK# 1030482 Susan Dionne -Kahke 50.00% 166]0°/ 143 TIS-R13W 400000 unleash Henry George Gain and 100.009. Section 5: SEASWA Hon Eugenia Gain 144 TIS-R13W 100600 HAK# 1031610 Beamu Andrew Bachner 100.00% 12.5009. Hilcorp Alas", LLC 100.00% Section 6: tut 1 145 TIS -1413W 49.5200 HAK# 1030482 Paul Dionne 500110 16.6]09. Intrepid Production 3.33333 Hilcorp Alaska, LLC 10000% Section 6: Lot 2 Company HAK# 1030482 Suzan Dionne -KaBke 50.00% 166]0°/. Hardy Hutto 2.0000009. 146 TIS-R13W 40.0000 HAK# 1030482 Paul Dionne 50009. 16.671031. Intrepid Production 5,333330% Hilcorp Alaska, LLC 100.009. Section ]: NE14NE/4 Company HAK# 1030482 Suun Dionne - Katike 50.00% 16.6700 Ninilchik Proposed Unit EOibit A Page 39 of 4] Last Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner loterest Percent Owner Percent Ownership Owner % 147 151 TIS-RI3W Section 7: SE/41 F 4 TIS-RI3W Section 7: That pan ofthe NEASWA mme particularly des ntd as Id 1 of Tiaman Subdivision as plattd in Plat eH-85-129 TIS - R 13W Section 7'. , Township 1 South, Range 13 Wast, S.M., Alaska, All of the NE4SW4 Except Lot 1 of Tieman Subdivision, Plat No 85-129, Homer Recording District, and Except that portion of Eh 'Ay4iKMA, Plat No. 86-16 BS, lying north of Sterling Highway TIS -ROW Semon 7: That pan of the N 4SW/4 mme particularly described as Lot 3 of Tieman Subdivision as platted in Plat 9H-85-129 a/d/a 02N 4N[14SW/4 and that part of the MSE/4NE4SWM lying north of the northerly right of awy ofth. Sterling Highway, TIS-RI3W Section 7: That pan ofth. NW/4SFI4 lying north of the Sterling Highway, less and incept that pan described as Jut 1 of Aurora Vista Subdivision planed in Plat MH -96-13 400000 HAKN 833999 David Ray Reaves and 20.00. Sherry Ann Reaves HAKk 835362 Carl W. and Linda E. 20.00°6 Kinkead HAKe 1031353 Paul Joseph Rochon Bare 20.00%. HAKa 1031354 Linda Marie McCool 20.00. HAKN 1031355 Ward Randall Grill, 20.O 8.7240 11 K9 1030708 lames R. Sabrowski and 50.00. Susanne E Sabrowski HAKa 1030708 Leonard &Juanita 50.00. S.Iadvoki Revocable Living Truss 23.5500 HAK# 591294 Fmgetmenol, LLC MOM 830117 Boyd Daniel Leman HAK# 591210 AKAR KPBM12. 0816-00 12.500% 12.500. 12.500. 12.500%. 12.500%. 12.500%. 12.500. Hilcnrp Alaska, LLC Nikon, Alaska, LLC Hilcory Alaska, LLC Hileorp Alaska, LLC Hilcmp Alaska, LLC Mori. rLLl, � IsCsa�a_I W Wa 100.00. Mow. Ninilchik Proposed Unit Exhibit A Page 40 of47 Led Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner% 152 TIS-RI3W 1.2900 HAKM 5913M Aurora Communications 100.009/6 12.500% Hilcorp Alaska, LLC 10000% Section ]: That pen ofthe NWASFJ4 lying International. Inc. north of the Slerling Nghway more particularly described as W 1 of Aurora Vista Subdivision in Plat NH -96-13 e—1 IS] TIS-RI3W 7.1510 HAKN 591]0] Kathleen McConnell 66.67% 12.300% Hilcarp Alaska, LLC 100.00°h 0-4 W way�a O Section]: That part ofthe NW/4SV4 lying HAKg 591308 Jeenne Potter 33.33% 12.50014. H V South of the Staling Highway FSI 6) 154 TIS-RI3W 6000o HAKM 591304 Donald Pinnow 100.00% 12.500% Hilcorp Alaska, LLC 100.00% Section]: That pan ofthe NE4SE4 lying W 17y north ofthe Staling Highway 155 TIS-RI3W 27.0000 unleased Shirley J. Provence 100.00% Section ]: That part of the NFJ4SFJ4 lying south of the Sterling Highway 156 TIS-RI3W 714500 HAKN 591294 Forgetmmol, LLC 100.00% 12.500% Hilcorp Alaska, LLC 100.00% Section ] The SE4SW4 and the SW ISFA &cept Lols 41 and 42 of Summered Acres Subdivision, Plat No. 8645, Homer Recording District; 156A TIS-RI3W 2.5400 ..lased Michael Walsh 100.0 Section 0: Lots 41 & 42 of Summerset Acres Subdivision (plat NTIS645) 157 TIS-RI3W 80.0000 unleased Henry George Gain and 100.00% Section S. N2NW/4 Flom Eugenia Gain 158 TIS-RI3W 17.8850 HAKk 833999 David Ray Reeves and 20.00% 11.500% Hilcorp Alaska LLC 10000% Section e: That pen ofth. SW/4NW/4 lying Sherry Ann Reaves ,vat of the Sterling Highway a/W. Lots 5 & 6 HAK # 835362 Carl W. and Linda E. 20W/6 12.500% of the E. Mounts Subdivision as planed in Kinkead plat4H41-23 HAKN 1031353 Paul Joseph Rochon Enure 2000% 12500% HAKN 1031354 Linda Marie McCool 2000% 12.500% HAK 8 1031355 Ward Randall Grille, 20.00°/1 12.500% 159 TIS-RI3W 22.1150 HAKn 1031352 Carolyn 0. Reifsnyder 10000% 12.500% Hilcarp Alaska, LLC 100.00/6 Section S. All of the SW/4NW/4lying east of the Staling Highway a/d/a Lots 1, 2, 3 & 4 of E. Mounts Subdivision as planed in plat #X- 81-23 Nmilchik Proposed Unit abibit A Page 41 of 4] Ua Update: 11/1/2016 Ninilohik Proposed Unit Exhibit A Lan Update: 11/1/2016 Page 42 of 47 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest laterest Tract Tract Legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner % 160 TIS-R13W 40.0000 HAK# 1029943 Elisabeth Quick 100.00% 12.SW% HUc rp Alaska, LLC 100.00% Section 8.N ASW/4 161 TIS-R13W 40.0000 BAK#591294 Forgctmenot, LLC 100.00% 12.500°/ Hilcorp Alaska, LLC 100.00% Section 18: NEA WA 162 TIS-R14W 359800 HAK#1035970 Jams, B. and Patricia 20.00% 12.500% Hikxa,Alaska,LLC 10000%. awl Section 12: Lm 2 Webster L HAK # 1035971 Charles E. Gat. 2000% 12300% IrlrH O HAK # 1035972 George A. and Patricia 20.0 % 12.500% ay4 Gams Fk8r.oI ,I HAK # 1035973 Robert L. and Carol A. 20.00% 12.500%001�1 N to Wilson I^1 es; BAK# 1035974 L.R. and Katherine turn. 2000% 12.500% W as 163 TIS-R14W 33.2100 HAK# 1035970 Jam. B. and Patricia 20.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 13: Lot 1 Webster HAK# 1035971 Charles E. Gat. 2000% 12.50Ma HAK# 1035972 Gaa%x A.and Patricia 2000% 12.500% Gat. HAK # 1035973 Robert L. and Carol A. 2000% 12.50W.. Wilson HAK# 1035974 L.R. and Katharine Lunne 20,W% 12.500% 164 TIS-R14W 80.0000 HAK# 591296 George R. Maki, Jr. 8.33% 12.500% Hilcory Alaska, LLC 100.00% Section 13 S/2SW/4 unl.sed Darwin E and Kaye A. 75.00°h Waldsmith unleased Edward Las Maki 8.33% unleasd Gloria Ann napolato 11,33% 165 TIS-RI4W 247200 HAK# 1031157 Stephen Waokowski and 5000% 12500% Hllcorp Alaska, LLC 100.00°0 Section 14: Tracts A & 8 and the north 6.34 Thomas Brady acres of Tract C of the Heavenly Sights H"ff 1033038 Cynthia L. Hatton 50.00% 12.500% Subdivision (Plat #H-96-17) a/d/a GLO Lm 1 166 TIS-R14W 4.4200 HAK# IWIWI Carolee Picket 2500% 12.500% Hilcom Alaska, LLC 100.00% Section 13: Tracts 1&2 of Caledge-Wilson Subdivision, Tract A Plat #78-32 unleased Jahn D. McCombs end 75.00 .. Deid. E. McCombs Ninilohik Proposed Unit Exhibit A Lan Update: 11/1/2016 Page 42 of 47 167 TIS-R14W 19500 HAK# 1031050 Thomas James and 75.00% 12.5006k Hilcorp Alaska, LLC 100 W/. Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Owner Interest Percent Owner Percent Ownership Owner % 167 TIS-R14W 19500 HAK# 1031050 Thomas James and 75.00% 12.5006k Hilcorp Alaska, LLC 100 W/. Section 13: Tract 3 of Cadedge-Wilson 12.500% Deborah Ann Bmdelow 100.00% Subdivision, Tract A Plat #78-32 HAK# 1031601 Carolee Picket 25.00% 12.500% 168 TIS.R14W 4.3900 HAK# 1031396 Gailan B. Johnson 7500°/. 12.5ow/. Hilcorp Alaska, LLC 100.00% Sermon 13: Tmcts4, 5, 8 ffi 11of Catldge- Gordon WilsonSubdivision, Tract A, Plat #78-32 HAK# 1031WI Carola Pickett 25.00°/. 12.500°/. 169 TIS-R14W Section 13: Trans 6 @ 7 of Cetledge-Wilson Subdivision, Tram A Plat #78-32 HAK# 1031196 Robert Flygern Cheryl King HAK# 1031601 Carolee Picknt 75.00% 12.500%. 25 00°6 12.500% Hllcmp Alaska, LLC 100 u1W/. 170 TIS-R14W 1.0600 HAK# 1031601 Carola Picker! 25.00% 12.500% Hilomp Alaska, UC 100.00% Section 13: Tram 9 of Calledge-Wilson Wass'ed Bobby J. A Selena G. 75.00% Subdivision, Tram A. Plat #78-32 Gordon 171 TIS-R14W SM AK 1.0700 HAK#1031087 Michael Roy Smith 75.00% 12.500°6 Hilcorp Alaska, IiC ICo. ow/. Section 13: Tract 10 of Leonard Catledge Subdivision, Wilson 1977 Subdivision, Tract HAK# 1031601 Carolee Picknt 25.00% 12.500% A Plat 978-32 172 TIS -RIM 2.7800 HAK# 1031601 Carolee Picknt 25.00°0 12500% Hilcorp Alaska, LLC 100.WA Section 13: Tram 12 of Catidge-Wilson Subdivision, Tract A. Plat 078-32 unleased Gale R. Graham 37.50% unleased Gary Andes and Mama 37.50% Andes 173 TIS-R14W 3.1950 HAK9591215 Walter Wilson 75.00% 12.500%. Hilcorp Alaska, LLC 100.0^ Section 13: Minerals underlying Arens and roads in Catldge-Wilson Subdivision, Tract HAK# 1031 601 Carolee Picknt 25.00%. 12.500°6 A, Plat 478-32 173A TIS-R14W 14340 HAK# 1031085 Paul E. Parsons, Jr. and 75.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 13: Tram 13 of Catledge-Wilson Cindi L. Parsons Subdivision, Tran A, Plat 978-12 HAK# 1031601 Carolee Pickett 250051v 12.500%. 174 TIS-R14W 47.3490 HAK# 1031WI Carola Pickett 25.00% 12.500% Hilcorp Alaska, LLC IM.00% Section 13: Trans B&C of CMhW 9- Subdivision,plat#74-2075 unlmsed Darwin E. and Kaye A. 75.00% Waldsmith 175 TIS-R14W 1.9900 HAK# 1031601 Carolee Picknt 100.0056 12.500°6 Hilcorp Alaska LLC 100.00% Section 13: Tram D of Catledge SubdiA n0u, plat R74-2075 Ninilchik Proposed Unit Exhibit A L 9 Update: 1111/2016 Page 43 d47 Working Working Tract Mineral Mineral Royalty ORRI ORRI interest Interest Tract Tract Legal Description Acreage (Rase # Owner Interest Percent Owner Percent Ownership Owner % 176 TIS-R14W Section 13: That pan of GLOW 2, SFJ4NW4 further described as Las 10, 11, 12, 13, 14, 15, 16, 17, 20, 21, 25, 26 end the Unsubdividel Reaaindar of Red Bluff Tasrece, and excluding tats 9, 18, 19, 22, 23 & 24 of RM Bluff retrace Addition No 2 (plat 41-1-200442) TIS-R14W Section 13: La 9 of and Bluff Tetra. Addition No. 2 (plat # H-200442) 1768 TIS-RI4W Section 13 Lots: 22, 23 & 24 of Red Bluff Tenace Addition No. 2 (plat N H-200442) 176C TIS-R14W Section 13: Lots 18 & 19 of Red Bluff Terace Addition No. 2 (pla # H-200442) 177 TIS-RI4W Smion 13: Lot 6, Block 1, RM Bluff Tenana, Subdivision Addition No. 1, Plat #86-58 246570 HAKN 1031601 Ceol.Pickett HMO 1033557 John L and Nancy E. Stengl HAK N 51321000 Darlene M. Ratak HAKN 51322000 Judith Ballentine 2500°/. 12.500% 25.00% 12.500°/ 25.00°/. 12.500% 25.00°/ 12.500% loow HAK# 1031601 Carolee Picket 2500% HAK# 1033557 David M. and Jmnine B. 2500% � Shm W HAK #51321000 David M. and Jmaine B. 2500%. Shot HAK # 513220M Judith Ballentine 25.00% 30850 HAK# 1031601 Cerol.Picket 2500% HAKN 1033557 John L and Nancy E. 25.00%. Stengl HAK # 51321000 % Theadae W. Romk Living 25M% Tryst HMO 51322000 Judith Ballentine 25.00%. 2.0000 HAKN 1031601 Cacol.Picket 25.00% HMO 1033557 John L. and Nancy E. 2500% Stm81 HAK# 51321000 Laity M. Rorak 2500°0 HAKN 51322000 Judith Ballentine 25.00% 1.0000 HAK# 1031601 Carola Pickett 25.00% HAK N 1033557 John L and Nancy E. 2500% Stengl HMO 51321000 Darlene M. Ronal, 25.00% HAKN 51322000 Judith Ballantine 25.00% 12.50w. 12.500% 12.500% 12.500%. 12.500% 12.500%. 12.500%. 12.500%. 12.500% 12.500%. 12.50 12.500%. 12.500% Hilcorp Alaska, LLC Hilcorp Alaska, LLC Hilcorp Alaska, LLC Hilcorp Alaska, LLC Hilcosp Alaska, LLC 100,00% F 100 � 0 � W 00 Wa 100.00% 1000% 100 00%. Nnilchik Proposed Unit Exhibit A Page 44 of 47 Gess Update: 11/1/2016 Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract legal Description Acreage Lease# Owner Interest Percent Owner Percent Ownership Owner% 178 TIS-RI4W Lwow HAK# 1031WI Carolee Picket 25.0066 12.500% Section 13: Lot 3, Black 1, Red Bluff'feneace 12.500% Hilcorp Alaska, LLC 100.00% Subdivision Addition No. 1, Plat 486-58 HAI(# 1033557 John L. and Nancy E. 25.00% 12500°/. Stengl Subdivision, Plat #98-57 HAI(#51321000 Derlae M. Ronk 25.Ol.. 12.500% HAK# 51322WO Judith Ballentine 25.00% 12500% 179 TIS-RI4W 1.0000 HAI(# 1031601 Carolee Picket 25.00% 12500% Section 13: Lot 2, Black 1, Red Bluff Terra. Subdivision Addition No. 1, Plat #96-58 ad.aed David R. Kdysz and lean 75.00% R. Gregaich Hilcep Alaska, LLC Hilcorp Alaska, LLC 100.00%. I00 001/6 180 TIS-RI4W 1.6300 HAKa 316 Janet M. and Robert C. 8.00% 12.500% Hilcorp Alaska, LLC 100.00% Section 13: W 2, Block 3, Red Bluff Tenace Clam Subdivision, Plat #98-57 HAK# 1031601 Carola Pickmt 25.0 12.500% 181 TIS - R 14W 0000 HAI(# 1031WI Carolee Pickett 25.0066 12.500% Hlleup Alaska, LLC 100.00% Smion 13: La 3, Block 3, Red Bluff iemm Subdivision, Plat 486-57 ..lased Michael S. and Cheryl B. 75.006/6 Sutton 182 TIS-RI4W 9.2500 HAI(# 1031MI Carola Picket 2500% 12.500% Hilcorp Alaska, LLC 100.00% Section 13: Las I, 4, 5, 7 & 8, Block I, Rd BluffTerrace Subdivision Addition No, 1, HAI( # 1033557 John L and Nancy E 25.00% 12.500% Plat #86-58 & Stengl Lot 4, Block 2 Rd Bluff Tera Subdivision HAK#51321000 Darlene M. Romk 250% 12.500% Plat#86-57 HAI(# 51322000 Judith Ballathe 25.00% 12.SOo% 192A TIS-RI4W 2.6200 HAK# 1031WI Carola Pickett 25.006/. 12.500% Hike,, Alaska, LLC 100.00% Section 13: Lot 1, Block 3, Rd Bluff Terrace Subdivision Plat No. 86-57 HAK # 51321000 Darlene M. Romk 50.00% 12500% HAK# 51322000 Judith Ballentine 25.00% 12.500% 184 TTIS-RI4W, S.M., Alaska, 5.4240 HAK# 591301 Richard Lee &Jeannie Lou 100006/. 12.5006/6 Hilcorp Alaska, LLC 100.00% Seaion 13: Phermn Acres No 2, Lot 1, Johnson ...ding In Plat 2002-I6, Homer Recording Di said, Third Judicial District, State of Alaska; and Pherson Aees No. 2, Tract B1, according to Plat 2002-16, Homer Recording Diane, Third Judicial District, State of Alaska; (Combined with Prior Tracts 183 and 183A) Ninilchik Proposed Unit Exhibit A Page 45 of47 Ism Updme 11/1/2016 196 TIS-R14W 1.7700 HAK# 1035905 Stateof Alaska, 10000% Working Working 10000°/. CD ed Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner percent Ownership Owner % 194A TIS-R14W 55530 HAK# 51323000 Timand RristineM.1ine 75,00% 12.500% Hilcarp Alaska LLC 100.00% Sation 13: Towe W afPherson Acres Carolespicken 2500°6 paniwlarly described by meta and bounds to Subdivision, plat #11-2001-19 unleased a ..my dead! dated 7/28/64 from Calvin 185 TIS-R14W 123420 HAK# 1035905 Suteof Alaska, 10000% 12.500% Hilcorp Alaska, LLC 100.00% C. Haman a ux to the State of Alaska, Section 13: State of Alaska Highwey Projat ADL# 390105 Depanmmtof Natural rncoded in book 34, page 121 of the Homes Numbs F-021-l(3Z Pamal Number 0l l8, as Resource ti more particularly described by mass and G� bounds in a warranty dead dated 626/64 nll-R12W 339.9600 HAKN 1031007 State of Alaska, 10000% 12.500% pry 10000% from l.eonad Lee Ca0edge a ux m the State Sauion20: Fsaatonal GLOLotsIA ADL# 389181 Depamentof Natural rec of Alaska, recorded in Book 33, Page 226 of inclusive & SB/4SF/4; Resources ay -'T the Homa Retarding Districr Saaion21: WnNW/4; MA N 196 TIS-R14W 1.7700 HAK# 1035905 Stateof Alaska, 10000% 125001A Hncmp Alaska, MC 10000°/. CD ed Seaton 13: A 1.77 ase aaa ofland being ADL#390105 Depanmentof Natural W %+ Stateof Kaska Highway proj.t Numb. F- Resource 021-1(3), P.cal Numb.011 S-A, as more paniwlarly described by meta and bounds to a ..my dead! dated 7/28/64 from Calvin C. Haman a ux to the State of Alaska, rncoded in book 34, page 121 of the Homes Recording District 197 nll-R12W 339.9600 HAKN 1031007 State of Alaska, 10000% 12.500% Hilcap Alaska, LLC 10000% Sauion20: Fsaatonal GLOLotsIA ADL# 389181 Depamentof Natural inclusive & SB/4SF/4; Resources Saaion21: WnNW/4; Seaion 29: Fractional bIV4NE4 & GLO Lott 188 TIN -RDW, SM. 564.450D 11 K41034394 Sute of Alaska, 10000% 12.500% Hilcorp Alaska,ILC 3.250000°/. Hilcmp Alaska, ILC 100.005s Sec. 1: SE/41F 4 & SEA & ADL # 5% Department of Natural SFl4SW/4 Revauroe S., 12: NFJ4NW/4 & NnN 4, except that pan lying above the line of mean high tide TIN-R12W, S.M. Sec. 6: W2 except that pan lying above the line of man high tide 199 TIS - R 13W 19.0000 HAK#591313 Avis Hardy 100.00% 12.50 Hilcorp Alaska LLC 100.m% Sation 7. That portion of the Sterling Highway Right -of -Way lying within the NnSFl4 containing 19 acres, more or less. Nnilchile Proposed Unit Exhibit A lastUpdate 11/1/2016 Page 4601`47 229 TIN-R12W,$M. 242400 HAKa 591260 Penelope J. Maize 100.00% 12.500°/ 0.00% Section 7: A porion ofthe NWl/4NB1/4 Hilcmp Alaska, LLC 100.00% Working Working Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Owner Interest Percent Owner Percent Ownership Owner % 229 TIN-R12W,$M. 242400 HAKa 591260 Penelope J. Maize 100.00% 12.500°/ 0.00% Section 7: A porion ofthe NWl/4NB1/4 Hilcmp Alaska, LLC 100.00% lying can ofthe centerline ofthe Stealing Highway; more Particularly described as 522.541 Coin Subdivision, Plat No. 9446, and all Hilcmp Alaska, LLC minerals underlying dedicated roads within 97, 7W.. the subdivsian,..[Wing Tracts C-lA and C -IB of the Celia Subdivision, Addition d2, Plat No. 2012-53 230 TIN-R12W, S.M. 3.8540 HAKk 591D6 James C. Kruse and Linde 100.00% 12.500% Hit corp Alaska, LLC 100.00w. Section 7'. Tmcus C-1 A and C -IB of Celia C. Kruse q.,Mi ,i— eddirinn 07 Plat No 2012-53 Total Unit Acreage 25,909.6284 Narking Interest Net Acres Unit % Owner Uncommited 522.541 2.21% Hilcmp Alaska, LLC 25,337.0874 97, 7W.. Ninilchik Proposed Unit Exhibit A Page 47 of47 Inst Update: 11/1/2016 0000° e LU r �O M ^O G C) ~ x �z o o � � Y w� Q z O N N M 00 Y w a U O ` LU 2 z a w = O ro ~ CL D A NO m Oo (N(N C0 0 ((0 `0 m0 W a rn, CO (D U� to � U g J m +� U(04 Q 1) N `n O ca = 00 (O c0 7 a T (n H N Z z N !=J LU 04 Z N Z W f6 a a z LU Y � w m cu C Q -J C a N _0 c0 C N E N N = N Y cf cn c0 U ui K N J c6 '� J C3) CL L w N O o �a LL Q)-0 m a��i C c0 OC O O Q) o3 0 a a) > Yo H_0 J LL :° U) (n Z) U a D ----------- -- ----- -------- ----- CIA 91 ... . ..... .... . 0 L 65 .............. 0 a- D D ............... - - - - ---- ------------- -- — ---------- --- ------- - -- A - ---------- . . . . .. .......... I .... ....... ------ - - ----- - ----- ----- .... .... .. o ------------ ---- - ----- -- - ---- -- �F �7. 13 k E .. 17 16 15 k k 3 is o � i 2 t 19 20 24 2 i Sop2No12w k 187 1. 22 k I k. 33A�1'��j 32 k. 33Cy_"� 33 - 23 _ i _ l 336 - 1330 336 33AI I 33D 2 L____ 31 _ _--1 ---- — 37 S002N 13W ' 1, 35 27 36 21 28 25 39 !r A. ` 111 Proposed �• Bletling tli9hwaY Tract Owner ryPe State I Nin,J Page 1 of8 N NiUnit - ..nilchik CIRI Cook Inlet Shoreline L—�� `.. 7 University Slate Plane Zone 4 NAD 192] feet a1 lam.. tet, Exhibit Proposetl PA Boundanes '.__ Fehe al ®Unleased Private 0 1,000 2,000 3,000 Feet Map Dale: 11/12016 ... __, ( I 39 25 30, 29 1 28 27 it 24 ., /40 41 2 S002NO13W f -- S002NO12W 31 42 / 33 T _ 25 34 38 xs l z 1 46 � � I 18 I a i l i FallsCreek 3 46 047 12 A Y� t _ —' -- / 49 S001NO12W SOA 19 2G S001N013W i 49A 51A/ \--A. ; 481_,.. 5 4 3 - . - I sl 1 52 53 1 � 53A 54 88 HL—j Proposed Trac[Owner type SterlingHigMvay NIIIIlCtIIk Unit State e,mmik urn Page 2 of 8 N __. Cook Inlet Exhibit B Shoreline CIRI University State Plane Zone 4 NAD 1927 (feet) liil II, Alaska. LLC ® Propose^ PA Boundanes L-__: i Federal ® Unleased Private 0 1,000 2,000 3,000 Map Date'. 11/1=16 _I Feet 30 31 4-U OSA 45B ISC 9SR 4. 45D 45E 45P 24 rag 45F 4V, 430 k44AL 44A-1 f 44AF —1 44AI 45AF 45AE --\ 45AR 45AD 45AA 45U GV 4452 d5w d� / 45M 4n d5L y 40 �44E1 4d --_ 2 44 D -AH -4 :44AH-2 44 a4c i 4 aF 44G 1744AE 44Z 41 44s S002NO12W 44L 32 � aer 1„d 42 440 Proposed __— — mloo rr e. Page 3 of8 Sterling Highway Tract ct Owner Type StaN Ninilchik Unit �J CIRI — Cook Inlet Shoreline } University Stale Plane Zone 4 NAD 1927 (feet) fa<4r,r.vaaka.LLc Exhibit B _ 1 Federal 1 Aoposetl PA eourdades I_ _- 1 Unleased Map Cate. 11/12016Private 0 290 580 870 -- Feet SO 2N013W 3002N012W 36 36 I 31 32 46 ._. 2 LS 46 3 047 12 SOAV 49'k�/ 5, I 19 26 5 2 1 SIA 3 52 53 W 0.. li F lis 53A Cref k PA _ _.. �.. 59.. 1551754 S001N 13W 188 ,. 62 /62$ _ 56 60 65 \) � 61 56 � 6 4x63 56 58 57. W 229 230' 3 'SA 66 12 76 167 — —6 13 3 11 _... 68 i 15 71 3 Proposed Ninilchik Unitff Sterling Hi9hwaY Tract Owrrer Type Stale Page 4 of 8 N Exhibit --- Cook Inlet Shoralim c,R, r Y —J Unbersit State Plane 2ana4 NA0192](feeQ 1lilearp Alaaka, LLC { R proposed PA Bour4aries'--_Federal f/—,/,l u I//� UnleasedZ7 �Piaate 0 1,000 2,000 3,000 Map Date: 11/12018 8 9 17 5 20 29 28 Proposed Ninilchik Unit AlitExhibitB llilrnrp Alu=ko, LLV Map Date'. 11112010 15 3 Grassim Oskolkoff PA II I 4 22 6 i 27 Sterling Highway Hi _ Owner Type L_ State y Trac[ -- Cook Inlet Shoreline i. CIRI � University Proposea PAaourdanes Federal ® Unloosed I Private 1 72 24 26 25 NinilchM Unit Ma, °VPV1iV Page 5 of 8 N Slate Plane Zone 4 NAD 1927 (feel) 0 1,000 2,000 3,000 Feet it 3 12 1 72 24 26 25 NinilchM Unit Ma, °VPV1iV Page 5 of 8 N Slate Plane Zone 4 NAD 1927 (feel) 0 1,000 2,000 3,000 Feet w 0 0A 0. ,9 20 21 % 22 i 2 Grassim i 7s Oskolkoff PA j 4 r / 29 28 6 4 79 27 30 � 26 � 6 � A a I8� 80E, 'FL j eo Bou SOB so 93 S001NO13W 94 8 0 95�,� 1 90 096Bv / 98. 096A 96 qac '�"---84 81 ii�- .I 8889A 86 115 � � I 114 113 32 - 33 u2A*2-Q 1128 35 31 112C 111 2 110 109 1108 105\ , 104 1033 118 J� IO2 6 134119 00 99 _ Susan / 101 t �'/ �I30 120 1 laXton PA 6 12l %\�.%-- – 130A S001S0 133 3W 4 3 Proposed Stenin9 Highway Trac[ Owner Type—J State mnm . urn °VerviPw Page 6 of 8 N Ninilchik Unit _ c,R, 3 j ---- -Cook Irdet Shoreline4r.....1 University State Plane Zone 4 HAD t92] (feet) Ilileo, Alueko, ILC. Exhibit B Federal O Proposea PAaounaanes ®Unleased Private 0 1,000 2,000 3,00 Map Dale. 11112016 eet w 0 0A 0. S001NO14WF 36 1 6 32 S001NO13W 1341 � X3`3` 00 ```��} 120 101 / 30 y� 34 133 122 123�� 129 132 116 114 128 i _125 _ _ f 7 131 12�Y�136A 30 t --I 13126�7 132A 1 136A t --I / 139/136B 136C.,..`_ 4 p 10 8. 133 1 136 W 2 Wo � 1J4, � IO 141 � 8 Susa /� 145 142 1 Dionn Paxton A r / j 146 y � ��N � � 31 S001SO14W e' ------------ 30 8 147 1 58 10 12 159 & 30 �T 152 .153 f X18 1 149 151 149 50 15] i ,. 11 �_� T" 160 l49 "1153 . _.-�.�1 1t 156A" 2t 11 162 ( 156 4! - - �- 31 14 3161 17 16 182A\ ,163 176A 180 82� eimirnx uml Proposed_ Ninilchik Unit — Sterling Highway Tract Owner type .' State MaFoeervlew Page7of8 T] -Cook Inlet Shoreline I, 1CIRI iUniversity State Plane Zone NAD 192](fee0 III ..Ir Alaska, LLC. Exhibit B- Feceml IM Proposetl PA 9ounpanes t_._ J Unleased Private 0 1,000 2,000 3,000 Map Date. 11112018 _� Feet O 3 - 146 8 30 i 1 147 12 Susan Dion p' 7 10 Paxton P % —� —— 152\1 148 I 151 \ 149 IISO 154;. I 149 153 L 162 156A' 21 156 11 S001SO14W161 X163176A 182A`1A SOO1S 13W 180 i - . 182 181 ��176 L 177 162\\/ i'�-. 13--. 176 ,ro68 188 s 31 18 I"'I 14 175 ` 15 �'- `I76C i" \ 179 �1 X 182 ' 174185, W '168 167 166 -- 184A 9 1 ,186' I_ 166 `1\173 184 Iho��Bl j 165 164 i 22 � 23 24 19 Proposed P i♦ N1nilehik Unit 14- Tract nate Sterling Highway ',� -1 Nlauml. oml rwaP o.erve Page 8 of 8 N _-.._. Cook Inlet SM1orefine I I CIRI d.-_' University State Plane Zone 4 HAD 1927 (feet) Exhibit B illkvrp Alaska, LLl'. OFroposetl PA Sourganes �__� Fe6aral ®Unleasetl Private 0 1,000 2,000 3,000 Faet Map Date, 11112016 Exhibit C .--I t` Falls Creek Participating Area - 2016 Proposal Ninilchik Unit ~�+ Wer TIN-R13W, S.M. Section 1: N ,INEA, SWANEA, SO4NW/4, N2SW/4, SW/4SW/4; Section 12: NW/4W/4 015 TIN-R13W, S.M. 39.6100 HAKN 1034934 2.6357760% Burcauofiand 100.00% 12.500% Hilmtp Alaska, LLC 3.250000% Hilcorp Mas W, LLc luuuv Section 12: That pan of Lot l lying AKAN A-024399 Management Working Working within the 52NEA Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease k Percentage Owner Interest Percent Owner Percent Ownership Owner % 002 T2N-R12W, S.M. 800000 HAKN 1030487 5.3234570% Stare of Alaska. 100.00% 12.500%. Paul Craig 2.466670% Hilcorp Masks, LLC 100.00Y. Section 31: SFJ4SW/4, SW/4SFJ4 HAKN IM4934 ADLN 384314 Depanmemof Naruml 3.250000% Hilcorp Masks, LLC 100.00% Swum 12: That part oflnt l lying in William Webb 1.3333304 Charles Delany Ealand B 0.350000% the N&4NE/4 Resources 0.350000%. Cook Inlet Energy, LLC 1.000000°/ Dorothy Anne Ddrick 0.100000% Kevin Maclntosh 0.050000% Donkel Oil and Gas [lC 0.500000% Mary Lynne Moellering 0b50000% Mina L. Mendez 0050000°/. lessira Craig 0.100000% Dustin D. Ealand 0.050000% Hest Sun Kim 0.1000 003 TIN-R12W, S.M. 311.8500 HAKN 1034385 20]514990% State of Alaska, 100.00%. 12500°/. Hilcorp Masks, LLC 6.500000% Hilcorp Masks, LLC 100.0 Section 6: That pan of the W2NFJ4 ADL N 3119737 Department of Natural lying below the line of mean high tide Resources TIN-R13W, S.M. Section 1: N ,INEA, SWANEA, SO4NW/4, N2SW/4, SW/4SW/4; Section 12: NW/4W/4 015 TIN-R13W, S.M. 39.6100 HAKN 1034934 2.6357760% Burcauofiand 100.00% 12.500% Hilmtp Alaska, LLC 3.250000% Hilcorp Mas W, LLc luuuv Section 12: That pan of Lot l lying AKAN A-024399 Management Ann L Edwards 0.350000% within the 52NEA Charles Delany Ealand B 0 350000% Dmmhy Anne Ddrick 0.100000%. Alira L. Mandez 0.050000% Dustin D. Ealand 0050000% Mary Lynne Moellering 0.050000% Kenn Macintosh 0050000%. 015A TIN -13W, S.M. 10.2300 HAKN IM4934 0.6807370% B.uofiand 100.00% 12.500% Hilcorp Alaska, LLC 3.250000% Hilcorp Masks, LLC 100.00% Swum 12: That part oflnt l lying in AKAN A424399 Management Charles Delany Ealand B 0.350000% the N&4NE/4 Ann L. Edwards 0.350000%. Dorothy Anne Ddrick 0.100000% Kevin Maclntosh 0.050000% Mary Lynne Moellering 0b50000% Mina L. Mendez 0050000°/. Dustin D. Ealand 0.050000% Falls Creek Proposal 2016 PA Ealdbit C Page I of 10 Las Update: 11292016 Falls Creek proposal 2016 PA aldbit C Page 2 of 10 Inst Update: 11292016 Working Working ti Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest E.y Tract Tract Legal Description Acreage Lease 0 Percentage Owner Interest Percent Owner Percent Ownership Owner % p 019 TIN-1113W,SM 40.0000 HAK# 1031481 26617380% University of AlasW 10000°/, 12500% Hikorp Alaska, LLC 100.00% N ak"�y4 b Section 6: SF/4NF14 UA# Ninilchik �#W 0 Tract #2 tm ,I_Vl W a 046 TIN-R12W, S.M. 49.3600 11 K# 1031633 3.2845]309. She11e K. Leman 33.33% 12.500% Hilcmp Alaska, 1t 10000% Section 6: Las 1 thou 7, inclusive, of the Webb Tracts 1974 Subdivision, Plat H, At 1031633 Stephen S. Webb 33.339. 12500% 74-1724, including all minerals underlying dedicated roads within the subdivision HAK# 1031633 Susan L. Steinbach 33.33% 12.500% 048 TIN-R12W,$M. 26700 HAK91034912 0.17]6]009. Brigine Thebaut 16.675, 12.500% Hilcorp Alaska, LLC 10000°h Section 6: Tract #1 of Udelhoven Subdivision (Plat #H77.70X a pan of HAK # 1034912 Joann Steik 16.675/. 12.500% government Lott HAK# 1034912 Shirley J. Cox 1667% 12.500% HAK# 1034912 Ann Marie Davis 8.33% 12500°a HAK# 1034912 Dawn M. Dutton 8.33% 12.5009. HAK# 1034912 Jennifer Unann 8.33% 12.500% Wiederspohn HAK# 1034912 Jesse Udahovm 8.33% 12.5009. Fl K# 1034912 Sandra K. Udelhavm- 8.33% 12500% Taylor HAK# 1034912 Henna Kogm Udelhoven 4,17% 12.500% HAK# 1034912 Miranda Marilyn 4.17% 12 .5009. Udellwven Falls Creek proposal 2016 PA aldbit C Page 2 of 10 Inst Update: 11292016 Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease g Percentage Owner Interest Percent Owner Percent Ownership Owner % 049 TIN-R12W,SM. 29.9500 HA Ji 1034912 1.9929690% James Udelhoven 25.00% Sation 6: Tracts 2, 3, 5, 6 and 7 of Udelhoven Subdivision (Plat MH7]-70), HAKa 1034912 Brigitte Thebaut 16.67% a pen of government I.a 2, less that pan of Tracts 2 and 3lying outside the SW/4N 4 and also any mineral rights HAKe 1034912 Joann Steik 16.67 lying under the medbed ofthe Sterling Highway right of way passing through fl K # 1034912 Shirley J. Con 16.61% GLO I t 2 HAK a 1034912 Ann Marie Davis 4.1'1% HA 4 1034912 Dawn M. Dutton 4.17% HAK01034912 Jennifer Unarm 4.17% W iederspol n HAK H 1034912 Jesse Udelhoven 4.17% HAK a 1034912 Sandra K. Udelhoven. 4336 Taylor HAKM 1034912 Hanna Koger Udelhoven 2.08% HAKX 1034912 Miranda Marilyn 10914, Udelhaven 12.500% Filter, Alaska, LLC 12:500% 12.500% 12.500°/. 12 50)% 12.500gs 12.500% 12.500°/. 12500% 12.500% 12.500% 6.500000% Rican, Alaska, LLC 10000% Falls Creek Proposed 2016 PA Fxhibit C Page of 10 lsn Update: 11Y29R016 Tract Tract Legal Description Tract Acreage Lease # Tract Mineral Percentage Owner Mineral Interest Royalty ORRI Percent Owner Working ORRI Interest percent Ownership Working Interest Owner % 049A TIN-R12W, S. M. 2.0000 HAK# 1034912 0.1330860% Lames Udelhoven 2500% 12.500% Hiuorp Alaska, LLC 100.00°/. Sandra K. Udelhoven- Section 6: That pan ofTmts 2 and 3 12.500% Taylor HAK # 1034912 lying outside the SW/4N 4 2.08°/. HA ft 1034912 Brigitte Thabaut 16.670 12.500% 2.08% 1250090 Udelhoven HAK# 1034912 Joann St6k 16.67% 12.500% 0.24088 Jennifer Unann 50.00% 12.500% Hilcorp Alaska, LLC 6.500000% Hilnorp Alaska UA 100.00% Swoon 6: That pan of Tract 4 of 11 K41034912 Shirley J. Cox 16.6/0 125000 HAK # 1034912 Brigitte Thebaut rLy, 12.500% SW/4NF14 HAK # 1034912 4" 16 619. 12.500% HAK# 1034912 Ann Marie Davis 4.17% 12.5009. 12.50090 pry O HAK # 1034912 Dawn M. Dutton 4.11°/. 12.5009e 50.00% 12.500% Hilcorp Alaska, LLC 3250000% Hilwrp Alaska, LLC 100.00°0 H py Widuipohn Udelhoven Subdivision lying outside HAKa 1034912 Brigitte Thebaut 16.67% 12.500% the SWANF14 HAK# 1034912 Jason Steik 16.61% Falls Creek Pmpoml 2016 PA Exhibit C Page 4 of 10 Ls[ Update: 11/29Q016 HAK#1034912 Jennifer Unann 4AW.. 12.5000 r Wid.pohn W a HAK# 1034912 Jerre Udelhoven 4.17% 12.500% HAK # 1034912 Sandra K. Udelhoven- 4.17% 12.500% Taylor HAK # 1034912 Hanna KoSer Udelhoven 2.08°/. 12.500% HAK# 1034912 Miranda Marilyn 2.08% 1250090 Udelhoven 050 TIN-R12W, S.M. 16200 HAK# 1034912 0.24088 Jennifer Unann 50.00% 12.500% Hilcorp Alaska, LLC 6.500000% Hilnorp Alaska UA 100.00% Swoon 6: That pan of Tract 4 of Widerspohn Udelhoven Subdivision lying within the HAK # 1034912 Brigitte Thebaut 16.6T/ 12.500% SW/4NF14 HAK # 1034912 Joann Steik 16 619. 12.500% HAK# 1034912 Shirley J. Co. 16.67% 12.50090 `. OSOA 2.6700 HAK#10349@ 0.1]]6]00°. lennifsLinenn 50.00% 12.500% Hilcorp Alaska, LLC 3250000% Hilwrp Alaska, LLC 100.00°0 SexhonTIN�R12W,S.M. SaYion 6: That put of Trad4 of Widuipohn Udelhoven Subdivision lying outside HAKa 1034912 Brigitte Thebaut 16.67% 12.500% the SWANF14 HAK# 1034912 Jason Steik 16.61% 12.500% HAK# 1034912 Shirley 1. Cox 16.67% 125000A Falls Creek Pmpoml 2016 PA Exhibit C Page 4 of 10 Ls[ Update: 11/29Q016 west of 0se Sterling Highway, las and except he north 165 fact and that portion of the Sterling Highway Right. of -Way lying within the N2SE/4 053A TIN-R12W,SM. 28.9000 HAK# 1034913 Working Working 12.500% Hilwrp Alaska, LLC 3.2500001/0 Hilcorp Alaska, LLC 100.00% Section 6: Lot 3 except the Nath 165' Tract Pederson Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease k Percentage Owner Interest Percent Owner Percent Ownership Owner % 051 TIN-R12W, S.M. 09100 HAI(# 10348% 0.0605540°/. E. W. Vandabilt 100.00% 125001A Hilwrp Alaska, LLC 6.5000N% Hilcorp Alaska, LLC lodooe/. 12.50010 Plat 7642 Section 6: That portion of the north (Margard Vanderbilt HAY# 1034911 James Reinhardt 1875% 12.500% 165' of the N2SE/4 lying west of the 1034911 Thomas Weyhaupt Lvg Trust) 12.500% HAK# 1034911 Norma Jeanne Nichols 16.6]% 12.500% Staling Highway 1034911 Walla G. Williams 8.336 12.500% OSIA TIN-R12W, S.M. 2.3400 HAK# 1034850 0.1557110% E. W. Vandabilt 100.00Y. 12500% Hilwrp Kaska, LLC 7.250000% Hilcorp Alaska, LLC 100.0016 Section 6: The North 165' of GLO Int 3 (Margard Vanderbilt aH Lvg Trust) Fy 052 TIN-Al2W, S.M. 58.0000 HAK# 1037560 3.65950 Hamid A. and 100.001/. 12.500% Hilcorp Alaska, LLC 100.001/. O �] 0 Section 6: That part of N/2SEJ4 lying Marguerite M. Pederson •� an of Sterling Highway Faros N Wiry 053 TIN-R12W, S.M. 21.0900 HAY# 1034913 1.4033960% Hamid Leeand Diane R. 100.00% 12.500% Hilcorp Alaska, LLC 6.500000% Hilwrp Alaska, LLC 100.00% Section 6: That part of MSE/4 lying Patteson west of 0se Sterling Highway, las and except he north 165 fact and that portion of the Sterling Highway Right. of -Way lying within the N2SE/4 053A TIN-R12W,SM. 28.9000 HAK# 1034913 1.9230990°o Herold l.ee and Diane W 100.00% 12.500% Hilwrp Alaska, LLC 3.2500001/0 Hilcorp Alaska, LLC 100.00% Section 6: Lot 3 except the Nath 165' Pederson thereof 056 TIN-R12W, S.M. 30.9010 HAK# 1034911 20562520% Charles Weyhaupt 1875% 12.500% Hilcorp Alaska, LLC 6.500000% Hilcorp Alaska, LLC 100.001/1 Section 6: SWASE/4, less add except Block 2, Lots 1 and 8, and Block 5, Lot 1 of Clammers Haven Subdivision, HAI( # 1034911 David Weyhaupt 18,75% 12.50010 Plat 7642 HAY# 1034911 James Reinhardt 1875% 12.500% HAK# 1034911 Thomas Weyhaupt 1835% 12.500% HAK# 1034911 Norma Jeanne Nichols 16.6]% 12.500% HAK# 1034911 Walla G. Williams 8.336 12.500% Falls Cteck Proposal 2016 PA Exhibit C Inst Update: 11292016 Page 5 of 10 061 TIN-R12W, S.M. 3.2580 HAK# 1034911 0.2167980°% Dennis Hedman 25.00% 12.500°A Hilamp Alaska, LLC 6.500000% Hilcorp Alaska, ILC Semon 6: Block 5, Lot 1 of Clammers Working Working Haven Subdivision, Plat 7662 Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest HAK#1034911 Tract Tract Legal Description Acreage Lease N Percentage Owner Interest Percent Owner Percent Ownership Owner % Thomas Weyhaupt 059 TIN-R12W, S.M. 2.9370 HAK# 1034911 0.1954370% Charles Weybaupt 18.75%. 12.500% Hilcmp Alaska, LLC 6.500000% Hilcorp Alaska LLC 10000% Smtion 6: Block2, Lot 1 ofClammers Haven Subdivision, Plat 76-62 HAKN 1014911 DavidWryhaupt 18.]5°/. 13500°A HAK# 1034911 James Reinhardt 18.75% 12.500%. HAK# 1034911 Thomas Wryhaupt 18.75% 12.500% HAK# 1034911 Jens H. and Armalite Hansen 12.50% 12.500%° s—I 7 L C� w I"'1 HAK# 1034911 Veray H. Mathews 12.50% 12.500% O 1-4-4 b 060 TIN-R12W, S.M. 2.9040 HAK# 1034911 0.1932420% John Stallmua Jr. 25.00% 12.500% Hilemp Alaska, LLC 6.500000°. Hilcorp Alaska, LLC 10000% sd Sermon 6: Block 2, lat 8 of Clammefs rlYl W a Haven Subdivision, Plot 6.62 HAK# 1034911 Charles Weyhaupt 18.75% 12.500% HAK#1034911 David Weyhaupt 18.75% 12.500% HAK # 1034911 lames Reinhardt 18.75% 12.500% HAK # 1034911 Thomas Wryhaupt 18.75°% 12.500% 061 TIN-R12W, S.M. 3.2580 HAK# 1034911 0.2167980°% Dennis Hedman 25.00% 12.500°A Hilamp Alaska, LLC 6.500000% Hilcorp Alaska, ILC Semon 6: Block 5, Lot 1 of Clammers Haven Subdivision, Plat 7662 HAK# 1034911 Charles Weyhaupt 1875% 12.500%° HAK#1034911 David Weyhaupt 1875% 12.500% HAK# 1034911 James Reinhardt 18.75% 13500% HAK# 1034911 Thomas Weyhaupt 1875% 12.500°/. Falls Creek Proposal 2016 PA &bibit C last Update: 11 %292016 Page 6 of 10 Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Legge # Percentage Owner Interest Percent Owner Percent Ownership Owner % 062 TIN-R12W, S. M. 34.9880 HAR#1034911 2.32821404, Charles Wayhaupt 18.75% 12.500% Hilcurp Alaska, LLC 6500000% Hilcmp Alaska, 116 10000% Section 6: That pan ofgovanment Wt 4lying in the SE/4SW/4, less Block 1, HAK# 1034911 David Weyhaupt 16.75°% 12,500% Lot 9 and less Block 2, Lon 3 and 4 of Fl K# 1034911 au p David Weyht 18.75% 12.500% Clammets Haven Add'n No. l HAK# 1034911 James Reinhardt 18,75% 12.500% Subdivision, Plat H-78-25; Block 2, HAK41034911 Lmes Reinhardt 18.75% 12.500% Lma 5 and 6 and any interest in roa l vreys and easements dedicated to public HAK# 1034911 Thomas Weyhaupt 18.73% 12,5N% use in the Clammefs Haven Add's No, HAK# 1034911 Thomas Weyhaupt 1&75% 12.500% I Subdivision, Plat78-25 HAK# 1034911 Norma Jeanne Nichols 1667% 12.500% HAK#1034911 Walter G. Williams 833% 12.500% 062A TIN-R12W, S.M. 12.1100 HAK# 1034911 0.8058380% Charly Weyhaupt 16.75% 12.500% Hilcorp Alaska, LLC 3.250000% Hilcmp Alaska LLC 100.00°% Sec 6. Those parts of Clammers Haven Addition No.I (plat H-78-251 described as all of Block 1, Lm 2 and those parts Fl K# 1034911 au p David Weyht 18.75% 12.500% of Block I , Las 4lying outside the SF/4SW/4 AND those pans ofB10ck 2, HAK41034911 Lmes Reinhardt 18.75% 12.500% Lm I lying outside the SF14SW74 and all minerals underlying dedicated roads and cownwms lying outside the HAK# 1034911 Thomas Weyhaupt 1&75% 12.500% SV4SW/4 (a pan of GLO Lot 4) HAK# 1034911 Norma Jeanne Nichols 16.67% 12.500% HA14i#1034911 Welter G. Williams 8.33% 12.500% 0628 TIN-R12W, S.M. 4.4610 HAK# 1034911 0.2968490% Edward C. and MWng 25.00% 12.500% Hilomp Alaska, LLC 3.250000% Hilcorp Alaska, LLC IonOo% Sec 6: now pans of Clammers Haven C. Greene Addition NoA(plat H-78-25),deadibed as all ofel«k 1, Lott (a pan of GLO HAK#1034911 CharleW hau ey Pt 1875% 12.500% Lot 4) HAK# 1034911 David Weyhaupt 19.75% 12.500% HAK# 1034911 James Rei nhardt 1875% 12.500% HAK# 1034911 ThomasWryhaupt 1635% 12,500% Falls Creak Proposal 2016 PA Exhibit C Wst Update: I ln9n016 Page 7 o 10 063 TIN-R12W.SM. 1.6990 HAK# 1034911 0.1130570-A Michael and Marjorie 25.00°/ 12500% Section 6That pan ofGovemment Lot Working Working Tract HAKN 1034911 Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease # Percentage Owner Interest percent Owner Percent Ownership Owner % 12.5901A 062C TIN-R12W, S.M. 29920 HAK# 1034911 0.1990970% Keith C. and Flon D. 25.00% 12.500% Hilcorp Alaska, LLC 3.250000% Hilcorp Alaska, LLC 100oU/. 12.500% Stan: Those pans of Clammefs Haven HAK# 1034911 Lovejoy 25.00% 12:500% Section 6: That pan of Government Lot Barry Addition No, I(plat H-78-25), described HAKN 1034911 Charles Weyhaupt 18.75% 125000h. 2, Lot 3 of Clammars Haven Addition as all of Block 1, Lot 3 (a part ofGLO HAK# 1034911 David Weyhaupt 1675% 1250&1.. Lot 4) HAK# 1034911 James Reinhardt 1875% 12.500% HAK# 1034911 Thomas Wayhaupt 18.75% 12.500% HAK# 1034911 David Weyhwpt 18.75% 12.500% HAK# 1034911 James Reinhardt 19.75% 12500°0 rl � HAK# 1034911 Thomas Weyhaupt 18,75% 12.500y s O 063 TIN-R12W.SM. 1.6990 HAK# 1034911 0.1130570-A Michael and Marjorie 25.00°/ 12500% Section 6That pan ofGovemment Lot Barry 4 more particularly described as Block HAKN 1034911 CharletWeyhaupt 1875% 12.500% 2, Lot 4 of Clammem Haven Addition No. 1, as planed in plat # H-78-25 HAK#1034911 David Weyhaupt 18.75% 12.5901A HAI(# 1034911 James Reinhardt 18.75°% 12.500% HAK# 1034911 Thomas Weyhaupt 18.75% 12.500% 064 TIN-R12W, S.M. 17410 HAK# 1034911 0.1158520% Michael and Marjorie 25.00% 12:500% Section 6: That pan of Government Lot Barry 4 more particularly described as Block HAK# 1034911 Charles Weyhaupt 18.75% 12500% 2, Lot 3 of Clammars Haven Addition No. 1, as planed in plat # H-7&25 HAK# 1034911 David Weyhaupt 1675% 1250&1.. HAK# 1034911 James Reinhardt 1875% 12.500% HAK# 1034911 Thomas Wayhaupt 18.75% 12.500% Hilcorp Alaska, LLC 6.500000°% Hilcorp Alaska, LLC Hilcorp Alaska, 100.00°/. Falls Creak Proposal 2016 PA Exhibit C Page of 10 Last Update: 11/29/2016 Tract Tract Legal Description Tract Acreage Lease # Tract Mineral Percentage Owner Mineral Interest Royalty Percent ORRI Owner Working ORRI Interest Percent Ownership Working Interest Owner % 065 TIN-R12W, S.M. 1.5720 HAK# 1034911 0.1046060% Chula Weyhaupt 18.75% 12.500% Hilwrp Alaska, LLC 6.500000% Hilwrp Alaska, LLC 10000°. Section 6: That pan of Government Lot government Ld 2, and a portion of the NW I/4NEIA lying wen clubs 4 more particularly described as Block HAK N 1034911 David Weyhaupt 18.75% 12.500°/. 067 TIN-R12W,SM. 4.0300 HAKk 591276 0.2681OWo James A.and Thema L. 100.00°6 12.500% Hilwrp Alaska, [LC 100.00% I, Lot 9 of Clammas Haven Addition Wilson Ridge 1978 Subdivision (Plat OH78-23 replatted 91178-71), a pen of No. 1, as planed in plat # H-78-25 government L9a2 068 TIN-R12W, S.M. 4.0280 RAKN 1033555 0.2680360% Richard S. Banolowits 100.009. 12.500% Hilcorp Alaska, LLC 100000. Section 7: Lots 9 and 12 of Falls Crack HAK# 1034911 James Reinhardt 18.75% 12.500% replaced 917841), a part of HAK# 1034911 Thomas Weyhaupt 18.75% 12.500% ati H HAK k 1034911 Corey Kruse 12.509: 12.500% aya 0 F4 HAK# 1034911 lames Kruse 12.50% 12.500% �y N 066 TIN-R12W, S.M. 114.8640 11 K41031611 7.6434190% Paniland Frances 10000% 12.500% Hilwrp Alaska, LLC 100.00°. Section 7: Government Lots 1 end 2 Banolowits and the 41,IW/4, less and except Lots 7, 9, 10, 12, 14 and 15 of Falls Creek Ridge 1978 Subdivision (Plat #H78-23 replanted 9117841Z a pan of government Ld 2, and a portion of the NW I/4NEIA lying wen clubs centerline fthe Sterling Higheay; 067 TIN-R12W,SM. 4.0300 HAKk 591276 0.2681OWo James A.and Thema L. 100.00°6 12.500% Hilwrp Alaska, [LC 100.00% Semon 2 Lots 7 and 10 of Fa11s Creek Wilson Ridge 1978 Subdivision (Plat OH78-23 replatted 91178-71), a pen of government L9a2 068 TIN-R12W, S.M. 4.0280 RAKN 1033555 0.2680360% Richard S. Banolowits 100.009. 12.500% Hilcorp Alaska, LLC 100000. Section 7: Lots 9 and 12 of Falls Crack Ridge 1978 Subdivision (Plat NH78-23 replaced 917841), a part of government Lm 2 069 TIN-R12W, S.M. 20280 HAK# 1031350 0.134950006 Paul D. and URae A. 100,00% 12.500% Hilwrp Alaska, LLC 100.000. Section 7: Lot 14 of Falls Creek Ridge Banolowits 1978 Subdivision (Plat 91178-23 replanted #H7&71), a pan of g0vescment La 2 070 TIN-R12W, S.M. 2.0260 HAK N 1031612 0.1348170% Paul D. and Lanae A. 100.001/. 12.5000. Hilcorp Alaska, Lt.0 10000% Section 7: Lot 15 of Falls Creek Ridge Banolowits 1978 Subdivision (Plat #H78-23 replaned #1178411. a pan of government Lot 2 Falls Crack Proposal 2016 PA ahibit C Last Update: l 1/292016 Page9 of 10 Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Percentage Owner lateral Percent Owner Percent Ownenhip Owner % 188 TIN -ROW, S.M. 564.4500 HAKa 1034384 Sec. 1. SE4NE4, SEA, ADL% 590 SE4SWA Sec. 12: NE4NW/4,MNE4,except that pan lying above the line of mean high tide; TIN.R12W, S.M. See. 6: Wn accept that pan lying above the line of man high tide 229 TIN-R12W, S.M. 24.]400 HAKAl 5912M Semon]'. A portion ofthe NW IANEH41ying east ofthe centerline ofthe Sterling Highway; more particularly described as Celia Subdivision, Plat No. 9446, and all nerals underlying dedicated roads within the subdivision, excluding Tracts C -IA and C -1B athe Celia Subdivision, Addition M2, Plat No. 2012-53 37.560313096 Stateof Alaska, 10000% 12500. HilcorP Alas", LLC Depanment of Natural Resources 1.6462790°% Penelope) Maire 100.00°% 12.500Y. 3.250001396 Hilcmp Alaska, LLC 100'aw. Hilcorp Alaska, LLC 100.00°6 230 TIN -RIM S.M. 3.8540 fl K# 591236 0.2564580ys James C.Kruseand 100.00% 12.500% Hilcorp Madre, LLC 100.00°% Swtiont Tracts C -IA and C -1B of Linda C. Krone Celia Subdivision, Addition 42, Plat No. 2012-53 Total PA Total Tract Working Interest Acreage Percentage Owners PA % 1,502.783 100.000000°% Uncommind 0.0000% Hilocup Alask& LLC IW W00% Falls Crack Proposal 2016 PA Exhibit C Last Update: 11/29/2016 Page 10 of 10 DRAFT Proposed Falls Creek Participating Area Ninilchik Unit Effective October 1, 2016 RECAPITULATION BY LAND CATEGORIES: LAND OWNERSHIP PERCENTAGE ACRES OF PA State of Alaska Lands 956.300 63.635269% Federal Lands 49.840 3.316513% Patented Fee Lands 496.643 33.048218% TOTAL: 1,502.783 100.000000% EXHIBIT 1 Page 71 of 74 Falls Creek PA Exhibit C Last Update: 11/29/2016 ®-� 35 S002NO13W A 2 1 } . 0 6®_ 1 3 3 l 46 9 snA�419 1 � z 51 �3 i 52 1 3 ISS 53A S001N013W S001N012N a 3 59 2C, � 62 � 56 ��� -1 62AA 6 bl 62B1. 463 EI 229 66 i 12301 169i cw e t , NlnilcNlk Vnil Ninilchik Unit � Unit Track ExhibitD Proposed Falls Creek Participating Area 1 I Proposed Falls Creek FA State Plane Zoned NAD 192] (ket) 118wq, Alaaks, LLC O proposed Ninilchik Unit Boundary Map Data: 1122016 0 1,300 2,60 eet Page 1 of 15 GEOLOGIC REPORT TO ACCOMPANY APPLICATION FOR APPROVAL OF POOL RULES FOR OPERATING IN THE NINILCHIK UNIT, KENAI PENINSULA BOROUGH STATE OF ALASKA Jacob Dunston — Geologist, Hilcorp Alaska LLC Submitted to State of Alaska Department of Natural Resources Division of Oil and Gas 10/28/2016 CONTENTS 1. INTRODUCTION 2. NINILCHIK HISTORY 3. STRATIGRAPHY AND HYDROCARBON GENERATION 4. DISTRIBUTION OF NATURAL GAS WITHIN THE UNIT 5. METHODOLOGY FOR ESTABILISH PA BOUNDARY 6. RECOMMENDATION 7. SECURITY OF INFORMATION 8. FIGURES AND TABLES EXHIBIT 1 Page 73 of 74 CONFIDENTIAL PER 11 AAC 53.153 STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES SUPPORT SERVICES DIVISION FINANCIAL SERVICES SECTION 550 W 7TH AVE SUITE 1410 ANCHORAGE AK 99501-3561 (907) 269-8500 REC DATE - AGREEMENT NUMBER -- 11/28/2016 ADL 384318 HILCORP ALASKA, LLC ATTN: RENTALS PO BOX 61229 HOUSTON CUST NO RECEIPT DESCRIPTION 53766 4186536 OIL AND GAS FILING FEE TX 772081229 CASH AMOUNT BANKCARD TYPE/NUMBER 0796 RECEIPTED AMOUNT REMITTER: CORTNEY MOORE ATTN: RENTALS HOUSTON TX 772081229 COMMENTS: NT -UNIT EXPANSION FEE FOR NINILCHIK UNIT RECEIPT - DO NOT PAY 50.00 $500.00 EXHIBIT 1 Page 74 of 74 PLC,LLC (flj1i111fCla IL u_L'�➢pltC(HI1 2440 East Tudar Road, 4230 Anchorage, AK 99507 January 2, 2017 Phone (907) 830-1151 Fax (907) 274-8211 To: Chantal Walsh, Director State of Alaska Division of Oil & Gas'` From: Paul L. Craig, Manager PLC, LLC f Re: Public Notice of Application to Expand the Ni Ichik Unit dated 12/5/2016 This letter is written in response to the public notice dated December 5, 2016 of Application to Expand the Ninilchik Unit ("Application") published by the State of Alaska Department of Natural Resources, Division of Oil & Gas on behalf of PLC, LLC and MH2, LLC. This letter includes comments, attachments, and two specific requests. I am the Manager of PLC, LLC. I am also submitting this letter on behalf of MH2, LLC. In this letter, I reference three Alaskans and the University of Alaska, all of whom lease mineral rights to Hileorp Alaska, LLC on properties north of the current Falls Creek Participating Area (FCPA). I am not submitting this letter on behalf of the University of Alaska or the three individual Alaskan mineral rights lessors. Insofar as I mentioned these Alaskans and the University of Alaska in this letter, I am copying them with this letter. Hilcorp Alaska, LLC is also being copied. Regarding MH2, LLC, Carol A. Hult is the Manager of MH2, LLC. Ms. Hult and 1 are 36 -year residents of the State of Alaska and are the parents of the three members of MH2, LLC — Marie Craig (now Marie Acemah), Hanna Craig, and Heather Craig (each equal 1/3 owners of MH2, LLC). OVERRIDING ROYALTY INTERESTS Hilcorp Alaska, LLC ("I-lilcorp") submitted the Application to expand the Ninilchik Unit ("NU") and to expand the Falls Creek Participating Area ("FCPA") within the NU on November 2, 2016. The Application includes a 47 -page chart labeled "Exhibit A" and a 10 -page chart labeled "Exhibit C". Pages 1 of Exhibits A & C contain information about various ownership interests in Tract 002 of the NU (i.e.. State of Alaska Oil & Gas Lease ADL 384314). Exhibits A & C state that "Paul Craig" owns a 2.466670% overriding royalty interest (ORRI) in ADL 384314 (see attached Page 1 from Exhibit A & Q. ADL 384314 is comprised of several non-contiguous parcels of oil and gas lease holdings that are all contained within the NU, immediately north of the existing FCPA. ADL EXHIBIT 2 Page 1 of 22 Page 2 384314 is located within the Kenai Recording District. Copies of the Kenai Recorder's Office date-stamped (October 19, 2001) Assignments of Interest in Oil and Gas Lease forms ("Assignments") transferring the 2.466670 ORRI from: Paul L. Craig (an individual) to: PLC, LLC (2.0% ORRI) and, M112, LLC (0.466670% ORRI) are attached for your review. One copy of these executed Assignments was retained by the Division of Oil & Gas in 2001. The copies of Assignments retained by the Division of Oil & Gas are routinely placed in the lease file for ADL 384314, and are available for public review. PLC, LLC and MH2, LLC are companies in good standing with the State of Alaska. See Alaska Corporations database — Entities 72869D and 72870D at: littT)s://www.commerce.a I aska.gov/cbp/Mai iVCBPLSearch.aspx?mode=Corp. The recorded Assignment forms provide old addresses and contact information for PLC, LLC and MH2, LLC. The current addresses for each entity are correctly stated in the Alaska Corporations database. These addresses are: PLC, LLC Attn: Paul L. Craig 2440 E. Tudor Rd, 4230 Anchorage, AK 99507 MH2, LLC Attn: Carol A. Hult 2440 E. Tudor Rd, #230 Anchorage, AK 99507 REQUEST #l: 2.0% ORRI — ADL 384314 0.466670% ORRI — ADL 384314 PLC, LLC and MH2. LLC hereby request that the Division of Oil & Gas require Hilcorp to correct page 1 of Exhibit A and page 1 of Exhibit C, and to file a corrected version of the Exhibits with the Division of Oil & Gas. EXHIBIT 2 Page 2 of 22 Page 3 EXPANSION OF FALLS CREEK PARTICIPATING AREA PLC, LLC and MH2, LLC ("the LLCs") support expansion of the north boundary of the FCPA. However, the LLCs opine that significantly more acreage than the proposed 80 acres to the north of the existing FCPA boundary must be included when the Division of Oil & Gas reaches its decision about the areal extent of the expanded Falls Creek Participating Area. The rationale for the LLCs' opinion and subsequent request is premised on the legal framework for expansion of participating areas in Alaska's oil and gas statutes and regulations, as well as geological, geophysical, or engineering data that is available to the Division. Hilcorp's letter of application titled "Proposal to expand Ninilchik Unit Falls Creek Participating Area" specifically states: Only acreage that has been proven to contribute to the production of natural gas has been included in this application. (italics added) Alaska's statutes and regulations regarding expansion of a participating area state (11 AAC 83.351(c)): A participating area must be expanded to include acreage reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities... (italics added) Importantly, the authority and responsibility to expand or contract a participating area is exclusively in the hands of the State of Alaska. The operator of a participating area as well as the owners of oil and gas interests in and around a participating area (e.g., non-operating working interest owners, public or private royalty owners, or overriding royalty owners) can provide suggestions, information, and advice to the Division of Oil & Gas regarding expansion of a participating area. But the actual decision regarding the areal extent of expansion of a participating area is the exclusive duty of the State of Alaska. When the Division of Oil & Gas decides what acreage must be included in the expanded participating area, the legal framework in Alaska allows the Division of Oil & Gas to use any of the geological, geophysical, or engineering data available to the State of Alaska (e.g., existing data on file with the Division of Oil & Gas, the archives and files of the AOGCC, as well as any confidential or public domain data submitted by the operator or other mineral interest owners). The legal framework that the Division of Oil & Gas must use when independently and objectively reaching its decision about the areal extent of acreage to be included when expanding a participating area is unambiguously stated in the Alaska Administrative Code quoted above. The standard used by Hilcorp when proposing acreage to include in the expansion of the FCPA (i.e., "Only acreage that has been proven to contribute to the EXHIBIT 2 Page 3 of 22 Page 4 production...") is much narrower than, and therefore inconsistent with the legal framework used in Alaska's statutes and regulations. The language used by Hilcorp when recommending acreage to be included in the expansion of the FCPA (i.e., `only acreage that has been proven to contribute to the production...") means that the 80 -acre parcel along the north boundary of the existing FCPA that has been proposed by Hilcorp for inclusion in the expanded FCPA, has been proven by Hilcorp to contribute to the production at the FCPA. Therefore, these 80 acres must be included when the Division of Oil & Gas expands the FCPA pursuant to the more inclusive language stated in the Alaska Administrative Code. Hilcorp's restrictive language (i.e., `only acreage that has been proven to contribute to the production...") for inclusion of acreage in the FCPA creates a much smaller boundary than is required under State of Alaska oil and gas law. Therefore, significantly more acreage must (italics added to emphasize the specific word used in Alaska Administrative Code) be included in the expansion of the FCPA based upon the geological, geophysical, or engineering data available to the Division of Oil & Gas. Based upon public domain geological, geophysical, or engineering data presented below, the LLCs request that the north boundary of the FCPA be expanded significantly further north than the proposed 80 acres into both Sections 31 and 32 — immediately to the north of the existing FCPA boundary. In addition to acreage within ADL 384314 in Sections 31 and 32, the expansion to the north must include additional mineral rights owned by individual Alaskans and the University of Alaska (i.e., Ninilchik Unit Tracts 18 and 46). Tracts 18 and 46 are represented in Exhibit A as being leased by Hilcorp with a 12.5% royalty interest retained by the owners/lessors. Tract 18's mineral rights owner is University of Alaska. Tract 46's mineral rights owners are Shelle K. Leman, Stephen S. Webb, and Susan L. Steinbach. The owners of the mineral rights within Tracts 18 and 46 have been copied with these comments. As stated previously, I am not writing this letter at their request or as their representative. To the extent these comments are economically favorable to the University of Alaska and these three individual Alaskans, the LLCs assume these parties will support "Request #2" stated below. PUBLIC DOMAIN GEOLOGICAL, GEOPHYSICAL, OR ENGINEERING DATA: Marathon was a predecessor company to Hilcorp with respect to the FCPA and the Ninilchik Unit. Around the time that Marathon drilled the Abalone #1 well (originally named "NNA 1" well) north of the FCPA, Marathon submitted a geological structure map of the Ninilchik Unit to the State of Alaska. An original copy of the structure map promulgated by Marathon in 2002 is on file with the AOGCC in the Abalone #1 well file. This structure map can be downloaded from the AOGCC website and is in the public domain. A copy of Marathon's structure map is attached for your convenience. The structure map was labeled by Marathon as "Tyonek Structure T2." EXHIBIT 2 Page 4 of 22 Page 5 In the upper right hand township of the attached Marathon structure map, I have hand drawn the approximate boundaries of Sections 31 and 32. The location of the east -west fault passing through these sections is submitted to the Division of Oil & Gas as the geological north boundary of the Beluga and Tyonek reservoir rock reasonably estimated to be capable of producing or contributing to the production of hydrocarbons in paying quantities from the Falls Creek Participating Area. Most of Section 31 — except for a few acres in the NE corner of this section — as well as a triangular shaped portion of Section 32 representing approximately one-third of the SW portion of that section, must be included within the boundaries of the expanded FCPA premised upon Alaska's legal framework for expansion of a participating area. The LLCs claim that all the acreage in Sections 31 and 32 south of the east -west fault identified by Marathon on its structure map can be reasonably estimated to be capable of producing or contributing to the production of gas from the Beluga and/or Tyonek formations and should therefore be included when the Division of Oil & Gas reaches a decision about the areal extent of the expansion of the Falls Creek Participating Area. In addition to the east -west fault discussed above, during 2014 Hilcorp drilled the Frances #1 well in Section 7 south of the Falls Creek Pad (see attached Hilcorp map titled "Ninilchik Unit Frances #V). I drew a small star on Marathon's structure map in the approximate location of the top of the productive horizon (TPH) for the Frances 41 gas well. The precise location of the TPH is stated in Hilcorp's "Well Summary" for the Frances 41 (see attached). The measured depth (MD) of the TPH may be 30 to 50 feet greater than the true vertical depth (TVD) of the TPH insofar as the Frances #1 was drilled directionally. Hilcorp's attached "Well Summary" indicates that the MD and TVD of the bottom hole location differs by 61 feet (13,055' versus 12,994') confirming that the TVD of the TPH is not dramatically shallower than its MD. The MD of the Tyonek sands perforated in the Frances #1 were from —7,574 feet to —7,598 feet (see attached "Well Prognosis" dated 11/25/14). Hilcorp's "Weekly Operations Summary" dated 12/10/14 (see attached) states that 24 feet of formation were perforated (MD 7,569 to 7,593') and that gas was "flowing 7.887 million at 1,978 psi." Hilcorp's data from the Frances #1 gas well clearly indicates that gas in paying quantities can be produced at a horizon significantly deeper than the 6,000' horizon of the Tyonek Formation marked as a contour on Marathon's structure map of the Falls Creek anticline. The MD depth of the productive zone in the Frances #1 supports the LLCs' conclusion that additional acreage to the north — acreage located south of the east -west fault in Sections 31 and 32; including acreage extending east and west along the downward slopes of the anticline through at least a TVD of 7,500 feet— can be reasonably estimated to be capable of producing or contributing to the production of gas from the Beluga or Tyonek formations, and can reasonably be estimated to be above the gas water contact within the Beluga or Tyonek gas reservoirs, and therefore must be included in the areal extent of the expansion of the FCPA. The Falls Creek #43-06 well is marked on Marathon's structure map to the north northeast of the Frances #1 well. On Marathon's map, this well is labeled "SFC 43-6". The Falls EXHIBIT 2 Page 5 of 22 Page 6 Creek #43-06 was drilled in 1973 along a similar contour as the Frances #1 well drilled in 2014 (see Marathon's structure map). The AOGCC records regarding the Falls Creek #43- 06 well state it was drilled to a total depth of 8,400 feet. Standard Oil of California plugged and abandoned the well. The Falls Creek #43-06 was logged, but was not tested in any of the formations penetrated (see AOGCC well file and page 10 of the Division's June 30, 2003 document titled "Nilnilchik Unit: The First Expansion of the Unit Area, Formation of the Falls Creek, Grassim Oskolkoff, and Susan Dionne Participating Areas, and Amendments to the Unit Agreement"). The absence of a test of the Falls Creek #43-06 in 1973 does not prove the absence (or presence) of gas in the upper Tyonek Formation, or any other formation penetrated by the Falls Creek #43-06. The presence of gas in paying quantities in the Frances #1 well unequivocally supports the thesis that the gas water contact associated with the Falls Creek anticline is lower than the TPH in the Frances #1 gas well. The testing results of the Frances #1 and the depth of the productive zone on the structure defined by the contours of the anticline shown on Marathon's map, provides geological, geophysical, or engineering data supporting the conclusion that the areal extent of lands that can be reasonably estimated to be capable of producing or contributing to the production of hydrocarbons in paying quantities reaches significantly further to the north of the existing FCPA, into most of Section 31 and a portion of Section 32, bounded on the north by the east -west fault contained in Marathon's 2002 structure map. For the convenience of the Division, a copy of the tract map labeled Exhibit B from Hilcorp's Application is also attached. I attempted to pencil in the approximate location of the east -west fault passing through Sections 31 and 32 as represented on Marathon's structure map to assist the Division when it decides about the north boundary of the expanded FCPA using the State of Alaska's statutes and regulations regarding expansion of a participating area rather than Hilcorp's much narrower definition of acreage to be included. Collectively, the data discussed above support a conclusion that significantly more acreage to the north and northeast of the existing FCPA, within Sections 31 and 32 — far beyond the proposed 80 acres — comprise "...acreage reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production..." of gas from the Beluga and Tyonek formations and therefore should be included in the expanded Falls Creek Participating Area. Marathon's proprietary metric for its proposed expansion of the FCPA (i.e, just the acreage "proven to contribute" to the production) does not comply with the State of Alaska's oil and gas legal framework. Marathon's proposed expansion of the FCPA is insufficient. A larger areal extent of leaseholds must be included when the Division of Oil & Gas reaches its decision about expansion of the FCPA to the north. EXHIBIT 2 Page 6 of 22 Page 7 DEVELOPMENT OF ALASKA'S RESOURCES FOR THE MAXIMUM BENEFIT OF ITS PEOPLE: When the Division of Oil & Gas establishes the expanded boundaries of the FCPA, it is in the interest of the State Alaska and its citizens for the Division of Oil & Gas to be fully inclusive of all State lands that can reasonably be estimated to be contributing gas to the production within the Falls Creek Participating Area. Specifically, appropriate inclusion of more acreage within ADL 384314 consistent with the legal framework of the Alaska Administrative Code equates to more royalty income to the State and its citizens. Furthermore, the Alaska statutory and regulatory foundation for correlative rights demands the inclusion of most of Section 31 and about one-third of Section 32. The gas produced from FCPA wells is being produced from either State of Alaska properties or properties owned by other mineral right owners (e.g., private Alaskans or the University of Alaska). Royalty payments are distributed to the State or other mineral right owners premised upon proportionate allocation of the pool of gas across the various properties from which the gas is produced. The Alaska Constitution unambiguously states: The legislature shall provide for the utilization, development, and conservation of all natural resources belonging to the State, including land and waters, for the maximum benefit of its people (italics added). I am not suggesting that the Division of Oil & Gas should inequitably load the FCPA with the State of Alaska's leased properties such as ADL 384314. Rather, I am stating that the Division must fairly and equitably include the full areal extent of all mineral rights that can be reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities within the Falls Creek Participating Area. In this instance, the existing geological, geophysical, or engineering data bodes favorably for the State of Alaska and its people by way of including more of ADL 384314 in the FCPA pursuant to the 2002 structure map submitted by Marathon and related data available to the Division. Appropriately including the additional acreage in Sections 31 and 32 that can be reasonably estimated to belong within the FCPA will proportionately increase royalty payments to the State of Alaska and will also protect the correlative rights of the University of Alaska, the three individual Alaskans mentioned previously, and the LLCs who own overriding royalties in portions of Sections 31 and 32. Regarding correlative rights, Alaska statute Sec. 31.05.170 (3), states: "correlative rights" mean the opportunity afforded, so far as it is practicable to do so, to the owner of each property in a pool to produce without waste the owner's just and equitable share of the oil or gas, or both, in the pool; being an amount, so far as can be practically determined, and so far as can practicably be obtained without waste, substantially in the proportion that the quantity of recoverable oil or gas, or both under the property bears to EXHIBIT 2 Page 7 of 22 Page 8 the total recoverable oil or gas or both in the pool, and for such purposes to use the owner's just and equitable share of the reservoir energy; The State of Alaska has a duty under Alaska's legal framework to review all available data and to independently and objectively establish the expanded boundaries of the FCPA in a manner that is just and equitable to all parties concerned, while also assuring that the Division's decision regarding the FCPA boundaries maximizes the benefit to Alaska and its people. The Division's decision regarding the boundaries of the FCPA must be determined independently — without bias created by the commercial preferences of Hilcorp pursuant to its suggested boundaries regarding expansion of the FCPA — boundaries that are based on a metric that does not specifically comply with State of Alaska laws and regulations regarding expansion of a participating area as discussed above. Parenthetically, the Alaska Administrative Code unambiguously states in 15 AAC 20.900 (c)(6): "royalty interest" means a basic royalty, overriding royalty, production payment (excluding loan repayment), net profit interest, or carried interest, in the production of oil and gas; (italics added) This portion of Alaska's legal framework is included to clarify that an "overriding royalty" in Alaska carries the same meaning as "royalty." The State has protected its correlative rights on royalty oil or gas produced along State -Federal boundaries. Similarly, the LLCs have a right to request protection of their correlative rights as owners of record of an overriding royalty interest in ADL 384314. Ms. Walsh, your reputation precedes you in the field of petroleum engineering and reservoir engineering. Hence, I defer to your expertise and the extensive set of public domain and confidential geological, geophysical, or engineering data available to you and your colleagues at the Division of Oil & Gas to determine the additional portions of Sections 31 and 32 that can reasonably be estimated to be capable of producing or contributing to the production of hydrocarbons in paying quantities from the gas produced at the Falls Creek Participating Area. I am neither a cartographer nor a landman and defer to the Division of Oil & Gas to correctly map and legally describe the additional properties that must be included in the expanded FCPA, consistent with the duties of the State of Alaska in this regard. REQUEST #2: For purpose of complying with the State of Alaska legal framework for expansion of a participating area, and to protect the correlative rights of the State of Alaska (i.e., the royalty income associated with State of Alaska Oil & Gas Lease ADL 384314), the correlative rights of the University of Alaska (i.e., the 12.5% royalty held by the University of Alaska on NU Tract 18), and the correlative rights of various private owners of royalties and overriding royalties including but not limited to PLC, LLC and MH2, LLC: EXHIBIT 2 Page 8 of 22 Page 9 The LLCs hereby request that the Alaska Division of Oil & Gas expand the north boundary of the Falls Creek Participating Area to include the full areal extent of all acreage reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities from the wells within the boundaries of the expanded the Falls Creek Participating Area. The LLCs submit that the north boundary of the expanded FCPA must include most of Section 31 and about one-third of Section 32 — specifically, the oil and gas property located south of the east -west fault mapped by Marathon in 2002. When deliberating about this matter on behalf of the State, please consider that correlative rights also include an equitable share of the reservoir energy contributed by the adjacent properties as required under State of Alaska statutes and regulations. The LLCs are fully aware that Alaska's oil and gas regulations only require a 1,500 foot set back from property lines for gas wells. And, the LLCs are fully aware that the physics associated with production from a pool of gas contained within contiguous reservoir rock clearly support the notion that over time, drainage of gas and depletion of reservoir energy can be reasonably estimated to extend beyond the 1,500 -foot diameter of one or more wells. In closing, these comments are silent regarding Ninilchik Unit Tracts 12, 26, and 47 in Section 5 immediately to the east of the FCPA. These tracts include properties leased to Hilcorp by Cook Inlet Region Inc., the State of Alaska and several individuals. Half of Tract 47 is owned by one or more private individuals and is not leased by Hilcorp. Obviously, a similar geological argument can be raised regarding these three tracts in Section 5 as the LLCs have raise in these comments and requests regarding Sections 31 and 32. Given that the LLCs do not own any interest in Section 5, the LLCs comments are deliberately silent regarding these Tracts. However, the Division of Oil & Gas may independently opt to include these Tracts in the expanded FCPA. Thank you for your attention to these two requests. If you have any question about the information I have submitted or my specific requests, please advise. Enclosures: Page 1 of Exhibit A Page 1 of Exhibit C Assignment of Interest in Oil and Gas Lease (ORRI) to PLC, LLC Assignment of Interest in Oil and Gas Lease (ORRI) to MH2, LLC Marathon's 2002 NNA 1 Location and Tyonek Structure Map Proposed Ninilchik Unit Exhibit B with approximate location of the east - west fault identified by Marathon on its structure map penciled in to suggest a reasonable estimate of the north boundary of the FCPA. Ninilchik Unit Frances #1 Map Frances #1 Well Summary Frances #1 Well Prognosis Frances #1 Weekly Operations Summary dated 12/10/2014 Proposed Nilchik Unit Exhibit B EXHIBIT 2 Page 9 of 22 Cc: Carol A. Hult, Manager, NM, LLC University of Alaska — Land Management Office Shelle K. Leman Stephen S. Webb Susan L. Steinbach David Duffy, Landman, Hilcorp Alaska, LLC Page 10 EXHIBIT 2 Page 10 of 22 WI nN—R13W 320.p100 N C4 Exhibit A Ninilehik Unit„ INwh 12.50% w 2016 Proposal Hilcmp Alaol ,I3 IW3O% W M. Tra6l Mlueral Mlmrai Royalty ORRI Tract Tract Legal Deserlp0on Acreage Lease # Owner Inherent pertenl Uwner Working ORRI Interest Ivercanl Ownership Working Interact Owner % WI nN—R13W 320.p100 11"d 1035733 Smeof Alalm. INwh 12.50% Hilcmp Alaol ,I3 IW3O% Sermon 36: Ste ADL# 3114318 Dnp% mafNuwnl Revourcen 102 RN�RUW 3518.45W HAS 1113840 Slmeaf Al.xU, 111Uao% 12.510% pnu1C'ui8 2,1666741% iill,'Alakn. LLC --- Blow% a Ikm l9: All ADL# 384314 DepmmmtofNwml Section 311;UmuweyM.Wl UJeaN Rnourccv William Webb 13333118 wUmm6eJ humk Cook Inlet Ener,. LLC I JXX'IXRII% Section: 21: NW/4NV4 h N/2NV4NV SV43NV4NW14 Dmkn1 Oil nut Gv LLC u_sfI1HHO4 Scmion28:SV4 Semim 29: Alld& nnJwUmumd lain, Ila Sun Kim 0.1(X)(110% Section M A11 levaica Cmi6 O.IW0011rn Snvm 31: Vacua..! W3 TIN -ROW 31195.550 10913X5 Smteof Maska. 1(03X1% 12.101% Hikulp Almka,IlC 6_4X11XXI't liiknrp Ale•ku. LLC IW Wri.,, M. auction 6'Thu... ADI -1 1119137 ADH Depnnmtal of Nnuml high uNnedfluu.1 aan, ofineae Uilb Ode (e.tim4led aI036 Rnv0urces ucrosl Smion l: FmOionol TIN ROW Sermon I: NW(4 nul WPNV4 and NO4NV4 amt W/2SW/4 out NV4SW14 004 TIN-RI3W 2.157.9900 HAK1101010 SmeoL\lu3m. IW.O% 1230(74} Ililcorp Alaaka.LLC 100570% Semina 2: W6 ADL # 311,130 Dulmnmam of Nmuml Senior 3: SE11 R..m Semina 10: M2 A, SW/4 Snvcn 23: mJmImb8ed Senior 23: All S subnur8cd lam! All I maM See0m 27: Lo15 eml nil IiJe and su6n¢r8W Wada W5 TIN -ROW 40!00 HAKa 1035732 Smmaf Almka. 100130% 12.50% Ililm Alaska, LLC IW.W% Semon 16:026: SW/4 ADL# 384306 Dtihmammofhatmal Resmrcen Nialkhik Pmpmml U.k exhibit A Ian UpJme: 11111016 pule 18447 TIN-1113W.SM. Exhibit N N Scmlm 12: NW14NWM 0 I )'I WRI IW, SAI. 39Allm HAKN IID4934 2.6357760[4 Bummoflnno 100.IWA 12- W% Illlc'.m An In,IJd; 3.25gXm!i Ilikwp Al'v.kn,ILC _ IUllJml; Seeuim l2: iLul pea of 6A 1 1Y11'6 AKA N A-024399 Mamgenimt within it. SfJNPl4 Ann 1.. Wen ik N FN CIUWm Minn., U..d 11 0351x91(Y:3 Falls Creek Participating Area - 2016 Proposal Dwm, Anne .vk 031ANXN'L N o "nsix.0% Dumin D. r�bud 111154mWi hl:vy Iym. hkellerinx 111151NXMN6 Cq 00511O105i Ninilsehik Unit >C m W W Working Working 'Tract TrvcJ Trutt Mlnerd Allnenl N9rWlr ORaI Oanl Interest t Interest Tract Legal Descriplion Acreage Lcau 11 Percentage Oana'e 1.1N.l Perm91 Owner percent OWncrship Owner IXI2 12N.R12W.S.h1. Miles) IIAKI I09487 532MT]0'k Snwof Akrska, Iwh09 12.500% PulCmiB 2A6M7I1} JhIvvIp Al:nkn.LW IgIJNIS Sn,Oun J1: SPASWI4,SW/4Sf14 ADL 13N4J14 DepaamrnpRNmum1 William Webb 1133311W Rm9unes Cmklnlal:nm"J' IIDXXn(Y.. Dmlkn OilunJGNvLLC 113000001: Je»uv Crai' 0.IINXXNI'k Ika tion Kim 0.11XXXNn: 00.1 TIN -R 12W,S.hJ. 311.X5011 O 1034]8.5 211ASI49911U Sam of Alaska. IIbJM15J @ D N4 aiLv0,dlab,LlC 4.ANNXm!: Ilikwl'.Xlmka, 1.11' IwIAxN Sw'li•m 6:'ILm Pen 9(me W/2Nf14 ADLAULs 389737 DemwnaYNvmJ lying below the line 9Lnean hieh tiJv Res9umes TIN-1113W.SM. Semlm 1: NU/4141414.SWOUN. S W4N W l4. Nl2S W l4, S W/4S6014; Scmlm 12: NW14NWM 0 I )'I WRI IW, SAI. 39Allm HAKN IID4934 2.6357760[4 Bummoflnno 100.IWA 12- W% Illlc'.m An In,IJd; 3.25gXm!i Ilikwp Al'v.kn,ILC _ IUllJml; Seeuim l2: iLul pea of 6A 1 1Y11'6 AKA N A-024399 Mamgenimt within it. SfJNPl4 Ann 1.. Wen ik 113501m.. CIUWm Minn., U..d 11 0351x91(Y:3 Dwm, Anne .vk 031ANXN'L Ah. L. jvl o.d¢ "nsix.0% Dumin D. r�bud 111154mWi hl:vy Iym. hkellerinx 111151NXMN6 Kevin SbelI 00511O105i VISA TIN dBAT 2: 1I.. 111.2xq AKA1103.1931 a680R)0^. Burcau... IWAIIR 12511!143 CliwlR Dhaka, LLC 33illomlfi IlikvnP ALdn.11C IINUXn: 5 tion 12: lLm pm u(Lx I ISinF m AKA b A-IR9199 NmeBemml Ch:vle+RlmeY 6LnJ It I135111NpG Uw NI%4NBli Ann L. F.JweN+ IL151INXPa Omw11 Anne Wades (JAeOUXv.: Kevin%Iwlnunh 01)5=11r• M., L)nmem-Ren., IInSXXmli Alinn L. Slend.a aJJSWXIM, O..111 U. FWend ODSIMXIOV Falb Cmek 20 16 PA exhibit L- Lut UPJae: I112W-OI6 P"e 1 ul 10 DO&G 25-84 LEASE AUL 384314 (LEASE ASSIGNMENT) LFI-'ECTIVL• DATE 8K00623PG0255 OF•LEASE 1/1/1995 Revisal 4/99 ` DNR 9 10- 113 STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS ASSIGNMENT OF INTEREST IN OIL AND GAS LEASE ��tCirYflar'ra� llhc undersigned whose address is as owner of _ signor Paul L. Crai 5432 E. Northern Light None docs hereby assign to whose address is=- 54 PLC, LLC 3.2 E. Northern I None 2 2.00000 3. Tho assignor is retaining None 4. Thc assignor is retaining 0.46667 Blvd., # 610, Anchorage, AK 995-P s. - percent of the leases working We percent working interest; — percent overriding royalty iatcrest. percent of the leases working interest. percent of overriding royally interest. 5. LANDS AFFECTED by this assignment of interest 7, 2N R 12W - Seward Meridian Kenai Recording District aSECTION 20, UNSURVEYEU, ALL'I'IUE & 5UUMERUEll z SECI'IUN 19, I ROTRAC'I'Ell, ALL: LANDS: N SECTION 21, SURVEYED. NW'/, NE'/.. N% NE'/. NE'/. SE'/.. NE'/. NW'/.: SGCI'ION tri. SURVL'VED. .; SECTION 29, 11NSURVEYED. ALL TIDE & SUBMERGED LANDS: SECTION 30, PROTRACTED. A4U 'unn EYED, ALL "TIDE & SUUMERGL•O SECTION 31, SURVEYED, FRACTIONAL, ALL; SECTION 31, UNSURV o LAND; a SECTION 32 SURVEYED, FRACTIONAL, LOT 2, SE'/., NE'/. SW'/,; SECDO0 32, UNSURVLYCIJ `AL TIDE & SUBMERGED LANDS; SECTION 33, SURVEYED, NE'/., SW'G SE'b, EA W'h, NW'/, NW'/. iZ `. R <. containing3 , 518'.4 5 acics, more or loss. r�r� v �y The Notification Lessee for the purpose of receiving any and all notices from the State of Alaska ill connection with the lease will be: Name PLC, LLC Attn: Paul L Craig Address 5432 E. Northern Li hts Blvd. #610 City, State, Zip Anchora a AK 99508 We, tie undersigned, request lire approval of this assignnhenl applicabell. We attest that this application discloses all parties receiving art interest ill the lease and that it is filed pursuant to 1 l AAC 82.605 and 11 AAC 82.615. We further attest that all parties to this agreement arc qualified to trarhsfor or hold all interest in oil and gas leases pursuant to I I AAC 82.200 and 1 I AAC 82.205. Whether approval in whole or in part, the assignee agrees to 6c RETURN TO: brimiORIG ORIG by Ole provisions of said Icaso_ WILLIAM. M. BANKSTON INAL RFSS=ORDID =AI RECORDING DISTRICP BANKSTON-GRONNING O'.HARA BOOK 510, PAGE 176 550 W 7TH AVE STE 1800" EXHIBIT 2 ANCHORAGE AK 99501 Page 13 of 22 Paul L. Assi0wes Nam= (Prin(or Typc) & THE UNMD STATES OF AMMUCA) CT ATG ng: Alaska ) September 14, 2001 Date BK00623PG025` Company Name Qualification File b of September 2001 , before me, a notary public in This certifies that on the 14th day duly commissional and sewn", and for the State of Alaska to me known and known to "to m be 01= personally appeared Paul L. Craig ales,. r� m,• , .. PC described in, and who executed thcforegoing assignment who Ulcn atter being duty shorn acc°� ro wRf, and in this ccrufi to first abovc;w�i(tiar;, t°e!� acknowledged to me under oath Unat he ctecutcd same frcety and voluntarily for U1c uses WITNESS my hand and official w the day Ycur _ uI ty F A k :>'•:, ,,;; � _ ._.•-.... c_-..a—_r–. "%r. ��..L.<' _'_�"1F.men•'1^s%�•���-"i...yc.'f`Fi: THE UNITED STATES OF AMERICA)SS. C4 A' r np Alaska -_ ) s hjy ( ton ssion expires _,46:0 September 14, 2001 ",'. PLC, LLC C0�mpanyNamc Qualification File N2240 nii certifies Utat-on die 14th day of September_" ; 2001, be onto a notary public m for duly conmtissioncd and S%v swum, , .. the Stale 'of Alaska to me known and known to lite to'be, Ute . ' ..nrcnnally AODCaf=d Paul L Craig 1,,..-nncrrbeinn-duly-swern..acW!0i,10 .c^ v 1 Biixib cicd in; and -woo executw w..--5-1 P _son d_�_—�_,- — - fnxl ami=voluitaiily for- t=":ups aeknorvledged to enc under oaff iaf he execu►ed'saint' Y r in this ccrtif to first aborn =,tioned. WITNESS my hand and official seal the day and yea }� My GQIUFtlssnon cr AA APPROVAL T rth 7 Ulcrcof, c[fixlive as of Utc 1 11c foregoing assignment is approved as to the lands described in ilan date se t fo below. 00904 20(11 OCT 19 P 12: IS KENAI DIUG DISTRICT Statc of Alaska Effective Date o EXHIBIT 2 Page 14 of 22 LEASE AUL 384314 DO&G 25-84 (LEASE ASSIGNMENT) EFFECTIVE DATE 8K00623PG025T. OF LEASE 1/1/1995 Revised 4/99 DNR k10-113 STATE OF ALASKA DEPARTMENT OF NATURAL RESOURCES DIVISION OF OIL AND GAS ,\" ASSIGNMENT OF INTEREST IN OIL AND GAS LEASE e 3• _ ''-r Paul L. Craig The undersigned assignor 5932 E. Northern Lights Blvd., 8 610, Anchors a AK 9950&'% =` whose addross is 9 None percent of Utc lease s working inter L, as ortmcr ofktlutu++� MH 2 , LLC die assignee, U _ docs nEty assigtr to _ _ 4962 Castle Court, Anchors a AK:99508 a whose address is .. N percent working interest; " P I. None U2. 0.96667 percent overriding royalty interest. , 0 3. The assignor is retaining None percent of the icases working interest. a 4. The assignor is retainingNone percent ofoverriding royalty interest. z 5. LANDS AFFECTED by this assignneut of interest T2N ,-li 12W Seward Meridian Reuai.Recording District 2 H SECTION 19, PROTRACTED, ALL; SECr10N 20, UNSURVEYED, ALL TIDE & SUBMERGED o LANDS' w SECTION 21, SURVEYED, NW'/. NEV.. N112NE'IIA NE'/. SE'/., NEV. NW'/.: SECTION tri. SURVEYED. SE'/.: a SECTION 29, UNSURVEYED, ALL TIDE & SUBMERGED LANDS; SECTION 30, PROTRACMD, ALL: SECTION 31, SURVEYED, TRACTIONAL, ALL; SECTION 31, UNSURVEYED, ALL TIDE & SUDNILRGEDT,:,ri. LAND;, SECTION 32, SURVEYED, FRACTIONAL, LOT 2, SE'/., NE'/. SW'/,; SUCTION 32, UNSURVL'YEL).Ar . i e :,•- cr TIDE&SUBMERGED LANDS: SECTION 33, SURVEYED, NE'/.: SW'/. SE'/., E,/, W NW'/. NW'/.. 3 , 518.4 5 - � : more or Icss. acres containing ''5,..'i..s-�r, ��.• The Notification Lessee for -the purpose of receiving any and all notices front rite State of Alaska in cuuuectiun with did lease will be: Name tg12; LLC' Ate: Carol A. Ault Address AAR 99508 Castle Court City, State, Zip Anchors a R 9 To, Ute undersigned, request the approval of this assignment application. We attest that this application discloses all parties receiving art interest in Ute lease and that it is filed t in mil snit gpursuant to l I AAC 82.GU5 acrd 11 AAC d gas- l We further attest that all parties to this agrcemcnt are qualifidd to transfer or hold an interesleases pursuant to I 1 AAC 82.200 and I I AAC 82.205. Whclher approved in whole or ill part, the assignee atiius to bC bound by Ute provisions of said lease. RETURN. TO: ORIGINAL RECORDED. KENAI RECORDING DISTRICT WILLIAM M. BANKSTON z BOOK 510 PA( 176 550 W 7TH AVE STE 1800 AMrUnRArF e¢ QQVAl EXHIBIT 2 Page 15 of 22 September 14 2001 ignoI's , rgnaturc Date BK 00 6 2 3 P6 0 25! Paul L. Crai Assignor's Name (Print or Type) & Title Company Name THE UNITED STATES OF AMERICA) Qualification File k )SS. STATE OF Alaska ) This certifies that on the day of September 4* 2001 • before jute, a rwtary public is and for Uri State of Alaska duly corns issimaod mrd snvrn, personally appcarod Paul L . Craig to 1110tuwu n arul lurowtr to nu to be the person described in, and who executed Ute foregoing assigtunen4 who Utrn ager bchrg duly sworn acootg to°law, acknowl0agcd to me under oath that he executed same frocly and voluntarily Utc uses amt p r � i!vgq;4 mentionod. W IT -NESS my hand and official seal the day sto year Oris cert g w first above wriuun5�-,�-'p N iluwwryMEV My Commission expires �� �� �srgrp;ti .:��mw•••y September 14, 2001 x Assigace's Signature Date . Carol A. Hult, Manager KH 2, LLC Assignee's Name (Print or Type) & Title Company Nanus itlE UNITED STATES OF AMERICA) Qualification Filc H 2239 i. )SS. STATE OF Alaska ) This certifies that on the 14th day of September xtg L001, before me, a rotary public in and for Use State of Alaska duly coumrissiouai and sworn. personally appeared Carol A. Hult to me known and known to me to be. the s ca"wlro,dm--aRerbcitWduly-swomzaccurdiug to•law:c---- persart dcscriSed'in; and oboe alh-, ilet-lic xccgoing'amc-frc t, acknowleiiged tome uiidcr'oath'that"hc executed'seine-frccfyand_voluntarily-for.-the-uses:and_pprposts Unacu� -�,•-v mentioned. WETNESS my hand and official seal lltc day and year in Otis ccrtifi first alwvc.wrilbax. ,Kl- My eGunrussion expires APPROVAL r The foregoing assignment is approved ds drscribed in'itrnr 7 Uitxcof, ffcctivcias of`9+y) as�to Uro lands- bC .. below. 009625 State. ofAaska RECORDING015TRICT' L2001 OCT 19 P 12: I.S ' it EXHIBIT 2 Page 16 of 22 6 0 EXHIBIT 2 Page 17 of 22 R14W R13W 12W Marathon NNA1 PTD 10,000' MO UCG1 SLA $O Opo B ' 6°0 3s $? m MCG1 FC 3- .t 00 0 0 MC 0 MG01 MG02 00 / foo 0 0 h 3 }�' o° 00 0 S / 0 3 N 1 i LSILES STUCTURE TYONEK T2 Cl = 500' LIARATHON OIL COMPANY ALASKA REGION ANCH i i Marathon NNA 1 Location i i AREA COOK INLET. ALASKA SHOWN June 2022 oircchandWmlrh*Wm, co IocR9 EXHIBIT 2 Page 17 of 22 FALLS CRR iRD43LiL Legend G Frances 01 Surface Hole Location (SHL) + Frances #1 Top of Productive Horizon (TPH) T Frances #1 Bottom Hole Location (BHL) a Other Surface Hole Locations • Other Bottom Hole Locations — — — Well Paths KPB Parcels Oil and Gas Unit Boundary 14 Ililrnq. AIu.Lu. LLC. SOOIN012W esantolowns raa Inces I SHL a ; .P 3 N 1 T 0 Frances 4 1 BI IL ADL39O363 Ninitchik Unit Frances #1 0 500 1,000 Feet Alaska State Plane Zone 4, NAD27 Map Date: 1012/2013 k EXHIBIT 2 Page 18 of 22 .0 • nik-, Alk.. 111 • Well Prognosis Well: Frances #1 Date:11/25/2014 Well Name: Frances #1 API Number: 50-133-20619-00 Current Status: Producing Leg: N/A Estimated Start Date. December 2n°, 2014 Rig: Reg. Approval Req'd? 10-003 Date Reg. Approval Rec'vd: Regulatory Contact: Donna Ambruz 777-8305 Permit to Drill Number: 213-121 First Call Engineer: Taylor Nasse (907) 777-8354 (0) (907)903-0341(C) Second Call Engineer: Paul Chan (907) 777-8333 (0) (907)444-2881(C) AFE Number: Estimated Bottom Hole Pressure: - 3,513 psi @ 7,807' ND (0.45 psi/ft gradient) Max. Anticipated Surface Pressure: - 2,933 psi (0.074 psi/it gas gradient to surface) Brief Well Summary The Frances No. 1 was an exploration well that TD'd at a depth of 12,920' and ran and cemented a liner on December 15, 2013. A DST on the West Foreland interval was completed in February 2014 with a CIBP set at 12420' and capped with 25' of cement. The well was then completed as a gas well and perforated in the T-60 intervals on July 31", 2014. Obiective of Work Add perforations in the Tyonek sands. E -line Procedure: 1. MIRU a -line and PT lubricator to 250 psi low/3,500 psi high. 2. Perforate the Tyonek sands with 2-7/8" 6 SPF 60 deg phased perf guns. All intervals are planned for 12 SPF so each will be shot twice. Depths are from the Priority CBL dated January 1, 2014. Make correlation pass and sendlog in to Dave Buthman and Taylor Nasse. Record tubing pressures before and after each perforating run. Record condition of gun. Proposed Perforated Intervals 3. RD E -line. 4. Turn well over to production. Attachments: 1. Current Wellbore Schematic 2. Proposed Wellbore Schematic EXHIBIT 2 Page 20 of 22 Sands Top (MD) Btm (MD) /"FT Tyonek T-50 ±7,574 ±7,598 i 24 _ 3. RD E -line. 4. Turn well over to production. Attachments: 1. Current Wellbore Schematic 2. Proposed Wellbore Schematic EXHIBIT 2 Page 20 of 22 0 E Hilcorp Alaska LLC Weekly Operations Summary . Well Name API Number Well Permit Number Start Date End Date Frances #1 50-133-20619 213-075 12/10/14 12/10/14 Daily Operations: 12/10/2014- Wednesday PTW and ISA. Spot equipment and rig up lubricator. Pressure test to 250 psi low and 3,500 psi high. Flowing 7.5 million at 1,840 psi. Drain lubricator and break off. Arm gun. RIH w/ 2" x 24' HC Nova, 6 spf, 60 deg phase and tie into Priority CBL log dated 1 Jan 2014. Run correlation log and send to town. Get ok to shot. Spot guns from 7,569' to 7,593'. Fired guns flowing 7.435 million at 1,886 psi. Rate was 7.782 million at 1,956 psi when closed swab. Guns were dry. RIH with second 2" x 24' HC Nova, 6 spf, 60 deg phase and tie into Priority CBL log dated 1 Jan 2014. Spot guns from 7,569' to 7,593'. Flowing 7.828 million at 1,964 psi. Fired guns. POOH. Guns were dry. Rig down lubricator. Flowing 7.887 million at 1,978 psi. EXHIBIT 2 Page 21 of 22 J-(1" w 24 �. 401 S002NO13W \� 12 �\ 25 � 25 i 2 46 i 1 ` / 46 047 12 i Croak i01.L-. f _ _._ _— av S001 NO12W sBA 49A\�5B 19 26 S001Nb13W SIA /aa 1 1 52 53 i3A i 159 1.551 154 in Proposed -- Slating Highway Tract Nm31ch1k Unit_ Omer Type Slate a. °"'""' Page 2 of Cmklnlel Sharelma i Exhibit B® _.' �iRl Bnrverxily SWIe Plans 2rv1e4NAD 199 poop 161—,AIu.Lt. 1.1.1: Pmyysetl PA Bounianes J Paealal r/7,1 unma,etl 1 Privala 0 1,000 2,000 3,000 FtlCI May Oat.: t1112016--' APPROVAL, IN PART, OF THE FIRST EXPANSION OF THE FALLS CREEK PARTICIPATING AREA Findings and Decision of the Director of the Division of Oil and Gas Under a Delegation of Authority from the Commissioner of the State of Alaska Department of Natural Resources May 16, 2017 EXHIBIT 3 Page 1 of 44 Contents I. INTRODUCTION AND DECISION SUMMARY..............................................................................3 II. APPLICATION AND LEASE SUMMARY........................................................................................3 III. DISCUSSION OF DECISION CRITERIA..........................................................................................7 A. Decision Criteria considered under 11 AAC 83.303(b)................................................................7 1. Environmental Costs and Benefits........................................................................................7 2. Geologic and Engineering Characteristics and Prior Exploration and Development Activities of the Proposed Falls Creek Participating Area .................................................... 8 3. Plans of Development.........................................................................................................11 4. The Economic Costs and Benefits to the State and Other Relevant Factors ....................... l l B. Decision Criteria considered under 11 AAC 83.303(a)..............................................................12 1. Promote the Conservation of All Natural Resources..........................................................12 2. The Prevention of Economic and Physical Waste..............................................................13 3. The Protection of All Parties of Interest, Including the State.............................................13 IV. FINDINGS AND DECISION ................................ ............................................................................. 14 A. The Conservation of All Natural Resources...............................................................................14 B. The Prevention of Economic and Physical Waste......................................................................14 C. The Protection of All Parties in Interest, Including the State......................................................14 V. Attachments........................................................................................................................................ 17 Attachment 1 Ninilchik Unit Falls Creek Participating Area Proposed Expansion Exhibit C Description of lands within the proposed Expansion participating area.....................................18 Attachment 2 Ninilchik Unit Falls Creek Participating Area Proposed Expansion Exhibit D Map of proposed participating area.........................................................................................................30 Attachment 3 Ninilchik Unit Falls Creek Participating Area: Draft Exhibit C of Approved FCPA (Land Descriptions)....................................................................................................................32 Attachment 4 Approved Ninilchik Unit Falls Creek Participating Area: Draft Exhibit D of Approved FCPA(FCPA Map)....................................................................................................................43 EXHIBIT 3 Page 2 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 2 I. INTRODUCTION AND DECISION SUMMARY On November 2, 2016, Hilcorp Alaska, LLC. (Hilcorp), as Ninilchik Unit (NU) Operator, applied to expand the Ninilchik Unit and Falls Creek Participating Area (FCPA) (Application). On March 2, 2017, the Department of Natural Resources (DNR), Division of Oil and Gas (Division) approved the second expansion of the NU effective November 2, 2016. The unit expansion decision expanded the NU to include an additional 40 acres bringing the total unit acreage to 25,909 acres. The FCPA expansion was not addressed in the unit expansion decision. Hilcorp proposed to expand the FCPA from 988.7 to 1,512.87 acres in the Application. A participating area "must be expanded to include acreage reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities, and must be contracted to exclude acreage reasonably proven through the use of geological, geophysical, and engineering data to be incapable of producing hydrocarbons in paying quantities, subject to approval by the commissioner." 11 AAC 83.351(c). Hilcorp submitted confidential and public information in support of the Application. The Application proposed to expand the FCPA to areas where presence of hydrocarbons is unlikely. The Division proposed a modified FCPA incorporating areas based on differing methodology. Hilcorp later concurred with the FCPA expansion area and methodology proposed by the Division. A review and analysis of the confidential geological, geophysical, and engineering data indicate that the acreage approved for inclusion in the FCPA is producing or contributing to production of hydrocarbons in paying quantities, or is reasonably estimated to be capable of producing or contributing to production of hydrocarbons in paying quantities. The Division finds that the expansion of the FCPA, as revised, promotes conservation of all natural resources, promotes the prevention of economic and physical waste, and provides for the protection of all parties of interest, including the State. AS 38.05.180(p); 11 AAC 83.303. I approve Hilcorp's Application, in part, under the terms and conditions of Section IV.3.C. The effective date of the expansion of the FCPA is April 1, 2017. II. APPLICATION AND LEASE SUMMARY The NU is a unit on the east side of Cook Inlet comprised mostly of onshore and offshore lands of the State of Alaska. The NU also consists of onshore federal, Cook Inlet Region Inc., University of Alaska, and private patent fee lands. The NU was approved effective October 30, 2001, and it was originally operated by Marathon Oil Company (Marathon). On June 30, 2003, the Division approved the First Expansion of the Ninilchik Unit which included the BLM- managed Falls Creek Unit area. The BLM approved the termination of the Falls Creek Unit Agreement concurrently with the expansion of the NU to include the Falls Creek Unit area. The June 30, 2003 decision also formed the NU's three participating areas (PA) — Susan Dionne, Grassim Oskolkoff, and Falls Creek. The PAs were approved based on geophysical data and commitments by Marathon to drill wells in each PA or a contraction of each PA area would EXHIBIT 3 Page 3 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area occur. Marathon satisfied the well commitments and contraction of the PAs did not occur at that time. Marathon began gas production from the FCPA on December 13, 2003. For the first ten years of production in the Fall Creek field, the royalty rate on state acreage was reduced to five percent under AS 38.05.180(f)(5). Hilcorp acquired 100% working interest in the NU on January 30, 2013, near the end of the royalty reduction period. Hilcorp drilled three wells (Falls Creek 5, Falls Creek 6, and Frances 1) in and near the FCPA since acquiring 100% working interest in the NU. Based on the results from the newly drilled wells, Hilcorp applied to expand both the NU and FCPA. Currently, Hilcorp is producing gas from the Tyonek and Beluga formations. The Alaska Oil and Gas Conservation Commission approved Hilcorp's request to commingle production from both formations through Conservation Order 701. Production from the Falls Creek 6 well was allocated to the FCPA. The Frances 1 and Falls Creek 5 production were not allocated to the PA. All production from these wells is allocated to fee mineral lands on a tract operation basis. To redistribute royalty payments and volumes in an equitable manner, the FCPA needs to be expanded and royalty payments reallocated to account for new engineering data provided by the new wells. The fee mineral lands proposed for inclusion in the Application are a mixture of lands leased to Hilcorp by private landowner, the State, and the Bureau of Land Management. The lands proposed to be added to the FCPA by Hilcorp in the Application are listed below. Table 1: Tracts proposed to add from the FCPA application (November 2, 2016) Tract Royalty Owner Acres Royalty WIO Legal Description Ns 002 003 State of Alaska, DNR ADL 384314 State of Alaska, DNR ADL 389737 015 Bureau of Land Management 019 University of Alaska 046 Shelle K. Leman, Stephen S. Webb, Susan L. Steinbach 80.001 12.5% 311.851 12.5% Hilcorp 100% Hilcorp 100% 39.61 12.5% Hilcorp 100% 40.001 12.5% Hilcorp 100% 38.93 12.5% Hilcorp 100% T.2N, R.12 W, S.M., AK. Sec 31: SE1/4SW 1/4, SW 1 ASEIA. T. IN, R. 12N, S.M., AK. Sec. 1: NEIANEIA, SWIANE1/4, SEIANWIA, Nl/2SW1/4. Sec. 6: That part of the W I/2NE 1 /4 lying below the line of mean high tide. T. IN, R.13 W. S.M., AK. Sec. 12: That part of the tide and submerged lands lying in the S1/2NE1A and SE1/4NW1/4. T.1N, R13W. S.M., AK. Sec. 12: That part of Lot I lying within the Sl/2NEl/4. T.1 N, R.12W, S.M., AK. Sec. 6: SEI/4NEI/4. T. IN, R. 12W, S.M., AK. Sec 6: That part of GLO 1 lying in the NEIANEIA. EXHIBIT 3 Page 4 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area Tract Royalty Owner Ns (Margaret Vanderbilt Living Trust) (Private) 052 Harold A. and Marguerite M. Pederson (Private) 053 !, Harold Lee and Diane R. Pederson (Private) 056 Charles Weyhaupt, David Weyhaupt, James Reinhardt, Thomas Weyhaupt, Norma Jeanne Nichols, Walter G. Williams (Private) 059 ' Charles Weyhaupt, David Weyhaupt, James Reinhardt, Thomas Weyhaupt, Jens H. and Anneline Hansen, Veray H. Matthews _ (Private) 060 John Stallone Jr, Charles Weyhaupt, David Weyhaupt, James Reinhardt, Thomas Weyhaupt (Private) 061 Dennis Hedman, Charles Weyhaupt, David j Weyhaupt, James Reinhardt, Thomas Weyhaupt (Private) 066 Emil and Frances Bartolowits (Private) 067 James A. and Teresa L Wilson (Private) Acres Royalty WIO Legal Description 100% Sec. 6: That portion of the north 165' of the Nl/2SE1/4 lying west of the Sterling Highway. 58.00_ _ -- ---- _ - 1 12.5% Hilcorp � T.1N, R.12W, S.M., AK. 100% See. 6: That part ofNl/2SE1/4 lying east of Sterling Highway. 21.091 12.5% E Hilcorp I J 100% 30.901 12.5% • Hilcorp 100% T.IN, R.12W, S.M., AK. Sec. 6: That part of N1/2SE1/4 lying west of the Sterling Highway, less and except the north 165' and that portion of the Sterling Highway Right -of - Way lying within the NI/2SE1/4. T. IN, R.12W, S.M., AK. Sec. 6: SW IASE1/4, less and except Block 2, Lots 1 and 8, and Block 5, Lot 1 of Clammer's Haven Subdivision, Plat 76-62. 2.9371 12.5%, Hilcorp T.1N, R.12W, S.M., AK. 100% Sec. 6: Block 2, Lot 1 of Clammer's Haven Subdivision, Plat 76-62. 2.9041 12.5% Hilcorp 100% 3.258 12.5% 114.864 Hilcorp 100% 12.5% Hilcorp 100% 4.03 12.5% Hilcorp 100% ------- T. IN, R. 12W, S.M., AK. See. 6: Block 2, Lot 8 of Clammet s Haven Subdivision, Plat 76-62. T. IN, R. 12W, S.M., AK. Sec. 6: Block 5, Lot 1 of Charmer's Haven Subdivision, Plat 76-62. T. 1N, R 12W, S.M., AK. Sec. 7: Government Lot 1 and 2 and the NE 1/4NW 1/4, less and except Lots 7, 9, 10, 12, 14, and 15 of Falls Creek Ridge 1978 Subdivision (Plat #HII-23 replatted #H78-71), a part of government Lot 2, and a portion ofthe NWIANEl/4 lying west of the centerline of the Sterling Highway. T. 1N, R. 12W, S.M., AK. Sec. 7: Lots 7 and 10 of Falls Creek Ridge Subdivision (Plat #H78-23 replatted #H78-71), a part of government Lot 2. EXHIBIT 3 Page 5 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 5 Tract Royalty Owner Acres Royalty WIO Legal Description Ns 068 Richard S. Bartolowits 4.028 12.5% Hilcorp T. IN, R. 12W, S.M., AK. (Private) 100% Sec. 7: Lots 9 and 12 of Falls Creek Ridge Subdivision (Plat #H78-23 replatted #H78-71), a part of government Lot 2. 069 Paul D. and LaRue A. Bartolowits (Private) 0707 Paul D. and LaRue A. Bartolowits (Private) 229 Penelope J Maize (Private) 230 ' James C. Kruse and Linda C. Kruse (Private), 2.082 12.50/(! Hilcorp' T. 1N, R. 12W, S.M., AK. 100% Sec. 7: Lot 14 of Falls Creek Ridge Subdivision (Plat #H78-23 replatted #H78-71), a part of government Lot 2. 24.740 3.854 12.5% 12.5% Hilcorp 7-. 1N, R. 12W, S.M, AK. 100%a Sec. 7: Lots 15 of Falls Creek Ridge Subdivision (Plat #H78-23 replatted #H78-71), a part of government Lot 2. Hilcorp T. 1N, R 12W, S.M.,AK. 100% I Sec. 7: A portion of the NW IANE1/4 lying east of the centerline of the Sterling Highway; more particularly described as Celia Subdivision, Plat No. 94-46, and all minerals underlying dedicated roads within the subdivision, excluding Tracts C -IA and C -1B of the Celia Subdivision, 'Addition #2, Plat No. 2012-53. 12.5% HilccTp , T. 1N, R.12W, S.M AK. 100% !Sec. 7: Tracts CAA and C-113 of Celia Subdivision, Addition #2, Plat No. 2012-53. Hilcorp proposed to exclude the following portion of the State of Alaska's unit tract number 3 from the FCPA. Table 2: Tract proposed to contract from the FCPA Application (November 2, 2016) Tract Royalty Owner State of Alaska, ADL 389737 Acres Royalty WIO Description 120.0 12.5%, Hilcorp T. IN, R13W, S.M., AK, 100% Sec. 11: E/2NE/4 Sec. 12: SWANWA Because Hilcorp's application included unit expansion, the Division provided public notice in accordance with 11 AAC 83.311. The Division issued a public notice for the unit and participating area expansion application on December 5, 2016 and published a public notice in the Alaska Dispatch News and Peninsula Clarion on December 3, 2016. Copies of the Application and the public notice were provided to interested parties. The Division provided public notice to, among others, the Alaska Department of Environmental Conservation, the Kenai Peninsula Borough, the City of Kenai, the Village of Tyonek, the Salamatof Native Association, Cook Inlet Region, Incorporated, the Soldotna Postmaster, and the radio station KDLL in Kenai. The notice was also published on the State of Alaska Public Notice website and EXHIBIT 3 Page 6 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area the Division's website. The public notices invited interested parties and members of the public to submit comments by January 4, 2017. The Division received four comments during the public notice period. Three of the comments were solicited by private mineral interest owners in or near the Ninilchik Unit — Dorothy Wallner, Stephen Webb, and Donald Shaw. The fourth comment was received from Paul Craig, manager of PLC, LLC and advocate for MH2, LLC., both limited liability companies hold overriding royalty interest in state oil and gas lease ADL 384314. The comments were all written regarding the proposed boundaries of the Falls Creek PA rather than the unit expansion portion of the Application, thus the comments are addressed in this decision instead of the separate March 2, 2017 unit expansion decision. The methodology for determining the boundary of the FCPA is directed by geologic, geophysical, and engineering data from public and confidential sources. Section III.A.2 of this decision describes the methodology used to determine the FCPA boundary. The comments pertaining to FCPA boundaries are addressed through the discussion in Section III.A.2 on how the FCPA boundaries were developed. III. DISCUSSION OF DECISION CRITERIA The DNR Commissioner (Commissioner) reviews applications related to units, including participating area formations, expansions and contractions, under 11 AAC 83.303-11 AAC 83.395. By memorandum dated September 30, 1999, the Commissioner approved a revision of Department Order 003 and delegated this authority to the Division Director. The Division's review of the Application is based on the criteria set out in 11 AAC 83.303 (a) and (b). A discussion of the subsection (b) criteria, as they apply to the Application, is set out directly below, followed by a discussion of the subsection (a) criteria. Analysis and discussion of subsection (b) requirements precedes and supports findings under subsection (a). A participating area "must be expanded to include acreage reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities, and must be contracted to exclude acreage reasonably proven through the use of geological, geophysical, and engineering data to be incapable of producing hydrocarbons in paying quantities, subject to approval by the commissioner." 11 AAC 83.351(c). A. Decision Criteria considered under 11 AAC 83.303(b) 1. Environmental Costs and Benefits Approval of the FCPA expansion has no direct environmental impact. This decision is an administrative action and does not authorize any on -the -ground activity. The Unit Operator must obtain approval of a plan of operations from the State and permits from various agencies on State leases before drilling a well or wells or initiating development activities to produce reservoirs within the unit area. 11 AAC 83.346. Potential effects on the environment are analyzed when permits to conduct exploration or development in the unit area are reviewed. Hilcorp has obtained the required permits for the current FCPA wells and is operating under an approved EXHIBIT 3 Page 7 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area plan of operations and plan of development. The DNR considers environmental issues during the lease sale process and the unit plan of operations approval process. 2. Geologic and Engineering Characteristics and Prior Exploration and Development Activities of the Proposed Falls Creek Participating Area a) Drilling history The Falls Creek gas field was discovered during drilling of the Falls Creek 1 (FC 1) well in April 1961 by Standard Oil Company of California (Soca]). FC1 penetrated the Beluga, Tyonek, Hemlock, and West Foreland Formations and reached total depth in the West Foreland Formation. Trace oil shows were present in the Hemlock and West Foreland Formations. Strong gas shows were present in the Beluga and Tyonek Formations. Socal performed five drill stem tests within the Beluga and Tyonek Formations; the best result was a Tyonek sandstone that produced a moderate amount of gas with no water. The resource, however, was deemed uneconomic and development did not proceed. However, the Falls Creek Unit was formed around the acreage believed to have the highest gas development potential. During the ensuing 35 years following drilling of FC I, only two more wells were drilled in the area. Both wells were drilled just outside the Falls Creek Unit boundary and both were dry holes. In 1973, the Falls Creek 43-06 (FC43-06) well was drilled by Socal about 3,500 ft east of FC1. Well logs indicated no significant productive zones were present and therefore the well was not flow tested. This well is approximately 170 ft structurally lower than the FC1 well. The Corea Creek Federal 1 (CC 1) well, located approximately 5,000 ft southwest of FC 1, was drilled in 1996 by Marathon Oil Company (MOC). This well flow tested six intervals and produced very small amounts of gas with significant influxes of water. This well is approximately 220 ft structurally lower than the FC1 well. FC43-06 and CCI are important control points that help define limits to the east and southwest boundaries of the Falls Creek Participating Area (FCPA). Between 2001 and 2004, MOC drilled three directional wells from the FC 1 well pad to begin producing the Falls Creek gas accumulation. Falls Creek 1 RD (FC 1 RD) was the first of these three to be drilled. It was a sidetrack well out of the FC 1 well bore and came onto production in September 2003. Since that time, it has remained the strongest gas producer in the field. FC1 was plugged and abandoned following completion of FCIRD. Falls Creek 3 (FC3) and Falls Creek 4 (FC4) were drilled to targets approximately 3,000 ft due west of FC1. FC3 appears to be 20 ft structurally higher than FC 1. This indicates that the crest of the structure may extend further to the west-southwest. These three wells remained the only gas producers in the field until Hilcorp took ownership in 2013. Hilcorp drilled Frances 1 (FR1) in late 2013 to a target approximately 3,000 ft southeast of FC1. The primary target for this well was oil in the Hemlock and West Foreland Formations with a secondary gas target in the Tyonek "G" sands. The Hemlock and West Foreland Formations yielded only minor oil shows; however, three productive gas intervals were encountered in the Tyonek Formation. Although approximately 140 ft structurally lower than FCI, this well remains a strong gas producer. Falls Creek 5 (FC5) was drilled in 2014 to approximately 2,700 ft south of EXHIBIT 3 Page 8 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area FC I. This well is approximately 110 ft structurally lower than FC I. Although FC5 has produced far less gas since completion than FC I, both wells confirm the Falls Creek gas accumulation extends south of the existing FCPA boundary. Hilcorp's most recent drilling in the Falls Creek area was the Falls Creek 6 (FC6) well, completed in late -2014. FC6 was drilled to a target approximately 2,800 ft north of FC1 and is situated approximately 40 ft structurally lower than FC 1. This well was completed in nine intervals within the Beluga and Tyonek Formations. Although the Tyonek Formation completions were not productive and the overall production rates in this well are the lowest in the Falls Creek field, FC6 does confirm the Falls Creek gas accumulation, within the Beluga Formation, extends into the northern portion of the existing FCPA. b) Geologic overview The Falls Creek gas accumulation defines the northernmost field on the Ninilchik structure, located in the south-central portion of the Cook Inlet basin. The Ninilchik structure is a thrust - cored fold that is part of a major thrust -faulted trend that runs from the Starichkof (Cosmopolitan) structure north to the Kenai Gas Field. The Ninilchik structure is approximately 24 miles long and four miles wide and straddles the coastline. However, the productive gas accumulations appear to be concentrated on the crest of the structure along a ten -mile swath between Ninilchik and Clam Gulch. Faults play an important role in the distribution of Ninilchik structure gas accumulations. The thrust fault at the core of the fold is the largest feature in the Ninilchik structure. This fault runs parallel to the axis of the anticline and dips to the southeast. It is sometimes referred to as the bounding fault since it marks the northwest limit for Ninilchik structure gas accumulations. There are also numerous near -vertical faults oriented perpendicular to the bounding fault. These perpendicular faults divide the Ninilchik anticline into discrete blocks, some of which contain isolated gas accumulations. The depositional environment for the Beluga and Tyonek Formations is non -marine fluvial with a mix of braided and meandering rivers and streams. The extreme variability in sand thickness of the disconnected sand bodies is typical of fluvial depositional environments. Cook Inlet reservoir sands in the Beluga and Tyonek Formations typically have high clay contents which can adversely affect porosity and permeability and make log analysis difficult. The structural complexities associated with a large thrust belt, such as the Ninilchik structure, and the unpredictable nature of fluvial depositional environments in general make traditional reservoir evaluation methods challenging in the Falls Creek area. Seismic data, though instrumental in identifying prospective structural traps, have proven to be unreliable in the Ninilchik area and other areas in Cook Inlet for detailed subsurface mapping of the internal architecture and outer limits of producing gas accumulations. EXHIBIT 3 Page 9 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area c) Allocation methodology For this determination, the operator proposed a Falls Creek PA boundary based on the Lowest Known Gas (LKG) method. This was determined by depth mapping each productive interval and interpreting an LKG contour, or polygon, for each productive interval. The operator chose to use only the existing wells in generating the depth maps and not use the seismic data. The composite outer limit of all the LKG polygons was considered the productive area. The final PA boundary was then derived from this composite polygon and the final tract factors were based on surface area. However, the Division had issues with the results. The resulting PA boundary included the two dry holes in the area, the FC43-06 and the CCI wells, as well as the steep structural rollover in the northwest portion of the unit. The Division agreed with the operator in not using the seismic data in this determination but disagreed with the inclusion of these areas which are very likely unproductive. The Division felt it was necessary to further simplify the approach to address these issues and the circle and tangent method was chosen. The circle and tangent method defines the gas depletion area based on the cumulative outer boundary of multiple overlapping circles, each having a radius of 1,500 ft and centered along the well bore wherever it is open to reservoir production. This cumulative outer boundary is further defined by drawing tangent lines connecting the outermost circle perimeters to create one encompassing boundary of maximum area. This area is referred to as the maximum convex hull. The resultant gas depletion area is an appropriate compromise that is large enough to accommodate the estimated ultimate recovery of the field, while also honoring the results of FC43-06 and CCI (dry -hole wells) and the steep structural rollover to the northwest. The determination of tract factors is based on surface area. The surface area technique has been used in most Cook Inlet fields and some fields located on the North Slope. It is usually employed in fields where the uncertainties about the distribution of oil or gas are high. This occurs when available well and seismic data cannot adequately yield high -confidence interpretations of the subsurface. The Division's decision to use a 1,500 ft radius circle for each open interval was based on the available data for this field and its historical experience with other gas developments within Beluga and Tyonek Formations in Cook Inlet. Uncertainty regarding true net pay thicknesses and the limited number of measured reservoir pressures available for analysis is typical given the mixed lithology of these formations. To determine tract factors the maximum convex hull boundary was projected to the surface. Each section of land was divided into 40 -acre quarter -quarter section aliquot parts. A fifty - percent rule was applied to each aliquot, meaning the maximum convex hull area must cover at least fifty -percent of each aliquot for that aliquot to be included in the PA. The fifty -percent rule has typically been used in Alaska when using surface area as the basis for allocations because not applying this correction will over -allocate the periphery of the field. The PA boundary was defined by including only the aliquots meeting the fifty -percent rule as described above. Tract EXHIBIT 3 Page 10 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 10 factors were then calculated by taking the ratio of the surface area covered by each PA tract divided by the surface area of the entire PA. The FCPA boundary established through this method is the most equitable approach with the available data. 3. Plans of Development The most recent drilling in the Falls Creek area occurred during the 2014 Plan of Development (POD) period when Hilcorp drilled the FC5, FC6, and FR1 wells. Hilcorp's 2016 NU POD was approved by the Division on April 21, 2016. During the 2016 POD period, Hilcorp did not propose drilling activities in the northern portion of the unit where the PA expansion is proposed. Hilcorp constructed the Kalotsa pad near the Susan -Dionne PA and drilled the Kalotsa 1 and 2 wells during the 2016 POD period. The 2017 POD proposes drilling the Kalotsa 3 and 4 wells in the Susan -Dionne PA. Hilcorp is evaluating future rig workover projects and plans to add compression to enhance production at the Frances pad. Hilcorp has not provided plans for drilling in or near the FCPA. 4. The Economic Costs and Benefits to the State and Other Relevant Factors The expanded FCPA will continue to provide economic benefits to the State through royalty and tax payments on gas production. Increased drilling and production near the FCPA will provide increased financial benefits to private royalty landowners previously within the FCPA and those landowners included in the FCPA through this decision. The delineation and development drilling in the Ninilchik Unit is resulting in high -paying jobs for Alaskans and further assessment of state oil and gas resources. The decision that formed the FCPA required allocation redetermination of all gas production retrospective to the date of first production if future revisions to the PA occurred. The decision also mandated that "any imbalances created by the retroactive adjustments of the FCPA tract participation schedule will be made from production of Unitized Substances from the FCPA after the effective date of the revised tract participation schedule." This provision was included to ensure the royalty owners within the PA would be correctly allocated past production upon fixture drilling and production. The State has been over -allocated production from the original FCPA since the date of first production to the effective date of this decision. The expansion of the FCPA reduces the State's tract participation in the FCPA from approximately 84.6% to 62.6%. Tract allocation for PAs within the NU is determined by surface acreage, which is a long-established methodology for equitable allocation of gas reservoirs in the Cook Inlet. Each tract's allocation of gas is determined by dividing the acreage of a PA tract by the total acreage of the PA. The State has been under -allocated production from the FRI and FC5 wells. These recently - drilled wells were not previously in the FCPA and the State has not received any allocation of their production. Royalty on these wells have been paid exclusively to the private fee land owners holding interest in the land from where the wells are producing. Thus, the State will be allocated production on these two wells per the allocation schedule approved in this decision. EXHIBIT 3 Page 11 of 44 Ninilchik Unit —First Expansion of Falls Creek Participating Area 11 The method used to ascertain the net adjustment to royalties due to the State incorporates several factors to ensure an equitable outcome. Total royalty -bearing production from the FCPA for the September 2003 through March 2017 period is re -allocated based on the new tract factors set forth through this decision. Hilcorp will provide the Division with a revised division of interest upon issuance of this decision. For each month, the royalty payment due to the State under the new tract factors is calculated as the product of (i) the State's allocated share of production, (ii) the weighted average of royalty in value per thousand cubic feet (mcf) of gas for the FCPA and (iii) the royalty rate. Production on State acreage from the FCPA was subject to a reduced royalty rate of five percent from September 2003 to September 2013 under AS 38.05.180(f)(5). The total royalty overpayment is determined as the difference between total royalty payments to the State from Marathon, Unocal, and Hilcorp made under the previous allocation schedule percentage (44.6%) and the new allocation schedule percentage (262.6%). The expansion of the FCPA also brings unallocated production from the FR1 and FC5 wells into the FCPA. The State is due the new allocation schedule percentage of production (262.6%) from both wells since their date of first production. The FRl and FC5 wells began producing in July 2014 and March 2014, respectively. For each month, the royalty payment due to the State under the new tract factors is calculated as the product of (i) the State's allocated share of production, (ii) the weighted average royalty in value per mcf of gas for the FCPA and (iii) the standard royalty rate of 12.5% found on the leases. This underpayment of royalty amount is then reduced by the amount of royalty overpaid to the State to reach the net adjustment to royalties due to the State. An adjustment to State royalties will be made from gas produced from the FCPA during the month of April 2017. Hilcorp will make a one-time net adjustment amount in the FCPA royalty reports (Al Forms) for the April 2017 production month, which are due by May 31, 2017. The delineation drilling performed in and near the FCPA has provided greater certainty to the extent of the gas reservoir and PA boundary. The initial FCPA boundaries were based on minimal well control and seismic data. Future PA expansion or contraction at the FCPA will be reallocated on a prospective basis. As opposed to retrospective reallocation, prospective reallocation redistributes production from newly -drilled wells to PA tract participant back to the date of a well's first production rather than the date of the FCPA first production. The prospective approach to reallocation provides allocation to new PA tracts based on new wells drilled. Payments to current royalty owners will be more consistent upon expansion of the PA without the unit operator potentially withholding payment to reallocate. Finally, FCPA royalty reports will be resubmitted to the State for a more precise reallocation. The benefits of these factors and greater certainty of the FCPA boundaries make prospective reallocation an equitable approach to protecting all parties. B. Decision Criteria considered under 11 AAC 83.303(a) 1. Promote the Conservation of All Natural Resources The unitization of oil and gas reservoirs and the expansion and contraction of participating areas within unit areas to develop hydrocarbon -bearing reservoirs are well -accepted means of EXHIBIT 3 Ninilchik Unit — First Expansion of Falls Creek Participating Area Page 12 of 44 12 hydrocarbon conservation. Expansion and contraction of a participating area within an existing unit, with development occurring under the terms of a unit agreement, promotes efficient evaluation and development of the State's oil and gas, and minimizes impacts to the area's cultural, biological, and environmental resources. 2. The Prevention of Economic and Physical Waste Approval of the Application will prevent economic and physical waste because the approval will allocate production revenue under the approved FCPA tract allocations, equitably allocating production revenues among the tracts. Approval of the expanded FCPA will not result in economic waste given the current well spacing, market demand, and anticipated production rates. Annual approval of the NU development activities as described in future PODS must also provide for the prevention of economic and physical waste. The FCPA lies within the Beluga/Tyonek Gas Pool and operates under the terms of Alaska Oil and Gas Conservation Commission's Conservation Order 701 and 701 A. The Conservation Orders allow Hilcorp to commingle gas production from the Beluga and Tyonek Formations. Commingled production from these formations prevents economic waste and allows Hilcorp to maximize recovery through minimizing costs and drilling of additional wells. Additionally, the production of hydrocarbons through the existing production and processing facilities reduces the environmental impact of the additional production. Using existing facilities will avoid unnecessary duplication of development efforts on and beneath the surface. 3. The Protection of All Parties of Interest, Including the State A participating area "must be expanded to include acreage reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities and must be contracted to exclude acreage reasonably proven through the use of geological, geophysical, and engineering data to be incapable of producing hydrocarbons in paying quantities, subject to approval by the commissioner." 11 AAC 83.351(c). The Division reviewed confidential geophysical, geological and engineering data and interpretations submitted by Hilcorp to determine the acreage proposed for inclusion in the revised FCPA. The Division provided an alternative methodology, the circle and tangent method, which defines the FCPA by drainage from producing perforations in the Falls Creek wells and FRl well. This methodology expanded the FCPA to include tracts reasonably estimated to be capable of producing hydrocarbons in paying quantities. Historically, the DNR has often employed the circle and tangent methodology in situations where reservoirs are not well delineated to define gas reservoir participating areas. The aim is to protect all parties by including only tracts reasonably estimated to be capable of producing hydrocarbons in paying quantities. Extending beyond what would be "reasonably estimated" would unfairly dilute the tract participation of parties with tracts within the FCPA. Conversely, extending the FCPA only to tracts where gas is known to be produced would fail to consider drainage area from producing wells. The expanded FCPA includes quarter -quarter sections within a 1,500 -foot radius of the EXHIBIT 3 Page 13 of 44 Ninilchik Unit —First Expansion of Falls Creek Participating Area 13 portion of the well bores open to production within the proven Tyonek and Beluga reservoirs. Only quarter -quarter sections where fifty percent or more of the reservoir is observed were included in the FCPA. As part of re-evaluating the PA boundaries, the DNR methodology shows a quarter -quarter section containing three unit tracts, included at formation of the FCPA, will be contracted from the FCPA. A portion of unit tract 46 in T. IN, R. 12W, Seward Meridian has been allocated production since the formation of the FCPA. Royalty payments will cease for royalty owners of tract 46; Hilcorp will not attempt to recover past overpayments of royalties made to the royalty owner of tract 46. Additionally, portions of unit tracts 3 and 188 in T.1N, R. 12W, Seward Meridian will also be contracted from the FCPA. Unit tract 3 and 188 are both state oil and gas leases which will reduce royalty payments to the State. IV. FINDINGS AND DECISION A. The Conservation of All Natural Resources Revision of the FCPA will provide for continued development of the participating area under the NU Agreement and will maximize the efficient recovery of oil and gas and minimize the adverse impacts on the surface and other resources, including hydrocarbons, gravel, sand, water, wetlands, and valuable habitat. B. The Prevention of Economic and Physical Waste Hilcorp submitted geological, geophysical, and engineering data to the Division in support of the Application, as revised. Division technical staff determined that the expanded FCPA area, as revised, is "reasonably estimated" to be capable of producing or contributing to production in paying quantities. 2. The available geological, geophysical and engineering data justify including the lands described in Section III.A.2. of this decision. 3. The production of hydrocarbons through the existing production and processing facilities reduces the environmental impact of the additional production. Using existing facilities will avoid unnecessary duplication of development efforts on and beneath the surface. C. The Protection of All Parties in Interest, Including the State The economic, geological, geophysical, and engineering data that Hilcorp provided reasonably justify the inclusion of the acreage into the revised FCPA under the terms of the applicable regulations governing formation, expansion, and operation of oil and gas units and participating areas (11 AAC 83.301-11 AAC 83.395) and the terms and conditions under which these lands were leased from the State. With input from the State, Hilcorp has submitted an acceptable methodology for establishing the expanded boundaries of the FCPA. EXHIBIT 3 Page 14 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 14 2. The NU tracts, with legal descriptions, added to the FCPA are listed in the table below. Table 3: Tracts added to the original FCPA Tract Royalty Owner Acres Royalty WIO Legal Description Ne 051 052 O53 -[Harold E.W Vanderbilt 0.91 (Margaret Vanderbilt Living Trust) (Private) Harold A. and 58.001 iMarguerite M. Pederson (Private) Harold Lee and Diane 21.09 I (Private) 12.5%Hilcorp 100% 12.5% Hilcorp' 100% 12.5%' Hilcorp 100% TIN, R.12W, S.M., AK. Sec. 6: That portion of the north 165' of the Nl/2SE1/4lying west of the Sterling Highway. T. IN, R.12W, S.M., AK. Sec. 6: That part of Nl/2SE1/4 lying east of Sterling Highway. K. T. IN, R.12W, S.M., AK Sec.6:ThatpartofNl/2SE1/4 lying west of the Sterling Highway, less and except the north 165' and that portion of the Sterling Highway Right -of - Way lying within the Nl/2SEI/4. 056 Charles Weyhaupt, 30.901 12.5% Hilcorp T.1N, R.12W, S.M., AK. We David Weyhaupt, James ' y p 100% Sec. 6: SW 1/4SE1/4, less and except Block 2, Reinhardt, Thomas Lots I and 8, and Block 5, Lot 1 of Clammer's Weyhaupt, Norma Haven Subdivision, Plat 76-62. Jeanne Nichols, Walter G. Williams (Private) 059 1 Charles Weyhaupt, 2.937 12.5% Hilcorp I T.1N, R.12W, S.M., AK. I David Weyhaupt, James 100% I Sec. 6: Block 2, Lot 1 of Clammer's Haven I Reinhardt, Thomas I Subdivision, Plat 76-62. Weyhaupt, Jens H. and Anneline Hansen, Veray H. Matthews Pnvate John Stallone Jr, 2.904 060 12.5% j Hilcorp T. IN, R.12W, S.M., AK. Charles Weyhaupt, 100% Sec. 6: Block 2, Lot 8 of Clammer's Haven David Weyhaupt, James Subdivision, Plat 76-62. Reinhardt, Thomas Weyhaupt (Private) 061 Dennis Hedman, 3.258 12.5% Hilcorp j T.IN, R.12W, S.M., AK, Charles Weyhaupt, 100% I Sec. 6: Block 5, Lot 1 of Clammer's Haven David Weyhaupt, James II 1 Subdivision, Plat 76-62. Reinhardt, Thomas 1 Weyhaupt (Private) --- {- 066 Emil and Frances 114.864 12.5% Hilcorp T. 1N, R. 12W, S.M AK. Bartolowits (Private) 100% Sec. 7: Government Lot 1 and 2 and the I NE]/4NW 1/4, less and except Lots 7, 9, 10, 12, 14, and 15 of Falls Creek Ridge 1978 Subdivision (Plat 9H78-23 replatted #H78-71), apart of government Lot 2, and a portion of the NW l /4NE1 /4 lying west of the centerline of the Sterling Highway. EXHIBIT 3 Page 15 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 15 Tract Royalty Owner Acres Royalty WIO Legal Description Ne 188 State of Alaska 524.450 12.5%Hilcorp T.1N, R.I2W, S.M., AK. ADL 590 100% ! i 229 Penelope J Maize 24.740 12.5% Hilcorp ! T. IN, R. 12W, S.M., AK. (Private) 100% Sec. 7: A portion of the NW 1/4NE1/4 lying east of the centerline of the Sterling Highway; j more particularly described as Celia Subdivision, , Plat No. 94.46, and all minerals underlying dedicated roads within the subdivision, excluding Tracts C- IA and C -1B of the Celia Subdivision, _ Addition #2, Plat No. 2012-53. 234 James C, Kruse and T 3 854 �H 12.5°l0 ilcorp T. 1N, R 12W, S.M , AK Linda C Kruse 100% 1 Sec. 7: Tracts C-1 A and C-113 of Celia Subdivision, (Private) Addition 92 Plat No 2012-53. 3. The redefining of the FCPA resulted in the contraction of the three unit tracts from the FCPA. The tracts contracted from the FCPA are listed in Table 4 below. Table 4: Tracts contracted from the original FCPA Tract Royalty Owner Acres Royalty WIO Description Ne 003 State of Alaska, DNR 266.80 12.5% Hilcorp T.1N, R13W, S.M., AK. AUL 389737 100% Sec. 1: SW/4SW/4 Sec. 11: E/2NE/4 Sec, 12: W/2NW/4 TIN, R12W SM.,AK. Sec 6: That part of the NW/4NE/4 lying below the line of mean high tide - ide046 0 4-6Shelle K. Leman, 10.44 125-X Hilcorp T.]N, R.12W, S.M., AK. 'Stephen S. Webb, 100% Sec 6: That part of the GLO Lot 1 lying within Susan L. Steinbach the W/2NE/4. -- — - - 188 State of Alaska, DNR 40.00 12 5% H lcorp T.1N, R 13W, S.M AK. ADL 590 100% Sec. 12 NE/4NW/4 4. Hilcorp will submit revised Ninilchik Unit exhibits C and D for the FCPA within 30 days of the issuance of this decision. Hilcorp will submit a finalized division of interest for approval by the Division with 15 days of issuance of this decision. 5. Attachment 1 and 2 of this decision provides Hilcorp's proposed FCPA exhibits C and D submitted on November 2, 2016. Attachment 3 depicts the draft exhibit C of the FCPA approved through this decision. EXHIBIT 3 Page 16 of 44 Ninilchik Unit - First Expansion of Falls Creek Participating Area 16 6. The reallocation of the FCPA royalties is retrospective to the first day of FCPA production. This reallocation methodology results in a net underpayment of royalties to the State. Hilcorp will make an adjustment for this underpayment in their royalty reports (A1 Forms) filed with the State for the April 2017 production month, due by May 31, 2017. Hilcorp should contact the Royalty Accounting Manager for the proper method of reporting the net adjustment amount on the April 2017 FCPA royalty report (Al Form). A prospective reallocation will be applied to future expansion of the FCPA. 7. Hilcorp will be solely responsible for reallocating royalty payments to private landowners underpaid after the FCPA expansion. The State will not be held liable for royalty payments to any past Ninilchik Unit operators or lessees regarding overpayments identified in this decision. For the reasons discussed in this Findings and Decision, I hereby approve the FCPA expansion and contraction retroactively effective to April 1, 2017. A person affected by this decision may appeal it, in accordance with 11 AAC 02. Any appeal must be received within 20 calendar days after the date of "issuance" of this decision, as defined in 11 AAC 02.040(c) and (d) and may be mailed or delivered to Andrew Mack, Commissioner, Department of Natural Resources, 550 W. 7th Avenue, Suite 1400, Anchorage, Alaska 99501; faxed to 1-907-269-8918, or sent by electronic mail to dnr.appeals@alaska.gov. This decision takes effect immediately. An eligible person must first appeal this decision in accordance with 11 AAC 02 before appealing this decision to Superior Court. A copy of 11 AAC 02 may be obtained from any regional information office of the Department of Natural Resources. Chantal Walsh, Director Date J Division of Oil and Gas V. Attachments 1. Ninilchik Unit Falls Creek Participating Area Proposed Expansion Exhibit C Description of lands within the proposed Expansion participating area (November 2, 2016) 2. Ninilchik Unit Falls Creek Participating Area Proposed Expansion Exhibit D Map of proposed participating area (November 2, 2016) 3. Approved Ninilchik Unit Falls Creek Participating Area: Draft Exhibit C of Approved FCPA (Land descriptions) 4. Approved Ninilchik Unit Falls Creek Participating Area: Draft Exhibit D of Approved FCPA (FCPA Map) EXHIBIT 3 Ninilchik Unit — First Expansion of Falls Creek Participating Area Page 17 of 44 17 Attachment 1 Ninilchik Unit Falls Creek Participating Area Proposed Expansion Exhibit C Description of lands within the proposed Expansion participating area EXHIBIT 3 Page 18 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 18 Exhibit C Falls Creek Participating Area - 2016 Proposal Ninilchik Unit Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest _ Tract Tract Legal Description Acreage Lease N Percentage Owner Interest Percent Owner Percent Ownership Owner % 002 T2N-R12W, S.M. 800000 HAKH 1030487 52879660%. Stateof Alaska, 100.00% 12.500% Paul Craig 2466670% Hiloorp Alaska, LLC 100.00% Section31: SE/4SW/4,SW/4SF/4 ADLM 384314 Department of Natural William Webb 1333330% Resources Cook Inla Energy, LLC 1.000000% Donkel Oil and Gas LLC 0.500000% Jessica Craig 0.100000% Hest Sun Kim 0.100000% 003 TIN -R I2W, S M. 311.8500 HAKH 1034385 206131530% Smse of Alaska, 10000% 12.500% Hilwrp Alaska, LLC 6.500000 % Hilomp Alaska, LLC 10000% Section 6: That pan ofthe W2NE/4 ADLH 389]3] Department of Natural lying below the line of mean high tide Resources TIN -11I3 W, S.M. Section 1: NEANEA,SW/4NE/4, SE/4NW/4, N2SW/4, SW/4SW/4; Swum 12: NW/4NW/4 015 TIN-R13W,S.M. 39.6100 HAKH 1034934 2.6182040% Bureau of land 100.00% 12.500%. Hilcorp Alaska LLC 3.250OW%. Hilwrp Alaska LLC 10000% Section 12: That pan of Lot l lying AKAN A-OM3W Management Ann L. Edwards 0.350000% within the S/2NE/4 Charles Delaney Ealand H 0.350000% Dorothy Anne Detrick 0.100000% Alin. L. Mend. 0 050000% Dustin D. Entered 0050000% Mary Lynne Moellering 005ww% Kevin M.clotosh 0.050000%. 015A TIN-13W,S.M. 10.2300 RAKH 1034934 06761990% Bureau of Land IM00% 12500% Hilwrp Alaska, LLC 3.250000%. Hilcorp Alaska, LLC IMOW. Section 12: That part of Lot 1 lying in AKA H A-024399 Management Charles Delaney Ealand II 0350000% the NEANF14 Ann L. Edwards 0350000% Dorothy Anne Dedrick 0.100000% Kevin Maclotosh 0.050000°/. Mary Lynne Moellering 0.050000% Alina L. Mend. 0.050000% Dunin D. Ealand 0.050000% ro C� e�rco � Fells Creek Proposal 2016 PA Exhibit C �p y~�y Page 1 of 10 Last Update: 9/15/2016 O 1y A A W Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease H Percentage Owner Interest Percent Owner Percent Ownership Owner% 019 TIN-R12W, S.M 400000 HAK# 1033481 26439830% Universityof Alaska 100.00% 12.500% Hilcorp Alaska, LLC 10000% Section 6: SV41F4 UA# Ninilchik Tract #2 046 TIN-R12W, S.M. 49.3600 HAKa IM 1633 32626750% Shell. K Leman 3333% 12.500% Hikorp Alaska, LLC 100.0000/a Section 6: Lots I thin 7, inclusive, of the Webb Tracts 1974 Subdivision, Plat 74-1724, including all minerals HAK # 1031633 Stephen S. Webb 33.33% 12.500% underlying dedicated roads within the subdivision HAK# 1031633 Susan L Steinbach 33.33% 12500"/. 048 TIN-R12W, S. M. 2.6700 HAK# 1034912 0.1764860% Brigitte Thebaat 1667% 12500% Hilcorp Alaska LLC 10000% Section 6: Tract #1 of Udelhoven Subdivision (Plan #H77-70), a part of gavvnment Lot 2 HAK k 1034912 Joann Steik 16.67°/a 12.500% HAK # 1034912 Shirley J. Co. 16.67% 12.500% HAK # 1034912 Ann Marie Davis 8.33/0 12.500% HAK # IW4912 Dawn M. Datum 8.33% 12.500% HAK# 1034912 Jennifer Lmann 8.33% 12.500% Wiederspohn HAK# 1034912 Jesse Udelhaven 8.33% 12.500/. HAK # 1034912 Sandra K. Udelhovan- 8.33% 12,50W. Taylor HAK # 1034912 Hanna Kos" Udelhoven 4.17% 12.500% ab HAK# 1034912 Miranda Marilyn 4.17% 12.50 Udelhoven uppa >1 ........ .............. ...-...... ..._.. N H 0 O I.y p'3 A W Falls Creak Proposal 2016 PA Exhibit C Last Update: 9/15/2016 Paget of 10 Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Percentage Owner Interest Percent Owner Percent Ownership Owner % 049 TIN-R12W, S.M. 29950 HAKk 1034912 19796820% James Udelhoven 25.00% 12500% Hilcarp Alaska, LLC 6.500000% Ware Alaska, LLC 100.00%. Section 6: Tress 2, 3, 5, 6 and 7 of Udelhoven Subdivision(Plat 41477-70), a part of government Lot 2, less that HAK 91034912 Brigitte Theban 16.67% 12.500°/4 part ofTmas 2 and 3 lying outside the SW/41 E 4 and also any mineral rights HAK k 1034912 Joann Steik 16.67% 12.500% lying under the roadbed of the Staling Highway right of way prism, through GJAI t2 HAKq 1034912 ShirlryJ. Co. I6.67°h 12.500% HAK 9 1034912 Ann Marie Davis 4.17% 12.500% HAK a 1034912 Daum M. Mum 4.17° 0 12.500% HAK9 1034912 Jennifer Linann 4.17% 12.500% Wiederspohn HAKk IM4912 Jesse Udelhoven 4.17% 12.50 HAK # 1034912 Sandra K. Udelhoven- 4.17% 12.500% Taylor HAK4 1034912 Hanna Koller Udelhovon 2.08% 12.500% HAKa 1034912 Miranda Marilyn 2.08% 12.500% Udelhwen Falls Cresk Proposal 2016 PA Ezhibit C Last Update: 9/15/2016 Page 7 of 10 050A TIN-R12W,S. M. 26700 HAKN 1034912 0.1764860% lennifa Linann 50.00°/. 12.500% Hilea,s Alaska, LLC 3250000% Hilwrp Alaska, LLC 100.00% Section 6: Thatpert of Tract 4 of Wiedaspoho Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lean # Percentage Owner Interest Percent Owner Percent Ownership Owner% 049A T1N-R12W, S. M. 2.0000 HAKN 1034912 0.1321990% James Udelhovea 2500% 12500% Hilcorp Alaska, LLC 10000% Section 6: The part of Trarts 2 and 3 lying outside the SW/4N 4 HAK 91034912 Brigitte Thebaut 16.6]% 12 500!/. HAK N 1034912 Joann Steil, Ib 67. 12.500% HAKN 1034912 Shirley J. Cox 16,67/. 12500% HAKN 1034912 Ann Marie Davis 4.17%. 12.50W. HAK # 1034912 Dawn M. Dutton 4.17% 12.5001/o ro Ci7 ((0 HAKN 1034912 Jennifer Linann 4.17% 12.500% Fti WI"'I Wiederspohn N N HAKN 1034912 Jesse Udelhoven 4.17% 12500%. O FN � F� FJAICN 1034912 Sandra K. Udelhavrn- 4.17% 1250 AW Taylor HAK 41034912 Hanna Koga Udelhoven 2.08% 12.500°/. HAK# 1034912 Mi.da Marilyn 208% 12.500°/. Udelhoven 050 TIN-R12W,S.M. 3.6200 HAK# 1034912 0.2392800% Jennifer Lesson 50.00°. 12.500% Hent, Alaska, LLC 6500000°/. Hilcorp Alaska, LLC 100.00°. Section 6: That pan of Tract 4 of Wee ks paho Udelhovea Subdivision lying within the HAK# 1034912 Briglue Thebaut 16.67% 12.500"6 SWANEA HAK# 1034912 Joann Steik 1667% 12500°0 HAK N 1034912 Shirley J. Cox 16.67% 12.500% 050A TIN-R12W,S. M. 26700 HAKN 1034912 0.1764860% lennifa Linann 50.00°/. 12.500% Hilea,s Alaska, LLC 3250000% Hilwrp Alaska, LLC 100.00% Section 6: Thatpert of Tract 4 of Wiedaspoho Udelhoven Subdivision lying outside the SW/4NF14 HAK N 1034912 Brigitte Thebaut 16.67. 12.50Wb HAKN 1034912 Joann Steik 16.67/a 12500% tIAK4 1034912 Shirley J. Cox 16.67. 12500°0 Falls Creek Proposal 2016 PA Exhibit C Page 4 of 10 Last Update: 9/15/2016 052 TIN-RIZW, S.M. 58.000 HAK# 1033560 3.8337750% Hmold A. and 100.00% 12.500% Hilcorp Alaska, Id.0 100.0% Section 6: That pan ofN/2SE14 lying 12.500°/. Marguerite M. Pederson 18,75% Working Thomas Weyhwpt TractWorking Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Percentage Owner Interest Percent Owner Percent Ownership Owner % 051 TIN-R12W, &A 091W HAK#1034850 0.0601510%.. E. W. Vanderbilt 100.000% 12500% Hilcorp Alaska, LLC 6.50W00% Hilwrp Alaska, LLC 100.00% Senior 6: That portion ofthe north HAK# 1034913 (Margaret Vanderbilt 3.25000% Hilwrp Alaska, ILC 100.0% Senior 6: Lot 3 except the North 165' Fader. thereof 165' of the NnSE/4 lying wee of the Lvg Trust) Sterling Highway OSIA TIN RI 20, 5. M. 2390 HAK# 1034850 0.1546730% Ear Vanderbilt 100.00% 12.500°h Hilwrp Alaska, LLC 3250000% Hilwrp Alazke, LLC 10.0°/. Sect on 6 The North 165' ofGLO La 3 (Margaret Vanderbilt Lvg Trust) 052 TIN-RIZW, S.M. 58.000 HAK# 1033560 3.8337750% Hmold A. and 100.00% 12.500% Hilcorp Alaska, Id.0 100.0% Section 6: That pan ofN/2SE14 lying 12.500°/. Marguerite M. Pederson 18,75% east of Sterling Highway Thomas Weyhwpt 18.75% 12.500/. 053 TIN-R12W, S.M. 210900 HAK# 1034913 1.3940400% Harold Lee and Diane R. 100.00% 12.50IA16 Hilwrp Alaska, LLC 6.500000% Hilwrp Alazke, LLC 100.0% Section 6: That part ofN/2SF,/4 lying 12.500% Pederson west of the Sterling Highway, less and except the north 165 feet and that Portion of the Staling Highway Right - of -Way lying within the N12SE14 053A TIN-R12W, S. M. 28.9000 HAK# 1034913 1.9102780% Harold Leeand Diane R. 100.0% 12500% Hilcorp Alaska, LLC 3.25000% Hilwrp Alaska, ILC 100.0% Senior 6: Lot 3 except the North 165' Fader. thereof 056 TIN-RI2W, S.M. 30.9010 HAK# 1034911 Section6: SWASE/4, less and except Block 2, Las I and 8, and Block 5, Lot HAK# 1034911 1 of Clamma'i Haven Subdivision, Plat 76-62 HAK# 1034911 HAK # 1034911 HAK# 1034911 HAK# 1034911 Falls Deck Proposal 2016 PA Exhibit C Last Update: 9/15/2016 2.0425430% Charles Weyhaupt 1875% 12,500% Hilcorp Alaska, LLC David Weyhaupt 19.75% 12.500°/. James Reinhardt 18,75% 12.500%. Thomas Weyhwpt 18.75% 12.500/. Norma Jeanne Nichols 16.67% 12.500% Walter G. Williams 8.33% 12.500% 6.500000°/. Hilwrp Alaska, LLC Page 5 of 10 uoU IIN-KI Lw, SM. 2.9040 HAKN 1034911 0.191953Wo John Stallone,Jr. 25.001% 12.500% Section 6: Block 2, Lot 8 of Clammede Haven Subdivision, Plat 662 IIAK N 1034911 Charles Weyhuupt 18 75% 12.500% HAKN 1034911 TractWorking 1875% 12.500% HAKW 1034911 James Reinhardt 18.75% 12.500% HAKN 1034911 Working Tract Tract Legal Description Acreage Tract Mineral Mineral Royalty ORRI ORRI Interest Interest HAKN 1034911 Lease 4 Percentage Owner Interest Percent Owner Percent Ownership Owner % 059 TIN-R12W,S.M. 29370 HAKN 1034911 0.1941350% Charles Wryhaupt 18.75% 12.500% Hilwrp Alaska, LLC 6.500000% Hilwrp Alaska, LLC 10000% Se Ima 6: Block 2, W 1 of Clammefs Haven Subdivision, Plat 76-62 A W HAKN 1034911 David Wryhaupt 1875% 12500% HAKN 1034911 James Reinhardt I835546 12.500% HAKN 1034911 Thomas Weyhaapt 1875% 12.500% HAKN 1034911 Jens H. and Anneline 1250% 12.500% Hensen BAK N 1034911 Vemy H. Matthews 12.50°0 12 500'. uoU IIN-KI Lw, SM. 2.9040 HAKN 1034911 0.191953Wo John Stallone,Jr. 25.001% 12.500% Section 6: Block 2, Lot 8 of Clammede Haven Subdivision, Plat 662 IIAK N 1034911 Charles Weyhuupt 18 75% 12.500% HAKN 1034911 David Wryhaupt 1875% 12.500% HAKW 1034911 James Reinhardt 18.75% 12.500% HAKN 1034911 Thomas Wryhaupt 18.75% 12.500% Hilwrp Alaska, LLC 6.500000% Hilcorp Alaska, LLC 100.00% m1 IIN-naw, S.M. 3.2580 HAKN 1034911 0.215352034a Dennis Heilman 25.00'. 12.500% Hilwrp Alaska, LLC 6.500000% Hilccrp Alaska, LLC 100.00% Swim 6: Block 5, Int I ofClammers Haven Subdivision, Plot 7662 HAKN 1034911 Charles Weyhaupt 18.75% 12.500% HAKN 1034911 David Wryhaupt 1875% I2 500% Yy.I1 HAKN 1034911 James Reinhardt 18.75% 12.500% �x[JHAKN 1034911 Thomas Wryhaupt 1875% 12.500% A A A W Falls Creek Proposal 2016 PA Exhibit C Last Update: 9/15/2016 Page6 of 10 Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease 0 Percentage Owner Interest Percent Owner Percent Ownership Owner % 062 TIN.R12W,S.M. 349880 HAK91034911 23126920%Charly Weyhaopt 18.75% 12.500% Hilwrp Alaska, LLC 6.500000% Htlomp Alaska, LLC 100.00% Semon 6: That parterf govemmera Lot C. Greene Addition No.I (pig H-78-25), described 4 lying in the SE/4SW/4, less Block 1, HAKN 1034911 David Wryhaupt 18.]5°6 12.500°/a Lot 9 and less Block 2, Las 3 and 4 of W 4) Charmers Haven Adan No. 1 HAKN 1034911 James Reinhardt 18.75% 12500% Subdivision, Plat H-78-25; Block 2, James Reinhardt M75% HAK 9 1034911 We 5 and 6 and any interest in road 18.75% ways and easements dedicated to public HAKN 1034911 Thomas Wryhaapt 18,75% 12.500% use in the Clammers Haven A ld'n Na. 1 Subdivision, P1978-25 HAKN 1034911 NmmeJeanne Nichols 16.67% 12.500°/. HAKN 1034911 Walter G. Williams 8.33% 12.50011, 062A TIN-R12W, S.M. 12.1100 HAKN 1034911 0.8004660% Charles Weyhaupt 18]5% 12.500% Hilcorp Alaska, LLC 3.250000% Hilemp Alaska, LLC 100.00% Sec 6: Those pans of Chimeras Haven Addition No.I (plat H-78-25), described m all ofBlock 1, Lot 2anit those pans HAKN 1034911 David Weyhaupt 18]5% 12.500°6 of Block 1 , La 4 lying outside the SFJ4SW/4 AND those pans of Block 2, HAKN 1034911 James Reinhardt 18.75% 12.500% W 1 lying outside the SE/4SW/4 and all minerals underlying dedicated roads and easements lying outside the HAKN 1034911 Thomas Weyhaupt 18.75% 12.500% SE4SW/4 (a pan of GLA Lot 4) HAKN 1034911 NormaJeanne Nichols 16.67% 12500% HAKN 1034911 Walter G. Williams 833% 12.500% 062B TIN-R12W, S.M. 4.4610 HAKN 1034911 0.2948700% Bdward C. and Myong 2500% Secs: Thosepensof Clammers Haven C. Greene Addition No.I (pig H-78-25), described asap of Block 1, Lot l (open of GLO HAK N 1034911 Charles Weyhaupt 18,75% W 4) HAK N 1034911 David Weyhaupt 18.75% HAKN 1034911 James Reinhardt M75% HAK 9 1034911 Thomas Weyhaupt 18.75% N y{ o tz O p.l "h y � W Falls Crock Proposal 2016 PA Exhibit C Last Update: 9/15/2016 12 500% Hilwrp Alaska, LLC 12.50 12.50W. 12.500°/. 12.500% 3.250000% Hilwrp Alaska, LLC 100.0 Page 7 of 10 Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease tt Percentage Owner Interest Percent Owner Percent Ownership Owner % 062C TIN -R12 W, S.M. 2.9920 HAK k 1034911 0.1977700% Keith C. and Flora D. 25 00°0 12.500% Hilcorp Alaska, LLC 3.250000° o Hilcurp Alaska, LLC 100.00% Sec 6: Those pans of Clammers Haven Lovejoy Additicn No.I (plat H-78-25), described as all of Block I, Lot 3 (a part of GIA HAK a 1034911 Charles Weyhaupt 18.75% 12500% Lot 4) HAK N 1034911 David Wryhaupt 1875% 12500% HAK a 1034911 James Reinhardt 13,75% 12.500% HAK0 1034911 Thomas Wryhaupt 18.75% 12.500% 063 TIN-R12W,SM_ 1.6990 FIAKN 1034911 0.1123030% Michael and Marjorie 2500% 12.500% Hilcorp Alaska, ILC 6.500000% Hilcorp Alaska, LLC 100.00% Swim 6: That part of Gwammem Lot Barry 4 more particularly described as Block 2, Lot 4 of Clammas Haven Addition HAK0 1034911 Charles Weyhaups 1835% 12.500% No. 1, as plarted in plat 9 H-78-25 HAKM 1034911 David Weyhaupt 18.75% 12500% H 41034911 James Reinhardt 1875% 12.500% HAK41034911 Thomas Wryhaupt 18.75% 12.500% 064 TIN-R12W, S.M. 1.7410 HAK0 IM4911 0.1150790% Michael and Marjorie 25.001. 12.500% Hilcorp Alaska, JLC 6500000% Hilcorp Alaska, LLC 10.00% Section 6: That pan of Government Lot Barry 4 more particularly described as Block 2, W 3 of Clammers Haven Addition HAKX 1034911 Charles Wryhaupt 1835% 12.500% No. I, as platted in plat a H-78-25 HAKM 1034911 David Wryhaupt 18.75% 12.500% J 41034911 James Reinhardt 18750 12.50% ISI b ♦ 1 A 9 IM4911 Thomas Weylimpt 18.75% 12.500% Falls Crack Proposal 2016 PA Exhibit C Last Update: 9/15/2016 Paps of 10 066 TIN -1112W, S.M. 124.9500 HAK# 1031611 8.259142 Emiland Frances 100.00% 12.500% Won, Alaska, LLC 100.W% Section 7: Government Lots 1 and 2 Bertolowas and the NE/4NW/4, less and except Lots 7, 9, 10, 12, 14 and 15 of Falls Creek Ridge 1978 Subdivision (Plat NH78-23 replotted #117841), a pmt of government Lot 2, and a portion of the NWI/4NEl A lying wine of the mtolme of the Staling Highway; 067 TIN-R12W, S. M. 4.0300 HAK#591276 0266381 James A.and Theresa L. 100.00% 12.500% Hilcop Alaska, LLC 100.0 Son ian 7: Ws 7 and 10 of Fells Creek Wilson Ridge 1978 Subdivision (Plat #H'JB-23 replatted NH7841), a pan of government La 2 068 TIN-R12W, S.M. 4.0280 Semon 7: Lots 9 and 12 of Falls Creek Ridge 1978 Subdivision (Plot #H78-23 replaned 01178-71), a pan of government Lot 2 HAK# 1033555 0.2662490%. Richard S. Hometowns 100.00% 12.50 Hilomp Alaska, LLC 100.00% 069 TIN -RI 2W, S.M. 2.0280 HAK# 1031350 01340500% Paul D. and Lanae A. 100.00% 12.500% Hdcorp Alaska, LLC 1000051. Working Working Bartolowits Tract 1978 Subdivision (Plot NH78-23 Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Percentage Owner Interest Percent Owner Percent Ownership Owner % 065 TIN-Rl2W,S.M. 1.5720 HAK# 1034911 0.1039090% Charles Weyhaupt 18.75% 12.50MA Hileorp Alaska, LLC 6.500000% Hilemp Alaska, LLC 100.00% Seetion 6: That pan of Govemment Lot 4 more particularly described as Black 1, Lot 9 of Clemmas Haven Addition HAKN 1034911 David Wayhaupl 18.75% 12.500% No. 1, as plotted in plot # H-78-25 HAK# 1034911 James Reinhardt 18.75% 12.5001. HAK#1034911 Thomas Wayhaupt 18.75% 12.500% HAK# 1034911 Corry gross 125W. 12.500°/. HAK# 1034911 James Kruse 125WK 12.500% 066 TIN -1112W, S.M. 124.9500 HAK# 1031611 8.259142 Emiland Frances 100.00% 12.500% Won, Alaska, LLC 100.W% Section 7: Government Lots 1 and 2 Bertolowas and the NE/4NW/4, less and except Lots 7, 9, 10, 12, 14 and 15 of Falls Creek Ridge 1978 Subdivision (Plat NH78-23 replotted #117841), a pmt of government Lot 2, and a portion of the NWI/4NEl A lying wine of the mtolme of the Staling Highway; 067 TIN-R12W, S. M. 4.0300 HAK#591276 0266381 James A.and Theresa L. 100.00% 12.500% Hilcop Alaska, LLC 100.0 Son ian 7: Ws 7 and 10 of Fells Creek Wilson Ridge 1978 Subdivision (Plat #H'JB-23 replatted NH7841), a pan of government La 2 068 TIN-R12W, S.M. 4.0280 Semon 7: Lots 9 and 12 of Falls Creek Ridge 1978 Subdivision (Plot #H78-23 replaned 01178-71), a pan of government Lot 2 HAK# 1033555 0.2662490%. Richard S. Hometowns 100.00% 12.50 Hilomp Alaska, LLC 100.00% 069 TIN -RI 2W, S.M. 2.0280 HAK# 1031350 01340500% Paul D. and Lanae A. 100.00% 12.500% Hdcorp Alaska, LLC 1000051. Section 7: W 14 of Falls Creek Ridge Bartolowits 1978 Subdivision (Plot NH78-23 replatted NH7841), is pan of government Lot 2 070 TIN-R12W,S.M. 2.0260 HAK# 1031612 0.1339180°/. Poul D.and LeRae A. 100.00% 12.500% Hilmrp Alaska, LLC 100.00°0 Section 7: Lot 15 of Fells Creek Ridge Banolowits 1978 Subdivision (Plat 91178-23 replotted 41178-71), a pan of government La 2 l UP Falls Creek Proposal 2016 PA Exhibit C ff0 Last Update: 9/152016 Page of 10 N Iy V M Ir a j A W TIN-RI2W, S.M. Working Working Tract Tract Mineral Mineral Royalty ORRI ORRI Interest Interest Tract Tract Legal Description Acreage Lease N Percentage Owner Interest Percent Owner Percent Ownership Owner % 188 TIN-R13W,S.M. 564.4500 HAK# 1034384 37.3099060°/. Stateof Alaska, 100.W% 12.500% Hilcorp Alaska, LLC 3.250000% Hilcorp Alaska, LLC 10000% Sec. I: SB/4NEr4, SE/4, ADL# 590 Department of Natural SV4SW/4 Resources Subdivision, Plat No. 94-46, and all Sec. 12: NE/414W/4, N/2NPA4, except minerals underlying dedicated roads that part lying above the line of mean within the subdivision, excluding Tracts C -IA and C-1 B ofthe Celia high tide, Subdivision, Addition 92, Fiat No, TIN-RI2W, S.M. Sec. 6: W/2 except that pan lying above the line of.. high tide 229 TIN-RI2W, S.M. 24.7400 11AK#591260 1.6353040% Pmelopel, Maize IW.00% 12.500°/. Hileop Alaska, LLC 100.00% Sectim7: Aponionofthe NW I/4NE1/4 lying east of the notholine of the Staling Highway; more particularly described as Celia Subdivision, Plat No. 94-46, and all minerals underlying dedicated roads within the subdivision, excluding Tracts C -IA and C-1 B ofthe Celia Subdivision, Addition 92, Fiat No, 2012-53 230 TIN-RI2W, S.M. 3.8540 HAK#591236 0.2547480°% James C. Kruse and 100.00% 12.500°/ Hilcorp Alaska, LLC 100.00%. Section7: Tracts C-IAsnd C-IBof Linda C. Kms. Celia Subdivision, Addition #2, Plat No. 2012-53 Total PA Total Tract Working Interest Acreage Percentage Owners PA % 1,512.869 100000000% Uncommitted 00000% Hilcorp Alaska, LLC 100.0000% i.Zr2 Falls Crock Proposal 2016 PA Exhibit C Last Update: 9/15/2016 Page 10 of 10 Proposed Falls Creek Participating Area Ninilchik Unit Effective October 1, 2016 RECAPITULATION BY LAND CATEGORIES: PERCENTAGE LAND OWNERSHIP ACRES OF PA State of Alaska Lands 956.300 63.211025% Federal Lands 49.840 3.294403% Patented Fee Lands 506.729 33.494572% TOTAL: 1,512.869 100.000000% EXHIBIT 3 Page 29 of 44 Falls Creek PA Exhibit C Last Update: 8/30/2016 Attachment 2 Ninilchik Unit Falls Creek Participating Area Proposed Expansion Exhibit D Map of proposed participating area EXHIBIT 3 Page 30 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 30 w w M peg O a a W w ! S002NO13W i 3 I •—®--tee— ®- i 1 � I y z 1 3 S001NO13IN 1 i A 1 I -- 12 11 � 1 3 i -ff®.-iO02NO12W 32 1 51 53 I 188 53A 62 62 56 62A 62B � 463 l 66 /ISA 15 0 : 68 � 79 d7 69 229 s30, 52 41 8 I Nmam,k u"n Nap Ninilchik Unit � Unit Tracts Overv1x Exhibit D Proposed Falls Creekm � N Participating Area 1Proposed Falls Creek PA 6tate Rane Zone 4 NAD 1929 (feat) 11.1, `p 'kl""k"'1'fI Q Proposed Ninilchik Unit Boundary 0 1,300 2,600 Map Dale: 1112/2016 Feet Attachment 3 Ninilchik Unit Falls Creek Participating Area: Draft Exhibit C of Approved FCPA (Land Descriptions) EXHIBIT 3 Page 32 of 44 Ninilchik Unit — First Expansion of Falls Creek Participating Area 32 01 Jo lafed LIOVOGE:pmpd0 0 t!q!453 tld 91021esodmd 1.0 slled %0000500 aap®W"1 au!Itl %00005E'0 spremp3 7 uW %00005EOpuele3 aaueia0 -I.qo %000001'0 rupao..W Agton>[J %0000500 pmlea'0 u0sn0 %00005ZE ynti.ltldi..pH b7 AU aql m ftAl ,I.S %0000500 ysotulapy wna�l eWawaBeue(1i 66EOZ0'tl atlJltl Ito'IJo yad IDyy :yl u0yaa %.00000001 7I9'aMsaltl rlI.vH %000050'08.,411-w auuS, laelV %OOS'Zl %00001 pue9Jo^¢Ding %0560LZ1'1 VE6VE01 iI NI OOEZ'01 'W'S'ME I -N Il vsIo b/MSb/3N I ."s WS'ME Ie-NI'L anyaap3 a!un J!!ga!!u!N !esodoad 91OZ eaav 8u!;edla!;jed gaa 1D spelt J l!Q!gxa .pit g8!q ueaw Jo samnosaa ami agtmapq SMAI 613N6/MS WnWN Jo tuawuedaa LEL68E VIEW aM Jo Wd WU ,..IMS %00000001 oT1'"-[V d'oal!H %000005'9 oT7 tj%olV dJoal!H %005 ZI %0000l 'egseltl Jo -MIS %09901 Z8'b SME01#NVH 0094 E6 W'S'MZIN-N1J. 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Craig, Manager Phone (907) 830-1151 Fax (907) 274-8211 Re: Appeal of "NINILCHIK UNIT APPROVAL, IN PART, OF THE FIRST EXPANSION OF THE FALLS CREEK PARTICIPATING AREA" dated May 16, 2017 This letter is written to appeal the decision entitled Ninilchik Unit Approval, in Part, of the First Expansion of the Falls Creek Participating Area issued by the Director of the Alaska Division of Oil & Gas on May 16, 2017 ("Decision) regarding Hilcorp Alaska, LLC's ("Hilcorp") "Proposal to expand Ninilchik Unit Falls Creek Participation Area" submitted by Hilcorp to the Alaska Division of Oil & Gas on November 2 2016 ("Proposal'). By way of review, I submitted comments to the Division of Oil & Gas (the "Division") regarding Hilcorp's Proposal on January 2, 2017 on behalf of PLC, LLC and MH2, LLC — both of whom are owners of record of an overriding royalty interest (ORAD in ADL 384314 (NU Tract 2). The comments dated January 2, 2017 constitute the foundation of this appeal. Additional comments pertinent to this appeal are contained herein. As part of this appeal, the LLCs request confirmation that the January 2, 2017 comments were read and fully considered by the Division. Receipt of my January 2, 2017 comments was acknowledged in the Decision. However, I am concerned that some or all of the content of my January 2, 2017 comments were not read, considered, or responded to prior to issuing the Decision. As a case in point, pages 1 and 2 of my letter and the first four enclosures submitted with the letter document the need for a correction regarding the stated owners of record of the ORRIS in NU Tract 2 (ADL 384314). Despite the LLCs' requests for a correction highlighted in bold at the bottom of pages 2 of 10 of the letter, Attachment 3 (Draft Exhibit C) to the Decision continues to misrepresent ownership of the ORRIs in NU Tract 2 (ADL 384314) which leaves me wondering whether the first two pages and the following eight pages of submitted comments were properly considered by Division before issuing the Decision. EXHIBIT 4 Page 1 of 6 Page 2 Hilcorp's Proposal specifically stated, "Only acreage that has been proven to contribute to the production of natural gas has been included in this application." That was the basis of Hilcorp's decision to include 80 acres of ADL 384314 in the expansion of the Falls Creek Participating Area ("FCPA'). The LLCs submitted comments' central concern was that "...proven to contribute..." is a much more conservative standard than is required to be used under the State of Alaska's statutory framework regarding participating areas (PAs). Specifically, Alaska law states that PAs should include acreage "...reasonably estimated through use of geological, geophysical, or engineering data to be capableof producing or contributing to the production of hydrocarbons in paying quantities... —a more inclusive definition than Hilcorp's "proven to contribute" standard. This appeal is premised, in part, on the fact that Hilcorp—as operator of the Ninilchik Unit—has gone on record stating that 80 acres within ADL 384314 have been proven by Hilcorp to be contributing to the production of natural gas. Again, this is a much more conservative standard for inclusion in a PA that is used within the Alaska legal framework for PAs. It is PLC, LLC's and MH2, LLC's contention that these 80 acres meet and exceed all the Alaska legal requirements for inclusion in the FCPA and therefore must be included in the FCPA pursuant to Hilcorp's claim and request. It is also the LLCs' contention—for the reasons stated in the LLC's submitted comments -that much more acreage to the north (and further to the east and west) of those 80 acre should be included in the expanded FCPA consistent with Alaska's statutes and regulations pertaining to PAs as well as Alaska's statutes and regulations regarding protection of correlative rights of royalty owners, which by Alaska law includes overriding royalty owners. In addition to the more extensive comments regarding this matter contained in the LLCs' submitted comments, the LLCs submit the following comments about the Division's Decision. The pool of gas being produced at the FCPA is from the Tyonek and Beluga formations. The Falls Creek #6 (FC6) is the well closest to ADL 384314. In fact, when preparing the current comments I learned that the bottom hole location of FC6 was permitted to be drilled into acreage contained in ADL 384314. The FC6 was completed in the Beluga and Tyonek formations. During September 2014 when planning the FC6, Hilcorp represented to the Alaska Oil and Gas Conservation Commission ("AOGCC") regarding the FC6, "Subsurface and 3D seismic control indicate flat structure to the northeast of the Falls Creek 1RD, which has cumulated over 20BCFG from predominately the Tyonek Formation." On June 9, 2015, Hilcorp Alaska, LLC submitted a "Brief Well Summary" to the AOGCC stating, "Falls Creek #6 is a grass roots well that is currently producing from the Tyonek and Beluga sands." Contrary to Hilcorp's representation to the AOGCC, the ' 11 AAC 83.351(c). EXHIBIT 4 Page 2 of 6 Page 3 Division states in its Decision, "...the Tyonek Formation completions were not productive..." The LLCs request that the Department Commissioner require the Division to explain this discrepancy in State records about the FC6. The Tyonek sands cannot be both productive and non-productive. Regardless of whether the Tyonek sands are productive or non-productive, the results of the FC6 as contained in the AOGCC well files certainly do not prove that Hilcorp was wrong when it asserted in the Proposal that 80 acres of ADL 384314 to the north of FC6 have been proven by Hilcorp to contribute to production of natural gas within the FCPA. The Division's Decision states, "There are also numerous near -vertical faults oriented perpendicular to the bounding fault. These perpendicular faults divide the Ninilchik anticline into discrete blocks, some of which contain isolated gas accumulations." A structure map of the Ninilchik Unit created by Marathon (the predecessor to Hilcorp in the Ninilchik Unit) based upon Marathon's seismic data was attached to the LLCs' submitted comments. The east -west fault to the north of FC6 that is perpendicular to the fault running north -south along the Ninilchik anticline is clearly represented by Marathon. That east -west fault is far to the north of the 80 acres in ADL 384314 that Hilcorp described as proven to contribute to production. In the Division's Decision it states, "Seismic data, though instrumental in identifying prospective structural traps, have proven to be unreliable in the Ninilchik area and other areas in Cook Inlet for detailed subsurface mapping of the internal architecture and outer limits of producing gas accumulations." The Division also states, "The operator chose to use only the existing wells in generating the depth maps and not use the seismic data." The Division also describes how Hiloorp used the "...Lowest Known Gas ("LKG") method. This was determined by depth mapping each productive interval and interpreting an LKG contour, or polygon, for each productive interval." The Decision goes on to state, "The Division agreed with the operator in not using the seismic data in this determination but disagreed with the inclusion of these areas which are very likely unproductive. The Division felt it was necessary to further simplify the approach to address these issues and the circle and tangent method was chosen..." rather than Hilcorp's "...LKG contour, or polygon..." method. In the Division's Decision it states, "The structural complexities associated with a large thrust belt, such as the Ninilchik structure, and the unpredictable nature of fluvial depositional environments in general make traditional reservoir evaluation methods challenging in the Falls Creek area." The LLCs agree with this statement. Then the Division comments that, "Seismic data, though instrumental in identifying prospective structural traps, have proven to be unreliable in the Ninilchik area and other areas in Cook Inlet for detailed subsurface mapping of the internal architecture and outer limits of producing gas accumulations." The LLCs agree that subsurface mapping of fluvial depositions is challenging. But that challenge does not obviate the fact that 31) seismic data is instrumental when modeling the putative conformation of structural and/or stratigraphic reservoir traps in and around fluvial depositions. EXHIBIT 4 Page 3 of 6 Page 4 In the face of the structural complexity created by the lenticular braided streambeds that formed the fluvial deposits of the Beluga and Tyonek reservoirs described in the Division's Decision, the Division and Hilcorp both decided that 3D seismic data should not be considered when attempting to reasonably estimate the FCPA reservoir. The Division also decided that drawing a 1,500 foot radius circle around the existing well bores accurately captures the areal extent of the braided fluvial streambeds contributing to production from each wellbore. Again, the LLCs fully agree with the Division's assertions regarding the structural complexity of fluvial deposits in and around the FCPA. Nonetheless, the LLCs disagree with any conclusion that this complexity warrants and supports a decision to disregard the available 3D seismic data when attempting to accurately define the areal extent of the FCPA reservoir. Moreover, the LLCs disagree that this reservoir complexity supports the use of the simplest method possible — namely, using a circle with a radius of 1,500 feet around each existing production wellbore to define contributory reservoir rock. Complexity compels the use of all available data — including but not limited to 3D seismic data to reach conclusions regarding the areal extent of complex reservoir rock reasonably estimated through use of geological, geophysical, or engineering data to be capable of producing or contributing to the production of hydrocarbons in paying quantities as required under Alaska statutes and regulations. A basic principle of scientific logic is parsimony. The parsimony principle tells us to choose the simplest scientific explanation that fits all the evidence — not just some of the evidence. Parsimony does not allow us to ignore evidence because of the complex nature of that evidence or the complex nature of the natural phenomenon that needs to be understood from a scientific perspective. Ignoring available scientific data (e.g. 3D seismic data) and imposing a simplistic explanatory model as a substitute for these data is wrong-headed, at best. The Division erred when it used a simplistic engineering technique (i.e., circle drawing), while ignoring useful and available data when attempting to explain a highly complex reservoir environment. Viewed from a different perspective, is it rational to conclude that over 20BCFG flowed exclusively from rock contained within a 1,500 feet radius surrounding the wellbore of the Falls Creek #IRD? The LLCs think that the conformation and areal extent of the Tyonek reservoir rock contributing to the production from the Falls Creek #IRD is much more complex than the circle model used by the Division would suggest. It is likely that one or more of the fluvial river bed channels penetrated by the FC #IRD in the Tyonek sands are connected through the braiding of the ancient river(s) to an aggregation of other streambeds of sufficient length to contain more than 20 BCFG. Lenticular braided streambeds are not deposited in circles. Rather, these deposits are lenticular and curvilinear and generally flow downstream within the -depositional environment in which they were originally created just like the Susitna and Matanuska Rivers flow downstream in a braided fashion today—building up yet another layer of fluvial deposits at the surface of the north -south oriented Cook Inlet basin. It is highly improbable that Hilcorp has summarily dismissed the available 3D seismic data when attempting to understand the reservoir from which more than 20 BCFG has been produced around the Falls Creek #IRD well. Rather, it is highly probable that the 3D seismic data in the region of the EXHIBIT 4 Page 4 of 6 Page 5 FCPA has been studied intensely with the goal of understanding the conformation of the Tyonek sands and finding similarly conformed fluvial seismic features in the Tyonek Formation elsewhere in and around the FCPA. Drawing circles around the producing wells in and near the existing FCPA while ignoring available 3D seismic data is not a parsimonious or scientifically valid approach to defining the FCPA reservoir rock. The argument that the use of circles instead of polygons is the correct method to define the areal extent of the Beluga and Tyonek reservoirs because the circles do not include wellbores that the Division asserts to be dry holes is not a satisfactory reason to ignore the available 3D seismic data or to conclude that the simplest model (drawing circles) accurately describes the conformation of these complex reservoirs. Because the circles drawn around producing wells conveniently did not circumscribe wells that the Division describes as non -producing, does not mean that each wellbore is surrounded by a 1,500 foot radius circle containing a balloon -like deposit of gas with none of the gas coming from reservoir rock exceeding this 1,500 foot radius. Similarly, it is incorrect to assume for the same reason that all of the reservoir rock within 1,500 feet of the producing well bores is a source of the produced gas. As suggested by the Division in its Decision, fluvial deposits created from the residua of lenticular braided streambeds create much more complex reservoirs than the circle model would suggest. In summary, it is not reasonable to ignore the available 3D seismic data when modeling the Beluga and Tyonek reservoirs. Arbitrarily drawing 1,500 circles around existing wellbores and then concluding that all the areal extent of reservoir rock reasonably estimated to be capable of producing or contributing to the production of hydrocarbons in paying quantities has been included within these circles is likewise unreasonable. The 1,500 radius around a well bore is the established set -back distance used in State of Alaska laws and regulations to define when a spacing exception is required before proceeding with the drilling of a gas well near a legal boundary. Using the 1,500 foot radius as the sole basis for defining the areal extent of a reservoir after wells have been drilled and ignoring available 3D seismic data is unacceptable. Full consideration of the 3D seismic data as well as the vagaries of the fluvial deposits in the Beluga and Tyonek formations must be included in the Department's consideration of the Division's Decision on appeal to arrive at a reasonable estimate of the FCPA reservoir. It is a matter of record that Hilcorp asserted that 80 acres of ADL 384314 have been proven to be contributing to production of natural gas within the FCPA. This assertion should have been acknowledged by the Division as part of its Decision and, at an absolute minimum, this acreage should be included in the FCPA as proposed by Hilcorp. Moreover, the LLCs assert that much more additional acreage surrounding these 80 acres to the north, east, and west should be classified as reasonably estimated to be capable of producing or contributing to the production of hydrocarbons in paying quantities and should be included in the FCPA as stated in detail in the January 2, 2017 comments. EXHIBIT 4 Page 5 of 6 Page 6 Remedies Requested: The LLCs appeal the Decision for the reasons stated above. The Division's Decision contains no findings of fact given the process used to reach the Division's decision. The Division's decision to ignore evidence available to the Division (i.e., 3D seismic data) is egregious and economically damaging to the LLCs. The Division's decision to capriciously exclude 80 acres—acreage that is described by Hilcorp (the operator of the FCPA) as proven to contribute to production—within ADL 384314 in the expanded FCPA was reached without providing due process to the LLCs. The LLCs request the following remedies: 1. The Department find that the Division erred on the above -stated points and issue a finding that reserves the Division's findings and conclusions; and 2. The Department schedule an oral hearing on this appeal. Thank you for your attention to this important matter. Cc: nr I i . ,-, Carol A. Hult; Manager, MH2, LLC University of Alaska — Land Management Office Bill Webb Shelle K. Leman Stephen S. Webb Susan L. Steinbach Donkel Oil & Gas, LLC David Duffy, Landman, Hilcorp Alaska, LLC EXHIBIT 4 Page 6 of 6 July 7, 2017 THE STATE Departlnent of Natural Resources ccwt:rNOR MIA. tc:,nrr VIA CERTIFIED MAIL Paul L. Craig PLC, LLC and MH2, LLC 2440 East Tudor Road, #230 Anchorage, AK 99507 Re: Appeal ofNinilchik Unit Falls Creek Participating Area Expansion Dear Mr. Craig: PLC, LLC and MH2, LLC (PLC/MH2) appealed the Department of Natural Resources (DNR) Division of Oil and Gas (Division) May 16, 2017 decision approving the first expansion of the Falls Creek Participating Area within the Ninilchik Unit (Division Decision). PLC/MH2 lacks standing and their appeal is dismissed for the reasons stated below. Only persons who are "aggrieved" by a decision may appeal to the Commissioner. AS 44.37.020(b). PLC/MH2 assert that their interest in the Division Decision is as overriding royalty interest holders (ORRI) in ADL 384314, which the Division did not include in the expanded Participating Area. But an ORRI has no interest in a lease or unit and thus has no basis to be aggrieved if a lease is included in a unit's participating area or not. An ORRI is a nonpossessory interest in a percentage of production at the surface, free of costs. See 38 Am. Jur. 2d Gas and Oil § 99 ("'Overriding interest' is an interest in oil and gas produced at the surface, free of the expenses of production."); Black's Law Dictionary 1446 (9th ed. 2009) (defining overriding royalty as "nonparticipating" and "[a] share of production— or of the revenue from production free its costs"). An ORRI has no interest in a lease, in the hydrocarbons in a lease, in whether those hydrocarbons are produced, or whether a lease is combined with others within a unit or unit participating area. An ORRI's interest arises only after hydrocarbons are produced. Thus an ORRI is not affected by decisions related to a lease or unit. In Donk-el Oil & Gas, LLC v. State ofAlasha, Department olWatural Resources, case no. 3AN-12- 07686C], Mr. Donkel appealed the denial of a request for a unit formation that would have included two leases in which Mr. Donkel held an ORRI. In a December 20, 2012 order, the superior court dismissed the appeal, holding that as an ORRI, "Donkel is not sufficiently `affected' since it is merely an[] ORRI holder, and thus cannot establish standing for the current appeal." The court based its holding on two Alaska Supreme Court decisions that questioned whether ORRIs have standing, as well as decisions from other jurisdictions holding that ORRIS have no interest in a lease or whether a lease is developed. See Gottstein r. State, Dcp't qf Natural Resources, 223 P.3d 609, 620 n.22 (Alaska 2010) (citing out of EXHIBIT 5 Page 1 of 2 Paul Craig July 7, 2017 Page 2 of 2 state and secondary sources indicating a lack of standing for ORRIS, but noting that the issue is not before the court on appeal); Allen v. Alaska Oil & Gas Conservation Comm n, 1 P.3d 699, 702, n.7 (Alaska 2000) (noting that the court was expressing no view on how it would decide the question of ORRI standing since the AOGCC had earlier conceded the point); see also Ridge Oil Co., 117c. v. Guinn Investments, Inc., 148 S.W. 3d 143, 155-60 (Tex. 2004) (ORRI has no right or ability to force continuation of a lease or seek recourse against a lessee for allowing a lease to terminate, thereby terminating the ORRI's interests). Just as in the Donk-el case where the ORRI was unaffected by whether leases were unitized, PLC/MH2 retain their interest in a share of production from ADL 384314 regardless of whether that lease is part of the Falls Creek Participating Area. A participating area is a grouping of leases within a unit that share a common, delineated reservoir. 11 AAC 83.351(b); see also Ninilchik Unit Agreement, Article 9.3. That grouping does not alter PLC/MH2's percentage interest in the oil or gas produced from ADL 384314. If and when the operator chooses to produce from ADL 384314, PLC/MH2 will then have a right to a share of that production. But as a nonpossessory interest in production, an ORRI does not provide ALC/MH2 with an interest in whether the operator produces from that lease as part of one particular participating area or another. Following the Donkel holding and the cases that court relied on, I find that PLC/MH2 lack standing to bring this appeal. Accordingly, PLC/MH2's appeal is dismissed. This Commissioner's Decision is the final administrative order and decision of the department for the purpose of an appeal to the superior court. An appellant affected by this final administrative order and decision may appeal to superior court within 30 days in accordance with the Alaska Rules of Court and to the extent permitted by applicable law. S' cerely, � C V`) C An rew T. Co missioner Department of Natural Resources EXHIBIT 5 Page 2 of 2