BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA

Transcription

1 BEFORE THE CORPORATION COMMISSION OF THE STATE OF OKLAHOMA APPLICANT: NEWFIELD EXPLORATION MID- CONTINENT INC. RELIEF SOUGHT: MULTIUNIT HORIZONTAL WELL LEGAL DESCRIPTION: SECTION 30 AND 31, TOWNSHIP 16 NORTH, RANGE 6 WEST, KINGFISHER COUNTY, OKLAHOMA JUN )3 2r COURT CLERKS OFFICE - TULSA CORPORpQ COMMISSION OF OKLAHOMA CAUSE CD NO T APPLICANT: NEWFIELD EXPLORATION MID- CONTINENT INC. RELIEF SOUGHT: MULTIUNIT HORIZONTAL WELL LOCATION EXCEPTION CAUSE CD NO T LEGAL DESCRIPTION: SECTION 30 AND 31, TOWNSHIP 16 NORTH, RANGE 6 WEST, KINGFISHER COUNTY, OKLAHOMA APPLICANT: NEWFIELD EXPLORATION MID- CONTINENT INC. RELIEF SOUGHT: POOLING (PART OF A MULTIUNIT HORIZONTAL WELL) CAUSE CD NO T LEGAL DESCRIPTION: SECTION 30, TOWNSHIP 16 NORTH, RANGE 6 WEST, KINGFISHER COUNTY, OKLAHOMA APPLICANT: CHAPARRAL ENERGY, L.L.C. RELIEF SOUGHT: POOLING CAUSE CD NO /T LEGAL DESCRIPTION: SECTION 30, TOWNSHIP 16 NORTH, RANGE 6 WEST, KINGFISHER COUNTY, OKLAHOMA

2 APPLICANT: CHAPARRAL ENERGY, L.L.C. RELIEF SOUGHT: LOCATION EXCEPTION CAUSE CD NO TT LEGAL DESCRIPTION: SECTION 30, TOWNSHIP 16 NORTH, RANGE 6 WEST, KINGFISHER COUNTY, OKLAHOMA REPORT OF THE ADMINISTRATIVE LAW JUDGE This cause originally came on for hearing before Curtis M. Johnson, Deputy Administrative Law Judge (AU) in the Oklahoma Corporation Commission's (Commission) courtroom, Kerr Building, Tulsa, Oklahoma pursuant to notice given as required by law and the rules of the Commission. Hearing Dates: January 7, March 1 and March 7, Appearances: Gregory L. Mahaffey, Attorney for Newfield exploration Mid-Continent Inc. (hereinafter referred to as Newfield); David E. Pepper, Attorney for Chaparral Energy, L.L.C. (hereinafter referred to as Chaparral); Robert A. Miller, Attorney for Marathon Oil Company (hereinafter referred to as Marathon); and Richard K. Books, Attorney for Gastar Exploration, Inc. (hereinafter referred to as Gastar). CASE SUMMARY Newfield is seeking a Multiunit Horizontal Well, a Multiunit Horizontal Well Location Exception, and a Pooling for the Mississippian (Less Chester) and Woodford. Chaparral is requesting a single unit well for Mississippian in Section 30 only; Chaparral filed a Location Exception and Pooling. Both Parties seek to be named operator of the Well; Newfield requests multiunit development, while Chaparral seeks single unit development. RECOMMENDATIONS The ALJ recommends the Multiunit, Location Exception, and Pooling applications be granted, and the ALJ recommends Newfield to be named operator of the Multiunit well. EXHIBITS Exhibit #1 - Exhibit A The Respondent List For CD T. Exhibit #2 - Newfield's Proposal Letter Dated July 21, Exhibit #3 - Working Interest Ownership Summary. Exhibit #4 - From Farmers Royalty Company Supporting Newfield For Operator. Exhibit #5 - Chaparral's Proposal Letter to Newfield Dated October 7, Exhibit #6 - Newfield's Well Plat Map. Exhibit #7 - Newfield's Well Plat Map With Type Log. Exhibit #8 - Newfield's Stack Activity Map. Exhibit #9 - Newfield's Authority For Expenditure For 10,000 Foot Lateral.

3 Exhibit Newfield's Authority For Expenditure For 5,000 Foot Lateral. Exhibit #11 - Newfield's Multi Section Development Comparison with Single Section Development. Exhibit #12 - B V Properties, LP's Supports Newfield For Operations. Exhibit #13 - Estimated Ultimate Recoveries Per Foot of Lateral For Meramec Wells. Exhibit #14 - Additional Estimated Ultimate Recoveries For Meramec Wells. Exhibit Chaparral's Production Base Map. Exhibit #16 - Chaparral's Type Log of Pappe #1-30. Exhibit Chaparral's Production Bubble Map For Meramec Horizontal Wells With Meramec SS Structure Map. Exhibit #18 - Chaparral's Examples Of Newfield's Properly Targeted Laterals. Exhibit #19 - Chaparral's Production Bubble Map For Meramec Horizontal Wells. Exhibit Chaparral's Authority For Expenditure. Exhibit #21 - Production Decline Curve For The Dover Unit. Exhibit #22 - Decline Curve For Newfield And Chaparral Meramec Wells. Exhibit Decline Curve For Chaparral and Payrock Meramec Wells With 5,000 Foot Laterals. FINDINGS AND SUMMARY OF EVIDENCE 1. Cause CD Nos T, T, and T, are the Applications of Newfield seeking Multiunit Horizontal Well, and Multiunit Horizontal Well Location Exception in Section 30 and 31, as well as a Pooling for Section 30, for the Mississippian (Less Chester) and Woodford common sources of supply in Township 16 North, Range 6 West, Kingfisher County, Oklahoma. 2. Cause CD Nos T and T are the Applications of Chaparral seeking Pooling and Location Exception for the Mississippian common sources of supply in Section 30, Township 16 North, Range 6 West, Kingfisher County, Oklahoma. 3. The Commission has jurisdiction over the subject matter, and notice has been given in all respects as required by law and the rules of the Commission. 4. Mr. Mahaffey called Dave Goodwin, a Petroleum Landman for Newfield as the first witness. Mr. Goodwin's qualifications were accepted as an expert in the field of Petroleum Land Management. Mr. Goodwin testified Newfield owns 46.25% of Section 30, and owns 80.14% of Section 31. Mr. Goodwin sponsored Exhibit #3, Working Interest Ownership Summary, to support his testimony. This Exhibit was accepted into evidence. The Witness explained his Exhibit illustrated Newfield's ownership of acres in Section 30 and acres in Section 31. The Witness stated Chaparral owns on interest in Section 31 and acres in Section 30. Mr. Goodwin testified concerning other working interest owners in the Units that support Newfield for operations. The Witness sponsored Exhibit #12, E V Properties, LP Supports

4 Newfield for Operator, and this Exhibit was accepted into evidence. The document showed E V Properties, LP as owner of net mineral acres in Section 30. The Witness further testified Farmers Royalty Company also supported Newfield for operator. Mr. Goodwin then sponsored Exhibit #4, from Farmers Royalty Company Supporting Newfield for Operator, and this Exhibit was accepted into evidence. Mr. Goodwin testified Farmers Royalty Company owned 10 acres in Section 30. The Witness was asked to add the interests of the parties supporting Newfield for operator to Newfield's interest in Section 30, which added up to total acres. The Witness agreed Chaparral's interest in Section 30 was acres or %. The Witness further agreed the reciprocal of this percentage would be 49.35% and that would be about 1% less than Chaparral's interest in Section 30. Mr. Mahaffey questioned the Witness concerning the notice given for these Applications. The Witness sponsored Exhibit #1, Exhibit A the Respondent List for CD T, and it was accepted into evidence. The Witness agreed this was the respondent list for the Multiunit Horizontal Well, and further testified due diligence was exercised to locate all respondents. Mr. Goodwin stated he had reviewed internet databases known as Accurint and Pangea's Respondent List to determine if there were parties to other causes. The Witness additionally testified all the offset operators toward which the Location Exception is moving were provided notice of the Location Exception Application, and that Mr. Goodwin had accurate address information for all of these operators. The Witness agreed that excepting of Chaparral, there was no other protests of the Location Exception Application. Mr. Goodwin did not know of any well operated by Chaparral located in the units toward which the Location Exception was moving. The Witness assured the court proper notice was given to all the respondents to the Multiunit Horizontal Well and the Horizontal Location Exception Applications. Mr. Goodwin continued in testimony that should the Multiunit Horizontal Well and Horizontal Location Exception Application be granted, an interim order should be issued in each of these Causes with a reopening date of June 28th Additionally, the Multiunit Horizontal Well should have an initial allocation of 50% for Section 30 and 50% in Section 31, until the exact allocation could be determined from the bottomhole survey at the final hearing on the merits. Mr. Goodwin testified regarding Newfield's actions in the Pooling Application. The Witness testified all good addresses were located for each of the Respondents, and those Respondents were provided proper notice of this Application. The only change the witness requested to the Respondent list was the exchange of Chaparral for Marathon, because Chaparral presently owns the interest in this application. The Witness stated he made a genuine effort to reach agreement with all of the Respondents. Mr. Goodwin stated a Proposal Letter was sent in an effort to reach agreement with these parties, which included an authority for expenditure attached, wherein the witness presented the Propsal Letter and AFE as Exhibit 2. The Witness' Exhibit #2 was accepted into evidence. Mr. Mahaffey questioned the Witness concerning facts related to the moving party in the subject area. The Witness agreed Newfield was the first to propose a well on July 21, 2015, and to file spacing, multiunit horizontal well, horizontal location exception, and pooling applications for Sections 30 and 31. The Witness stated he was surprised when he received a protest from Chaparral, because he did not realize Chaparral had acquired an interest in Section 30.

5 Furthermore, Chaparral's predecessor in interest, Marathon, had signed a letter agreement with Newfield prior to Chaparral acquiring Marathon's interest in Section 30, The Witness testified he did receive a competing well proposal from Chaparral dated October 7th 2015, offered as Exhibit #5. Exhibit #5 was accepted into evidence. Mr. Goodwin then testified regarding the terms and time periods to be included in the Order to issue in this Cause, should the Application be granted. The Witness stated the fair market value for minerals paid in this area and surrounding areas in the last year were $2700 with a 1/8, $2600 with a 3/16, or $2000 and a 115 royalty. The Witness explained Newfield took two leases in September 2015 at $2000 per acre with a 115 royalty. Mr. Goodwin further stated some 1/4 leases had been taken in this Unit after the pooling was filed, and the Witness contends these leases were taken in anticipation of a well to be drilled in the Unit, and were therefore not indicative of fair market value. The Witness requested that should the Application be granted, those parties with overburdened interest, which elect not to participate, be paid $1 per acre and Newfield will accept their interest as burdened. The Witness stated in the initial Well to be drilled in the Unit, parties would have 20 days from the issuance date of the Order to elect to participate or select one of the fair market value terms, and 25 days from issuance to pay their cost if they elected to participate. The operator should have 35 days from issuance to pay bonus money to those parties electing not to participate, or those electing to participate who then fail to pay costs within the time provided. The Operator shall have one year to commence the initial Well in the Unit. The Witness requested Newfield be named operator of the Unit and as such, should pay any bonus money pursuant to the Order. Mr. Goodwin requested the proposed Well be a multiunit well. When the Witness was asked why Newfield should be named the Unit operator, his response was that Newfield had drilled quite a few multiunit wells in this area. Furthermore, Newfield owns 63% of the interest in the multiunit with another 1% of the ownership supporting them for operator. In contrast, Chaparral only owns 25.33% in of the multiunit. 5. On cross-examination by Mr. Pepper, the Witness stated he did not have anything particularly negative to say about Chaparral's ability to drill a single-unit well. The Witness agreed Chaparral was capable of drilling a single unit horizontal well in the Mississippian formation. Mr. Goodwin also agreed Chaparral owned just over 50%, acres, in Section 30 and with an interest that large the Commission could name Chaparral operator. The Witness was uncertain if Chaparral owned interest in the offsetting units to Section 30. The Witness did testify Newfield wanted to be named operator because they were proposing to drill a multiunit Mississippian well. Mr. Goodwin stated Chaparral had not drilled wells in this township but had done so in townships outside the subject township. The witness did not know the location or number of wells drilled. The Witness did recommend that only Newfield be allowed to propose subsequent wells, because it would provide for the orderly development of the Unit. Mr. Goodwin stated there were no overburdened interest in Section 31, but such might be in Section 30, because he had no knowledge of the terms of the Marathon and Chaparral assignment. The Witness understood Chaparral was requesting any working interest owner could propose a subsequent well.

6 6. Mr. Mahaffey conducted redirect examination of the Witness. The Witness stated Newfield has 183,000 acres of leasehold in the Stack play in Kingfisher and Canadian Counties. When the Witness was asked if he had ever encountered Chaparral in this area prior, the Witness responded Chaparral had leasehold interest in a few wells Newfield had drilled, but those interests were only small interests. 7. Mr. Mahaffey called Daniel Denise Robinson, senior geologist for Newfield. The Witness sponsored Exhibit #6, Newfield' s Well Plat Map, and it was accepted into evidence. The Witness indicated the black line on this Exhibit represents the approximate location of the Well Newfield would like to drill targeted for the Mississippi (Less Chester) in Section 31 and up in Section 30. The surface location for the proposed Well would be located in the SW/4 of Section 31, with the completion interval being no closer than 165 feet from the South line of Section 31, no closer than 165 feet from the North line of Section 30, and no closer than 330 feet from the West line of Sections 30 and 31. The Witness agreed this would be a legal location for the Woodford or a shale formation. The Witness sponsored Exhibit 47, Newfield's Well Plat Map with Type Log, and it was accepted into evidence. The Witness testified the type log was a true and correct copy of the Shafenberg #1-31 log, which is located in the NW/4 of Section 31. The Witness requested the Meramec portion of the Mississippian be designated as shale. She based this request upon proprietary core data she had reviewed from wells in this area and gamma ray logs like the one on Exhibit #7. The Witness testified the yellow on this Exhibit illustrates the fine grain shale portion of the Mississippian, while the blue signifies more carbonate material. The Witness stated she utilized a 30 to 40 gramma ray cutoff to distinguish between shale and carbonate material, with readings higher then these being indicative of shale. The Witness testified the Commission has already designated the Meramec portion of the Mississippi (Less Chester) as shale in Section 25, 36, 1 and 12 to the west, 19 and 18 to the north, and 17 and 20 to the northeast. The Witness believed the Meramec underlying Sections 30 and 31 is the same common source of supply as underlies the aforementioned Sections. Ms. Robinson agreed Newfield was requesting the Commission designate the Meramec interval of the Mississippi (less Chester) as shale and approve the Multiunit Application. The Witness also agreed the well cost should be apportioned on a 50% to 50% basis between Sections 30 and 31. Ms. Robinson further testified the benefit to drilling a multiunit well was that more of the formation would be penetrated by the wellbore. If single unit laterals were used, it would strand 165 feet a reservoir on each side of the Section line. The Witness contends that a well drilled 165 feet from the north and south lines, and 330 from the east and west lines, would have no effect on the offsets, because the Meramec interval is very tight and would therefore not cause any drainage to the offsetting units. For these reasons, the Witness requested no penalty be placed upon the well drilled at the requested location. The Witness requested the Multiunit and Location Exception Applications of Newfield be granted, as this would prevent waste, promote the orderly development of the Meramec interval, and hopefully result in the greatest recovery of hydrocarbons. Ms. Robinson further testified that a well drilled at the proposed location would also provide proper well spacing for the development of future wells, in the event this well is successful.

7 The Witness sponsored Exhibit #8, Newfield's Stack Activity Map, and this Exhibit was accepted into evidence. The Witness indicated the two sections outlined in red are the subject Sections, 30 and 31. Ms. Robinson testified this Exhibit illustrates 115 Stack Activity wells drilled in this area, wherein 99 of those are multiunit wells. The Witness preferred multiunit wells to single unit wells, because they increased the footage of welibore contact with the reservoir, reducing the environmental footprint, and decreasing costs. The Witness stated Newfield committed one billion dollars to the Anadarko play. Ms. Robinson was questioned regarding the Rice # Well located two miles to the west of the subject area, and she explained this Well was drilled on a single unit basis to access stranded acreage, because Payrock had the well in the offset. Mr. Mahaffey questioned the Witness as to why Newfield wanted to drill a 10, 000 foot multiunit well, and additionally why that would be preferrable to drilling a 5,000 foot single unit lateral as proposed by Chaparral. The Witness responded the multiunit lateral contacts more of the reservoir and avoids stranding acreage between the two 640 acre units. Furthermore, multiunit wells are cheaper to drill than two single unit wells. The Witness further suggested that drilling single unit laterals would constitute underground waste because reserves would be stranded between the units. Mr. Mahaffey questioned the Witness concerning personnel and rigs dedicated to this play. The Witness testified there are eight geologists working this play for Newfield. The Witness also testified Newfield has rigs working this area, and should Newfield receive the regulatory authority to drill, Newfield would commence drilling immediately. 8. Mr. Pepper conducted cross examination of the Witness. The Witness understood that Chaparral was not disputing the Meramec portion of the Mississippi (Less Chester) be characterized as a shale. The Witness did agree the only objection Newfield had to drilling two single unit laterals instead of one multiunit lateral was 330 feet, or 165 feet on each side of the section line which would not be penetrated, thus it would cost more to drill two single unit laterals and would constitute a larger environmental footprint. The Witness was asked if there were certain intervals in the Meramec Newfield targets. The Witness responded affirmative, there were the Upper and Lower Meramec. In the Upper Meramec the intervals focused on are the MSL3 and MSL4. The Witness explained she distinguished these units because they are bounded by more clayish units. The Witness referred to the well log and testified the top of MSL4 is 7,550' and that goes to the top of the MSL3 at 7,626'. The Witness testified these upper zones are the intervals Newfield is targeting in the proposed Well. Mr. Pepper asked the Witness in which specific interval Newfield will drill the lateral. The Witness responded Newfield drills through MSL4 and puts the lateral in the upper part of MSL3 and fracs the MSL3 up into MSL4. The Lower intervals in the Meramec are MSL 1 and MSL 2, with MSL 1 being below MSL2. The Witness explained Newfield usually drills half the wellbores in the Upper Meramec (MSL3 and MSL4) with the other half dedicated to the Lower Meramec (MSL1 and MSL2), but that is dependant on the productive potential of the intervals in a specific area. The Witness testified in the subject area the upper intervals are more productive than the lower. The Witness was asked to explain why the upper interval is more productive in this area, and she responded the hydrocarbon pore value is higher in the upper interval. The Witness testified this information

8 came from proprietary core date form the State #111-16, which is located about four miles southwest of the subject area. Mr. Pepper questioned the Witness regarding why Newfield had no increased density wells in this area. The Witness agreed Newfield wanted all those section held before drilling increased density wells. The Witness further agreed it was easier to hold sections with multiunit wells, because two sections are held with one weilbore. Mr. Pepper asked the Witness if Newfield had conducted any study into drilling a well from Section 31 into Section 6. The Witness testified this would put the well off pattern, as it relates to the multiunit well drilled in the E/2 of Sections 25 and 36. The Witness agreed there was nothing stopping Newfield from drilling a well in Sections 31 and 6, and she further testified even if the proposed well was off pattern with the well in Sections 25 and 36, this would not keep the proposed well from effectively draining the reserves. Ms. Robinson also agreed the same Meramec common source of supply underlies both Section 6 and section 30. The Witness testified Newfield does hold an interest in Section 6, and she stated Newfield had conducted a study that verified the MSL 3 and 4 were present under Section 6. The Witness agreed nothing was stopping Newfield from letting Chaparral develop Section 30 as a single unit well while Newfield drilled a multiunit lateral through Section 31 and 6. Mr. Pepper questioned the Witness regarding when and where Newfield was planning to drill an increased density well. The Witness responded within the next year and it will not be in this area. Mr. Pepper questioned the Witness regarding the wells to the west and southeast of the subject location. Ms. Robinson agreed these wells were the Reherman, the Rice, the Post Brothers, Kretchman, Stuteville, and the Knauss. The Witness also agreed there was no geologic difference in the Meramec between the area where those wells were located and the subject area. The Witness further agreed the Rice well was a Newfield well, it was a single unit lateral, and also testified Newfield had drilled the Rehermand and Post Brothers Wells as single unit laterals. Furthermore, Payrock is also active in this area and they are primarily drilling single unit laterals. The Witness stated Payrock did have some success drilling single unit laterals in this area. 9. Mr. Mahaffey conducted redirect examination of the Witness. Mr. Mahaffey had the Witness refer back to Exhibit #8, Newfield's Stack Activity Map, and asked the Witness to explain what she meant by off pattern. The Witness testified if Newfield were to drill a well, like Mr. Pepper suggested, from Section 31 into Section 6, that would mean Newfield would have to drill a multiunit well in Sections 7 and 18. The Witness explained the end result of these would require Newfield to drill 5000 foot lateral, single unit lateral, to fill in these single units and this would result in the stranded acreage discussed earlier, which Newfield hopes to avoid by drilling multiunit wells. Mr. Mahaffey referred the Witness to the single unit wells, the Knauss, Stuteville, and Kretchmar, on this Exhibit and asked the Witness to tell the Court the significance of these Wells. The Witness testified these were some of the first wells Newfield drilled in this area and these are only single unit laterals because Newfield was refining the science of drilling and completion techniques with the laterals in the Meramec in this area. Ms. Robinson agreed that even though the geology of this area is fairly consistent, the rock quality varies from

9 welibore to welibore, and the most orderly method of developing the Mississippian from a geological standpoint is to drill a multiunit later in Sections 30 and 31, and not Sections 31 and Mr. Pepper conducted re-cross examination of the Witness. Ms Robinson agreed she had earlier testified during cross examination that the geological quality of the Meramec reservoir to the west was basically the same as the subject area. But during her redirect with Mr. Mahaffey she testified the rock quality can vary as you move to the west. The Witness explained this contradiction in her testimony by stating, 'when you asked me about the geologic quality of the reservoir it was more in general, yes, its basically the same, but when you get down to minute details well to well, it does change.' Mr. Pepper asked the Witness to tell him the how the rock quality changes between wells in this area. The Witness explained that moving south and further away from the source, the result is an increase in the clay content in the rock. The Witness stated the increase in the clay content results in a decrease in hydro-carbon pore values. The Witness could not indicate wells to the west or south that encountered these high clay volumes. She did testify there was a well to the east with higher clay percentages, the Patrick well. Therefore, Ms. Robinson believed the wells to the south, southwest, and west all had about the same clay content and were similar. 11. Mr. Mahaffey then called Matthew Patten, a drilling engineer for Newfield. The Witness sponsored Exhibit 99, Newfield' s authority for expenditure for 10,000 foot lateral, the AFE is for the Apache 1H-30X well, dated December 3, The Witness explained he prepared this Exhibit and it represents an accurate and reasonable estimate of the cost to drill the proposed 7,780 true vertical depth well to a measured depth of 18,400 feet. The Witness asserts these costs are accurate because they are based on Newfield' s experience of drilling more than 100 wells to this formation including a learning curve, and the costs reflect Newfield' s current drilling costs in the area. The Witness then referred to the AFE sent out with the proposal letter, dated March 19, 2015, which shows a dry hole cost of $3.46 million. The Witness testified Newfield's costs decreased significantly since the AFE was prepared. Mr. Patten further explained Newfield estimates it can drill one of these wells for less that $2.57 million. The Witness based this conclusion on drilling cost of the J.R. Barton Well ($2.25 million) completed in 11.5 days. The Witness explained the drilling cost estimate of $2.57 million is not their best-in-class well, but is more of an average cost to drill these wells. Mr. Mahaffey referred the Witness to Exhibit 410, Newfield's Authority for Expenditure For 5,000 foot lateral, dated December 3, The Witness explained this Exhibit illustrated Newfield could drill a 5,000 lateral for $2.07 million, or about half a million less than a 10,000 lateral. The Witness further added this estimate was calculated from Newfield's experience drilling 10,000 laterals wherein Newfield had drilled laterals shorter than 5,000. The Witness agreed to get the same amount of lateral as a 10,000 foot lateral Newfield would need to drill two 5,000 foot laterals which would cost approximately $1.5 million more than drilling one 10,000 foot lateral. Mr. Patten then testified in the event two wells were drilled, such would double the size of the surface facilities, and would require two pads and two lease roads. Therefore, the Witness stated it was more environmentally friendly to drill one 10,000 foot lateral rather than two 5,000 foot laterals.

10 The Witness explained Newfield will either run a 9 flat rate or 13 3/8 surface to 1,500 feet, and then run a full string of 5 '/2 to TD and cement. The Witness was asked to evaluate Chaparral's authority for expenditure. The Witness explained this AFE illustrated a drilling cost of $1.6 million, about $400,000 less than Newfield's $2.07 million. The Witness stated the difference results from Chaparral attributing some costs as completion costs while Newfield counts these costs as drilling costs. Also the Witness thought some of the costs Chaparral used in their AFE were low. The Witness listed the costs he thought were too low: well location, roads, location restoration, MMBO costs, rig moving, and drilling bits. Mr. Mahaffey questioned the Witness regarding Chaparral's completion process for the proposed Well. The Witness stated Chaparral runs 7 inch casing through the curve and a 4 '/2 inch liner uncemented. The Witness explained this process differs from Newfield' s completion technique because Newfield cases and cements through the lateral. The Witness was asked the types of completion techniques employed by operators that drill many of these wells. Mr. Patten responded 'plug and perf, and contended at least one million dollars in drilling costs would be wasted if Chaparral's plan was employed to drill a 5,000 foot lateral, not including the underground loss of reserves, and doubling of surface usage. For these reasons, Mr. Patten stated a multiunit well verses single unit lateral would prevent waste, and give the most orderly development process. 12. Mr. Pepper conducted cross examination of the Witness. The Witness agreed Newfield's completed for production cost on the AFE were $6.989 million for a 10,000 lateral. The Witness further agreed these costs would be similar to the J.R. Barton Well. The Witness stated the drilling costs for the J.R. Barton Well were determined, but the completion costs were not. The drilling costs for that 10,000 lateral Well were $2.25 million. The Witness was not certain if Newfield had drilled a well with completed for production costs of $6,989,000. The Witness explained he is not responsible for the completion portion of these wells, but is only involved in the drilling phase. Mr. Pepper asked the Witness if Newfield had drilled a well with a 5,000 lateral for $2.07 million he had testified to earlier. The Witness responded yes, the Lanker Well was drilled for $1.95 million. The Witness was unsure of Chaparral's costs to drill a 5,000 foot lateral well. Mr. Patten knew Newfield had participated in one of Chaparral's 5,000 wells, the Betty, but the Witness did not know drilling costs for the Betty Well. The Witness testified the most recent well drilled by Newfield in this area was the Church Well completed in October or November of Drilling costs for this Well were $3.5 million. The Witness agreed those costs are one million dollars higher than drilling costs for the Well proposed today. The Witness further agreed Newfield utilized their new techniques to drill this Well, but that did not reduce drilling costs, and further stated when drilling a 10,000 lateral, the opportunity for problems in the latter half of the well could be greater. Problems Newfield experienced were loss of circulation, drilling into fractured zones, and drilling out of target. The Witness testified he did not know of any well Newfield had lost due to loss of circulation, and stated Newfield has always managed to seal the circulation losses off. The Witness testified resolving this type of issue results in costs similar to repairing the same problem in a 5,000 lateral. Mr. Patten explained that fracture zones can lead to a stuck pipe or a

11 cave-in. The Witness did not believe repairing this type of damage costs more in a 10,000 lateral than a 5,000 lateral, and xplained the only difference is the time might be an hour or two longer to reach the area needing in a 10,000 lateral, but in the big picture those costs are not much different. The Witness was asked if he had problems in the 16 wells he drilled from 2012 to present in this area, and he testified he had no major problems. Mr. Pepper questioned the Witness regarding drilling costs of wells similar to the drilling costs reflected on Exhibit 49, $2.57 million. The Witness responded the J.R. Barton was drilled for $2.25 million. Another was the Jimenez Well drilled for $2.7 million, and Jimenez was one of the wells drilled by the Witness. Another drilled by the Witness was the Storm drilled for $2.75 million. The Witness agreed the most recent Well by Newfield in this area was the Church Well, which had drilling costs of $3.5 million, one million dollars greater than AFE drilling costs on Exhibit 49. Another Well drilled for 2.7 million was the Loris Well. The Witness stated the last four wells mentioned were 800 to 1,000 feet deeper than the proposed Well. The Witness explained the AFE costs for drilling illustrated on Exhibit #9 were $200,000 less, to account for a more shallow drill depth. Mr. Patten testified concerning new drilling techniques Newfield has refined in operations of this area. The Witness stated these new techniques involve different bits and new motor designs, and he further explained changes in the bit result from examination of the wear of the bit which helps Newfield determine how to change the angles and shapes of the cones. With regard to the motor, turning the bit down hole requires changing to higher differential pressure, which can result in faster drilling. Motor changes have also been made to help the motors last longer, therefore drilling in the hole for longer durations which results in fewer days drilling the well. All these techniques reduce overall drilling costs. Mr. Pepper questioned the Witness regarding drilling costs for 5,000 and 10,000 foot laterals. The Witness agreed it costs approximately $1.5 million to drill a 5,000 lateral and to extend that lateral another 5,000 feet costs an additional $0.5 million dollars. 13. On redirect examination by Mr. Mahaffey the witness was questioned regarding the drilling of the extra 5,000 feet of lateral after the well was drilled to a 5,000 lateral length. The Witness agreed Newfield would not have to make another location, repay surface damages, build another lease road, drill surface hole, set surface pipe, drill another vertical well, or set long string through the vertical portion. Mr. Patten testified this is why it only costs an additional half million dollars to drill the second 5,000 feet of lateral. The Witness stated these cost savings are the very reasons Newfield wants to drill one 10,000 foot lateral as opposed to two 5,000 foot laterals. The Witness was asked about his response to Mr. Pepper's loss of circulation problem and if this was the fault of the operator. The Witness stated it has nothing to do with the negligence of the operator. The loss of circulation is a risk of drilling any well, and is directly attributable to the rock being drilled. Mr. Patten agreed it would be just as easy to lose circulation in a 5,000 lateral as in a 10,000 lateral, and also stated Newfield had not experienced this problem, but if it did occur, Newfield had personnel to resolve that problem, and had more than 12 engineers dedicated to this play.

12 Mr. Mahaffey questioned the Witness regarding well costs. The Witness agreed Newfield well costs were steadily falling including wells drilled as late as October and November of last year. The Witness agreed the J.R. Barton had been drilled for less than $2.57 million and the Jimenez and the Storm, which were deeper than the proposed well, were drilled for $2.7 million. The Witness also agreed the Church well was probably the newest well in the area, October or November of last year, at a cost of $3.5 million. The Witness contends the higher costs of this Well were attributable to loss of circulation, and it targeted a different interval in the Meramec, wherein the rock is different. 14. On re-cross by Mr. Pepper the Witness agreed drilling costs of these wells were reduced by half during Mr. Patten stated the drilling cost went from $4 million in January 2015 to $2.57 million estimate for the proposed Well. Mr. Pepper asked the Witness about the $3.5 million for the Church well Newfield just drilled. Again the Witness explained the higher costs were attributable to loss of circulation and drilling in a different part of the Meramec. Mr. Pepper asked the Witness in what portion of the lateral did you lose circulation. The Witness responded he did not know. Mr. Pepper continued by asking the Witness what portion of the Meramec was targeted in the Church Well. The Witness again stated he did not know, but it was a lower interval of that formation. The Witness testified the reason he did not know the answers to these questions was because he did not drill the Church Well. Mr. Pepper asked the Witness of the 16 wells he had drilled, how many were in the lower Meramec? The Witness responded half. The Witness agreed wells drilled in the lower Meramec took more time to drill. 15. Mr. Mahaffey called Michael Harvey, a completions engineer for Newfield in the STACK play. Mr. Mahaffey referred the Witness to Exhibit #9, Newfield's authority for expenditure for 10,000 foot lateral. He agreed the completion costs along with surface facility costs and artificial lift costs were accurate. Mr. Mahaffey offered Exhibit #9 and it was accepted into evidence. The Witness testified the total completed for well costs of $3.934 million is accurate based upon the well costs of the last five wells Newfield drilled. The average cost for these five wells was $3.942 million with some wells slightly less and some slightly more. This was the basis for his argument that Newfield could drill the proposed well for this amount. Mr. Mahaffey then had the Witness refer to Exhibit #10, Newfield's authority for expenditure for 5,000 foot lateral. The Witness agreed he had been involved in the development in this Exhibit, and there was no difference in the surface facility costs or artificial lift costs between the 5,000 foot lateral AFE and the 10,000 lateral AFE. The Witness also stated $1.982 million is a reasonable estimate for completing a 5,000 foot lateral well. Whereupon Mr. Mahaffey offered Exhibit #10 which was accepted into evidence. Mr. Mahaffey requested the Witness compare the cost of drilling two 5,000 foot laterals versus one 10,000 lateral. The Witness testified each 5,000 lateral's total cost to drill and complete is $4,534,379 or $9,068,758 total for two wells. The total drilling and completion costs for a 10,000 lateral well are $6,989,121. If these two figures are subtracted from one another it is a savings of $2,079,637 to drill one 10,000 lateral instead of two 5,000 laterals. The Witness contends this shows a substantial savings of development costs and prevents waste to drill the one 10,000 lateral well instead of two 5,000 lateral wells.

13 The Witness testified regarding the completion technique he recommend for the proposed Well. He stated a cased hole with a plug and perf completion is best for the development of the Meramec wells. In reviewing Chaparral's AFE he concluded they planned to do an open hole completion with a 4 1/2 inch liner and lugged and packers. Mr. Patten explained this is a packers plus or ball-drop type system and explained the advantage of a cased hole plug and perf completion technique is the opportunity to down space clusters or increase cluster spacing. The benefit is it allows isolation of any type of geo-hazards and has the ability to change gun design mid-frac giving lexibility in the completion. The Witness contends this gives Newfield more control in a plug and perf completion method, and is preferred over packers plus, because in packers plus changes cannot be made to stage spacing or perforation design. The Witness further explained the only thing that can be changed in a packers plus open hole completion is the amount of fluid and sand used in fracing. Furthermore, there isn't a way to avoid geo-hazards in a packer plus completion technique. Mr. Mahaffey questioned the Witness regarding frac costs. The Witness testified Chaparral's AFE did not include any cost for frac water and the cost of $20,000 for coil tubing unit and nitrogen looked very low. The Witness stated the last five Newfield well completion costs in this area fell right in line with the completion costs estimate for the proposed Well of $3.94 million. The Witness agreed if the proposed well can be drilled for $2.57 million or less and is trouble free, the reasonable total well costs for the proposed well would be $6.99 million. Mr. Mahaffey referred the Witness to Exhibit #1, Newfield' s authority for expenditure for 5,000 foot lateral. The Witness agreed Chaparral's AFE costs are about $600,000 less than Newfield's AFE cost for a 5,000 foot lateral. Chaparral's AFE costs are $3.9 million and Newfield's are $4.5 million for a 5,000 lateral well. Based upon this comparison, the Witness contends Chaparral's AFE costs are about $600,000 too low. In the event Chaparral's costs are correct, their costs to drill two 5,000 laterals are $3.9 million each or $7.8 million total, and this still exceeds by $800,000 Newfield's costs of $6.99 million to drill one 10,000 lateral. 16. On cross examination by Mr. Pepper, the witness testified he has worked this play for two years and has participated in 22 completions, and further testified this is the total number of completions for his career as an engineer. The Witness agreed he worked with Mr. Patton to complete Newfield's AFE, Exhibit #9, and he could not tell Mr. Pepper of a well Newfield drilled and completed for production with costs of $6,989,121. The Witness explained the reason he could not do this was his primary focus is on completion costs only, not total costs. The Witness stated he does see final well costs at some point in time, and testified that off the top of his head he did not know of a well Newfield drilled in this area for the total proposed Well costs of $6.985 million. Mr. Pepper stated he had drilling costs for the most resent Newfield drilled well in the area, the Church Well, of $3.359 million. Mr. Pepper asked the Witness if he had completion costs for the Church Well. The Witness responded those costs are $3.813 million. The Witness agreed these figures added together would be about $200,000 over the proposed Well's estimated total well costs, and Mr. Patten stated the offset to the Church was the Edgar and this Well had a completion cost of $3.69 million. The Lori Well had a completion cost of $3.703 million, and the Meyer had a completion cost of $4.364 million. The witness then estimated an average completion cost for these wells and arrived at $3.942 million.

14 Mr. Pepper questioned the Witness regarding his knowledge of Payrock wells in this area. The Witness was aware the Payrock had drilled and completed some good wells in this play. Mr. Pepper asked the Witness if he noticed differences between Payrock's and Newfield's development of these wells. The Witness testified Payrock drills one mile laterals while Newfield prefers the multiunit wells, and Payrock uses twice the proppant in a one mile lateral then Newfield does in a two mile lateral. The Witness also testified their fluid treatment volumes are different. Payrock uses more fluid, lower proppant concentrations, and different proppants. The Witness explained he had observed Payrock using two different types of proppant 30/50 and 40/70. The Witness stated Newfield normally used 40/70 in the completion process. Payrock uses 8.6 Million pounds of sand to complete one mile laterals, while Newfield uses 1500 pounds per lateral foot which would be equivalent to 7.5 million pounds in a one mile lateral. With the proppant Payrock uses 170,000 barrels of fluid. The Witness testified Newfield normally uses 95,238 barrels of fluid. The Witness stated these differences are attributable to different fracture stimulation techniques employed by Payrock and Newfield. Payrock uses more of a slick water frac, while Newfield uses a crosslink technique. The Witness explained the difference in these fracture stimulation processes as crosslink having a higher viscosity fluid which carries more proppant further out into the formation. On the other hand, slick water is water with a friction reducer; it is just 8.4 pounds per gallon water. The Witness did agree Payrock had some good results with the slick water fracture stimulation technique. 17. Mr. Mahaffey conducted redirect examination of the Witness and had the Witness revisit the question regarding whether Newfield had completed wells with costs similar to the proposed well total costs of $6.989 million. Mr. Patton testified the drilling costs on the Lori Well were $2.7 million and completion costs for that Well were $3.703 million, so the total well costs for that Well would be $6.4 million. The Witness agreed the surface facilities and the artificial lift costs would be similar to Newfield's other AFEs totaling $485,000. The Witness then added this figure to the $6.4 million to arrive at a total well cost for the Lori Well of $6.88 million. The Witness agreed this was a recently drilled Well that would be below the AFE costs of the proposed Well shown on Exhibit #9. Mr. Mahaffey questioned the Witness regarding completion techniques and frac jobs. The Witness testified he did not know of any Chaparral wells which had 5,000 foot laterals completed in this area, so he could not determine how Chaparral would drill and complete this type of well. The Witness did agree Newfield is continuously updating completion science to achieve the best results and indicated he did not know of any company with more experience drilling and completing wells in the STACK than Newfield. The Witness testified there was not anything Mr. Pepper raised on cross examination that changed his opinion it was better to drill a 10,000 foot lateral rather than two 5,000 foot laterals. For this reason the Witness contends, working interest owners will pay lower costs to develop the reserves in the Meramec if Newfield is named operator versus Chaparral named operator. 18. Mr. Mahaffey called Laura Stauffer, a reservoir engineer for Newfield, to testify for Newfield. The Witness stated she works with a team which is responsible for the development of the Meramec and Woodford reservoirs in the Stack area, and she explained the Meramec had

15 just recently been placed under her supervision. She further stated she had also worked the OBO wells, outside operated AFEs. Mr. Mahaffey asked the Witness if she had made any evaluation of the merits of drilling a 5,000 foot lateral versus a 10,000 foot lateral. Ms. Stauffer responded she had made such an evaluation, and sponsored Exhibit #11, Newfield' s Multi Section Development Comparison with Single Section Development. Exhibit #11 was accepted into evidence. The Witness testified that based upon information on this Exhibit, the 10,000 foot lateral was determined to be the best method of development for the prevention of waste, and the best method to recover the maximum hydrocarbons. The determination was based upon the Witness' evaluation that only 165 feet, or 20 acres, of reservoir at each end of the multiunit lateral would not be developed. In comparison, the single unit development still lost 20 acres on each end of the lateral plus an additional 40 acres, plus another 165 feet on each end, between each 5,000 foot lateral. The Witness also testified the reserves in those 40 acres between the two 5, 000 foot laterals will be left in place and never recovered. Mr. Mahaffey asked the Witness if she performed any volumetric calculation of the amount of oil going unrecovered in the Meramec using each development technique. Ms. Stauffer responded she did, and these figures are shown on the bottom of Exhibit #11, wherein she estimated using the 5,000 lateral technique proposed by Chaparral and concluded it could leave up to 4.3 MBO unrecovered, while the 10,000 lateral development plan proposed by Newfield would only leave 2.1 MBO unrecovered. The Witness stated this resulted in a substantial difference in the amount of waste depending upon which plan was used, and this Witness had the opinion that even if Newfield let Chaparral drill one 5,000 lateral, Newfield would still be forced to drill a 5,000 lateral to pick up the stranded acreage, while also having to drill three additional 10,000 laterals to completely develop the multiunit. The Witness testified the net result of this would be a loss of '/4 of the reserves wasted by drilling all 5,000 laterals, 2.1 MBO, or about 500,000 plus barrels of oil would be unrecovered, the result of not using the 10,000 foot laterals. The Witness contrasted the amount of capital necessary to develop these two Sections using 10,000 laterals verses 5,000 laterals, and again referred to Exhibit #11. Ms. Stauffer explained if four 10,000 foot laterals at a cost of $6.9 million were drilled, the cost to develop the two Sections would be $ million. Alternatively, if development were done in the two Sections with eight 5,000 foot laterals costing $3.9 million, a total cost would be $ million. The Witness concluded this established a savings of almost $6 million to working interest owners in these two Sections using 10,000 laterals development instead of 5,000 laterals. The Witness further testified to a comparison of the cost per barrel of oil between 5,000 foot and 10,000 foot laterals, and indicated there were only two Meramec 5,000 laterals she could find Chaparral had drilled. In the Robin Well drilled in Sections 14, and the Blackbird Well drilled in Section 25, Township 18 North, Range 7 West, the Witness had calculated estimates showing the Blackbird Well would produce about 15 barrels of oil per foot of lateral, while the Robin Well would only produce about 11 barrels of oil per foot. Ms. Stauffer compared these two Wells with Newfield's Reherman with a 10,000 foot lateral, a direct East offset to the Chaparral's wells, and the Rice Well which is Newfield 5,000 lateral well. The Witness calculated the

16 Reherman Well would produce approximately 34 barrels of oil per foot and the Rice Well would produce 40 barrels of oil per foot. The Witness explained she did not have production figures for the Church or the Edgar Wells because these two Wells are currently flowing back and do not have stabilized rates. Mr. Mahaffey requested the Witness calculate an average dollar per barrel from multiple wells in the Meramec reservoir in the area, since the Meramec is a heterogeneous reservoir. The Witness based her calculation on 21 Newfield Meramec wells in the area, of which two, the Rice and the State, had 5,000 foot laterals. Ms. Stauffer arrived at 36 barrels of oil per foot on average for Newfield's Meramec Wells in the area. The Witness then compared her calculation average with Chaparral's two 5,000 foot lateral Wells in the area, which combined had an average of 13 barrels of oil per foot. Ms. Stauffer then explained Chaparral's total well cost of almost $4 million divided by the average production of 13 barrels of oil per foot would result in a cost per barrel of $62 or $63 per barrel, and the witness futher used Newfield's total well cost of $6.989 million divided by the average production of 36 barrels per foot which would result in $19 per barrel. Ms. Stauffer testified that even at current oil prices of $30 per barrel, Newfield could still economically develop the Meramec reservoir in the area using Newfield' s 10,000 foot lateral drilling technology. Mr. Mahaffey asked the Witness if Newfield would consider drilling additional wells with Chaparral's 5,000 foot drilling technology. The Witness responded Newfield would not be interested in drilling wells at $62 I barrell of oil production cost given $30 / barrel of oil sales price. 19. Mr. Pepper conducted cross examination of the Witness. The Witness agreed her evaluations of oil left in place were based upon original oil in place, and Ms. Stauffer was aware production would not recover the original oil in place. The Witness added that if it is not accessed, it is definitely not going to be produced. Mr. Pepper asked the Witness what recovery factor Newfield used for Meramec reservoir wells. The Witness responded the recovery factor varies based upon reservoir quality, completion efficiencies and fluid properties, and the Witness further explained she could not give Mr. Pepper a recovery factor until she had sufficient well information to calculate that recovery factor. Ms. Stauffer did agree the volumes shown on Exhibit #11 would not all be recovered regardless of what type of drilling operation was performed, and the Witness testified she did agree the 2.1 MMBO of stranded oil she calculated on Exhibit #11 is just oil the weilbore will contact, not what it will recover. Ms. Stauffer stated she calculated an average recovery factor for Meramec wells in the area of 10 to 15%. Mr. Pepper questioned the Witness regarding her calculations of barrels of oil per foot of lateral. The Witness started with the Chaparral Blackbird which had an estimated ultimate recovery (hereinafter referred to as EUR) of 106 MBO, and she father stated there was only monthly data available for this Well, so she used that data, and divided it by 30.4 to get the daily rate. This daily rate value was run through ARIES and combined with a hyperbolic B factor of 1.3, an initial decline factor of 98%, a terminal decline of 10% and with a 3 barrel of oil per day economic limit. Ms. Stauffer then used this same formula on the Robins Well and came up with 56 MBO for the EUR. Accordingly, she used a 1.3 B factor initial decline of 91% and the same terminal decline of 10% and 3 barrel per day economic limit.

17 The Witness sponsored Exhibit #13, Estimated Ultimate Recoveries per Foot of Lateral for Meramec Wells; the Exhibit was accepted into evidence. The Witness explained this Exhibit contained her estimate of oil production per foot of lateral for the two Chaparral wells, and the twenty-one Newfield wells in the Meramec in this area. Ms. Stauffer testified the two Chaparral wells had 5,000 laterals and the Newfield wells had 10,000 laterals, except for the Rice and the State Wells which had 5,000 laterals. The two Chaparral Wells have 10.8 and 14.9 barrels of oil per foot. The Newfield Wells produce from a low of 11.5 up to a high of 71.4 barrels of oil per foot. 20. Mr. Mahaffey conducted redirect examination of the Witness. Mr. Mahaffey had the Witness refer to Exhibit #13 and asked the Witness to read the estimated ultimate recovery for the Reherman Well in the west offset to the subject Sections 30 and 31. The Witness responded 343,000 barrels of oil and 2.6 to 2.7 BCF. The Witness then converted this into thousands barrels of oil equivalent (hereinafter referred to as MBOE) of MBOE. The Witness explained that she arrived at this estimate by dividing 2,663 MMCF by six, which is the conversion factor she used, and then added the 343,000 barrels of oil to that number. Mr. Mahaffey then had the Witness refer to the production for the two Chaparral Wells. Ms. Stauffer testified the estimated ultimate recovery for the Blackbird Well is 106 MBO and the Robin Well is 56 MBO. The Witness stated this results in a barrel per foot of lateral estimate for the Blackbird Well of 14.9 barrels of oil per foot of lateral and the Robin only produces 10.8 barrels of oil per foot of lateral. Mr. Mahaffey then asked the Witness what was the average barrels per foot of lateral for the 21 wells shown on Exhibit 913 and the Witness responded 36 barrels per foot. The Witness stated Newfield' s recovery per foot of lateral is almost three times that of Chaparral's Wells. Referring to Exhibit #8 the Witness testified Newfield drilled and completed more Meramec wells in this area than any other operator. Mr. Mahaffey then had the Witness add the estimated ultimate recoveries for the two Newfield 5,000 lateral Wells, the Rice and the State Wells, to get a combined production figure of 326 MBO. Next Mr. Mahaffey had the Witness compare this figure with the other nineteen Newfield 10,000 lateral Wells. The Witness testified that the average of the nineteen 10,000 laterals is 39,000 barrels more than sum of the Rice and State Wells EURs combined. The Witness agreed production of 39,000 barrels more oil and savings up to $2 million drilling one 10,000 lateral versus two 5,000 laterals, resulted in a better economic outcome drilling the longer lateral. Mr. Mahaffey questioned the Witness regarding her testimony concerning the oil left in place with single unit and multiunit development. He referred the Witness to the line item referring to the original oil in place (hereinafter referred to as OOIP). Ms. Stauffer did agree these figures are original and not recoverable oil in place, and the Witness did recall testifying she could not give a rate of recovery for Sections 30 and 31 until a well is drilled in these Sections, but the average rate of recovery from other wells in this area was 10% to 15%. Ms. Stauffer agreed this meant Newfield would leave from 210,000 barrels of oil at a 10% recovery rate to 315,000 barrels of oil at a 15% recovery rate, in the event Newfield developed these Sections on a single unit basis, because this left 40 acres not contacted by the weilbore between the Sections. The Witness further agreed these unrecovered reserves would be about the same as that of single section wells produced. Ms. Stauffer further agreed regardless of what the recovery factor was, a substantial amount of reserves were left in the ground it Newfield was forced to develop the

18 Meramec on a single section basis. The Witness testified this resulted in underground waste. For this reason, the Witness requested Newfield be named operator of the multiunit. 21. Mr. Pepper conducted re-cross examination of the Witness. Mr. Pepper questioned the Witness regarding the production rates of Payrock, Newfield and Chaparral Meramec wells in this area. The Witness testified the six Payrock 5,000 foot lateral wells have an average production per foot of barrels of oil per foot. Newfield's average production per foot of lateral is 36 barrels of oil per foot. Chaparral's average production per foot of lateral is 13 barrels of oil per foot. 22. Mr. Mahaffey conducted re-redirect examination of the Witness. Mr. Mahaffey asked the Witness if Chaparral could drill a well and get similar results as Payrock. The Witness responded she had not seen that result but she did agree Payrock and Newfield both used a plug and perf development technique in the Meramec and further agreed Chaparral's AFE showed they were going to do an open hole packers plus completion. Mr. Mahaffey had the Witness estimate production per foot of lateral on three Payrock wells. The Witness testified the Payrock Moffat Well would produce 40 barrels of oil per foot of lateral. The Payrock Benson Well would produce 29 barrels per foot of lateral. The Payrock CMN Farms Well would produce 40 barrels of oil per foot of lateral. The Witness then compared the production rate per foot of lateral between the Newfield Reherman Well of 34 barrels per foot of lateral and the Payrock Benson Well of 29 barrels per foot of lateral. The Witness testified this would give you an average of 36 barrels per foot of lateral for these three Payrock Wells. 23. Mr. Pepper conducted re-recross examination of the Witness. The Witness testified Exhibit #14, additional estimated ultimate recoveries for Meramec wells, is just like Exhibit #13 but also includes the additional estimates of barrels of oil per foot of lateral for six Payrock Wells and some additional columns. The columns she added are frac pounds, frac gallons, traps, gross perforated interval, and scenarios which comes out of ARIES. Ms. Stauffer confirmed she had testified earlier that one of Payrock's Well's which produced 89 barrels of oil per foot of lateral, was an anomaly. Mr. Pepper then asked the Witness about the two Payrock Wells that produced 79 and 78 barrels of oil per foot of lateral. The Witness agreed Newfield did not have any wells close to these rates of production and added that neither did Chaparral. Exhibit 414 was accepted into evidence. 24. At this point in the proceeding Newfield rested it's Cause. 25. Mr. Pepper began the Cause for Chaparral by calling Bailey Benhan. The Witness testified Chaparral owns a right to drill in these Sections, and explained Chaparral owns 325 acres while Newfield owns 293 acres. The Witness testified Chaparral acquired this acreage through a land swap with Marathon, because Chaparral really likes this prospect. The Witness stated the letter of intent was signed with Marathon in July of 2015, then closed on part of the acreage in September of 2015, and closed on the remainder of acreage December of Chaparral sent a proposal letter for this Section in October of 2015, after which Chaparral filed their Pooling Application. The Witness referred to the Respondent List attached to that Application and requested Respondent #4, Tulsa Energy Partners, and Respondent #7, Kirby Minerals both be dismissed from the Application. The Witness stated Chaparral made a good

19 faith effort to locate all the Respondents by looking at court house records, Secretary of State, court clerk's office, and internet search engines. The Witness agreed excluding the acreage of Newfield and Chaparral there are only about 19 acres remaining, and further agreed with the earlier testimony of Newfield's Witness regarding fair market values in this area. Bailey Benhan stated Chaparral disagreed with Newfield on operations concerns for the Unit. The Witness testified Chaparral owns about 25,000 acres in Kingfisher County and Chaparral has proposed the subject well along with others in Kingfisher County. 26. Mr. Mahaffey conducted cross examination of the Witness. The Witness agreed there are only three Respondents with interest in this Unit on Chaparral's Respondent list which are Newfield, Farmers, and E.V. Properties. The Witness agreed Farmers owns 10 acres and E.V. Properties owns 9.94 acres. The Witness also agreed that if Mr. Goodwin's testimony was correct, and these Respondents support Newfield for operations, then Chaparral would own 50.7% of the Unit and Newfield and it's supporters would own 49.3%. Mr. Mahaffey asked the Witness of the 25,000 acres owned by Chaparral in Kingfisher County how much of that acreage is located in the four township area of 16, 6, 16, 7, 15, 6 and 15, 7? The Witness responded she looked at 16 North, 6 West and came up with a little more than 2,500 acres. The Witness testified Chaparral has 228 acres of leasehold expiring on July 8th The Witness agreed as long as a well is commenced before July 8th 2016, Chaparral's leases would be protected. 27. Mr. Pepper conducted cross examination of the Witness. The Witness agreed there could be an issue of commencing the well depending on the Section the well is started in. If the proposed Well is commenced in the offsetting Unit and drilled into the Section where the leases are expiring and the lateral does not cross the section line prior to July 8, 2016, there could be a question of whether or not the leases are perpetuated. 28. Mr. Pepper called Garrett Reasoner, a senior geologist for Chaparral, to testify. The Witness sponsored Exhibit #15, Chaparral's production base map and the Exhibit was accepted into evidence. The Witness explained this Exhibit has offsetting well color coded to indicate which formation Chaparral produces fromand the proposed track of the weilbore is shown within Section 30. The proposed Well would be drilled from South to North. The Witness testified the reason for drilling the Well in this direction was to keep the toe of the Weilbore up dip and there was a possibility of encountering fracture system that runs East and West in this area. The Witness stated Chaparral did have some difficulty drilling the Robin Well because it encountered two large faults, and this occurred because Chaparral did not possess seismic over this area. Currently Chaparral has the ability to license seismic over the subject area. Mr. Pepper questioned the Witness regarding the Meramec and a study of this area. The Witness testified Chaparral has broken the Meramec into six intervals with A being the deepest interval and F being the shallowest interval. In the two Meramec wells Chaparral drilled in Dover they targeted the lower intervals of the Meramec, the A and B intervals. The Witness stated Chaparral is targeting different intervals for the Well in Section 30 because the rock quality varies in this area. In the Dover area the Meramec has less silica, lower porosity, much more fracture driven reservoir. The Witness explained this is why the Blackbird and Robin Wells were not as productive as expected. The Witness further testified Chaparral had drilled a new

20 Well, the Betty 1UMH-27. This Well is targeted in the same Meramec zone, the D, that Chaparral and Newfield are targeting Section 30. The Witness sponsored Exhibit #16, Chaparral's type log of Pappe #1-30 Well, and this Exhibit was accepted into evidence. The Witness testified this Exhibit is a portion of the log of the Pappe #1-30 Well showing the top Mississippian, the base of the Mississippian which coincides with the Woodford top. The Meramec in this Exhibit is from 7,500 to about 7,800 feet in depth. The Witness said the D interval Chaparral would be targeting in Section 30 on this log is located at a depth of 7,590 to about 7,620 feet. The Witness sponsored Exhibit #17, Chaparral's production bubble map for Meramec horizontal wells with Meramec SS structure map, and this Exhibit was accepted into evidence. The Witness stated this Exhibit is a structure map on top of the Meramec with 20 foot contour lines, and liustrates the overall depth of the Meramec from the northeast to the southwest. Only Meramec horizontal wells are shown on this map. The wells illustrated in blue are the Newfield operated wells, while the wells shown in green are Payrock wells. The large green bubbles on this Exhibit are the EURs or the EURs normalized to 4,800 foot lateral. The Witness testified that looking at this Exhibit she doesn't think there are any structural hazards in Section 30. The Witness testified she was requesting Chaparral be named operator of the Unit and that a 5,000 lateral be approved for the proposed Well. The Witness explained that drilling 5,000 laterals is not a new phenomenon in this area and Payrock had been very successful drill single section 5,000 laterals. The Witness stated Chaparral's geologists and engineers share information with Payrock's geologists and engineers, because both companies are attempting to drill the best well possible in this play. The Witness stated she reviews all Mississippian wells drilled in her area and she is also responsible for steering Chaparral operated Mississippian wells in this area. If Chaparral is named operator she would be steering the subject Well. The Witness expressed Chaparral's concern regarding drilling 10,000 laterals in the Meramec in this area. The Witness explained Chaparral contends it is difficult to keep the lateral within the targeted interval within the Meramec especially when you are reaching the toe of the 10,000 lateral. The Witness stated she had steered some 10,000 foot laterals in other areas and Chaparral has gone back to 5,000 laterals because they are easier to keep in the target window. The Witness explained the ability for the well to slide necessarily greatly increases after about 7,000 to 7,500 feet, you have a lot more propensity to go out of the target zone. The Witness stated this is even true of the Newfield wells she has reviewed in this area. She explained these Newfield wells take a huge turn away from what was originally targeted in the first 2/3 of the lateral. When requested to give specific wells that illustrated this sliding out of the targeted zone, the Witness responded the Newfield RPM Well slide out of the zone on the high side at 7,000 to 7,500 feet. The Wittrock Well went out of zone at about 7,000 feet. The Witness testified the Zummallen, Ralph and Mueggenborg Wells stayed within the target window but they porpoised up and then down sharply at the last 1/3 of the lateral. The Witness then compared these 10,000 lateral wells against the Betty well that she most recently steered in this area and determined that the lateral in the Betty only varied about 2 to 3 feet from the pre-drill plan for the entire well. The Witness stated this resulted in a very nice, smooth straight wellbore. The Witness explained this is even more important if Newfield' s well plan is accepted because the toe portion of the lateral will be