RE: PETITION OF PAR MINERALS FILED FOR RECORD

Transcription

1 BEFORE THE STATE OIL AND GAS BOARD OF MISSISSIPPI RE: PETITION OF PAR MINERALS FILED FOR RECORD CORPORATION TO AMEND THE p~,, SPECIAL FIELD RULES FOR PISTOL hm ' S mf RIDGE FIELD, FORREST AND PEARL STATE OIL AND GAS BOARD RIVER COUNTIES, MISSISSIPPI, AND LISA IVSHIN, SUPERVISOR OBTAIN RELATED RELIEF DOCKET NO ORDER NO ORDER THIS MATTER came to be heard at the regular March 2007 meeting of the State Oil and Gas Board on the Petition of PAR MINERALS CORPORATION, Petitioner, requesting the Board to amend the Special Field Rules for Pistol Ridge Field, and grant related relief. Having considered the Petition, the evidence in support thereof, and being fully advised in the premises, the Board finds that the Petition is well-taken and should be granted. The Board also finds as follows: 1. The Board has jurisdiction over the parties and the subject matter of the Petition. Due and legal notice of the hearing on the Petition has been given in the time and manner required by law and the rules and regulations of this Board. 2. Petitioner is the operator of wells and/or proposed wells in Pistol Ridge Field which is located in Forrest and Pearl River Counties, Mississippi. In particular, Petitioner operates the Seale Well No. 1 (the "Well") which is located 1067 feet West of the East line and 1502 feet South of the North line of Section 18, Township 1 South, Range 13 West, Forrest County, Mississippi, on a 320-acre unit comprised of the North One-Half of said Section 18. The Well produces from what is presently defined as the "Lower Tuscaloosa Gas Producing Pool." The name of that pool should be amended to be named the "Lower Tuscaloosa Gas and Oil Producing Pool," with appropriate language changes to the definition of the pool. That amendment is needed because that pool is productive of natural gas,

2 condensate and oil; furthermore, the amendment will encourage and facilitate the drilling of additional wells and development of the said pool. The amended pool name and definition should be as follows: The Lower Tuscaloosa Gas and Oil Producing Pool in Pistol Ridge Field is defined as those strata of the Lower Tuscaloosa Formation productive of natural gas, condensate and/or oil in the interval between the measured depths of 8245 feet and 8480 feet in the Gulf Refining Company-No. 1 McKinney, et al. Well, as indicated on the log of that well, and those strata productive of natural gas, condensate and oil which can be correlated with that interval, said well having been drilled at a location 60 feet South of the North boundary line and 330 feet West of the East boundary line of Lot 10, Section 3, Township 1 South, Range 14 West, Pearl River County, Mississippi. 4. The Special Field Rules should also be amended so as to delete the existing definition of "The Upthrown Lower Tuscaloosa Gas Producing Pool," because the intervals that comprise that pool are completely encompassed within the intervals of what has now been defined as the Lower Tuscaloosa Gas and Oil Producing Pool, set forth above. 5. Because of the geology and other reservoir factors and characteristics of the said Lower Tuscaloosa Gas and Oil Producing Pool, increased well density is needed in order to effectively and efficiently drain a 320-acre unit for the said pool. Therefore, the existing spacing rules for wells that produce from the said pool should be amended to provide as follows: With respect to each well that is completed into and produces from the Lower Tuscaloosa Gas and Oil Producing Pool: (1) Each well must be located on a drilling unit consisting of 320 contiguous surface acres, or a governmental halfsection containing not less than 300 acres, or eight (8) contiguous governmental quarter-quarter sections (or lots) whose total acreage is not less than 300 acres. (2) The distance between any two points farthest apart on the drilling unit shall not exceed 6300 feet. (3) Each such drilling unit may contain up to eight wells that produce from the said pool.

3 (4) Each well that produces from the said pool must be located at least 660 feet from every other drilling or producible well in the same pool. (5) Each well that produces from the said pool must be located at least 330 feet from the nearest exterior boundary line of the drilling unit. (6) Each well on each such drilling unit shall be granted a full gas well allowable for production from the said pool. 6. The proposed amendments to the Special Field Rules will result in drilling units for the said pool; will allow the pool to be effectively and efficiently drained and produced; will foster, encourage and promote the drilling of additional wells and the development and production of the said pool; will prevent waste; and will safeguard, protect and enforce the coequal and correlative rights of the owners in the pool and in the field. IT IS, THEREFORE, ORDERED AND ADJUDGED that the Petition filed herein is granted; the Special Field Rules are amended as set forth herein; and Exhibit "1" hereto sets forth the Special Field Rules as herein amended. Permittee shall acquire all other permits, if any, required by any other permitting authority. SO ORDERED AND ADJUDGED, this the sta;pe oil^nd was bgamxof Mississippi By: CHAIRMAN PREPARED BY: Glenn Gates Taylor (MBN 7453) C. Glen Bush (MBN 7589) COPELAND, COOK, TAYLOR & BUSH, P.A. 200 Concourse, Suite Highland Colony Parkway P. O. Box 6020 Ridgeland, Mississippi ATTORNEYS FOR PETITIONER L:\GGT\Par Minerals\ogb\sfr.pistol ridge fidd\order.sfr.0307.wpd:3627-8

4 EXHIBIT A Docket No SPECIAL FIELD RULES FOR PISTOL RIDGE FIELD, FORREST AND PEARL RIVER COUNTIES. MISSISSIPPI The Pistol Ridge Field, as used herein, is that area in Sections 4, 5, 6,7, 8,9,16, 17 and 18, Township 1 South, Range 13 West, Forrest County, Mississippi, and Sections 1, 2, 3, 4 and 12, Township 1 South, Range 14 West, Pearl River County, Mississippi, and including all productive extensions thereof, which area is underlain by the "4500" Foot Gas Sand Producing Pool, the "4800" Foot Gas Sand Producing Pool, the Entrekin Gas Sand Producing Pool and the Lower Wilcox Gas Sand Producing Pool of the Wilcox Formation; the Midway Gas Pool of the Midway Formation; the Eutaw-Upper Tuscaloosa Gas Producing Pool, the Hatten Sand Oil Producing Pool, and the Crow- Creosote Sand Oil Producing Pool of the Eutaw-Upper Tuscaloosa Formation; the Lower Tuscaloosa Gas and Oil Producing Pool, theupthrown Massive Sand Gas Producing Pool, the Massive Sand Gas Producing Pool and the Stevens Sand Oil Pool of the Lower Tuscaloosa Formation; the Foot Dantzler Gas Pool, the Pigford Sand Oil Producing Pool, the 9,000-Foot Dantzler Gas Pool, the Nelson Sand Oil Pool of the Dantzler Formation; the 9390-Foot Washita-Fredericksburg Gas Pool, the 9448-Foot Washita-Fredericksburg Gas Pool, the 9500-Foot Sand Gas Producing Pool, the 9,600-Foot Washita-Fredericksburg Gas Pool, the 9816-Foot Washita-Fredericksburg Gas Pool, the 9,945-Foot Sand Gas Pool, the 10,000-Foot Washita-Fredericksburg Gas Pool, the "A" Sand Gas Pool, the 10,350-Foot Washita-Fredericksburg Oil Pool, the 10,380-Foot Washita-Fredericksburg Gas Pool, the 10,500-Foot Washita-Fredericksburg Gas Pool, the 10,700-Foot Washita- Fredericksburg Gas Pool, the "C" Sand Gas Pool of the Washita-Fredericksburg Formation, the 11,000-Foot Washita-Fredericksburg Gas Pool, the 11,006-Foot Washita-Fredericksburg Gas Pool, the Paluxy 11,100 Foot Oil Pool, the 11,560-Foot Paluxy Oil Pool, and the Gammill Sand Gas Pool. A. The "4500"-Foot Gas Sand Producing Pool of the Wilcox Formation, as used herein, shall be construed to mean those strata of the Wilcox Formation productive of gas in the interval 2798 feet to 4500 feet in the Gaylord Crosby "A" Unit located 100 feet north of the center of the Southeast Quarter of the Northwest Quarter (SE 1/4 NW 1/4) of Section 17, Township 1 South, Range 13 West. (Order No ; Amended ) B. The "4800"-Foot Gas Sand Producing Pool of the Wilcox Formation, as used herein,

5 shall be construed to mean those strata of the Wilcox Formation productive of gas in the interval 4500 feet to 5290 feet in the said Gaylord Crosby "A" Well, located 100 feet North of the center of the Southeast Quarter of the Northwest Quarter (SE 1/4 NW 1/4) of Section 17, Township 1 South, Range 13 West, but less and except the Entrekin Gas Sand Producing Pool as defined in (C) below. (Order No ; Amended ) C. The Entrekin Gas Sand Producing Pool of the Wilcox Formation, as used herein, shall be construed to mean those strata of the Wilcox Formation productive of gas in the interval of 4620 feet to 4640 feet in the Norton Oil Company - Entrekin Well No. 4 located 200 feet North and 100 feet West of the Southeast corner of the West Half (W la) of Section 9, Township 1 South, Range 13 West, Forrest County, Mississippi. (Order No ) D. The Lower Wilcox Gas Sand Producing Pool, as used herein, shall be construed to mean those strata of the Wilcox Formation productive of gas in the interval of 5,884 feet to 5,900 feet in the Delphi Oil, Inc. - Crosby 6-13 No. 2 Well, located in Lot 13 of Section 6, Township 1 South, Range 13 West, Forrest County, Mississippi, as indicated on the electric log of said well and all sands correlative of these strata productive of gas. (Order No ) E. The Midway Gas Pool, as used herein, shall be construed to mean those strata of the Midway Formation productive of gas in the interval of 6000 to 6050 feet in the Joseph F. Fritz Operating Company - L. W. White Well No. 2 located 330 feet from the West line and 400 feet from the North line of the NE 1/4 of the NE 1/4 of Section 13, Township 1 South, Range 14 West, Pearl River County, Mississippi, as indicated on the electric log of said well. (Order No ) F. The Eutaw-Upper Tuscaloosa Gas Producing Pool, as used herein, shall be construed to mean those strata of the Eutaw-Upper Tuscaloosa Formation productive of gas in the interval 7150 feet to 7905 feet in the Morgan & Norton No. 1 Entrekin Well located 990 feet South and East of the Northwest corner of Section 9, Township 1 South, Range 13 West, Forrest County, Mississippi, or correlative of these strata in other wells to said interval, excluding that sand known as the Hatten Sand which is productive of oil in the interval from 7410 feet to 7426 feet as found in the Gaylord Container Corporation - N. L. Hatten #1, as indicated on electrical log of this well and all sands correlative of these strata productive of oil in Sections 1 and 12, Township 1 South, Range 14 West, Pearl River County, Mississippi, and Sections 6 and 7, Township 1 South, Range 13 West, Forrest County, Mississippi, and excluding the Crow-Creosote Sand as found in the interval from 7462 feet 2

6 to 7484 feet in the Southern Natural Gas Company's Crow-Creosote Well #1 located in Section 7, Township 1 South, Range 13 West, Forrest County, Mississippi. (Adopted Order No , Amended No ) G. The Hatten Sand Oil Producing Pool, as used herein, shall be construed to mean those strata of the Eutaw-Upper Tuscaloosa Formation productive of oil in the mterval of 7410 feet to 7426 feet (7140 feet subsea) in the Gaylord Container Corporation - N. L. Hatten Well No. 1 as indicated on the electric log of this well and all sands correlative of these strata productive of oil as defined by Statewide Rules 2(i) and (j) in other wells to said interval within Sections 1 and 12, Township 1 South, Range 14 West, Pearl River County, Mississippi, and Sections 6 and 7, Township 1 South, Range 13 West, Forrest County, Mississippi. (Order No ) H. The Crow-Creosote Sand Oil Producing Pool, as used herein, shall be construed to mean those strata of the Eutaw-Upper Tuscaloosa Formation productive of oil in the interval of 7462 feet to 7484 feet in the Southern Natural Gas Company's Crow-Creosote Well No. 1 located in Section 7, Township 1 South, Range 13 West, Pistol Ridge Field, Forrest County, Mississippi, as indicated on the electric log of this well and all sands correlative of these strata productive of oil as defined by Statewide Rule (i) and (j) in other wells. (Order No ) I. The Lower Tuscaloosa Gas and Oil Producing Pool in Pistol Ridge Field is defined as those strata of the Lower Tuscaloosa Formation productive of natural gas, condensate and/or oil in the interval between the measured depths of 8245 feet and 8480 feet in the Gulf Refining Company-No. 1 McKinney, et al. Well, as indicated on the log of that well, and those strata w productive of natural gas, condensate and oil which can be correlated with that interval, said well having been drilled at a location 60 feet South of the North boundary line and 330 feet West of the East boundary line of Lot 10, Section 3, Township 1 South, Range 14 West, Pearl River County, Mississippi. J. The Upthrown Massive Sand Gas Producing Pool, as used herein, shall be construed to mean those strata of the Lower Tuscaloosa Formation productive of gas on the upthrown side of the major Pistol Ridge - Maxie Field Fault in the interval of 8190 feet to 8380 feet in the Petroleum Services Consulting -No. 1 P. E. Norris Well located 660 feet North and 660 feet West of the Southeast Corner of SE1/4 of SW1/4 of Section 12, Township 1 South, Range 14 West, Pearl River County, Mississippi, or correlative of these strata in other wells to said interval. (Order No ) 3

7 K. The Massive Sand Gas Producing Pool, as used herein, shall be construed to mean those strata of the Lower Tuscaloosa Formation productive of gas on the downthrown side of the major Pistol Ridge - Maxie Field Fault in the interval from 8470 feet in the Morgan & Norton No. 1 Creosote Oil Corporation located 990 feet South and 990 feet West of the Northeast corner of Section 8, Township 1 South, Range 13 West, Forrest County, Mississippi, to 8875 feet in the Gulf Refining Company, et al. No. 1 Reid, et al. Unit Well located 990 feet South and 990 feet West of the Northeast Corner of the NE 1/4 of NW 1/4 of Section 7, Township 1 South, Range 13 West, Forrest County, Mississippi, or correlative of these strata in other wells to said interval. (Adopted No ; Amended No ) L. The Stevens Sand Oil Pool, as used herein, shall be construed to mean those strata of the Lower Tuscaloosa Formation productive of oil and associated gas in the interval 8420 feet to 8500 feet in the Gulf Oil Corporation - McKinney-Mobley, et al. Unit Well No. 1 and all sands correlative of these strata, which pool is geographically located within Sections 2,3 and 4, Township 1 South, Range 14 West, Pearl River County, Mississippi. (Adopted No ; Amended ) M. The 8800-Foot Dantzler Gas Pool shall be construed to mean those strata of the Dantzler Formation productive of gas and gas-condensate which occur within the interval of 8790 feet to 8822 feet in the Gulf Oil Corporation - McKinney, et al. Unit Well No. 2, as indicated on the Induction-Electric Log of said well, and all sands correlative of these strata productive of gas and gas-condensate in the Pistol Ridge Field. (Order ) N. The Pigford Sand Oil Producing Pool, as used herein, shall be construed to mean those strata in the Dantzler Formation of the Lower Cretaceous productive of oil in the interval of 8995 feet in the Gulf Refining Company - J. M. Morse, et al. Unit No. 1 Well to 9050 feet in the Humble Refining Company- L. B. Stevens No. 1 Well as indicated on the electric logs of these wells and all sands correlative of these strata productive of oil. (Order No ) O. The 9,000-Foot Dantzler Gas Pool, as used herein, shall be construed to mean those strata productive of gas in the interval between 9,001 feet to 9,043 feet in the D. C. Latimer, et al. - Southern Minerals Corporation, et al. No. 1 Well, as indicated on the electric log of said well and all sands correlative of these strata productive of gas and gas condensate. (Order No ) P. The Nelson Sand Oil Producing Pool, as used herein, shall be construed to mean those strata of the Lower Cretaceous (Dantzler Formation) productive of oil in the interval of 9,592 feet 4

8 to 9,614 feet in Gulf Oil Corporation - Pistol Ridge Unit No. 6 as indicated on the electric log of the well and all sands correlative of those strata productive of oil. (Order No ) Q- The 9390-Foot Washita-Fredericksburg Gas Reservoir shall be construed to mean those strata in the Washita-Fredericksburg Formation of the Lower Cretaceous productive of gas and condensate in the interval of 9390 feet to 9400 feet in J. C. Trahan Drilling Contractor, Inc. - Mary M.Reid Well No. 1. (Order No ) R. The 9448-Foot Washita-Fredericksburg Gas Reservoir shall be construed to mean those strata in the Washita-Fredericksburg Formation of the Lower Cretaceous productive of gas and condensate in the interval of 9448 feet to 9470 feet in J. C. Trahan Drilling Contractor, Inc. - Mary M. Reid Well No. 1. (Order No ) S. The 9500-Foot Sand Gas Producing Pool of the Washita-Fredericksburg Formation, as used herein, shall be construed to mean those strata of the Lower Cretaceous System productive of gas in the interval 9,470 feet to 9,525 feet in the Gulf Coast Drilling and Exploration, Inc. - Southern Tung Corporation No. 2 Well, located 455 feet East and 330 feet South of the Northwest Corner of Lot 17, Section 3, Township 1 South, Range 14 West, Pearl River County, Mississippi, as indicated on the electric log of said well, and points correlative thereto in other wells. (Order No ) T. The 9,600-Foot Washita-Fredericksburg Gas Pool, as used herein, shall be construed to mean those strata of the Washita-Fredericksburg Formation productive of gas in the interval of 9,600 feet to 9,650 feet in the Larco Drilling Corporation - Southern Mineral Corp., et al. Unit B, Well No. 3, located 330 feet from the west line and 330 feet from the south line of Section 1, Township 1 South, Range 14 West, Pearl River County, Mississippi, or correlative of these strata in other wells to said interval. (Order No ) U. The 9816-Foot Washita-Fredericksburg Gas Reservoir shall be construed to mean those strata in the Washita-Fredericksburg Formation of the Lower Cretaceous productive of gas and condensate in the interval of 9,816 feet to 9,854 feet in the Gulf Oil Corporation, et al. - Southern Minerals Corporation, et al. Unit D-A, Well No. 1. (Order No ) V. The 9,945-Foot Sand Gas Pool of the Washita-Fredericksburg Formation, as used herein, shall be construed to mean those strata of the Washita-Fredericksburg Formation of the Lower Cretaceous productive of gas and condensate in the interval of 9,945 feet to 9,955 feet in Gulf 5

9 Oil Corporation - Pistol Ridge Unit No. 6, as indicated on the electric log of this well, and all sands correlative of this strata productive of gas and condensate. (Order No ) W. The 10,000-Foot Washita-Fredericksburg Gas Pool, as used herein, shall be construed to mean those strata of the Washita-Fredericksburg Formation productive of gas in the interval 9970 feet to 10,000 feet in the Joseph F. Fritz-No. 1 Ridgway Unit Well, located 100 feet South and 300 feet West of the Northeast Corner of the West Half of Section 11, Township 1 South, Range 14 West, Pearl River County, Mississippi, as indicated on the electric log of this well and all sands correlative to these strata productive of gas and condensate. (Order No ) X. The "A" Sand Gas Pool of the Washita-Fredericksburg Formation, as used herein, shall be construed to mean those strata in the Washita-Fredericksburg Formation of the Lower Cretaceous productive of gas and condensate in the interval of 10,091 feet to 10,099 feet in Gulf Refining Company - Coryell McKinney No. 2, as indicated on the electric log of this well and all sands correlative of these strata productive of gas and condensate. (Order No ) Y. The 10,350-Foot Washita-Fredericksburg Oil Pool in Pistol Ridge Field shall be construed to mean those strata productive of oil in the interval between the depth of 10,350 and 10,365 feet as indicated on the electric log of the Gulf Oil Corporation - No. 1 Southern Mineral Corp., et al, Unit 1-A Well located 990 feet North and 990 feet West of the Southeast Corner of Section 2, Township 1 South, Range 14 West, Pearl River County, Mississippi, and all correlative intervals in communication therewith. (Order No ) Z. The 10,500-Foot Washita-Fredericksburg Gas Pool, as used herein, shall be construed to mean those strata of the Washita-Fredericksburg Formation productive of gas and gas condensate in the interval of 10,495 feet to 10,505 feet in the D. C. Latimer, et al. - Southern Minerals Corporation, et al. No. 1 Well, as indicated on the electric log of said well and all sands correlative of these strata productive of gas and gas condensate. (Order No ) AA. The 10,700-Foot Washita-Fredericksburg Pool of the Washita-Fredericksburg Formation, as used herein, shall be construed to mean those strata productive of gas and gas condensate in the interval of 10,710 feet to 10,735 feet in the Robert O. Sigler, et al. - Andrew Reed No. 1 Well, located approximately feet East and approximately 660 feet South of the Northwest Corner of Section 7, Township 1 South, Range 13 West, Forrest County, Mississippi. (Order No ) 6

10 BB. The "C" Sand Gas Pool of the Washita-Fredericksburg Formation, as used herein, shall be construed to mean those strata in the Washita-Fredericksburg Formation of the Lower Cretaceous productive of gas and condensate in the interval of 10,778 feet to 10,784 feet in Gulf Refining Company - Coryell McKinney No. 1, as indicated on the electric log of this well and all sands correlative of these strata productive of gas and condensate. (Order No ) CC. The Paluxy 11,100 Foot Oil Pool, as used herein, shall be construed to mean those strata of the Paluxy Formation productive of oil in the interval of 11,100 feet to 11,120 feet in the Delphi Oil, Inc. - Walters O. et al Well No. 1 located in Lot 19 of Section 6, Township 1 South, Range 13 West, Forrest County, Mississippi, as indicated on the electric log of said well and all sands correlative of these strata productive of oil. DD. The Gammill Sand Gas Pool shall be construed to mean those strata of the Paluxy Formation productive of gas and condensate in the interval 11,821 feet to 11,846 feet in the Tomlinson Interests, Inc. Crosby 6-10 Well No. 1 located 3,285 feet from the north line and 2,640 feet from the east line of Section 6, Township 1 South, Range 13 West, Forrest County, Mississippi and all correlative intervals in communication therewith. (Order No ) EE. The 11,560-Foot Paluxy Oil Pool shall be construed to mean those strata of the Paluxy Formation productive of oil and casinghead gas in the interval of 11,520 feet to 11,608 feet in the Tomlinson Interests, Inc. Crosby, et al. Unit 6-20 Well No. 1 located in Lot 20, Section 6, Township 1 South, Range 13 West, Forrest County, Mississippi, and all correlative intervals in communication therewith. FF. The 11,006-Foot Washita-Fredericksburg Gas Pool shall be construed to mean those strata of the Washita-Fredericksburg Formation productive of gas and condensate in the Dual Induction - Laterolog interval of 11,006 feet to 11,014 feet in the Tomlinson Interests, Inc.-Crosby, et al. Unit 6-13 Well No. 2 located in Lot 13, Section 6, Township 1 South, Range 13 West, Forrest County, Mississippi, and all correlative intervals in communication therewith. (Order 28-81) GG. The 10,3 80-Foot Washita-Fredericksburg Gas Pool shall be construed to mean those strata of the Washita-Fredericksburg Formation productive of gas and condensate in the Dual Induction - Laterolog interval of 10,380 feet to 10,400 feet in the Tomlinson Interests, Inc.-Southern Minerals Corporation, et al. Unit 2-10 Well No. 1 located in Lot 10, Section 2, Township 1 South, Range 14 West, Pearl River County, Mississippi, and all correlative intervals in communication 7

11 therewith. (Order 30-81) HH. The 11,000-Foot Washita-Fredericksburg Gas Pool shall be construed to mean those strata of the Washita-Fredericksburg Formation productive of gas and condensate in the Dual Induction-SFL Log interval of 11,007 feet to 11,034 feet in the Tomlinson Interests, Inc-Ophelia Walters, et al Unit No. 2, Well No. 1 located in Lot 19, Section 6, Township 1 South, Range 13 West, Forrest County, Mississippi, and all correlative intervals in communication therewith. (Order ) RULE 1: GAS WELL SPACING (a) With respect to the Massive Sand Gas Producing Pool, the characteristics of said pool are such and the evidence shows that a gas well located in conformity with Rule 8 in Statewide Order No on a tract of land consisting of approximately 320 contiguous surface acres will adequately drain, efficiently produce and economically recover the production therefrom without avoidable waste and will protect the co-equal and correlative rights of the owners in said pool. (b) With respect to the Lower Wilcox Gas Sand Producing Pool of the Wilcox Formation: (1) Each gas well must be located on a drilling unit consisting of at least 320 contiguous surface acres, or a governmental half section containing not less than 300 acres or 8 contiguous quarter-quarter sections (or lots) containing not less than 300 acres; (2) The distance between any two points farthest apart on the drilling unit upon which a gas well is located shall not exceed 6300 feet. (3) Each such drilling unit may contain up to eight (8) gas wells that produce from the said pool; (4) Each gas well that produces from said pool must be located at least 660 feet from every other drilling or producible gas well in the same pool; (5) Each gas well that produces from said pool must be located at least 330 feet from the nearest exterior boundary of the drilling unit; and (6) Each gas well on each such drilling unit shall be granted a full allowable for production from said pool. The characteristics of the Lower Wilcox Gas Sand Producing Pool of the Wilcox Formation are such that gas wells located in conformity with the foregoing spacing pattern will adequately 8

12 drain, efficiently produce and economically recover the production therefrom without avoidable waste, and will protect the co-equal and correlative rights of the owners in said pool. Additional Rules Applicable To Wells In The Lower Wilcox Gas Sand Producing Pool: As to the Lower Wilcox Gas Sand Producing Pool of the Wilcox Formation, each flowing gas well may be produced without production tubing as an exception to Statewide Rule 18 and any other applicable rules, provided that the operator thereof takes proper measures to protect against any undue hazard both underground and at the surface. (c) With respect to each well that is completed into and produces from the Lower Tuscaloosa Gas and Oil Producing Pool: (1) Each well must be located on a drilling unit consisting of 320 contiguous surface acres, or a governmental half-section containing not less than 300 acres, or eight (8) contiguous governmental quarter-quarter sections (or lots) whose total acreage is not less than 300 acres. (2) The distance between any two points farthest apart on the drilling unit shall not exceed 6300 feet. (3) Each such drilling unit may contain up to eight wells that produce from the said pool. (4) Each well that produces from the said pool must be located at least 660 feet from every other drilling or producible well in the same pool. (5) Each well that produces from the said pool must be located at least 330 feet from the nearest exterior boundary line of the drilling unit. (6) Each well on each such drilling unit shall be granted a full gas well allowable for production from the said pool. (d) With respect to each pool other than the Massive Sand Gas Producing Pool, the Lower Wilcox Gas Sand Producing Pool, and the Lower Tuscaloosa Gas and Oil Producing Pool, every gas well: (1) Shall be located on a drilling unit consisting of at least 320 contiguous surface acres, or a governmental half section containing not less than 300 acres or 8 contiguous quarterquarter sections (or lots) containing not less than 300 acres, upon which no other drilling or producible well is located; (2) The distance between any two points farthest apart on the drilling unit upon which the well is located shall not exceed 6300 feet; (3) No portion of the drilling unit upon which the well is located shall be

13 attributed, in whole or in part, to any other drilling or producible well in the same pool; (4) The rights of all owners in the drilling unit upon which the well is located shall first be pooled or consolidated; (5) The well shall be located at least 1320 feet from every other drilling or producible well located in conformity with this rule; (6) The well shall be located not less than 660 feet from every exterior boundary of the unit; and (7) That the characteristics of the respective gas pools are such that a gas well located in conformity with the foregoing spacing pattern on a drilling unit 320 acres as provided for will adequately drain, efficiently produce and economically recover the production therefrom without avoidable waste and will protect the co-equal and correlative rights of the owners in said pool. (Order No ; Amended No ; Amended ) RULE 2: OIL WELL SPACING (a) With respect to the Paluxy 11,100 Foot Oil Pool of the Paluxy Formation: (1) Each oil well shall be located on a drilling unit of four (4) contiguous quarterquarter sections (or lots) containing not less than 144 acres nor more than 176 acres upon which no other well drilling to or producing from the same pool is located; (2) Any drilling unit not composed of four (4) contiguous quarter-quarter sections (or lots) shall contain 160 surface acres which must be completely encompassed by the perimeter of a rectangle 2640 feet by 3500 feet provided, however, no unit shall be permitted which will create island acreage. (3) Each well shall be located at least 1500 feet from every drilling or producible well from the same pool and not less than 750 feet from every exterior boundary of the drilling unit. (4) The characteristics of the "Paluxy 11,100 Foot Oil Pool" of the Paluxy Formation are such that oil wells located in conformity with the foregoing spacing pattern will adequately drain, efficiently produce and economically recover the production therefrom without avoidable waste, and will protect the co-equal and correlative rights of the owners in said pool. (b) With respect to each pool other than the Paluxy 11,100 Foot Oil Pool, every oil well shall be drilled on units and at locations in conformity with Rule 7 in the Statewide Field Rules, Order No , and amendments thereto. 10

14 RULE 3: High reservoir pressures exist in said pools and adequate controls and equipment to prevent blowouts are to be used. RULE 4: Statewide Rule 33, as amended by Docket No , Order No , effective July 1, 1978, and Statewide Rule 34, as amended by Docket No , Order No , effective July 1,1978, shall be applicable to all producing gas pools in the Pistol Ridge Field. RULE 5: The production from the gas wells in the pools as defined herein requires the necessary separation of liquid hydrocarbons, the storage of same, and other treating operations, and such can be more efficiently and more economically done with central separation and storage facilities. The construction and operation of central separation and storage facilities to process the gas produced in the Pistol Ridge Field will prevent waste and result in substantial benefits to all concerned, and the co-equal and correlative rights of all owners and royalty owners will be protected. Upon written request and submission of appropriate diagrams and description of such central facilities by the producer to the Supervisor of the Board, the Supervisor shall have the authority to approve the construction and operation of such facilities without special notice and hearing before the Board provided such central facilities comply with the following requirements: (a) Each well connected to such facility shall be provided with an individual flow line meter of a type generally accepted in the industry. (b) Specific gravity and temperature determinations will be made of the gas periodically in order to provide a basis of measurement, and all gas measurements will be corrected for specific gravity, temperature and super compressibility. (c) All wells flowing into such facilities shall be connected to the separators in such a manner as to allow periodic testing of each well under average operating conditions. (d) The storage facilities provided at these locations shall be arranged and connected to the separators in such manner as to allow periodic testing of each well under average operating conditions. (e) The gas from each of the separation units will be measured by an orifice meter which shall be calibrated periodically. 11

15 (f) All liquid hydrocarbons will be measured after production into common storage at each central facility. (g) Allocation of liquid hydrocarbons produced into the stock tanks and salable gas allocations will be made on the basis of gas-oil ratio of each individual well as determined through periodic testing. (h) All such central facilities shall be operated in an orderly and prudent manner with due respect to authorized allowables, well performance, facility capacity, and other factors pertinent to the allocation to each owner or deliverance to the purchaser for the account of each owner of the gas and liquid hydrocarbons produced therefrom. (Order No ) RULE 6: All rules and regulations contained in Statewide Order No , and amendments thereto, not specifically covered in the foregoing rules are hereby adopted and will apply by inference to the Pistol Ridge Field. These Rules are effective from and after this date. The Board expressly reserves its right, after notice and hearing, to alter, amend, or repeal any other of the foregoing regulations. [The remainder of this page is left blank intentionally.] w 12