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Home My WebLink AboutO 1721. May 17, 2019 2. ------------------ 3. July 2, 2019 4. July 9, 2019 5. July 17, 2020 6. October 30, 2019 7. January 15, 2020 8. January 16, 2020 9. April 7, 2020 10. April 30, 2020 11. July 20, 2020 12. October 1, 2020 13. October 6, 2020 Other Order 172 Docket No: OTH-19-017 Ltr from Operator requesting decreased bonding amount Background Information AOGCC Bonding Amount letter to operator Malamute's response to AOGCC 7/2/19 ltr AOGCC Grants Malamute request for reconsideration Notice of Hearing, Affidavit of Publication and Mailing email from Operator regarding hearing and informing them when record closes Transcript, exhibits (Exh E held in secure storage), BLM's testimony and sign in sheet Ltr to Malamute informing them decision would be forthcoming by April 30, 2020 Ltr to Malamute informing them decision would be forthcoming by July 31, 2020 Ltr to Malamute informing them decision would be forthcoming by September 30, 2020 Operator request for Suspension of Bonding pursuant to 20 AAC 20.025 Bonding AOGCC GRANTS Malamute's request of 10/1/2020 until April 6, 2021 to sell leases and P&A Wells ORDERS STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 7th Avenue Anchorage, Alaska 99501 Re: Request by Malamute Energy, Inc. for ) Docket Number: OTH-19-017 reduction in the bonding amount required ) Other Order 172 under new regulation 20 AAC 25.025. ) Malamute Energy, Inc. Bond Reconsideration Request September 28, 2020 DECISION AND ORDER On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) sent Malamute Energy, Inc. (Malamute) a letter regarding the new bonding requirements in 20 AAC 25.025. This letter advised that under the new regulation Malamute's 2 permitted wellheads increased Malamute's bonding level to $800,000. Because Malamute had a $200,000 bond in place, an additional $600,000 in bonding was required, payable in two annual installments of $500,000 and $100,000. On July 9, 2019, Malamute requested reconsideration, seeking a reduction in the required bonding amount. On January 16, 2020, the AOGCC held a hearing on Malamute's request for reconsideration. FINDINGS: Based upon the evidence presented by Malamute, including the testimony of its president, AOGCC finds as follows: 1. By letter to the AOGCC dated February 23, 2018, Malamute stated that the cost to plug and abandon (P&A) its wells was $2,900,000. 2. In late 2019, the Bureau of Land Management (BLM) increased the bonding requirement on Malamute's Umiat Unit from $200,000 to $1,250,000, with $525,000 to be posted by early March 2020. 3. The sole basis for Malamute's request to reduce its AOGCC bond is that it is entitled to an offset because the bonding requirement of $1,250,000 by the BLM exceeds the $800,000 bonding level required by the AOGCC. Malamute indicated it would post the BLM bond. 4. Malamute requests a total reduction of its new AOGCC bonding amount of $600,000, leaving Malamute with the bonding requirement of $200,000 that is already in place. CONCLUSIONS: 1. The only basis for Malamute's request was that it should receive on offset of the BLM bond it intended to post. As of the date of this order, Malamute has not posted any of the new BLM bond. Malamute's bonding with the BLM remains at $200,000. Other Order 172 September 28, 2020 Page 2 of 2 NOW THEREFORE IT IS ORDERED THAT: Malamute's request for reconsideration is DENIED. Malamute's bonding requirement for the AOGCC is $800,000 less Malamute's existing $200,000 AOGCC bond. As a result, Malamute's bond requires an additional $600,000. DONE at Anchorage, Alaska and dated September 28, 2020. Jeremym. .19.11, 1.b, ft.µ1 ma 111— x,am,le.9na Jessie L. ametr..yn Price wu:lov.wv wx-zmoavoams, m99„-0g9p Chmielowsld Jeremy M. Price Daniel T. Seamount, Jr. Jessie L. Chmielowski Commissioner, Chair Commissioner Commissioner Daniel T. o'9"lssig tl°r wn*IT.&,.mwnt L. Seamount, Jr. o"e103 027 1811:190 w AND This order on reconsideration is the FINAL order of the AOGCC. It may be appealed to superior court. Any appeal MUST be filed within 33 days after the date on which the AOGCC mails this order, OR 30 days if the AOGCC otherwise distributes this order. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. Bernie Karl K&K Recycling Inc. Gordon Severson Richard Wagner P.O. Box 58055 3201 Westmar Cir. P.O. Box 60868 Fairbanks, AK 99711 Anchorage, AK 99508-4336 Fairbanks, AK 99706 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 C �,Ic� IZ°�0 I� Colombie, Jody J (GED) From: Leonard Sojka <leonard@malamuteenergy.com> Sent: Friday, August 7, 2020 2:45 AM To: Colombie, Jody J (CED) Subject: Re: Bonding Categories: Yellow Category Got it. Thanks. On Thu, Aug 6, 2020 at 9:16 PM Colombie, Jody J (CED) <jody.colombieftalaska. > wrote: Leonard, You can request reconsideration of the August 2020 payment in light of the proposed amendment to the current Bonding Regulation. Jody Colombie Special Assistant T)Ir: STATE: "ALASKA GOVERNOR MICHAEL. J. DUNLEAVY October 6, 2020 Leonard Sojka (Sent by Email) President, Malamute Energy, Inc. 7701 Golden Valley Road P.O. Box 27121 Golden Valley, MN 55427 Re: Request for suspension of bonding 20 AAC 25.025 Dear Mr. Sojka: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 The Alaska Oil and Gas Conservation Commission (AOGCC) has received a request from Malamute Energy, Inc. (Malamute) dated October 1, 2020, requesting suspension of the required bond increase for Umiat 18 and Umiat 23H until May 31, 2021. Malamute is required to post $600,000, in addition to the current $200,000 in bonding with the AOGCC (OTH-19-017). Malamute states it is in negotiations to sell the Renaissance Umiat assets in exchange for the buyer agreeing to plug and abandon Umiat 18 and Umiat 23H during the upcoming 2020/2021 drilling season. Based on the representations made in Malamute's October 1 letter, the AOGCC grants a 6 -month extension of time either to post the required bond or to file a designation of operator form transferring operatorship of the Renaissance Umiat 18 and 23H wells. The new deadline is 180 days from the date of this letter. Jeremy M. Price °a"1O101Q°` uuasmw Jeremy M. Price Chair, Commissioner Daniel T. w MW. ; j,. Seamount, Jr. QiP 3030IM 1e:3ms2 aem Daniel T. Seamount, Jr. Commissioner Jessie L. °q11"`gne0WJ-f L rtx ww Chmielowski'.°'°'°°°""'° Jessie L. Chmielowski Commissioner As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for recomideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denim reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to ran is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 12 Malamute Energy, Inc. October 1, 2020 Jessie Chmielowski Petroleum Engineering Commissioner Alaska Oil and Gas Conservation Commission 333 W. 71h Ave Anchorage, Alaska 99501 Re: Request for suspension of bonding pursuant to 20 AAC 25.025 Bonding Commissioner Chmielowski: Malamute Energy, Inc. is the designated operator for Renaissance Umiat, LLC, who has one suspended well on each of its two BLM leases: • Umiat 18 (API/ONRR 50-287-20028; PTD 213-014) on lease AKAA 081726, and • Umiat 23H (API/ONRR 50-287-20029; PTD 213-020) on lease AKAA 084141 2 Malamute is negotiating to sell all of the Renaissance Umiat assets, including the two BLM leases, in exchange for the buyer agreeing to plug and abandon Umiat 18 and Umiat 23H during the upcoming 2020 / 2021 drilling season. 3 Malamute is also working to obtain a BLM letter acceptable to the potential buyer which states that the potential buyer is not responsible for any legacy environmental liabilities on either of the two leases, other than to plug and abandon Umiat 18 and Umiat 23H. 4 The BLM has suspended operations on the Umiat Unit until May 31, 2021, including the incremental BLM bonding requirements. Please see the attached BLM suspension letter. 5 Malamute requests that the AOGCC suspend the requirement that Malamute post $600,000 of bonding until May 31, 2021. Thank you, Leonard Sojka President Malamute Energy, Inc. Page 1 of 1 „SENT F.y United States Department of the Interior A O BUREAU OF LAND MANAGEMENT ' Alaska State Office 222 West Seventh Avenue, # 13 Anchorage, Alaska 99513-7504 www.blm.zov/alaska In Reply Refer To: 3135(932) AKAA 81726 AKAA 84141 August 1, 2020 Leonard Scjka President, Malamute Energy, Inc. PO Box 27131 7710 Golden Valley Road Golden Valley, Mn. 55427 Dear Mr. Sojka: Your request for suspension of NPR -A leases AKAA 81726 and AKAA 84141 pursuant to 43 CFR 3135.2, was received on July 29, 2020. In your letter, Malamute Energy, Inc. stated that the company has been impacted due to; access of your lease holdings, unprecedented collapse in global oil prices, as well as a postponement until 2021 regarding the final comprehensive subsurface report to help shape your future operations. BLM recognizes the unprecedented hardships currently being experienced by federal oil and gas operators. Due to circumstances beyond your control, the request for suspension of operations is approved and will be effective beginning August 1, 2020. This suspension of operations encourages the greatest ultimate recovery of oil and gas from the leases and halts the running of the lease term, but does not suspend the payment of rental or minimum royalty. A suspension of operations extends the term of the lease by the duration of the suspension and prevents the lease from expiring during the suspension. The period of suspension will be applied to the Initial and Continuing Development Obligations for the Umiat Unit. In the event Malamute Energy were to commence any operations associated with the leases under suspension, the BLM the suspension will be lifted on the first day of the month in which those operations occur. If no operations occur, the suspension will expire on May 31, 2021. If you have any questions, please contact Rob Brumbaugh at (907) 271-4429. Sincerely, Wayne Svejnoha INTERIOR REGION 11 • ALASKA THE STATE °fALASKA. July 20, 2020 GOVERNOR MICHAEL J. DUNLEAVY Leonard Sojka President Malamute Energy, Inc. 7701 Golden Valley Road P.O. Box 27121 Golden Valley, MN 55427 Re: Docket No: OTH- 19-017 Request to reconsider bonding amount Dear Mr. Sojka: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.aogcc.alaska.gov This matter is pending on Malamute Energy Inc: motion to reconsider the bonding amount imposed under 20 AAC 25.025. On April 7, 2020 the Alaska Oil and Gas Conservation Commission held in abeyance this request until April 30, 2020. As a result of the continuing disruptions from the COVID-19 virus outbreak, the motion to reconsider will be held in abeyance until September 30, 2020. Sincerely, U � 4— Jeremy M. Price Chair, Commissioner As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall gram or refuse the application for reconsideration in whole or in part within 10 days after it is filed. Failure m act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to ran is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. THE STATE 01ALASKA GOVERNOR MICfLAEL I. DUNLEAV'Y April 30, 2020 Leonard Sojka President Malamute Energy, Inc. 7701 Golden Valley Road P.O. Box 27121 Golden Valley, MN 55427 Re: Docket No: OTH-19-017 Request to reconsider bonding amount Dear Mr. Sojka: Alaska Oil and Gas Conservation Commission 333 west Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.ciaska.gov This matter is pending on Malamute Energy Inc. motion to reconsider the bonding amount imposed under 20 AAC 25.025. On April 7, 2020 the Alaska Oil and Gas Conservation Commission held in abeyance this request until April 30, 2020. As a result of the continuing disruptions from the COVID-19 virus outbreak, the motion to reconsider will be held in abeyance until July 31, 2020. Sincerely, V V � ��— Jeremy M. Price Chair, Commissioner As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application for reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed. failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to run is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. THE E STATE 01ALASKA April 7, 2020 GOVERNOR MICHAEL J. DUNLEAVY Leonard Sojka President Malamute Energy, Inc. 7701 Golden Valley Road P.O. Box 27121 Golden Valley, MN 55427 Re: Docket No: OTH-19-017 Reconsideration request of bonding regulation 20 AAC 25.025 Dear Mr. Sojka: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 www.00gcc.alaska.gov This matter is currently pending on a motion to reconsider the additional bonding amount imposed upon Malamute Energy, Inc. as a result of implementation of the new bonding regulation, 20 AAC 25.025. As a result of the COVID-19 virus outbreak and its impact upon the functioning of both operators and the AOGCC, the motion to reconsider will be held in abeyance until at least April 30, 2020. Prior to April 30, Alaska Oil and Gas Conservation Commission will assess whether a further extension of this order is necessitated by the COVID-19 virus outbreak. Sincerely, rerice air, issioner AND APPEAL As provided in AS 31.05.080(a), within 20 days after written notice of the entry of this order or decision, or such further time as the AOGCC grants for good cause shown, a person affected by it may file with the AOGCC an application for reconsideration of the matter determined by it. If the notice was mailed, then the period of time shall be 23 days. An application fm reconsideration must set out the respect in which the order or decision is believed to be erroneous. The AOGCC shall grant or refuse the application for reconsideration in whole or in part within 10 days after it is filed Failure to act on it within 10 -days is a denial of reconsideration. If the AOGCC denies reconsideration, upon denial, this order or decision and the denial of reconsideration are FINAL and may be appealed to superior court. The appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision denying reconsideration, UNLESS the denial is by inaction, in which case the appeal MUST be filed within 40 days after the date on which the application for reconsideration was filed. If the AOGCC grants an application for reconsideration, this order or decision does not become final. Rather, the order or decision on reconsideration will be the FINAL order or decision of the AOGCC, and it may be appealed to superior court. That appeal MUST be filed within 33 days after the date on which the AOGCC mails, OR 30 days if the AOGCC otherwise distributes, the order or decision on reconsideration. In computing a period of time above, the date of the event or default after which the designated period begins to min is not included in the period; the last day of the period is included, unless it falls on a weekend or state holiday, in which event the period runs until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. AOGCC 1/16/2020 FFMO: REQUC ARECONSIDERATIONOFBONDINGREQUIUE NTS ALASKA OIL and GAS CONSERVATION COMMISSION In the Matter of the Request for ) Reconsideration of Bonding ) Requirements by Malamute Energy, ) LLC. ) PUBLIC HEARING Anchorage, Alaska January 16, 2020 10:00 a.m. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner CanFuter Matrix, LLC Phone: %7-2434668 135 Chuatenaen Dr., Ste, 2., Mch. AK 99501 Fax 907-243-1473 Email'. a ilx Bci na AOGCC 11162020 ITMO: UQUE AMCONSIDER TIONOF80NDINGREQUBEMENTS Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Chairman Price 03 3 Testimony by Mr. Sojka 07 4 Testimony by Mr. Brumbaugh 23 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 C.,.e , &U. , L. Phone: 907-243-0668 135 Chmtemen Dc, Ste. 2., Aneh, A 99501 Fix: 90]-243-14]3 Email' sero¢ QBci.net AOGCC I 1/1&2020 ITMO: REQU) R RECONSIDERATIONOF BONDINGKEQUIREMENTS Page 3 1 P R O C E E D I N G S 2 (On record - 10:00 a.m.) 3 CHAIRMAN PRICE: Good morning. I'll call this 4 hearing to order. This is a public hearing to consider 5 Malamute Energy, LLC's request for reconsideration of 6 their new bonding amounts. This hearing is being held 7 on the morning of January 16, 2020 at 10:00 a.m. The 8 location is the Alaska Oil and Gas Conservation 9 Commission offices at 333 West Seventh Avenue, 10 Anchorage, Alaska. Before we begin I'll introduce the 11 Commissioners. To my left is longtime Commissioner Dan 12 Seamount, to my right is Commissioner Jessie 13 Chmielowski and I am Chairman Jeremy Price. 14 If any persons here need special accommodations 15 to participate in this proceeding please see Samantha 16 Carlisle and she'll do her best to accommodate you. 17 She's raising her hand right now. 18 And I believe we have on the phone today 19 Leonard Sojka. Can you hear me? 20 MR. SOJKA: Yes, sir. Thank you. 21 CHAIRMAN PRICE: Okay. I'm going to run 22 through a little more business before -- and I'll come 23 back to you. 24 Thanks for joining us. 25 MR. SOJKA: Thank you. Computer Matrix, LLC Phone: 90T -243A668 135 Christensen Dr, Ste, 2., And, AK 99501 Fax: 90)-243-14)3 Email sahile©8ci.net AOGCC 1/16/2020 ITMO. REQI� IRECONSIDERATION OF BONDMG REQUIREMENTS Page 4 1 CHAIRMAN PRICE: Computer Matrix will be 2 . recording the proceeding. Upon completion and 3 preparation of the transcript persons desiring a copy 4 will be able to obtain it by contacting Computer 5 Matrix. 6 Malamute Energy Incorporated by letter dated 7 July 9th, 2019 requested the Alaska Oil and Gas 8 Conservation Commission reconsider bonding amounts that 9 were established when 20 AAC 25.025 was adopted on May 10 18th, 2019. Malamute currently has a bond for 11 $200,000. The new bond amount is based on Malamute 12 having two wells, Umiat number 18 and Umiat 23H. Both 13 are in suspended status. So the total bonding amount 14 is $400,000 for each well with a total of $800,000. 15 This hearing is being held in accordance with 16 Alaska Statute 44.62 and 20 AAC 25.540 of the Alaska 17 Administrative Code. 18 A few housekeeping topics before we begin. If 19 you submitted written comments you may, but there's no 20 need to reiterate your testimony. Oral testimony must 21 have relevance to the topic of today's hearing. The 22 sign -in sheet will be used to help format hearing 23 testimony. So if you plan to testify make sure you 24 have signed in and indicated that you'll be testifying. 25 And then I'd like to remind those who are testifying to Computer Morin, LLC phone 907-243-0668 135 Chrism u m Dr, S2. 2., Am h. AR 99501 Fav: 907-243-1473 C.A. sahile'@8u met AOGCC 1/16/2020 RMO: EEQUL.tMC0NSIDEMTI0N0F80NDMGUQUBEMENTS Page 5 1 speak into the microphones so the persons in the rear 2 of the room can hear and so the court reporter can get 3 a clear recording. Participants will be expected to 4 identify themselves as an expert or a witness. If you 5 are testifying as an expert you must have the 6 credentials, i.e., background and schooling. 7 This is a public hearing, not a debate. Please 8 be courteous to other speakers. To have a question 9 directed to someone testifying we ask that you provide 10 your question in writing along with your name and that 11 of the witness to Samantha Carlisle. Before the end of 12 the hearing the Commission will review these questions 13 and ask those it believes will be helpful in eliciting 14 relevant information. 15 A notice of this hearing was published in the 16 Anchorage Daily News on October 30th, 2019. It was 17 also posted on the State of Alaska Online Notices 18 website email distribution list as well as AOGCC's own 19 website. 20 Before we get started do we have any comments 21 from the Commissioners? 22 COMMISSIONER CHMIELOWSKI: No, thank you. 23 COMMISSIONER SEAMOUNT: I have none. 24 CHAIRMAN PRICE: All right. Mr. Sojka, would 25 you mind..... Computes Matrix, LLC Phone'.9 -N34668 135 Chdm... D,, Ste. 2., M h. A 99501 Fax'. 902-243-1403 Email: sahil.@,inn AOGCC I 116@020 RMO: REQU!RRECONSIDEBATIONOFBONDMGREQUIREMENTS Page 6 1 MR. SOJKA: Yes, sir. 2 CHAIRMAN PRICE: .....running through your 3 qualifications, background, education and current 4 position. And then I'll -- after that I'll go through 5 the swearing in. 6 MR. SOJKA: Well, I've been the sole I guess 7 employee of Malamute Energy since it was incorporated 8 in late 2016. Malamute as outlined in the letter I 9 submitted this morning, is the operator for Renaissance 10 Umiat. My background is primarily in finance although 11 I've spent a lot of time analyzing the mining industry 12 and the oil and gas industry. And so I -- I'm not a 13 qualified oil and gas professional from that 14 perspective, but otherwise, you know, I've been working 15 on and trying to further the efforts at 16 Malamute/Renaissance Umiat since late 2016. 17 CHAIRMAN PRICE: Okay. So you're an expert 18 when it comes to the business and operations, but in 19 terms of technical, you don't have the qualifications. 20 So if we get into any technical issues we'll -- we can 21 postpone for another time with another qualified 22 witness. 23 Does that sound fair? 24 MR. SOJKA: And/or I can, you know, bird dog 25 whatever questions you have and get them back -- get Computer Matrix, LLC Phone: W-243-060 135 Chdstenaen Dr., Ste. 2., M9h, AIC 99501 Fax: 907-243-1473 Emeil: sahile(a}gdnn AOGCC ' 1/16/2020 ITMO: REQUI A RECONSIDERATION OF BONDINGREQWMMENFS Page 7 1 1 answers to you for sure. 2 CHAIRMAN PRICE: Okay. Any issues with that, 3 Commissioners? 4 COMMISSIONER CHMIELOWSKI: No. 5 COMMISSIONER SEAMOUNT: No. 6 CHAIRMAN PRICE: At this point I'll ask that 7 you -- you're not here so you can't raise your hand, 8 but if you can just testify that you'll speak the truth 9 and nothing but the truth today. 10 MR. SOJKA: Yes, I will so testify. 11 LEONARD SOJKA 12 called as a witness on behalf of Malamute Energy, LLC, 13 testified as follows on: 14 DIRECT EXAMINATION 15 CHAIRMAN PRICE: Thank you. Did you want to -- 16 I appreciate the letter. Did you want to run through 17 the -- kind of the general arguments and the background 18 contained in your letter or did you want to start off 19 with us just asking questions, what would be most 20 helpful for you? 21 MR. SOJKA: Well, I guess -- I know it's a 22 little late, but I've been trying to refine, you know, 23 the information that I can provide. The letter that I 24 sent in this morning is an update of all our requests 25 from our July letter and it basically reflects the fact Campmer Mon., LLC Phone 907-243-0668 135 Chnstemea Dr., Sm. 2., A rh. A 99501 Fe: 907-243-1473 Emeil: sehile&&.mt AOGCC f UM020 RMO:MQUi .t]IECONSWEMTIONOF BONDINGMQUIREMENTS Page 8 1 that in -- you know, that that Umiat unit was formed, a 2 federal unit was formed, in -- as of September 1, 2019. 3 And subsequent to that the BLM performed a bond 4 adequacy review of the project and they've increased 5 their bonding requirements from the two $100,000 so 6 called lease bonds for the two leases to 1,250,000 to 7 reflect, you know, the unit and/or the wells on it. 8 And so since they -- and so we're asking the 9 Commission to consider the fact that these being BLM 10 leases that BLM is, you know, the primary regulator and 11 that any increase in AOGCC bonding would be redundant. 12 And so therefore we're now asking that there be no 13 increase in AOGCC bonding as opposed to, you know, only 14 $200,000 less to reflect the two BLM -- the $200,000 15 posted with the BLM. 16 So that would be I guess the primary difference 17 from our previous letter other than, you know, just 18 some, you know, additional incremental historical 19 background on this letter from this morning. 20 CHAIRMAN PRICE: Could you -- excuse me, could 21 you also just kind of run through a little bit of that 22 history, again current status. You had an original 23 letter from 2018 that had some of that history and then 24 again you touched on it again today. Would you mind 25 just kind of running through kind of what's been going Computer Matrix, LLC Phone: 901-243-0668 135 CMh men Dr., Ste. 2., Mch. AIt 99501 Fax: 907-243-1413 Email: sahile@gci.nd AOGCC V16 020 ITMO: BEQUC.3MCONSIDERATIONOFBONDTNGI(EQUIME TS Page 9 1 on the last few years with the Umiat leases and kind of 2 what's projected or planned for the near term? 3 MR. SOJKA: Well, sure. So, you know, we've 4 entered into a Umiat unit with the BLM and that has 5 their, you know, the various obligations over the next 6 five years that as I understand it are -- can be 7 adjusted, you know, from year to year, but basically 8 we've got an outline of what the BLM expects and what 9 we've agreed to try to do. So there's that. And but 10 otherwise what we've been trying to do is de -risk the 11 technical aspects of this project. You know, Linc came 12 in -- Linc was a publicly traded Australian oil and gas 13 company that bought into the -- that basically bought 14 Renaissance/Umiat from a private -- a previous owner in 15 I think it was 2015 plus or minus. Then they quickly 16 drilled two -- two so called modern wells up there 17 after the previous or subsequent to the previous 12 18 wells that were drilled primarily by the Navy as I 19 understand it, maybe not CV, but basically by the Navy. 20 And so Linc drilled a well in March of 2013 and 21 a well in 2014, neither well was successful. I'm not 22 really capable of drilling down into the nuances of why 23 they weren't successful, but neither well -- one of the 24 wells flowed something like 600 or 800 barrels in 25 total, the other well didn't flow at all. And so -- Compmes Metrix, LLC Phone: 9 -243-0668 135 Christensen Dc, SW 2., Anch. A 99501 Fax 907-243-1473 Email. sahile®Sci.net AOGCC 1 1/162020 ❑M0: REQUE :MCONSIDERATION OF BONDMGREQUIREMENTS Page 10 1 1 and then that plus, you know, Linc's other well, I 2 don't know how to characterize it, mismanagement you 3 could say, caused them to file bankruptcy. And so then 4 they just abandoned the project and/or because they 5 were now in Chapter 11 and/or other bankruptcy 6 proceedings, everything just collapsed. And so then 7 nothing happened at Malamute until creditors, and I 8 outlined this in more detail in this morning's letter, 9 but Linc Energy creditors through this, you know, 10 procedure allowed under Chapter 11 bankruptcy law 11 swapped some of their debt, you know, their investment 12 in Linc Energy (indiscernible) secured debt for Linc's 13 -- all of Linc's ownership in Renaissance/Umiat which 14 even though the percentages changed from that time due 15 to some disagreements with other minority members at 16 Renaissance/Umiat was effectively 97 and a half 17 percent. 18 So that's how Malamute -- Malamute shareholders 19 who are previous Linc creditors are now -- now own, you 20 know, Malamute Energy and Malamute Energy's sole asset 21 is its investment in Renaissance/Umiat. And so, you 22 know, in the -- since we acquired it or since Malamute 23 acquired it, we've, you know, studied the technical 24 aspects of why the previous wells didn't flow and tried 25 to, you know, de -risk some of that as much as possible. Computer Martz, LLC Phme: 907-243-0668 135 Chdstenun Dr., Ste, 2., Mch. A 99501 Fix: 90]-243-14]3 Email uhile@wLnet AOGCC 1 1/16/2020 IMO: REQUE . MCONSIDERATIONOF BONDMGREQUIREMENTS Page 11 1 So its -- you know, Umiat is well known to have a lot 2 of oil starting from apparently the time when it was -- 3 was or still is seeping to surface. And so throughout 4 -- so, you know, one of the first things we did is we 5 pulled together a whole bunch of oil industry experts 6 that were familiar with the Umiat project from having 7 Linc -- worked on it for Linc or previous owners and, 8 you know, we kind of characterize it as a 9 multidisciplinary study, but we all came together in a 10 room and talked about the petrophysics and the geology 11 and the reservoir modeling and what the issues were 12 and, you know, what to do about it. And then from that 13 Malamute has been pursuing primarily three technical 14 study with the university -- with a professor at the 15 University of Anchorage, Alaska and I outlined those in 16 this -- in this letter from this morning too in brief. 17 And again I can provide more information to the 18 Commission on the results of those. The first two 19 studies have been completed and I've written up or I 20 have summary reports on those first two projects, the 21 third project is winding up now and that one is the 22 most interesting hopefully of the three and it goes to 23 applying modern analysis and updated computing power 24 effectively to reanalyze the 2008 3D seismic that was 25 shot at site. Computer Mama, LLC Phone: 907-243-0 8 135 Chnue0aen Dr., Ste. 2., Anch, A 99501 F. 907-243-1473 Email: aahile'@8ci.net AOGCC 1/16/2020 ITMO: REQU9 tMCONSIDERATIONOFBONDMGREQUIREMENTS Page 12 1 And so where I currently am is -- so when we 2 first started analyzing this project it was, you know, 3 de -risk it, try to figure it all out. Well, once you 4 realize or once it becomes clear that even though the 5 oil -- so it's quite possible that the oil in the -- in 6 the -- so a lot of the oil at Umiat or at least the oil 7 reserves at Umiat are in permafrost. And it's 8 conceivable that that oil can be produced, but nobody 9 else in Alaska is doing it. And so, you know, I've 10 concluded that that's not going to -- it's -- or it's 11 less likely to attract, you know, industry players than 12 if we can find oil that's deeper. And so that's what 13 we're trying to do now with this updated project three 14 at the University of Anchorage, Alaska, this Av0 15 analysis. And so we're trying to see if we can 16 redelineate some of the prospective layers of oil 17 deeper than the permafrost at Umiat. 18 CHAIRMAN PRICE: Okay. And so to be clear 19 then, so are you saying that one of the wells or 20 neither well will flow on its own? 21 MR. SOJKA: Neither well. 22 CHAIRMAN PRICE: Okay. 23 COMMISSIONER CHMIELOWSKI: Mr. Sojka, this is 24 Jessie Chmielowski. What specific obligations has 25 Malamute agreed to as part of the unit agreement? Computer Matrix, LLC Phone%7-243-0568 135 Christ.. Dc, Ste. 2., Anch. AIC 99501 Fax: 907-243-1471 Email'sahileQgci.nU AOGCC 1 1/16/2020 ITM0:UQ1d t RECONSIDERATIONOFBONDINGREQUI�NTS 9 COMMISSIONER CHMIELOWSKI: So, Mr. Sojka, in a 10 letter dated to -- in a letter to the AOGCC dated 11 February 23rd, 2018, Malamute stated that the cost to 12 P&A these two wells in $2.9 million. Has that cost 13 estimate changed? 14 MR. SOJKA: For -- I -- did you say the cost to 15 -- the estimated cost to P&A the two wells? 16 COMMISSIONER CHMIELOWSKI: Right. Can you hear 17 me? There was a letter Malamute sent to the AOGCC in 18 2018 that gave a cost estimate to P&A the two wells at 19 $2.9, is that still correct? 20 MR. SOJKA: Yes. So basically at the tail end 21 of Linc's involvement or actually while Linc was in 22 bankruptcy one of the qualified oil engineers working 23 -- consultants working for Linc did an analysis of what 24 it would cost to P&A the two wells. And he -- yeah, 25 round number $3 million at the time which we think is Com9mmr Mama, LLC Phone907-243-0666 135 Chrismmaa Dc, Sm. 2, Anch. A 99501 Fax 907-243-1473 Email sahila@gci,m% Page 13 1 MR. SOJKA: Oh. Well, I don't have those up. 2 There's a five year window. One of the -- within two 3 or three years we've committed to drilling another well 4 there, that would be the most significant aspect of our 5 commitments. 6 COMMISSIONER CHMIELOWSKI: Thank you. 7 MR. SOJKA: And I can get you the details of 8 that for sure, I can send them to you 9 COMMISSIONER CHMIELOWSKI: So, Mr. Sojka, in a 10 letter dated to -- in a letter to the AOGCC dated 11 February 23rd, 2018, Malamute stated that the cost to 12 P&A these two wells in $2.9 million. Has that cost 13 estimate changed? 14 MR. SOJKA: For -- I -- did you say the cost to 15 -- the estimated cost to P&A the two wells? 16 COMMISSIONER CHMIELOWSKI: Right. Can you hear 17 me? There was a letter Malamute sent to the AOGCC in 18 2018 that gave a cost estimate to P&A the two wells at 19 $2.9, is that still correct? 20 MR. SOJKA: Yes. So basically at the tail end 21 of Linc's involvement or actually while Linc was in 22 bankruptcy one of the qualified oil engineers working 23 -- consultants working for Linc did an analysis of what 24 it would cost to P&A the two wells. And he -- yeah, 25 round number $3 million at the time which we think is Com9mmr Mama, LLC Phone907-243-0666 135 Chrismmaa Dc, Sm. 2, Anch. A 99501 Fax 907-243-1473 Email sahila@gci,m% AOGCC 1/IN2020 ITMO: REQn : MCONSIDERATIONOFBONDMOMQWREMENTS Page 14 1 still reasonable and it could be higher. But as we've 2 pushed on that basically that analysis assumed a snow 3 road, you know, and so roughly two-thirds of the cost 4 of P&Aing the wells in that 3 million plus estimate is, 5 you know, logistics of getting out to Umiat. And so, 6 you know, even though I'm not rushing to P&A these 7 wells because that may be a mistake from the 8 perspective of oil exploration and I'm not a -- I don't 9 really -- we -- I don't and currently Malamute 10 directors don't want to make a call of P&Aing these 11 wells at this point in time. 12 But I've had discussions and I've done some 13 work since that $3 estimate was commissioned and I've 14 learned that it's quite conceivable that a much cheaper 15 approach could be done using modular equipment flown 16 into -- basically flown into Umiat since there is an 17 airstrip there and then using helicopters and P&Aing 18 the wells in the summertime. So I don't have a number 19 for that, I haven't -- I'm not rushing to P&A the wells 20 and so I can't quantify it, but without having to build 21 a snow road the cost will go down dramatically. 22 And then another avenue as to the cost of 23 P&Aing the wells goes to the U.S. Army Corps of 24 Engineers and their fairly significant reclamation 25 efforts at Umiat. And I'm meeting with the Army -- Computer Mavlx, LLC Phone: 907-243-0 135 Christensen Dc, SW, 2., Aac . A 99501 Fax: 907-243-1413 Email sahile&d.net AOGCC 1/16/2020 ITMO: REQUE : RECONSIDERATION OF BONDINGREQUIREMENTS Page 15 1 some people from the Army Corps tomorrow morning just 2 to get a better understanding. And there's some fairly 3 large documents that the Corps has put out about the 4 cleanup at Umiat. But they're going to be up there 5 from what I can tell, you know, each year during the 6 summer building roads and doing reclamation work. And 7 so another avenue to a less costly P&A of those wells 8 should it come to it could be, you know, tagging along 9 or tagging onto the Army Corps efforts and, you know, 10 being out there in the summer. Again not building a 11 snow road and either using modular equipment or if the 12 Army Corps, this is just conceptual on my part, but if 13 the Army Corps is out there building roads to Umiat 14 Lake and that's, you know, a hundred yards from one of 15 the wells then it's conceivable that I guess regulatory 16 issues aside, I'm not an expert on that, but it's 17 conceivable that we could P&A the wells much less 18 costly that way. 19 CHAIRMAN PRICE: One of the other things you 20 mention in that 2018 letter is that it would be cheaper 21 if you could -- if you combined abandonment operations 22 with quote, other development activities at Umiat or in 23 the Umiat area generally. Do you foresee in the near 24 future any of those types of activities occurring 25 absent the Army Corps issues that you just mentioned, Computer Matrix, LLC Phone: 9W-243-0668 135 Christenson Dr., Ste, 2., Anch. A 99501 Fax 901-243-1473 Email s6k@gdoet AOOCC 1/16/2020 ITMO: BEQUE . MCONSIDEBATIONOFBONDMGBEQU�NTS Page 16 1 1 but just your operations within your company? 2 MR. SOJKA: Yeah, I guess I'd have to see that 3 letter. I don't off the top of my head know what other 4 activities up there I'd be referring to. So I'm sorry. 5 So basically no, I don't have any other thoughts on 6 that unless I go and try to figure out what I meant by 7 that in that letter. 8 CHAIRMAN PRICE: Okay. Thanks. 9 COMMISSIONER CHMIELOWSKI: Mr. Sojka, the well 10 that wasn't able to flow, did that well encounter 11 hydrocarbons? 12 MR. SOJKA? I think they both encountered 13 hydrocarbons, but I don't know for a fact the details. 14 And again I can -- I can get -- I can answer that for 15 you subsequent to this when I dig into it. 16 COMMISSIONER CHMIELOWSKI: Also I'm just 17 curious, could you describe what assets Malamute 18 currently has on the Slope, there are two wells, is 19 there anything on the surface that's out there? 20 MR. SOJKA: We have a quonset but there, a 21 convex I guess you could say with some stuff in it. 22 There's also a pad out there. I'm not sure if it's the 23 -- I forget whose pad it is, one of the contractors out 24 there has a pad that's kind of northwest of the western 25 end of the runway, it's west of the CB, it might even Computer Mount, LLC Phone: 909-243-0668 135 Chdeteneen Dr., Ste, 2., Anch. AIC 99501 Fee: M -W-1473 Emml: sehile@Sci.net kocc` 1/1&2020 ITMO: BEQUE, .RECONSIDER TIONOFBONOMGMQMMMENTS Page 17 1 be called the CB pad. But it's got a whole bunch of 2 that black material, a mental blank on it, on what it's 3 called, but a bunch of, you know, materials related to, 4 you know, doing a drilling campaign in the wintertime. 5 But nothing of significant value, no major equipment up 6 there of any sort, just, you know, odds and ends of 7 whatever was left over when Linc pulled the plug and 8 sold off what they could and stuffed the rest of it 9 into the connex and/or onto that pad. And again all -- 10 everything up there is as is from -- from when Linc 11 transferred the project to Malamute. 12 COMMISSIONER CHMIELOWSKI: Thank you. 13 CHAIRMAN PRICE: I'd like to get into that 14 first -- the first couple bullets in your letter where 15 you talked about the BLM has required an increase to 16 your existing bond, I think it used to be $200,000 and 17 they're phasing it in to $525,000 this year and $1.25 18 million next year; is that correct? 19 MR. SOJKA: 1.25 in total, 525 this year, 525 20 next year. 21 CHAIRMAN PRICE: Okay. It -- I don't know when 22 this -- I don't know when this -- specifically this 23 guidance came down, but I would be very curious to know 24 what that would cost you on an annual basis. Do you 25 know what that increase in cost would be with those Computer Mama, LLC Phone: 901443-0 135 Chrimenaen Dr., Sle. 2., Anch. AK 99501 Fax: 901-243-1473 Email s ile@gci.naa AOGCC 1 adjustments? VI6/2020 ITMO: REQUE, . RECONSIDERATIONOF BONDINGREQUIREMENTS 2 MR. SOJKA: Cost in as cost of capital? 3 CHAIRMAN PRICE: How much does it cost the 4 company to receive or retain these bonds compared to 5 your existing bond? 6 MR. SOJKA: Well, we have 400,000 in total of 7 bonds now and those bonds throw out de minimis interest 8 because, you know, they're in First National Bank of 9 Alaska CDs. Posting another 525 a year would also earn 10 de minimis interest that -- you know, less than 1 11 percent annually. What it would cost us would depend 12 on, you know, what Malamute shareholders, what 13 financing they can raise. So I guess I'd hesitate to 14 -- I don't know what the cost of capital for that 15 million dollar plus would be, but, you know..... 16 COMMISSIONER CHMIELOWSKI: Mr. Sojka, just..... 17 MR. SOJKA: Yeah, I don't know for sure. 18 COMMISSIONER CHMIELOWSKI: Sorry to interrupt 19 you. Are you saying that your financial assurance is 20 in the form of cash at a bank..... 21 MR. SOJKA: I'm sorry. 22 COMMISSIONER CHMIELOWSKI: .....it's in a CD? 23 MR. SOJKA: I'm sorry. I didn't understand 24 that. 25 COMMISSIONER CHMIELOWSKI: Your financial Computer Manz, LLC Phone: 90'1-243-0668 135 Chnamaen Dr., Ste. 2., Anch. AK 99501 Fax: 90]-243.14]3 Email: eahile@gci.na AOGCC 1 1/16/2020 IMO: REQUE. . RFCONSIDERATIONOF BONDMGREQUIREMENTS Page 19 1 assurance, your bonds, are secured by a CD at a bank, 2 it's..... 3 MR. SOJKA: Oh, that's correct, yes. 4 COMMISSIONER CHMIELOWSKI: Yeah. 5 MR. SOJKA: The current $400,000 are -- are 6 First National Bank of Alaska CDs pledged to -- 200,000 7 to the BLM, 200,000 to the AOGCC, that's correct. 8 COMMISSIONER CHMIELOWSKI: And your new bonds 9 are -- you're saying would be in a similar method? 10 MR. SOJKA: Yes, that's what..... 11 COMMISSIONER CHMIELOWSKI: Yeah. 12 MR. SOJKA: .....I would expect. 13 COMMISSIONER SEAMOUNT: Mr. Sojka, this is Dan 14 Seamount. You mentioned a professor at AAU that is 15 performing a study. How far along is he on that study? 16 MR. SOJKA: He's completed the first two 17 studies that I touch on briefly at the bottom of this 18 morning's letter, he's wrapping up the third study of 19 the AVO analysis as we speak. I['m going to meet with 20 him tonight and tomorrow and -- and I'm hoping for a 21 fairly significant final draft report by, you know, 22 early February. 23 COMMISSIONER SEAMOUNT: Are those numbers 9, 10 24 and 11, project one, two and three? 25 MR. SOJKA: Yes, sir. Compuw Matrix, LLC Phone: 90]-243.0668 135 Chrinenxn M., Ste. 2., Aneh. AK 99501 Fax: 901-243-1473 Email: minleQRei.ne, AOGCC 1 1/16/2020 FFMO: REQIM( _ RECONSIDERATIONOF BONDINGREQUIREMENTS Page 20 1 COMMISSIONER SEAMOUNT: And are you able to 2 provide his name, is there confidentiality issues? 3 MR. SOJKA: Oh, no. It's Shuvajit 4 Bhattacharya. He's -- he's been in several Northern -- 5 not Northern Minor, Petroleum News articles and he does 6 work for a variety of people in Alaska. 7 COMMISSIONER SEAMOUNT: What..... 8 MR. SOJKA: Shuvajit Bhattacharya. 9 COMMISSIONER SEAMOUNT: How do you spell 10 Bhattacharya? 11 MR. SOJKA: It's -- would you like me to spell 12 it? 13 COMMISSIONER SEAMOUNT: Yes, please. 14 MR. SOJKA: Excuse me one second please. I'll 15 -- yeah, it's -- his first name is Shuvajit, S -H -U -V as 16 in Victor, 17 A -J -I -T, Shuvajit. Might be Shuvajit. Bhattacharya, B 18 as in boy, H -A -T -T -A -C -H -A -R -Y -A. And he has -- I'm 19 not sure technically if he's got a Conoco chair or 20 something, he's partially funded in that respect at the 21 University of Alaska Anchorage. 22 COMMISSIONER SEAMOUNT: And what department is 23 that at UAA? 24 MR. SOJKA: Petroleum engineering I would 25 think. Computer Matrix, s s r Phone'. 909-24)-0668 135 Christensen Dr., Ste. 2., Mch. A 99501 Fex. 909-243-1473 Email'. sehile'@Su nn AOGCC 1116/2020 ITMO:UQUE. , MCONSWElUTIONOF80N MGMQUIME WS Page 21 1 COMMISSIONER SEAMOUNT: Okay. Is there a 2 problem with our staff approaching him and asking him 3 questions? 4 MR. SOJKA: I'd like to I guess be part of 5 that, but conceptually no. 6 COMMISSIONER SEAMOUNT: Okay. Petroleum 7 engineering is his discipline; is that correct? 8 MR. SOJKA: Yes. 9 COMMISSIONER SEAMOUNT: Thank you. 10 CHAIRMAN PRICE: Before -- I got one last 11 question. This is Jeremy Price again. Mr. Sojka, I'm 12 -- I'd like to go back to the original purpose of these 13 bonding requirements. And in the statute, in AS 14 31.05.030(d)(4), I'd like to just read that real quick. 15 It says the Commission may require the furnishing of a 16 reasonable bond with sufficient surety conditions for 17 the performance of the duty to plug each dry or 18 abandoned well or the repair of wells causing waste. 19 So I know you kind of summarized it in the letter, but 20 if you could on the record here for the hearing, can 21 you explain whether or not you think this bond is 22 reasonable? And when I say bond I mean the $800,000 23 for the two wells. And if it's..... 24 MR. SOJKA: Well, by itself it's not 25 unreasonable. Added to the BLM bonding it seems Compute Matrix, LLC Phone: 907-243-0668 135 Chn.temmrt D,., Ste, 2., And. A "%I Fax: 907-243-1473 Email: uhile@gu net AOGCC 1/16/2020 ITMO: MQUE-MCONSIDE TIONOFBONDMGMQUIME NTS Page 22 1 redundant. That would be my argument. 2 CHAIRMAN PRICE: Okay. If no other..... 3 MR. SOJKA: But, yeah, I mean, from your 4 perspective it's not -- it's -- it's, you know, some -- 5 some subset of the total cost, not the total cost, so 6 it's not unreasonable. 7 CHAIRMAN PRICE: Okay. Thank you for that. I 8 think that's all of our questions for now. If you 9 don't mind we'd like you to stay on the line though as 10 we proceed through the hearing. Is that all right? 11 MR. SOJKA: Yes, sir. Thank you. 12 CHAIRMAN PRICE: Okay. Appreciate it. Next 13 we'd like to call up our friend from the BLM. Do we 14 have Rob Brumbaugh in the room? Brumbaugh. Sorry 15 about that. 16 MR. BRUMBAUGH: You know, nobody ever gets that 17 the first time. 18 CHAIRMAN PRICE: Yeah, no worries. I 19 appreciate -- thanks for coming over. We appreciate 20 you taking the time to come and offer some insight into 21 this issue. 22 Do you mind if we swear you in? 23 MR. BRUMBAUGH: Do it. 24 (Oath administered) 25 MR. BRUMBAUGH: I do. Computer Mauix, LLC Phone'. 907-243-0 8 135 Chrimaue Dr., Ste, 2., A.& A 99501 Fax: 90]-24314]3 Email' mhik@p m AOOCC 1/16/2020 ITMO. REQOE .RECONSIDER TIONOF Page 23 1 CHAIRMAN PRICE: Thank you. 2 ROB BRUMBAUGH 3 called as a witness on behalf of BLM, testified as 4 follows on: 5 DIRECT EXAMINATION 6 CHAIRMAN PRICE: And I guess I should have had 7 you raise your right arm. I apologize. 8 So -- you raised it. All right. Good deal. 9 COMMISSIONER CHMIELOWSKI: Get his name and 10 affiliation for the record. 11 CHAIRMAN PRICE: Oh, I'm sorry. Name and 12 affiliation for the record. I apologize. 13 MR. BRUMBAUGH: Name, Rob Brumbaugh. So B -R -U- 14 M -B -A -U -G -H. And I am the section chief of oil and gas 15 at the Bureau of Land Management, Alaska state office. 16 CHAIRMAN PRICE: Thank you. We..... 17 MR. BRUMBAUGH: 222 West Seventh Avenue, 9950 18 -- 99513. 19 CHAIRMAN PRICE: I know where to find you now. 20 So we have not read your statement here, I just got it 21 here this morning. Do you want to run through that or 22 summarize it or read it, whatever you want to do. 23 MR. BRUMBAUGH: I'll just read it. 24 CHAIRMAN PRICE: Okay. 25 MR. BRUMBAUGH: Yeah. So the BLM just wanted Cmpuw Metrix, LLC Phony 901-243-0668 135 Chrismmn Dr., Sm. 2., Mch. A 99501 Fu: 901-243-1413 Ernmi sshil,&ci.me AOU(< 1/16/2020 ITMO: BEQUE1 .UCONSIDE TIONOFBOMINGUQUIMNENTS Page 24 1 to take an opportunity to make a statement. And I'll 2 . just read this word for word, try not to bore anybody 3 too much. 4 I'm here today to represent the BLM and provide 5 testimony relevant to bonding actions by the BLM on 6 leases operated by Malamute, LLC. 7 The BLM's position is that if an operator were 8 to default on their obligations on federal leases in 9 the NPR -A the federal government would be responsible 10 and hold the liability. We assess bonds on operators 11 to cover the potential cost of BLM assuming such 12 liability. 13 On December 2nd, 2019 the BLM instituted a bond 14 increase from $200,000 to 1.25 million for Malamute 15 LLC, operator of the Umiat unit which is comprised of 16 two federal leases in the NPR -A. The BLM routinely 17 reviews oil and gas bonds issued on federal leases in 18 units and in 2019 our national office instituted a new 19 bond review policy and methodology which applied to all 20 federal operators. Malamute was found to have an 21 insufficient bond for their two leases containing two 22 temporarily abandoned, unplugged oil and gas wells. 23 The increase to $1.25 million therefore represents a 24 525 percent increase from their original bonds. 25 The BLM is aware that the AOGCC has conducted a Computer Metrix, 4C Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Amb. A 99501 F. 907-243-1473 Emvl: nhileQBci.nd AOGCC Men= ITMO:MQUEI . BECONSIDEBATIONOF BONDM MQUIMWWS Page 25 1 statewide review of all bonds and has implemented an 2 increase. For Malamute this will double their state 3 bond from $400,000 to $800,000 even though a 1.25 4 million federal bond exists. 5 As the responsible entity should Malamute 6 default, the BLM would have the liability for these 7 leases and associated development and we would rely on 8 our federal bond not the state bond to cover that 9 liability. 10 CHAIRMAN PRICE: Thank you. A few questions 11 right off the top. When you -- when you determine that 12 the existing bond is inadequate and it needs to be 13 increased do you -- how do you determine that's the 14 case, do you ask the operator to provide an estimate, 15 do you do an estimate yourself or..... 16 MR. BRUMBAUGH: So part of our policy that we 17 get directed by Washington office, our national office 18 as I refer to here, it -- basically there's a criteria 19 involved and we just run through that criteria, it's 20 kind of a worksheet. And so you essentially arrive at 21 a dollar amount. And then there is some discretion by 22 the authorized officer. 23 CHAIRMAN PRICE: Okay. And so do you know if 24 there's a certain amount set aside within that 1.25 25 million for specifically plugging and abandonment or is Computer Matrix, LLC Phone 907-243-0668 135 Chrissensen Dr., Ste. 2., Mch. AIC 99501 Fax: 909-243-1493 Enot): ehileQBd.nes AOGCC f 116/2020 ITMO: REQIJEI . RECONSIDERATIONOFBONDING REQUIREMENTS Page 26 1 it not broken down by..... 2 MR. BRUMBAUGH: That's a good question. The 3 1.25 would cover it all. The -- and I know Mr. Sojka 4 is -- what he mentioned there, the -- what we know 5 about Malamute is they -- their surface footprint is 6 essentially that connex, but it's the -- right around 7 the well pad. There's no pad, it was all drilled off 8 ice. There's a cellar and of course the wellhead. So 9 that's the surface portion of that. Primarily that 10 bond is going to be used on subsurface because that's 11 really -- you know, the downhole's really where the 12 issues are. And so..... 13 CHAIRMAN PRICE: Okay. And so the -- we have 14 an estimate from 2018 that puts it at roughly 3 15 million. Do you have different numbers or are you 16 relying the same estimate or..... 17 MR. BRUMBAUGH: But -- yeah. And the thing is, 18 you know, because the federal government tries to make 19 one size fit all for every state, you know, we 20 basically just have to take that national policy and 21 adhere to that as closely as possible. And you kind of 22 run through a worksheet and everything gets a certain 23 amount of points. And so we take those points and add 24 those up at the end and then that gives you an amount. 25 That amount is then confirmed, you know, as sufficient ComPmn Matrix, LLC Phone: 901-24341668 135 Chdi m. D,., Ste, 2., A & A 99501 Fax 909-243-1413 Email: aahil @gmmn AOC'CC IJ16/2020 ITMO: REQM- . MCONSIDERATIONOFBONDMOREQUIUE NTS Page 27 1 by the authorized officer. So that's how we do it. 2 CHAIRMAN PRICE: Okay. 3 COMMISSIONER CHMIELOWSKI: Mr. Brumbaugh, was 4 this -- was the 1.25 million straight from the 5 worksheet or was there discretion involved? 6 MR. BRUMBAUGH: There was some discretion 7 involved, yes. 8 COMMISSIONER CHMIELOWSKI: And was the revision 9 at all related to the GAO audit that came out, was that 10 why Washington changed their stance on bonding with the 11 memo? 12 MR. BRUMBAUGH: That was -- yeah, that had 13 something to do with it. 14 COMMISSIONER CHMIELOWSKI: Okay. And I'm just 15 curious, is there another appeal of your bond that 16 might take place or has it or will it? 17 MR. BRUMBAUGH: There was an appeal that took 18 place and that has since been resolved. The result was 19 still the same. The only difference was instead of the 20 1.25 being all due right off the bat it is spread over 21 two years as Leonard mentioned in his testimony. 22 CHAIRMAN PRICE: So..... 23 COMMISSIONER CHMIELOWSKI: So no further 24 audits? 25 Sorry. MR. BRUMBAUGH: And that is -- and that is Compute Metrix, LLC Phone: 907-243A 135 Chriaunsen Dr., Ste, I. Aneh. A 99501 Fax: 907-243-1473 Email: while ,doet AOGCC 1/16/2020 ITMO: REQUEL. . RECONSIDERATION OF BONDMG REQUIREMENTS Page 28 1 consistent with our policy to do. 2 COMMISSIONER CHMIELOWSKI: Okay. So no further 3 appeals is what I meant? 4 MR. BRUMBAUGH: Correct. 5 COMMISSIONER CHMIELOWSKI: Right. Okay. 6 MR. BRUMBAUGH: Yes. 7 CHAIRMAN PRICE: So maybe this question for you 8 or Mr. Sojka. So at this point they will -- Malamute 9 will be providing the 1.25 million in 2021. 10 There's..... 11 MR. BRUMBAUGH: Correct. 12 CHAIRMAN PRICE: Okay. 13 MR. BRUMBAUGH: Yes. They have 90 days to 14 provide us with the 525 and then they have a year from 15 that to provide us with the remaining 525. 16 CHAIRMAN PRICE: Okay. Ninety days from when 17 the letter went out or whenever..... 18 MR. BRUMBAUGH: That's right. 19 CHAIRMAN PRICE: .....they were..... 20 MR. BRUMBAUGH: Yeah. Yeah, when -- and that 21 was December 2nd..... 22 CHAIRMAN PRICE: Okay. 23 MR. BRUMBAUGH: .....so, yeah, 90 days from 24 that point. 25 CHAIRMAN PRICE: Okay. Computer Metria LLC Phone: 901-243-0668 135 Chrisanaen Dc, Ste. 2., Anch. AK 99501 F. 90]-243-14]3 Email: sAile@gci.net AOGCC i 1/16/2020 ITMO: REQUE . RECONSIDERATION OF BONDMG REQUIREMENTS Page 29 1 COMMISSIONER SEAMOUNT: Mr. Brumbaugh, this is 2 Dan Seamount as you know, but the court recorder 3 doesn't know. Are we able to look at this worksheet, 4 is it published somewhere? 5 MR. BRUMBAUGH: It is not because it's all just 6 part of the file. It's just within our Malamute file. 7 COMMISSIONER SEAMOUNT: Are we allowed to look 8 at the Malamute files? 9 MR. BRUMBAUGH: That's a good question. 10 Proprietary. I don't know. 11 COMMISSIONER SEAMOUNT: Could you..... 12 MR. BRUMBAUGH: Would we be able to look at 13 your files? I mean, it's the same type of deal. 14 COMMISSIONER SEAMOUNT: What's in the record 15 you can look at. 16 MR. BRUMBAUGH: You know, it..... 17 COMMISSIONER SEAMOUNT: We have a record and 18 you can look at that. 19 MR. BRUMBAUGH: Yeah, we have -- I mean, we 20 have a record, like our lands record that we keep. But 21 to look at the specific worksheet, I'd have to -- I'd 22 have to look into that. I don't know. 23 COMMISSIONER SEAMOUNT: Could you get back to 24 us on that? 25 MR. BRUMBAUGH: I can get back to you. Computer Metrix, LLC Phone: 907-243-0668 135 Chdmnsw Dr., Ste. 2, Anch. A 99501 Fix: 907-243-1473 Email' while©gd.nn AOGCC 1/16/2020 ITMQ REQUES RECONSIDERATIONOF BONDMGREQU@ MENTS Page 30 1 COMMISSIONER SEAMOUNT: Let's say that Malamute 2 . went under and you guys -- you say the federal 3 government, BLM, would take responsibility to take care 4 of the cleanup including plugging and abandoning and 5 all of a sudden you ran out of bond money. Would you 6 go after the AOGCC bond money next? 7 MR. BRUMBAUGH: We would not, no. 8 COMMISSIONER SEAMOUNT: So that money would 9 just be sitting out there, correct? 10 MR. BRUMBAUGH: I don't know. And I guess -- 11 you know, just to have a frank discussion, I honestly 12 don't know any mechanism that it would be possible for 13 the feds to go after state money. I -- and I guess 14 that -- that's kind of why I'm here is I don't -- I 15 don't think it's even possible. I -- and I don't think 16 the state money would be made available to the federal 17 government anyway, I don't even know how that would 18 work. 19 CHAIRMAN PRICE: In your experience here in 20 Alaska have you had to deal with bankrupt operators 21 yet? 22 MR. BRUMBAUGH: Not -- not like the state has. 23 CHAIRMAN PRICE: Okay. 24 MR. BRUMBAUGH: I mean, you know, we don't have 25 as many operators as the state. We basically have two Computer Maui, LLC Phone 90] NM668 135 Chrieteneen Dc, Ste. 2., Meh. A 99501 Fax M-243-1473 Email sahileQBci.na AOGCC 1/16/2020 ITMO: R QU' A UCONSIDEPATIONOF Page 31 1 and then -- well, we've got -- we've got a couple, but 2 two primary, Conoco and Hilcorp. 3 CHAIRMAN PRICE: On the Conoco bond what was 4 the -- if you can say, what was the revised amount -- 5 bond amount for Conoco? 6 MR. BRUMBAUGH: 2,5. 7 CHAIRMAN PRICE: Okay. And do you recall off 8 the top of your head how many wells they have? 9 MR. BRUMBAUGH: I do not. 10 CHAIRMAN PRICE: Okay. 11 MR. BRUMBAUGH: Production wells? 12 CHAIRMAN PRICE: What's that? Yeah. Yeah. 13 MR. BRUMBAUGH: I mean, the thing -- the thing 14 about that is, you know, you got -- you also got to 15 recognize the opportunity in which you would be 16 plugging wells because you've got infrastructure, 17 you've got -- speaking in terms of Conoco you got 18 infrastructure, you got grouped wells so you could 19 perspectively -- and I assume the state comes up with a 20 bond similar to -- you know, their amounts similar to 21 how the BLM does, that you would take advantage of 22 those types of efficiencies. 23 CHAIRMAN PRICE: Okay. So that's -- you kind 24 of look at that? 25 MR. BRUMBAUGH: we look at that, uh-huh. Compute Matrix, LLC Ph one: 907843-0868 135 Christ.$. Dc, Sb. 2, Mch. AK 99501 Fax 901-243-1473 E..0 u ilq@,d .v AOGCC 1 1/16/2020 ITMO: REQU, B RECONSMERATIONOFBONDMGREQUIR WS Page 32 1 CHAIRMAN PRICE: Okay. All right. 2 MR. BRUMBAUGH: You know, and we've got a track 3 record with Conoco and Hilcorp as far as, you know, 4 plugging wells once they drill them and, you know..... 5 CHAIRMAN PRICE: Okay. 6 MR. BRUMBAUGH: .....production and INCs, 7 things like that. So all that comes into play when 8 setting bond amounts. 9 CHAIRMAN PRICE: Thanks. Any other questions? 10 COMMISSIONER SEAMOUNT: Yeah, I have one more I 11 believe. You say that BLM would not go after AOGCC 12 bond money..... 13 MR. BRUMBAUGH: Correct. 14 COMMISSIONER SEAMOUNT: .....if they ran out. 15 So it would be up to the federal government just to 16 take it out of their budget..... 17 MR. BRUMBAUGH: Yep, put..... 18 COMMISSIONER SEAMOUNT: .....which you..... 19 MR. BRUMBAUGH: .....put it on record, it would 20 be up to the federal government to go after their 21 budget. 22 COMMISSIONER SEAMOUNT: Which sounds kind of 23 hard to do at this time..... 24 MR. BRUMBAUGH: Well..... 25 COMMISSIONER SEAMOUNT: .....considering the Computer Mahn, LLC Phone: 907-243U668 135 ChnMencen Dr., Sce. 2., Aneh. AR 99501 Fav: 907-243-1473 Email: while rni gci.na AOGCC 1 legacy wells. 1/1612020 "0. REQUI .R RECONSIDERATION OF BONDING REQUIREMENTS Page 33 2 MR. BRUMBAUGH: .....I'm not sure the state has 3 more money either. 4 COMMISSIONER SEAMOUNT: Well, if we had a bond 5 it would be out there, okay, 6 MR. BRUMBAUGH: Yeah, those -- but the leg -- 7 you know, and I figured this would come up, but, you 8 know, in terms of the legacy wells we're also talking 9 about 136 holes in the ground that were left out there 10 and this is -- you know, this is two. And we've got a 11 starter here and they're -- hopefully by the time -- if 12 this were to ever come to pass, you've got other -- you 13 know, you would have other ways of dealing with this, 14 perhaps in better technology, helicopter mounted rigs, 15 I mean, you know, you could potentially do this -- do 16 this correctly and cheaper, I mean. 17 Well, how does the -- how does the state come 18 up with 800,000? 19 CHAIRMAN PRICE: We don't answer questions from 20 the bench. 21 MR. BRUMBAUGH: Okay. That's fine, I'm 22 just..... 23 COMMISSIONER SEAMOUNT: You could look..... 24 MR. BRUMBAUGH: .....that will..... 25 COMMISSIONER SEAMOUNT: .....we do have a Computer Matrix, LLC Phone: 907 -WA 668 135 Christensen Dr., Ste, 2., Anch. A 99501 Fix: 907-2431403 Email: sahileQBu.net AUGCC 1IM020 ITMO: REQUkI dRECONSIDERATIONOFEONOMGREQUIREMENTS Page 34 1 record. You can take a look at our record, see how we 2 came -- well, not how we came -- you can see what we 3 did to come up with those numbers. 4 COMMISSIONER CHMIELOWSKI: It's straight from 5 the regulation. 6 MR. BRUMBAUGH: Absolutely. 7 COMMISSIONER SEAMOUNT: It's straight from the 8 regulations. And we do have -- we do have the -- oh, 9 I'm answering the question. 10 CHAIRMAN PRICE: You are. 11 COMMISSIONER SEAMOUNT: I guess I won't. 12 MR. BRUMBAUGH: Don't worry about it. It's 13 okay. 14 CHAIRMAN PRICE: We can look at the -- we can 15 get together after the hearing and..... 16 MR. BRUMBAUGH: Okay. 17 CHAIRMAN PRICE: If there's no other questions 18 we -- maybe we could take a recess and talk with staff 19 and then circle back. 20 Mr. Brumbaugh, really appreciate you stopping 21 by. Thank you. 22 MR. BRUMBAUGH: No, thanks a lot. I appreciate 23 it. 24 CHAIRMAN PRICE: Okay. 25 COMMISSIONER SEAMOUNT: I had one more question Computer Mattix, LLC Phone: 90]-243-0666 135 Chnstensen Dc, Sm, 2, Anch, AK 99501 Fax 907-213-1473 Emailsahile©gci.not AOOCC ( 1/1&2020 ITMO'REQU2 RRECONSWERATIONOFBONI)MBEQUIREMENTS Page 35 1 and that was we -- this is Dan Seamount again. Are you 2 able to elaborate on how the BLM feels about the AOGCC 3 requiring bonds on federal lands? 4 MR. BRUMBAUGH: Well, I mean, the BLM feels 5 like all operators definitely need to be bonded. In 6 the case of -- you know, in the case of Malamute where 7 they're only a federal operator, it just feels 8 redundant to have a state bond on top of a federal bond 9 without a mechanism in place where the feds could even 10 perspectively utilize a state bond. I just feel like 11 it would -- well, it feels like the money would just be 12 sitting there. If a circumstance were to arise and 13 then the state rightly so would come after the feds and 14 say hey, you guys are responsible for this, this is on 15 federal land, you need to produce the funding or you 16 need to go out and plug these wells as, you know, to 17 spec. So..... 18 COMMISSIONER SEAMOUNT: Okay. Thank you. 19 MR. BRUMBAUGH: Yeah. 20 CHAIRMAN PRICE: So how about a recess for 21 what, 10, 15 minutes? 22 COMMISSIONER CHMIELOWSKI: Uh-huh. 23 CHAIRMAN PRICE: How about we'll come back at 24 five until the hour. 25 (Off record - 10:45 a.m.) Computer Matrix, LLC Pheae, 907-243-0 135 Chriatenua Dr., Ste. 2., Aach. AR 99501 Fax 90]-243-14]3 Email sahileQSdnet AOOCC I 1/16/2020 ITMO: REQU, RRECONSWERATIONOFBONOMGREQUIREMENTS Page 36 1 (On record) - 11:02 a.m.) 2 CHAIRMAN PRICE: Sorry for the delay, it's 3 11:02. Apologies. Took a little longer than we 4 thought. 5 We just have a couple questions. Mr. Sojka, 6 are you still on the phone? 7 MR. SOJKA: Yes, sir. 8 CHAIRMAN PRICE: If -- when you were talking 9 about the potential for actually utilizing helicopters 10 or whatever to lower actual P&A cost, we'd be 11 interested if you would be inclined, you don't have to, 12 but if you'd be inclined to submit a revised P&A 13 estimate that -- utilizing some of those details you 14 mentioned earlier, we would welcome that. 15 Do you have any interest in doing that? 16 MR. SOJKA: Yeah. Sure. I don't have it now, 17 I would have to..... 18 CHAIRMAN PRICE: Sure. 19 MR. SOJKA: .....reach out. So basically the 20 gestation of that concept comes from a conversation I 21 had last summer with -- when I was doing the well 22 inspections with a fellow who's got a modular rig. And 23 I can't even get into, you know, differentiate his rig 24 from the gargantuan rigs that are typically used in 25 northern Alaska, but their -- his rig is going to be Computer Mmiz, LLC Phone: %7-243-0668 135 Cbfl.n m Or., Ste. 2., A.& AR 99501 Fu: 90]-243-14)3 Email'. sahilo'Ju 8ci.na 40000 1/162020 YIMO: REQUI RRECONSMERATIONOPBONDINGREQU[REMENTS Page 37 1 used and I think the BLM's probably aware of this, but 2 his rig and his company is going to be used at an 3 adjacent operator's site this summer as I understand it 4 loosely and this is just word of mouth so I don't know 5 any specifics. But my understanding is that there's 6 going to be a well drilled if not this summer, next 7 summer, using this rig. 8 And so if they're going to be up there drilling 9 in the summer my understanding is that that means 10 they're not obviously building snow roads. And so that 11 rig could be used to P&A these two wells. You know, if 12 they can -- if they can use that rig to drill on leases 13 that are north of Umiat then somehow they've got to get 14 the rig there and presumably -- I might be wrong, 15 presumably they're flying it into the Umiat airstrip 16 and then helicoptering it up to the lease that's north 17 of our leases. 18 And so that's the concept I'm operating under. 19 I have not done any detailed analysis of it. I can 20 reach out to this fellow and get some information and 21 put together an estimate. Yes, I'd be happy to do 22 that. 23 CHAIRMAN PRICE: Okay. I appreciate that. And 24 I think we'd want to ensure that the estimate came 25 from, you know, this third party versus just from the Computes Matrix, LLC Phan.: 90]-243-0668 135 Chloe . Dc, SW, 2, A..h. AR 99501 Fax' 90]-243-14]3 Email vhileQi gdnm AOGCC( 1/162020 FFMO: REQUE RRECONSIDERATIONOF BONDMGBEQUIREMENIS Page 3 8 1 1 operator. Does that make sense? 2 MR. SOJKA: Sure. 3 CHAIRMAN PRICE: Okay. All right. I 4 appreciate that. And then I think Commissioner 5 Chmielowski has a question. 6 COMMISSIONER CHMIELOWSKI: Yes, Mr. Sojka. 7 Your bond with BLM is increasing from 200,000 to 8 725,000 in March of this year; is that correct? 9 MR. SOJKA: That's the requirement by the BLM, 10 yes. 11 THE COURT: So my question is does Malamute 12 intend to increase the bond with the BLM this year? 13 MR. SOJKA: Well, the bar is still considering 14 that. We're trying -- you know, it puts a lot of 15 strain on the company and we're talking, trying to 16 discuss -- find capital. So I can't say definitely 17 that we will or won't. 18 COMMISSIONER CHMIELOWSKI: Okay. Thank you. 19 CHAIRMAN PRICE: Commissioner Seamount, do you 20 have any questions? 21 COMMISSIONER SEAMOUNT: I have none. Thank 22 you. 23 COMMISSIONER CHMIELOWSKI: No further 24 questions. Thanks. 25 CHAIRMAN PRICE: Okay. Thank you to the BLM, Computer Maldx, LLC Phone: 907-243-0668 135 Christensen Dr, Sm. 2., Anch. A 99501 Fax 907-243-1473 Email: sahileQgci.net AOGCC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1/16/2020 ITMO', REQUL R RECONSIDERATION OF BONDING REQUIREMENTS Page 39 thank you, Mr. Sojka. And at this time we'll adjourn. It's 11:05. Thank you. MR. SOJKA: Thank you very much. (Adjourned - 11:05 a.m.) (END OF PROCEEDINGS) Computer Metrix, LLC Phone'. 901-243-0660 135 Christensen Dr., Ste. 2., Anch, AK 99501 Fax'. 901-243-1473 Email. s,Ui &,, nn AOGCC 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1/16/2020 ITMO: REQURRECONSIDEItATIONOFBONDINGREQUIREMENTS TRANSCRIBER'S CERTIFICATE I, Salena A. Hile, hereby certify that the foregoing pages numbered 02 through 40 are a true, accurate, and complete transcript of proceedings IN RE: Bonding Requirements by Malamute Energy, LLC., transcribed under my direction from a copy of an electronic sound recording to the best of our knowledge and ability. Computer Mwix, LLC Phone: M-243-0666 135 Christensen Dr., Ste. 2., Anch. AIC 99501 Fax: 909-243-1473 Email: sahileQi gu.net STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Malamute Energy, Inc. RECONSIDERATION OF BONDING AMOUNT JANUARY 16, 2020 at 10:00 am NAME AFFILIATION Testifv (yes or no) r"-jfo/\ IU�d /4--V L �a T&L Z9uk9A1)6N ALM Y's ✓kCt- Rlxs� l C % 975 wAag(�c Malamute Energy, Inc. January 16, 2020 Jessie Chmielowski, Commissioner Jeremy Price, Commissioner Daniel Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission 333 W. 7a' Avenue Anchorage, Alaska 99501 Re: Malamute request for bonding reconsideration hearing Commissioners: RECEIVED JAN i 6 2020 AOGCC Thank you for your consideration of this matter. Malamute would like to state the following: 1. The Bureau of Land Management ("BLM") is the primary regulator of the two leases that constitute the Umiat Unit. After conducting a bond adequacy review late in 2019, the BLM has increased its bonding on the Umiat Unit from $200,000 to $1.25 million, with $525,000 to be posted by early March 2020. 2. The BLM bonding increase exceeds the $800,000 of total bonding proposed by the AOGCC. Therefore, Malamute asks that the AOGCC not increase its bonding above its existing $200,000, because such increase would be duplicative in bonding the same two wells. 3. The wells pose no environmental risk. As described in the two well inspection reports filed with the AOGCC in late summer 2019, neither well will flow to surface without incremental pressure. Furthermore, the two exploratory capped wells may provide significant benefit to a new partner, who may find the wells useful for further exploration or production activities. 4. Malamute's primary focus since acquiring the Umiat project has been to de -risk the technical challenges, in hopes of attracting an oil industry partner. Malamute expects an update very soon from the University of Alaska Anchorage on the Project 3 technical study, which applies state-of-the-art seismic problem solving and modern computing power to re -analyze the 3D seismic data shot at Umiat during 2008. Malamute's primary goal for Project 3 is to better delineate and/or identify new oil reservoir targets beneath the permafrost. 5. Malamute continues to actively seek a partner to fund further development of the Umiat Oil Field. What follows is a short historical summary of Malamute's involvement with the Umiat project. Page 1 of 3 1. Linc Energy, Inc. ("Linc") drilled the two modern wells at the Umiat Oil Field ("Umiat"), the first in March of 2013 and the second in March 2014. In the summer of 2016, Linc defaulted on its debt and filed for U.S. Chapter 11 bankruptcy protection. 2. Linc effectively owned 97.5% of Renaissance Umiat, LLC ("Renaissance"), which controls two BLM leases at the Umiat. 3. Malamute Energy, Inc. ("Malamute") was newly incorporated in 2016 for the sole purpose of acquiring Renaissance from Linc. Malamute acquired Renaissance by way of a November 2016 credit bid in the Linc Chapter 1 I bankruptcy, whereby Line's Senior Secured creditors exchanged a portion of their investment in Linc bonds for Line's entire ownership of Renaissance. This is how Linc creditors became Malamute shareholders and owners of Renaissance. Thus, Malamute shareholders are former Linc Energy creditors who inherited the Umiat wells and the plug & abandonment obligation on which Linc had effectively defaulted. 4. Malamute now owns 97.5% of Renaissance, and is the designated operator. 5. The Umiat Oil Field is 90 miles west of the Dalton Highway and the Trans -Alaska pipeline. However, oil production infrastructure rapidly working south from the North Slope is now approximately 45 miles from Umiat. 6. The Umiat Oil Field is widely known to be prospective for oil accumulation. A 2012 Qualified Person's Report estimated 1,000 MMBO Original Oil In Place, with 650 MMBO estimated for the Grandstand sands. A December 2015 QP Report quantified 145 MMBO of 2P Net Remaining Reserves, of which approximately 100 MMBO are in the Lower Grandstand formation and thus mostly below the permafrost. 7. The Umiat Oil Field poses challenging economics at current oil prices. A significant portion of the known oil reserve at Umiat is situated in permafrost, whereas all current Alaska oil production is from formations deeper than the permafrost. 8. Since acquiring Renaissance, Malamute's primary focus has been to de -risk the technical aspects of the Umiat Oil Field, so as to make the project attractive to an oil industry partner. a. Malamute conducted a multi -disciplinary reservoir workshop to identify known issues with the field, including compartmentalization, seals and seal variability, fracture sets and pattern of sand variation. b. Malamute conducted extensive tests on the Umiat oil, which confirmed that both the gasoline and the diesel fractions are low in total sulfur and have less than detectable readings for dibenzyl disulfide. This makes the Umiat oil a good candidate for producing Ultra Low Sulfur Fuels for sale into the Alaska North Slope market. Page 2 of 3 c. Malamute formed the Federal Umiat Unit to make management of the Umiat leases more efficient. d. Malamute also commissioned three detailed technical projects at the University of Alaska Anchorage ("UAA") to further investigate issues with the oil field. 9. UAA Project 1, entitled "Integrated Subsurface Characterization of the Shallow Conventional Reservoirs in the Umiat Field, North Slope, Alaska" provided detailed information about the reservoir sands and seals across the Nanushuk Formation, and determined detailed mineralogical composition of the sands and shale seals with special consideration of the clays. 10. UAA Project 2, entitled Forward Seismic Modeling, Multi-component Acoustic Velocity, and Anisotropy Analysis of the Brookian Sequences, North Slope, Alaska was intended to utilize the outcomes of the petrophysical analysis from Project 1 to expand the understanding of the shallow oil reservoirs fracture orientation and density, which will control horizontal well design and orientation. Project 2 included acoustic velocity scanning of core data to further define the sand bodies and their heterogeneous nature, including the reservoir facies, for use as a predictive tool in targeting hydrocarbon saturated sands. 11. UAA Project 3, entitled 5D Interpolation, Amplitude versus Offset, and Analysis of the Deep Reservoir Potential in the Umiat Field, Alaska, is close to completion. Further building on Projects 1 and 2, this Project 3 applies state-of-the-art seismic problem solving and modern computing power to analyze the 3D seismic data shot at Umiat during 2008. Malamute's primary goal for Project 3 is to better delineate and/or identify new oil reservoir targets beneath the permafrost. Thank you, Leonard Sojka President Malamute Energy, Inc. Managing Member Renaissance Umiat, LLC Page 3 of 3 I am here today to represent the BLM and provide testimony relevant to bonding actions by the BLM on leases operated by Malamute LLC. The BLM's position is that if an operator were to default on their obligations on Federal leases in the NPR -A, the federal government would be responsible and hold the liability. We assess bonds on operators to cover the potential cost of BLM assuming such liability. On December 2, 2019, the BLM instituted a bond increase from $200k to $1.25M for Malamute LLC, operator of the Umiat Unit, which is comprised of 2 Federal Leases in the NPR -A. The BLM routinely reviews oil and gas bonds issued on Federal leases and units. In 2019, our National Office issued a new bond review policy and methodology which applied to all federal operators. Malamute was found to have an insufficient bond for their two leases containing 2 temporarily abandoned, unplugged oil and gas wells. The increase to 1.25 million dollars, therefore, represents a 525% increase from their original bonds. The BLM is aware that the AOGCC has conducted a statewide review of all bonds and has implemented an increase. For Malamute, this will double their State bond from 400k to 800k; even though a $1.25 million Federal Bond exists. As the responsible entity, should Malamute default, the BLM would have the liability for these leases and associated development, and we would rely on our Federal bond, not the State bond, to cover that liability. Thank you for the opportunity to provide this testimony. JAN 16 1'629 VA Carlisle, Samantha J (CED) From: Carlisle, Samantha J (CED) Sent: Friday, January 17, 2020 1:11 PM To: Leonard Sojka Subject: RE: Malamute hearing Leonard, The hearing record will be left open until March 2, 2020. Please provide the AOGCC with the requested information from the hearing by close of business March 2, 2020. Thank you, Samantha Carlisle Executive Secretary III Alaska Oil and Gas Conservation Commission 333 West 70, Avenue Anchorage, AK 99501 (907) 793-1223 CON FIIJGNTIALIIYN077Cr:'this c -mail message, int lading anv at tach menls, contains inforlit lion Tom the Alaska Oil and Gas C;unSeivatiun Commi cion (AC161 C j, Stato of Alaska and is lot the sok- use of the intended recipient(s), It mile contain confidential and I or privileged mfurmation, l'he unanthorm, i v.viow, rug or disc losura of Such information mays violate stato or federal law. If eau mean uniutvnded frcipicnt of this c -mail, plcuso deh4o it, nvitltpnt firsI Sac in;� ni Fon wanting it, and, so that the AOG<YisauaTo of the nustake un sending it toyou, ton tatt5amantha C-arlisle at (907) 713 t v •r s, aniantln n C rftstF il e ko7,ok. From: Leonard Sojka <leonard@malamuteenergy.com> Sent: Thursday, January 16, 2020 11:42 AM To: Carlisle, Samantha J (CED) <samantha.carlisle@alaska.gov> Subject: Re: Malamute hearing Samantha, How do I request a transcript of today's Malamute hearing? Thank you Leonard Sojka Malamute Energy, Inc. On Thu, Jan 16, 2020 at 7:59 AM Carlisle, Samantha J (CED) <samantha.carlisleC@alaska.aov> wrote: Yes, thank you. From: Leonard Sojka <leonard@malamuteenerev.com> Sent: Thursday, January 16, 2020 7:57 AM To: Carlisle, Samantha J (CED) <samantha.carlisle @alaska.gov> Subject: Fwd: Malamute hearing Good Morning Samantha, Jody is apparently out of the office. Would you please forward the attached letter to the three commissioners? Thank you, Leonard Soj Malamute Energy, Inc. ---------- Forwarded message --------- From: Leonard Sojka <leonard@malamuteenergv.com> Date: Thu, Jan 16, 2020 at 7:53 AM Subject: Re: Malamute hearing To: Colombie, Jody 1 (CED) <iody.colombie@alaska.gov> Jody, Please see the attached Malamute letter to the AOGCC. Thanks much, Leonard On Wed, Jan 15, 2020 at 10:04 AM Leonard Sojka <leonard malamuteenergy.com> wrote: Got it. No. Just me on the phone. Thanks much. On Wed, Jan 15, 2020 at 1:03 PM Colombia, Jody J (CED) <jody.colombiePalaska.gov_> wrote: Leonard the call in number is 1-800-315-6338, code is 14331. If there is a problem call the 907-279-1433 and they can transfer you into the hearing room. Will there be anyone in the hearing room from Malamute? Jody From: Leonard Sojka <leonard@malamuteenerey.com> Sent: Wednesday, January 15, 2020 9:52 AM To: Colombie, Jody J (CED) <iody.colombie@alaska.eov> Subject: Malamute hearing Good Morning Jody, What is the telephone number that I should call for tomorrows' hearing? Are there any other procedural issues of which I should be aware? Thanks much, Leonard STATE OF ALASKA ADVERTISING ORDER NOTICE TO PUBLISHER SUBMIT INVOICE SHOWING ADVERTISING ORDER NO, CERTIFIED AFFIDAVIT OF PUBLICATION WITH ATTACHED COPY OF ADVERTISMENT. ADVERTISING ORDER NUMBER AO-20-009 FROM: AGENCY CONTACT: Jody Colombie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O. AGENCY PHONE: 333 West 7th Avenue 10/29/2019 907) 279-1433 Anchorage, Alaska 99501 DATES ADVERTISEMENT REQUIRED: COMPANY CONTACT NAME: PHONE NUMBER: ASAP FAX NUMBER: 907 276-7542 TO PUBLISHER: Anchorage Daily News, LLC SPECIAL INSTRUCTIONS: PO Box 140147 Anchorage, Alaska 99514-0174 TYPE OF ADVERTISEMENT: rV LEGAL DISPLAY 7 CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE Malamute Energy Inc. Initials of who prepared AO: Alaska Non -Taxable 92-600185 :SII6MIT WVOICESNOWjRri:ADt+ERi1SR1G� :':'1fYlDB&NO;;CEkY1BIF',6i:TF6'DIAVfI'Op:': :PUBIpIC,AT,IOriW[TN'At'r'wCNEDC6PYbF:: Anv6RTISMENT'r0;: AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pae I of I Total of All Pa es $ REF Type I Number Amount Date Cammeras 1 PvN IVCO21795 2 AD AO-20-009 s a FIN I AMOUNT SY Act. Template I PGM LCR Object I FY I DIST LIQ 1 1 20 AOGCC 3046 20 z 3 4 5 � 4L 11 P basing u TitleMM: Purchasing Authority's Signature Telephone Number 1. A. # nd r-liceiving agency name must appear on all invoices and documents relating to this pumhase. 2. Th to is registered for tax free transactions under Chapter 32. IRS code. Registration number 92-73-0006 K. Items are for the exclusive use of the state and not for nasal U15TRIBUTtON -.::: Dmsto4 FtseAVOnglaal AO ...... .... C4PIea Patillsker (taxed) Aiv1aS44 1 Typal Receiving Form: 02-901 Revised: 10/29/2019 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Malamute Energy, Inc. Request for reconsideration regarding recently adopted bonding requirements 20 AAC 25.025 Malamute Energy, Inc., by letter dated July 9, 2019, requests the Alaska Oil and Gas Conservation Commission (AOGCC) reconsider bonding amounts that were established when 20 AAC 25.025 was adopted May 18, 2019. The AOGCC has scheduled a public hearing on this application for January 16, 2020, at 10:00 a.m. at 333 West 7th Avenue, Anchorage, Alaska 99501 In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7`h Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the January 16, 2020 hearing. If, because of a disability, special accommodations may be needed to comment or attend the hearing, contact the AOGCC's Special Assistant, Jody Colombie, at (907) 793-1221, no later than January 12, 2020. Jedsie L. Chmielowski Commissioner Bernie Karl K&K Recycling Inc. P.O. Box 58055 Fairbanks, AK 99711 George Vaught, Jr. P.O. Box 13557 Denver, CO 80201-3557 Gordon Severson 3201 Westmar Cir. Anchorage, AK 99508-4336 Darwin Waldsmith P.O. Box 39309 Ninilchik, AK 99639 Penny Vadla 399 W. Riverview Ave. Soldotna, AK 99669-7714 Richard Wagner P.O. Box 60868 Fairbanks, AK 99706 Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Tuesday, October 29, 2019 8:18 AM To: 'Leonard Sojka' Cc: Colombie, Jody J (CED) Subject: Public Notice Attachments: Malamute Bonding Public Hearing Notice.pdf Jody J Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7tb Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 2 76- 7542 Fax Celornbie, Jody J (CED) To: ANC Legal Ads Subject: RE: Public Notice approved From: ANC Legal Ads <legalads@adn.com> Sent: Tuesday, October 29, 2019 10:39 AM To: Colombie, Jody 1 (CED) <jody.colombie @alaska.gov> Subject: Re: Public Notice Below is the confo and proof. Please let me know if this is approved to run Order Number: W0012179 Order Status: Submitted Notice of Public Hearing Classification Legals & Public Notices STATE OF ALASKA Package: LegalsADN ALASKA OAND GAS CONSERVATION COMMISSION Final Cost: 122.03 Re: Malamute Energy, Inc. Referral Code: AO -20-009 Request for reconsideration Payment Type: regarding recently adopted bonding requirements User to: W0010445 20 AAC 25.025 Malamute Energy, Inc., by letter dated Ju9, 2019, requests the ACCOUNT INFORMATION Alaska O and Gas Conservation Commission (AOGCC) reconsider bonding amounts that were ST OF AK OI L AND GAS CONSERVATION COMMISSION established when 20 AAC 25.025was adopted May 18, 2019. 333 W. 7TH AVE STE 100 The AOGCC has scheduled a ANCHORAGE. AK 99501 public hearing on this appilcation 907-279-1433 for January 16, 2020, at 1000 a.m. at 333 West 7th Avenue, legalads@adn.com Anchorage, Alaska 99501 ST OF AK/AK OIL AND GAS CONSERVATION COMMISSION In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7th Avenue, Anchorage, TRANSACTION REPORT Alaska 99501. Comments must be received no later than the conclusion of the January 16, Date 10:47 AM - Tue, Oct 29, 2019 2020 hearing. Amount: 122.03 If, because of a disabillty, special accommodations may be needed to comment or attend the hearing, contact the AOGCCs SCHEDULE FOR AD NUMBER W00121790 Special Assistant, Jody Colombia, at (907) 793-1221, no later than January 12, 2020. Wed Oct 30.2019 Anchorage Daily News sie I I.Chmlelowski Commissioner Legals Published: Oct. 30, 2019 Lisi Misa Legal Advertising Iegalads(o)adn.com 1907-257-4286 Anchorage Daily News I adn.com 300 W. 31st Ave. Anchorage, AK 99503 000 **As of July 8th, we will be charging for affidavits. The standard affidavit charge is $5. This charge will automatically be included in all costiquotes unless requested otherwise. Please keep all correspondence for legal advertising addressed to lectalads(a)adn.com, to assure best service and tracking . On Tue, Oct 29, 2019 at 10:35 AM Colombie, Jody J (CED) <jody.colombie@alaska.gov> wrote: No, I have figured out to go to ADN website to confirm that the notices have been published. Thank you From: ANC Legal Ads <legalads@adn.com> Sent: Tuesday, October 29, 2019 10:27 AM To: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: Re: Public Notice Good Morning, Before I proceed, would you like the affidavit? ($5) Usi Misa Legal Advertising leaaladscu)adn.com 1907-257-4286 Anchorage Daily News I adn.com 300 W. 31st Ave. Anchorage, AK 99503 ** As of July 8th, we will be charging for affidavits. The standard affidavit charge is $5. This charge will automatically be included in all costiquotes unless requested otherwise. Please keep all correspondence for legal advertising addressed to legalads(a)adn.com, to assure best service and tracking . On Tue, Oct 29, 2019 at 7:59 AM Colombie, Jody 1 (CED) <iody.colombie@alaska.gov> wrote: Please publish Jody J Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7i' Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 276-7542 Fax Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Wednesday, July 17, 2019 11:20 AM To: Leonard Sojka Cc: Colombie, Jody J (CED) Subject: RE: Bonding increase - Malamute response letter Leonard, The request for reconsideration filed by Malamute Energy, Inc. (Malamute) on July 9, 2019 is GRANTED. AOGCC will respond to your request in due course. Thanks, Jody From: Leonard Sojka <leonard@malamuteenergy.com> Sent: Tuesday, July 9, 2019 1:32 PM To: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: Bonding increase - Malamute response letter Jody, Please see the attached Malamute response letter pursuant to AS 31.05.080(a). Please confirm AOGCC receipt of this letter. Please correct our address in your records, as shown on the bottom of the letter. Thank you, Leonard Sojka Malamute Energy, Inc. July 9, 2019 Jessie L. Chmielowski, Commissioner Daniel T. Seamount, Jr., Commissioner Alaska Oil and Gas Conservation Commission 333 W. 7"' Avenue Anchorage, Alaska 99501 Re: Response to the AOGCC letter dated July 2, 2019 Commissioners: Pursuant to AS 31.05.080(a), Malamute Energy, Inc. ("Malamute") hereby applies for reconsideration of the AOGCC's application of 20 AAC 25.025 to Malamute, as outlined in the AOGCC letter to Malamute dated July 2, 2019, as follows. Malamute Energy, Inc. owns 97.5% of, and is the designated operator for, Renaissance Umiat, LLC, who has two suspended wells on its Bureau of Land Management ("BLM") leases at Umiat. As noted, Malamute "currently has bond number 61257060 in the amount of $200,000 on file with the AOGCC." However, application of 20 AAC 25.025 to Malamute should consider the fact that Malamute has also posted bonds totalling $200,000 with the BLM on the same two wells for the same regulatory purpose. Therefore. Malamute should only be required to post an incremental $400,000 of bonding. As an aside, neither of the two good, competent modern Umiat wells (2013, 2014) will flow to surface without added pressure. The wells thus pose very little risk of rupture or environmental release. In addition to the $400,000 of combined bonding currently posted with the State of Alaska and the BLM, Malamute has posted $10 million of pollution liability insurance with the State of Alaska Department of Environmental Conservation. Therefore, the State of Alaska has very low economic exposure to costs from the Umiat wells. Thank you, Leonard Sojka President Malamute Energy, Inc. PO Box 27131 7701 Golden Valley Road Golden Valley, Minnesota 55427 Page 1 of 1 State of Alaska Alaska Oil and Gas Conservation Commission 333 West 7th Avenue Anchorage, Alaska 99501-3572 CERTIFIED MAID 7018 0680 X002 2052 8771 Leonard So ka, President Malamute Energy, Inc. P.O. Boz 27121 Golden Valley, MN 55427 TllL ST.4"1; July 2, 2019 °ALASKA Leonard Sojka President GOVERNOR MICKILEL 1. PUNLEAVY Malamute Energy, Inc. 7701 Golden Valley Road P.O. Box 27121 Golden Valley, MN 55427 Dear Mr. Sojka: Alaska Oil and Gas Conservation Commission 333 west Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 w-aogcc.alasko.gov On May 18, 2019, revisions to the Alaska Oil and Gas Conservation Commission's (AOGCC) Regulation 20 AAC 25.025 became effective (see enclosed). Under 20 AAC 25.025(b), bonding amounts are set based on the number of permitted wellheads. According to AOGCC records, Malamute Energy, Inc. has 2 permitted wellheads (see enclosed list). Malamute Energy, Inc. is required to establish a bond in the amount of $800,000 with the AOGCC. Malamute Energy, Inc. currently has bond number 61257060 in the amount of $200,000 on file with the AOGCC. Under the new regulation, an operator with a bond in place on May 18, 2019 is permitted to increase the amount of its current bond using up to four installment increments --subject to a minimum installment amount --over a period of three years. If Malamute Energy, Inc. chooses to increase its bond amount using installment increments, the schedule is: Installment Due Date Minimum Bond Increase First August 16 2019 $500,000 Second August 16, 2020 $100,000 Third August 16 2021 $0 Fourth August 16, 2022 $0 Enclosed are new Forms 10-402A and 10-402B for use with establishing a new surety or personal bond. Also enclosed is the AOGCC's Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank form, should Malamute Energy, Inc. choose a Certificate of Deposit as its bonding instrument. Page 2 of 2 if you have any questions, iody.colombie(a)alaska. ov or Mr. Sincerely, g!� Daniel T. S cunt, Jr. Commissioner please contact Ms. Jody Colombie at 907-793-1221 or Dave Roby at 907-793-1232 or dave.robv(&alaska ov. . Je je L. Chmielowski C issioner Enclosures: 20 AAC 25.025 Regulations Forms: 10-402A and 10-402B Foran: AOGCC — Assignment of CD / Confirmation/Agreement List of Permitted Wellheads As Provided -- -" INvrlCE - �_ P ed in C 31.05.080(a), within 20 days after written notice of the en time as the AOGCC grants for good cause shown, a person affected y file with reconsideration by of this order or decision, or such further enation of the matter determined by it. lithe notice w b rt may the AO application for recosideration must set out the as mailed, then the GCC shallme application for respect in which the order or decisioneis believed o be rr 23 days, An The AOGCC shall grant or refuse the application for reerroneous. Failure o act on it within I0 -da consideration in whole or in order or decision and the d ys is a denial of reconsideration. If the AO Pmr within 10 days after it is filed. be filed within 33 days den Of reconsideration are FINAL and may OCC denies reconsideration, u Y after the date on which the AO Pon denial, this order or decision den OCC mails, O y appealed to suPenor court. The appeal MUST ging reconsideration, the UNLESS the denial is byRinactioansiif the AOGCC which case thOtherwise distributes, the within 40 days after the dao o which the application for reconsiderationls byiwas filed, appeal MUST be filed If the AOGCC grants an application for reconsideration, this order or decision does not b or decision on reconsideration will be the FINAL order or decision of the AO court. That appeal MUST be filed become final. Rather, the order otherwise distributes, within 33 days after the date on which the AO C, and it may 3 appealed a superior the order or decision on reconsideration. GCC mails, OR 30 days leif the AOGCC In computing a perm of time above, the date of the event or default after which the designated not included in the period; the last day of the event the period runs period, t 00 Period is included, unless it falls on a weekend or tate h begins n run h p.m. on the next day that does not fall on a w eekte h or state holiday, in which weekend or state holiday. Alaska Oil and Gas Conservation Commission Malamute Energy, Inc. *EXPLORATORY '213-014 150-287-20028-00-00 'UMIATI8 '2013-04-29 'SUSP 2013-04-29 *EXPLORATORY 1213-020 150-287-20029-00-00 UMIAT23H 2014-03-20 ISUSP 2014-03-20 Wellhead Report 7/2/2019 Page 1 of 1 M1 natu i )15 Agent OFFICIAL USI ru 4l Certified Mall Fee 17 []Yes O $ nU F a SeMces&Faas(chck6 eddl ,a, VprwaM) 0 Retum Receipt(na Ar y) $ co 0 Return Receipt alemmnic) $ ' c 7.(' 1 Pdstrnark co [] a fiw Mall ResVic Nfl e $ Here ❑Adua Signature ReOulr $ E] Adult Signature ResMRetl aegvey IS 17 Postage co Toth . Leonard Sojka, President A o Malamute Energy, Inc. -0 ars::.1-11:01- 7701 Golden Valley Road t7 M1 P.O. Box 27121 cm;smr<Golden Valley, MN 55427 ■ Complete items 1, 2, and 3. ■ Print your name and address on the reverse so that we can return the card to you. ■ Attach this card to the back of the mailpiece, or on the front if space Dermits. Leonard Sojka, President Malamute Energy, Inc. 3olden Valley Road P.O. Box 27121 Golden Valley, MN 55427 II 1111111 11111111111 IIII 111I'll1111 IIII II1I III 9590 9402 4351 8190 1898 92 018 0680 0002 2052 8771 Ps Form 3811, July 2015 PSN 7530-02-000-9053 X 113 gnatu ❑ R� istered all'- gnature Zgte (very 1Niegiste all Reshictetl 0 Certified Mall RestriclW OBlylep 0 Collect an Delivery �'a�' ❑ Collect on Delivery 0 Insured Mail Restnc[ed 0 Imured Mall Restricted Dellvery E Domestic Return Receipt natu i )15 Agent ❑ Addressee :e d by (Printed N e C. Date of Delivery 'eliVery addre 17 []Yes ES, enter tKI No I JU 17 J cc 9 ?0 :e Ty 0 Priority Mall 4.8 gnatu ❑ R� istered all'- gnature Zgte (very 1Niegiste all Reshictetl 0 Certified Mall RestriclW OBlylep 0 Collect an Delivery �'a�' ❑ Collect on Delivery 0 Insured Mail Restnc[ed 0 Imured Mall Restricted Dellvery E Domestic Return Receipt THE STATE °fA LASKA 1.1 July 18, 2019 GOVERNOR MIKE DUNLEAVY Kippy Lane South Center Branch Manager First National Bank of Alaska 201 W 36th Ave Anchorage, AK 99503 Re: Renaissance Umiat, LLC. Certificate of Deposit 461269084 Dear Mr. Lane: Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 w-aogcc.alaska.gov Please release the Certificate of Deposit No. 61269084 in the amount of $100,000 to Renaissance Umiat. The Certificate of Deposit had the incorrect name of the operator. The said Certificate was never approved by the Alaska Oil and Gas Conservation Commission. If there are any questions, please contact Ms. Jody Colombie at (907) 793-1221. Sincerely, Jessie L. Chmielowski Commissioner Attachment cc: Leonard Sojka, via email STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION PERSONAL BOND BOND NUMBER PENAL SUM $ 100,000 KNOW ALL PERSONS BY THESE PRESENTS, That Renaissance Umiat LLC of the airy of Golden Valley —�_ > state of Minnesota as operator, is held firmly bound unto the Alaska Oil and Gas Conservation Commission in the penal sum as indicated above, lawful money of the United States of America, for which payment, well and truly to be made, the operator binds itself and its heirs, executors, administrators, successors, and assigns, firmly by these presents. The operator's performance under this bond is guaranteed by the following security, the disposition of which shall be solely determined and can only be released by the Alaska Oil and Gas Conservation Commission. ❑✓ The attached Certificate of Deposit No. 61269084 issued in sole favor Alaska Oil and Gas Conservation Commission by FNBA a bank authorized to do business in the State of Alaska. ❑ The attached Irrevocable Letter of Credit issued in sole favor of the Alaska Oil and Conservation Commission by a bank authorized business in the State of Alaska. ❑ [Description of other approved security.] WHEREAS the above bonded operator proposes to engage in the drilling or operating of a well or wells subject to regulation by the Alaska Oil and Gas Conservation Commission. Check the proper box: umbMori.dd Wellhead Bond Amount Installment Amount ❑✓ lls $400,000 per well Operators with ❑ ells $6,000,000 active bonds as of May 18, 2019, may ❑ ells $10,000,000 increase their ❑bonding level over a wells $20,000,000 period of three years ❑ in accordancewith ells $30,000,000 20 AAC 25.025(c). Total Wells 2 Total Bond Amount 800,000 Form 10402B Rev. 0512019 Page 1 of 2 Submit in Duplicate BONDNUMBER NOW, THEREFORE. the above bonded operator shall comply with all of the provisions of the laws of the State of Alaska and the regulations, rules, and orders of the Alaska Oil and Gas Conservation Commission in the drilling, operation, maintenance, repair, and abandonment of each well and the clearance of each location, and shall file with the Alaska Oil and Gas Conservation. Commission all notices and records required by said Commission. This obligation shall remain in full force and effect until released by the Alaska Oil and Gas Conservation Commission in accordance with 20 AAC 25.025(c). The Alaska Oil and Gas Conservation Commission must be provided written notification at least 90 days before the expiration or termination of this bond or security. Witness our hand and seal this day of June (7 10 19 Renaissance Umiat, LLC. A= -- By, Operator Signature Leonard Sojka, Managing Member PO Box 27131, Golden Valley MN 55$ Printed name and title Address/City/State/ZIP ACKNOWLEDGEMENT State ofAint1e50-�A Judicial District (or County of 4LOomr` e i Yi ) The foregoing instrument was acknowledged before me on this -7-"h da of J V Yl -e ZO t y by Leo T�e+rd �o�jSct (name) (n��t» (title)of KerlatssancE tfrniak L v ?onal+ssa„yIcrvthSa� operator). on behalf of U not lc}_—�_ C. (operator). l— 7 FA0lIFAELARY PUBLIC Notary [#rfrti nand forH2n AND GAS Approved: Commissioner Approved: Commissioner Approved: Commissioner (Requires approval torr Iwu C01nmissiuners) Date Date Date Form 10-4028 Rev. 05/2019 Page 2 ort Submit in Duplicate STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION ASSIGNMENT OF CERTIFICATE OF DEPOSIT AND CONFIRMATION AND AGREEMENT OF ISSUING BANK On June 11, 2019 Renaissance Umiat, LLC (Principal/Obligor) PO Box 27131, 7701 Golden Valley Road, Golden Valley, MN 55427 assigns the following certificate of deposit: 1. 61269084 in the amount of $ 100,000 (Certificate of Deposit Number) issued by FNBA (name of bank), to secure, in accordance with 20 AAC 25.025, any default that may occur under State of Alaska, Alaska Oil and Gas Conservation Commission Personal Bond No. (Bond). WHEREAS, under 20 AAC 25.025, an operator submitting a personal bond on Form 10- 4028, must provide security, issued in the sole favor of the Alaska Oil and Gas Conservation Commission, by a bank authorized to do business in the State of Alaska guaranteeing the operator's performance: NOW THEREFORE. to meet the requirements of 20 AAC 25.025, under this Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank Assignment, A. the Principal/Obligor agrees to the following: the assignment of its rights to the Certificate to the Alaska Oil and Gas Conservation Commission; 2. the State of Alaska, by and through its duly authorized agents, is irrevocably constituted and appointed as its Attorney -in -Fact to do all things necessary to effectuate the purposes of this Assignment; and 3. this Assignment shall remain in full force and effect until released in writing by the Alaska Oil and Gas Conservation Commission in accordance with 20 AAC 25.025. AOGCC — ASSIGNMENT OF CD / CON FIRMATION/AGRL"• EMENT (5/2019) Page 1 of 6 B The Issuing Bank confirms and agrees to the following: I. it is a bank authorized to do business in the State of Alaska; 2. it is federally insured or a Federal Reserve Bank branch; 3. it has changed its records to show that, subject to its compliance with all applicable State of Alaska and federal laws, only the Alaska Oil and Gas Conservation Commission may collect the principal amount of the Certificate; 4. it has placed a hard hold or freeze on the Certificate in accordance with this Assignment; 5. it shall, within three business days after the Certificate are issued, deliver the original Certificate --or, if it does not issue original Certificate, other account documents, such as receipts, adequately showing that the Certificate was issued—to the Alaska Oil and Gas Conservation Commission (which shall hold them until this Assignment is released in writing by the Alaska Oil and Gas Conservation Commission); 6. the Certificate complies with the following requirements: (a) the principal of the Certificate is in the sole favor and for the exclusive use of the Alaska Oil and Gas Conservation Commission —i.e., the Certificate will be held by the Alaska Oil and Gas Conservation Commission or by the Issuing Bank in trust for the benefit of Alaska Oil and Gas Conservation Commission; (b) the Certificate is assigned to the Alaska Oil and Gas Conservation Commission in writing and upon the books of the Issuing Bank to secure any default, as determined by the Alaska Oil and Gas Conservation Commission in its sole discretion, that may occur under the Bond, which accompanies the Certificate; (c) subject to the Principal/Obligor compliance with all applicable State of Alaska and federal laws, the Alaska Oil and Gas Conservation Commission alone, in its sole discretion, may authorize the release, in any form, to any party of any or all of the principal amount of the Certificate; (d) the Certificate is, at any time prior to maturity, redeemable, and the principal amount of the Certificate is payable, in whole or in part at the Alaska Oil and Gas Conservation Commission's sole discretion, to the Alaska Oil and Gas Conservation Commission immediately upon written demand; AOGCC —ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 2 of 6 (e) the Certificate is in such amount that liquidation prior to maturity will result in the full amount of the Bond, or the Certificate is issued with the provision that all costs of liquidation (including, for example, penalties for early redemption) will be paid out of the interest earned by the Principal/Obligor, not out of principal amount of the Certificate; (f) the Certificate is federally insured; (g) the Certificate automatically renews; (h) the Certificate is subject to no expiration date that would restrict the right of the Alaska Oil and Gas Conservation Commission to collect the principal amount of the Certificate at any time of default; and (i) the Certificate is not, and will not be, subject to any rights of set-off or liens of the Issuing Bank; and the State of Alaska, by and through its duly authorized agents, is irrevocably constituted and appointed as its Attorney -in -Fact to do all things necessary to effectuate the purposes of this Assignment; 8. this Assignment shall remain in full force and effect until released in writing by the Alaska Oil and Gas Conservation Commission in accordance with 20 AAC 25.025; and 9. it shall immediately notify the Alaska Oil and Gas Conservation Commission and Principal/Obligor if it becomes unable, for any reason, to fulfill its obligations under the Certificate or if it learns, or reasonably should have learned, that any confirmation or agreement above is or becomes inaccurate. AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 3 of 6 IN WITNESS WHEREOF. the Principal/Obligor has set its signature and seal (if it has one) this \7 day of June 2019 (Signature of Principal/Obligor) By: Leonard Sojka Title: Managing Member IN WITNESS WHEREON, the Issuing Bank has set its si.anature and seal (if it has one) this (1 day of June of Issuing B> i k " Title: _Jk f.� Ytfi(/1 �Ll{121e�/ 019 AOGCC —ASSIGNMENT OF CD I CONFIRMATION/AGREEMENT (5!2019) Pave 4 of 6 STATE OF MN ) )ss. ACKNOWLEDGEMENT OF PRINCIPAL/OBLIGOR On this __ day of June ----.,2 019 , before me, a notary public in and for the State of MN duly commissioned and sworn, appeared Leonard Sojka to me personally known, who, being by me duly sworn, said the Managing Member _ Renaissance Umiat, LLC following: (1) he/she is I the Principal/Obligor that executed the attached Assignment of Certificate of Depobit and Confirmation and Agreement of Issuing Bank (Assignment); (2) the seal (if applicable) affixed to the Assignment is the Principal/Obligors corporation seal: (3) the Assignment was signed and sealed (if applicable) on behalf of the Principal%Obligor by the authority of its Board of Directors: and (4) executing the Assignment is the free act and deed of the Principal Obligor for the uses and purposes set forth in it. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day, month, and year aforesaid - ANDREA HELENASCHROEDER NOTARY PUBLIC MINNESOTA otary Public'm and for the State of IV 0My Camm saon Expres Jan 31, 7027 My Commission Expires: 3 AOGCC—ASSIGNMLNT OF CD I CONFIRMATION/AGREEMENT (52019) Page 5 of 6 STATE OF ) )ss. ACKNOWLEDGEMENT OF ISSUING BANK On this l44"day of �OA/t� e— _ , 2 01 , before me, a notary public in and for the State of A¢$rCt . duly commissioned and swom; appeared gwi i ,J,j2n pl , to me personally known, who, being by me duty swom, said the following (1) he she is FNBA the Issuing Bank that executed the attached Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank (Assignment): (2) the seal (if applicable) affixed to the Assignment is the Issuing Bank's corporation seal; (3) the Assignment was signed and sealed (if applicable) on behalf of the Issuing Bank by the authority of its Board of Directors; and (4) executing the Assignment is the free act and deed of the Issuing Bank for the uses and purposes set forth in it. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day, and year aforesaid. Notary Public in and for the My Commission Expires: AOGCC—ASSIGNMENT OF CD CONFIRMATION AGREEMENT (i 2019) Page 6 of 6 Colombie, Jody J (CED) From: Leonard Sojka <leonard@malamuteenergy.com> Sent: Tuesday, July 2, 2019 10:14 AM To: Colombie, Jody J (CED) Subject: Re: Renaissance Umiat - incremental AOGCC bonding Categories: Red Category I will resubmit the documents. Thanks. On Tue, Jul 2, 2019 at 12:24 PM Colombie, Jody J (CED) <iody.colombieC@alaska.eov> wrote: Leonard, All bonds and bond -related documents (CD documents, assignment of CDs, etc.) must be in the exact name of the Designated Operator for the leases and wells. Jody From: Leonard Sojka <IeonardPmalamuteenerev com> Sent: Thursday, June 27, 2019 9:31 AM To: Colombie, Jody J (CED) <iody.colombieC@alaska.eov> Subject: Re: Renaissance Umiat - incremental AOGCC bonding Jody, Do you specifically want me to refile just Form 10-4026 for each of the two bonds ($200,000 and $100,000)? Are the Assignment of CDs, etc. forms OK? Thanks, Leonard On Thu, Jun 27, 2019 at 11:50 AM Colombie, Jody J (CED) <jodv.colombieCaalaska.gov> wrote: Leonard, Your email states that the current operator for the affected Umiat leases and suspended wells is Malamute Energy, Inc.. However, the three Designation of Operator forms on file are unclear as each form lists "RENAISSANCE UMIAT, LLC c/o Malamute Energy, Inc." in box #3, Name and Address of Designated Operator. To comply with AOGCC regulations, there needs to be an unequivocal designation of the operator. One entity "c/o" another entity will not suffice. Renaissance Umiat, LLC (the owner of record) must submit new Designation of Operator forms that unequivocally designate one company as operator for the affected leases and wells. Please feel free to contact me if you have additional questions. Regards, Jody J. Colombie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7°i Avenue Anchorage, AK 99501 (907) 793-1221 Direct (90 7) 2 76- 7542 Fax From: Leonard Sojka <leonard@mmdmuteenergv.com> Sent: Thursday, June 20, 2019 9:11 AM To: Colombie, JodyJ (CED) <lody.colombie@alaska.eov> Subject: Re: Renaissance Umiat - incremental AOGCC bonding Jody, Renaissance Umiat, LLC holds the two BLM leases in NPRA. There is an exploratory capped well on each lease. Malamute Energy, Inc. owns 97.5% of Renaissance Umiat and is the designated operator for Renaissance Umiat. Back in 2016 Malamute funded the the $200,000 replacement bond that you hold, so that a then existing Renaissance Umiat bond could be released to the Linc Energy bankruptcy trustee. Technically, that bond should have instead been in the name of Renaissance Umiat, LLC. The most recent bond was made out in the name of Renaissance Umiat, as it should be. The notary who witnessed these documents in one place wrote that Renaissance Umiat was the operator. Marlamute Energy, Inc. is the operator. I did not think that it mattered to AOGCC, as long as the bond was listed in the name of Renaissance Umiat, LLC. We are fine with the current bond being in the name of Malamute. As a practical matter, the AOGCC would not release it unless Renaissance Umiat performed under the regulations. Happy to discuss. Thanks, Leonard 763-213-6038 1 � On Thu, Jun 20, 2019 at 11:55 AM wlombie, Jody J (CED) <jodv.colombie@alaska.aov> wrote: Dear Mr. Sojka: Renaissance Umiat, LLC is the Designated Operator for the Umiat No. 18 and Umiat No. 23H wells. On June 17, 2019, Renaissance Umiat, LLC submitted a Personal Bond with Certificate of Deposit No. 61269084 in the amount of $100,000 as security. Malamute Energy, Inc. currently has Bond No. 61257060 in the amount of $200,000 on file with the AOGCC. Please clarify the legal relationship of these two companies so that AOGCC can ensure its bonding records are accurate. Regards, Jody Colombie From: Leonard Sojka <leonard@malamuteener¢v.com> Sent: Monday, June 17, 2019 12:59 PM To: Colombie, Jody J (CED) <iodv.colombie@alaska.eov> Subject: Renaissance Umiat - incremental AOGCC bonding Hi Jody, Please see the attached Renaissance Umiat, LLC Personal Bond and associated Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank. Renaissance Umiat, LLC currently has $400,000 of posted bonds for the two wells ($200,000 with the AOGCC and $200,000 with BLM). The attached incremental bond for $100,000 represents the first of four installments to raise the total bonding to $800,000, as required by the current statute. Thank you, Leonard Sojka President Malamute Energy, Inc. Renaissance Umait, LLC 763-213-6038 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION BOND R1 jk 1/, PERSONAL BOND PENAL SUM $ 200,000.00 That Malamute Energy, Inc. KNOW ALL PERSONS BY THESE PRESENTS, of the City of Golden Valley State of Minnesota as operator, is held firmly bound unto the Alaska Oil and Gas Conservation Commission in the penal sum as indicated above, lawful money of the United States of America, for which payment, well and truly to be made, the operator binds itself and its heirs, executors, administrators, successors, and assigns, firmly by these presents. The operator's performance under this bond is guaranteed by the following security, the disposition of which shall be solely determined by the Alaska Oil and Gas Conservation Commission until released by said Commission. D The attached Certificate of Deposit No. & (Z S% 0&0 issued in sole favor of the Alaska Oil and Gas Conservation Commission by rm a bank authorized to do business in the State of Alaska. ❑ The attached Irrevocable Letter of Credit issued in sole favor of the Alaska Oil and Gas Conservation Commission by a bank authorized to do business in the State of Alaska. ❑ [Description of other approved security.] WHEREAS the above bounden operator proposes to engage in the drilling or operating of a well or wells subject to regulation by the Alaska Oil and Gas Conservation Commission at a location described as follows: ❑ SINGLE WELL BOND - minimum penal sum $100,000 (except as otherwise allowed by the Commission under 20 AAC 25.025(b)) Unit or Lease Name Well Number Area of State Surface Well Location - Sec., Twp., Rng. and Mer. Surface Well Location - Alaska State Plane Coordinate System coordinates C] BLANKET BOND - minimum penal sum $200,000 Any and all wells drilled or operated by the operator in the State of Alaska. ' """ I Page 1 of 2 Submit in Duplicate BOND NUMBER (continued) PENAL SUM $ 200,000.00 NOW, THEREFORE, the above bounden operator shall comply with all of the provisions of the laws of the State of Alaska and the regulations, rules, and orders of the Alaska Oil and Gas Conservation Commission in the drilling, operation, maintenance, repair, and abandonment of each well and the clearance of each location, and shall file with the Alaska Oil and Gas Conservation Commission all notices and records required by said Commission. This obligation shall remain in full force and effect until released by the Alaska Oil and Gas Conservation Commission in accordan�cee wjth 20 AAC 25.025(c). 7 Witness our hand and seal this �(day of November 2016 Malamute Energy. Inc. By: Operator Signature Leonard Sojka, Chief Financial Officer ACKNOWLEDGEMENT State of Printed name and title Judicial District (or County of Ae-in n�e In 1 ✓1 ) The foregoing instrument was acknowledged before me on this ?J'� dayof ber 26 « by cQrv0.✓ (name) CF0 (title) of Nerator), on behalf of ^ R 110 ";y� `WEEDY A. ANGELS � /1 NOTARY PUBLIC.MIN'NESUTA c, j •7 W Comm. Exp. Jan 31, 20211) My commission expires: San 31 2ozo Public in and Official Use Only Below Line As, AS CONSERVATION COMMISSION Approve l Z / Z Coml issioner Date s� Approved: u / i 12- - Z —// Commissioner Date Approved: Commissioner (Requires approval by two Commissioners) Date Foml 10-4026 Rev, 05/2012 Page 2 of 2 Submit in Duplicate C If STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION ASSIGNMENT OF CERTIFICATE OF DEPOSIT AND CONFIRMATION AND AGREEMENT OF ISSUING BANK On November 3 201k Malamute Energy, Inc. (Principal/Obligor) P.O. Box 27131, 7701 Golden Valley Road, Golden Valley, MN 55427 (Address) assigns the following certificate of deposit: I. CDS iQ 0, 5-%060 0 in the amount of $200,000.00 issued by 6r B k (name of bank), to secure, in accordance with 20 AAC 25.025, any default that may occur under State of Alaska, Alaska Oil and Gas Conservation Commission (AOGCC) Personal Bond No. you &47 (Bond). WHEREAS, under 20 AAC 25.025, an operator submitting a personal bond on Form 10- 402B, must provide security, issued in the sole favor of the AOGCC, by a bank authorized to do business in the State of Alaska guaranteeing the operator's performance; NOW THEREFORE, to meet the requirements of 20 AAC 25.025, under this Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank Assignment, A. the Principal/Obligor agrees to the following: the assignment of its rights to the Certificate to the AOGCC; 2. the State of Alaska, by and through its duly authorized agents, is irrevocably constituted and appointed as its Attorney -in -Fact to do all things necessary to effectuate the purposes of this Assignment; and 3. this Assignment shall remain in full force and effect until released in writing by the AOGCC in accordance with 20 AAC 25.025(c). B. The Issuing Bank confirms and agrees to the following: it is a bank authorized to do business in the State of Alaska; 2. it is federally insured or a Federal Reserve Bank branch; AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (6/2012) Page 1 of 1 C r it has changed its records to show that, subject to its compliance with all applicable State of Alaska and federal laws, only the AOGCC may collect the principal amount of the Certificate; 4. it has placed a hard hold or freeze on the Certificate in accordance with this Assignment; 5, it shall, within three business days after the Certificate is issued, deliver the original Certificate -or, if it does not issue original Certificate, other account documents, such as receipts, adequately showing that the Certificate was issued—to the AOGCC (which shall hold them until this Assignment is released in writing by the AOGCC); 6. the Certificate complies with the following requirements: (a) the principal of the Certificate is in the sole favor and for the exclusive use of the AOGCC—i.e., the Certificate will be held by the AOGCC or by the Issuing Bank in trust for the benefit of AOGCC; (b) the Certificate is assigned to the AOGCC in writing and upon the books of the Issuing Bank to secure any default, as determined by the AOGCC in its sole discretion, that may occur under the Bond, which accompanies the Certificate; (c) subject to the Principal/Obligor compliance with all applicable State of Alaska and federal laws, the AOGCC alone, in its sole discretion, may authorize the release, in any form, to any party of any or all of the principal amount of the Certificate; (d) the Certificate is, at any time prior to maturity, redeemable, and the principal amount of the Certificate is payable, in whole or in part at the AOGCC's sole discretion, to the AOGCC immediately upon the AOGCC's written demand; (e) the Certificate is in such amount that liquidation prior to maturity will result in the full amount of the Bond, or the Certificate is issued with the provision that all costs of liquidation (including, for example, penalties for early redemption) will be paid out of the interest earned by the Principal/Obligor, not out of principal amount of the Certificate; (f) the Certificate is federally insured; (g) the Certificate is automatically renewable; AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (6/2012) Page 2 of 2 f r (h) the Certificate is subject to no expiration date that would restrict the right of the AOGCC to collect the principal amount of the Certificate at any time of default; and (i) the Certificate is not, and will not be, subject to any rights of set- off or liens of the Issuing Bank; and 7. the State of Alaska, by and through its duly authorized agents, is irrevocably constituted and appointed as its Attorney -in -Fact to do all things necessary to effectuate the purposes of this Assignment; 8, this Assignment shall remain in full force and effect until released in writing by the AOGCC in accordance with 20 AAC 25.025(c); and 9. it shall immediately notify the AOGCC and Principal/Obligor if it becomes unable, for any reason, to fulfill its obligations under the Certificate or if it learns, or reasonably should have learned, that any confirmation or agreement above is or becomes inaccurate. IN WITNESS WHEREOF, the Principal/Obligor has set its signature and seal (if it has one) this 3J day c f November , 2016 (Signature dfPrincipal/Obligor) By: Leonard Sojka Title: Chief Financial Officer IN WITNESS WHEREOF, the Issuing Bank has set its signature and seal (if it has one) this �'A day of•— I) lNC)VwtV(, 2016 (Signature of Issuing Bank) By: bt Kait5c.ktte-e, Title: &,&oel i Y1' &%5e✓ AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (6/2012) Page 3 of If r STATE OF ) )ss. ACKNOWLEDGEMENT OF PRINCIPAL/OBLIGOR On this _ day of November 2016 , before me, a notary public in and for the State of Minnes6, duly commissioned and sworn, appeared Leonard Scjka to me personally known, who, being by me duly sworn, said the following: (1) he/she is Chief Financial Officer Malamute Energy, Inc. of the Principal/Obligor that executed the attached Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank (Assignment); (2) the seal (if applicable) affixed to the Assignment is the Principal/Obligor's corporation seal; (3) the Assignment was signed and sealed (if applicable) on behalf of the Principal/Obligor by the authority of its Board of Directors; and (4) executing the Assignment is the free act and deed of the Principal/Obligor for the uses and purposes set forth in it. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day, month, and year aforesaid. Notary Public i and for the State of My Commission Expires: T� —31 2020 AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (6/2012) Page 4 of 4 STATE OF A,� LK& ) )ss. ACKNOWLEDGEMENT OF ISSUING BANK Id On this lz� day of NOVP t/fl X -K , 201 , before me, a notary public in and for the State of A(yKa , duly commissioned and sworn, appeared ails eta i%C J,,ae,,, to me personally known, who, being by me duly sworn, said the following: (1) he/she is ibye-06% rOaoeSe.- of RV8S Qai-o,)al gaaK AlesVe D q the Issuing Bank that executed the attached Assignment of Certificate of Deposit and Confirmation and Agreement of Issuing Bank (Assignment); (2) the seal (if applicable) affixed to the Assignment is the Issuing Bank's corporation seal; (3) the Assignment was signed and sealed (if applicable) on behalf of the Issuing Bank by the authority of its Board of Directors; and (4) executing the Assignment is the free act and deed of the Issuing Bank for the uses and purposes set forth in it. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day, month, and year aforesaid. Notary Public in and fo he State of w _ _ My Commission Expires: acia l laolq AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (6/2012) Page 5 of 5 ertificate of Deposit Date Tax Opened: 11/22/2016 Term: 365 Days ID: 81-3914810 Number: Dollar Account Number: 61257060 Amount of Deposit: Two Hundred Thousand Dollars And No Cents $ 200,000.00 This Time Deposit is Issued to: 'STATE OF ALASKA ITF MALAMUTE ENERGY INC PO BOX 27131 GOLDEN VALLEY MN 55427 Not Negotiable - Not Transferable - Additional terms are below. This form contains the terms for your time deposit. It is also the Truth -in -Savings disclosure for those depositors entitled to one. There are additional terms and disclosures on page two of this form, some of which explain or expand on those below. You should keep one copy of this form. Maturity Date. This account matures 11/22/2017 (See below for renewal information.) Rate Information. The interest rate for this account is .18 with an annual percentage yield of .18%. This rate will be paid until the maturity date specified above. Interest begins to accrue on the business day you deposit any noncash item (for example, a check). Interest will be compounded not applicable Interest will be credited upon renewal or maturity ® The annual percentage yield assumes that interest remains on deposit until maturity. A withdrawal of interest will reduce earnings. ❑ If you close your account before interest is credited, you will not receive the accrued interest. The Number of Endorsements needed for withdrawal or any other purpose is: one Account Ownership (Select One and Initial) ❑ Single Party Account ❑ Multiple Party Account ❑ Trust - Separate Agreement dated: X Corporation - For Profit Rights at Death (Select One and Initial) Single Party Account Multiple Party Account with Right of Survivorship ❑ Multiple Party Account without Right of Survivorship ❑ Single Party Account with Pay on Death ❑ Multiple Party Account with Right of Survivorship and Pay on Death Pay On Death Beneficiaries, To add Pay On Death Beneficiaries' name one or more: Issuer: FIRST NATIONAL BANK ALASKA PO BOX 100720 ANCHORAGE, AK 99510-0720 By Minimum Balance Requirement. You must make a minimum deposit to open this account of $ 750.00 ❑ You must maintain this minimum balance on a daily basis to ear the annual percentage yield disclosed. Withdrawals of Interest. Interest ® accrued ❑ credited during a term can be withdrawn: after maturity Early Withdrawal Penalty. If we consent to a request for a withdrawal that is otherwise not permitted you may have to pay a penalty. The penalty will be an amount equal to: 180 days Interest interest on the amount withdrawn. Renewal Policy ❑ Single Maturity. If checked, this account will not automatically renew. Interest ❑ will ❑ will not accrue after maturity. ® Automatic Renewal. If checked, this account will automatically renew on the maturity date. (see page two for terms) Interest ❑ will ❑ will not accrue after final maturity. TIN: Social Security or Employer's I.D. Number. A correct taxpayer identification number is required for almost every type of account. A certification of this number is also required and is contained on the fust copy of this certificate. Backup Withholding. A certification that you are not subject to backup withholding is necessary for almost all accounts (except for persons who are exempt altogether) - and a certification that the FATCA code (if any) is correct. These certifications are contained on the first copy of this form. Failure to provide these certifications when required will cause us to withhold a percentage of the interest earned (for payments to the IRS). Providing a false certification can result in serious federal penalties. 11 Endorsements. Sign Only When You Request Withdrawal COMMON FEATURES - The following fees may be Imposed against your A, account: Garnishments/Executions/Levies: 5100.00 each X X Cergfkate of Deposit/Amount Agreement -Ax 13 N ers ayetemeTM VMP® Wolters Kluwer Financial aervkes 0 2015 Read Page Two for Additional Terms CD-AA-LA2-AK 3/15/2015 Pope 1 of 2 Definitions. We,e" our, „ and us mean the i if this account and "you" and "your" mean the depositor(s). "Acco& neans the original certificate of deposit as well as the deposit it evidences. "Party" means a person who by the terms of the account, has a present right, subject to request, to payment from a multiple -party account. Transfer. "Transfer" means any change in ownership, withdrawal tights, or survivorship rights, including (but not limited to) any pledge or assignment of this account as collateral. You cannot transfer this account without our written consent. Primary Agreement. You agree to keep your funds with us in this account until the maturity date. (An automatically renewable account matures at regular intervals.) You may not transfer this account without first obtaining our written consent. You must present this certificate when you request a withdrawal or a transfer. This account is void if the deposit is made by any method requiring collection (such as a check) and the deposit is not immediately collected in full. If the deposit is made or payable in a foreign currency, the amount of the deposit will be adjusted to reflect final exchange into U.S. dollars. We may change any term of this agreement. Rules governing changes in interest rates have been provided. For other changes we will give you reasonable notice in writing or by any other method permitted by law. If any notice is necessary, you all agree that the notice will be sufficient if we mail it to the address listed on page one of this form. You must notify lis of any change. :Withdrawals and Transfers. Only those of you who sign the permanent signature card may withdraw funds from this account. (In appropriate cases, a court appointed representative, a beneficiary of a trust or pay -on -death account whose right of withdrawal has matured, or a newly ippointed and authorized representative of a legal entity may also withdraw from this account.) The specific number of you who must agree to any withdrawal is written on page one in the section bearing the title Number of Endorsements. This means, for example, that if two of you sign the signature card but only one endorsement is necessary for withdrawal then either of you may request withdrawal of the entire account at any time. Unless otherwise specified in writing, only one endorsement is required to withdraw finds from this account. These same rules apply to define the names and the number of you who can request our consent to a transfer. Pledges. Any pledge of this account (to which we have agreed), must fust be satisfied before the rights of any joint account survivor, pay -on -death beneficiary or trust account beneficiary become effective. For example, if one joint tenant pledges the account for payment of a debt and then dies, the surviving joint tenant's rights in this account are subject fust to the payment of the debt. Account Ownership. You intend these rules to apply to this account depending on the form of ownership and beneficiary designation, if any, specified on page 1. We make no representations as to the appropriateness or effect of the ownership and beneficiary designations, except as they determine to whom we pay the account funds. Single -Party Account. Such an account is owned by one party. Multiple -Party Account. Parties own account in proportion to net contributions unless there is clear and convincing evidence of a different intent. Trust Account Subject to Separate Agreement. We will abide by the terms of any separate agreement which clearly pertains to this certificate and which you file with us. Any additional consistent terms stated on this form will also apply. Rights at Death Single -Party Account. At death of party, ownership passes as part of party's estate. Multiple -Party Account with Right of Survivorship. At death of party, ownership passes to surviving parties. If two or more parties survive and one is the stf' 'ng spouse of the deceased party, the amount to which the deceased p .nunediately before death, was beneficially entitled by law belongs to the surviving spouse. If two or more parties survive and none is the spouse of the decedent, the amount to which the deceased party, immediately before death, was beneficially entitled by law belongs to the surviving parties in equal shares. Multiple -Party Account without Right of Survivorship. At death of parry, deceased party's ownership passes as part of deceased party's estate. Single -Party Account with POD (Pay -On -Death) Designation. At death of parry, ownership passes to POD beneficiaries and is not part of party's estate. Multiple -Party Account with Right of Survivorship and POD (Pay -on -Death) Designation. At death of last surviving party, ownership passes to POD beneficiaries and is not part of last surviving party's estate. Set -Off. You each agree that we may (without prior notice and when permitted by law) set off the funds in this account against any due and payable debt owed to us now or in the future, by any of you having the right of withdrawal, to the extent of such person's or legal entity's right to withdraw. The amount subject to set-off is that proportion to which you are or were immediately before your death, beneficially entitled, and in the absence of proof of net contributions, to an equal share with all parties having present rights of withdrawal. If the debt arises from a note, "any due and payable debt" includes the total amount of which we are entitled to demand payment under the terms of the note at the time we set off, including any balance the due date for which we properly accelerate under the note. This right of setoff does not apply to this account if. (a) it is an Individual Retirement Account or other tax-deferred retirement account, or (b) the debt is created by a consumer credit transaction under a credit card plan, or (c) the debtor's right of withdrawal arises only in a representative capacity. You agree to hold us harmless from any claim arising as a result of our exercise of our right of setoff. Balance Computation Method. We use the daily balance method to calculate the interest on this account. This method applies a daily periodic rate to the principal in the account each day. Transaction Limitations. You cannot make additional deposits to this account during a term (other than credited interest). You cannot withdraw principal from this account without our consent except on or after maturity. (For accounts that automatically renew, there is a grace period after each renewal date during which withdrawals are permitted without penalty.) In certain circumstances, such as the death or incompetence of an account owner, the law permits, or in some cases requires, the waiver of the early withdrawal penalty. Other exceptions may also apply, for example, if this is part of an IRA or other tax-deferred savings plan. For Accounts that Automatically Renew. Each renewal term will be the same as this orioinal one , beginning on the maturity date (unless we notify you, in writing, before a maturity date, of a different term for renewal). You must notify us in writing before, or within a ten day grace period after, the maturity date if you do not want this account to automatically renew. Interest earned during one term that is not withdrawn during or immediately after that term is added to principal for the renewal term. The rate for each renewal term will be determined by us on or just before the renewal date. You may call us on or shortly before the maturity date and we can tell you what the interest rate will be for the next renewal term. On accounts with terms of longer than one month we will remind you in advance of the renewal and tell you when the rate will be known for the renewal period. See your plan disclosure if this account is part of an IRA or Keogh. CO-"-W-AK 3/5/2015 Services© 2015 Pepe 2 of 2 r MALAMUTE ENERGY, INC. f EXECUTION VERSION WRITTEN CONSENT OF THE BOARD OF DIRECTORS September 28, 2016 The undersigned, being the sole member of the board of directors (the "Board") of Malamute Energy, Inc., a Delaware corporation (the "Company"), acting by written consent without a meeting pursuant to Section 141(1) of the General Corporation Law of the State of Delaware (as amended, the "DGCI:), does hereby expressly waive notice of the place, date, time and purpose of, and any rights to receive any material otherwise required to be furnished in a notice of a meeting or meetings at which the actions taken herein would have been submitted to the Board, and does hereby consent to the adoption of, and does hereby adopt, the resolutions attached hereto as Annex I by this written consent without any meeting of the Board. [Signature Page Follows] f r IN WITNESS WHEREOF, the resolutions attached as Annex I hereto have been adopted as of the date first above written. BOARD: Alex Zyng'ter [Signature Page to Written Consent of Board of Directors) Annex I Resolutions of the Board of Directors of Malamute Energy, Inc. Appointment of Officers. RESOLVED, that the following person (the "Appointee') be, and hereby is, appointed and elected to serve as an officer of the Company (an "Officer") in the office set forth below opposite the Appointee's name, to serve until the Appointee's successor is duly appointed and qualified or until the Appointee's earlier death, resignation or removal from office: Name Office Leonard James Sojka Chief Financial Officer 2. General Authorization. RESOLVED, that the duly authorized officers of the Company, be, and each of them hereby is, authorized, empowered and directed, in the name and on behalf of the Company, to make all such arrangements, to take all such further action, to cause to be prepared and filed all such documents, to make all expenditures and incur all expenses, and to pay all required fees, and to execute and deliver, in the name of and on behalf of the Company, all agreements, instruments, documents and certificates (including stock certificates), including without limitation, officers' certificates, as they may deem necessary, appropriate or advisable (including, without limitation, amendments to any of the foregoing) in order to fully effectuate the purpose of each and all of the foregoing resolutions and the execution by such proper officer of any such agreement, instrument, document or certificate or the payment of any such expenditures or expenses or the doing by them of any act in connection with the foregoing matters shall conclusively establish their authority therefor from the Company and the approval and ratification by the Company of the agreement, instrument, document or certificate so executed, the expenses or expenditures so paid and the action so taken; and be it further RESOLVED, that each and every action previously taken and performed by any officer of the Company in connection with the actions contemplated by the foregoing resolutions be, and they hereby are, adopted, ratified, confirmed and approved in all respects as the acts and deeds of the Company; and be it further RESOLVED, that in connection with the transactions contemplated in the preceding resolutions, any officer of the Company be, and each of them hereby is, authorized, in the name and on behalf of the Company, to certify any more formal or detailed resolutions as such officers may deem necessary or appropriate to effectuate the intent of the foregoing resolutions and that such officers be, and each of them hereby is, authorized and directed to annex such resolutions to this consent, and thereupon such Doc#: US1:108486440 C C resolutions shall be deemed adopted as and for the resolutions of the Board as if set forth at length in this consent. Doc#: Us1: 108486445 Delaware The First State I, JEFFREY W. BULLOCK, SECRETARY OF STATE OF THE STATE OF DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND CORRECT COPY OF THE RESTATED CERTIFICATE OF "ARCTIC ACQUISITION, INC." CHANGING ITS NAME FROM "ARCTIC ACQUISITION INC." TO "MALAMUTE ENERGY, INC.", FILED IN THIS OFFICE ON THE SIXTEENTH DAY OF SEPTEMBER, A.D. 2016, AT 1:58 O'CLOCK P.M. A FILED COPY OF THIS KENT COUNTY RECORDER OF DEEDS. 7 8100 SR#20 SR# 20165819847 xtmly You may verify this certificate online at corp.delaware.gov/authver.shtmi HAS BEEN FORWARDED TO THE Page 1 X 1�q Ty W. a.... iRa 0 U.. Authentication: 203008103 Date: 09-16-16 State of Delaalre Secrtary of State Division of Corponttoms Delivered 01:58 PM 0911612016 FILED 01:58 PM 0 9716 2 016 SR 20165819847 - HeNumber 6071277 A c EXECUTION VERSION AMENDED AND RESTATED CERTIFICATE OF INCORPORATION of ARCTIC ACQUISITION, INC. Arctic Acquisition, Inc., a Delaware corporation (the `sCo_pr oration"), hereby certifies as follows: 1. The name of the Corporation is Arctic Acquisition, Inc. The date of filing of its original Certificate of Incorporation with the Secretary of State of the State of Delaware was on June 17, 2016. 2. This Amended and Restated Certificate of Incorporation amends and restates in its entirety the Certificate of Incorporation of the Corporation as currently in effect and has been duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware (the "DGCL") by the Board of Directors and the written consent of the holders of the outstanding capital stock entitled to vote thereon in accordance with the provisions of Section 228 of the DGCL. 3. The text of the Certificate of Incorporation as currently in effect is hereby amended and restated to read in its entirety as set forth in full on Exhibit A attached hereto (as so amended and restated, the "Amended and Restated Certificate of Incomoration'). [Signature Page Follows] D*0:US1:10814652v4 r r IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to he signed as of the date first aabove written. By: Name: Alex Zyngier Title: Chairman, President and Secretary [Signanme Page So Amended and BeeMledCerllficnte of Jn rpomuanj r" r^ AMENDED AND RESTATED CERTIFICATE OF INCORPORATION of MALAMUTE ENERGY, INC. Name. The name of the corporation is Malamute Energy, Inc. (the "Corporation'). 2. Address; Registered Office and Agent. The address of the Corporation's registered office is 850 New Burton Rd., Suite 201, Dover, Kent County, Delaware 19904; and the name of its registered agent at such address is National Corporate Research, Ltd. 3. Purposes. The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the "DGCL"). 4. Number of Shares. The total number of shares of stock that the Corporation shall have authority to issue is 1,000,000 all of which shall be shares of Common Stock with the par value of $0.01 per share. 5. Election of Directors. Unless and except to the extent that the By- laws of the Corporation (the "By-laws") shall so require, the election of directors of the Corporation need not be by written ballot. 6. Limitation of Liabilitv. (a) To the fullest extent permitted under the DGCL, as amended from time to time, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. (b) Any amendment or repeal of Section (a) of this Article 6 shall not adversely affect any right or protection of a director of the Corporation hereunder in respect of any act or omission occurring prior to the time of such amendment or repeal. 7. Indemnification. (a) Right to Indemnification. The Corporation shall indemnify and hold harmless, to the fullest extent permitted by applicable law as it presently exists or may hereafter be amended, any person (a "Covered Person") who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (a "Proceeding'), by reason of the fact that he or she, or a person for whom he or she is the legal Docx:us1a0814652v4 l r representative, is or was a director or officer of the Corporation or, while a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee or agent of another entity or enterprise, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys' fees) reasonably incurred by such Covered Person. Notwithstanding the preceding sentence, except as otherwise provided in Section (c) of this Article 7, the Corporation shall be required to indemnify a Covered Person in connection with a Proceeding (or part thereof) commenced by such Covered Person only if the commencement of such Proceeding (or part thereof) by the Covered Person was authorized by the Board of Directors of the Corporation (the "Board"). (b) Prepayment of Expenses. To the extent not prohibited by applicable law, the Corporation shall pay the expenses (including attorneys' fees) incurred by a Covered Person in defending any Proceeding in advance of its final disposition;opr vided, however, that, to the extent required by applicable law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the Covered Person to repay all amounts advanced if it should be ultimately determined that the Covered Person is not entitled to be indemnified under this Article 7 or otherwise. (c) Claims. If a claim for indemnification or advancement of expenses under this Article 7 is not paid in full within 30 days after a written claim therefor by the Covered Person has been received by the Corporation, the Covered Person may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim. In any such action the Corporation shall have the burden of proving that the Covered Person is not entitled to the requested indemnification or advancement of expenses under applicable law. (d) Nonexclusivity of Rights. The rights conferred on any Covered Person by this Article 7 shall not be exclusive of any other rights that such Covered Person may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, the By-laws, agreement, vote of stockholders or disinterested directors or otherwise. (e) Other Sources. The Corporation's obligation, if any, to indemnify or to advance expenses to any Covered Person who was or is serving at its request as a director, officer, employee or agent of another entity or enterprise shall be reduced by any amount such Covered Person may collect as indemnification or advancement of expenses from such other entity or enterprise. (f) Amendment or Reveal. Any amendment or repeal of the foregoing provisions of this Article 7 shall not adversely affect any right or protection hereunder of any Covered Person in respect of any act or omission occurring prior to the time of such amendment or repeal. Doc$: US7 A0814652v4 (g) Other Indemnification and Prepayment of Expenses. This Article 7 shall not limit the right of the Corporation, to the extent and in the manner permitted by applicable law, to indemnify and to advance expenses to persons other than Covered Persons when and as authorized by appropriate corporate action. 8. Adoption, Amendment or Repeal of By -Laws. The Board is authorized to adopt, amend or repeal the By-laws. 9, Certificate Amendments. The Corporation reserves the right at any time, and from time to time, to amend or repeal any provision contained in this Certificate of Incorporation, and add other provisions authorized by the laws of the State of Delaware at the time in force, in the manner now or hereafter prescribed by applicable law; and all rights, preferences and privileges of whatsoever nature conferred upon stockholders, directors or any other persons whomsoever by and pursuant to this Certificate of Incorporation (as amended) are granted subject to the rights reserved in this Article. Dock: US710914652v4 Malamute Energy, Inc. May 17, 2019 Jessie Chmielowski Petroleum Engineering Commissioner Alaska Oil and Gas Conservation Commission 333 W. 7' Ave Anchorage, Alaska 99501 Re: Request for decreased bonding pursuant to 20 AAC 25.025 Bonding Commissioner Chmielowski: 1 Malamute Energy, Inc. is the designated operator for Renaissance Umiat, LLC, who has one suspended well on each of its two BLM leases at Umiat. 2 The BLM is responsible for regulating the P&A liability for the wells on its leases. 3 Renaissance Umiat, LLC has posted with the BLM bonding of $100,000 for each well. 4 Renaissance Umiat, LLC has also posted with AOGCC bonding of $100,000 for each well. 5 Renaissance Umiat, LLC has thus posted a total of $200,000 bonding for each of its two wells. 6 Neither of the two good, competent modem wells (2013, 2014) will flow to surface without added pressure. The wells thus pose very little risk of rupture. Malamute does not believe that these wells are subject to the increased bonding pursuant to 20 AAC 25.025, and requests AOGCC confirmation that no increased bonding is required. Alternatively, any AOGCC requirement for increased bonding should take into account the combined existing BLM / AOGCC bonding, which totals $200,000 per well, such that the four required installments should equal $100,000 (two existing wells @ $400,000 = $800,000, less $400,000 of existing bonding = $400,000, divided by 4 years = $100,000). Thank you, Leonard Sojka President Malamute Energy, Inc. Page 1 of 1