2. There is evidence of oil field waste discharged to an unnamed tributary to Bad Luck Creek. This is a violation of 40 CFR Part

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1 September 10, 2008 Bill Fowler Chesapeake Energy Corporation P.O. Box Oklahoma City, OK RE: Cooper 7-9, 2-5H, Authorization # Dear Mr. Fowler: On, September 9, 2008, Eric Fleming and I performed a complaint investigation of the above referenced drilling site in accordance with the provisions of the Arkansas Water and Air Pollution Control Act and the regulations promulgated thereunder. The complaint alleged that a discharge from the drilling site had turned an unnamed tributary to Bad Luck Creek gray and a foamy substance was present. The investigation revealed the following violations: 1. There is evidence of an unpermitted discharge of drilling fluids to Waters of the State. The discharge of industrial waste or other such wastes into any of the Waters of the State without a permit is a violation of A.C.A There is evidence of oil field waste discharged to an unnamed tributary to Bad Luck Creek. This is a violation of 40 CFR Part A sample collected by Chesapeake Energy, after the discharge occurred, showed a chloride level of 500 ppm in the unnamed tributary to Bad Luck Creek. This is a violation of Regulation No. 2, Reg Chloride concentration limits are 20 mg/l in the White River Basin. Please submit a copy of the sample results for the unnamed tributary and the area near the cuttings boxes. 4. There is evidence of a layer of drilling mud deposited in the unnamed tributary to Bad Luck Creek. This is a violation of Regulation No. 2, Reg Physical Alteration of Habitat. Please submit a remediation plan for the unnamed tributary to Bad Luck Creek. 5. ADEQ representatives were not allowed to inspect the site upon our arrival to the drilling pad. 6. The discharge was not reported to this department as required. At the time of the inspection, the alleged closed loop system containing the drilling fluids was no longer on site. Please submit any records of where the drilling fluids were disposed of. The above items require your immediate attention. Please submit a written response to these findings to the Water Division Enforcement Branch of this Department. This response should contain documentation describing the course of action taken to correct the item noted. This corrective action should be completed as soon as possible, and the written response is due by date October 1, If I can be any assistance, please contact me at Sincerely, Jill Glenn Inspector Water Division cc: Water Division Enforcement Branch Water Division Permits Branch

2 Natural Gas Drilling Operations Inspection Form Date of Inspection : 9/9/08 Inspector: Jill Glenn, Eric Fleming Operator: Chesapeake Energy Corp. Drilling Contractor: Nomac Coordinates: Drilling Pad Name & No.: Cooper 7-9, 2-5H Reserve Pit Authorization #/: On Site Contact Person: Patrick Morris, Chesapeake ( ) DETAILS: Section 5, Township 7N, Range 9W County: White Stage of Well Development: Construction of Pad Air Drilling Water Base Mud Drilling Oil Base Mud Drilling Well completion Well Finished Section A Drilling Pad 1. Evidence of sediment runoff from the drilling pad or well site observed in waters of the state? Y N NA NE 2. At the time of inspection, was evidence observed of Reg. 2 turbidity standards being exceeded? It appears at the time of the discharge that turbidity standards were violated due to evidence of drilling mud deposited in the unnamed trib. to Bad Luck Creek. Y N NA NE 3. Does the site have BMP s in place to minimize sediment runoff from occurring? Y N NA NE 4. Are BMP s being maintained in good operating condition? Y N NA NE 5. At the time of the inspection was there evidence that the site had any oil/fluid spills? Y N NA NE a. If so, were the spills properly contained, cleaned, and disposed of? Y N NA NE b. Has the spill been reported to ADEQ? Y N NA NE 6. Did any rerouting, filling, or channelization of any water of the state occur during drilling pad construction? Y N NA NE a. If so, was proper authorization received? Y N NA NE b. Evidence of any Reg. 2 violations due to construction of the drilling pad? Y N NA NE 7. Does it appear that chemicals used in the drilling process are being stored on site properly? Y N NA NE SECTION B: Reserve Pits and Drilling Fluids 1. At the time of inspection, is there any evidence that the reserve pit was not constructed with the appropriate liner? (i.e. 20 mil Synthetic Liner, Compacted Clay Liner, and/or Bentonite Liner) 2. Are there any evidence at the time of inspection, that the reserve pit is not structurally sound? ( i.e. cracks/holes in levees and/or tears/holes in liners) Y N NA NE Y N NA NE 3. Is there any indication that seepage is coming from pad or reserve pit Y N NA NE 4. At the time of the inspection was there any evidence that any reserve pit fluids has been discharged onto the ground or into waters of the state from the reserve pit or from drilling pad? Y N NA NE a. If so, has the discharge been reported Y N NA NE b. Has the fluid been properly contained, cleaned up, sampled, and disposed of? Y N NA NE 5. Is a 2 ft. minimum freeboard being maintained in the reserve pit? Y N NA NE 6. Any evidence noted at the time of inspection, that the reserve pit contained unapproved fluids or materials? (i.e. waste oil, hydraulic or completion fluids, trash, or any Nonhazardous Oilfield Waste) Y N NA NE 7. According to on site contact person how and where are fluids disposed? a. Carrier : b. Destination: c. Type of Disposal: SECTION C : Closed out Well site Date well was finished: 1. Have all drilling fluids and/or solids been removed from the reserve pit? Y N NA NE 2. Does it appear that the pit has been properly closed and seeded? Y N NA NE Comments: A reserve pit was not constructed. A closed loop system consisting of two cuttings boxes was allegedly used to receive the fluids. The drilling of the well was occurring at the time of this inspection. There was evidence of a discharge off of the north side of the drilling pad of drilling fluids to an unnamed trib. to Bad Luck Creek. Inspector: Jill Glenn, Eric Fleming Arkansas Department of Environmental Quality Date Report: September 9, 2008 DW Arkansas Dept. Environmental Quality

3 Arkansas Department of Environmental Quality (ADEQ) Official Photograph Sheet Location: Cooper 7-9, 2-5H Photographer: Eric Fleming Witness: None Photo # 1 Of 6 Date: 9/9/08 Time: 1122 Description: Evidence of drilling fluids discharge on north side of drilling pad Photographer: Eric Fleming Witness: None Photo # 2 Of 6 Date: 9/9/08 Time: 1123 Description: Evidence of discharge along north side of drilling pad heading towards the unnamed tributary.

4 Location: Cooper 7-9, 2-5H Photographer: Eric Fleming Witness: None Photo # 3 Of 6 Date: 9/9/08 Time: 1125 Description: Evidence of discharge along northern edge of drilling pad entering unnamed tributary. Photographer: Eric Fleming Witness: None Photo # 4 Of 6 Date: 9/9/08 Time: 1124 Description: Photo showing the drilling mud in the unnamed tributary downstream of the drilling pad.

5 Location: Cooper 7-9, 2-5H Photographer: Jill Glenn Witness: Eric Fleming Photo # 5 Of 6 Date: 9/9/08 Time: 1053 Description: Photo showing the impact to the unnamed tributary, 100 yards downstream of the drilling pad near Burl Cooper Rd. Photographer: Eric Fleming Witness: None Photo # 6 Of 6 Date: 9/9/08 Time: 1121 Description: Unnamed tributary upstream of the drilling pad showing the appearance of the water quality.

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