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Home My WebLink AboutO 173Other Order 173 Docket No: OTH-20-006 1. July 2, 2019 Ltr to Operator regarding bonding amount 2. July 2, 2019 Ltr from DNR to Glacier regarding DR&R 3. August 2, 2019 CIE's Request to Consolidate bonding amounts 4. August 5, 2019 CIE's GRANTS reconsideration for CIE and Savant 5. August 12, 2019 CIE's request to stay until final decision of the AOGCC is GRANTED 6. November 3, 2019 Notice of Hearing, Affidavit of Publication and Mailing 7. February 12, 2020 Transcript, exhibit and sign in sheet 8. March 13, 2020 Email CIE informing them decision would be forthcoming by March 20, 2020 9. April 7, 2020 Ltr to CIE informing them decision would be forthcoming by April 30, 2020 10. July 20, 2020 Ltr to CIE informing them decision would be forthcoming by September 30, 2020 11. August 6, 2020 CIE's request 2nd installment to stayed until after AOGCC adopts or declines proposed bonding amendment. AOGCC Grants request 8/6/2020. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION 333 West 71" Avenue Anchorage, Alaska 99501 Re: Request by Cook Inlet Energy, LLC for ) Docket Number: OTH-20-006 reduction in the bonding amount required ) Other Order 173 under new regulation 20 AAC 25.025. ) Cook Inlet Energy, LLC Bond Reconsideration Request September 28, 2020 DECISION AND ORDER On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC) sent Cook Inlet Energy, LLC (CIE) a letter regarding the new bonding requirements in 20 AAC 25.025. This letter advised that under the new regulation CIE's 26 permitted wellheads increased CIE's bonding level to $6,000,000. Because CIE had a $200,000 bond in place, an additional $5,800,000 in bonding was required, payable in four annual installments of $1,450,000 per year. On July 25, 2019, CIE requested reconsideration, seeking a reduction in the required bonding amount. On February 12, 2020, the AOGCC held a hearing on CIE's request for reconsideration. At the hearing, CIE provided proof of its bond with the EPA as well as testimony from its president. FINDINGS: Based upon the evidence presented by CIE, including the testimony of its president, AOGCC finds as follows: 1. CIE agrees the new bond amount of $6,000,000 would be the cost to plug and abandon (P&A) its wells. 2. CIE states that it is entitled to an offset because the Department of Natural Resources (DNR) required CIE to post a statewide dismantlement, removal and restoration (DR&R) bond. That bond covers the costs of DR&R of the surface of CIE's DNR leases. CIE claims that the DR&R bond includes an unspecified amount intended to cover the costs to P&A CIE's wells. 3. CIE also contends it should get an offset for the $324,000 bond CIE has in place with the U.S. Environmental Protection Agency (EPA). That bond is dedicated to the P&A of the West McArthur River Unit 4D and Redoubt Unit DI disposal wells. 4. CIE requests a total reduction of its new AOGCC bonding amount of $824,000, leaving CIE with a total bonding requirement of $5,176,000, including the $200,000 bond already in place with the AOGCC.I CIE states that its well count is 25 wells, not 26 wells as stated in the July 2, 2019 letter from AOGCC, due to the P&A of well Redoubt Unit 6. The AOGCC agrees. However, the one well reduction has no impact on CIE's bonding amount. Other Order 173 September 28, 2020 Page 2 of 2 CONCLUSIONS: The AOGCC grants, in part, CIE's request for reconsideration. 1. The $324,000 EPA bond is exclusively dedicated to the P&A costs of the West McArthur River Unit 4D and Redoubt Unit DI Class 1 disposal wells. The EPA bond will be accounted for in CIE's bonding obligation to the AOGCC. 2. The $500,000 bond with DNR is for the DR&R of the surface of DNR's leases to a condition acceptable to DNR. As of the date of this order, no evidence has been offered that any of the DNR bond is exclusively dedicated to the costs to properly P&A CIE's wells. CIE's bonding amounts will not be reduced by the amount of the DNR DR&R bond. I►C�Y.'/ IT IS ORDERED THAT: As of the date of this order, CIE's bonding requirement for the AOGCC is $6,000,000 less CIE's existing $200,000 AOGCC bond and its $324,000 EPA bond. As a result, CIE's revised bond requires an additional $5,476,000. CIE must immediately notify AOGCC of any change in the amount or status of the EPA bond. DONE at Anchorage, Alaska and dated September 28, 2020. Jeremy krt yM.FnaW 0a,emma5xe M. Price Jeremy M. Price Commissioner, Chair Daniel T. w ai sea.Mn. Seamount,Jr. e,an'deroo Daniel T. Seamount, Jr Commissioner AND APPEAL NgUllysignedby Jessie L. ,essie L chmlelom Chmielowski le: 1020.W.28 0895:45-0800' Jessie L. Chmielowski Commissioner 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 ifthe 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 Gordon Severson Richard Wagner K&K Recycling Inc. 3201 Westmar Cir. P.O. Box 60868 Fairbanks,, AAK 99711 P.O. Box Anchorage, AK 99508-4336 Fairbanks, AK 99706 K George Vaught, Jr. Darwin Waldsmith P.O. Box 13557 P.O. Box 39309 Denver, CO 80201-3557 Ninilchik, AK 99639 o Zo INDEXES Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Thursday, August 6, 2020 3:42 PM To: Romerdahl, Elena M. (Perkins Coie) Cc: Colombie, Jody J (CED) Subject: RE: CIE and Savant Requests for Reconsideration of August 2020 Installment Payments Under 20 AAC 25.025 Categories: Yellow Category Elena, Your request for deferral of the Aug. 16, 2020 installment is GRANTED for CIE and Savant until further notice. An updated payment date will be issued once the Commission has adopted or declined to adopt the proposed amendments to 20 AAC 25.025. Jody Colombie From: Romerdahl, Elena M. (Perkins Coie) <ERomerdahl@perkinscoie.com> Sent: Thursday, August 6, 2020 11:20 AM To: Colombie, Jody 1 (CED) <jody.colombie@alaska.gov> Subject: CIE and Savant Requests for Reconsideration of August 2020 Installment Payments Under 20 AAC 25.025 Hi Jody, Attached please find requests for reconsideration of the August 16, 2020 installment payments due under 20 AAC 25.025(c) for Cook Inlet Energy, LLC and Savant Alaska, LLC. Please let me know if I can provide any additional information to support these requests. Elena Elena Romerdahl I Perkins Coie LLP PARTNER 1029 West Third Avenue Suite 300 Anchorage, AK 99501-1981 D. +1.907.263.6914 M. +1.202.487.8657 E. ERomerdahlraloerkinscoie.com NOTICE: This communication may contain privileged or other confidential information. If you have received d in error, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you. T1L S]A] E Alaska Oil and Gas "ALASKAConservation Commission 333 west Seventh Avenue GOVERNOR MICHUL 1. DUNI.EAVY Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax 907.276.7542 www.00gcc,aiaska.gov July 20, 2020 Elena Romerdahl Counsel for Cook Inlet Energy PerkinsCoie 1029 West Third Avenue, Suite 300 Anchorage, Alaska 99501 Re: Docket No: OTH-20-006 Reconsideration request of bonding regulation 20 AAC 25.025 Dear Ms. Romerdahl: This matter is pending on Cook Inlet Energy 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` v v 1'" 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 t0 -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 nau until 5:00 p.m. on the next day that does not fall on a weekend or state holiday. THE STATE April 7, 2020 01ALAS-KA GOVERNOR MICHAEL J. DUNLEAVY Elena Romerdahl Counsel for Cook Inlet Energy PerkinsCoie 1029 West Third Avenue, Suite 300 Anchorage, Alaska 99501 Re: Docket No: OTH-20-006 Reconsideration request of bonding regulation 20 AAC 25.025 Dear Ms. Romerdahl: 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 currently pending on a motion to reconsider the additional bonding amount imposed upon Cook Inlet Energy LLC. 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, y s1c seio ner As provided in AS 31.05.080(a), within 20 days atter 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 anapplication for reconsideration of the matter determined by it. Ifthe notice was mailed, then the period oftime 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 giants 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. Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Friday, March 13, 2020 1:01 PM To: Romerdahl, Elena M. (Perkins Coie) Cc: Colombie, Jody J (CED) Subject: FW: CIE extension to March 30 Elena, I wanted to let you know that the AOGCC will not be able to render a decision in the Cook Inlet Energy bonding reconsideration decision until March 30, 2020. Jody Colombie From: Chmielowski, Jessie L C (CED) <jessie.chmielowski@alaska.gov> Sent: Friday, March 13, 202012:04 PM To: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: CIE extension to March 30 Hi Jody, Can you please reach out to Elena R. via email? I think the 30 days from CIE close of record for bond reconsideration is Monday. I'd like to extend the time until we issue the order until Monday, March 30. Thanks, Jessie Jessie Chmielowski Commissioner Alaska Oil and Gas Conservation Commission CONFIDENTIALITY NOTICE: This e-mail message, including any attachments, contains information from the Alaska Oil and Gas Conservation Commission (AOGCC), State of Alaska and is for the sole use of the intended recipient(s). It may contain confidential and/or privileged information. The unauthorized review, use or disclosure of such information may violate state or federal law. If you are an unintended recipient of this e-mail, please delete it, without first saving or forwarding it, and, so that the AOGCC is aware of the mistake in sending it to you, contact AOGCC at 907- 793-1223 or iessie.chmielowski(&alaska.eov. SL6ZHK9 2/12/2020 ITMO: REQU� FOR RECONSIDERATION OFBONDING ALASKA OIL AND GAS CONSERVATION COMMISSION In the Matter of the Request for ) Reconsideration of Bonding ) Requirements by Cook Inlet Energy, ) LLC. ) PUBLIC HEARING February 12, 2020 Anchorage, Alaska 11:00 a.m. BEFORE: Jeremy Price, Chairman Jessie Chmielowski, Commissioner Daniel T. Seamount, Commissioner Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 2/12/2020 ITMO: REQL) -_, FOR RECONSIDERATION OFBONDING Page 2 1 TABLE OF CONTENTS 2 Opening remarks by Chairman Price 03 3 Testimony by Mr. Elliott 05 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 2/12/2020 ITMO: REQU f FOR RECONSIDERATION OFBONDING Page 3 1 P R O C E E D I N G S 2 (On record - 11:03 a.m.) 3 CHAIRMAN PRICE: We'll call this hearing to 4 order. Today is February 12th, 2020, the time is 5 11:03. I am Jeremy Price, to my right is Commissioner 6 Jessie Chmielowski, to my left is Commissioner Dan 7 Seamount. We are at 333 West Seventh Avenue, 8 Anchorage, Alaska, the office of the Alaska Oil and Gas 9 Conservation Commission. This is a hearing for 10 reconsideration of bonding amounts under 20 AAC 25.025 11 for Cook Inlet Energy, LLC. 12 Cook Inlet Energy, LLC currently has 26 13 permitted wellheads and their bonding amount is 14 $200,000. The total bonding amount under the new 15 regulations is $6 million. 16 Computer Matrix will be recording proceedings. 17 You can get a copy of the transcript from Computer 18 Matrix Reporting. 19 Here to testify is Mr. Phillip Elliott of 20 Glacier Oil. And available to testify are Stephen 21 Ratcliff and Elena Romerdahl. 22 All right. I'll run through our quick 23 formality and then jump into it. Commissioners will 24 ask questions during testimony. We also may take a 25 recess to consult with staff to determine whether Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.nel AOGCC 2/12/2020 ITMO: REQU--, FOR RECONSIDERATION OFBONDING Page 4 1 additional information or clarifying questions are 2 necessary. If a member of the audience has a question 3 that he or she feels should be asked please submit that 4 question in writing to Jody Colombie. she'll provide 5 the question to us and if we feel that question will 6 assist us in making our determinations we will ask it. 7 For those testifying please keep in mind that 8 you must speak into the microphones so that those in 9 the audience and the court reporter can hear your 10 testimony. Also please remember to reference -- never 11 mind, you're not presenting any slides or presentation; 12 is that correct? 13 (No comments) 14 CHAIRMAN PRICE: Then at this point I'll jump 15 into it. I'll have to swear you in again. If you can 16 raise your right hand. 17 COMMISSIONER SEAMOUNT: I have..... 18 CHAIRMAN PRICE: I'm sorry. 19 COMMISSIONER SEAMOUNT: I have a disclosure. 20 CHAIRMAN PRICE: Oh, I'm sorry. Please, 21 Commissioner. 22 COMMISSIONER SEAMOUNT: Okay. Before we start 23 I should disclose that as I have other times when Cook 24 Inlet has been before the Commission that my wife works 25 for I believe it's Glacier Oil who -- and Cook Inlet's Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC 2/12/2020 ITMO: REQL_- f FOR RECONSIDERATION OFBONDING Page 5 1 a subsidiary. We don't -- rules of the house is we 2 don't talk shop at home. So I don't even know who she 3 works for, but I guess it's Glacier Oil. Having said 4 that I feel for the record that I can make a fair and 5 impartial decision in the matter so I'll again ask if 6 there's any objection to my continued participation? 7 (No comments) 8 COMMISSIONER SEAMOUNT: Okay. Hearing none, 9 I'm ready. 10 CHAIRMAN PRICE: Okay. Any other cautions or 11 thoughts before we get started Commissioner 12 Chmielowski? 13 COMMISSIONER CHMIELOWSKI: No, thank you. 14 CHAIRMAN PRICE: Okay. Okay. Let's try that 15 again. Please raise your right hand. 16 (Oath administered) 17 MR. ELLIOTT: I do. 18 PHILLIP ELLIOTT 19 called as a witness on behalf of Cook Inlet Energy, 20 LLC, testified as follows on: 21 DIRECT EXAMINATION 22 CHAIRMAN PRICE: Thank you. And again just 23 repeat what you said before, name, position, background 24 credentials and what you consider your expertise to be 25 in. Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net AOGCC 1 2/122020 ITMO: REQI) -.., FOR RECONSIDERATION OFBONDING Page 6 1 MR. ELLIOTT: For the record my name is Phillip 2 Elliott, I am president and CFO of Glacier Oil and Gas 3 and am here today on behalf of the wholly owned 4 subsidiary, Cook Inlet Energy, LLC. Also present on 5 our behalf are Stephen Ratcliff, our VP of drilling, 6 and Elena Romerdahl, our outside counsel and partner 7 with Perkins Coie. 8 I've been working in the oil and gas industry 9 for approximately 25 years with the last five years 10 being with Glacier. I have a bachelor's degree from 11 Bucktown University in environmental science, a master 12 of science from the University of Pittsburgh's 13 Engineering School, an MBA from Carnegie Mellon 14 University. I'll be testifying on behalf of general 15 industry knowledge and financial knowledge. If there 16 are technical or more detailed type of questions I'll 17 refer those to Steve Ratcliff. 18 CHAIRMAN PRICE: Okay. Any objections or 19 additional questions on that from Commissioners? 20 COMMISSIONER SEAMOUNT: None. 21 COMMISSIONER CHMIELOWSKI: None. Thank you. 22 CHAIRMAN PRICE: Okay. Please proceed with 23 your comments. 24 MR. ELLIOTT: Jumping right into Cook Inlet's 25 situation. Cook Inlet Energy is the operator of 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK99501 Fax: 907-243-1473 Email: sahilc@gci.net AOGCC 2/12/2020 ITMO: REQL, i FOR RECONSIDERATION OFBONDING Page 7 1 permitted wells, not 26 which was listed in the 2 Commission's dated letter -- letter dated July 3rd, 3 2019. RU -6 was plugged and abandoned when we drilled 4 the RU -6A sidetrack well, Same -- same wellbore hole 5 and basically when you're doing a sidetrack you have to 6 abandon the existing well. 7 So we're the operator of all 25 permitted wells 8 as listed at three separate units, Redoubt, operated 9 from the Osprey platform, West McArthur River located 10 on the west side of the Cook Inlet and North Fork, a 11 small gas field located on the east side of the Cook 12 Inlet, not far from Anchor Point, Alaska. Using the 13 AOGCC's matrix for abandonment liability, Cook Inlet 14 Energy is being asked to post $5.8 million in 15 additional bonds, that is $6 million less the $200,000 16 for an existing bond held by the AOGCC. We're not 17 disputing the gross amount of the abandonment 18 liability, our view is that it is reasonable and within 19 our internal expectations for abandoning these 25 20 wells, however we are asking that the Commission 21 provide credit for bonds issued to the DNR and the EPA 22 and that are available for the abandonment of these 23 wells, no different than the credit provided to us for 24 the bond held by the AOGCC. The bond held by the DNR 25 equals $500,000 and the one for the EPA is $324,000 for Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahile@gci.net AOGCC I 2/122020 ITMO: REQUr —, FOR RECONSIDERATION OFBONDING Page 8 1 a total existing in place bonding of $824,000, all of 2 which is available for abandonment of these 25 wells. 3 Providing credit for these bonds lowers Cook Inlet's 4 incremental bonding requirement from $5.8 million to 5 approximately $5 million. 6 To conclude, we strongly support the goals of 7 the Commission's amended bonding regulation. It is 8 important that companies take responsibility for these 9 liabilities. We merely ask that the Commission allow 10 for all bonds to count towards AOGCC's total bonding 11 requirement which will go a long way in ameliorating 12 the financial impact to Cook Inlet Energy. 13 I welcome any questions that the Commission may 14 have. Thank you for your time and consideration. 15 CHAIRMAN PRICE: Thank you. Have you submitted 16 any information or documentation on the EPA bonds to 17 the Commission, correct me if I'm wrong, those are for 18 Redoubt unit D1 and West McArthur River unit 4D, two 19 disposal wells? 20 MR. ELLIOTT: That's correct, they are. And we 21 did provide that, it was an exhibit to the July 22 response to your initial letter. 23 COMMISSIONER CHMIELOWSKI: There's some 24 documentation about the surety bond there, just 25 confirming that only those two well are covered..... Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net AOGCC 2/12/2020 ITMO: REQU,-,. FOR RECONSIDERATION OFBONDING Page 9 1 MR. ELLIOTT: That's correct. 2 COMMISSIONER CHMIELOWSKI: .....under the EPA 3 bond? 4 MR. ELLIOTT: That's correct. 5 COMMISSIONER CHMIELOWSKI: Is it..... 6 MR. ELLIOTT: They are specifically set aside 7 for those two wells? 8 COMMISSIONER CHMIELOWSKI: Okay. I didn't see 9 the well names listed in the bonding documents. Does 10 it cover the full P&A cost of those wells, 344,000? 11 MR. ELLIOTT: It -- it likely doesn't not cover 12 the full cost of abandoning those two wells. 13 COMMISSIONER CHMIELOWSKI: Do you have any 14 information about what the P&A cost estimate is for 15 those two wells? 16 MR. ELLIOTT: We are in the process of updating 17 all of our estimates related to P&Aing for the 25 wells 18 in question. We do not have updated numbers at this 19 point. 20 COMMISSIONER CHMIELOWSKI: Can the EPA be used 21 for any other purpose besides well P&A? 22 MR. ELLIOTT: Not to my knowledge. 23 COMMISSIONER CHMIELOWSKI: Is there any 24 restrictions on the money, is it specifically stated 25 for P&A or is it for any other use, none? Computer Matrix, LLC Phone: 907-243-0668 135 Chnstensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: sahilecgci.net I AOGCC 2/12/2020 ITMO: REQU.-_. FOR RECONSIDERATION OFBONDING Page 10 1 MR. ELLIOTT: I believe it's specifically for 2 the P&A, the abandonment of those two wells. 3 COMMISSIONER CHMIELOWSKI: Is it written down 4 anywhere, your agreement with EPA? 5 MR. ELLIOTT: I think it's in the -- yeah, it 6 is. EPA identification number, name, address and 7 plug/abandonment amounts for each injection while 8 guaranteed by this bond. Basically it's solely in the 9 language, the surety performance bond is dedicated to 10 the P&A of those wells. 11 COMMISSIONER CHMIELOWSKI: Okay. So it says 12 bond covers the plugging of injection wells of which 13 you say there are two? 14 MR. ELLIOTT: That's correct. 15 COMMISSIONER CHMIELOWSKI: Okay. 16 COMMISSIONER CHMIELOWSKI: Yeah, RU -D1 and WRU- 17 4D. 18 COMMISSIONER SEAMOUNT: And you say you are 19 working on updated estimates on plugging those two 20 wells? 21 MR. ELLIOTT: We're working on updated 22 estimates on all of our Cook Inlet wells. 23 COMMISSIONER SEAMOUNT: When would you estimate 24 those estimates be completed? 25 MR. ELLIOTT: It -- it's probably going to be a Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net AOGCC 2/12/2020 ITMO: REQU—.. FOR RECONSIDERATION OFBONDING Page 11 1 month or two by the time we -- we want it to be 2 thoughtful and useful. 3 COMMISSIONER SEAMOUNT: You say your bond is 4 $500,000 from DNR? 5 MR. ELLIOTT: Yes. 6 COMMISSIONER SEAMOUNT: Are -- is -- do you 7 anticipate DNR upping those bonds, that bond? 8 MR. ELLIOTT: For what purpose, for..... 9 COMMISSIONER SEAMOUNT: Raising it, I don't 10 know, I..... 11 MR. ELLIOTT: I do not anticipate that -- I 12 mean, we have a separate agreement with the DNR for 13 abandonment of the Osprey platform. 14 COMMISSIONER SEAMOUNT: Okay. That's where I 15 was going..... 16 MR. ELLIOTT: Okay. 17 COMMISSIONER SEAMOUNT: .....but..... 18 MR. ELLIOTT: And that agreement has been in 19 place for a while, it's been amended several times, the 20 basic premise is it covers 100 percent of the 21 abandonment related to the Osprey and the pipeline 22 servicing the Osprey platform. 23 COMMISSIONER SEAMOUNT: Okay. So that's a 24 separate agreement bond? 25 MR. ELLIOTT: That's a separate agreement..... Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Arch. AK 99501 Fax 907-243-1473 Email. sahile@gci.nel AOGCC 2/12/2020 ITMO: REQU—. FOR RECONSIDERATION OFBONDING Page 12 1 COMMISSIONER SEAMOUNT: Okay. 2 3 MR. ELLIOTT: .....and we -- you know, we have 4 -- just for full disclosure, we have -- currently have 5 approximately $14.5 million in a control account for 6 the abandonment of the Osprey platform. We also have 7 an agreement in place that securitizes the tax credits 8 owed to us by the state for the purposes of covering 9 the incremental bonding or cash requirements related to 10 that agreement. So we're required to put an additional 11 $5 million into that control account over the next 12 several years. However if the state pays us tax 13 credits that obligation accelerates and we deposit all 14 of those proceeds into that agreement so effectively 15 the abandonment for the Osprey platform and those 16 pipelines is completely collateralized and covered. So 17 allowing for the $500,000 bond that's in place to be 18 separate and for obligations related really to just P&A 19 is the only liability that remains. 20 COMMISSIONER SEAMOUNT: Okay. Thank you, Mr. 21 Elliott. 22 COMMISSIONER CHMIELOWSKI: There's no 23 information about this Osprey platform agreement in 24 your application for reconsideration. You -- what you 25 have written is that you have a DNR agreement of Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net AOGCC 1 500,000? 2/12/2020 ITMO: REQU.._ ,FOR RECONSIDERATION OFBONDING Page 13 2 MR. ELLIOTT: We have -- yes. We're glad to 3 provide the agreement with the DNR related to the 4 facilities of the Osprey platform. It specifically 5 excludes the wells. C 7 COMMISSIONER Okay. MR. ELLIOTT: That's why it was not 8 provided..... 9 COMMISSIONER CHMIELOWSKI: Right. 10 MR. ELLIOTT: .....as not being really 11 relevant, but understanding the relevancy as it 12 connects to the DNR $500,000 bond, we're glad to 13 provide that agreement. It should help clarify a few 14 of the details. 15 COMMISSIONER CHMIELOWSKI: Besides the Osprey 16 platform what does Cook Inlet Energy expect that the 17 surface remediation of its other operations would cost? 18 MR. ELLIOTT: The other -- the remaining 19 surface facilities are all on private land and we have 20 agreements with and bonds in place with either, you 21 know, vested parties related to those facilities. So 22 the most significant one being the west side 23 facilities. We have a bond in place with CIRI and 24 (indiscernible)..... 25 COMMISSIONER CHMIELOWSKI: I'm going to ask a Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net AOGCC 1 2/12/2020 ITMO: REQLj-_ . FOR RECONSIDERATION OFBONDING Page 14 1 question I asked you for Savant also just to clarify. 2 Does Cook Inlet Energy still request that it and Savant 3 be combined into one operator, one bond? 4 MR. ELLIOTT: No. 5 COMMISSIONER CHMIELOWSKI: Do you have a ball 6 park on what your P&A cost estimate will be, will it be 7 more than $6 million? 8 MR. ELLIOTT: For the 25 wells, I -- you know, 9 I'm a little -- we're working through that number. I'd 10 say as an analogy we have an estimate of about $2 11 million for the wells on the Redoubt platform. That -- 12 those numbers are maybe slightly dated, but using that 13 analogy you come close to $6 million for -- you know, 14 that's about a third of our wells, we have another 15 third at West McArthur and another third at North Fork 16 of the 25, so it's -- you know, you could extrapolate 17 to about $6 million. I anticipate it's probably a 18 little bit higher than that. 19 COMMISSIONER CHMIELOWSKI: Okay. One of the 20 options available to operators is to provide a third 21 party cost estimate to the AOGCC. Would Cook Inlet 22 Energy like to -- be able to provide that information 23 in a relatively timely manner or would you prefer not 24 to have the record kept open for that information? 25 MR. ELLIOTT: I don't have -- we don't -- Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax: 907-243-1473 Email: while@gci.net AOGCC 2/122020 ITMO: REQU,-. FOR RECONSIDERATION OFBONDING Page 15 1 there's no reason to -- we're not disputing the $6 2 million amount. 3 COMMISSIONER CHMIELOWSKI: Okay. 4 MR. ELLIOTT: We agree that it's in the ball 5 park of what the true liability is and there's no real 6 reason to provide that estimate..... 7 COMMISSIONER CHMIELOWSKI: Okay. Thank you. 8 MR. ELLIOTT: .....that part of the estimate. 9 CHAIRMAN PRICE: I don't have the March letter 10 in front of me, where did the 6.3 million come from, 11 that number, is that just an estimate or..... 12 MR. ELLIOTT: The 6.3..... 13 COMMISSIONER CHMIELOWSKI: Yeah, there was a 14 letter from Glacier to the AOGCC dated March 8th, 2018 15 and I believe 25 wells were listed in a table in that 16 letter with very rough cost estimates. Two of those 17 wells were Savant wells and so I think of the remaining 18 23 wells on the table the cost was estimated to be 19 somewhere around $6 million. 20 CHAIRMAN PRICE: Okay. 21 MR. ELLIOTT: May we have a copy of that 22 letter, we don't have one on us at this time? 23 COMMISSIONER CHMIELOWSKI: Yeah. I don't have 24 it with me. It was provided with a letter sent from 25 Glacier to AOGCC..... Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax 907-243-1473 Email: sahile®gci.net AO(A V 2/12/2020 ITMO: REQU.._ . FOR RECONSIDERATION OFBONDING Page 16 1 MR. ELLIOTT: Right. 2 COMMISSIONER CHMIELOWSKI: .....and find that 3 March 8th, 2018. 4 MR. ELLIOTT: I'm sure that we'll find it. 5 COMMISSIONER CHMIELOWSKI: It aligns with what 6 you're saying, it was just a piece of information that 7 we had from before. 8 MR. ELLIOTT: Yeah. 9 COMMISSIONER CHMIELOWSKI: Yeah. 10 MR. ELLIOTT: That's fair. 11 CHAIRMAN PRICE: We'll make sure that Jody 12 sends that to you, that -- the letter from March 8th of 13 2018. Yeah. 14 MR. ELLIOTT: I'm sure we'll find it in our 15 records as well, so but if you can provide it that 16 would be great. 17 CHAIRMAN PRICE: Okay. 18 COMMISSIONER CHMIELOWSKI: Yeah. 19 CHAIRMAN PRICE: Sure. 20 COMMISSIONER SEAMOUNT: How much did it cost to 21 plug the Three Mile Creek wells? 22 MR. ELLIOTT: More than it should have. 23 Actually the wells were in the neighborhood of 6, 24 700,000. 25 COMMISSIONER SEAMOUNT: Each? Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax 907-243-1473 Email: sahile@gct.net AOGCC 2/122020 ITMO: REQU— . FOR RECONSIDERATION OFBONDING Page 17 1 MR. ELLIOTT: No. No, total. 2 COMMISSIONER SEAMOUNT: Total 3 MR. ELLIOTT: There was three wells, you know, 4 approximately 200,000 plus to plug each well. And we 5 did actually provide that to the AOGCC in a request for 6 the release of bond proceeds. 7 COMMISSIONER SEAMOUNT: Okay. Thank you. 8 CHAIRMAN PRICE: Any other questions from 9 Commissioners? 10 COMMISSIONER SEAMOUNT: No. 11 COMMISSIONER CHMIELOWSKI: I don't have any. 12 Just looking to the back of the room if we need to take 13 a recess or we have adequate information. 14 CHAIRMAN PRICE: Okay. 15 COMMISSIONER CHMIELOWSKI: No further questions 16 from me. 17 COMMISSIONER CHMIELOWSKI: All right. And what 18 was the -- did we decide if we needed to extend the 19 hearing record? 20 COMMISSIONER CHMIELOWSKI: I believe no. 21 Sounds like there's no additional information to be 22 provided. 23 MR. ELLIOTT: The only additional information 24 will be provided is the DNR agreement related to our 25 obligations..... Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax 907-243-1473 Email: sahile®gci.net AOGCC 2/12/2020 ITMO: REQU, -. FOR RECONSIDERATION OFBONDING Page 18 1 THE COURT: 2 CHAIRMAN PRICE: Oh, right. 3 COMMISSIONER CHMIELOWSKI: For Osprey. Okay. 4 MR. ELLIOTT: .....for Osprey, but we can do 5 that today. 6 CHAIRMAN PRICE: Okay. All right. 7 COMMISSIONER CHMIELOWSKI: Then we'll leave the 8 record open to the close of business today. Does that 9 work for you? 10 MR. ELLIOTT: That's fine. 11 COMMISSIONER CHMIELOWSKI: Great. Okay. 12 COMMISSIONER CHMIELOWSKI: Okay. Anything else 13 from you that you want to say before we close the 14 record or close the hearing? 15 MR. ELLIOTT: Thank you. Appreciate your time 16 and consideration. 17 CHAIRMAN PRICE: Okay. All right. Thank you. 18 At this time we'll close the hearing at 11:20. 19 (Adjourned - 11:25 a.m.) 20 (END OF PROCEEDINGS) 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch. AK 99501 Fax 907-243-1473 Email: sahile@gci.net AOGCC 2/12/2020 ITMO: REQt,—f FOR RECONSIDERATION OFBONDING Page 19 1 TRANSCRIBER'S CERTIFICATE 2 I, Salena A. Hile, hereby certify that the 3 foregoing pages numbered 19 through 18 are a true, 4 accurate, and complete transcript of proceedings IN RE: 5 Reconsideration of Bonding Requirements by Cook Inlet 6 Energy, LLC., transcribed under my direction from a 7 copy of an electronic sound recording to the best of 8 our knowledge and ability. 9 10 11 DATT? gA-EDTA A HTLE, (Transcriber) 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Computer Matrix, LLC Phone: 907-243-0668 135 Christensen Dr., Ste. 2., Anch.AK 99501 Fax: 907-243-1473 Email: sahile@gci.net Fourth Amended CIE Performance Bond Agreement Fourth Amended Cook Inlet Energy LLC Performance Bond Agreement This Fourth Amended Cook Inlet Energy LLC Performance Bond Agreement ("Fourth Amended Agreement' or "Agreement") is entered into by and between Cook Inlet Energy, LLC ("CIE"), an Alaska limited liability company, as Principal, whose address is 188 W. Northern Light Blvd., Suite 510, Anchorage, Alaska 99503, and the State of Alaska, Department of Natural Resources ("DNR"), as Obligee. These entities are further collectively referred to as "the Parties." The purpose of this amendment is to further modify the terms and conditions of that certain First Amended Cook Inlet Energy LLC Performance Bond Agreement, dated effective as of February 19, 2016, under which DNR approved the assignment of certain Assets on and associated with State Leases as a result of the reorganization process of Miller Energy Resources, Inc. ("Miller") as described in Recital C. In this Fourth Amended Agreement, CIE is still held and firmly bound unto DNR, for the sums and commitments specified herein, dated effective as of July 1, 2019. RECITALS A. As part of the transaction whereby CIE acquired rights in certain leases previously held by Pacific Energy Alaska Operating, LLC, CIE and DNR entered into that certain Assignment Oversight Agreement dated November 5, 2009 ("the Assignment Oversight Agreement'). B. The Assignment Oversight Agreement set out certain bond requirements in Paragraph 6 thereof. The Parties entered into a more comprehensive agreement, the Cook Inlet Energy LLC Performance Bond Agreement, dated December 1, 2009, in order to clarify the rights and obligations of the Parties with respect to the bonds referenced in Paragraph 6 of the Assignment Oversight Agreement. C. Subsequent to the reorganization under Case Number 15-00236, Miller remained the sole member of CIE. As a result of the reorganization process and that certain assignment application, dated January 27, 2016, Highbridge Principal Strategies, LLC ("Highbridge") and Apollo Investment Corporation ("Apollo') became the direct or indirect owners of Miller. Highbridge Principal Strategies, LLC operates as a subsidiary of Highbridge Capital Management, LLC, and acts as an investment manager for a group of its affiliates that were involved in a certain credit agreement with Miller. Apollo Investment Management, L.P. acts as investment manager for Apollo Investment Corporation while AAC Management, LLC is its general partner. D. Effective April 13, 2016, Miller amended its legal name to Glacier Oil & Gas Corp. ("Glacier"). CIE is a wholly-owned subsidiary of Glacier. E. As a result of the reorganization process and the assignment application cited in Recital C, Highbridge and Apollo became the indirect owners of CIE, through Glacier. Page I of 11 Fourth Amended CIE Performance Bond Agreement F. The DNR Commissioner is entering into this Fourth Amended Agreement under the authority set out at AS 38.05.020 (b)(2) and (4), 11 AAC 82.600, 11 AAC 82.605, 11 AAC 83.160, and 11 AAC 96.060. NOW, THEREFORE, in consideration of the mutual promises stated herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows. I. DEFINITIONS 1.1 Assets means those facilities and infrastructure on State Leases, and those associated with State Leases that are located on State Land, and includes pipelines, power lines, easements, platforms, structures, or equipment. 1.2 Bank means a bank or other financial institution authorized to do business in the State. 1.3 BLM means the United States, Department of the Interior, Bureau of Land Management. 1.4 CIE Trust Account means an account, other than the State Trust Account, established to hold Performance Bonds, as provided for in this Agreement. 1.5 DNR Authorizations means those permits, easements, plans of operations, plans of development, or plans of exploration issued or approved by DNR for activities or Assets associated with the State Leases. 1.6 DR&R Estimate means the most recent estimate, prepared by an independent engineering firm preapproved by DNR, and presented in a detailed report containing an introduction, executive summary, project scope, estimate process, assumptions, and estimate results, of the total cost to meet the Performance Obligations. 1.7 Leases or State Leases means ADL 374002, ADL 378114, ADL 381203, ADL 381201, and ADL 381003. 1.8 Letter of Credit means an irrevocable letter of credit issued by a bank or other financial institution authorized to do business in the State. 1.9 Performance Bond means the funds deposited into a Trust Account as stipulated under this Agreement for the purpose of guaranteeing fulfillment of Performance Obligations. Performance Bond includes the deposited cash, Surety Bonds, or Letters of Credit pledged to fulfill Performance Obligations. 1.10 Performance Obligations means CIE's dismantlement, removal & restoration obligations under this Agreement and applicable state laws and regulations, State Leases, an approved unit agreement, or DNR Authorizations for the Redoubt Assets. 1.11 Redoubt Assets means the Osprey Platform, three pipelines, and one subsea communication and power cable in and associated with the Redoubt Unit. 1.12 Redoubt Unit Plan of Development means an approved unit plan of development for the Redoubt Unit under 11 AAC 83.343. 1.13 Redevelopment Plan means the redevelopment plan for the Redoubt Unit approved by the Commissioner. L14 Rehabilitation Plan means CIE's plans to meet its dismantlement, removal, and restoration obligations. 1.15 State Trust Account means the Trust Account established with the Alaska Department of Revenue to hold those Performance Bonds set up as cash deposits with the State, and Page 2 of I i Fourth Amended CIE Performance Bond Agreement includes the bond referenced as the "reclamation bond posted by Cook Inlet Energy' in the Session Laws of Alaska (§9 Chapter 13 SLA 2010 and § 19 Chapter 41 SLA 2010). 1.16 State Land has the meaning given in AS 38.05.965. 1.17 Surety Bond means a corporate surety bond with a company qualified to do business as such in the State and with an A.M. Best rating of A or better, and a minimum financial size category of Class XV or better, or as approved by DNR. 1.18 Trust Account means either the State Trust Account or a CIE Trust Account. 2. SCOPE A. This Agreement applies to Performance Obligations associated with the Redoubt Unit and Redoubt Shoal Field. As of December 1, 2009, the State Leases and DNR Authorizations in and associated with the Redoubt Unit and Redoubt Shoal Field include the following: • ADL 374002, effective April 1, 1991 (O&G Lease); • ADL 378114, effective December 1, 1991 (O&G Lease); • ADL 381203, effective December 1, 1994 (O&G Lease); • ADL 381201, effective December 1, 1994 (O&G Lease); • ADL 381003, effective December 1, 1994 (O&G Lease); • ADL 227954, effective May 1, 2003 (Easement); • ADL 228217, effective March 2, 2004 (Easement); • LOCI 98-07, approved June 22, 2000; • LOCI 01-004, approved May 7,2002; and • Redoubt Unit Agreement, effective August 15, 1997. B. The leases in the West McArthur River Unit, West Foreland Field, and the Kustatan Field, which are specifically identified as ADL 359111, ADL 359112, ADL 390368, and State Land within BLM lease A035017, are NOT required to post a Performance Bond under this Agreement. Nothing in this Agreement is intended to excuse CIE from any requirements or obligations, including bond obligations, for these units and leases. The requirement to post a performance bond for the "Onshore Assets" as defined under Paragraph 6 of the Assignment Oversight Agreement is eliminated. C. The requirement to post a performance bond for the "Offshore Assets" as defined under Paragraph 6 of the Assignment Oversight Agreement is satisfied through compliance with this Agreement. To the extent that this Agreement conflicts with any provision of the Assignment Oversight Agreement, the provisions in this Agreement will control. 3. FUNDING REQUIRED A. AMOUNT OF BOND. CIE shall deposit funds into the Trust Accounts, as stipulated in this Agreement, to cover the costs of meeting its Performance Obligations. In the initial Agreement, dated December 1, 2009, the initial amount required to meet the Performance Obligations was 518,000,000 (in 2010 dollars) for the Redoubt Assets. There, CIE was Page 3 of 11 Fourth Amended CIE Performance Bond Agreement required to begin making deposits into the Trust Accounts on July 1, 2013, according to the payment schedule below: Payment Due: Payment Amount: 7/1/2013 $1,000,000 7/1/2014 $1,500,000 7/1/2015 $2,000,000 7/1/2016 $2,500,000 7/1/2017 $2,000,000 7/1/2018 $1,500,000 7/1/2019 $1,500,000 Furthermore, the initial Agreement, and amendments thereof, including this 41 amendment, stipulate that, over time, installation of new Assets on the State Leases by CIE and inflation may cause the Performance Bond to grow. As a result, CIE shall continue making annual payments into the Trust Accounts on or before July i of each year in an amount not to exceed an inflation-adjusted $1,500,000 per year in 20I0 dollars, to reach or maintain an amount at which the Trust Accounts are fully funded to cover the Performance Obligations, plus inflation. Inflation may be mitigated by earnings in the Trust Accounts. The payment schedule above was based on the confidential Redoubt Unit Redevelopment Plan submitted January 21, 2011 and the July 31, 2010 Ralph E. Davis Reserves Report provided by CIE. If CIE applies for a royalty adjustment or modification under AS 38.05.180, the DNR Commissioner may revise the payment schedule. If CIE proposes a Pian of Development for the Redoubt Unit that seeks to develop reserves that are materially different from the approved Redoubt Unit Redevelopment Plant, the DNR Commissioner may revise the payment schedule. Additionally, any changes in the estimate provided by a third party independent engineering firm, as described in subsection 3B below, may result in the adjustment to the amount required to meet the Performance Obligations. On March 21, 2018, CIE provided an updated DR&R Estimate, placing the amount required to meet the Performance Obligations at $18,326,731 in 2017 dollars. Any modification to the payment schedule will be conducted in accordance with Paragraph 4 below. By entering into this Fourth Amended Agreement, and pursuant to Paragraph 4, the Parties agree to modify the initial payment schedule as follows: Payment Due: Payment Amount: 7/1/2013 $1,000,000 7/1/2014 $1,500,000 7/1/2015 $2,050,000 7/1/2016 $2,500,000 7/1/2017 $0 7/7/2018 $0 7/1/2019 $0 7/1/2020 $1,500,000 Page 4 of 11 Fourth Amended CIE Perfoffnance Bond Agreement 7/1/2021 $1,500,000 7/1/2022 $1,500,000 The greater of (1) $500,000; and (2) the most current 7/l/2023 DR&R Estimate less all monies held in the CIE Trust Accounts and the State Trust Account CIE expects to receive from the Alaska Department of Revenue an amount of cash ("Tax Credit Payments") during the period July 1, 2020 through July 1, 2023. CIE shall use part or all of the Tax Credit Payments to continue funding the CIE Trust Account to meet the Performance Obligations for the Redoubt Assets, as follows: (1) the first $500,000 in Tax Credit Payments otherwise due CIE shall be retained by the State and credited to the payment due hereunder on 7/l/2023; (2) the next $1,500,000 Tax Credit Payment otherwise due CIE shall be retained by the State and credited to the payment due hereunder on 7/1/2022; (3) the next $1,500,000 otherwise due CIE shall be retained by the State and credited to the payment due hereunder on 7/1/2021; (4) the next $1,500,000 otherwise due CIE shall be retained by the State and credited to the payment due hereunder on 7/112020; (5) the next amount otherwise due CIE shall be applied to the balance, if any, due with respect to the payment due hereunder on 7/1/2023; and (6) any remaining Tax Credit Payment due CIE shall, upon full satisfaction of all amounts due under this Fourth Amended Agreement, be paid in full to CIE. For avoidance of doubt, all Tax Credit Payments shall be applied to the "back end" of the revised payment schedule set forth hereunder, and shall not defer or be credited to currently due installments except in the order set forth in the preceding sentence. The parties intend that CIE's obligations under this Agreement, or under any amendment to this Agreement, are secured by that certain Security Agreement of even date, entered into between Glacier Oil & Gas Corporation and CIE, collectively as Pledgor, and the State of Alaska, Department of Natural Resources, as Secured Party. This Fourth Amended Agreement is effective only upon the State receiving that fully executed Security Agreement, and also the fully executed Subordination Agreement and Consent executed by HPS Investment Partners, LLC (FKA Highbridge Principal Strategies, LLC), and Apollo Investment Corporation with respect to that Security Agreement. B. PERFORMANCE OBLIGATIONS REASSESSMENTS. On or before the dates below, until the end of field life, CIE shall provide to DNR an updated DR&R Estimate to be used for making adjustments, if any, to the annual deposits to occur after July 1, 2023, if any, as described in subsection 3A, required to meet the Performance Obligations. DR&R Estimate due: 12/5/2020 12/5/2022 Every year thereafter Page 5 of 11 Fourth Amended CIE Performance Bond Agreement Both parties acknowledge receipt of the Fairweather report dated March 6, 2018, which details the DR&R Estimate at a total cost of $18,326,731. This estimate excludes the cost to plug and abandon all wells drilled from the Osprey platform. C. BANK FIELD FUNDS. CIE shall establish the CIE Trust Accounts for those Performance Bonds held by a Bank or issued by a surety company. All written agreements with the Bank or surety company pertaining to the account will be attached to and become a part of this Agreement. CIE is solely responsible for all fees associated with these accounts. A Certificate of Deposit used as security for a Performance Bond must be automatically renewable and made payable solely to the "State of Alaska, Department of Natural Resources, ITF" (In Trust For). Upon the incapacity of a Bank, surety company, or other financial institution providing financial assurances under this Agreement, by reason of bankruptcy, insolvency, or suspension or revocation of a charter or license, CIE will be considered to be without bond coverage. DNR will notify CIE to replace its bond coverage. If CIE fails to replace the Performance Bond within 45 days after the notice, CIE will be in default of this Agreement subject to the default proceedings under the applicable State Lease. Until the total inflation adjusted Performance Bond is funded, CIE shall cause the earnings on the CIE Trust Accounts to be deposited and retained in the applicable CIE Trust Account. After the Performance Bond is fully funded, CIE may use the earnings however it chooses, provided the total inflation adjusted Performance Bond is less than the balance in the CIE Trust Accounts and the State Trust Account combined. If the total inflation adjusted Performance Bond becomes more than the balance in the CIE Trust Accounts and the State Trust Account combined, CIE shall again deposit and retain the earnings from the Performance Bond in the CIE Trust Accounts. As of February 28, 2019, the CIE Trust Account, held at First National Bank Alaska, had a principal balance of $7,050,000.00. D. STATE HELD FUNDS. The State will maintain the State Trust Account to hold those Performance Bonds deposited as cash with the State. The State, Department of Revenue ("DOR') will manage the account. Any fees associated with managing this account will be deducted from the account. If the account is established in the State General Fund and Other Non -segregated Investments Pool (GeFONSI), monthly statements will be available to CIE that reflect the balance of the account and account activity for that statement period. DNR has established the State Trust Account to hold funds transferred to the State from the First National Bank Alaska escrow account established for the Osprey Platform and Redoubt Unit by CIE's predecessor working interest owner and operator. The State Trust Account for the Redoubt Unit is referenced by collocation code 64100588, account code 22528. On February 28, 2019, the State Trust Account had a principal balance of $7,360,846.28. Page 6 of 11 Fourth Amended CIE Performance Bond Agreement The State will hold the State Trust Account in an interest-bearing account to the extent allowed by state law. The interest earned on the balance of the State Trust Account will be appropriated to the State Trust Account provided it is appropriated by the Alaska Legislature for that purpose. The Alaska Legislature has appropriated the interest through June 30, 2016, on the reclamation bonds for CIE that are included in the State Trust Account. (§9 Chapter 13 SLA 2010 and §19 Chapter 41 SLA 2010). CIE will work with DNR to ensure the State Trust Account remains in an interest-bearing account. If the Alaska Legislature, through action or inaction, alters the interest-bearing nature of the State Trust Account, CIE may, with the DNR Commissioner's consent, transfer the funds in the State Trust Account to a CIE Trust Account. E. PAYMENTS. CIE shall make payments into the Trust Accounts in accordance with this Agreement. With each payment, including payments into the State Trust Account, CIE shall submit an executed Performance Guaranty Form (Attachment A) that identifies this Agreement and the type of Performance Guaranty. The executed Performance Guaranty Form will be attached to and become part of this Agreement. CIE shall make payments to the State Trust Account by wire transfer, payable to DOR or as otherwise directed by DNR in writing and shall reference this Agreement and the account number provided by DNR. Unless otherwise specified in writing by DNR, CIE shall make payments to DNR at: Financial Services Section 550 West 7' Avenue, Suite 1410 Anchorage, Alaska 99501 CIE shall submit a certified true copy or the original Certificates of Deposit, Surety Bonds, or Letters of Credit to DNR as evidence of a Performance Bond payment made to a CIE Trust Account. F. LATE FEES. The State will assess a late payment fee of $50,000 on a late Performance Bond payment if the payment, or proof of payment, is not received by the 10" day after the payment is due as provided in Paragraph 3.A., above. The DNR Commissioner may, for good cause, grant an extension of time for CIE to make a payment under this Agreement. An extension request must be received by the DNR Commissioner in writing no less than 30 days prior to the payment due date, with a copy of the request sent to the Director of the DNR Division of Oil and Gas. G. EXPENDTTURES IN EXCESS OF BONDING AMOUNTS. CIE shall be fully liable for all Performance Obligations even if expenditures exceed the available funds in the Trust Accounts. 4. ADJUSTMENTS Page 7 of 11 Fourth Amended CIE Performance Bond Agreement A. MATERIAL CHANGES. The Parties will evaluate and reassess the Performance Obligations contained in this Agreement and may adjust the total amount of the Performance Bond to fund the Performance Obligations if there is a material change in the Assets that both Parties agree, in good faith, would likely require an adjustment to the Performance Bond. The Parties will mutually agree on a process for this evaluation. The amount of any adjustment will be determined by a third party independent engineering estimate obtained by CIE and approved by DNR. B. ANNUAL INFLATION ADJUSTMENT. The total amount of the Performance Bond will be adjusted annually for inflation based on the Anchorage Consumer Price Index, All Items, 1982-84 for All Urban Consumers (CPI -U). The base CPI -U index at the start of 2010 was 193.456 (2"d Half 2009, Bureau of Labor Statistics). The annual inflation adjustment calculation will add any new Performance Obligations and subtract satisfied Performance Obligations to determine the total amount of the Performance Bond. C. UPON COMPLETION OF CERTAIN OBLIGATIONS. The total amount of the Performance Bond will be adjusted to account for Performance Obligations that are met upon the completion of activities under a DNR approved Rehabilitation Plan. 5. REHABILITATION PLAN• RELEASE OF FUNDS A. Prior to commencing any work to meet the Performance Obligations under this Agreement, CIE shall submit a Rehabilitation Plan to DNR for approval, which approval will not be unreasonably withheld. DNR will review, and approve or disapprove, the Rehabilitation Plan within 90 days of submittal by CIE. This may be an iterative process and may include several submittals each with 90 -day review periods. The Parties agree that an approved Rehabilitation Plan may provide for discrete payments from a Trust Account for specific activities under the Rehabilitation Plan. B. CIE may request payment from a Trust Account to execute an approved Rehabilitation Plan after CIE has funded the Performance Obligations under this Agreement. DNR will not be required to release funds from a Trust Account if the remaining balance of the combined Trust Accounts is insufficient to meet the remaining Performance Obligations under this Agreement. C. To request the release of funds from a Trust Account, CIE shall submit invoices or expense receipts to DNR for reimbursement of expenditures associated with the Performance Obligations, along with proof that the Performance Obligation has been satisfactorily completed in compliance with the terms of the State Leases, the applicable unit agreements, DNR Authorizations, and applicable state laws and regulations. CIE shall include a statement certifying that all applicable activities have been accomplished in accordance with the approved Rehabilitation Plan. D. DNR will evaluate requests to release funds from a Trust Account within 15 working days, and either approve or disapprove the release of funds. If approved, CIE may elect which CIE Trust Account from which to release the funds. After all funds have been Page 9 of I I Fourth Amended CIE Performance Bond Agreement released from the CIE Trust Accounts, funds may be released from the State Trust Account. Funds from the State Trust Account that are approved by DNR for release will be released within 45 calendar days after approval. E. Prior to the last funds being released from the State Trust Account, CIE shall document to DNR that it has satisfied the plugging, abandonment, site clearance, and restoration obligations, in accordance with an approved Rehabilitation Plan, and in compliance with the State Leases and DNR Authorizations. CIE shall document it has properly plugged and abandoned the wells by providing proof of satisfactory completion from the Alaska Oil and Gas Conservation Commission. F. DNR may demand payment, in writing, from the Trust Accounts if Rehabilitation Plan activities are not conducted in compliance with the DNR approved Rehabilitation Plan, or if CIE defaults on any term of this Agreement; provided, however, that if CIE or another person agrees to comply with the conditions of the DNR approved Rehabilitation Plan, the payment may be postponed. Notwithstanding the foregoing, CIE will have a 30 -day period to cure any default that would entitle DNR to demand payment. 6. DEFAULT A. Any one of the following events will be a default of this Agreement subject to the default proceedings under the applicable Lease: (a) CIE fails to comply with a material obligation or condition under this Agreement; or (b) CIE has become insolvent, an application for adjudication in bankruptcy has been filed by or against CIE, or an application for assignment, composition, extension or receivership, has been filed by or against CIE. B. If DNR determines that a default has occurred under this Agreement and CIE, after due notice under the default provisions of the Lease, fails to cure the default, DNR will notify the Bank or surety company, or other financial institution providing financial assurances under this Agreement that a default has occurred. DNR will send a copy of its notice of uncured default to CIE. After DNR has declared CIE in default and provided notice, DNR shall have the right to withdraw all or any funds from the Trust Accounts, without recourse to judicial proceedings and without demand, appraisal, advertisement, or notice of any kind, all of which are hereby expressly waived by CIE. The Performance Bonds and any accrued interest will be available to DNR for any necessary operations, monitoring, removal, reclamation or rehabilitation of the Leases and Assets. 7. ASSIGNMENT OF LEASES Prior to DNR approving any request from CIE to assign a Lease or portion of a Lease subject to this Agreement, DNR will evaluate the request to ensure that the assignee can adequately meet the Performance Bond and Performance Obligations under this Agreement. If DNR determines that the proposed assignment constitutes a material change in the Assets, which would likely result in an adjustment of the amount of the Performance Bond, DNR and CIE will follow the procedures in Paragraph 4 above with regard to that adjustment. Page 9 of 11 Fourth Amended CIE Performance Bond Agreement 8. NOTICE All notices, requests, demands, and other communications must be in writing and must be delivered by hand, mail, or fax to the addresses designated below. Any notice, request, demand or other communication delivered or sent in this manner will be deemed given or made when actually delivered to the correct address. For DNR: Jim Beckham, Acting Director Division of Oil and Gas, Department of Natural Resources 550 W. 7`h Ave., Suite 1100 Anchorage, Alaska 99501 Facsimile: 907-269-8938 For CIE: Phillip G. Elliott, President & CFO Cook Inlet Energy, LLC 188 W. Northern Light Blvd., Suite 510 Anchorage, Alaska 99503 Facsimile: 907-334-6735 9. MISCELLANEOUS A. Funds for plugging and abandoning any wells within the Redoubt Unit, the West McArthur River Unit and the Kustatan lease are NOT included in the Performance Bond. None of the funds in the Trust Accounts will be released for this purpose. B. Funds for the dismantlement, removal and restoration of the Kustatan Production Facility, West McArthur River Production Facility, West Foreland Facility and the Mosquito Station are NOT included in the Performance Bond. None of the funds in the Trust Accounts will be released for this purpose. C. Nothing in this Agreement is a waiver or release of the State's rights against any other entity or person that may be liable for all or any par[ of the Performance Obligations or is an assumption by the State of any obligations or liabilities associated with the Performance Obligations or Assets. D. CIE agrees that the neglect or forbearance of the State in enforcing this Agreement will not in any way release CIE from any liability or commitment under this Agreement. E. Each provision of this Agreement is severable from all others. If any term or provision is deemed invalid, void or unenforceable, this Agreement has been made with the clear intention that the validity and enforceability of the remaining parts, terms and provisions will not be affected thereby. Page 10 of 11 Fourth Amended CIE Performance Bond Agreement F. This Agreement will be construed, interpreted and governed by the laws of the State without regard to its conflicts of laws and principles. G. Section headings are not to be considered a part of this Agreement and are not intended to be a full and accurate description of the contents hereof. H. This Agreement maybe executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. 1. This Agreement may be amended at any time by mutual agreement of the Parties. IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date written above, and by our signatures, agree to be bound by its terms and conditions. Cook Inlet Energy, LLC By: 1-/ — /9 Phi iP G. Elliott Date Its: President & CFO State of Alaska Department of Natural Resources LIM Jim Beckham Its: Department of Natural Resources, Division of Oil and Gas, Acting Director Date Page 11 of 11 Fourth Amended CIE Performance Bond Agreement ATTACHMENT A STATE OF ALASKA DEPARTMENT OF NATURAL, RESOURCES DIVISION OF OIL AND GAS PERFORMANCE GUARANTY CIE Performance Bond Agreement Bond Type and #: X126254 (Cash or CD and associated account number) COOK INLET ENERGY, LLC, ("CIE"), an Alaska limited liability company, (a wholly owned subsidiary of Miller Energy Resources, Inc., a Tennessee corporation), as Principal, whose address is 601 West 5`r' Avenue, Suite 310, Anchorage, Alaska 99501, are held and firmly bound unto the State of Alaska, Department of Natural Resources, in the sum of $ %a w l Dip.td lawful money of the United Sates, for the use and benefit of the state. For the payment of such sum we hereby jointly and severally bind ourselves, our heirs, executors, administrators, successors, and assigns by this bond. The Principal hereby pledges as security, Pe KIrCMIb �i� I (bond type and account #) deposited with Ir /(/ 1 6 k `} " DO Bax /aDJaA�r! jik Pig (name & address of Financial Institution or DOR). The Principal does hereby irrevocably constitute and appoint the State of Alaska (the State) by and through its duly authorized agents as its Attorney -in -Fact to do all things necessary and appropriate to fulfill the obligations of the Principal should the Principal default on the Redoubt Performance Bond. It is agreed and understood that this bond shall remain in full force and effect for the period of time provided by law, and until released by the State for actions against this Performance guarantee. THE OBLIGATIONS of this Performance Guaranty are as follows: 1. The Principal has by written agreement entered into the Cook Inlet Energy LLC Performance Bond Agreement (Agreement) with the State of Alaska, Department of Natural Resources (DNR) involving oil and gas leases on State land that is by reference incorporated fully herein in all its terms and made a part of this Performance Guaranty. 2. In accordance with state regulations l I AAC 82.600, 11 AAC 83.160 and 11 AAC 96.060, the Alaska Department of Natural Resources (the Department) has determined that the Principal is required to furnish the State an individual Performance Guaranty, acceptable to the Department and conditioned upon compliance with all terns of the Agreement. 3. The Principal has chosen to post this individual Performance Guaranty with the Department as a guarantee that the obligations, terms, and conditions of the Agreement will be completed as required by the Agreement and state law. Redoubt Performance Bond Page I of 3 Bond Type and # 10W Z i/6 Fourth Amended CIE Performance Bond Agreement 4. The coverage of this Performance Guaranty extends to the Principal's obligations under the Agreement and under applicable laws and regulations, to assure that all of the activities on and uses of the state land subject to the Agreement arc conducted by the Principal in compliance with the obligations, terms, and conditions of the Agreement. 5. Upon a determination by the State that the Principal has satisfactorily complied with the obligations, terms and conditions of the Agreement, and the applicable laws and regulations, then the obligations of this Performance Guaranty shall be released; otherwise, this Performance Guaranty shall remain in full force and effect until exercised or released in writing by the State. 6. The Principal agrees that: (a) Unless the Principal has replaced this Performance Guaranty with other guaranty acceptable to the Department conditioned upon compliance with all terms of the Agreement, coverage under this Performance Guaranty shall extend to and include any extension(s) in time of the Agreement, such coverage to continue irrespective of the expiration of the obligations, terms, and conditions originally set forth in the Agreement; the Principal and Financial Institution (if applicable) shall not cancel this Performance Guaranty unless released in writing by the State. (b) Notwithstanding any modifications of the Agreement approved by the Department, this Performance Guaranty remains in full force and the Principal and Financial Institution (if applicable) waive, as a defense against the State, any right to notice of any such modifications. (c) The Department shall review this Performance Guaranty from time to time and may require an adjustment in the amount of the Performance Guaranty under the terms of the Agreement. No increase in Performance Guaranty amount shall bind the Principal without the Principal's written consent. (d) The neglect or forbearance of the State in enforcing against the Principal, performance by the Principal of any obligation, term, or condition of the Agreement shall not in any way release the Principal from liability under this Performance Guaranty. (e) Whenever the Principal shall be, and is declared by the State to be, in default under the obligations, terms, and conditions of the Agreement, the State shall notify the Principal. Upon receipt of a notice of the Principal's default form the State and demand by the State for performance or payment, the State shall promptly move to collect face value of the Performance Guaranty by executing the negotiable instrument or liquidating fund or securities provided, or in lieu of paying the face amount, the Department may approve the Principal's remedy of the default by the Principal fully completing the performance of the Principal's obligations under the Agreement. The Principal's completion of the performance obligations under the Agreement does not relieve the Principal of their other obligations under the Agreement. Redoubt Performance Bond// Page 2 of 3 Bond Type and N J 11114, Fourth Amended CIE Performance Bond Agreement NOW THEREFORE, the Principal certifies that the above cash deposit is free of all liens, including tax liens. PRINCIPAL r Signed and executed this 4 day of �% a , 20 / 9 By:A-z L � -- Philli G. Elliott, President & CFO Cooklfnlet Energy, LLC 188 W. Northern Light Blvd., Suite 510, Anchorage, Alaska 99503 FINANCIAL INSTITUTION (if applicable) Signed and executed this _ day of _ , 20 By: (Signature of Financial Representative) (Print name) (Name and Address of Financial Institution) (Title) ACKNOWLEDGEMENT OF FINANCIAL INSTITUTION The foregoing instrument was acknowledged before me by this day of (Name of individual) Witness my hand and official seal (Signature of Notary Public) My Commission Expires: • . (Seal) --- APPROVAL AND ACCEPTANCE BY THE STATE OF ALASKA BY: Dated: — — -- - - Jim Beckham, Acting Director Department of Natural Resources, Division of Oil and Gas Redoubt Performance Bond Page 3 of 3 Bond Type and 4 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION COOK INLET ENERGY LLC. RECONSIDERATION OF BONDING AMOUNT FEBRUARY 12, 2020 at 11:00AM NAME AFFILIATION Testify (yes or no) �� CIO /'Oil 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 1 AO-20-012 FROM: AGENCY CONTACT: Jody Colomhie/Samantha Carlisle Alaska Oil and Gas Conservation Commission DATE OF A.O.AGENCY PHONE: 333 West 7th Avenue 10/31/2019 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: FV LEGAL 7 DISPLAY CLASSIFIED OTHER (Specify below) DESCRIPTION PRICE Cook Inlet Energy Initials of who prepared AO: Alaska Non -Taxable 92-600185 sUBOTlivvoicesi{owruc:auvlg6SI rs =A bTUY6&NfS:;CERTIF1Eti Mn :'M18LtCATIOi?WrTH ATTACHfiD C6PYgF:- ' AHVERTISMBNT To; AOGCC 333 West 7th Avenue Anchorage, Alaska 99501 Pae 1 of 1 Total of All Pa es $ REF Type Number Amount Date Comments I PYN IVCO21795 2 Ao AO-20-012 3 4 FIN AMOUNT BY Act. Template PGM LCR Object FY DIST LIQ 1 20 AOGCC 3046 20 2 3 4 Punch u e Title• Purchasing Authority's Signature Telephone Number .O .6may'06me must appear on all invoices and documents relating to this purchase. 2. The e s registered for tax free transactions under Chapter 32. IRS code. Registration number 92-73-ON6 K. Items are for the exclusive use of the slate and not for resale. 41STR1 UTION .........1/Original.rlS9 Copies. Yolilislter(laxeii)Divrsioa idCalltecelYiug Form: 02-901 Revised: 10/30/2019 Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION Re: Cook Inlet Energy, LLC. Request for reconsideration regarding recently adopted bonding regulations and request to consolidate bonding requirements 20 AAC 25.025 Cook Inlet Energy, LLC. requested 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 February 12, 2020, at 11:00 a.m. at 333 West 7h Avenue, Anchorage, Alaska 99501 In addition, written comments regarding this application may be submitted to the AOGCC, at 333 West 7h Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the February 12, 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 February 9, 2020. Je e L. Chmielowski Commissioner ANCHORAGE DAILY NEWS AFFIDAVIT OF PUBLICATION Account #: 270227 ST OF AK/AK OIL AND GAS CONSERVATION 1 333 W. 7TH AVE STE 100, ANCHORAGE, AK 99501 Order#: WOO 12238 Cost: $174.32 STATE OF ALASKA THIRD JUDICIAL DISTRICT Lisi Miss being fust duly sworn on oath deposes and says that she is a representative of the An- chorage Daily News, a daily newspaper. That said newspaper has been approved by the Third Judicial Court, Anchorage, Alaska, and it now and has been published in the English language continually as a daily newspaper in Anchorage, Alaska, and it is now and during all said time was printed in an office maintained at the afore- said place of publication of said newspaper. That the annexed is a copy of an advertisement as it was published in regular issues (and not in supplemental form) of said newspaper on 11/03/2019 and that such newspaper was regularly distrib- uted to its subscribers during all of said period. That the full amount of the fee charged for the foregoing publication is not in excess of the rate charged private individuals. Signed X(''�-� `� Subscribed and sworn to before me this 4th day of November 2019. in and for LVED 2019 AOGCC Notice of Public Hearing STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION Re: Cook inlet EnergyI.I.C. Request for reconsideration regarding recently adopted bonding regulations and request to consolidate bonding requirements 20 AAC 25.025 Cook Inlet Energy, LLC. requested 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 February 12, 2020, at 11:00 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 7th Avenue, Anchorage, Alaska 99501. Comments must be received no later than the conclusion of the February 12, 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 February 9, 2020. Hsignature on file// Jessie L. Chmielowski Commissioner Published: November 3, 2019 TX State of Alaska. OF ALAS/, ud Division P� Anchorage, Alaskaco NPCP MY C ISS_ I EXPIRES ?\.Por' c° cy (z a��• ✓ada t- Bernie Karl Gordon Severson Penny Vadla K&K Recycling Inc. P.O. Box 58055 3201 Westmar Cir. 399 W. Riverview Ave. Fairbanks, AK 99711 Anchorage, AK 99508-4336 Soldotna, AK 99669-7714 George Vaught, Jr. Darwin Waldsmith Richard Wagner P.O. Box 13557 P.O. Box 39309 P.O. Box 60868 Denver, CO 80201-3557 Ninilchik, AK 99639 Fairbanks, AK 99706 Colombie, Jody J (CED) From: Romerdahl, Elena M. (Perkins Coie) <ERomerdahl@perkinscoie.com> Sent: Monday, August 12, 2019 2:12 PM To: Colombie, Jody 1 (CED) Subject: RE: Your August 2, 2019 Request for Stay Jody, Thank you. I will let my client know. Elena Elena Romerdahl I Perkins Cole LLP COUNSEL 1029 West Third Avenue Suite 300 Anchorage, AK 99501 D. +1.907.263.6914 M. +1.202.487.8657 E. ERomerdahlralDerkinscoie.com PeRKINSCOIe From: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Sent: Monday, August 12, 2019 1:46 PM To: Romerdahl, Elena M. (ANC) <ERomerdahl@perkinscoie.com> Cc: Colombie, Jody J (CED) <jody.colombie@alaska.gov> Subject: Your August 2, 2019 Request for Stay Elena, The Commissioners have reviewed your Request to Stay Savant's and CIE's obligation to increase their bonds with the Commission. Savant's and CIE's 1st installment can be postponed until 30 days after written decision by the Commission. All other installment remain the same. Jody J Colomhie Special Assistant Alaska Oil and Gas Conservation Commission 333 West 7rt' Avenue Anchorage, AK 99501 (907) 793-1221 Direct (907) 2 76- 7542 Fax NOTICE: This communication may contain privileged or other confidential information. If you have received it in error, please advise the sender by reply email and immediately delete the message and any attachments without copying or disclosing the contents. Thank you. Colombie, Jody J (CED) From: Colombie, Jody J (CED) Sent: Monday, August 5, 2019 1:55 PM To: Romerdahl, Elena M. (Perkins Coie) Subject: RE: Request for Reconsideration Elena, Yes, this email GRANTS reconsideration for both Cook Inlet Energy and Savant. Jody Colombie From: Romerdahl, Elena M. (Perkins Coie) <ERomerdahl@perkinscoie.com> Sent: Monday, August 5, 2019 1:51 PM To: Colombie, Jody 1 (CED) <jody.colombie@alaska.gov> Subject: RE: Request for Reconsideration Jody, Thank you. 1 assume this means that both CIE's request for reconsideration and Savant's request for reconsideration were granted because it doesn't specify one or the other, but I just wanted to confirm. Elena Elena Romerdahl I Perkins Cole LLP COUNSEL 1029 West Third Avenue Suite 300 Anchorage, AK 99501 D. +1.907.263.6914 M. +1.202.487.8657 E. ERomerdahlna.oerkinwoie.com PeRKINSCOIe From: Colombie, Jody J (CED) <jodv.colombie@alaska.¢ov> Sent: Monday, August 5, 2019 1:41 PM To: Romerdahl, Elena M. (ANC) <ERomerdahl[a@perkinscoie.com> Cc: Colombie, Jody J (CED) <iodv.colombie@alaska.eov> Subject: Request for Reconsideration Ms. Romerdahl: Your Request for Reconsideration is GRANTED. The Alaska Oil and Gas Conservation Commission will issue a Notice of Hearing in the near future. Jodv J. Colombie Sprcial AS'Sistanl :llaacka Oil and Gac CCon.vcrvalion C'onmiie.vion 333 Wcst 7° Ai enue PeRKINSCOIe August 2, 2019 VIA HAND DELIVERY Commissioner Daniel T. Seamount, Jr. Commissioner Jessie L. Chmielowski Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 1029 West Third Avenue O +1907.279.8561 Suile 300 O +1.907276.3108 Anchorage. AK 99501-1981 perkinscoie.com Re: Request to Consolidate Bonding Requirements Dear Commissioner Seamount and Commissioner Chmielowski: Elena M. Romerdahl ERomerdahl@perkinscoie.com D . +1.907.263.6914 F. +1.907.263.6428 " VE A! u 0 2 2019 A0GGC On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC or "the Commission") issued letters to Glacier Oil and Gas ("Glacier") subsidiaries Savant Alaska, LLC ("Savant")' and Cook Inlet Energy, LLC ("CIE") regarding recent revisions to AOGCC's regulation 20 AAC 25.025. In separate requests for reconsideration dated July 25, 2019, Savant and CIE requested that the Commission take notice of existing bonding in place for those wells and adjust Savant's and CIE's respective outstanding bond obligations under 20 AAC 25.025(b)(1) accordingly.2 In addition to the requests made in those July 25, 2019 requests for reconsideration, Glacier hereby requests that the Commission allow Glacier to provide a single consolidated bond to satisfy the bonding obligations of Savant and CIE under 20 AAC 25.025(b)(1). Under 20 AAC 25.025(a), operators proposing to drill wells in the state are required to file a bond and, if required under 20 AAC 25.025(a)(2), security in the amount specified in the table provided in 20 AAC 25.025(b)(1) "to ensure that each well is drilled, operated, maintained, repaired, plugged and abandoned and each location is cleared" in accordance with AOGCC regulations. The number of permitted wellheads an operator is responsible for is the only factor used to determine the amount of bonding required under 20 AAC 25.025(b)(1). An operator is not required to post separate bonds based on the location of Savant Alaska, LLC is a subsidiary of Glacier subsidiary Cook Inlet Energy, LLC. Z Copies of these requests for reconsideration are attached hereto as Exhibits A and B. August 2, 2019 Page 2 its permitted wellheads, and the amount of bonding required is not based on the actual estimated cost of plugging and abandoning an operator's specific wells. After an operator exceeds 10 wellheads, the per -well amount of the bond required under 20 AAC 25.025(b)(1) generally decreases as the number of permitted wellheads increases. An operator with 1,000 permitted wellheads is required to provide just $20,000 in bonding per well, while an operator with 11 permitted wellheads is required to provide $545,454 in bonding per well. Savant and CIE are collectively responsible for 31 permitted wellheads: Savant is responsible for 5 permitted wells, and CIE is responsible for 26 permitted wells.3 Under 20 AAC 25.025(b)(1), Savant is individually responsible for a bond in the amount of $2,000,000, and CIE is individually responsible for a bond in the amount of $6,000,000. If Glacier was permitted to provide a single bond to cover the combined 31 wellheads permitted to its subsidiaries, Glacier's total bonding obligation would be just $6,000,000— $2,000,000 less than the separate bonding obligations of Savant and CIE combined. The disparity in the amount of bonding required per wellhead under the Commission's amended regulation benefits large operators and penalizes small operators like Savant and CIE. In light of this disparity, the disproportionate impact the Commission's amended regulation has on smaller operators, and the lack of correlation between the amount of bonding required per well and the per -well cost of remediation, Glacier respectfully requests that the Commission allow it to satisfy its subsidiary companies' bonding obligations with a single statewide bond. If the Commission permits Glacier to satisfy the bonding obligations of Savant and CIE with a single statewide bond, Glacier's total bonding obligation under 10 AAC 25.025(b)(1) would be $6,000,000.' As described in detail in Savant's and CIE's July 26, 2019 requests for reconsideration, Savant and CIE each have bonding in place for their respective wells that Savant and CIE have requested be credited toward their outstanding bond obligations. Glacier also requests that those bonds be credited to any statewide bond 7 AOGCC's July 2, 2019 letter to Savant asserted that Savant is responsible for 12 permitted wellheads, and CIE is responsible for 26 permitted wellheads. In Savant's July 25, 2019 request for reconsideration, Savant requested that the Commission acknowledge that BP retained responsibility for all DR&R obligations, including plugging and abandonment, associated with 7 of the 12 Savant wells, and that Savant is therefore only responsible for 5 permitted wellheads. See Exhibit A, at 1-2. The bonding obligation for Savant's and CIE's wells combined would be $6,000,000 regardless of whether the Commission grants Savant's request for reconsideration regarding the number of wells Savant is responsible for, as the bond amount required under 20 AAC 25.025(b)(1) for 38 wells is the same amount required for 31 wells: $6,000,000. ° See supra note 3. Perkins Cole LLP August 2, 2019 Page 3 the Commission allows it to provide on behalf of Savant and CIE. In addition to the $200,000 statewide bonds that Savant and CIE have in place with AOGCC,S Savant has $1,375,000 in bonds and pledged security with DNR that cover plugging and abandonment of the Badami Unit wells for which Savant is responsible,6 and CIE has a $500,000 bond in place with DNR and an $324,000 bond in place with the U.S. Environmental Protection that cover CIE's plugging and abandonment obligations.' If the Commission permits Glacier to provide a consolidated bond for Savant and CIE's combined 31 permitted wellheads, Glacier requests that the $2,599,000 of bonding currently in place for plugging and abandonment of Savant and CIE's combined 31 permitted wellheads be credited towards its $6,000,000 bonding obligation, which would leave an outstanding bonding obligation of $3,401,000.8 For the reasons stated above, Glacier requests that it be allowed to provide a single consolidated bond in satisfaction of the bonding obligations of its subsidiaries, Savant and CIE, under 20 AAC 25.025(b)(1). Glacier further requests that the Commission credit the $2,599,000 in bonding currently in place for Savant's and CIE's permitted wells toward the $6,000,000 bond owed for their combined 31 wells so that the outstanding bond amount owed by Glacier is $3,401,000. As a condition of this consolidated bond, Glacier will agree to be liable for all plugging and abandonment obligations associated with Savant and CIE's 31 permitted wells. Finally, Glacier requests that the Commission stay Savant's and CIE's obligation to increase their bonds with the AOGCC on August 16, 2019 as articulated in the Commission's July 2, 2019 letter while the Commission considers Glacier's requests herein and Savant's and CIE's July 25, 2019 requests for reconsideration. Glacier respectfully requests that the Commission respond to this stay request prior to August 16, 2019. Thank you for your consideration. s Savant's bond number is LPM89445440; CIE's bond number is LPM9297832. 6 See Exhibit A at 2 and Exh. B. 'See Exhibit B at 1 and Exh. B. s Glacier is not requesting that the Commission reduce the amount of the bond required under 20 AAC 25.025(b)(1). Instead, Glacier requests that the outstanding amount due by Glacier if it is permitted to place a single consolidated bond to satisfy Savant's and CIE's bonding obligations reflect the bonds currently in place for plugging and abandonment of Savant's and CIE's wells. Perkms Cow LLP August 2, 2019 Page 4 Sincerely, �?1�04AOWW Elena M. Romerdahl Counsel for Glacier Oil and Gas Perkns Cue LLP PeRKINSCOte July 25, 2019 VIA HAND DELIVERY Commissioner Daniel T. Seamount, Jr. Commissioner Jessie L. Chmielowski Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 Re: July 2, 2019 Savant Bonding Letter Request for Reconsideration Exhibit A Page 1 of 37 1029 West Third Avenue O +1.907.279.8561 Suite 300 O +1.907.276.3108 Anchorage. AK 99501-1981 perkinscoie.com Dear Commissioner Seamount and Commissioner Chmielowski: Elena M. Romerdahl ERomerdahl@perkinscoie.com D . +1.907.263.6914 F _ +1.907.263.6428 On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC or "the Commission") issued a letter to Savant Alaska, LLC ("Savant") regarding recent revisions to AOGCC's regulation 20 AAC 25.025 (the "Commission's Letter," attached hereto as Exhibit A). The Commission's Letter states: "According to AOGCC records, Savant Alaska LLC has 12 permitted wellheads (see enclosed list)." The list attached to the Commission's Letter identifies the 12 permittcd wells at the Badami Unit: 131-7, 131-1, B 1- 11A, 131-14, 131-15, 131-16, 131-18A, 131-21, 131-25, 131-28, 131-36, and 131-38. Based on AOGCC records, Savant is required under 20 AAC 25.025(b)(1) to establish a bond in the amount of $6,000,000 with the AOGCC. The Commission's Letter provides an installment schedule that Savant may use to increase its current AOGCC bond of $200,000 by $1,450,000 annually until 2022. Under the installment schedule, Savant's first payment of $1,450,000 will be due August 16, 2019. For the reasons discussed below, Savant respectfully requests reconsideration of the Commission's July 2, 2019 Letter. 1. Savant is only responsible for DR&R at five Badami Unit wells. Pursuant to the Purchase and Sale Agreement between BP Exploration (Alaska) Inc. ("BPXA"), Savant, and ASRC Exploration, LLC ("AEX") effective December 9, 2011 through which Savant acquired its interest in the Badami unit (the "PSA"), BPXA as former operator of the Badami unit and owner of overriding royalty interests in Badami Unit leases agreed to retain DR&R obligations for all existing wells at the Badami Unit except wells B 1-18A, B 1-21, B 1-36, and B 1-38 and any wells that Savant or AEX later modified or re- Exhibit A Page 2 of 37 July 25, 2019 Page 2 entered.1 At the time the PSA was executed, there were 11 Badami Unit wells: B1-01 (injection well), B 1-11A, B 1-14, B 1-15, B 1-16, B 1-18A, B 1-21, B 1-25, B 1-28, B 1-36, and BI -38. Savant as Badami Unit operator has since re-entered two of the nine wells listed in Exhibit A-2 to the PSA: B1 -18A and B1-38. Savant has not and does not plan to re-enter any of the other original Badami Unit wells. Pursuant to the PSA, Savant is therefore only responsible for the DR&R obligations, including plugging and abandonment, of 4 of the original 11 Badami Unit wells: B1 -18A, B1-21, B1-36, and B1-38.2 The Commission's Letter identifies one additional Badami well that was drilled after the PSA was executed: BI -07. Savant as unit operator drilled B1-07 and is responsible for DR&R obligations associated with that well. Savant is therefore responsible for DR&R obligations, including plugging and abandonment, related to the following 5 Badami Unit wells: 131-07, B1 -18A, 131-21, B1-36, BI -38. 2. Savant has satisfied a portion of its DR&R bonding obligations for the Badami Unit wells. The Commission's Letter confirms that Savant currently has in place a $200,000 bond with the AOGCC that covers its Badami Unit wells (bond number LPM89445440). Savant also entered into a Badami DR&R Agreement with the Alaska Department of Natural Resources ("DNR") effective July 31, 2017 (the "Badami DR&R Agreement"), under which DNR obtained $1,375,000 to cover the DR&R obligations of Savant and its working interest partners at the Badami Unit, including plugging and abandonment of the 5 Badami Unit wells for which Savant is responsible. A copy of the Badami DR&R Agreement is attached hereto as Exhibit B.3 On July 2, 2019, Savant received a letter from Acting Director of the Division of Oil and Gas James Beckham in which he acknowledged the Badami DR&R Agreement and ' BP's retention of DR&R obligations at the Badami Unit is memorialized in the Badami DR&R Agreement attached hereto as Exhibit B. Savant may be able to provide the Commission with a redacted excerpt of the PSA upon request. z The PSA and related exhibits do not identify or discuss injection well BI -01, which was completed by BP on November 14, 1997. Savant's understanding is that injection well B1-01 was considered a facility under the PSA for which BP retained full DR&R responsibility. 3 On July 22, 2019, Savant requested that DNR agree to terminate the Badami DR&R Agreement and release the funds currently held by DNR under that agreement. If DNR agrees to that request, Savant will immediately notify the AOGCC and transfer the amount currently held by DNR under the Badami DR&R Agreement to the AOGCC in satisfaction of the bonding requirements under 20 AAC 25.025(b)(1). Pe kite Cole LLP Exhibit A Page 3 of 37 July 25, 2019 Page 3 confirmed that from DNR's perspective the DR&R Agreement covers all of Savant's DR&R obligations at the Badami Unit, including plugging and abandonment of the Badami wells for which Savant is responsible. A copy of that letter is attached hereto as Exhibit C. Notwithstanding DNB's July 2, 2019 letter, Savant acknowledges that 20 AAC 25.025(b)(1) requires Savant as Badami Unit operator to provide a bond in the amount of $400,000 per well.' As discussed above, Savant is responsible for 5 wells at the Badami Unit and is therefore required to provide a bond in the amount of $2,000,000. There is currently a $200,000 bond in place with AOGCC and $1,375,000 in bonds and pledged security with DNR that cover plugging and abandonment of the 5 Badami Unit wells for which Savant is responsible. Savant should therefore be required to post an additional $425,000 in bonds to cover its remaining obligations under 20 AAC 25.025(b)(1). 3. The Commission should reissue its letter regarding Savant's bonding obligations under 20 AAC 25.025. Savant does not request that the Commission reduce the amount of the bond required under 20 AAC 25.025(b)(1). Savant simply requests that the Commission acknowledge that 1) Savant is only responsible for DR&R obligations, including plugging and abandonment, related to 5 of the 12 Badami Unit wells because BP has assumed responsibility for DR&R, including plugging and abandonment, of 7 of the 12 existing wells at the Badami Unit; and 2) Savant's outstanding bonding obligation under 20 AAC 25.025(b)(1) is only $425,000 due to the $200,000 bond in place with AOGCC and $1,375,000 in bonds and pledged security currently in place with DNR for plugging and abandonment of Savant's 5 Badami Unit wells. For the reasons stated herein, Savant respectfully requests that the Commission reconsider and reissue its July 2, 2019 letter to reflect that 1) Savant is only responsible for providing a bond in the amount of $2,000,000 under 20 AAC 25.025 for 5 of the 12 Badami Unit wells listed in the Commission's Letter: B1-07, B1 -18A, 131-21, B1-36, 131-38; and 2) Savant is required to increase the amount of its bond by $425,000 to satisfy its bond obligation of $2,000,000 under 20 AAC 25.025(b) for those wells. 4 According to the table in 20 AAC 25.025(6)(1), a bond of $400,000 per well is required for operators responsible for up to 10 wellheads. As discussed above, Savant is responsible for 5 wellheads at the Badami Unit and is therefore required to provide bonding in the amount of $2,000,000. POws Cae LLP Exhibit A Page 4 of 37 July 25, 2019 Page 4 In the alternative, Savant requests a hearing under 20 AAC 25.505 to review the evidence submitted and any additional evidence the Commission requires to determine that Savant's outstanding bonding requirement under 20 AAC 25.025 should be $425,000. Thank you for your consideration. Sincerely, Elena M. Romerdahl Counsel for Savant Alaska, LLC Perkins Cue LLP Tl Ili S'1 ATI. "ALASKA GOVERNOR MICKAEL J. IRTNLEA\1 JUL 03 2019 July 2, 2019 Phillip Elliott President and CFO Savant Alaska LLC. 188 West Northern Lights Blvd. Suite 510 Anchorage, AK 99503 Dear Mr. Elliott: Page 5 of 37 Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax! 907.276.7542 v .aogcc.alaska.gov On May 18, 2019, revisions to the Alaska Oil and Gas Conservation Commission's (AOGCQ 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, Savant Alaska LLC. has 12 permitted wellheads (see enclosed list). Savant Alaska LLC. is required to establish a bond in the amount of $6,000,000 with the AOGCC. Savant Alaska LLC. currently has bond number LPM8945440 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 Savant Alaska LLC. chooses to increase its bond amount using installment increments, the schedule is: Installment Due Date Minimum Bond Increase First August 16 2019 $1 450 000 Second Au st ]6 2020 $1 450 000 Third August 16 2021 $1,450,000 Fourth August 16 2022 $1,450,000 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 Savant Alaska LLC. choose a Certificate of Deposit as its bonding instrument. Page 2 of 2 Exhibit A Page 6 of 37 If you have any questions, please contact Ms. Jody Colombie at 907-793-1221 or iodv.colombie�d,)alaska.gov or Mr. Dave Roby at 907-793-1232 or dave.roby n,alaska.eov . Sincerely, Daniel T. ount, Jr. Commissioner Jes4L. Chmielowski CoMmissioner Enclosures: 20 AAC 25.025 Regulations Forms: 10-402A and 10-402B Form: AOGCC — Assignment of CD / Confirmation/Agreement List of Permitted Wellheads RECONSIDERATION AND APPEAL NOTICE 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 maybe 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 he 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. Alaska Oil and Gas Conservation Commission Savant Alaska LLC. Field Permit API Well Name Completion Well Status Status Date BADAMI 12_17-173 1,50-029-2_3589-00-00 BADAMI B1-07 2018-05-01 1 -OIL 2018-05-01 BADAMI .197-157 50-029-22799-00-00 i BADAM I UNIT Bl -01 '1997-11-14 IWDSPl 1997-11-14 BADAMI 1198-034 '50-029-22829-01-00 1BADAMIUNITB141A 11998-03-02 1 -OIL 11998-08-08 BADAMI 1198-063 50-029-22874-00-00 1BADAMI UNIT Bl -14 1998-08-05 1 -GAS 2012-08-19 BADAMI 1198-074 50-029-22878-00-00 'BADAMI UNIT B1-15 1998-07-28 1 -OIL 1998-07-28 BADAMI 198-080 :50-029-22880-00.00 'BADAMI UNIT B1-16 1998-08-09 1 -OIL 11998-08-09 BADAMI ,21_0-003 '50-029-22857-01-00 1 BADAMI UNIT Bl -18A 12010-03-11 1 -OIL 12010-03-11 BADAMI 1197-17_4 S0-029-22809-0 0 BADAMI UNIT B1-21 11998-04-06 1GINJ 2013-08-16 BADAMI 198-153 50-029-22906-00-00 BADAMI UNIT Bl -25 '1998-11-21 1 -OIL ^1998-11-21 BADAMI 198-130 50-029-22899-00-00 BADAMI UNIT B1-28 1998-10-18 1 -OIL 1998-10-18 BADAMI 198-232 50-029-22933-00-00 'iBADAMIUNIT Bl -36 1999-05-27 1-0I1. 1999 -OS -27 BADAMI 208-190 50-029-23407-00-00 BADAMI UNIT B1-38 !2010-02-09 1 -OIL 2010-02-09 Wellhead Report 7/2/2019 Page 1 of 1 Exhibit A Page 8 of 37 Register 230, July 2019 MISCELLANEOUS BOARDS 20 AAC 25.025 is repealed and readopted to read: 20 AAC 25.025. Bonding. (a) An operator proposing to drill a well for which a permit is required under 20 AAC 25.005 shall file a bond and, if required under (2) of this subsection, security to ensure that each well is drilled, operated, maintained, repaired, plugged and abandoned and each location is cleared in accordance with this chapter. The bond must be (1) a surety bond issued on Form 10-402A in favor of the Alaska Oil and Gas Conservation Commission by an authorized insurer under AS 21.09 whose certificate of authority is in good standing; or (2) a personal bond of the operator on Form 10-402B accompanied by security guaranteeing the operator's performance; security must be in the form of a certificate of deposit or irrevocable letter of credit issued in the sole favor of the Alaska Oil and Gas Conservation Commission by a bank authorized to do business in the state, or must be in another form that the commission determines to be adequate to ensure payment. (b) A bond and, if required, security must be in compliance with the following: (1) a bond and, if required, security must be in the amount specified in the following table: Number of Permitted Wellheads Bond A"well #1 - 410 wells $400,0per#I 1 - #40 wells $6,000#41 - #100 wells $10,00#101 - #1,000 wells $20,00Over 1,000 wells $30,00 (2) for the purposes of this section, a wellhead is considered any well, excepting lateral well branches drilled from an existing well, for which the commission has issued a Permit to Drill (Form 10-401) that has not been permanently plugged and abandoned; (3) upon request of an operator, or on its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts. (c) An operator with a bond and, if required, security in place on May 18, 2019 will be allowed to increase the amount of its bond and, if required, security to the amount required under (b) of this section in four installments. The installments shall be made as follows: (1) the first installment is due August 16., 2019 and must be a minimum of $500,000 or one-quarter of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater, (2) the second installment is due August 16, 2020 and must be a minimum of $500,000 or one-third of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; (3) the third installment is due August 16, 2021 and must be a minimum of $500,000 or one-half of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; and (4) the final installment is due August 16, 2022 and must be in the amount of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section. Exhibit A Page 9 of 37 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION SURETY BOND BOND NUMBER PENAL SUM $ KNOW ALL PERSONS BY THESE PRESENTS, That we, of the City of State of as principal, and of as surety, an authorized insurer under AS 21.09 whose certificate of authority is in good standing, are 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, we bind ourselves and each of us, and each of our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents. 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: Number of Permitted Wellheads Bond Amount Installment Amount 1 - 10 wells $400,000 per well Operators with active bonds as of May 18, 2019, may increase ❑ 41 - 100 wells $10,000,000 their bonding leve] Total Wells Total Bond Amount NOW, THEREFORE, the above bonded principal 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. ❑ ❑ 1 I - 40 wells $6,000,000 over a period of three El 101 - 1000 wells $20,000,000 years in accordance with 20 AAC EJ Form 10-402A Rev. 05/2019 Page 1 of 2 Submit in Duplicate Over 1000 wells $30,000,000 25.025(c). Form 10-402A Rev. 05/2019 Page 1 of 2 Submit in Duplicate Exhibit A BOND NUMBER This obligation shall remain in full force and effect until released by the Alaska Oil and Gas Conservation Commission at the request of principal or surety. 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 sea] this Principal Printed name and title Witness our hand and seal this Surety Printed name and title day of By: _ Signature Address/City/State/ZIP day of By: _ Signature Address/City/State/ZIP ,20— ,20— Countersigned (Resident Agent if necessary) Official Use Only Below Line ALASKA OIL AND GAS CONSERVATION COMMISSION Approved: Commissioner Date Approved: Commissioner Date Approved: Commissioner Date (Requires approval by two Commissioners) Form 10-402A Rev. 05/2019 Page 2 of 2 Submit in Duplicate BOND NUMBER STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION PERSONAL BOND PENAL SUM $ KNOW ALL PERSONS BY THESE PRESENTS, Exhibit A That of the City of State of 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. issued in sole favor Alaska Oil and Gas Conservation Commission by 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 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: Number of Permitted Wellhead Bond Amount Installment Amount F-11 - 10 wells $400,000 per well Operators with active bonds as of May 18, 2019, may ❑ 11 - 40 wells $6,000,000 increase their bonding level over a ❑ 41 - 100 wells $10,000,000 El101 - 1000 wells $20,000,000 20 AAC 25.025(c). Period of three years in accordance with 1000 wells El Over Total Wells Total Bond Amount Form 10-4028 Rev. 0512019 Page 1 of 2 Submit in Duplicate 20 AAC 25.025(c). 1000 wells $30,000,000 Page 12 of 37 BOND NUMBER 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 Operator Printed name and title ACKNOWLEDGEMENT day of 20 By: Signature Address/City/State/ZIP State of Judicial District (or County of ) The foregoing instrument was acknowledged before me on this day of by (name) (title) of (operator), on behalf of Notary Public in and for (operator). My commission expires: Official Use Only Below Line ALASKA OIL AND GAS CONSERVATION COMMISSION Approved: Commissioner Approved: Approved: Date Commissioner Date Commissioner Date (Requires approval by two Commissioners) Form 104028 Rev. 05/2019 Page 2 of 2 Submit in Duplicate Exhibit A Page 13 of 37 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION ASSIGNMENT OF CERTIFICATE OF DEPOSIT AND CONFIRMATION AND AGREEMENT OF ISSUING BANK On —,20—, (Principal/Obligor) (Address) assigns the following certificate of deposit: in the amount of $ (Certificate of Deposit Number) issued by (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- 402B, 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 / CONFIRMATION/AGREEMENT (5/2019) Page 1 of 6 Exhibit A Page 14 of 37 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; 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 Exhibit A Page 15 of 37 (e) the Certificate is in such amount that liquidation prior to maturity will result in the fall 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; (� 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 7. the State of Alaska, by and through its duly authorized agents, is irrevocably constituted and appointed as its Attomey-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 Exhibit A Page 16 of 37 IN WITNESS WHEREOF, the Principal/Obligor has set its signature and sea] (if it has one) this day of 2 (Signature of Principal/Obligor) 0 Title: IN WITNESS WHEREOF, the Issuing Bank has set its signature and seal (if it has one) this day of 12 (Signature of Issuing Bank) Title: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 4 of 6 Exhibit A Page 17 of 37 STATE OF ) )ss. ACKNOWLEDGEMENT OF PRINCIPAL/OBLIGOR On this _ day of , 2 , before me, a notary public in and for the State of duly commissioned and sworn, appeared to me personally known, who, being by me duly swom, said the following: (1) he/she is 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 in and for the State of My Commission Expires: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 5 of 6 Exhibit A Page 18 of 37 STATE OF ) )ss. ACKNOWLEDGEMENT OF ISSUING BANK On this day of 2 before me, a notary public in and for the State of duly commissioned and swom, appeared , to me personally known, who, being by me duly sworn, said the following: (I) he/she is of 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 for the State of My Commission Expires: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 6 of 6 Badami DR&R Agreement July 31, 2017 Badami DR&R Agreement Exhibit A Page 19 of 37 This Badami DR&R Agreement ("the Agreement") is entered into by Savant Alaska, LLC ("Savant"), an Alaska limited liability company, whose address is 601 W. 51' Avenue, Suite 310, Anchorage, AK 99501; ASRC Exploration, LLC ("AEX"), an Alaska limited liability company, whose address is 3900 C Street, Suite 1000, Anchorage, AK 99503; Great Bear Petroleum Ventures 111, TLC ("Great Bear"), a Delaware limited liability company, whose address is 601 W. 5a' Ave., Suite 505, Anchorage, AK 99501; Caracol Petroleum LLC ("Caracol'% a Delaware limited liability company, whose address is 15 Hoe Chiang Rd #12-05 Tower 15, Singapore 089316 Singapore; TP North Slope Development, LLC ("1'P North Slope"), a 1lelaware limited liability company, whose address is 510 L Street, Suite 601, Anchorage, AK 99501, collectively referred to as "the Lessees" and individually as "the Lessee"; and the State of Alaska, Department of Natural Resources ("DNR"). These entities are further collectively referred to as "the Parties" and individually as "Party." This Agreement is entered in support of and as part of a group of applications for approval of the assignments, under I I AAC 82.605, of certain state oil and gas leases, permits, rights -o£ -way, and easements set out in the attached Exhibit A (`the Leases'D. The terms and conditions set out in this Agreement supplement, but do not replace the obligations stated in the Leases, and applicable statutes and regulations. The DNR Commissioner is entering into this Agreement under his authority set out in AS 38.05.020(b)(2) and (4), and 11 AAC 82.615(a)(4). The effective date of this Agreement shall be the same as the effective date of the assignments of the Leases ("the Effective Date"). A. WHEREAS, pursuant to a certain Purchase and Sale Agreement between Savant, AEX, and BP Exploration (Alaska) Inc. ("BPXA"), executed on December 9, 20;1 ("the BP Agreement', Savant and AEX acquired the leases identified in Exhibit A as the Group 1 Leases (`the Group 1 Leases"); B. WHEREAS, under the terms of the BP Agreement, BPXA agreed to retain its obligations for decommissioning and rehabilitating the site of the existing Badami facilities and for plugging and abandoning all retained wells not transferred within the farmout agreement to Savant and AEX ("the BP Retained DR&R Obligations"); C. WHEREAS, as the current lease holders of the Group I Leases, Savant and ABX arejointly and severally responsible for dismantling, removing, and rehabilitating the Assets within the Group 1 Leases not covered by the BP Retained DR&R Obligations ("the Badami DR&R Obligations"); D. WHEREAS, as of the Effective Date, the Badami unit Operator ("the Operator") is Savant; E. WHEREAS, Savant is party to a certain "Savant DR&R Agreement," dated effective as of December 5 2014, and to a certain "First Amended Savant DR&R Agreement" dated effective as of February 19, 2016 (collectively, "the Savant Agreement"); F. WHEREAS, the Savant Agreement will be amended to reflect the provisions of this Agreement in relation to the Badami DR&R Obligations in the Group I Leases; G. WHEREAS, Savant has covered the current estimate of the cost to fulfill the Badami DR&R Obligations for the subject Leases pursuant to the Savant Agreement, whereby DNR has agreed to discount Savant's DR&R Remaining Requirement by $500,000, which is equivalent to its oil and gas statewide bond, and Savant established and maintained its Savant DR&R Trust account (with a balance of $508,333 as of the Effective Date); H. WHEREAS, AEX is seeking to assign part of its working interest in the Group 1 Leases to Great Bear, Caracol, and TP North Slope; I. WHEREAS, Caracol and TP North Slope are seeking to assign to AEX part of their working interest ownership in the leases shown in Exhibit A as the Group 2 Leases (`the Group 2 Leases"); J. WHEREAS, upon approval of the submitted lease assignments, the Lessees are liable to fulfill the Page 1 of 14 Exhibit A Page 20 of 37 Badami DR&R Agreement July 31, 2017 Badami DR&R Obligations under the terns of the Leases, and applicable statutes and regulations; K. WHEREAS, each Lessee is severally liable for its Contributions, as defined below; L. WHEREAS, it is agreed that, as of the Effective Date, the Cumulative DR&R Estimate, as defined below, to meet the Badami DR&R Obligations is $1,375,000; NOW, THEREFORE, in consideration of the mutual promises stated herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties agree as follows. 1. DEFR TTIONS 1.1 "Approved DR&R Contractor" means any person engaged in meeting the Badami DR&R Obligations after being approved to do so by DNR 1.2 "Assets" means facilities, infrastructure, roads, pads, equipment, wells and other improvements on the Leases. 1.3 "Badami DR&R Obligations" means any and all obligations under the leases that are not retained by BPXA pursuant to the BP Agreement, or existing and future statutes and regulations relating to the DRUZ of Uha subject Leases. 1.4 "Badami DR&R Trost Account" is the account established to hold the Contributions and designed to fund the expenditures in meeting the Badami DR&R Obligations pursuant to Section 4.1 of this Agreement. 1.5 "Contribution(s)" means the amount(s), as determined in section 3, in U.S. legal tender that each Lessee shall provide as financial assurance for its share of the Cumulative DR&R Estimate. The Contributions for each Lessee shall be deposited into the Badami DR&R Trust Account. The Operator shall be the entity in charge of depositing all Contributions into the Badami DR&R Trust Account. 1.6 "Contribution Date" means December 6 of each year, starting in 2019. 1.7 "Cumulative DR&R Estimate" means the aggregate of the DR&R Estimates across all the Leases. 1.8 "DR&R" means the dismantlement and removal of facilities and infrastructure, repair of damage to land or property resulting from activity on the leased land or operations of any of the Leases or their agents pursuant to thelease, and return of the leased land to a condition acceptable to the Commissioner of DNR 1.9 "DR&R Estimate" means, for each Lease, the most recent estimate of the total cost to meet the Badami DR&R Obligations for that Lease. The DR&R Estimate is to be prepared by an independent engineering firm, acceptable to DNR, and presented in a detailed report of sufficient detail so as to provide a basis for judging its accuracy and completeness. For the purpose of calculating the Contributions, the DR&R Estimate shall. to the extent possible, reflect the allocation of the Badami DR&R Obligations for each of the Leases. 1.10 "DR&R Remaining Requirement" means, for each Lessee, the Contributions into the Badami DR&R Trust Account needed to completely fund its respective share of the Cumulative DR&R Estimate as of the Contribution Date. Specifically, it is the difference, for each Lessee, between the values of its DR&R Requirement and its sum of previous Contributions. I.11 "DR&R Requirement" means the Lessee's respective share of the most recent Cumulative DR&R Estimate. It is calculated, for each Lessee, as the product of the allocated DR&R Estimate multiplied by the Lessee's worldng interest ownership in that Lease, summed across all Leases. 1.12 "Effective Date" of this Agreement has the meaning provided above. 1.13 "Leases" means the oil and gas leases set out in Exhibit A. Page 2 of 14 Exhibit A Page 21 of 37 Badami DR&R Agreement July 31, 2017 1.14 "Reassessment Date" means the due date, occurring every three years and starting on December 6, 2019, by which the Operator must provide updated DR&R Estimates to DNR for each Lease. Reassessment Dates will continue until the Badami DR&R Obligations are met to the satisfaction of the DNR Commissioner. 1.15 "Rehabilitation Plan" is a plan outlining a process by which the dismantlement and removal and restoration of Assets and the return of the land in good order and condition to the satisfaction of the DNR Commissioner are assessed and implemented. 2. SCOPE—PRIORITY 2.1 This Agreement applies to the Badami DR&R Obligations of the Lessees under the Leases. 2.2 If DNR approves an expansion of the Badami Unit, this Agreement will be amended to include the leases added to the unit. 2.3 If DNR approves a contraction of the Badami Unit, this Agreement will be amended to remove the leases contracted out of the unit, provided that the Badami DR&R Obligations in the removed leases, if any, are met to the satisfaction of the DNR Commissioner. 2.4 As of the Effective Date, Savant has covered dic current estimate of the cost to fulfill the Badami DR&R Obligations for the subject Leases pursuant to the Savant Agreement, whereby DNR has agreed to discount Savant's DR&R Remaining Requirement by $500,000, which is equivalent to its oil and gas statewide bond. D\rR has allowed Savant to discount its DR&R Remaining Requirement by the amount of its statewide operating bond because the leases within the Badami Unit were the only leases in Alaska in which Savant had improvements and infrastructure on the leases. if, after the Effective Date of this Agreement, Savant conducts oil and gas exploration or development activities on leases in Alaska that are not within the Badami Unit, Savant will no longer be allowed to discount its DR&R Remaining Requirement by the value of its oil and gas statewide bond. If Savant conducts oil and gas exploration or development activities on leases not within the Badami Unit, this Agreement will be amended to reflect this change in Savant's funding requirement; Savant's DR&R Remaining Requirement will no longer be discounted by its oil and gas statewide bond, and Savant will be required to fully fund its DR&R Remaining Requirement within one year after the date of the commencement of oil and gas exploration or development activities on leases outside of the Badami Unit. 3. FUNDING METHODOLOGY 3.1 As of the Effective Date, the current Cumulative DR&R Estimate is $1,375,000. Lessees hereby agree that, as of the Effective Date, their respective DR&R Requirements are as follows: 3.1.1 Savant: $928,125 (67.5 percent working interest) 3.1.2 AEX: $288,750 (21.0 percent working interest) 3.1.3 Great Bear. 555,000 (4 percent working interest) 3.1.4 Caracol: $51,562.50 (3.75 percent working interest); and 3.1.5 TP North Slope: $51,562.50 (3.75 percent working interest) 3.2 On or before September 1, 2017, the Savant DR&R Trust Account shall be converted to the Badami DR&R Trust Account. 3.3 As of the Effective Date, Savant has covered its share of the current Cumulative DR&R Estimate for the leases pursuant to the Savant Agreement, whereby DNR has agreed to discount Savant's DR&R Remaining Requirement by $500,000, which is equivalent to its oil Page 3 of 14 Exhibit A Page 22 of 37 Badami DR&R Agreement July 31, 2017 and gas statewide bond, and Savant established and maintained the Savant DR&R Trust account (with a balance of $508,333 as of November 2016); with the addition of the remaining Lessees, Savant's previous contributions are now sufficient to cover its current DR&R Requirement listed in Section 3.1.1, resulting in a negative (or credit balance) for Savant's DR&R Remaining Requirement of $80,208. 3.4 On or before October 1, 2017, DNR shall authorize the release of the credit balance described in Section 3.2.2 of 580,208. 3.5 Within 60 days after December 6, 2019, and based on the DR&R Estimates developed and presented as of the first Reassessment Daze, Operator shall make Contributions equal to the stmt of the Lessees' DR&R Remain ng Requirement for the sole and exclusive purpose of fully funding the Badami DR&R Trust Account. 3.6 Starting on December 6, 2022, and based on the DR&R Estimates developed and presented as of each Reassessment Date (December 6), Operator shall make Contributions according to section 3.5 for the sole and exclusive purpose of fully funding the Badami DR&R Trust Account 3.7 AMOUNT OF THE CONTRIBUTION 3.7.1 The Contribution for each Lessee will be determined as follows: DR&R Remaining Contribition = Requirement at year t atyear 1 6-1 , r=0,1,2,3,4,5 When t refers to the year of the Contribution Date. In particular, t = 0 refers to 2022 and t = 5 refers to 2027. 3.7.2 On the Contribution Date, the Operator shall submit to DNR a report ("the Contributions Report") detailing the Contributions provided by each Lessee. 3.7.3 If the value of the Cumulative DR&R Estimate provided at any Reassessment Date is greater than the value of the most recent Cumulative DR&R Estimate, then a new six- year period shall begin for the purpose of calculating the Contributions. 3.8 if, on a Reassessment Date, the corresponding DR&R Remaining Requirement for a Lessee is negative, then DNR shall authorize a partial release of the Badami DR&R Trust Account balance back to the Operator within 90 days after the corresponding Contribution Date. Provided the DR&R Remaining Requirement for a Lessee is negative, the amount to be released by DNR from the Badami DR&R Trust Account shall be equal to the amount in excess of the corresponding DR&R Requirement 4. PROVISIONS RELATED TO THE BADAMI DR&R TRUSTACCOUNT 4.1 ACCOUNT REQUIREMENTS. 4.1.1 The Operator shall establish the Badami DR&R Trust Account with DNR as sole beneficiary with a bank or other financial institution authorized to do business in the State of Alaska within sixty (60) days after the Effective Date. The form and terms of the Badami DR&R Trust Account must be acceptable to the State, consistent with this Agreement, and recognize that the sole and exclusive purpose of the account is to provide funds to cover the Badami DR&R Obligations associated with the Leases. All written agreements with the bank or furancial institution pertaining to the account will be attached to and become a part of this Agreement. The Operator is solely responsible for all costs and fees associated with the Page 4 of 14 Exhibit A Page 23 of 37 Badatnl DR&R Agreement July 31, 2017 establishment and maintenance of the account. 4.1.2 The Operator shall cause the earnings on the amounts deposited in the Badami DR&R Trust Account to be deposited and retained within the Badami DR&R Trust Account. 4.1.3 The Badami DR&R Trust Account will run with the Leases for the benefit of the State. If the Leases are further assigned under 11 AAC 82.605, all the funds in the Badami DR&R Trust Account shall remain in that account to be used by DNR, the Operator, or any approved assignee to fulfill the Badami DR&R Obligations. 4.1.4 If a change of operator under 1 I AAC 83.331 in the Badami Unit or a new assignment under 11 AAC 82.605 of the Leases in this Agreement occurs, (i) the Operator shall cause the APCA (Exhibit B) to be amended, to the satisfaction of the DNR Commissioner, to reflect this change, and (ii) the new operator or assignee shall become a Party to this Agreement. 4.1.5 Upon the incapacity of the bank or other financial institution administering the Badami DR&R Trust Account, by reason of bankruptcy, insolvency, or suspension or revocation of a charter or license, the Operator will be considered in material breach of this Agreement. If such a breach occurs, DNR will provide the Operator written notice of the breach and request that the Operator remedy it. If the Operator fails to remedy the breach to DNR's satisfaction within forty-five (45) days after the notice, DNR may take whatever legal action it deems reasonable to protect and enforce its rights under this Agreement, the Leases, any applicable Unit Agreement, and applicable statutes and regulations. 4.2 LATE PAYMENT FEES. For each Lessee, and based on the information provided in the Contributions Report, DNR will assess a late payment fee at the rate set out in AS 38.05.135(d) if a Contribution is not made according to the provisions of section 3 by the 10th day after it is due. The DNR Commissioner may, for good cause, grant an extension of time for the Lessee to make a payment, without incurring a late payment fee, of up to, but not more than sixty (60) days. An extension request must be received by the DNR Commissioner in writing no less than thirty (30) days prior to the payment due date, with a copy of the request sent to the Director of the DNR Division of Oil and Gas. The DNR Commissioner will notify the Lessee in writing at least seven (7) days before the payment due date as to whether the extension request is approved or disapproved. 4.3 EXCESS EXPENDITURES. Nothing in this Agreement is intended to limit the Badami DR&R Obligations. The Lessees shall be liable for their corresponding share of the Badami DR&R Obligations even if meeting these obligations results in expenditures exceeding the available balance of the Badami DR&R Trust Account. 4.4 DNR may, at its sole discretion, use any funds in the Badami DR&R Trust Account for any of the Badami DR&R Obligations. 5. REHABILITATION PLAN —RELEASE OF FUNDS 5.1 Prior to commencing any work to fulfill the Badami DR&R Obligations under this Agreement, the Operator shall submit a Rehabilitation Plan to DNR for approval. DNR will approve or disapprove the Rehabilitation Plan in writing. If DNR disapproves the Rehabilitation Plan, DNTR will explain in reasonable detail the reason(s) for its disapproval. DN'R may request additional information from the Operator to aid its review of the Rehabilitation Plan. 5.2 The Operator may request the release of funds from the Badami DR&R Trust Account to execute an approved Rehabilitation Plan. 5.3 To request partial release of funds from the Badami DR&R Trust Account, the Operator shall submit invoices or expense receipts to DMR for reimbursement of expenditures Page 5 of 14 Exhibit A Page 24 of 37 Bodami DR&R Agreement July 31, 20I7 associated with the Badami DR&R Obligations, along with proof that the relevant activities have been satisfactorily completed in compliance with the terms of the Rehabilitation Plan. The Operator shall include a statement certifying that all applicable activities havebeen completed in accordance with the approved Rehabilitation Plan. 5.4 DNR will evaluate requests to release funds from the Badami DR&R Trust Account, and either approve or disapprove the release of funds in writing. If DNR disapproves a request to release funds, DNR will explain in reasonable detail the reason(s) for its disapproval. 5.5 Prior to the last funds being released from the Badami DR&R Trust Account, the Operator shall document to DNR that it has satisfied the Badami DR&R Obligations in accordance with an approved Rehabilitation Plan, and in compliance with the Leases, and applicable statutes and regulations. The Operator shall document it has properly plugged and abandoned the wells by providing DNR proof of satisfactory completion from the Alaska Oil and Gas Conservation Commission. 5.6 DNR may demand payment, in writing, from the Badami DR&R Trust Account if (i) DR&R activities are not conducted in compliance with the Rehabilitation Plan as approved by DNR or (ii) the Operator is in breach of this Agreement; provided, however, that if the Operator or another person agrees to comply with the conditions of the DNR -approved Rehabilitation Plan, the payment maybe postponed. Notwithstanding the foregoing, the Operator will have thirty (30) days to cure any breach that would entitle DNR to demand payment. 6. BREACH — REMEDIES and CURE 6.1 Any one of the following events will be a breach under this Agreement subject to whatever legal action DNR deems reasonable to protect and enforce its rights underthis Agreement and the Leases: (a) a Lessee or the Operator fails to comply with a material obligation or condition under this Agreement; (b) the Operator is deemed to be in breach of this Agreement under Section 4.1.5 above; or (c) a Lessee or the Operator has become insolvent, an application for adjudication in bankruptcy has been filed by or against a Lessee or the Operator, or an application for assignment, composition, extension or receivership has been filed by or against a Lessee or the Operator. 6.2 If a breach occurs, other than a breach deemed to have occurred under Section 4.1.5 above, under this Agreement, and the Operator or Lessee(s) that caused this breach, after due notice from DNR, fails to cure the breach, as provided in the notice, DNR will notify the bank or other financial institution administering the Badami DR&R Trust Account under this Agreement that a breach has occurred. DNR will send a copy of its notice of uncured breach to the Operator and the Lessee(s) that caused this breach. After DNR has provided the uncured breach notice to the Operator and the Lessee(s), DNR may withdraw from the Badami DR&R Trust Account funds equivalent to the Sum of Previous Contributions by the Lessee(s) or by the Operator in breach under this Agreement to cover their share of the Badami DR&R Obligations, without any requirement to seek recourse to judicial proceedings and without demand, appraisal, advertisement, or notice of any kind, all of which are hereby expressly waived by the Operator and the Lessee(s). 7.ON TICES 7.1 All notices, requests, demands, and other communications must be in writing and must be delivered by hand, mail or facsimile to the addresses designated below. Any notice, request, demand or other communication delivered or sent in this manner will be deemed given or made when actually delivered to the correct address. Page 6 of 14 Badami DR&R Agreement July 31, 2017 7.1.1 For DNR: Department of Natural Resources, Commissioner's Office ATT: Commissioner 550 W. 7th Avenue, Suite 1400 Anchorage, Alaska 99501 Facsimile: (907) 269-8918 Division of Oil and Gas, Department of Natural Resources ATT: Director 550 W. 7th Avenue, Suite 1100 Anchorage, Alaska 99501 Facsimile: (907) 269-8938 7.1.2 For the Operator: Savant Alaska, LLC ATT: Carl F. Giesler, Jr. Chief Executive Officer Glacier Oil and Gas Corp. 4601 Washington Ave., Suite 220 Houston, TX 77002 Facsimile: (281) 661-2513 7.1.3 For AFX: ASRC Exploration, LLC ATT: Teresa town President 3900 C Street, Suite 1000 Anchorage, Alaska 99503 Facsimile: (907) 339-6028 7.1.4 For Great Bear. Great Bear Petroleum Ventures 111, LLC ATT: Patrick Galvin Chief Commercial Officer 601 W."Ave., Suite 505 Anchorage, AK 99501 Facsimile: (907) 868-3887 7.1.5 For Caracol Caracol Petroleum LLC ATT: Dean Gallegos President and Chief Executive Officer 510 L Street, Suite 601 Anchorage, AK 99501 Facsimile: (907) 339-9961 7.1.6 For TP North Slope: TP North Slope Development, LLC ATT: Majid Joumbchi Exhibit A Page 25 of 37 Page 7 of 14 Exhibit A Page 26 of 37 Badand DR&R Agreement July 31, 2017 President 10000 Memorial Drive, Suite 120 Houston, TX 77024 Facsimile: (281) 853-9018 8. MISCELLANEOUS 8.1 The Lessees are liable to fulfill the Badami DR&R Obligations under the terms of the Leases and applicable statutes and regulations. 8.2 Each Lessee is severally liable for its Contributions. Failure of the Operator to deposit the Contributions from each Lessee shall not relieve the Lessee from its commitment to fulfill its share of the Badami DR&R Obligations. 8.3 Nothing in this Agreement is (i) a waiver or release of the State's rights against any other entity or person that may be liable for all or any part of the Badami DR&R Obligations or (ii) an assumption by the State of any obligations or liabilities associated with the Badami DR&R Obligations. 8.4 Each Lessee agrees that if it assigns interest in the Leases that it remains fully liable for all existing Badami DR&R Obligations at the time of such an assignment. 8.5 Each Lessee agrees that the neglect or forbearance by the State in enforcing this Agreement will not in any way release any Lessee from any liability or commitment under this Agreement. 8.6 Each provision of this Agreement is severable from all others. If any term or provision is deemed invalid, void or unenforceable, this Agreement has been made with the clear intention that the validity and enforceability of the remaining parts, terms and provisions will not be affected thereby. 8.7 Ibis Agreement will be interpreted, governed and enforced under the laws of the State of Alaska without regard to its conflicts of laws principles. 8.8 Section headings are included in this document for convenience only and are not to be considered a part of this Agreement or relied upon for its interpretation. 8.9 This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constitute one and the same instrument. 8.10 This Agreement and the attached Exhibits may be amended at any time by mutual agreement of the Parties. IN WITNESS WHEREOF, the Patties have executed this Agreement and, by our signatures, agree to be bound by its terms and conditions. AGREED, UNDERSTOOD, AND CONSENTED TO: State of Alaska, Department of Natural Resources, Division of Oil & Gas Date: !41h -.t_ Name: Clianial Walsh Savant Alaska, LLC Date: Name: Carl F. Giesler, Jr. (L U k),tL Director Chief Executive Officer Page 8 of 14 Exhibit A Page 27 of 37 Badami DR&R Agmemeat July 31, 2017 President 10000 Memorial Drive, Suite 120 Houston, TX 77024 Facsimile: (281) 853-9018 8. MISCELLANEOUS 8.1 The Lessees are liable to fulfill the Badami DR&R Obligations under the terms of the Leases and applicable statutes and regulations. 82 Each Lessee is severally liable for its Contributions. Failure of the Operator to deposit the Contributions from each Lessee shall not relieve the Lessee from its commitment to fulfill its share of the Badami DR&R Obligations. 8.3 Nothing in this Agreement is (i) a waiver or release of the State's rights against any other entity or person that may be liable for all or any part of the Badami DR&R Obligations or (ii) an assumption by the State of any obligations or liabilities associated with the Badami DR&R Obligations. 84 Each Lessee agrees that if it assigns interest in the Leases that it remains fully liable for all existing Badami DR&R Obligations at the time of such an assignment. 8-5 Each Lessee agrees that the neglect or forbearance by the State in enforcing this Agreement will not in any way release any Lessee from any liability or commitment under this Agreement. 8.6 Each provision of this Agreement is severable from all others. If any tern or provision is deemed invalid, void or unenforceable, this Agreement has been made with the clear intention that the validity and enforceability of the remaining parts, terns and provisions will not be affected thereby. 8.7 This Agreement will be interpreted. governed and enforced under the laws of the State of Alaska without regard to its conflicts of laws principles. 8.8 Section headings are included in this document for convenience only and are not to be considered a part of this Agreement or relied upon for its interpretation. 8.9 This Agreement may be executed in one or more counterparts, each of which will be deemed to be an original, but all of which together will constituoe one and the same instrument. 8.10 This Agreement and the attached Exhibits may be amended at any time by mutual agreement of the Parties IN WITNESS WHEREOF, the Parties have executed this Agreement and, by our signatures, agree to be bound by its terms and conditions. AGREED, UNDERSTOOD, AND CONSENTED TO: State of Alaska, Department ofNatural Resources, Division of Oil & Gas Date: Name: Chantal Walsh Savant Alaska, LLC Date: k// / f/ Name: Carl F. Giesler, Jr. Director Chief�OIi' er Page 9 of 14 Badami DR&R Agreement July 31, 2017 ASRC .4ploration, LLC Date: Name: T resa mm Great Bear Petroleum Ventures I❑ Date: Name: Patrick Galvin Caracol Petroleum LLC Date: Name: Dean Gallegos TP North Slope Development, LLC Date: Name: Majid Jourabchi Exhibit A Page 28 of 37 President Chief Commercial Officer President and Chief Executive Officer President Page 9 of 14 Badami DR&R Agreement July 31, 2017 ASRC Exploration, LLC Dale: Name: Teresa Imre Great Bear Petroleum Ventures III 7 Date: / 3 I Name: Patrick Galvin Caracol Petroleum LLC Date: Name: Dean Gallegos TP North Slope Development, LLC Date: Name: Majid Jourabchi Exhibit A Page 29 of 37 President Chief Commercial Officer President and Chief Executive Officer President Page 9 of 14 Badami DR&R Agreement July 3l, 2017 ASRC Exploration, LLC Date: Name: Teresa Imm Great Bear Petroleum Ventures III Date: Name: Patrick Galvin Caracol Petroleum LLC Date: Name: Tad Ser o TP North Slope Development, LLC Date: Name: MajidJourabchi President Chief Conunercial Officer President A Exhibit A Page 30 of 37 Page 9 of 14 Bxdami DR&R Agreement July 31, 2017 ASRC Exploration, LLC Date: Name: Teresa Imm Great Bear Petroleum Ventures III Date: Name: Exhibit A Page 31 of 37 President Patrick Galvin Chief Commercial Officer Caracol Petroleum LLC Date: Name: Tan Ser Ko TP North Slope Devel ment, LLC Date: #1 Name: MaJidJour chi Director Page 9of14 Exhibit A Page 32 of 37 Badami DR&R Agreement July 31, 2017 EXHIBIT A: List of Leases and Badami Unit Authorizations Group 1 Leases Group 2 Leases 365533 390825 365535 391001 367006 367011 ADL 415965 375093 SPCS 375094 Plan of Operations and various Amendments 377011 Badami Unit Badami Unit Authorizations ADL/Auth. Number Type Division ADL 415472 Bad Oil Pipeline Right -of -Way (ROW) SPCS ADL 415965 Badami Utility ROW Lease SPCS LONS 95-2 Plan of Operations and various Amendments DO&G Badami Unit 10t° POD Badami Unit Unit Agreement, as amended DO&G Badami Unit DR&R DO&G Badami Unit Unit Expansion Application DO&G LAS 29141 Land Use Permit — Screeding DML&W LAS 28591 Land Use Permit — Off Road Tundra Travel DML&W LAS 27107 Land Use Permit — Ice Road Construction DML&W TWUA A2013-233 Temporary Water Use Authorization DML&W TWUA A2013-234 Temporary Water Use Authorization DML&W TWUA A2013-235 Temporary Water Use Authorization DML&W Permanent Water Right Certificate of LAS 23839 Dh"W Appropriation TWUA A2015-50 Temporary Water Use Authorization DML&W File No. 3130-3R NSB No Historic Properties Affected SHPO Page 10 of 14 Exhibit A Page 33 of 37 Badami DR&R Agreement July 31, 2017 EXHIBIT B: Account Pledge and Control Agreement Savant Alaska, LLC ("Savant'), an Alaska limited liability company, whose address is 601 W. 5`" Avenue, Suite 310, Anchorage, AK 99501, and Operator of the Badami Unit acting on behalf of the Lessees in the Badami DR&R Agreement, as Principal, enters into this Account Pledge and Control Agreement ("APCA") with the State of Alaska, Department of Natural Resources ("DNR") and ! name of financial institution here]. The Principal is held and firmly bound unto DNR for the sums and commitments specified in the Badami DR&R Agreement ("DR&R Agreement 1. In accordance with that DR&R Agreement, the account established by the APCA is required to satisfy the Badami DR&R Obligations set forth in the DR&R Agreement. The account being pledged hereby contains cash or cash equivalents comprising CDs, demand deposit accounts, savings accounts, or other approved cash account and/or a brokerage account containing U.S. Government Treasure obligations with a maturity of less than one year or a U.S. Treasury based money market account. Following are the account number(s), name, and address of the Financial Institution holding the accounts, and description of the account. Account number: Financial institution holding account: I Name of financial institution] Atm: [Name of contact person from financial institution] Address: [address of financial institution] Phone: [phone number] Description of account (amount / type of asset): The sole and exclusive purpose of the account is to provide funds to cover the dismantlement, removal, and restoration (DR&R) obligations of the Lessees under the DR&R Agreement. Any withdrawals of the funds from the account, except as provided below in cases of default and future assignments, are for the purposes of meeting these Badami DR&R Obligations when they become due, and are to be requested by the Principal and agreed to by DNR in writing. That written consent must include an express release of funds in a specified amount to the Principal, and must be verified by the Financial Institution. The Principal and the Financial Institution holding the account agree and understand that this account shall remain in full force and effect until terminated by DINR and the Principal, unless that DNR in its sole discretion may terminate the account due to the default of the Principal or any of the Lessees under the terns of the DR&R Agreement or due to the Leases subject to the DR&R Agreement being assigned. The Financial Institution is required to comply with the abovementioned termination instructions from DNR without any right or obligations to verify the existence of such default or assignment. The Principal or any of the Lessees cannot close the account or withdraw funds from the account without the prior written consent of DNR, which must be verified by the Financial Institution. If the assets making up the account have an expiration date, those assets shall be automatically renewed into the same assets unless DNR directs that all or a portion of the funds be put into a demand deposit account. Page 11 of 14 Exhibit A Page 34 of 37 Badami DR&R Agreement July 31, 2017 Notwithstanding any modifications to the DR&R Agreement approved by DNR, this APCA remains in full force and effect, and the Financial Institution and the Principal and the Principal's assignee, if any, waives, as a defense against DNR, any right to notice of such modifications. DNR shall review the account and, at times as set forth in the DR&R Agreement, may require additional cash contributions to the account pursuant to the terms of the DR&R Agreement. The Principal shall pay all the costs and expenses associated with establishing and maintaining the account. Interest on the account shall be reinvested and remain part orthe account. Upon determination by DNR that a complete assignment of the Leases covered in the DR&R Agreement has taken place, the Financial Institution shall release the funds, if instructed in writing by DNR, without any right or obligations to verify the existence of the assignment. The neglect or forbearance of DNR in enforcing against the Principal or Financial Institution, performance by the Principal or Financial Institution of any obligation, term, or condition of the DR&R Agreement shall not in any way release the Principal from liability ander this APCA. In the event the Principal or any of the Lessees is declared by DNR to be in default under the terms and conditions of the DR&R Agreement, then, upon written demand from DNIR, the Financial Institution shall provide all the funds currently in the account to DNR without any right or obligations to verify the existence of such default. The Financial hrstitution is permitted to charge the APCA for fees based on the current published fee schedule and it is permitted to deduct the fees from the APCA. Within 30 days after the Financial Institution deducts any fees from the APCA, Principal shall deposit into the APCA the frill amount of the deducted fees. The Financial Institution has the right to resign and/or assign to a successor organization after providing the Principal and DNR thirty (30) day notice. Within 30 days after such notice of resignation, the Principal shall, with DNR's approval, establish a new account with another financial institution that shall satisfy the financial assurance obligations set forth in the DR&R Agreement. All notices, requests, demands, and other communications must be in writing and must be delivered by hand, mail or facsimile to the addresses designated below. Any notice, request, demand or other communication delivered or sent in this manner will be deemed given or made when actually delivered to the correct address. For DNR: Department of Natural Resources, Commissioner's Office ATT: Commissioner 550 W. 7tb Avenue, Suite 1400 Anchorage, Alaska 99501 Facsimile: (907)269-8918 Division of Coil and Gas, Department of Natural Resources ATT: Director 550 W. 7th Avenue, Suite 1100 Anchorage, Alaska 99501 Facsimile: (907)269-8938 Page 12 of 14 Exhibit A Page 35 of 37 Hadand DR&R Agreement July 31, 2017 For Savant: Savant Alaska, LLC ATT: Carl Giesler, Jr. [Address I] [Address 2) Facsimile: For the Financial Institution: [Name of financial institution) ATT: [Name of contact from financial institution] [Address I ] [Address 21 Facsimile: DNR and the Principal agree to hold the Financial Institution harmless for all conduct related to this APCA unless the Financial Institution is grossly negligent. NOW THEREFORE, the Principal certifies that the above cash deposit is free of all liens, including tax liens. PRINCIPAL, Signed and executed this day of 20 Date: Savant Alaska, LLC [Name of company's president] [Title] FINANCIAL. INSTITUTION Signed and executed this day of .20 By: (Signature of Financial Representative) (Print name) (Title) (.'Jame and Address of Financial Institution) Page 13 of 14 Exhibit A Page 36 of 37 Badami DR&R Agreement July 31, 2017 ACKNOWLEDGEMENT OF FINANCIAL INSTITUTION The foregoing instrument was acknowledged before me by this day of 20_ (Name oflndivfduao Witness my hand and official seal (Signature ofNoiaro Public) My Commission Expires: ---- (Seal) ---- APPROVAL AND ACCEPTANCE BY THE STATE OF ALASKA, DNR By: Dated: Andrew T. Mack, Commissioner Department of Natural Resources Page 14 of 14 Exhibit A Page 37 of 37 July 2, 2019 Glacier Oil and Gas ATTN: Mr. Phil Elliott 4601 Washington Avenue, Suite 220 Houston, TX 77007 Dear Mr. Elliott: Your company has a Dismantlement, Removal and Restoration (DR&R) agreement with the Division which includes plugging and abandoning your wells. The Alaska Oil and Gas Conservation Commission (AOGCC) recently adopted regulations increasing the level of bonding required for certain well obligations, including plugging and abandonment. (20 AAC 25.025). As the land owner and party to the contract under which you conduct your oil and gas operations, the Division is satisfied your DR&R obligations, including plugging and abandoning wells, is adequately covered through this agreement. However, our agreement may not satisfy or may not be a substitute for the AOGCC's new bonding requirements. To be assured you are meeting the regulatory requirements of AOGCC, I would encourage early communication with them on this important topic. Relief from potential double coverage for plugging and abandoning liabilities may be available to you through 20 AAC 25.505 and 20 AAC 25.540. If you have any questions, please feel free to contact me. Sincerely, J es B. Beckham Acting Director Copy: Commissioner Dan Seamount Commissioner Jessie Chmielowski PeRKINSCOIE July 25, 2019 VIA HAND DELIVERY Commissioner Daniel T. Seamount, Jr. Commissioner Jessie L. Chmielowski Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 Re: July 2, 2019 CIE Bonding Letter Request for Reconsideration 1029 West Third Avenue Suite 300 Anchorage. AK 99501-1981 Dear Commissioner Seamotmt and Commissioner Chmielowski: Exhibit B Page 1 of 21 Y � 1907 279 8561 0 -1907 276 3108 perlunscoie cam Elena M. Romerdahl ERomerdahl@pffkinscoic.com n. +1.907.263.6914 r. +1.907.263.6428 On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC or "the Commission") issued a letter to Cook Inlet Energy, LLC ("CIE") regarding recent revisions to AOGCC's regulation 20 AAC 25.025 (the "Commission's Letter," attached hereto as Exhibit A). The Commission's Letter confirms that CIE has 26 permitted wellheads and states that CIE is therefore required under 20 AAC 25.025(b)(1) to establish a bond in the amount of $6,000,000 with the AOGCC. The Commission's Letter provides an installment schedule that CIE may use to increase its current AOGCC bond of $200,000 by $1,450,000 annually until 2022. Under the installment schedule, CIE's first payment of $1,450,000 will be due August 16, 2019. For the reasons discussed below, CIE respectfully requests reconsideration of the Commission's July 2, 2019 Letter. The Commission's Letter acknowledges that CIE currently has in place a bond of $200,000 with the AOGCC to cover plugging and abandonment of its 26 permitted wellheads. The letter does not acknowledge that CIE also has in place a $500,000 statewide bond with the Alaska Department of Natural Resources ("DNR") that covers plugging and abandonment of CIE's 26 permitted wellheads and a $324,000 bond in place with the U.S. Environmental Protection Agency ("EPA") for plugging and abandonment of the WMRU 4D and Redoubt -D 1 disposal wells.I CIE does not request that the Commission reduce the amount of the bond required under 20 AAC 25.025(b)(1) based on these bonds. CIE requests only that the Commission acknowledge the additional $824,000 in bonds CIE currently has in ' A copy of the EPA Surety Performance Bond is attached hereto as Exhibit B. Exhibit B Page 2 of 21 July 25, 2019 Page 2 place with DNR and the EPA and reduce the outstanding amount due under 20 AAC 25.025(b)(1) by that amount. CIE respectfully requests that the Commission reconsider and reissue its July 2, 2019 letter to reflect that 1) CIE also has a $500,000 bond in place with DNR for plugging and abandonment of its 26 permitted wellheads and a $324,000 bond in place with the EPA for plugging and abandonment of 2 of those permitted wellheads; and 2) CIE's outstanding bonding obligation under 20 AAC 25.025(b)(1) is $4,976,000. In the alternative, CIE requests a hearing under 20 AAC 25.505 to review the evidence submitted and any additional evidence the Commission requires to determine that CIE's outstanding bonding requirement under 20 AAC 25.025 should be $4,976,000. Thank you for your consideration. Sincerely, Elena M. Romerdahl Counsel for Cook Inlet Energy, LLC Perkm Cow LLP "ALASKA GOVERNOR IJICHAEL J. DUNLEAVI IUL 03 2015 July 2, 2019 Phillip Elliott President Cook Inlet Energy, LLC. 188 West Northern Lights Blvd. Anchorage, AK 99503 Dear Mr. Elliott: Page 3 of 21 Alaska Oil and Gas Conservation Commission 333 West Seventh Avenue Anchorage, Alaska 99501-3572 Main: 907.279.1433 Fax: 907.276.7542 wvsvv.aogcc.a la ska.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, Cook Inlet Energy, LLC. has 26 permitted wellheads (see enclosed list). Cook Inlet Energy, LLC. is required to establish a bond in the amount of $6,000,000 with the AOGCC. Cook Inlet Energy, LLC. currently has bond number LPM9297832 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 Cook Inlet Energy, LLC. chooses to increase its bond amount using installment increments, the schedule is: Installment Due Date Minimum Bond Increase First August 16, 2019 $1,450,000 Second August 16, 2020 $1,450,000 Third August 16, 2021 $1,450,000 Fourth August 16 2022 $1,450,000 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 Cook Inlet Energy, LLC. choose a Certificate of Deposit as its bonding instrument. Page 2 of 2 Exhibit B Page 4 of 21 If you have any questions, please contact Ms. Jody Colombie at 907-793-1221 or iody.colombie a,alaska.go or Mr. Dave Roby at 907-793-1232 or dave.roby n alaska.gov . Sincerely, Daniel T. eamount, Jr. Commissioner Jes a L. Chmielowski C&hmissioner Enclosures: 20 AAC 25.025 Regulations Forms: 10-402A and 10-402B Form: AOGCC — Assignment of CD / Confirmation/Agreement List of Permitted Wellheads NOTICE 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 areFINAL and maybe 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 nmt day that does not fall on a weekend or state holiday. Alaska Oil and Gas Conservation Commission Cook Inlet Energy, LLC. Field Permit NORTH FORK .210-111 API 50-231-20035-00-00 Well Name 1 NORTH FORK UNIT 14-25 Completion 2010-10-11 Well Status 1 -GAS Status Date 12011-03-13 NORTH FORKi 212-094 '.50-231-20038-00-00 (NORTH FORK UNIT 22-35 12012-12-08 11 -GAS 12012-12-08 NORTH FORK 1212-091 150-231-20037-00-00 NORTH FORK UNIT 23-25 12013-01-23 1 -GAS 2013-01-23 NORTH FORK NORTH FORK 214-166 210-088 50-231-20045-00-00 50 231-20034-00-00 !NORTH FORK UNIT 24-26 jNORTH FORK UNIT 32-35 2014-12-27 2010-11-25_ 1-GAS120 1 -GAS 2-27 2011-02-07 NORTH FORK _ 1208-063 150-231-20033-00-00 NORTH FORK UNIT 34-26 .2008-09-23 1 -GAS '20_08-30-01 NORTH FORK 1165-021150-231-10004-00-00 I. NORTH FORK UNIT 41.35 1965-12-20 1 -GAS 1965-12-20 NORTH FORK REDOUBT SHOAL 1214-170 1213-079 :50-231-20046-00-00 150-733-20497-01-00 I NORTH FORK UNIT 42-35 1 REDOUBT UNIT 1A012 12015-02-03 3 08-14 1 -GAS _ 1 -OIL ' 2015-02-03 2013-08-14 REDOUBTSHOAL 212-172 150733-20501-0100 !REDOUBT UNIT 2A_ 12013-06-19 _ 1 -OIL '2013-06-19 REDOUBTSHOAL REDOUBTSHOAL 1216-170 .50-733-2050401-00 203-081 50-733-20506-01-00 1 REDOUBT UNIT 3A !REDOUBTUNIT4A _ 12017-05-30 !2003-07-17 11WINJ 1 -GAS 12017-05-30 12003-0_7-_17 REDOUBTSHOAL 213-107 150-733-20513-02-00 REDOUBTUNITSB 12013-10-10 '1-0I1. 2013-10-10 REDOUBTSHOAL REDOUBTSHOAL 1202-228 218-083 150-733-20519-00-00 50-733-20519-01-00 !REDOUBT UNIT 6 _ REDOUBT UNIT 6A 12003-04-16 'SW_INJ 2005-02-15 REDOUBTSHOAL REDOUBTSHOAL 214-191 1213-175 50-733-20526-01-00 50-733-20622-00-00 REDOUBT UNIT 78 REDOUBT UNIT 9 201612-26 4_i 2014-11-09 -OIL 1 -OIL 2016-12-26 2014-11-09 REDOUBTSHOAL 201-085 150-733-20502-00-00 REDOUBT UNIT DI 2001-07-23 ;WDSP1 2007-07-20 W MCARTHUR RIV 1213-080 150-133-20615-00-00 '50-133-20419-01-00 (SWORD 1 W MCARTHUR RIV UNIT IA 12013-11-17 11995-12-29 11 -OIL 2013-31-17 W MCARTHUR RIV 1195-118 11 -OIL 11995-12-29 W MCARTHUR RIV 1214-039 ;50-133-20447-02-00 W MCARTHUR RIV UNIT 28 12014-05-26 TOIL 12014-05-26 W MCARTHUR RIV 197-234 W MCARTHUR RIV 198-047 150-133-20481-00-00 150-133-20486-00-00 W MCARTHUR RIV UNIT 4D W MCARTHUR RIV UNIT 5 1998-02-26 1998-05-11 ! WDSPI ;1 OIL 2007-07-20 1998-05-11 W MCARTHUR R1V '200-107 50-133-20494-00-00 W MCARTHUR RIV UNIT 6 2000-10-01 2001-04-27 2014-03-03 11 -OIL 'I -OIL 1 -OIL 2000-10-01 2001-04-27 2014-03-03 W MCARTHUR RIV 201-042 150-133-20500-01-00 W MCARTHUR RIV UNIT 7A W MCARTHUR RIV :213-152 '50-133-20620-00-00 W MCARTHUR RIV UNIT8 Wellhead Report 7/2/2019 Page 1 of 1 Exhibit B Page 6 of 21 Register 230, July 2019 MISCELLANEOUS BOARDS 20 AAC 25.025 is repealed and readopted to read: 20 AAC 25.025. Bonding. (a) An operator proposing to drill a well for which a permit is required under 20 AAC 25.005 shall file a bond and, if required under (2) of this subsection, security to ensure that each well is drilled, operated, maintained, repaired, plugged and abandoned and each location is cleared in accordance with this chapter. The bond must be (1) a surety bond issued on Form 10-402A in favor of the Alaska Oil and Gas Conservation Commission by an authorized insurer under AS 21.09 whose certificate of authority is in good standing; or (2) a personal bond of the operator on Form 10-402B accompanied by security guaranteeing the operator's performance; security must be in the form of a certificate of deposit or irrevocable letter of credit issued in the sole favor of the Alaska Oil and Gas Conservation Commission by a bank authorized to do business in the state, or must be in another form that the commission determines to be adequate to ensure payment. (b) A bond and, if required, security must be in compliance with the following: (1) a bond and, if required, security must be in the amount specified in the following table: Number of Permitted Wellheads Bond Amount #1 - 410 wells $400,000 per well 411 -#40 wells $6,000,000 #41 - #100 wells $10,000,000 #101 - #1,000 wells $20,000,000 Over 1,000 wells $30,000,000 (2) for the purposes of this section, a wellhead is considered any well, excepting lateral well branches drilled from an existing well, for which the commission has issued a Permit to Drill (Form 10-401) that has not been permanently plugged and abandoned; (3) upon request of an operator, or on its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts. (c) An operator with a bond and, if required, security in place on May 18, 2019 will be allowed to increase the amount of its bond and, if required, security to the amount required under (b) of this section in four installments. The installments shall be made as follows: (1) the first installment is due August 16, 2019 and must be a minimum of $500,000 or one-quarter of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; (2) the second installment is due August 16, 2020 and must be a minimum of $500,000 or one-third of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; (3) the third installment is due August 16, 2021 and must be a minimum of $500,000 or one-half of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; and (4) the final installment is due August 16, 2022 and must be in the amount of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section. STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION SURETY BOND BOND NUMBER PENAL SUM $ That we, of the City of as principal, and KNOW ALL PERSONS BY THESE PRESENTS, State of Exhibit B Page 7 of 21 "' as surety, an authorized insurer under AS 21.09 whose certificate of authority is in good standing, are 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, we bind ourselves and each of us, and each of our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents. 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. the proper box: Total Wells Total Bond Amount NOW, THEREFORE, the above bonded principal 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. Form 10-002A Rev. 0512019 Page 1 of 2 Submit in Duplicate Number of Permitted Wellheads Bond Amount Installment Amount ❑ 1 - 10 wells $400,000 per well Operators with active bonds as of May 18, 2019, may increase their bonding level over a period of three years in accordance with 20 AAC 25.025(c). ❑ 11 - 40 wells $6,000,000 ❑ 41 - 100 wells $10,000,000 ❑ 101 - 1000 wells $20,000,000 ❑ Over 1000 wells $30,000,000 Total Wells Total Bond Amount NOW, THEREFORE, the above bonded principal 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. Form 10-002A Rev. 0512019 Page 1 of 2 Submit in Duplicate Exhibit B BOND NUMBER This obligation shall remain in full force and effect until released by the Alaska Oil and Gas Conservation Commission at the request of principal or surety. 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 By: Principal Signature Printed name and title Address/City/State/ZIP Witness our hand and seal this day of By: Surety Signature Printed name and title Countersigned Approved: Approved: Approved: Address/City/State/ZIP 20 ,20 _ (Resident Agent if necessary) Official Use Only Below Line ALASKA OIL AND GAS CONSERVATION COMMISSION Commissioner Commissioner Commissioner (Requires approval by two Commissioners) Form 10-402A Rev. 05/2019 Page 2 of 2 Date Date Date Submit in Duplicate Exhibit B STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION PERSONAL BOND BOND NUMBER PENAL SUM $ KNOW ALL PERSONS BY THESE PRESENTS, That of the City of State of 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. issued in sole favor Alaska Oil and Gas Conservation Commission by 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 business in the State of Alaska. ❑ [Description of other approved security.] , a bank authorized 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: Total Wells Total Bond Amount Foran 10-4028 Rev. 05/2019 Page 1 of 2 Submit in Duplicate Number of Permitted Wellheads Bond Amount Installment Amount ❑ 1 - 10 wells $400,000 per well Operators with active bonds as of ❑ l 1 - 40 wells $6,000,000 May 18, 2019, may increase their n 41 - 100 wells $10,000,000 bonding level over a period of three years Ll 101 - 1000 wells $20,000,000 in accordance with 20 AAC 25.025(c). ❑ Over 1000 wells $30,000,000 Total Wells Total Bond Amount Foran 10-4028 Rev. 05/2019 Page 1 of 2 Submit in Duplicate Exhibit B BOND NUMBER 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 Operator Printed name and title ACKNOWLEDGEMENT By: _ Signature Address/City/State/ZIP ,20 State of Judicial District (or County of ) The foregoing instrument was acknowledged before me on this day of ,by My commission expires: (name) (title) of (operator), on behalf of Notary Public in and I Official Use Only AND GAS CONSERVATION COMMISSION Approved: Commissioner Approved: Approved: Commissioner Commissioner (Requires approval by two Commissioners) Date Date Date (operator). Line Form 10402B Rev, 05/2019 Page 2 of 2 Submit in Duplicate Exhibit B Page 11 of 21 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION ASSIGNMENT OF CERTIFICATE OF DEPOSIT AND CONFIRMATION AND AGREEMENT OF ISSUING BANK On 20_, (Principal/Obligor) (Address) assigns the following certificate of deposit: Iin the amount of $ ; (Certificate of Deposit Number) issued by (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- 402B, 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 / CONFIRMATION/AGREEMENT (5/2019) Page 1 of 6 Exhibit B Page 12 of 21 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; 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 Exhibit B Page 13 of 21 (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 Exhibit B Page 14 of 21 IN WITNESS WHEREOF, the Principal/Obligor has set its signature and seal (if it has one) this day of 2 (Signature of Principal/Obligor) 0 Title: IN WITNESS WHEREOF, the Issuing Bank has set its signature and seal (if it has one) this day of (Signature of Issuing Bank) m Title: 2 AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 4 of 6 Exhibit B Page 15 of 21 STATE OF ) )ss. ACKNOWLEDGEMENT OF PRINCIPAL/OBLIGOR On this _ day of , 2 , before me, a notary public in and for the State of duly commissioned and swom, appeared , to me personally known, who, being by me duly sworn, said the following: (1) he/she is 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 in and for the State of My Commission Expires: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 5 of 6 Exhibit B Page 16 of 21 STATE OF ) )ss. ACKNOWLEDGEMENT OF ISSUING BANK On this day of , 21 before me, a notary public in and for the State of duly commissioned and swom, appeared , to me personally known, who, being by me duly swom, said the following: (1) he/she is of 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 for the State of My Commission Expires: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 6 of 6 Exhibit B Page 17 of 21 SURETY PERFORMANCE BOND U.S. ENVIRONMENTAL PROTECTION AGENCY UNDERGROUND INJECTION CONTROL FINANCIAL RESPONSIBILITY REQUIREMENT To: Mail Code: 8ENF-UF0 U.S. Environmental Protection Agency, Region 8 1595 Wynkoop Street Denver, CO 80202-1129 BOND COVERS THE PLUGGING OF INJECTION WELLS Date Bond Executed: September IIS 2018 Effective Date: _ September 18 2018 Principal: Cook Inlet Energy, LLC (Legal name of owner or operator) 4601 Washington Avenue, Suite 220 Houston, TX 77007 (Business address of owner or operator) Type of Organization: LLC (Individual, joint venture, partnership, or corporation) State of incorporation: Surety(ies): Fideliry and Deposit Comnanv of Maryland (Name) 1299 Zurich Way. Schaumburg, IL 60196 (Business Address) EPA Identification number, name, address, and plugging and abandonment amount(s) for each injection well guaranteed by this bond. (indicate plugging and abandonment amounts for each well. Attach separate list if necessary.) Infection Well Information Plus! & Abandon Amount RUD#1 1918' FSL, 315', FEL, Sec. 14, T7N, R14W WMRU #4D 2026' FSL, 1974' FWL, Sec. 22, T8N, R14W Total penal sum of bond: S 324,000.00 Surety's bond number: LPM9297833 Exhibit B Page 18 of 21 KNOW ALL PERSONS BY THESE PRESENTS, That we, the Principal and Surety(ies) hereto are firmly bound to the U.S. Environmental Protection Agency (hereinafter called EPA), in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that where the Surety(ies) are corporations acting as co -sureties, we, the Sureties, bind ourselves in such sum `jointly and severally" only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as it set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sum. WHEREAS said Principal is required, under the Underground Injection Control Regulations, as amended, to have a permit or comply with provisions to operate under rule for each injection well identified above, and WHEREAS said Principal is required to provide financial assurance for plugging and abandonment as a condition of the permit or approval to operate under rule, and WHEREAS said Principal shall establish a standby trust fund as is required when a surety bond is used to provide such financial assurance; NOW, THEREFORE, the conditions of this obligation are such that if the Principal shall faithfully perform plugging and abandonment, whenever required to do so, of each injection well for which this bond guarantees plugging and abandonment, in accordance with the plugging abandonment plan and other requirements of the permit or provisions for operating under rule and other requirements of the permit or provisions for operating under rule and other requirements of the permit or provisions for operating under rule as may be amended, pursuant to all applicable laws, statutes, rules and regulations, as such laws, statutes, rules, and regulations may be amended, Or, if the Principal shall provide alternate financial assurance as specified in Subpart F of 40 CFR 144, and obtain the EPA Regional Administrator's written approval of such assurance, within 90 days after the date of notice of cancellation is received by both the Principal and the EPA Regional Administrator(s), from the Surety(ies), then this obligation shall be null and void. Otherwise it is to remain in full force and effect. The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by an EPA Regional Administrator that the Principal has been found in violation of the plugging and abandonment requirement of 40 CFR 144, for an injection well which this bond guarantees performances of plugging and abandonment, the Surety(ies) shall either perform plugging and abandonment with the plugging and abandonment plan and other permit conditions or provisions for operating under rule and other requirement or place the amount for plugging and abandonment into a standby trust fund as directed by the EPA Regional Administrator. Upon notification by an EPA Regional Administrator that the Principal has failed to provide alternate financial assurance as specified in Subpart F of 40 CFR 144, and obtain written approval of such assurance from EPA Regional Administrator(s) during the 90 days following receipt by both the Principal and the EPA Regional Administrator(s) of a notice of cancellation of the bond, the Surety(ies) shall place funds in the amount guaranteed for the injection well(s) into the standby trust fund as directed by the EPA Regional Administrator. The Surety(ies) hereby waive(s) notification of amendments to plugging and abandonment plans, permits, applicable laws, statutes, rules, and regulations and agrees that no such amendment shall in any way alleviate its (their) obligation on this bond. The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the Exhibit B Page 19 of 21 bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of the said penal SUM. The Surety(ies) may cancel the bond by sending notice by certified mail to the owner or operator and to the EPA regional Administrator(s) for the Region(s) in which the injection well(s) is (are) located, provided, however, that cancellation shall not occur during the 120 days beginning on the date of receipt of the notice of cancellation by both the Principal and the EPA regional Administrator(s), as evidenced by the return receipts. The Principal may terminate this bond by sending written notice to the Surety(ies); provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the EPA Regional Administrator(s) of the EPA Region(s) in which the bonded injection well(s) is (are) located. IN WITNESS WHEREOF, The Principal and Surety(ies) have executed this Performance Bond and have affixed their seals on the date set forth above. The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording on this surety bond is identical to the wording specified in 40 CFR 144.70 (c), as such regulation was constituted on the date this bond was executed. PRINCIPAL: Cook Inlet Energy. LLC (Name) 4601 Washington Avenue, Suite 220 Houston, TX 77007 (Address) ffu /^ Z- (Sign. re) FU (Title) Corporate Seal State of Incorporation CORPORATE SURETY (IES): Fidelity and Deposit Company of Maryland (Name) 1299 Zurich Way Schaumburg, IL 60196 (Address) 847-605-6000 (Surety Telephone Number) ISIgnature) Desiree E. Westmoreland. Attomey-in-Fact (Title) Corporate Seal Maryland State of Incorporation S 9,720.00 S 324 000.00 Bond Premium Liability Limit (For every co -surety, provide signature(s), corporate seal, and other information in the same manner as the Surety above.) Exhibit B Page 20 of 21 ZURICH AMERICAN INSURANCE COMPANY COLONIAL AMERICAN CASUALTY AND SURETY COMPANY FIDELITY AND DEPOSIT COMPANY OF MARYLAND POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That the ZURICH AMERICAN INSURANCE COMPANY, a corporation of the State of New York, the COLONIAL AMERICAN CASUALTY AND SURETY COMPANY, a corporation of the State of Maryland. and the FIDELITY AND DEPOSIT COMPANY OF MARYLAND a corporation of the State of Maryland (herein collectively called the "Companies"), by DAVID MCVICKER, Vice President, in pursuance of authority granted by Article V, Section 8. of the By -Laws of said Companies, which are set forth on the reverse side hereof and are hereby certified to be in full force and effect on the date hereof, do hereby nominate. constitute, and appoint Bret S. BURTON, Tim H. HEFFEL, Desiree E. WESTMORELAND, Timothy Craig SMITH, David B. McKINNEY, Todd Alan RAMBO and Myriah A. VALDIVIA, all of Wichita, Kansas, EACH its true and lawful agent and Attorney - in -Fact, to make, execute, seal and deliver, for, and on its behalf as surety. and as its act and deed: any and all bonds and undertakings, and the execution of such bonds or undertakings in pursuance of these presents, shall be as binding upon said Companies, as fully and amply, to all intents and purposes, as if they had been duly executed and acknowledged by the regularly, elected officers of the ZURICH AMERICAN INSURANCE COMPANY at its office in New York, New York., the regularly elected officers of the COLONIAL AMERICAN CASUALTY ANDSURETYCOMPANY at its office in Owings Mills, Maryland., and the regularly elected officers of the FIDELITY AND DEPOSIT COMPANY OF MARYLAND at its office in Owings Mills, Maryland., in their own proper persons. The said Vice President does hereby certify that the extract set forth on the reverse side hereof is a true copy of Article V, Section 8, of the By -Laws of said Companies. and is now in force. IN WITNESS WHEREOF, the said Vice -President has hereunto subscribed his/her names and affixed the Corporate Seals of the said ZURICH AMERICAN INSURANCE COMPANY, COLONIAL AMERICAN CASUALTY AND SURETY COMPANY, and FIDELITY AND DEPOSIT COMPANY OF MARYLAND, this 30th day of June, A.D. 2017. ATTEST: Assistant Secretary Joshua 6ecker ZURICH AMERICAN INSURANCE COMPANI' COLONIAL AMERICAN CASUALTY AND SURETY COMPANY FIDELITY AND DEPOSIT COMPANY OF MARYLAND 4wo nraii� e',,r'��N! tag .,4 gg m 9 rsr : g1 �Jgt�.jt'� Vice President David Mcl'icker State of Maryland County of Baltimore On this 30th day of June. A.U. 2017, before the subscriber, a Notary Public of the State of Maryland, duly commissioned and qualified, DAVID MCVICKER, Vice President, and JOSHUA LECKER, Assistant Secretary, of the Companies, to me personally known to be the individuals and officers described in and who executed the preceding instrument, and acknowledged the execution of same, and being by me duly swom, deposeth and saith, that he/she is the said officer of the Company aforesaid, and that the seals affixed to the preceding instrument are the Corporate Seals of said Companies, and that the said Corporate Seals and the signature m such officer were duly affixed and subscribed to the said instrument by the authority and direction of the said Corporations. IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my Official Seal the day and year first above written. Constance A. Dunn, Notary Public My Commission Expires: July 9, 2019 POA -F 076.66926 Exhibit B Page 21 of 21 EXTRACT FROM BY-LAWS OF THE COMPANIES "Article V, Section 8. Attomevs-in-Fact. The Chief Executive Officer, the President, or any Executive Vice President or Vice President may, by written instrument under the attested corporate seal, appoint attorneys -in -fact with authority to execute bonds, policies, recognizances, stipulations, undertakings. or other like instruments on behalf of the Company, and may authorize any officer or any such attomey-in-fact to affix the corporate seal thereto; and may with or without cause modify of revoke any such appointment or authority at any time." CERTIFICATE 1, the undersigned, Vice President of the ZURICH AMERICAN INSURANCE COMPANY, the COLONIAL AMERICAN CASUALTY AND SURETY COMPANY, and the FIDELITY AND DEPOSIT COMPANY OF MARYLAND, do hereby certify that the foregoing Power of Attorney is still in full force and effect on the date of this certificate; and I do further certify that Article V, Section 8, of the By -Laws of the Companies is still in force. This Power of Attorney and Certificate may be signed by facsimile under and by authority of the following resolution of the Board of Directors of the ZURICH AMERICAN INSURANCE COMPANY at a meeting duty called and held on the 15th day of December 1998. RESOLVED: "That the signature of the President or a Vice President and the attesting signature of a Secretary or an Assistant Secretary and the Seal of the Company may be affixed by facsimile on any Power of Attorney... Any such Power or any certificate thereof bearing such facsimile signature and seal shall be valid and binding on the Company." This Power of Attorney and Certificate may be signed by facsimile under and by authority of the following resolution of the Board of Directors of the COLONIAL AMERICAN CASUALTY AND SURETY COMPANY at a meeting duly called and held on the 5th day of May, 1994, and the following resolution of the Board of Directors of the FIDELITY AND DEPOSIT COMPANY OF MARYLAND at a meeting duly called and held on the I Oth day of May, 1990. RESOLVED: "That the facsimile or mechanically reproduced seal of the company and facsimile or mechanically reproduced signature of any Vice -President, Secretary, or Assistant Secretary of the Company, whether made heretofore or hereafter, wherever appearing upon a certified copy of any power of attorney issued by the Company, shall be valid and binding upon the Company with the same force and effect as though manually affixed. IN TESTIMONY WHEREOF, 1 have hereunto subscribed my name and affixed the corporate seals of the said Companies. this/& LA day of iaQAfaj bj,4 ,20_1.e. aOr,. W 3�ai�e"°YR4 D 3' ib��iwa�� SLAL� 4110 D Michael Bond, Vice President TO REPORT A CLAIM WITH REGARD TO A SURETY BOND, PLEASE SUBMIT ALL REQUIRED INFORMATION TO: Zurich American Insurance Co. Attn: Surety Claims 1299 Zurich Way Schaumburg, IL 60196-1056 PeRKINSC012 July 25, 2019 VIA HAND DELIVERY Commissioner Daniel T. Seamount, Jr. Commissioner Jessie L. Chmielowski Alaska Oil and Gas Conservation Commission 333 West 7th Avenue, Suite 100 Anchorage, AK 99501 Re: July 2, 2019 CIE Bonding Letter Request for Reconsideration 1029 West Third Avenue O +1.907179.8561 Suite 300 O +1.907.2763108 Anchorage. AK 99501-1981 perkinscoie.com Dear Commissioner Seamount and Commissioner Chmielowski: Elena M. Romerdahl ERomerdahl@perkinscoie.com D, +1.907.263.6914 F. +1.907.263.6428 p'IJ JUL 2 5 2019 AOGCC On July 2, 2019, the Alaska Oil and Gas Conservation Commission (AOGCC or "the Commission") issued a letter to Cook Inlet Energy, LLC ("CIE") regarding recent revisions to AOGCC's regulation 20 AAC 25.025 (the "Commission's Letter," attached hereto as Exhibit A). The Commission's Letter confirms that CIE has 26 permitted wellheads and states that CIE is therefore required under 20 AAC 25.025(b)(1) to establish a bond in the amount of $6,000,000 with the AOGCC. The Commission's Letter provides an installment schedule that CIE may use to increase its current AOGCC bond of $200,000 by $1,450,000 annually until 2022. Under the installment schedule, CIE's first payment of $1,450,000 will be due August 16, 2019. For the reasons discussed below, CIE respectfully requests reconsideration of the Commission's July 2, 2019 Letter. The Commission's Letter acknowledges that CIE currently has in place a bond of $200,000 with the AOGCC to cover plugging and abandonment of its 26 permitted wellheads. The letter does not acknowledge that CIE also has in place a $500,000 statewide bond with the Alaska Department of Natural Resources ("DNR") that covers plugging and abandonment of CIE's 26 permitted wellheads and a $324,000 bond in place with the U.S. Environmental Protection Agency ("EPA") for plugging and abandonment of the WMRU 4D and Redoubt -D 1 disposal wells.' CIE does not request that the Commission reduce the amount of the bond required under 20 AAC 25.025(b)(1) based on these bonds. CIE requests only that the Commission acknowledge the additional $824,000 in bonds CIE currently has in I A copy of the EPA Surety Performance Bond is attached hereto as Exhibit B. July 25, 2019 Page 2 place with DNR and the EPA and reduce the outstanding amount due under 20 AAC 25.025(b)(1) by that amount. CIE respectfully requests that the Commission reconsider and reissue its July 2, 2019 letter to reflect that 1) CIE also has a $500,000 bond in place with DNR for plugging and abandonment of its 26 permitted wellheads and a $324,000 bond in place with the EPA for plugging and abandonment of 2 of those permitted wellheads; and 2) CIE's outstanding bonding obligation under 20 AAC 25.025(b)(1) is $4,976,000. In the alternative, CIE requests a hearing under 20 AAC 25.505 to review the evidence submitted and any additional evidence the Commission requires to determine that CIE's outstanding bonding requirement under 20 AAC 25.025 should be $4,976,000. Thank you for your consideration. Sincerely, Elena M. Romerdahl Counsel for Cook Inlet Energy, LLC Perkin Coe LLP TI IF STATE "'ALASKA GOVERNOR MICKUL L DUNLF.AVY IUL 03 2013 July 2, 2019 Phillip Elliott President Cook Inlet Energy, LLC. 188 West Northern Lights Blvd. Anchorage, AK 99503 Dear Mr. Elliott: 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 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, Cook Inlet Energy, LLC. has 26 permitted wellheads (see enclosed list). Cook Inlet Energy, LLC. is required to establish a bond in the amount of $6,000,000 with the AOGCC. Cook Inlet Energy, LLC. currently has bond number LPM9297832 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 Cook Inlet Energy, LLC. chooses to increase its bond amount using installment increments, the schedule is: Installment Due Date Minimum Bond Increase First August 16, 2019 $1,450,000 Second August 16, 2020 $1,450,000 Third August 16, 2021 $1,450,000 Fourth August 16 2022 $1,450,000 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 Cook Inlet Energy, LLC. choose a Certificate of Deposit as its bonding instrument. Exhibit A Page 1 of 14 Page 2 of 2 If you have any questions, please contact Ms. Jody Colombie at 907-793-1221 or iody.colombie(rbalaska.Rov or. Mr. Dave Roby at 907-793-1232 or dave.robyg—alaska.gov . Sincerely, Daniel T. eamount, Jr. Commissioner 2JeseL.Chmielowski issioner Enclosures: 20 AAC 25.025 Regulations Forms: 10-402A and 10-402B Form: AOGCC — Assignment of CD / Confirmation/Agreement List of Permitted Wellheads 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 grunts 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 I0•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. Exhibit A Page 2 of 14 Alaska Oil and Gas Conservation Commission Cook Inlet Energy, LLC. NORTH FORK _ NORTH FORK _'2212-094 NORTH FORK NORTH FORK NORTH FORK 1210-111150-231-20035-00-00 2_1_2-091 214-166 210-088 '50-231-20038-00-00 S0-231-20037_-00-00 150-231-20045-00-00 150-231-20034-00-00 !NORTH FORK UNIT 14-25 12010-10-11 NORTH FORK UNIT 22-35 12012-12-08 'NORTH FORK UNIT 23-2512013-01-23 I NORTH FORK UNIT 24-26 2014-12-27 j NORTH FORK UNIT 32-35 2010-11-25 1 -GAS 1 -GAS 1 -GAS 1 -GAS 1 -GAS 2011-03-13 12012-12-08 2013-01-23 2014-12-27 2011-02-07 NORTH FORK 1208-063 150-231-20033-00-00 NORTH FORK UNIT 34-26 2008-09-23 1 -GAS 2008-10-01 NORTH FORK 150-231-10004-00-00 NORTH FORK UNIT 41-35 11965-12-20 1 -GAS 1965-12-20 __465-021 NORTH FORK 1214-170 50-231-20046-00-00 1 NORTH FORK UNIT 42-35 2015-02-03 111 -GAS 2015-02-03 REDOUBT SHOAL 213-079 150-733-20497-01-00 IREDOUBTUNITIA 2013-08-14 11 -OIL 2013-08-14 REDOUBT SHOAL 212-172150-73_3-20501-01-00 I REDOUBT UNIT 2A 2013-06-19 1 -OIL 2013-06-19 REDOUBT SHOAL 216-170 50-73_3-2050401-00 REDOUBT UNIT 3A 2017 -OS -30 1WINJ 2017-05-30 REDOUBT SHOAL 1203-081 Y50-733-20506-01-00 !REDOUBTUNIT4A 2003-07-17 i1—GAS 2003-07-17 REDOUBT SHOAL 218-107 ',50-733-20513-02-00 IREDOUBTUNITSB 2013-10-10 I1 -OIL 2013-10-10 REDOUBT SHOAL '202-228 'S0-733-20519-00-00 - 'REDOUBT UNIT 6 2003-04_16 '1WIN1 2005-02-15 REDO_UBTSHOAL_ 218-083 150-733-20519-01-00 REDOUBTUNIT6A __ _ REDOUBT SHOAL 214-19_1 50-733-20526-01-00 REDOUBT UNIT 76 2016-12-26 1-0I1. 2016-12-26 SHOAL 213-175 50-733-206_22-00-00 REDOUBTUNIT 9 2014-11-09 1 -OIL 20_1_4-11-09 _REDOUBT REDOUBTSHOAL 201-085 50-733-20502-00-00 REDOUBTUNITD1 2001-07-23 WDSP1 2007-07-20_ W MCARTHUR RIV 213-080 50-133-20615-00-00 SWORD 1 2013-11-17 1 -OIL x2013-11-17 W MCARTHUR RIV 195-11_8 50-133-20419-01-00 W MCARTHUR RIV UNIT 1A 1995-12-29 1-0I1- 1995-12-29 W MCARTHUR RIV 214-039 50-133-20447-02-00 W MCARTHUR RIV UNIT 28 2014-05-26 1 -OIL 2014-05-26 W MCARTHUR RIV 197-234 50-133-20481-00-00 W MCARTHUR RIV UNIT 41) '1998-02-26 WDSPl 2007-07-20 W MCARTHUR RIV 198-047 50-133-20486-00-00 W MCARTHUR RIV UNIT 5 1998-05-11 1 -OIL 1998-05-11 W MCARTHUR RIV 200-107 50-133-20494-00-00 W MCARTHUR RIV UNIT 6 2000-10-01 1 -OIL 2000-10-01 W MCARTHUR RIV 201-042 50-133-20500-01-00 W MCARTHUR_ RIV UNIT 7A 2001-04-27 '1 OIL 20_01-04-27 W MCARTHUR RIV 213-152 50-133-20620-00-00 W MCARTHUR RIV UNIT 8 2014-03-03 1 -OIL 2014-03-03 Wellhead Report 7/2/2019 Page 1 of 1 Register 230, July 2019 MISCELLANEOUS BOARDS 20 AAC 25.025 is repealed and readopted to read: 20 AAC 25.025. Bonding. (a) An operator proposing to drill a well for which a permit is required under 20 AAC 25.005 shall file a bond and, if required under (2) of this subsection, security to ensure that each well is drilled, operated, maintained, repaired, plugged and abandoned and each location is cleared in accordance with this chapter. The bond must be (1) a surety bond issued on Form 10-402A in favor of the Alaska Oil and Gas Conservation Commission by an authorized insurer under AS 21.09 whose certificate of authority is in good standing; or (2) a personal bond of the operator on Form 10-402B accompanied by security guaranteeing the operator's performance; security must be in the form of a certificate of deposit or irrevocable letter of credit issued in the sole favor of the Alaska Oil and Gas Conservation Commission by a bank authorized to do business in the state, or must be in another form that the commission determines to be adequate to ensure payment. (b) A bond and, if required, security must be in compliance with the following: (1) a bond and, if required, security must be in the amount specified in the following table: er of Permitted Wellheads wells r well#40 wells a VAmountt10 #100 wells #1,000 wells Over 1,000 wells (2) for the purposes ofthis section, a wellhead is considered any well, excepting lateral well branches drilled from an existing well, for which the commission has issued a Permit to Drill (Form 10-401) that has not been permanently plugged and abandoned; (3) upon request of an operator, or on its own motion, the commission may increase or decrease the amounts set out in (1) of this subsection based on evidence that engineering, geotechnical, environmental, or location conditions warrant an adjustment of those amounts. (c) An operator with a bond and, if required, security in place on May 18, 2019 will be allowed to increase the amount of its bond and, if required, security to the amount required under (b) of this section in four installments. The installments shall be made as follows: (1) the first installment is due August 16, 2019 and must be a minimum of $500,000 or one-quarter of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; (2) the second installment is due August 16, 2020 and must be a minimum of $500,000 or one-third of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; (3) the third installment is due August 16, 2021 and must be a minimum of $500,000 or one-half of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section, whichever is greater; and (4) the final installment is due August 16, 2022 and must be in the amount of the difference between the operator's existing level of bonding and, if required, security and the level required under (b) of this section. Exhibit A Page 4 of 14 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION SURETY BOND BOND NUMBER PENAL SUM $ That we, of the City of as principal, and KNOW ALL PERSONS BY THESE PRESENTS, State of as surety, an authorized insurer under AS 21.09 whose certificate of authority is in good standing, are 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, we bind ourselves and each of us, and each of our heirs, executors, administrators, successors, and assigns, jointly and severally, firmly by these presents. 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: Number of Permitted Wellheads Bond Amount Installment Amount ❑ 1 - 10 wells $400,000 per well Operators with active bonds as of May 18, ❑ 11 - 40 wells $6,000,000 2019, may increase their bonding level El 41 - 100 wells $10,000,000 over a period of three El 101 - 1000 wells $20,000,000 Total Wells Total Bond Amount NOW, THEREFORE, the above bonded principal 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. Form 10-002A Rev. 05/2019 Page 1 of 2 suPba9tTt5oUplig�te Number of Permitted Wellheads Bond Amount Installment Amount ❑ 1 - 10 wells $400,000 per well Operators with active bonds as of May 18, ❑ 11 - 40 wells $6,000,000 2019, may increase their bonding level El 41 - 100 wells $10,000,000 over a period of three El 101 - 1000 wells $20,000,000 years in accordance with 20 AAC El Over 1000 wells $30,000,000 25.025(c). NOW, THEREFORE, the above bonded principal 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. Form 10-002A Rev. 05/2019 Page 1 of 2 suPba9tTt5oUplig�te BOND NUMBER This obligation shall remain in full force and effect until released by the Alaska Oil and Gas Conservation Commission at the request of principal or surety. 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 20 BV: Principal Printed name and title Witness our hand and seal this Surety Printed name and title Countersigned ALASKA OIL AND GAS Approved: Commissioner Approved: Commissioner Approved: Signature Address/City/State/ZIP day of Bv: Signature ,20 Address/City/State/ZIP (Resident Agent if necessary) Official Use Only Below Line -'ONSERVATION COMMISSION Date Date Commissioner Date (Requires apprnval by two Commissioners) Fo" 10-402A Rev. 0512019 Page 2 of 2 9ubMttii� &e Page 6 o 14 BOND NUMBER STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION PERSONAL BOND PENAL SUM $ KNOW ALL PERSONS BY THESE PRESENTS, That of the City of State of 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. issued in sole favor Alaska Oil and Gas Conservation Commission by a bank authorized to do business in the State of Alaska. 11 The attached Irrevocable Letter of Credit issued in sole favor of the Alaska Oil and Gas Conservation Commission by business in the State of Alaska. ❑ [Description of other approved security:] , a bank authorized 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: Total Wells Total Bond Amount Form 10-402B Rev. 05/2019 Page 1 of 2 SubME*hWi&te Page 7 of 14 Number of Permitted Wellheads Bond Amount Installment Amount ❑ 1 - 10 wells $400,000 per well Operators with active bonds as of ❑ I I - 40 wells $6,000,000 May 18, 2019, may increase their ❑ 41 - 100 wells $10,000,000 bonding level over a period of three years Ll 101 - 1000 wells $20,000,000 in accordance with 20 AAC 25.025(c). ❑ Over 1000 wells $30,000,000 Total Wells Total Bond Amount Form 10-402B Rev. 05/2019 Page 1 of 2 SubME*hWi&te Page 7 of 14 BOND NUMBER 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 Operator Printed name and title ACKNOWLEDGEMENT By: Signature Address/City/State/ZIP ,20 State of Judicial District (or County of ) The foregoing instrument was acknowledged before me on this day of My commission expires: Approved: Approved: Approved: ,by (name) (title) of (operator), on behalf of. ALASKA OIL AND GAS Commissioner Commissioner Commissioner (Requires approval by two Commissioners) Notary Public in and (operator). I Official Use Only Below Lire ATION COMMISSION Date Date Date Form 10-402B Rev. 0512019 Page 2 of 2 SubmFtWbb14i&te Page 8 of 14 STATE OF ALASKA ALASKA OIL AND GAS CONSERVATION COMMISSION ASSIGNMENT OF CERTIFICATE OF DEPOSIT AND CONFIRMATION AND AGREEMENT OF ISSUING BANK On _, 20_, (Principal/Obligor) (Address) assigns the following certificate of deposit: I , in the amount of $ (Certificate of Deposit Number) issued by (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- 402B, 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 / CONFIRMATION/AGREEMENT (5/2019) Page 1 of 6 Exhibit A Page 9 of 14 B. The Issuing Bank confirms and agrees to the following: it is a bank authorized to do business in the State of Alaska; 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; 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 Exhibit A Page 10 of 14 (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 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 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 Exhibit A Page 11 of 14 IN WITNESS WHEREOF, the Principal/Obligor has set its signature and seal (if it has one) this day of 2_ (Signature of Principal/Obligor) LE Title: IN WITNESS WHEREOF, the Issuing Bank has set its signature and seal (if it has one) this day of 12_ (Signature of Issuing Bank) m Title: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 4 of 6 Exhibit A Page 12 of 14 STATE OF ) )ss. ACKNOWLEDGEMENT OF PRINCIPAL/OBLIGOR On this day of , 2 , before me, a notary public in and for the State of duly commissioned and swom, appeared to me personally known, who, being by me duly swom, said the following: (1) he/she is 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 in and for the State of My Commission Expires: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 5 of 6 Exhibit A Page 13 of 14 STATE OF ) )ss. ACKNOWLEDGEMENT OF ISSUING BANK On this day of , 2 , before me, a notary public in and for the State of , duly commissioned and swom, appeared , to me personally known, who, being by me duly swom, said the following: (1) he/she is of 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 for the State of My Commission Expires: AOGCC — ASSIGNMENT OF CD / CONFIRMATION/AGREEMENT (5/2019) Page 6 of 6 Exhibit A Page 14 of 14 SURETY PERFORMANCE BOND U.S. ENVIRONMENTAL PROTECTION AGENCY UNDERGROUND INJECTION CONTROL FINANCIAL RESPONSIBILITY REQUIREMENT To: Mail Code: SENF-UFO U.S. Environmental Protection Agency, Region 8 1595 Wynkoop Street Denver, CO 80202-1129 BOND COVERS THE PLUGGING OF INJECTION WELLS Date Bond Executed: September 118 2018 Effective Date: _ September 18. 2018 Principal: Cook Inlet Energy, LLC (Legal name of owner or operator) 4601 Washington Avenue, Suite 220 Houston, TX 77007 (Business address of owner or operator) Type of Organization: LLC (Individual, joint venture, partnership, or corporation) State of incorporation: Surety(ies): Fidelity and Deposit Company of Maryland (Name) 1299 Zurich Way. Schaumburg. IL 60196 (Business Address) EPA Identification number, name, address, and plugging and abandonment amount(s) for each injection well guaranteed by this bond. (Indicate plugging and abandonment amounts for each well. Attach separate list if necessary.) Infection Well Information Plug & Abandon Amount RUD#1 1918' FSL, 315', FEL, Sec. 14, T7N, RI4W WMRU #4D 2026' FSL, 1974' FWL, Sec. 22, T8N, R 14 Total penal sum of bond: $ 324,000.00 Surety's bond number: LPM9297833 Exhibit B Page 1 of 8 KNOW ALL PERSONS BY THESE PRESENTS, That we, the Principal and Surety(ies) hereto are firmly bound to the U.S. Environmental Protection Agency (hereinafter called EPA), in the above penal sum for the payment of which we bind ourselves, our heirs, executors, administrators, successors, and assigns jointly and severally; provided that where the Surety(ies) are corporations acting as co -sureties, we, the Sureties, bind ourselves in such sum "jointly and severally" only for the purpose of allowing ajoint action or actions against any or all of its, and for all other purposes each Surety binds itself, jointly and severally with the Principal, for the payment of such sum only as it set forth opposite the name of such Surety, but if no limit of liability is indicated, the limit of liability shall be the full amount of the penal sum. WHEREAS said Principal is required, under the Underground Injection Control Regulations, as amended, to have a permit or comply with provisions to operate under rule for each injection well identified above, and WHEREAS said Principal is required to provide financial assurance for plugging and abandonment as a condition of the permit or approval to operate under rule, and WHEREAS said Principal shall establish a standby trust fund as is required when a surety bond is used to provide such financial assurance; NOW, THEREFORE, the conditions of this obligation are such that if the Principal shall faithfully perform plugging and abandonment, whenever required to do so, of each injection well for which this bond guarantees plugging and abandonment, in accordance with the plugging abandonment plan and other requirements of the permit or provisions for operating under rule and other requirements of the permit or provisions for operating under rule and other requirements of the permit or provisions for operating under rule as may be amended, pursuant to all applicable laws, statutes, rules and regulations, as such laws, statutes, rules, and regulations may be amended, Or, if the Principal shall provide alternate financial assurance as specified in Subpart F of 40 CFR 144, and obtain the EPA Regional Administrator's written approval of such assurance, within 90 days after the date of notice of cancellation is received by both the Principal and the EPA Regional Administrator(s), from the Surety(ies), then this obligation shall be null and void. Otherwise it is to remain in full force and effect. The Surety(ies) shall become liable on this bond obligation only when the Principal has failed to fulfill the conditions described above. Upon notification by an EPA Regional Administrator that the Principal has been found in violation of the plugging and abandonment requirement of 40 CFR 144, for an injection well which this bond guarantees performances of plugging and abandonment, the Surety(ies) shall either perform plugging and abandonment with the plugging and abandonment plan and other permit conditions or provisions for operating under rule and other requirement or place the amount for plugging and abandonment into a standby trust fund as directed by the EPA Regional Administrator. Upon notification by an EPA Regional Administrator that the Principal has failed to provide alternate financial assurance as specified in Subpart F of 40 CFR 144, and obtain written approval of such assurance from EPA Regional Administrator(s) during the 90 days following receipt by both the Principal and the EPA Regional Administrator(s) of a notice of cancellation of the bond, the Surety(ies) shall place funds in the amount guaranteed for the injection well(s) into the standby trust fund as directed by the EPA Regional Administrator. The Surety(ies) hereby waive(s) notification of amendments to plugging and abandonment plans, permits, applicable laws, statutes, rules, and regulations and agrees that no such amendment shall in any way alleviate its (their) obligation on this bond. The liability of the Surety(ies) shall not be discharged by any payment or succession of payments hereunder, unless and until such payment or payments shall amount in the aggregate to the penal sum of the Exhibit B Page 3 of 8 bond, but in no event shall the obligation of the Surety(ies) hereunder exceed the amount of the said penal SUM. The Surety(ies) may cancel the bond by sending notice by certified mail to the owner or operator and to the EPA regional Administrator(s) for the Region(s) in which the injection well(s) is (are) located, provided, however, that cancellation shall not occur during the 120 days beginning on the date of receipt of the notice of cancellation by both the Principal and the EPA regional Administrator(s), as evidenced by the return receipts. The Principal may terminate this bond by sending written notice to the Surety(ies); provided, however, that no such notice shall become effective until the Surety(ies) receive(s) written authorization for termination of the bond by the EPA Regional Administrator(s) of the EPA Region(s) in which the bonded injection well(s) is (are) located. IN WITNESS WHEREOF, The Principal and Surety(ies) have executed this Performance Bond and have affixed their seals on the date set forth above. The persons whose signatures appear below hereby certify that they are authorized to execute this surety bond on behalf of the Principal and Surety(ies) and that the wording on this surety bond is identical to the wording specified in 40 CFR 144.70 (c), as such regulation was constituted on the date this bond was executed. PRINCIPAL: Cook Inlet Energy. LLC (Name) 4601 Washington Avenue, Suite 220 Houston TX 77007 (Address) (Signa ire)/ '°llSial Fc - (Title) Corporate Seal State of incorporation CORPORATE SURETY (IES): Fidelity and Deposit Company of Maryland (Name) 1299 Zurich Way Schaumburg, IL 60196 (Address) 847-605-6000 (Surety Telephone Number) ignature) Desiree E Westmoreland Attorney -in -Fact (Title) Corporate Seal Maryland State of Incorporation S 9.720.00 $ 324 000.00 Bond Premium Liability Limit (For every co -surety, provide signature(s), corporate seal, and other information in the same manner as the Surety above.) Exhibit B Page 5 of 8 ZURICH AMERICAN INSURANCE COMPANY COLONIAL AMERICAN CASUALTY AND SURETY COMPANY FIDELITY AND DEPOSIT COMPANY OF MARYLAND POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS: That the ZURICH AMERICAN INSURANCE COMPANY, a corporation of the State of New York, the COLONIAL AMERICAN CASUALTY AND SURETY COMPANY, a corporation of the State of Maryland, and the FIDELITY AND DEPOSIT COMPANY OF MARYLAND a corporation of the State of Maryland (herein collectively called the "Companies"), by DAVID MCVICKER, Vice President, in pursuance of authority granted by Article V, Section 8, of the By -Laws of said Companies, which are set forth on the reverse side hereof and are hereby certified to be in full force and effect on the date hereof, do hereby nominate, constitute, and appoint Bret S. BURTON, Tim H. HEFFEL, Desiree E. WESTMORELAND, Timothy Craig SMITH, David B. McKINNEY, Todd Alan RAMBO and Myriah A. VALDIVIA, all of Wichita, Kansas, EACH its true and lawful agent and Attorney - in -Fact, to make, execute, seal and deliver, for, and on its behalf as surety, and as its act and deed: any and all bonds and undertakings, and the execution of such bonds or undertakings in pursuance of these presents, shall be as binding upon said Companies, as fully and amply, to all intents and purposes, as if they had been duly executed and acknowledged by the regularly elected officers of the ZURICH AMERICAN INSURANCE COMPANY at its office in New York, New York., the regularly elected officers of the COLONIAL AMERICAN CASUALTY AND SURETY COMPANY at its office in Owings Mills, Maryland., and the regularly elected officers of the FIDELITY AND DEPOSIT COMPANY OF MARYLAND at its office in Owings Mills, Maryland., in their own proper persons. The said Vice President does hereby certify that the extract set forth on the reverse side hereof is a true copy of Article V. Section 8, of the By -Laws of said Companies, and is now in force. IN WITNESS WHEREOF, the said Vice -President has hereunto subscribed his/her names and affixed the Corporate Seals of the said ZURICH AMERICAN INSURANCE COMPANY, COLONIAL AMERICAN CASUALTY AND SURETY COMPANY, and FIDELITY AND DEPOSIT COMPANY OF MARYLAND, this 30th day of June, A.D. 2017. ATTEST: Assistant Secretary Joshua Lecker ZURICH AMERICAN INSURANCE COMPANY COLONIAL AMERICAN CASUALTY AND SURETY COMPANY FIDELITY AND DEPOSIT COMPANY OF MARYLAND Na�N J,o eVyi! '1.11 b+.. n a ac 1mt _ 1 Vice President David McVicker State of Maryland County of Baltimore On this 30th day of June, A.D. 2017, before the subscriber, a Notary Public of the State of Maryland, duly commissioned and qualified, DAVID MCVICKER, Vice President, and JOSHUA LECKER, Assistant Secretary, of the Companies, to me personally known to be the individuals and officers described in and who executed the preceding instrument, and acknowledged the execution of same, and being by me duly sworn, deposeth and saith, that he/she is the said officer of the Company aforesaid, and that the seals affixed to the preceding instrument are the Corporate Seals of said Companies, and that the said Corporate Seals and the signature as such officer were duly affixed and subscribed to the said instrument by the authority and direction of the said Corporations. IN TESTIMONY WHEREOF. I have hereunto set my hand and affixed my Official Seal the day and year first above written. 1s,-.. Constance A. Dunn, Notary Public My Commission Expires: July 9, 2019 POA -F 076-66928 Exhibit B Page 7 of 8 EXTRACT FROM BY-LAWS OF THE COMPANIES "Article V, Section 8, Attomeys-in-Fact. The Chief Executive Officer, the President, or any Executive Vice President or Vice President may, by written instrument under the attested corporate seal, appoint attomeys-in-fact with authority to execute bonds, policies, recognizances, stipulations, undertakings, or other like instruments on behalf of the Company, and may authorize any officer or any such attorney-in-fact to affix the corporate seal thereto; and may with or without cause modify of revoke any such appointment or authority at any time." CERTIFICATE I, the undersigned, Vice President of the ZURICH AMERICAN INSURANCE COMPANY, the COLONIAL AMERICAN CASUALTY AND SURETY COMPANY, and the FIDELITY AND DEPOSR COMPANY OF MARYLAND, do hereby certify that the foregoing Power of Attorney is still in full force and effect on the date of this certificate; and I do further certify that Article V, Section 8, of the By -Laws of the Companies is still in force. This Power of Attorney and Certificate may be signed by facsimile under and by authority of the following resolution of the Board of Directors of the ZURICH AMERICAN INSURANCE COMPANY at a meeting duly called and held on the 15th day of December 1998. RESOLVED: "That the signature of the President or a Vim President and the attesting signature of a Secretary or an Assistant Secretary and the Seal of the Company may be affixed by facsimile on any Power of Attomey...Any such Power or any certificate thereof bearing such facsimile signature and seal shall be valid and binding on the Company." This Power of Attorney and Certificate may be signed by facsimile under and by authority of the following resolution of the Board of Directors of the COLONIAL AMERICAN CASUALTY AND SURETY COMPANY at a meeting duly called and held on the 5th day of May, 1994, and the following resolution of the Board of Directors of the FIDELITY AND DEPOSIT COMPANY OF MARYLAND at a meeting duly called and held on the I Oth day of May, 1990. RESOLVED: "That the facsimile or mechanically reproduced seal of the company and facsimile or mechanically reproduced signature of any Vice -President, Secretary, or Assistant Secretary of the Company, whether made heretofore or hereafter, wherever appearing upon a certified copy of any power of attorney issued by the Company, shall be valid and binding upon the Company with the same force and effect as though manually affixed. IN TESTIMONY WHEREOF, 1 have hereunto subscribed my name and affixed the corporate seals of the said Companies. this�A day of 545494!',9110. Z0FJ• J fo SEAL FR � tea.. 11f) D Michael Bond, Vice President TO REPORT A CLAIM WITH REGARD TO A SURETY BOND, PLEASE SUBMIT ALL REQUIRED INFORMATION TO. Zurich American Insurance Co. Attn: Surety Claims 1299 Zurich Way Schaumburg, IL 60196-1056 Exhibit B Page 8 of 8 THE STATE °fKA11. --- GOVERNOR MICHAEL J. DUNLEAVY July 2, 2019 Glacier Oil and Gas ATTN: Mr. Phil Elliott 4601 Washington Avenue, Suite 220 Houston, TX 77007 Dear Mr. Elliott: Department of Natural Resources DIVISION 01: OIL AND GAS 550 West 7r, Avenue, Suite 1100 Anchorage, AK 99501-3561 Main: 907.269-8800 Fax, 907-269-6587 RECEIVED JUL 0 3 2919 AOGCC Your company has a Dismantlement, Removal and Restoration (DR&R) agreement with the Division which includes plugging and abandoning your wells. The Alaska Oil and Gas Conservation Commission (AOGCC) recently adopted regulations increasing the level of bonding required for certain well obligations, including plugging and abandonment. (20 AAC 25.025). As the land owner and party to the contract under which you conduct your oil and gas operations, the Division is satisfied your DR&R obligations, including plugging and abandoning wells, is adequately covered through this agreement. However, our agreement may not satisfy or may not be a substitute for the AOGCC's new bonding requirements. To be assured you are meeting the regulatory requirements of AOGCC, I would encourage early communication with them on this important topic. Relief from potential double coverage for plugging and abandoning liabilities may be available to you through 20 AAC 25.505 and 20 AAC 25.540. If you have any questions, please feel free to contact me. Sincerely, J es B. Beckham Acting Director Copy: Commissioner Dan Seamount Commissioner Jessie Chmielowski TILE STATV July 2, 2019 01ALASKA GOVERNORIMICH.4EL J. DUNLEAVY Phillip Elliott President Cook Inlet Energy, LLC. 188 West Northern Lights Blvd. Anchorage, AK 99503 Dear Mr. Elliott: 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 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, Cook Inlet Energy, LLC. has 26 permitted wellheads (see enclosed list). Cook Inlet Energy, LLC. is required to establish a bond in the amount of $6,000,000 with the AOGCC. Cook Inlet Energy, LLC. currently has bond number LPM9297832 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 Cook Inlet Energy, LLC. chooses to increase its bond amount using installment increments, the schedule is: Installment ond Increase First 2019 gAugmust Second 2020Third 10t.ViOnnn 2021Fourth 16.2022A 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 Cook hilet Energy, LLC. choose a Certificate of Deposit as its bonding instrument. Alaska Oil and Gas Conservation Commis;ior Cook Inlet Energy, LLC. Field Permit NORTH FORK 210-111 NORTH FORK 1212-094 API 50-231-20035-00-00 50-231-20038-00-00 Well Name NORTH FORK UNIT 14-25 NORTH FORK UNIT 22-35 Completion 2010-10-11 2012-12-08 Well Status 1 -GAS 1 -GAS Status Date 2011-_03-13 2012-12-08 NORTH FORK 212-091 50-231-20037-00-00 INORTH FORK UNIT 23-25 2013-01-23 11 -GAS 2013-01-23 NORTH FORK NORTH FORK 214-166 210-088 50-231-20045-00-00 50-231-20034-00-00 NORTH FORK UNIT 24-26 NORTH FORK UNIT 32-35 2014-12-27 2010-11-25 1GS 1 -GAS 12014-12-27 2011-02-07 NORTH FORK 208-063 50-231-20033-00-00 NORTH FORK UNIT 34-26 2008-09-23 1 -GAS 12008-10-01 NORTH FORK NORTH FORK 165-021 214-170 50-231-10004-00-00 50-231-20046-00-00 1 NORTH FORK UNIT 41-35 NORTH FORK UNIT 42-35 1965-12-20 2015-02-03 1 -GAS 1 -GAS 11965-12-20 !2015-02-03 REDOUBT SHOAL 213-079 50-733-20497-01-00 REDOUBT UNIT 1A 2013-08-14 1 -OIL 2013-08-14 REDOUBT SHOAL 212-172 50-733-20501-01-00 REDOUBT UNIT 2A 2013-06-19 1-0I1. '2013-06-19 REDOUBTSHOAL 216-170 50-733-20504-01-00 REDOUBT UNIT 3A 2017-05-30 IIWIN1 2017 -OS -30 REDOUBT SHOAL 203-081 50-733-20506-01-00 REDOUBT UNIT 4A 2003-07-17 1 -GAS 2003-07-17 REDOUBT SHOAL 213-107 50-733-20513-02-00 REDOUBT UNIT 5B 2013-10-10 1 -OIL 2013-10-10 REDOUBT SHOAL 202-228 50-733-20519-00-00 REDOUBT UNIT 6 2003-04-16 � 1WINJ 2005-02-15 REDOUBT SHOAL 218-083 50-733-20519-01-00 REDOUBT UNIT 6A REDOUBT SHOAL 214-191 50-733-20526-01-00 REDOUBT UNIT 7B 2016-12-26 1 -OIL 2016-12-26 REDOUBT SHOAL 213-175 50-733-20622-00-00 REDOUBT UNIT 9 2014-11-09 1-9I1L 2014-11-09 REDOUBT SHOAL 201-085 50-733-20502-00-00 REDOUBT UNIT Dl 2001-07-23 WDSP1 2007-07-20 W MCARTHUR RIV 213-080 50-133-20615-00-00 SWORD 1 2013-11-17 1 -OIL 2013-11-17 W MCARTHUR RIV 195-118 50-133-20419-01-00 W MCARTHUR RIV UNIT 1A 1995-12-29 1 -OIL 1995-12-29 W MCARTHUR RIV 214-039 50-133-20447-02-00 W MCARTHUR RIV UNIT 2B 2014-05-26 1 -OIL 2014-05-26 W MCARTHUR RIV 197-234 50-133-20481-00-00 W MCARTHUR RIV UNIT 4D 1998-02-26 WDSPl 2007-07-20 W MCARTHUR RIV 198-047 50-133-20486-00-00 W MCARTHUR RIV UNIT 5 1998-05-11 1 -OIL 11998_-05-11 W MCARTHUR RIV 50-133-20494-00-00 W MCARTHUR RIV UNIT 6 2000-10-01 1 -OIL 2000-10-01 W MCARTHUR RIV W MCARTHUR RIV 201-042 213-152 50-133-20500-01-00 50-133-20620-00-00 W MCARTHUR RIV UNIT 7A W MCARTHUR RIV UNIT 8 2001-04-27 2014-03-03 ,1 -OIL 1 -OIL 2001-04-27 2014-03-03 Wellhead Report 7/2/2019 Page 1 of 1 PostalCERTIFIED • l o RECEIPT 11 Registered MaV- Dr, Domestic O Registered Mall Reatram M1 Delivery 0 Return Receipt for (: Merchandise ❑ Signature Confrmatlon^+ Signature n -I u-) Certified Mail Fee Confirmation Restricted Delivery 0 $ ru FJdra Services S Feas (1h ckba W resaz ePPraPMatel ❑ReturnRerelpt(naNcpPN $ O[IReNm Recelpt(elec4onic) $ ❑comflw Mall Rwmea p ,W y $ Postmark O ❑ Ad -It ely.wre Ramiro $ Here ❑AEult SigreNre ReeNCFeO Delivery $ � Postage Tom Phillip Elliott ! / J(/( \ 0 O $ President -2�bISl, Z` $en' Cook Inlet Energy, LLC. � M1 188 West Northern Lights div an; Anchorage, AK 99503 - ------- —1- -- - ■ complete items 1, 2, and 3. 7Sgna■ Print your name and address on the reverseso that we can return the card to you.■ Attach this card to the back of the mailpiece, or on the front if soana normae ,.'u uGIeA OmSSed to: '- Phillip Elliott President Cook Inlet Energy, LLC. 188 West Northern Lights Blvd. Anchorage, AK 99503 9590 9402 4351 8190 1898 16 7018 0680 0002 2052 8719 PS Form 3811, July 2015 PSN 7530-02-000-9053 �I 14 Agent ❑ Addressee C. Date of Delivery D. Is delivery atldress different from Item If YES, enter delivery address below! V No JUL 0 5 2033 ❑ Aduh SI -E O Priority Mall Fxpresse ❑ Atluf Signature Restricted Delive Delivery 11 Registered MaV- b certified Mail® O Registered Mall Reatram ❑ Certified Mall Restricted Delivery ❑ Collect on Delivery Delivery 0 Return Receipt for ❑ Collect on Delivery gestric[ed Delivery 'Insure Merchandise ❑ Signature Confrmatlon^+ Signature Mail Insuredd Mail R¢sMcted Delivery Confirmation Restricted Delivery mover $500) Domestic Return Receipt